EX-13AR
CHICO'S
[CHICO'S PHOTOGRAPH]
ANNUAL REPORT
FISCAL 2002
[ PHOTOGRAPH ]
[PHOTOGRAPH]
A message from our CEO to our shareholders
A MESSAGE
FROM OUR CEO
TO OUR SHAREHOLDERS
I would like to open with my heartfelt thanks to the tremendous Chico's team
and all the customers and stockholders who have embraced our dream. Last year I
reported that fiscal 2001 had been our best year in terms of financial,
operational, and management accomplishments and that we had set very aggressive
goals for fiscal 2002. These goals included opening our newly-acquired
distribution facility while transitioning out of the distribution portion of
our existing Ft. Myers facilities, preparing for an early fiscal 2003 roll out
of our new concept (which was later named Pazo) and to add at least an
additional 64 Chico's stores by year end. I'm happy to report that we
accomplished all of the above, as well as other initiatives, in fiscal 2002.
I'd like to review with you the financial results for fiscal 2002, go over our
key accomplishments during this very productive year, and finally set some
goals for fiscal 2003.
Fiscal 2002 continued our strong sales and earnings growth trends as we saw
sales increase 40% to just over $531 million, while earnings per share
increased by 54% to close the year at $0.78 per share versus $0.50 per share
for the previous year (adjusted for our 2 for 1 split in July last year). Our
same stores sales were up double digits for each of the four quarters, we ended
the year with our highest gross margin since 1995 at over 60%, and we achieved
our highest operating margin in our history of just over 20%. On the balance
sheet side, we funded over $25 million of one-time capital expenditures for our
new distribution center and our Pazo and software initiatives, we paid off the
mortgage on our Ft. Myers headquarters facility, and, at the same time, we
managed to add over $46 million to our cash and marketable securities balances.
Our inventory balances remain strong at $65 per sq. ft., which is in the same
range we have experienced in ten of the last eleven quarters since back in the
second quarter of fiscal 2000 when we adopted the initiative to raise the
number of apparel units per square foot in our stores. Lastly, our net book
value rose by over $96 million to end the year at over $240 million.
During fiscal 2002 we planned for a launch of the Pazo division in early fiscal
2003, and I am pleased to say that we successfully opened our first ten Pazo
test stores in March 2003. With no advertising and little promotion, we have
already seen a strong, positive reaction from our target customer. We look
forward to reacting to this customer's desires and we're committed to a
continued enhancement, as and when necessary, of the Pazo brand. For example,
we've already added a size two to our four to fourteen size range and we are
making subtle changes to our display fixtures to better highlight the clothing,
shoes, and accessories.
As I stated last year, we acquired a 230,000 square foot distribution facility
north of Atlanta, Georgia in early 2002. During fiscal 2002 we successfully
installed state-of-the-art material handling equipment, hired an all new staff
in Georgia, installed best-of-breed software from Manhattan Associates,
transitioned all distribution activities to Georgia in the third and fourth
quarters, and transitioned out of the distribution operations in our Ft. Myers
headquarters facility. This fiscal year we will convert our Ft. Myers
distribution center to office space and move our Pazo team from rented
facilities into their own new headquarters that we recently acquired adjacent
to our existing Chico's headquarters. On our software initiatives, we are still
targeting a late year conversion of our existing back office systems (all
merchandising, production, sourcing, sales audit, and financial applications)
to systems we believe will help to provide part of the foundation for our
"bridge to a billion" that we have talked about in the past.
Our Passport Club membership steadily increases as we continue building the
Chico's brand. Last year our permanent membership rose by approximately 240,000
members, or almost 60%, while our preliminary membership jumped by
approximately 774,000 members, or 50%. Our Passport members accounted for over
90% of our sales last year, with over 70% coming from our permanent members. We
continue to offer exciting promotions to our permanent members in an effort to
maintain their interest. Beyond that, we plan to increase our circulation of
catalogs from approximately 18 million last year to over 27 million this year
and significantly increase our television advertising as we continue our
penetration of the baby boomer apparel market. Although the catalogs are
primarily designed to increase our store visits, they also provide the impetus
for our call center which handles direct sales from the internet and catalog
and where sales increased to just over $16 million in fiscal 2002 from just
over $10 million in fiscal 2001.
Looking forward, our current plan for fiscal 2003 is to open 70-75 net new
stores, of which a minimum of 10 will carry the Pazo brand. We believe that the
Chico's brand, as it stands now, should allow us to operate between 550 and 650
Chico's stores (we are currently at 391 Chico's stores) and a yet-to-be
determined amount of Pazo stores. We have also identified yet another
opportunity as we have begun to explore possibilities in extending the Chico's
brand into intimates and activewear. Already, we have been successfully testing
some intimate wear in our outlets and we are very pleased with this spring's
test of activewear in our front line stores. We have also hired an experienced
product development manager for this new, yet unnamed concept, and plan at this
point to test this concept in 6 to 10 stores in fiscal 2004. The hope is that
this new concept will be able to leverage the Chico's brand and take advantage
of our Passport database of over 3 million customers who already know and love
the Chico's brand. We remain committed to providing our Chico's customers with
the quality and value that have made Chico's so successful and to offering this
same quality and value as a key element in each of our new concepts.
Lastly, we have begun the transition of my duties as I approach retirement in
early 2004. Scott Edmonds, our President and COO, has been working directly
with our Chief Merchandising Officer and our Senior Vice President of
Marketing, while Charlie Kleman, our CFO, has been working directly with our
CIO in an effort to effect an orderly transition of these activities. Although
Helene and I plan to retire from our day-to-day activities early next year, we
will be monitoring Chico's, both as Board members and dedicated Founders, to
help ensure that the vision and values are maintained at the same levels.
Helene and I believe the Chico's brand has only now begun to be recognized. We
look forward to partnering with the Chico's management team and its directors
to take advantage of the tremendous growth potential that we see both now and
in the future.
As always, keep your eye on Chico's.
Sincerely,
/s/ Marvin J. Gralnick
Marvin J. Gralnick, CEO
April 18, 2003
[PHOTO]
FISCAL 2002 continued our strong sales
and earnings growth trends as we saw SALES INCREASE 40%
to just over $531 million, while earnings per
share increased by 54% ... AND WE ACHIEVED OUR
HIGHEST operating margin IN OUR HISTORY
of just over 20%.
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CONTENTS
06 Financial Highlights
07 Management's Discussion & Analysis
17 Stock Information
18 Financial Statements
39 Executive Officers/Directors
45 Store Listing
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FINANCIAL HIGHLIGHTS
FISCAL YEAR ENDED
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FEBRUARY 1, FEBRUARY 2, FEBRUARY 3, JANUARY 29, JANUARY 30,
2003 2002 2001 2000 1999
(52 WEEKS) (52 WEEKS) (53 WEEKS) (52 WEEKS) (52 WEEKS)
----------- ----------- ----------- ----------- -----------
(Dollars in thousands except per share data)
STATEMENT OF INCOME DATA:
Net Sales .......................... $531,108 $378,085 $259,446 $155,002 $106,742
Income from Operations ............. 106,793 67,536 45,363 24,806 15,134
Net Income ......................... 66,759 42,187 28,379 15,489 9,139
Basic Earnings Per Share (1) ....... 0.80 0.52 0.36 0.20 0.13
Diluted Earnings Per Share (1) ..... 0.78 0.50 0.35 0.19 0.12
BALANCE SHEET AND OPERATING DATA:
Total Assets ....................... $301,544 $186,385 $117,807 $ 70,316 $ 49,000
Long-Term Debt ..................... -- 5,022 5,150 5,222 5,294
Other Noncurrent Liabilities ....... 6,551 2,922 2,008 1,617 1,419
Stockholders' Equity ............... 240,133 143,495 85,321 52,641 34,303
# of Stores (at end of period):
Company-owned ..................... 366 300 239 191 154
Franchised ........................ 12 11 11 9 8
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Total ......................... 378 311 250 200 162
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(1) Restated to give retroactive effect for the 2 for 1 stock split
payable in July 2002, the 3 for 2 stock split payable in January 2002,
the 3 for 2 stock split payable in May 2001 and the 2 for 1 stock
split payable in January 2000.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and notes thereto.
GENERAL
Chico's FAS, Inc. (together with its subsidiaries, the "Company") is a
specialty retailer of exclusively designed, private label, sophisticated,
casual-to-dressy clothing, complementary accessories and other non-clothing
gift items under the Chico's and Pazo brand names.
The Chico's brand, which began operations in 1983, focuses on women
who are 35 years old and up with moderate and higher income levels. The styling
is relaxed, figure-flattering and designed for easy care. Pazo, which opened
its first 10 test stores in March 2003, focuses on women in the 25-40 age group
with moderate income. Its offerings are more diverse, including casual, active
wear, intimate apparel and casual career. The Pazo brand intends to be more
fashion forward with a European feel that is more fashionable.
Since the Company opened its first store in 1983 principally selling
folk art, its retail store system, now selling principally women's apparel, has
grown to 378 stores as of February 1, 2003, of which 366 are Company-owned
stores and 12 are franchised stores. Over the last five fiscal years, the
Company has opened 243 new Company-owned stores and acquired two stores from
franchisees, and one franchisee has opened five new franchised stores. Of the
new Company-owned stores, 66 were opened in fiscal 2002 (year ended February 1,
2003), 64 were opened in fiscal 2001, 51 were opened in fiscal 2000, 40 were
opened in fiscal 1999, and 22 were opened in fiscal 1998. During this same time
period, the Company closed 11 Company-owned stores and no franchised stores
closed. The Company plans to open a minimum of 70-75 net new Company-owned
stores (including at least 10 Pazo stores, the Company's new concept store) in
the fiscal year ending January 31, 2004. In addition, the Company is evaluating
certain existing Company-owned store locations, including stores with leases
coming up for renewal, and is considering the possibility of closing between
one and three existing Company-owned stores in fiscal 2003.
7
RESULTS OF OPERATIONS
The following table sets forth, for each of the respective periods
indicated, certain operating statement data and the percentage of the Company's
net sales represented by each line item presented.
FISCAL YEAR ENDED (000'S)
---------------------------------------------------------------------------------
February 1, February 2, February 3,
2003 2002 2001
(52 weeks) % (52 weeks) % (53 weeks) %
----------- ----- ----------- ----- ----------- -----
Net sales by company stores .............. $508,492 95.8% $362,443 95.9% $252,168 97.2%
Net sales by catalog and Internet ........ 16,070 3.0 10,203 2.7 2,656 1.0
Net sales to franchisees ................. 6,546 1.2 5,439 1.4 4,622 1.8
-------- ----- -------- ----- -------- -----
NET SALES ............................. 531,108 100.0 378,085 100.0 259,446 100.0
Cost of goods sold ....................... 209,770 39.5 153,937 40.7 108,671 41.9
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GROSS PROFIT .......................... 321,338 60.5 224,148 59.3 150,775 58.1
General, administrative and store
operating expenses .................... 199,495 37.6 146,611 38.8 99,757 38.4
Depreciation and amortization ............ 15,050 2.8 10,001 2.6 5,655 2.2
-------- ----- -------- ----- -------- -----
INCOME FROM OPERATIONS ................ 106,793 20.1 67,536 17.9 45,363 17.5
Interest income, net ..................... 883 0.2 507 0.1 409 0.1
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INCOME BEFORE INCOME TAXES ............ 107,676 20.3 68,043 18.0 45,772 17.6
Provision for income taxes ............... 40,917 7.7 25,856 6.8 17,393 6.7
-------- ----- -------- ----- -------- -----
NET INCOME ............................ $ 66,759 12.6% $ 42,187 11.2% $ 28,379 10.9%
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FIFTY-TWO WEEKS ENDED FEBRUARY 1, 2003 COMPARED TO
THE FIFTY-TWO WEEKS ENDED FEBRUARY 2, 2002
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NET SALES. Net sales by Company-owned stores for the fifty-two weeks
ended February 1, 2003 (the current period) increased by $146.0 million, or
40.3%, over net sales by Company-owned stores for the comparable fifty-two
weeks ended February 2, 2002 (the prior period). The increase was the result of
a comparable Company store net sales increase of $48.3 million, or 13.5%, and
$97.7 million additional sales from new stores not yet included in the
Company's comparable store base (net of sales of $1.0 million from three stores
closed in the previous fiscal year).
Net sales by catalog and Internet for the current period increased by
$5.9 million, or 57.5%, compared to net sales by catalog and Internet for the
prior period. The increase was believed to be principally attributable to the
increased number of catalog mailings and additional television spots in the
current year versus the prior period.
Net sales to franchisees for the current period increased by
approximately $1.1 million, or 20.4%, compared to net sales to franchisees for
the prior period. The increase in net sales to franchisees was primarily due to
a net increase in purchases by the franchisees, and to a lesser degree, to the
opening of a new franchise location by an existing franchisee.
GROSS PROFIT. Gross profit for the current period was $321.3 million,
or 60.5% of net sales, compared with $224.1 million, or 59.3% of net sales, for
the prior period. The increase in the gross profit percentage primarily
resulted from improved initial merchandise markups on new products, and a
significant improvement in the gross profit percentage experienced in the
Company's outlet division. To a lesser degree, this increase in gross profit
percentage resulted from decreased freight and inventory shrinkage costs as
well as from leveraging costs associated with the Company's product development
and merchandising operations (which costs are included in the Company's cost of
goods sold), and net of a slight increase in markdowns as a percent of sales
and an overall increase in outlet net sales as a percent of overall sales.
Although the gross profit percentage in the outlet division has improved,
outlet net sales still tend to have a substantially lower gross
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profit margin than sales at the Company's front line stores. The increase in
outlet net sales as a percent of net sales and the increase in gross profit
percentage in this division results primarily from the change in outlet
strategy implemented by the Company in the prior fiscal year.
GENERAL, ADMINISTRATIVE AND STORE OPERATING EXPENSES. General,
administrative and store operating expenses increased to $199.5 million, or
37.6% of net sales, in the current period from $146.6 million, or 38.8% of net
sales, in the prior period. The increase in general, administrative and store
operating expenses was, for the most part, the result of increases in store
operating expenses, including associate compensation, occupancy and other costs
associated with additional store openings, and to a lesser degree, an increase
in marketing expenses. The decrease in these expenses as a percentage of net
sales was principally due to decreases in store payroll and bonuses as a
percentage of sales, and to a lesser degree, to leverage associated with the
Company's fiscal 2002 same store sales increase of 13.5%.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
to $15.1 million, or 2.8% of net sales, in the current period from $10.0
million, or 2.6% of net sales, in the prior period. The increase in
depreciation and amortization was principally due to capital expenditures
related to new, remodeled and expanded stores, which have tended to be greater
on a per store basis than capital expenditures for previously opened stores.
The higher capital expenditures per store for new stores is attributable
largely to a growth in the average square footage for the newer stores.
INTEREST INCOME, NET. The Company had net interest income during the
current period of approximately $883,000 versus approximately $507,000 in the
prior period. The increase in net interest income was primarily a result of the
Company's increased cash and marketable securities position, partially offset
by lower interest rates.
NET INCOME. As a result of the factors discussed above, net income
increased 58.2% to $66.8 million in the current period from net income of $42.2
million in the prior period. The income tax provision represented an effective
rate of 38% for the current and prior period.
FIFTY-TWO WEEKS ENDED FEBRUARY 2, 2002 COMPARED TO
THE FIFTY-THREE WEEKS ENDED FEBRUARY 3, 2001
NET SALES. Net sales by Company-owned stores for the fifty-two weeks
ended February 2, 2002 (fiscal 2001 or the current period) increased by $110.3
million, or 43.7%, over net sales by Company-owned stores for the fifty-three
weeks ended February 3, 2001 (fiscal 2000 or the prior period). The increase
was the result of a comparable Company store net sales increase of $42.1
million, and $68.2 million additional sales from the new stores not yet
included in the Company's comparable store base (net of sales of $1.8 million
from six stores closed in fiscal 2001 and fiscal 2000, and net of $5.3 million
sales from the additional week in the prior year versus the current year).
Net sales from the Company's call center (website and catalog sales),
which began operations in late May 2000, increased by $7.5 million in the
current period compared to the short year of selling in fiscal 2000.
Net sales to franchisees for the current period increased by
approximately $817,000, or 17.7%, compared to net sales to franchisees for the
prior period. The increase in net sales to franchisees was primarily due to a
net increase in purchases by the franchisees as a whole, and the opening by an
existing franchisee of two additional franchised stores in fiscal 2000, net of
the additional week in the prior period.
[PHOTO]
GROSS PROFIT. Gross profit for the current period was $224.1 million,
or 59.3% of net sales, compared with $150.8 million, or 58.1% of net sales, for
the prior period. The increase in the gross profit percentage primarily
resulted from an improvement in the Company's initial markup on goods, offset,
in part, by slightly higher markdowns as a percent of sales in the current
period versus the prior period. To a lesser degree, the increase in the gross
profit percentage resulted from leveraging costs associated with the Company's
product development and merchandising areas, which costs are included in the
Company's cost of goods sold.
9
GENERAL, ADMINISTRATIVE AND STORE OPERATING EXPENSES. General,
administrative and store operating expenses increased to $146.6 million, or
38.8% of net sales, in the current period from $99.8 million, or 38.4% of net
sales, in the prior period. The increase in general, administrative and store
operating expenses was, for the most part, the result of increases in store
operating expenses, including store compensation, occupancy and other costs
associated with additional store openings, and to a lesser degree, an increase
in marketing expenses. The increase in these expenses as a percentage of net
sales was principally due to an increase in direct store expenses related to
costs associated with the Company's new cash register rolled out in the first
half of fiscal 2001 and an increase in direct marketing expenses as a
percentage of net sales, comprising 3.4% of net sales in the current period,
versus 2.7% of net sales in the prior period, net of leverage associated with
the Company's 17.1% comparable Company store sales increase for the current
period.
[PHOTO]
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
to $10.0 million, or 2.6% of net sales in the current period from $5.7 million,
or 2.2% of net sales, in the prior period. The increase in depreciation and
amortization was principally due to capital expenditures related to new,
remodeled and expanded stores as well as capital expenditures related to the
new cash registers and the addition to the Company's Headquarters facility
which opened in early 2001. The increase as a percentage of net sales was
principally due to the new cash registers and the Headquarters expansion.
INTEREST INCOME, NET. The Company had net interest income during the
current period of approximately $507,000 versus approximately $408,000 in the
prior period. The increase in net interest income was primarily a result of the
Company's increased cash and marketable securities position throughout most of
the year, net of decreased interest rates earned on cash and marketable
securities.
NET INCOME. As a result of the factors discussed above, net income
increased 48.7% to $42.2 million in the current period from net income of $28.4
million in the prior period. The income tax provision represented an effective
rate of 38.0% for the current and prior period.
COMPARABLE COMPANY STORE NET SALES
Comparable Company store net sales increased by 13.5% in the 52 weeks
ended February 1, 2003 (fiscal 2002) when compared to the comparable prior
period. Comparable Company store net sales data is calculated based on the
change in net sales of currently open Company-owned stores that have been
operated as a Company store for at least thirteen months, including stores that
have been expanded or relocated within the same general market area
(approximately five miles).
The comparable store percentage reported above includes 44 stores that
were expanded or relocated within the last two fiscal years by an average of
882 net selling square feet. If the stores that were expanded and relocated had
been excluded from the comparable Company-owned store base, the increase in
comparable Company-owned store net sales would have been 11.8% for fiscal 2002
(versus 13.5% as reported). The Company does not consider the effect to be
material to the overall comparable store sales results and believes the
inclusion of expanded stores in the comparable store net sales to be an
acceptable practice, consistent with the practice followed by the Company in
prior periods and by many other retailers.
The Company believes that the increase in comparable Company store net
sales in the current fiscal year resulted from the continuing effort to focus
the Company's product development, merchandise planning, buying and marketing
departments on Chico's target customer. The Company also believes that the
look, fit and pricing policy of the Company's product was in line with the
needs of the Company's target customer, and that the increase in comparable
store sales was also fueled by a coordinated marketing plan, which includes
national and regional television advertising, national magazine advertising,
increased direct mailings of catalogs,
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a larger database of existing customers for such mailings and the success of
the Company's loyalty club (the "Passport Club"). To a lesser degree, the
Company believes the increase was due to continued store-level training efforts
associated with ongoing training programs and continuing strong sales
associated with several styles of clothing produced from a related group of
fabrics newly introduced by the Company in the fourth quarter of fiscal 1998.
The following table sets forth for each of the quarters of the previous
five fiscal years, the percentage change in comparable store net sales at
Company-owned stores from the comparable period in the prior fiscal year:
FISCAL YEAR ENDED
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2/1/03 2/2/02 2/3/01 1/29/00 1/30/99
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FULL YEAR 13.5% 17.1% 34.3% 23.3% 30.3%
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First Quarter 13.2% 27.7% 30.9% 22.6% 31.7%
Second Quarter 11.6% 17.4% 34.3% 17.2% 23.0%
Third Quarter 18.2% 7.0% 39.1% 26.9% 28.5%
Fourth Quarter 11.0% 17.9% 32.2% 26.5% 38.5%
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary ongoing capital requirements are for funding
capital expenditures for new, expanded, relocated and remodeled stores and
merchandise inventories. Also, during fiscal 2002, the Company experienced the
need for capital to address the acquisition and equipping of the Company's new
distribution center, the remodeling of the space at the Company's Ft. Myers
headquarters that previously had been used for distribution, and the
acquisition and installation of new software packages as more fully described
in the Company's Form 10-K for the fiscal year ended February 1, 2003.
During the current fiscal year (fiscal 2002) and the prior fiscal year
(fiscal 2001), the Company's primary source of working capital was cash flow
from operations of $108.8 million and $65.5 million, respectively. The increase
in cash flow from operations of $43.3 million was primarily due to an increase
in net income of $24.6 million, an increase in the tax benefit of options
exercised of $14.4 million, an increase in accounts payables and accrued
liabilities of $20.0 million in the current period versus an increase of $9.6
million in the prior period, and an increase in depreciation and amortization
of $5.7 million. These increases were offset by an increase in inventories in
the current year of $16.0 million versus an increase of $4.5 million in the
prior period. The year-over-year increases in accounts payable and inventories
are due to a planned increase in inventory levels in the current period versus
the prior period due to strong unplanned January sales in the prior period and
a general reduction in inventories last year due to concerns over the effect of
terrorist attacks.
[PHOTO]
The Company invested $64.7 million in the current fiscal year in
capital expenditures primarily associated with the acquisition and costs of
equipping its new distribution center in Georgia and modify its existing
distribution center in Florida ($14.0 million), the acquisition and initial
installation costs associated with new software packages ($10.3 million) and,
the costs associated with the establishment of Pazo concept stores (including
costs incurred to date on unopened Pazo stores) and the acquisition of
additional land and a 12,000 square foot building, which property is adjacent
to the Company's headquarters in Ft. Myers, Florida and is to be used as the
Pazo headquarters ($2.2 million), and with the balance attributable primarily
to new, relocated, remodeled and expanded Chico's Company stores. During the
same period in the prior fiscal year, the Company invested $37.4 million
primarily for capital expenditures associated with the opening of new,
relocated, remodeled and expanded Company stores.
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During the current fiscal year, fourteen of the Company's eighteen
officers and two of its three independent directors exercised an aggregate of
3,495,628 stock options (split-adjusted) at prices ranging from $0.36 to $10.84
(split-adjusted) and several employees and former employees exercised an
aggregate of 179,264 (split-adjusted) options at prices ranging from $0.36 to
$10.84 (split-adjusted). Also, during this period, the Company sold 29,296 and
18,315 shares of common stock during the July and September offering periods
under its employee stock purchase plan at prices of $15.44 and $15.09,
respectively. The proceeds from these issuances of stock, exclusive of the
tax benefit realized by the Company, amounted to approximately $7.2 million.
[PHOTO]
The Company invested $50.7 million, net, in marketable securities and
repaid its existing mortgage of $5.2 million in the current year. In the prior
year, the Company invested $26.2 million in marketable securities and repaid
$66,000 of its indebtedness.
In September 2002, the Company entered into a replacement unsecured
revolving credit facility with Bank of America, N.A., expanding the maximum
available commitment from $25 million to $45 million, extending the maturity to
June 2005 and increasing the letter of credit sublimit of the facility from $22
million to $35 million.
The following table summarizes the Company's contractual obligations
at February 1, 2003:
LESS THAN AFTER
TOTAL 1 YEAR 1-3 YEARS 4-5 YEARS 5 YEARS
------------ ----------- ----------- ----------- -----------
Long-term debt $ -- $ -- $ -- $ -- $ --
Short-term
borrowings -- -- -- -- --
Operating leases 217,177,0000 33,279,000 65,052,000 53,407,000 65,439,000
Non-cancelable
purchase
commitments 24,865,000 23,800,000 1,065,000 -- --
------------ ----------- ----------- ----------- -----------
TOTAL CONTRACTUAL
COMMITMENTS $242,042,000 $57,079,000 $66,117,000 $53,407,000 $65,439,000
============ =========== =========== =========== ===========
At February 1, 2003 and February 2, 2002, the Company did not have any
relationship with unconsolidated entities or financial partnerships, which
certain other companies have established for the purpose of facilitating
off-balance sheet arrangements or other contractually narrow or limited
purposes. Therefore, the Company is not materially exposed to any financing,
liquidity, market or credit risk that could arise if the Company had engaged in
such relationships.
As more fully described in "Item 1" beginning on page 14 of the
Company's Annual Report on Form 10-K for the fiscal year ended February 1,
2003, the Company is subject to ongoing risks associated with imports. The
Company's reliance on sourcing from foreign countries causes the Company to be
exposed to certain unique business and political risks. Import restrictions,
including tariffs and quotas, and changes in such tariffs or quotas could
affect the importation of apparel generally and, in that event, could increase
the cost or reduce the supply of apparel available to the Company and have an
adverse effect on the Company's business, financial condition and/or results of
operations. The Company's merchandise flow could also be adversely affected by
political instability in any of the countries in which its goods are
manufactured, by significant fluctuations in the value of the U.S. dollar
against applicable foreign currencies and by restrictions on the transfer of
funds.
The Company plans to open a minimum of approximately 70-75 net
Company-owned new stores (which includes a minimum of 10 Pazo stores) in fiscal
2003, of which 23 were opened as of April 18, 2003. The
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Company believes that the liquidity needed for its planned new store growth,
continuing remodel/expansion program, continued remodeling of the space in the
Company's Ft. Myers headquarters previously used for distribution, continued
installation of new software packages, rollout of its new concept stores on a
test basis in fiscal 2003, and maintenance of proper inventory levels
associated with this growth will be funded primarily from cash flow from
operations and its strong existing cash and marketable securities balances. The
Company further believes that this liquidity will be sufficient, based on the
above, to fund anticipated capital needs over the near-term. Given the
Company's existing cash and marketable securities balances and the capacity
included in its bank credit facilities, the Company does not believe that it
would need to seek other sources of financing to conduct its operations or
pursue its expansion plans even if cash flow from operations should prove to be
less than anticipated or if there should arise a need for additional letter of
credit capacity due to establishing new and expanded sources of supply, or if
the Company were to increase the number of new Company stores planned to be
opened in future periods.
SEASONALITY AND INFLATION
Although the operations of the Company are influenced by general
economic conditions, the Company does not believe that inflation has had a
material effect on the results of operations during the current or prior
periods. The Company does not consider its business to be seasonal.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
[PHOTO]
This annual report may contain certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, which
reflect the current views of the Company with respect to certain events that
could have an effect on the Company's future financial performance. The
statements may address items such as future sales, gross profit expectations,
planned store openings, closings and expansions, future comparable store sales,
future product sourcing plans, inventory levels, planned capital expenditures
and future cash needs. In addition, from time to time, the Company may issue
press releases and other written communications, and representatives of the
Company may make oral statements which contain forward-looking information.
These statements, including those in this annual report and those in
press releases or made orally, may include the words "expects," "believes," and
similar expressions. Except for historical information, matters discussed in
such oral and written statements, including this annual report, are
forward-looking statements. These forward-looking statements are subject to
various risks and uncertainties that could cause actual results to differ
materially from historical results or those currently anticipated. These
potential risks and uncertainties include the financial strength of retailing
in particular and the economy in general, the extent of financial difficulties
that may be experienced by customers, the ability of the Company to secure and
maintain customer acceptance of Chico's styles, the propriety of inventory mix
and sizing, the quality of merchandise received from vendors, the extent and
nature of competition in the markets in which the Company operates, the extent
of the market demand and overall level of spending for women's private label
clothing and related accessories, the adequacy and perception of customer
service, the ability to coordinate product development with buying and
planning, the ability of the Company's suppliers to timely produce and deliver
clothing and accessories, the changes in the costs of manufacturing, labor and
advertising, the rate of new store openings, the buying public's acceptance of
the Company's new store concept, the performance, implementation and
integration of management information systems, the ability to hire, train,
energize and retain qualified sales associates and other employees, the
availability of quality store sites, the ability to hire and train qualified
managerial employees, the ability to effectively and efficiently establish and
operate catalog and Internet sales, the ability to secure and protect
trademarks and other intellectual property rights, the ability to effectively
and efficiently integrate and operate the newly
13
acquired facility, risks associated with terrorist activities and other risks.
In addition, there are potential risks and uncertainties that are peculiar to
the Company's reliance on sourcing from foreign vendors, including the impact
of work stoppages, transportation delays and other interruptions, political or
civil instability, foreign currency fluctuations, imposition of and changes in
tariffs and import and export controls such as import quotas, changes in
governmental policies in or towards foreign countries and other similar
factors.
The forward-looking statements included herein are only made as of the
date of this Annual Report. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company's discussion and analysis of its financial condition and
results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of
consolidated financial statements requires the Company to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, the Company evaluates its estimates, including those related to
customer product returns, inventories, income taxes, insurance reserves,
contingencies and litigation. The Company bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
The Company believes the following critical accounting policies affect
its more significant judgments and estimates used in the preparation of its
consolidated financial statements.
Inventory Valuation
The Company identifies potentially excess and slow-moving inventories
by evaluating turn rates and inventory levels in conjunction with the Company's
overall growth rate. Excess quantities are identified through evaluation of
inventory ageings, review of inventory turns and historical sales experiences,
as well as specific identification based on fashion trends. Further, exposure
to inadequate realization of carrying value is identified through analysis of
gross margins and markdowns in combination with changes in the fashion
industry. The Company provides lower of cost or market reserves for such
identified excess and slow-moving inventories.
Inventory Shrinkage
The Company estimates its expected shrinkage of inventories between
physical inventory counts by applying historical chain-wide average shrinkage
experience rates to the related periods' sales volume. The historical rates are
updated on a regular basis to reflect the most recent physical inventory
shrinkage experience.
[PHOTO]
Sales Returns
The Company's policy is to honor customer returns at all times.
Returns after 30 days of the original purchase, or returns without the original
receipt, qualify for store credit only. The Company will, in certain
circumstances, offer full customer refunds either after 30 days or without a
receipt. The Company estimates its reserve for likely customer returns based on
the average refund experience in relation to sales for the related period.
14
Self-Insurance
The Company is self-insured for certain losses relating to workers'
compensation, medical and general liability claims. Self-insurance claims filed
and claims incurred but not reported are accrued based upon management's
estimates of the aggregate liability for uninsured claims incurred using
insurance industry benchmarks and historical experience. Although management
believes it has the ability to adequately accrue for estimated losses related
to claims, it is possible that actual results could significantly differ from
recorded self-insurance liabilities.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk of the Company's financial instruments as of
February 1, 2003 has not significantly changed since February 2, 2002. The
Company is exposed to market risk from changes in interest rates on its
indebtedness. The Company's exposure to interest rate risk relates in part to
its revolving line of credit with its bank; however, as of February 1, 2003, the
Company did not have any outstanding borrowings on its line of credit and, given
its strong liquidity position, does not expect to utilize its line of credit in
the foreseeable future except for its continuing use of the letter of credit
facility portion thereof.
[PHOTO]
NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities" (SFAS 146). The standard
requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. SFAS 146 is effective for exit or disposal activities
that are initiated after December 31, 2002. The adoption of SFAS 146 did not
have a significant impact on the Company's financial position or results of
operations.
In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 elaborates on
the existing disclosure requirements for most guarantees, including loan
guarantees such as standby letters of credit. It also clarifies that at the
time a company issues a guarantee, the company must recognize an initial
liability for the fair value, or market value, of the obligations it assumes
under that guarantee and must disclose that information in its interim and
annual financial statements. FIN 45 is effective on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. The adoption of FIN 45 did not
have a significant impact on the Company's financial position or results of
operations.
In December 2002, the FASB issued SFAS 148, "Accounting for
Stock-Based Compensation, Transition and Disclosure" (SFAS 148). SFAS 148
amends SFAS 123, to provide alternative methods of transition to the fair value
method of accounting for stock-based employee compensation. In addition, SFAS
148 amends the disclosure provisions of SFAS 123. SFAS 148 does not amend SFAS
123 to require companies to account for their employee stock-based awards using
the fair value method. However, the disclosure provisions are required for all
companies with stock-based employee compensation, regardless of whether they
utilize the fair value method of accounting described in SFAS 123 or the
intrinsic value method described in APB 25. The Company adopted the disclosure
provisions of SFAS 148 during the year ended February 1, 2003.
15
CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, an evaluation was
earned out under the supervision and with the participation of the Company's
management, including its Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Company's periodic
SEC filings. There were no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.
LEGAL PROCEEDINGS
The Company was named as defendant in a suit filed in September 2001
in the Superior Court for the State of California for the County of Orange.
This suit, Carmen Davis vs. Chico's FAS, Inc., was filed by the plaintiff,
seeking to represent all other Company assistant store managers, sales
associates and hourly employees in California from September 21,1997 to the
present. The Company responded by seeking to dismiss the complaint and strike
selected claims in order to either eliminate the litigation or gain greater
clarity as to the basis for the plaintiff's action. In response, the plaintiff
filed an amended complaint on February 15, 2002, which differs in a number of
material respects from the original complaint. The amended complaint alleged
that the Company failed to pay overtime wages and failed to provide rest breaks
and meal periods. The action sought "class action" status and sought
unspecified monetary damages. Following preliminary settlement discussions, the
parties attended a mediation on October 14, 2002, at which the parties reached
a settlement on a class-wide basis. The settlement provides for a common fund
out of which settlement awards to class members and the costs of the settlement
will be paid. The parties prepared a settlement agreement, which was lodged
with the Court. The settlement agreement states that the settlement is not an
admission of liability and that the Company continues to deny liability for any
of plaintiff's claims. Subsequent to year end, the Court heard the plaintiff's
motion for preliminary approval of the settlement. The Court granted the motion
and ordered that the parties give notice of the settlement to the class
members. Once notice is given, class members will have sixty days to file claim
forms to participate in the settlement or to file exclusion forms to opt out of
the settlement. On September 16, 2003, the Court will hold a settlement
fairness hearing for the purpose of determining whether to give final approval
to the settlement. If final approval is given, and no appeals challenging the
settlement are filed, the Company will pay the settlement sums to class members
who have filed valid claims and also will pay amounts owing for attorney's
fees, costs and other expenses of the settlement. The settlement provides for a
release of all covered claims by class members who do not opt out of the
settlement. The Company does not believe the outcome of this will have a
material impact on the Company's results of operations or financial condition.
[PHOTO]
Chico's is not a party to any other legal proceedings, other than
various claims and lawsuits arising in the normal course of the Company's
business, none of which the Company believes should have a material adverse
effect on its financial condition or results of operations.
16
[PHOTO]
TRADING AND DIVIDEND INFORMATION
The following table sets forth, for the periods indicated, the range
of high and low sale prices for the Common Stock, as reported on the New York
Stock Exchange and Nasdaq National Market System.(1)
FOR THE FISCAL YEAR ENDED FEBRUARY 1, 2003 High(2) Low(2)
------- ------
Fourth Quarter (November 3, 2002 - February 1, 2003) $23.73 $16.83
Third Quarter (August 4, 2002 - November 2, 2002) 21.09 13.02
Second Quarter (May 5, 2002 - August 3, 2002) 21.00 13.26
First Quarter (February 3, 2002 - May 4, 2002) 18.99 14.40
FOR THE FISCAL YEAR ENDED FEBRUARY 2, 2002 High(2) Low(2)
------- ------
Fourth Quarter (November 4, 2001 - February 2, 2002) $15.29 $ 9.50
Third Quarter (August 5, 2001 - November 3, 2001) 13.00 6.83
Second Quarter (May 6, 2001 - August 4, 2001) 12.84 8.66
First Quarter (February 4, 2001 - May 5, 2001) 10.45 6.86
(1) On April 11, 2001, the Company commenced its trading on the New York
Stock Exchange.
(2) Adjusted for the 2 for 1 stock split payable in July 2002, the 3 for 2
stock split payable January 2002 and the 3 for 2 stock split payable
in May 2001.
The Company does not intend to pay any cash dividends for the
foreseeable future and intends to retain earnings, if any, for the future
operation and expansion of the Company's business. Any determination to pay
dividends in the future will be at the discretion of the Company's Board of
Directors and will be dependent upon the Company's results of operations,
financial condition, contractual restrictions and other factors deemed relevant
by the Board of Directors.
The approximate number of equity security holders of the Company is as follows:
Title of Class Number of Record Holders As of April 18, 2003
- -------------------------------------- ---------------------------------------------
Common Stock, par value $.01 per share 1,080
17
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Chico's FAS, Inc.
We have audited the accompanying consolidated balance sheet of Chico's FAS,
Inc. and subsidiaries as of February 1, 2003, and the related consolidated
statements of income, stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Chico's FAS, Inc.
and subsidiaries as of February 2, 2002 and for each of the two years in the
period then ended, were audited by other auditors who have ceased operations
and whose report dated March 4, 2002, expressed an unqualified opinion on those
statements before the common stock split restatement adjustments described in
Note 1.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Chico's FAS, Inc.
and subsidiaries at February 1, 2003, and the consolidated results of their
operations and their cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States.
As discussed above, the financial statements of Chico's FAS, Inc. and
subsidiaries as of February 2, 2002, and for each of the two years in the
period then ended were audited by other auditors who have ceased operations. As
described in Note 1, in the fiscal year ended February 1, 2003, the Company's
Board of Directors approved a two-for-one common stock split, and all
references to number of shares and per share information in the financial
statements have been adjusted to reflect the common stock split on a
retroactive basis. We audited the adjustments that were applied to restate the
number of shares and per share information reflected in the financial
statements for the years ended February 2, 2002 and February 3, 2001. Our
procedures included (a) agreeing the authorization for the two-for-one common
stock split to the Company's underlying records obtained from management, and
(b) testing the mathematical accuracy of the restated number of shares, basic
and diluted earnings per share and other applicable disclosures such as stock
options. In our opinion, such adjustments are appropriate and have been
properly applied. However, we were not engaged to audit, review, or apply any
procedures to the financial statements of the Company for the years ended
February 2, 2002 and February 3, 2001 other than with respect to such
adjustments and, accordingly, we do not express an opinion or any other form of
assurance on the financial statements for the years ended February 2, 2002 and
February 3, 2001 taken as a whole.
/s/ Ernst & Young LLP
Tampa, Florida
February 28, 2003
[PHOTO]
18
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
THIS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS IS A COPY OF A REPORT
PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP AND HAS NOT BEEN REISSUED BY ARTHUR
ANDERSEN LLP. THE INCLUSION OF THIS PREVIOUSLY ISSUED ANDERSEN REPORT IS
PURSUANT TO THE "TEMPORARY FINAL RULE AND FINAL RULE REQUIREMENTS FOR ARTHUR
ANDERSEN LLP AUDITING CLIENTS," ISSUED BY THE U.S. SECURITIES AND EXCHANGE
COMMISSION IN MARCH 2002. NOTE THAT THIS PREVIOUSLY ISSUED ANDERSEN REPORT
INCLUDES REFERENCES TO CERTAIN FISCAL YEARS, WHICH ARE NOT REQUIRED TO BE
PRESENTED IN THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR
THE YEARS ENDED FEBRUARY 1, 2003.
To Chico's FAS, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Chico's FAS,
Inc. (a Florida corporation) and subsidiaries as of February 2, 2002, and
February 3, 2001, and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal years ended February 2,
2002, February 3, 2001, and January 29, 2000. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Chico's FAS, Inc. and
subsidiaries as of February 2, 2002, and February 3, 2001, and the results of
their operations and their cash flows for the fiscal years ended February 2,
2002, February 3, 2001, and January 29, 2000, in conformity with accounting
principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
Tampa, Florida
March 4, 2002
[PHOTO]
19
CHICO'S FAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
[PHOTO]
ASSETS FEBRUARY 1, FEBRUARY 2,
2003 2002
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 8,753,089 $ 13,376,864
Marketable securities 91,195,175 40,428,675
Receivables, less allowances for sales returns of $304,000
and $293,000, respectively 2,226,068 2,083,470
Inventories 44,907,504 28,905,066
Prepaid expenses 6,222,526 3,796,798
Deferred taxes 7,125,000 4,400,000
------------ ------------
Total current assets 160,429,362 92,990,873
PROPERTY AND EQUIPMENT:
Land and land improvements 5,166,394 2,870,111
Building and building improvements 19,667,654 12,424,784
Equipment, furniture and fixtures 71,769,250 41,752,754
Leasehold improvements 78,792,080 57,259,004
------------ ------------
Total property and equipment 175,395,378 114,306,653
Less accumulated depreciation and amortization (36,686,235) (23,000,701)
------------ ------------
Property and equipment, net 138,709,143 91,305,952
DEFERRED TAXES 92,000 1,166,000
OTHER ASSETS, NET 2,313,242 922,535
------------ ------------
$301,543,747 $186,385,360
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 28,488,471 $ 18,054,137
Accrued liabilities 26,200,081 16,585,157
Current portion of debt and deferred liabilities 171,217 306,876
------------ ------------
Total current liabilities 54,859,769 34,946,170
NONCURRENT LIABILITIES:
Long-term debt, excluding current portion -- 5,022,499
Deferred liabilities 6,550,856 2,921,760
Total noncurrent liabilities 6,550,856 7,944,259
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 200,000,000 shares
authorized and 85,282,321 and 81,581,318 shares
issued and outstanding, respectively 852,823 815,813
Additional paid-in capital 63,985,702 34,226,490
Retained earnings 175,109,145 108,350,203
Accumulated other comprehensive income 185,452 102,425
------------ ------------
Total stockholders' equity 240,133,122 143,494,931
------------ ------------
$301,543,747 $186,385,360
============ ============
The accompanying notes are an integral part of these consolidated balance
sheets.
20
CHICO'S FAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FISCAL YEAR ENDED
----------------------------------------------
FEBRUARY 1, FEBRUARY 2, FEBRUARY 3,
2003 2002 2001
------------ ------------ ------------
Net sales by company stores $508,492,490 $362,443,217 $252,168,208
Net sales by catalog and internet 16,070,061 10,202,908 2,656,156
Net sales to franchisees 6,545,594 5,439,215 4,621,532
------------ ------------ ------------
NET SALES 531,108,145 378,085,340 259,445,896
Cost of goods sold 209,770,101 153,937,579 108,670,577
------------ ------------ ------------
GROSS PROFIT 321,338,044 224,147,761 150,775,319
General, administrative and store
operating expenses 199,495,043 146,610,788 99,757,264
Depreciation and amortization 15,049,746 10,001,087 5,654,582
------------ ------------ ------------
INCOME FROM OPERATIONS 106,793,255 67,535,886 45,363,473
Interest income, net 882,687 507,145 408,146
------------ ------------ ------------
INCOME BEFORE INCOME TAXES 107,675,942 68,043,031 45,771,619
Income tax provision 40,917,000 25,856,000 17,393,000
------------ ------------ ------------
NET INCOME $ 66,758,942 $ 42,187,031 $ 28,378,619
============ ============ ============
PER SHARE DATA:
Net income per common share - basic $ 0.80 $ 0.52 $ 0.36
Net income per common and common
equivalent share - diluted $ 0.78 $ 0.50 $ 0.35
Weighted average common shares outstanding - basic 83,308,829 80,365,350 78,083,786
Weighted average common and common
equivalent shares outstanding - diluted 86,032,052 83,778,336 81,665,394
[PHOTO]
The accompanying notes are an integral part of these consolidated statements.
21
CHICO'S FAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
[PHOTO]
Common Stock Accumulated
----------------------- Additional Other
Par Paid-in Retained Comprehensive
Shares Value Capital Earnings (Loss) Income Total
---------- -------- ----------- ------------ ------------- ------------
BALANCE, JANUARY 29, 2000 77,078,412 $770,784 $14,109,739 $ 37,784,553 $(24,334) $ 52,640,742
Net income -- -- -- 28,378,619 -- 28,378,619
Unrealized gain on marketable
securities, net -- -- -- -- 71,580 71,580
------------
Comprehensive income 28,450,199
Issuance of common stock 1,668,758 16,688 1,526,456 -- -- 1,543,144
Stock option compensation -- -- 70,156 -- -- 70,156
Tax benefit of stock options
exercised -- -- 2,617,000 -- -- 2,617,000
---------- -------- ----------- ------------ -------- ------------
BALANCE, FEBRUARY 3, 2001 78,747,170 787,472 18,323,351 66,163,172 47,246 85,321,241
Net income -- -- -- 42,187,031 -- 42,187,031
Unrealized gain on marketable
securities net -- -- -- -- 55,179 55,179
------------
Comprehensive income 42,242,210
Issuance of common stock 2,834,148 28,341 7,674,495 -- -- 7,702,836
Stock option compensation -- -- 44,644 -- -- 44,644
Tax benefit of stock options
exercised -- -- 8,184,000 -- -- 8,184,000
---------- -------- ----------- ------------ -------- ------------
BALANCE, FEBRUARY 2, 2002 81,581,318 815,813 34,226,490 108,350,203 102,425 143,494,931
Net income -- -- -- 66,758,942 -- 66,758,942
Unrealized gain on marketable
securities, net -- -- -- -- 83,027 83,027
------------
Comprehensive income 66,841,969
Issuance of common stock 3,701,003 37,010 7,210,212 -- -- 7,247,222
Tax benefit of stock options
exercised -- -- 22,549,000 -- -- 22,549,000
---------- -------- ----------- ------------ -------- ------------
BALANCE, FEBRUARY 1, 2003 85,282,321 $852,823 $63,985,702 $175,109,145 $185,452 $240,133,122
========== ======== =========== ============ ======== ============
The accompanying notes are an integral part of these consolidated statements.
22
CHICO'S FAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
[PHOTO]
FISCAL YEAR ENDED
---------------------------------------------------
February 1, February 2, February 3,
2003 2002 2001
------------- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................................... $ 66,758,942 $ 42,187,031 $ 28,378,619
------------- ------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities --
Depreciation and amortization, cost of goods sold ............ 1,093,486 405,787 323,162
Depreciation and amortization, other ......................... 15,049,743 10,001,087 5,654,582
Stock option compensation .................................... -- 44,644 70,156
Deferred tax benefit ......................................... (1,651,000) (1,816,000) (606,000)
Tax benefit of options exercised ............................. 22,549,000 8,184,000 2,617,000
Deferred rent expense, net ................................... 1,481,689 882,873 406,971
Loss from disposal of property and equipment ................. 1,314,696 1,445,078 393,970
(Increase) decrease in assets --
Receivables, net ............................................. (142,598) 915,440 (1,292,249)
Inventories .................................................. (16,002,438) (4,510,904) (9,559,362)
Prepaid expenses ............................................. (2,425,728) (1,542,449) (1,585,654)
Other assets, net ............................................ 735,079 (292,305) (109,821)
Increase in liabilities --
Accounts payable ............................................. 10,434,334 4,302,375 7,769,078
Accrued liabilities .......................................... 9,612,266 5,285,805 6,706,248
------------- ------------ ------------
Total adjustments ......................................... 42,048,529 23,305,431 10,788,081
------------- ------------ ------------
Net cash provided by operating activities ................. 108,807,471 65,492,462 39,166,700
------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities .............................. (134,918,633) (56,396,476) (30,131,458)
Proceeds from sale of marketable securities ..................... 84,235,160 30,244,500 29,977,045
Purchases of property and equipment ............................. (64,741,870) (37,436,496) (40,468,993)
------------- ------------ ------------
Net cash used in investing activities ..................... (115,425,343) (63,588,472) (40,623,406)
------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock .......................... 7,247,222 7,702,836 1,543,144
Principal payments on debt ...................................... (5,155,500) (66,000) (72,000)
Deferred finance costs .......................................... (97,625) (78,080) (81,250)
------------- ------------ ------------
Net cash provided by financing activities ................. 1,994,097 7,558,756 1,389,894
------------- ------------ ------------
Net (decrease) increase in cash and cash equivalent ....... (4,623,775) 9,462,746 (66,812)
CASH AND CASH EQUIVALENTS,
Beginning of period ............................................. 13,376,864 3,914,118 3,980,930
------------- ------------ ------------
CASH AND CASH EQUIVALENTS,
End of period ................................................... $ 8,753,089 $ 13,376,864 $ 3,914,118
============= ============ ============
SUPPLEMENT DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest .......................................... $ 284,739 $ 610,384 $ 893,811
Cash paid for income taxes ...................................... $ 19,200,379 $ 17,657,563 $ 15,839,172
The accompanying notes are an integral part of these consolidated statements.
23
CHICO'S FAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[PHOTO]
FEBRUARY 1, 2003
1. BUSINESS ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS ORGANIZATION
The accompanying consolidated financial statements include the accounts of
Chico's FAS, Inc., a Florida corporation, and its wholly-owned subsidiaries.
The Company operates as a specialty retailer of exclusively designed, private
label casual clothing and related accessories. The Company sells its products
through traditional retail stores, catalog, a small franchise network and via
the Internet at www.chicos.com. As of February 1, 2003, the Company's retail
store system consisted of 378 stores located throughout the United States, 366
of which are owned and operated by the Company, and 12 of which are owned and
operated by franchisees.
FISCAL YEAR
The Company has a 52-53 week fiscal year ending on the Saturday closest to
January 31. The fiscal years ended February 1, 2003, February 2, 2002, and
February 3, 2001 contained 52, 52 and 53 weeks, respectively.
FRANCHISE OPERATIONS
A summary of the changes in the number of the Company's franchise stores as
compared to total company-owned stores as of February 1, 2003, and February 2,
2002, and for the fiscal years then ended is as follows:
FISCAL YEAR ENDED
--------------------------
FEBRUARY 1, FEBRUARY 2,
2003 2002
----------- -----------
Franchise stores opened ............................ 1 --
Franchise stores in operation at fiscal year-end ... 12 11
Company-owned stores at fiscal year-end ............ 366 300
PRINCIPAL OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Significant estimates and assumptions made by management primarily impact the
following key financial areas:
24
Inventory Valuation
The Company identifies potentially excess and slow-moving inventories
by evaluating turn rates and inventory levels in conjunction with the
Company's overall growth rate. Excess quantities are identified
through evaluation of inventory ageings, review of inventory turns and
historical sales experiences, as well as specific identification based
on fashion trends. Further, exposure to inadequate realization of
carrying value is identified through analysis of gross margins and
markdowns in combination with changes in the fashion industry. The
Company provides lower of cost or market reserves for such identified
excess and slow-moving inventories.
Inventory Shrinkage
The Company estimates its expected shrinkage of inventories between
physical inventory counts by applying historical chain-wide average
shrinkage experience rates to the related periods' sales volume. The
historical rates are updated on a regular basis to reflect the most
recent physical inventory shrinkage experience.
Sales Returns
The Company's policy is to honor customer returns at all times.
Returns after 30 days of the original purchase, or returns without the
original receipt, qualify for store credit only. The Company will, in
certain circumstances, offer full customer refunds either after 30
days or without a receipt. The Company estimates its reserve for
likely customer returns based on the average refund experience in
relation to sales for the related period.
[PHOTO]
Self-Insurance
The Company is self-insured for certain losses relating to workers'
compensation, medical and general liability claims. Self-insurance
claims filed and claims incurred but not reported are accrued based
upon management's estimates of the aggregate liability for uninsured
claims incurred using insurance industry benchmarks and historical
experience. Although management believes it has the ability to
adequately accrue for estimated losses related to claims, it is
possible that actual results could significantly differ from recorded
self-insurance liabilities.
RECLASSIFICATIONS
Reclassifications of certain prior-year balances were made in order to conform
to the current-year presentation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand and in banks with original
maturities of three months or less.
MARKETABLE SECURITIES
Marketable securities are classified as available-for-sale securities and are
carried at fair value, with the unrealized holding gains and losses, net of
income taxes, reflected as a separate component of stockholders' equity until
realized. For the purposes of computing realized and unrealized gains and
losses, cost is determined on a specific identification basis.
25
INVENTORIES
Fabric inventories of approximately $2,466,000 and $2,400,000 as of February 1,
2003, and February 2, 2002, respectively, are recorded at the lower of cost,
using the first-in, first-out (FIFO) method, or market. All other inventories
consisting of merchandise held for sale are recorded at the lower of cost,
using the last-in, first-out (LIFO) method, or market. If the lower of FIFO or
market method had been used for all inventories, inventories would have been
approximately $638,000 and $1,578,000 higher as of February 1, 2003, and
February 2, 2002, respectively, than those reported in the accompanying
consolidated balance sheets. Purchasing, merchandising, distribution and
product development costs are expensed as incurred, and are included in the
accompanying consolidated statements of income as a component of cost of goods
sold.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation of property and
equipment is provided on a straight-line basis over the estimated useful lives
of the assets. Leasehold improvements are depreciated over the lesser of the
useful lives of the assets or the lease terms. The Company's property and
equipment is depreciated using the following estimated useful lives:
ESTIMATED USEFUL LIVES
----------------------
Land and land improvements............................... 35 years
Building and building improvements....................... 20 - 35 years
Equipment, furniture and fixtures........................ 2-10 years
Leasehold improvements................................... 3-10 years or term of lease, if shorter
Maintenance and repairs of property and equipment are expensed as incurred, and
major improvements are capitalized. Upon retirement, sale or other disposition
of property and equipment, the cost and accumulated depreciation or
amortization are eliminated from the accounts, and any gain or loss is charged
to operations.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets are reviewed periodically for impairment if events or changes
in circumstances indicate that the carrying amount may not be recoverable. If
expected future undiscounted cash flows from operations are less than their
carrying amounts, an asset is determined to be impaired, and a loss is recorded
for the amount by which the carrying value of the asset exceeds its fair value.
INCOME TAXES
The Company follows the liability method, which establishes deferred tax assets
and liabilities for the temporary differences between the financial reporting
bases and the tax bases of the Company's assets and liabilities at enacted tax
rates expected to be in effect when such amounts are realized or settled. Net
deferred tax assets, whose realization is dependent on taxable earnings in
future years, are recognized when a greater than 50 percent probability exists
that the tax benefits will actually be realized sometime in the future.
[PHOTO]
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
marketable securities, short-term trade receivables and payables and in the
prior year, long-term debt instruments. The carrying values of cash and cash
equivalents, marketable securities, trade receivables and trade payables equal
current fair value. The terms of the Company's long-term debt agreements, as
amended, include variable interest rates, which approximate current market
rates.
26
REVENUE RECOGNITION
Retail sales by Company stores are recorded at the point of sale and are net of
estimated customer returns. Retail sales by catalog and Internet are recorded
when shipments are made to catalog and Internet customers and are net of
estimated customer returns. Net sales to franchisees are recorded when
merchandise is shipped to franchisees and are net of estimated returns.
STORE PRE-OPENING COSTS
Operating costs (including store set-up, rent and training expenses) incurred
prior to the opening of new stores are expensed as incurred and are included in
general, administrative and store operating expenses in the accompanying
consolidated statements of income.
[PHOTO]
ADVERTISING COSTS
Costs associated with advertising are charged to expense when the advertising
occurs. During the fiscal years ended February 1, 2003, February 2, 2002, and
February 3, 2001, advertising costs of approximately $18,811,000, $12,816,000
and $7,051,000, respectively, are included in general, administrative and store
operating expenses.
STOCK-BASED COMPENSATION PLANS
As allowed by Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123), the Company has elected
to account for its stock-based compensation plans under the intrinsic value
method of accounting prescribed by Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25). Accordingly, the
Company does not recognize compensation expense for stock option grants when
the exercise price of the option equals or exceeds the market price of the
Company's common stock on the date of grant. The Company has adopted the pro
forma disclosure requirements of SFAS 123 and SFAS 148. See Note 7.
COMMON STOCK SPLITS
During the fiscal years ended February, 1, 2003 and February 2, 2002, the Board
of Directors (the Board) declared three common stock splits (collectively, the
Stock Splits). On April 19, 2001, the Board declared a three-for-two stock
split of the Company's common stock, payable in the form of a stock dividend on
May 16, 2001, to shareholders of record as of the close of business on May 2,
2001. On December 19, 2001, the Board declared a three-for-two stock split of
the Company's common stock, payable in the form of a stock dividend on January
18, 2002, to shareholders of record as of the close of business on December 31,
2001. On June 27, 2002, the Board declared a two-for-one stock split of the
Company's common stock, payable in the form of a stock dividend on July 29,
2002, to shareholders of record as of the close of business on July 15, 2002.
Accordingly, all historical weighted average share and per share amounts and
all references to the number of common shares elsewhere in the consolidated
financial statements and notes thereto have been restated to reflect the Stock
Splits. Par value remains unchanged at $0.01.
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
SFAS No. 128, "Earnings per Share" (SFAS 128), requires companies with complex
capital structures that have publicly held common stock or common stock
equivalents to present both basic and diluted earnings per share (EPS) on the
face of the income statement. As provided by SFAS 128, basic EPS is based on
the
27
weighted average number of common shares outstanding and diluted EPS is based
on the weighted average number of common shares outstanding plus the dilutive
common equivalent shares outstanding during the period.
The following is a reconciliation of the denominators of the basic and diluted
EPS computations shown on the face of the accompanying consolidated statements
of income as restated for the Stock Splits:
FISCAL YEAR ENDED
--------------------------------------------
FEBRUARY 1, FEBRUARY 2, FEBRUARY 3,
2003 2002 2001
----------- ----------- -----------
Weighted average common shares
outstanding - basic............................ 83,308,829 80,365,350 78,083,786
Dilutive effect of stock options outstanding....... 2,723,223 3,412,986 3,581,608
---------- ---------- ----------
Weighted average common and common
equivalent shares outstanding - diluted........ 86,032,052 83,778,336 81,665,394
========== ========== ==========
The following options were outstanding as of the end of the fiscal years but
were not included in the computation of diluted EPS because the options'
exercise prices were greater than the average market price of the common
shares:
FISCAL YEAR ENDED
------------------------------------------------------------------
FEBRUARY 1, FEBRUARY 2, FEBRUARY 3,
2003 2002 2001
----------------- --------------- ----------------
Number of options 523,800 373,000 1,026,000
Exercise price $18.30 - $21.42 $10.66 - $13.34 $7.31 - $7.72
Expiration date........... June 25, 2012 - May 23, 2010 - August 7, 2010 -
December 16, 2012 January 2, 2012 October 30, 2010
NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
146, "Accounting for Costs Associated with Exit or Disposal Activities" (SFAS
146). The standard requires companies to recognize costs associated with exit
or disposal activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. SFAS 146 is effective for exit or
disposal activities that are initiated after December 31, 2002. The adoption of
SFAS 146 did not have a significant impact on the Company's financial position
or results of operations.
[PHOTO]
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45). FIN 45 elaborates on the
existing disclosure requirements for most guarantees, including loan guarantees
such as standby letters of credit. It also clarifies that at the time a company
issues a guarantee, the company must recognize an initial liability for the
fair value, or market value, of the obligations it assumes under that guarantee
and must disclose that information in its interim and annual financial
statements. FIN 45 is effective on a prospective basis to guarantees issued or
modified after December 31, 2002. The disclosure requirements of FIN 45 are
effective for financial statements of interim or annual periods ending after
December 15, 2002. The adoption of FIN 45 did not have a significant impact on
the Company's financial position or results of operations.
28
[PHOTO]
In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation Transition and Disclosure" (SFAS 148). SFAS 148 amends SFAS 123,
to provide alternative methods of transition to the fair value method of
accounting for stock-based employee compensation. In addition, SFAS 148 amends
the disclosure provisions of SFAS 123. SFAS 148 does not amend SFAS 123 to
require companies to account for their employee stock-based awards using the
fair value method. However, the disclosure provisions are required for all
companies with stock-based employee compensation, regardless of whether they
utilize the fair value method of accounting described in SFAS 123 or the
intrinsic value method described in APB 25. The Company adopted the disclosure
provisions of SFAS 148 during the year ended February 1, 2003.
2. MARKETABLE SECURITIES:
Marketable securities classified as available-for-sale consist of the
following:
FEBRUARY 1, FEBRUARY 2,
2003 2002
----------- -----------
Municipal bonds, cost...................... $91,009,723 $40,326,250
Municipal bonds, fair value................ 91,195,175 40,428,675
----------- -----------
Unrealized gain............................ $ 185,452 $ 102,425
=========== ===========
During the fiscal years ended February 1, 2003, February 2, 2002 and
February 3, 2001, realized gains of approximately $5,900, $500 and $5,000,
respectively, were recognized on sales of the Company's marketable securities
and are included in interest income, net in the accompanying consolidated
statements of income. At February 1, 2003, approximately 26 percent of the
Company's marketable securities mature within one year, 7 percent between one
and two years and the remainder by 2032.
3. ACCRUED LIABILITIES:
Accrued liabilities consisted of the following:
FEBRUARY 1, FEBRUARY 2,
2003 2002
----------- -----------
Allowance for estimated customer
returns, gift certificates and
store credits outstanding..................... $10,136,121 $ 5,598,777
Accrued payroll, bonuses and
severance costs............................... 8,004,105 6,203,882
Other........................................... 8,059,855 4,782,498
----------- -----------
$26,200,081 $16,585,157
=========== ===========
4. INCOME TAXES
The Company's income tax provision consisted of the following:
FISCAL YEAR ENDED
-----------------------------------------------
FEBRUARY 1, FEBRUARY 2, FEBRUARY 3,
2003 2002 2001
----------- ----------- -----------
Current:
Federal............................. $37,399,000 $24,394,000 $15,820,000
State............................... 5,169,000 3,278,000 2,179,000
Deferred:
Federal............................. (1,451,000) (1,603,000) (492,000)
State............................... (200,000) (213,000) (114,000)
----------- ----------- -----------
Total income tax provision....... $40,917,000 $25,856,000 $17,393,000
=========== =========== ===========
29
The reconciliation of the income tax provision based on the U.S. statutory
federal income tax rate (35 percent) to the Company's income tax provision is
as follows:
FISCAL YEAR ENDED
---------------------------------------------------
FEBRUARY 1, FEBRUARY 2, FEBRUARY 3,
2003 2002 2001
----------- ----------- -----------
Tax expense at the statutory rate............... $37,687,000 $23,815,000 $16,020,000
State income tax expense, net of federal
tax benefit................................... 3,230,000 2,041,000 1,369,000
Other........................................... -- -- 4,000
----------- ----------- -----------
Total income tax provision $40,917,000 $25,856,000 $17,393,000
=========== =========== ===========
Deferred tax assets and liabilities are recorded due to different carrying
amounts for financial and income tax reporting purposes arising from cumulative
temporary differences. These differences consist of the following as of
February 1, 2003, and February 2, 2002:
[PHOTO]
FEBRUARY 1, FEBRUARY 2,
2003 2002
----------- -----------
Assets:
Accrued liabilities and allowances ... $ 5,505,000 $ 2,897,000
Lease obligations .................... 1,738,000 1,176,000
Inventories .......................... 1,577,000 1,431,000
Other ................................ 860,000 207,000
----------- -----------
9,680,000 5,711,000
Liabilities:
Property and equipment ............... (2,463,000) (145,000)
----------- -----------
$ 7,217,000 $ 5,566,000
=========== ===========
5. LONG-TERM DEBT AND DEFERRED LIABILITIES:
Debt and deferred liabilities consisted of the following:
FEBRUARY 1, FEBRUARY 2,
2003 2002
----------- -----------
Line of credit ............................... $ -- $ --
Mortgage note ................................ -- 5,155,500
Deferred rent ................................ 4,574,666 3,095,635
Deferred compensation ........................ 2,147,407 --
----------- -----------
Total debt and deferred liabilities ........ 6,722,073 8,251,135
Less current portion ....................... (171,217) (306,876)
----------- -----------
$ 6,550,856 $ 7,944,259
=========== ===========
30
During the fiscal year ended February 3, 2001, the Company entered into a
two-year unsecured revolving credit facility (the Credit Facility), whereby the
Company was able to borrow up to $25 million. The Credit Facility consisted of
a $10 million line of credit and $15 million in reserves for letters of credit
(see Note 6). During the fiscal year ended February 2, 2002, the Company
amended the Credit Facility, to (i) increase the reserve for letters of credit
from $15 million to $20 million and lower the line of credit from $10 million
to $5 million and (ii) extend the Mortgage Note through February 2012, as more
fully described below. In September 2002, the Company entered into a
replacement unsecured revolving credit facility replacing the existing Credit
Facility, expanding the maximum available commitment from $25 million to $45
million, extending the maturity to June 2005 and increasing the letter of
credit sublimit of the facility to $35 million. All borrowings under the Credit
Facility bear interest at the LIBOR rate, plus an additional amount ranging
from 0.80 percent to 2.90 percent adjusted quarterly based on the Company's
performance per annum (a combined 2.14 percent at February 1, 2003). The
Company is also required to pay, quarterly in arrears, a commitment fee of 0.10
percent per annum on the average daily unused portion of the Line. There are no
compensating balance requirements associated with the Credit Facility.
The Credit Facility contains certain restrictions regarding additional
indebtedness, business operations, liens, guaranties, transfers and sales of
assets, and transactions with subsidiaries or affiliates. In addition, the
Company must comply with certain quarterly restrictions (based on a rolling
four-quarters basis) regarding net worth, leverage ratio, fixed charge coverage
and current ratio requirements. The Company was in compliance with all
covenants at February 1, 2003.
The Mortgage Note was financed with a bank, initially bearing interest at the
bank's prime rate plus 0.5 percent. During the fiscal year ended February 3,
2001, in connection with the closing of the Credit Facility, the Company
amended the Mortgage Note to provide that the existing indebtedness would bear
interest under the same provision as that in the Credit Facility and the
restrictive covenants would be modified to be the same as those in the Credit
Facility. The Mortgage Note was secured by a first priority mortgage on land,
land improvements and certain building and equipment. During December 2001, the
Company amended the Mortgage Note to extend the balloon payment due date from
2003 to February 2012. The monthly payments were increased from $6,000
principal plus interest to $11,083 principal plus interest, beginning February
2002. Monthly principal payments thereafter increase annually by 6 percent each
February through 2011. In December 2002, the Company repaid the outstanding
balance on the Mortgage Note of $5,049,862.
Deferred rent represents the difference between actual operating lease
obligations due and operating lease expense, which is recorded by the Company
on a straight-line basis over the terms of its leases.
Deferred compensation represents the deferred compensation liability payable to
participants of the Chico's FAS, Inc. Deferred Compensation Plan (the "Deferred
Plan"). See Note 8.
6. COMMITMENTS AND CONTINGENCIES:
The Company leases retail store space and various office equipment under
operating leases expiring in various years through the fiscal year ending 2013.
Certain of the leases provide that the Company may cancel the lease if the
Company's retail sales at that location fall below an established level, while
certain leases provide for additional rent payments to be made when sales
exceed a base amount. Certain operating leases provide for renewal options for
periods from three to five years at their fair rental value at the time of
renewal. In the normal course of business, operating leases are generally
renewed or replaced by other leases.
[PHOTO]
31
Minimum future rental payments under noncancellable operating leases (including
leases with certain minimum sales cancellation clauses described below and
exclusive of common area maintenance charges and/or contingent rental payments
based on sales) as of February 1, 2003, are approximately as follows:
FISCAL YEAR ENDING AMOUNT
------------------ ------------
January 31, 2004............................ $ 33,279,000
January 29, 2005............................ 33,679,000
January 28, 2006............................ 31,373,000
February 3, 2007............................ 28,716,000
February 2, 2008............................ 24,691,000
Thereafter.................................. 65,439,000
------------
$217,177,000
============
[PHOTO]
As mentioned previously, a majority of the Company's new store operating leases
contain cancellation clauses that allow the leases to be terminated at the
Company's discretion, if certain minimum sales levels are not met within the
first few years of the lease term. The Company has not historically exercised
many of these cancellation clauses and, therefore, has included the full lease
terms of such leases in the above table. For the fiscal years ended February 1,
2003, February 2, 2002, and February 3, 2001, total rent expense under the
Company's operating leases was approximately $42,204,000, $30,818,000 and
$21,185,000, respectively, including common area maintenance charges of
approximately $5,206,000, $3,560,000 and $2,511,000, respectively, other rental
charges of approximately $5,014,000, $3,406,000 and $2,473,000, respectively,
and contingent rental expense of approximately $3,970,000, $3,431,000 and
$2,437,000, respectively, based on sales.
At February 1, 2003, the Company had approximately $22,766,000 in commercial
letters of credit outstanding (see Note 5), which had arisen in the normal
course of business due to foreign purchase commitments.
The Company was named as defendant in a suit filed in September 2001 in the
Superior Court for the State of California for the County of Orange. This suit,
Carmen Davis vs. Chico's FAS, Inc., was filed by the plaintiff, seeking to
represent all other Company assistant store managers, sales associates and
hourly employees in California from September 21, 1997 to the present. The
Company responded by seeking to dismiss the complaint and strike selected
claims in order to either eliminate the litigation or gain greater clarity as
to the basis for the plaintiff's action. In response, the plaintiff filed an
amended complaint on February 15, 2002, which differs in a number of material
respects from the original complaint. The amended complaint alleged that the
Company failed to pay overtime wages and failed to provide rest breaks and
meal periods. The action sought "class action" status and sought unspecified
monetary damages. Following preliminary settlement discussions, the parties
attended a mediation on October 14, 2002, at which the parties reached a
settlement on a class-wide basis. The settlement provides for a common fund out
of which settlement awards to class members and the costs of the settlement
will be paid. The parties prepared a settlement agreement, which was lodged
with the Court. The settlement agreement states that the settlement is not an
admission of liability and that the Company continues to deny liability for any
of plaintiff's claims. Subsequent to year end, the Court heard the plaintiff's
motion for preliminary approval of the settlement. The Court granted the motion
and ordered that the parties give notice of the settlement to the class
members. Once notice is given, class members will have sixty days to file claim
forms to participate in the settlement or to file exclusion forms to opt out of
the settlement. On September 16, 2003, the Court will hold a settlement
fairness hearing for the purpose of determining whether to give final approval
to the settlement. If final approval is given, and no appeals challenging the
settlement are filed, the Company will pay the settlement sums to class members
who have filed valid claims and also will pay amounts owing for attorney's
fees, costs and other expenses of the settlement. The settlement provides for a
release of all covered claims by class members who do not opt out of the
settlement. The Company does not believe the outcome of this will have a
material impact on the Company's results of operations or financial condition.
Chico's is not a party to any other legal proceedings, other than various
claims and lawsuits arising in the normal course of the Company's business,
none of which the Company believes should have a material adverse effect on its
financial condition or results of operations.
32
7. STOCK OPTION PLAN AND CAPITAL STOCK TRANSACTIONS:
1992 STOCK OPTION PLAN
During fiscal year 1992, the Board approved a stock option plan (the 1992
Plan), which reserved approximately 1,210,000 shares of common stock for future
issuance under the 1992 Plan to eligible employees of the Company. The per
share exercise price of each stock option is not less than the fair market
value of the stock on the date of grant or, in the case of an employee owning
more than 10 percent of the outstanding stock of the Company and to the extent
incentive stock options, as opposed to nonqualified stock options, are issued,
the price is not less than 110 percent of such fair market value. Also, the
aggregate fair market value of the stock with respect to which incentive stock
options are exercisable for the first time by an employee in any calendar year
may not exceed $100,000. Options granted under the terms of the 1992 Plan
generally vest evenly over three years and have a 10-year term. As of February
1, 2003, approximately 13,000 nonqualified options are outstanding under the
1992 Plan.
1993 STOCK OPTION PLAN
During fiscal year 1993, the Board approved a stock option plan, as amended in
fiscal 1999 (the 1993 Plan), which reserved approximately 7,010,000 shares of
common stock for future issuance under the 1993 Plan to eligible employees of
the Company. The terms of the 1993 Plan are essentially the same as the 1992
Plan. As of February 1, 2003, approximately 3,945,000 nonqualified options are
outstanding under the 1993 Plan.
INDEPENDENT DIRECTORS' PLAN
In October 1998, the Board approved a stock option plan (the Independent
Directors' Plan), which reserved 1,257,500 shares of common stock for future
issuance to eligible independent directors of the Company. Options granted
under the terms of the Independent Directors' Plan and these individual grants
vest after six months and have a 10-year term. As of February 1, 2003, 402,500
shares had been granted under the Independent Directors' Plan. Since 1993 and
prior to adoption of the Independent Directors' Plan, four independent
directors of the Company had been granted a total of 651,000 nonqualified
options through individual grants at exercise prices ranging from $0.93 to
$1.42. Subsequent to the adoption of the Independent Directors' Plan, three
independent directors of the Company were granted 135,000 nonqualified stock
options through individual grants at exercise prices of $4.29 per share. As of
February 1, 2003, approximately 534,000 of these individual grant nonqualified
options and options under the Independent Directors' Plan are outstanding.
[PHOTO]
OMNIBUS STOCK AND INCENTIVE PLAN
In April 2002, the Board approved the Chico's FAS, Inc. Omnibus Stock and
Incentive Plan (the Omnibus Plan), which reserved 4,862,640 shares of common
stock for future issuance to eligible employees and directors of the Company.
The Omnibus Plan provides for awards of nonqualified stock options, incentive
stock options, restricted stock awards and restricted stock units. No new
grants will be made under the Company's existing 1992 Plan, 1993 Plan or
Independent Directors' Plan, and such existing plans will remain in effect only
for purposes of administering options that were outstanding thereunder on the
date the Omnibus Plan was approved by the Company's stockholders. As of
February 1, 2003, approximately 520,000 nonqualified options are outstanding
under the Omnibus Plan.
33
[PHOTO]
EXECUTIVE OFFICERS' SUPPLEMENTARY STOCK OPTION PROGRAM
During the fiscal year ended February 3, 2001, the Board approved an executive
officers' supplementary stock option program (the Executive Officers' Program),
which reserved 375,000 shares of common stock for future issuance to eligible
executive officers of the Company. Options granted under the terms of the
Executive Officers' Program vest after three years and have a 10-year term. As
of February 1, 2003, all 375,000 shares have been granted under the Executive
Officers' Program at exercise prices ranging from $3.40 to $5.10. Of the
375,000 shares granted, 45,000 shares were granted at exercise prices below
fair market value. The granting of these shares resulted in stock compensation
expense of approximately $45,000 and $70,000 in the accompanying consolidated
financial statements for the fiscal years ended February 2, 2002, and February
3, 2001, respectively. No compensation expense was recorded for the fiscal year
ended February 1, 2003. At February 1, 2003, there were no options outstanding
under the Executive Officers' Program.
AGGREGATE STOCK OPTION ACTIVITY
As of February 1, 2003, 5,011,600 nonqualified options are outstanding at a
weighted average exercise price of $8.75 per share, and 4,342,840 remain
available for future grants. Of the options outstanding, 2,275,095 options are
exercisable.
Stock option activity for the fiscal years ended February 1, 2003, February 2,
2002, and February 3, 2001, was as follows:
FISCAL YEAR ENDED
--------------------------------------------------------------------------
FEBRUARY 1, 2003 FEBRUARY 2, 2002 FEBRUARY 3, 2001
------------------------ --------------------- ----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
---------- --------- ---------- --------- ---------- ---------
Outstanding, beginning of period..... 7,251,228 $ 3.66 8,712,158 $2.40 7,721,812 $1.14
Granted........................... 1,435,266 16.66 1,927,000 8.84 2,700,000 5.02
Exercised......................... (3,653,392) 1.78 (2,579,780) 2.21 (1,586,044) 0.76
Canceled or expired............... (21,500) 5.09 (808,152) 7.07 (123,610) 2.09
---------- ---------- ----------
Outstanding, end of period........... 5,011,600 8.75 7,251,226 3.66 8,712,158 2.40
========== ========== ==========
Options exercisable, end of period... 2,275,095 5.87 4,167,668 1.64 5,004,298 1.15
========== ========== ==========
The following table summarizes information about stock options as of
February 1, 2003:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------ -------------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
RANGES OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE (YEARS) PRICE EXERCISABLE PRICE
- --------------- ----------- ------------- --------- ----------- ---------
$ 0.36 - $ 2.49 495,828 3.58 $ 0.88 495,828 $ 0.88
$ 2.50 - $ 4.99 1,358,006 6.96 3.08 988,001 3.12
$ 5.00 - $ 9.99 1,369,500 8.04 8.27 339,500 8.16
$10.00 - $21.42 1,788,266 9.08 15.61 451,766 15.64
--------- ---------
5,011,600 8.56 8.75 2,275,095 5.87
========= =========
34
EMPLOYEE STOCK PURCHASE PLAN
The Company has a noncompensatory employee stock purchase plan (ESPP) under
which substantially all fulltime employees are given the right to purchase up
to 800 shares of the common stock of the Company two times a year at a price
equal to 85 percent of the value of the stock immediately prior to the
beginning of each exercise period. During the fiscal years ended February 1,
2003, February 2, 2002, and February 3, 2001, approximately 48,000, 260,000 and
82,000 shares, respectively, were purchased under the ESPP. The Company
recognized no compensation expense for the issuance of these shares.
SFAS NO. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION"
The Company accounts for its stock-based compensation plans under APB 25 and,
accordingly, does not recognize compensation expense based on the fair value
method of accounting as provided under SFAS 123. If the Company had elected to
recognize compensation cost based on the fair value of all options granted
beginning in fiscal year 1995, net income would have been reduced to the
proforma amounts indicated in the table below.
For proforma disclosure purposes, the fair value of each option granted has
been estimated as of the grant date using the Black-Scholes option pricing
model with the following weighted average assumptions: risk-free interest rate
of 4.8, 5.1 and 6.3 percent for the fiscal years ended February 1, 2003,
February 2, 2002, and February 3, 2001, respectively, expected life of seven
years, no expected dividends, and expected volatility of 68, 73 and 74 percent
for the fiscal years ended February 1, 2003, February 2, 2002, and February 3,
2001, respectively. The weighted average fair value of options granted during
the fiscal years ended February 1, 2003, February 2, 2002, and February 3,
2001, was $11.63, $8.84 and $4.09, respectively. Options granted under the 1992
Plan and 1993 Plan generally vest ratably over three years. All other options
were either exercisable generally after six months or vested ratably over three
years. The term of all options granted is 10 years.
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FISCAL YEAR ENDED
---------------------------------------------------------
FEBRUARY 1, FEBRUARY 2, FEBRUARY 3,
2003 2002 2001
----------- ----------- -----------
Net income:
As reported ....................... $66,758,942 $42,187,031 $28,378,619
Pro forma ......................... 58,063,247 37,372,941 26,382,313
Net income per common share - basic:
As reported ....................... $ 0.80 $ 0.52 $ 0.36
Pro forma 0.70 0.47 0.34
Net income per common and common
equivalent share - diluted:
As reported ....................... $ 0.78 $ 0.50 $ 0.35
Pro forma ......................... 0.67 0.45 0.32
35
8. RETIREMENT PLANS:
The Company has a 401(k) defined contribution employee benefit plan (the Plan)
covering substantially all employees. Employees' rights to Company-contributed
benefits vest over two to six years of service, as specified in the Plan. Under
the Plan, employees may contribute up to 20 percent of their annual
compensation, subject to certain statutory limitations. The Company has elected
to match employee contributions at 33 1/3 percent on the first 6 percent of the
employees' contributions and can elect to make additional contributions over
and above the mandatory match. Effective January 1, 2003, the Plan has been
amended for the Company to match employee contributions at 50 percent on the
first 6 percent of the employees' contributions. For the fiscal years ended
February 1, 2003, February 2, 2002, and February 3, 2001, the Company's costs
under the Plan were approximately $935,000, $425,000 and $283,000,
respectively.
In April 2002, the Company adopted the Chico's FAS, Inc. Deferred Compensation
Plan (the "Deferred Plan") to provide supplemental retirement income benefits
for a select group of management employees. Eligible participants may elect to
defer up to 80 percent of their salary and 100 percent of their bonuses
pursuant to the terms and conditions of the Deferred Plan. The Deferred Plan
generally provides for payments upon retirement, death or termination of
employment. In addition, the Company may make employer contributions to
participants under the Deferred Plan. To date, no Company contributions have
been made under the Deferred Plan. The amount of the deferred compensation
liability payable to the participants is included in "deferred liabilities" on
the consolidated balance sheet. A portion of these obligations are funded
through the establishment of trust accounts held by the Company on behalf of
the management group participating in the plan. The trust accounts are
reflected in "other assets" in the accompanying consolidated balance sheet.
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36
9. QUARTERLY RESULTS OF OPERATIONS (Unaudited):
[PHOTO]
NET INCOME
NET INCOME PER COMMON
PER COMMON AND COMMON
NET GROSS NET SHARE - EQUIVALENT SHARE
SALES PROFIT INCOME BASIC DILUTED
------------ ----------- ----------- ---------- ----------------
FISCAL YEAR ENDED
FEBRUARY 1, 2003:
First quarter ......... $130,453,641 $81,464,050 $19,777,283 $0.24 $0.23
Second quarter ........ 125,068,123 75,478,555 16,388,288 0.20 0.19
Third quarter ......... 137,260,963 82,375,696 15,543,679 0.19 0.18
Fourth quarter ........ 138,325,418 82,019,743 15,049,692 0.18 0.17
FISCAL YEAR ENDED
FEBRUARY 2, 2002:
First quarter ........... $ 93,233,012 $56,291,716 $12,379,128 $0.16 $0.15
Second quarter .......... 89,492,217 53,684,549 11,090,613 0.14 0.13
Third quarter ........... 93,978,124 55,542,287 8,899,660 0.11 0.11
Fourth quarter .......... 101,381,987 58,629,209 9,817,630 0.12 0.12
FISCAL YEAR ENDED
FEBRUARY 3, 2001:
First quarter ........... $ 56,692,814 $33,928,820 $ 7,475,922 $0.10 $0.09
Second quarter .......... 60,638,316 34,994,364 7,377,426 0.09 0.09
Third quarter ........... 68,990,473 40,669,142 7,820,096 0.10 0.09
Fourth quarter .......... 73,124,293 41,182,993 5,705,175 0.07 0.07
37
[PHOTO]
38
[PHOTO]
Executive Officers Directors
Marvin J. Gralnick Marvin J. Gralnick
Chairman of the Board Chairman of the Board
Chief Executive Officer Chief Executive Officer
Helene B. Gralnick Helene B. Gralnick
Senior Vice President- Senior Vice President-
Design & Concept Design & Concept
Scott A. Edmonds Charles J. Kleman
President Executive Vice President-
Chief Operating Officer Chief Financial Officer
Secretary/Treasurer
Charles J. Kleman
Executive Vice President- Verna K. Gibson
Chief Financial Officer Retailing Consultant
Secretary/Treasurer
Ross E. Roeder
Patricia A. Murphy Chairman and
Executive Vice President- Chief Executive Officer-
Chief Merchandising Officer Smart & Final, Inc.
Mori C. MacKenzie John W. Burden, III
Senior Vice President-Stores Retailing Consultant
James P. Frain
Senior Vice President-
Marketing
Barry I. Shapiro
Senior Vice President-Pazo
Michael J. Kincaid
Vice President-Finance
Ajit Patel
Vice President
Chief Information Officer
39
[PHOTO]
40
REPORTS ON FORM 10-K
A copy of the Company's annual report to the Securities and Exchange Commission
on Form 10-K will be sent to any shareholder without charge upon written
request to Investor Relations at the mailing address or website address below:
Chico's FAS, Inc.
11215 Metro Parkway
Fort Myers, Florida 33912
Website: www.chicos.com
Transfer Agent and Registrar:
The Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Legal Counsel:
Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis
Tampa, Florida 33602
Independent Certified Public Accountants:
Ernst & Young LLP
Tampa, Florida 33602
Investor Relations:
11215 Metro Parkway
Fort Myers, Florida 33912
(877) 424-4267
Annual Shareholders' Meeting:
Tuesday, June 24, 2003 at 2:00 p.m.
Sanibel Harbour Resort
Fort Myers, Florida 33908
[PHOTO]
41
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42
[PHOTO]
the freshest new face in fashion...
PAZO
Chico's has certainly capitalized on an underserved demographic group (35 to
55) in the marketplace. Pazo is ready to do the same for the fashion conscious
25 to 40 year old. As of April 2003, ten Pazo stores have opened in some of the
best specialty retail centers in the U.S. The store design is an exciting blend
of sleekly finished beechwood fixtures with plasma screens displaying Pazo's
European inspired fashions. Customers will experience reverse sticker shock
when they see the surprisingly low prices. The Pazo combination of exclusive
fashion forward designs, sparkling presentation with terrific pricing should
add sales and profits to Chico's FAS in the future.
[PHOTO]
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[PHOTO]
ALABAMA Birmingham Foley(**) Huntsville Montgomery ARIZONA Chandler Glendale
Phoenix Scottsdale Tempe(**) Tucson ARKANSAS Little Rock Rogers CALIFORNIA Brea
Burlingame Calabasas Camarillo(**) Carmel Corte Madera Costa Mesa Danville Del
Mar Emeryville Encino Fresno La Can`ada La Jolla Lafayette Laguna Beach Long
Beach Los Angeles Los Gatos Manhattan Beach Marina del Rey Milpitas(**) Mission
Viejo Monterey Newport Beach Ontario(**) Palm Desert Palm Springs Palo Alto
Pasadena Pleasanton Rolling Hills Estates Sacramento San Diego San Francisco
San Jose Santa Ana Santa Barbara Santa Monica Santa Rosa Sonoma Studio City
Thousand Oaks Vacaville(**) Valencia Ventura Walnut Creek COLORADO Boulder
Colorado Springs Denver Lakewood(**) Littleton CONNECTICUT Avon Fairfield
Glastonbury Greenwich Mystic Ridgefield Stamford Southbury Uncasville West
Hartford Westport Wilton DELAWARE Greenville FLORIDA Amelia Island Aventura
Boca Raton Bonita Springs Brandon Captiva Clearwater Coral Gables Destin
Ellenton(**) Estero(**) Fort Lauderdale Fort Myers Gainsville Jacksonville Key
West Manalapan Marco Island Miami Miami Beach Naples Orlando Ormond Beach Palm
Beach Gardens Ponte Vedra Beach Sanibel Sarasota St. Augustine(**) St.
Petersburg Stuart Sunrise(**) Tampa Vero Beach Wellington West Palm Beach
Winter Park GEORGIA Alpharetta Atlanta Augusta Columbus Lawrenceville(**)
Marietta Norcross Peachtree City St. Simons Island IDAHO Boise ILLINOIS Chicago
Deer Park Geneva Gurnee(**) Highland Park Hinsdale Naperville Northbrook
Oakbrook Peoria River Forest Schaumburg Skokie Springfield Wheaton Wilmette
INDIANA Fort Wayne Indianapolis Michigan City KANSAS Leawood Overland Park
Prairie Village KENTUCKY Lexington Louisville LOUISIANA Baton Rouge Lafayette
Mandeville New Orleans MAINE Portland MARYLAND Annapolis Baltimore Bethesda
Chevy Chase Columbia Potomac Rockville Towson MASSACHUSETTS Acton Boston
Braintree Burlington Canton Chestnut Hill Hyannis Longmeadow Marlborough
Mashpee Natick Peabody Wellesley Wrentham(**) MICHIGAN Ann Arbor Birmingham
Flowood Grand Rapids Grandville Grosse Point Livonia Novi Okemos Petosky
Rochester Hills Troy West Bloomfield MINNESOTA Edina Mall of America Maple
Grove Rochester St. Paul Wayzata White Bear Lake Woodbury MISSISSIPPI Jackson
Ridgeland MISSOURI Des Peres Kansas City St. Louis NEBRASKA Lincoln Omaha
NEVADA Las Vegas NEW JERSEY Bridgewater Cherry Hill Denville Edgewater
Hackensack Marlton Mount Laurel Paramus Princeton Ridgewood Sea Girt Short Hills
Shrewsbury Westfield Westwood Woodcliff Lake NEW MEXICO Santa Fe NEW YORK Albany
Bayside Buffalo Central Valley(**) Garden City Great Neck Manhattan Mount Kisco
Rochester Riverhead(**) Southampton Stony Brook Syracuse White Plains Woodbury
NORTH CAROLINA Asheville Charlotte Durham Greensboro Greenville Hickory
Huntersville Raleigh OHIO Beachwood Chagrin Falls Cincinnati Cleveland Columbus
Dayton Rocky River Upper Arlington Woodmere Worthington OKLAHOMA Edmond Norman
Oklahoma City Tulsa OREGON Bend Eugene Gresham Lake Oswego Portland PENNSYLVANIA
Allentown Ardmore Chestnut Hill Concordville Doylestown King of Prussia Lahaska
Manayunk Paoli Pittsburgh RHODE ISLAND Cranston Newport Smithfield SOUTH
CAROLINA Charleston Columbia Greenville Montgomery Hilton Head Mount Pleasant
Myrtle Beach TENNESSEE Franklin Germantown Johnson City Knoxville Memphis
Nashville TEXAS Arlington Austin Corpus Christi Dallas Fort Worth Friendswood
Frisco Grapevine(**) Houston Hurst Lubbock Midland Plano San Antonio Southlake
Sugar Land Woodlands UTAH Provo Salt Lake City VERMONT Burlington VIRGINIA
Alexandria Arlington Charlottesville Fairfax Fredericksburg Leesburg(**)
Lynchburg McLean Norfolk Reston Richmond Virginia Beach Williamsburg
Woodbridge(**) WASHINGTON Bellevue Redmond Seattle Spokane WASHINGTON D.C.
Georgetown Union Station WISCONSIN Appleton Brookfield Fox Point Wauwatosa
WYOMING Jackson Hole (*)Coming Soon / (**)Outlet Store
[PHOTO]
CHICO'S FAS, INC.
11215 Metro Parkway
Fort Myers, Florida 33912
p. 239.277.6200
f. 239.277.5237
1.888.855.4986
www.chicos.com