FORM 10-Q/A
(Amendment No. 1)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 2, 2003
IRS Employer Exact name of Registrant, State of Incorporation;
Identification No. Address of Principal Executive Offices; and Telephone Number
22-2894486 J. CREW GROUP, INC.
(A New York corporation)
770 Broadway
New York, New York 10003
(212) 209-2500
22-3540930 J. CREW OPERATING CORP.
(A Delaware corporation)
770 Broadway
New York, New York 10003
(212) 209-2500
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports) and (2) have been subject to
such filing requirements for the past 90 days. Yes x No___
---
Indicated by check mark whether the registrants are accelerated filers (as
defined in Rule 12b-2 of the Exchange Act). Yes___ No x
---
The number of shares of Common Stock outstanding of each of the issuers as of
August 25, 2003
J. CREW GROUP, INC.
12,870,373 shares of Common Stock, par value $.01 per share
J. CREW OPERATING CORP.
100 shares of Common Stock, par value $.01 per share (all of
which are owned beneficially and of record by J.Crew Group,
Inc.)
This combined Form 10-Q/A is separately filed by each of J. Crew Group, Inc and
J. Crew Operating Corp. The information contained herein relating to each
individual registrant is filed by such registrant on its own behalf. No
registrant makes any representation as to information relating to any other
registrant.
J. Crew Operating Corp. meets the conditions set forth in General Instruction H
(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced
disclosure format.
Explanatory Note
----------------
The purpose of this amendment to the Quarterly Report on Form 10-Q of J.Crew
Group, Inc. and J.Crew Operating Corp. is to reverse a reclassification of the
liquidation value of J.Crew Group, Inc.'s Series A Preferred Stock, which
aggregates $92.8 million, to stockholders' deficit. The consolidated balance
sheets of J.Crew Group, Inc. and subsidiaries at February 1, 2003 and August 2,
2003 have been restated to reclassify the Series A Preferred Stock out of
stockholders' deficit, consistent with the company's prior filings.
This amendment does not reflect events occurring after the original filing of
the Quarterly Report on Form 10-Q on September 17, 2003 or modify or update
those disclosures as presented in the Quarterly Report on Form 10-Q as
originally filed, except to reflect the restatement as described above.
Part I - Financial Information
Item I. Financial Statements
J. CREW GROUP, INC. AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets
August 2, February 1,
Assets 2003 2003
------ ---- ----
(unaudited)
(in thousands)
Current assets:
Cash and cash equivalents $ 31,497 $ 18,895
Merchandise inventories 84,810 107,318
Prepaid expenses and other current assets 18,316 24,886
Refundable income taxes 6,278 6,278
--------- ---------
Total current assets 140,901 157,377
--------- ---------
Property and equipment - at cost 304,806 300,910
less accumulated depreciation and amortization (148,859) (129,363)
--------- ---------
155,947 171,547
--------- ---------
Deferred income tax assets 5,000 5,000
Other assets 15,457 14,954
--------- ---------
Total assets $ 317,305 $ 348,878
========= =========
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Current portion of long-term debt $ 1,164 $ --
Accounts payable and other current liabilities 93,992 116,384
Federal and state income taxes 2,716 2,978
--------- ---------
Total current liabilities 97,872 119,362
--------- ---------
Deferred credits 61,068 65,141
--------- ---------
Long-term debt 290,358 292,000
--------- ---------
Redeemable preferred stock 283,570 264,038
--------- ---------
Stockholders' deficit (415,563) (391,663)
--------- ---------
Total liabilities and stockholders' deficit $ 317,305 $ 348,878
========= =========
See notes to unaudited condensed consolidated financial statements.
2
J. CREW GROUP, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Operations
Thirteen weeks ended
August 2, August 3,
--------- --------
2003 2002
---- ----
(unaudited)
(in thousands)
Revenues:
Net sales $ 159,186 $ 160,946
Other 7,881 6,687
--------- ---------
167,067 167,633
--------- ---------
Cost of goods sold including buying and occupancy costs 117,919 106,613
Selling, general and administrative expenses 61,967 62,478
--------- ---------
Loss from operations (12,819) (1,458)
Interest expense - net (13,028) (9,540)
Gain on exchange of debt (net of related expenses of $2,992) 41,085 --
--------- ---------
Income/(loss) before income taxes 15,238 (10,998)
Income taxes -- 3,850
--------- ---------
Net income/(loss) $ 15,238 $ (7,148)
========= =========
See notes to unaudited condensed consolidated financial statements.
3
J. CREW GROUP, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Operations
Twenty-six weeks ended
August 2, August 3,
-------- --------
2003 2002
---- ----
(unaudited)
(in thousands)
Revenues:
Net sales $ 311,778 $ 318,829
Other 16,784 15,856
--------- ---------
328,562 334,685
--------- ---------
Cost of goods sold including buying and occupancy costs 223,500 206,700
Selling, general and administrative expenses 127,746 138,425
--------- ---------
Loss from operations (22,684) (10,440)
Interest expense - net (22,790) (19,133)
Gain on exchange of debt (net of related expenses of $2,992) 41,085 --
--------- ---------
Loss before income taxes (4,389) (29,573)
Income taxes -- 10,350
--------- ---------
Net loss $ (4,389) $ (19,223)
========= =========
See notes to unaudited condensed consolidated financial statements.
4
J. CREW GROUP, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Twenty-six weeks ended
August 2, August 3,
--------- ---------
2003 2002
---- ----
(unaudited)
(in thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (4,389) $(19,223)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 16,329 16,496
Amortization of deferred financing costs 933 1,343
Non cash compensation expense 21 (594)
Non cash interest expense 11,722 8,621
Gain on exchange of debt (41,085) -
Changes in operating assets and liabilities:
Merchandise inventories 22,508 (8)
Prepaid expenses and other current assets 6,570 4,309
Other assets 11 (1,696)
Accounts payable and other liabilities (17,893) (33,115)
Federal and state income taxes (262) (10,796)
-------- --------
Net cash used in operating activities (5,535) (34,663)
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (5,800) (18,787)
Proceeds from construction allowances 1,000 3,245
-------- --------
Net cash used in investing activities (4,800) (15,542)
======== ========
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in notes payable, bank -- 48,000
Additional long term debt 25,820 --
Repayment of long-term debt (291) --
Costs incurred in connection with debt financings (2,592) --
-------- --------
Net cash provided by financing activities 22,937 48,000
-------- --------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 12,602 (2,205)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 18,895 16,201
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 31,497 $ 13,996
======== ========
NON-CASH FINANCING ACTIVITIES:
Dividends on preferred stock $ 19,532 $ 16,992
======== ========
Interest payable on 13 1/8% Senior Discount Debentures
at February 1, 2003 capitalized and added to the principal
amount of debt $ 4,416 $ --
======== ========
See notes to unaudited condensed consolidated financial statements.
5
J.CREW GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Thirteen and twenty-six weeks ended August 2, 2003 and August 3, 2002
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
include the accounts of J. Crew Group, Inc. and its wholly-owned
subsidiaries (collectively, "Holdings"). All significant intercompany
balances and transactions have been eliminated in consolidation.
The condensed consolidated balance sheet as of August 2, 2003 and the
condensed consolidated statements of operations and cash flows for the
thirteen and twenty-six week periods ended August 2, 2003 and August
3, 2002 have been prepared by Holdings and have not been audited. In
the opinion of management, all adjustments, consisting of only normal
recurring adjustments necessary for the fair presentation of the
financial position of Holdings, the results of its operations and cash
flows have been made.
Certain information and footnote disclosure normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed
or omitted. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Holdings consolidated financial statements for the fiscal year ended
February 1, 2003.
The results of operations for the twenty-six-week period ended August
2, 2003 are not necessarily indicative of the operating results for
the full fiscal year.
2. Exchange Offer
On May 6, 2003 Holdings (through its newly-formed, wholly owned
subsidiary, J.Crew Intermediate LLC ("Intermediate")) completed an
offer to exchange 16% Senior Discount Contingent Principal Notes due
2008 of Intermediate (new notes) for its outstanding 13 1/8% Senior
Discount Debentures due 2008 (existing debentures). Approximately 85%
of the outstanding debentures were tendered for exchange.
Intermediate exchanged $87,006,000 fair value of new notes for
$131,083,000 face amount (including accrued interest of $10,750,000)
of existing debentures. The difference between the fair value of the
new notes and the carrying value of the existing debentures is
included as a gain in the statement of operations for the period ended
August 2, 2003. The new notes were initially recorded at their fair
value and the debt issuance discount of $44,077,000 will be accreted
to the principal amount over the life of the new notes as additional
interest expense.
Interest from October 15, 2002 through May 5, 2003 was paid on the
existing debentures not exchanged at 13 1/8%. Interest from October
15, 2002 through May 5, 2003 on the existing debentures that were
exchanged was added to the principal amount at 16% in accordance with
the terms of the exchange offer.
The new notes bear interest at 16% payable in arrears on May 15 and
November 15. Interest from date of issuance through November 15, 2005
will be added to the principal amount of the notes. Effective November
15, 2005, interest will accrue and become payable on each May 15 and
November 15 thereafter through May 15, 2008.
Commencing on May 15, 2004 and on each May 15 through May 15, 2008,
the accreted value of the new notes will be increased by 10% of
earnings before interest, taxes and depreciation and amortization
[EBITDA] in excess of $50.0 million for the immediately preceding
fiscal year. Interest at 16% will accrue on such increase in
principal.
6
J.CREW GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Thirteen and twenty-six weeks ended August 2, 2003 and August 3, 2002
3. Debt Financings
(a) On February 4, 2003, Holdings and J.Crew Operating Corp.
("Operating Corp.") entered into a credit agreement with TPG-MD
Investment, LLC, a related party, which provides for a Tranche A
loan to Operating Corp. in an aggregate principal amount of $10.0
million and a Tranche B loan to Operating Corp. in an aggregate
principal amount of $10.0 million. The loans are due in February
2008 and bear interest at 5.0% per annum payable semi-annually in
arrears on January 31 and July 31, commencing on July 31, 2003.
Interest will compound and be capitalized and added to the
principal amount on each interest payment date. The outstanding
amount of these loans is convertible into shares of common stock
of Holdings at $6.82 per share. These loans are subordinated in
right of payment to the prior payment of all senior debt and are
on the same terms as the 10-3/8% Senior Subordinated Notes due
2008 of Operating Corp.
(b) The Loan and Security Agreement dated December 23, 2002, as
amended, by and among Wachovia Bank, N.A., as arranger, Congress
Financial Corporation, as administrative and collateral agent and
a syndicate of lenders (the "Congress Credit Facility") was
further amended on April 4, 2003 to (a) consent to the formation
of J.Crew Intermediate LLC and the exchange offer; (b) carve-out
from the EBITDA covenant for fiscal 2002 a $9.0 million one-time
charge for non-current inventory; (c) modify required EBITDA
covenant levels and (d) eliminate the supplemental loan
availability in fiscal 2003.
(c) On April 8, 2003, Operating Corp. borrowed the real estate
availability of $5.8 million under the Congress Credit Facility.
This borrowing is repayable at $97,000 per month commencing June
1, 2003.
4. Recent Accounting Pronouncements
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." This statement
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for
hedging activities under FASB Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The provisions of this
statement are effective for contracts entered into or modified after
7
J.CREW GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Thirteen and twenty-six weeks ended August 2, 2003 and August 3, 2002
June 30, 2003 and hedging relationships designated after June 30,
2003. The provisions of the Statement related to Statement 133
implementation issues that have been effective for fiscal quarters
that begin prior to June 15, 2003 should continue to be applied in
accordance with their respective effective dates. The adoption of SFAS
No. 149 will not have a significant effect on the Company's financial
statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." This statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. The provisions of this Statement are
effective at the beginning of the first interim period beginning after June 15,
2003. The adoption of SFAS No. 150 will result in a reclassification of the
liquidation value and accumulated and unpaid dividends of the Series B preferred
stock and the accumulated and unpaid dividends related to the Series A preferred
stock to liabilities. ($190.8 million as of August 2, 2003)
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities." The FASB believes that if a business enterprise has
a controlling interest in a variable interest entity, the assets, liabilities
and results of the variable interest entity should be included in the
consolidated financial statements with those of the business enterprise. The
Interpretation applies immediately to enterprises that hold a variable interest
in variable interest entities created after January 31, 2003. It applies in the
first fiscal year or interim period beginning after June 15, 2003 to enterprises
that hold a variable interest in variable interest entities created before
February 1, 2003. The adoption of FASB Interpretation No. 46 will not have a
significant effect on the Company's financial statements.
EITF Issue No. 02-16 "Accounting by Customer (including a Reseller) for Certain
Consideration Received from a Vendor" is effective for fiscal periods beginning
after December 15, 2002. This release addresses how a reseller of a vendor's
products should account for cash consideration received from a vendor, and
provides that cash consideration received by a customer from a vendor is
presumed to be a reduction of the prices of the vendor's products or services,
and should, therefore, be characterized as a reduction of cost of sales when
recognized in the customer's income statement. However, the presumption is
overcome when the consideration is either a payment for assets or services
delivered to the vendor, or a reimbursement of costs incurred by the customer to
sell the vendor's products. The adoption of EITF 02-16 did not have any effect
on the Company's financial statements, since the Company sells all its
merchandise under its own brand name and receives no incentives from vendors.
8
J. CREW OPERATING CORP. AND
SUBSIDIARIES
Condensed Consolidated Balance Sheets
August 2, February 1,
Assets 2003 2003
------ ---- ----
(unaudited)
(in thousands)
Current assets:
Cash and cash equivalents $ 31,497 $ 18,895
Merchandise inventories 84,810 107,318
Prepaid expenses and other current assets 18,316 24,886
Refundable income taxes 6,278 6,278
---------- ----------
Total current assets 140,901 157,377
Property and equipment - at cost 304,806 300,910
less accumulated depreciation and amortization (148,859) (129,363)
---------- ----------
155,947 171,547
---------- ----------
Other assets 12,877 13,646
---------- ----------
Total assets $ 309,725 $ 342,570
========== ==========
Liabilities and Stockholder's Deficit
-------------------------------------
Current liabilities:
Current portion of long-term debt $ 1,164 $ --
Accounts payable and other current liabilities 92,465 111,176
Federal and state income taxes 2,716 2,978
Deferred income tax liabilities 910 910
---------- ----------
Total current liabilities 97,255 115,064
---------- ----------
Deferred credits 61,068 65,141
---------- ----------
Long-term debt 174,865 150,000
---------- ----------
Due to J.Crew Group, Inc. 8,225 2,040
---------- ----------
Stockholder's deficit (31,688) 10,325
---------- ----------
Total liabilities and stockholder's deficit $ 309,725 $ 342,570
========== ==========
See notes to unaudited condensed consolidated financial statements.
9
J. CREW OPERATING CORP. AND
SUBSIDIARIES
Condensed Consolidated Statements of Operations
Thirteen weeks ended
August 2, August 3,
--------- --------
2003 2002
---- ----
(unaudited)
(in thousands)
Revenues:
Net sales $ 159,186 $ 160,946
Other 7,881 6,687
--------- ----------
167,067 167,633
Cost of goods sold including buying and occupancy costs 117,919 106,613
Selling, general and administrative expenses 61,956 62,184
--------- ----------
Loss from operations (12,808) (1,164)
Interest expense - net (4,970) (5,129)
--------- ----------
Loss before income taxes (17,778) (6,293)
Income tax benefit -- 2,230
--------- ----------
Net loss $ (17,778) $ (4,063)
========= ==========
See notes to unaudited condensed consolidated financial statements.
10
J. CREW OPERATING CORP. AND
SUBSIDIARIES
Condensed Consolidated Statements of Operations
Twenty-six weeks ended
August 2, August 3,
--------- --------
2003 2002
---- ----
(unaudited)
(in thousands)
Revenues:
Net sales $ 311,778 $ 318,829
Other 16,784 15,856
--------- ---------
328,562 334,685
Cost of goods sold including buying and occupancy costs 223,500 206,700
Selling, general and administrative expenses 127,725 137,966
--------- ---------
Loss from operations (22,663) (9,981)
Interest expense - net (10,030) (10,399)
--------- ---------
Loss before income taxes (32,693) (20,380)
Income tax benefit -- 7,130
--------- ---------
Net loss $ (32,693) $ (13,250)
========= =========
See notes to unaudited condensed consolidated financial statements.
11
J. CREW OPERATING CORP. AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Twenty-six weeks ended
August 2, August 3,
--------- ---------
2003 2002
---- ----
(unaudited)
(in thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (32,693) $ (13,230)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 16,329 16,496
Amortization of deferred financing costs 765 1,200
Non cash compensation expense -- (1,053)
Non-cash interest expense 500 --
Changes in operating assets and liabilities:
Merchandise inventories 22,508 (8)
Prepaid expenses and other current assets 6,570 4,309
Other assets 11 (1,696)
Accounts payable and other liabilities (18,628) (33,115)
Federal and state income taxes (262) (7,566)
---------- ---------
Net cash used in operating activities (4,900) (34,663)
---------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (5,800) (18,787)
Proceeds from construction allowances 1,000 3,245
---------- ---------
Net cash used in investing activities (4,800) (15,542)
---------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in notes payable, bank -- 48,000
Additional long-term debt 25,820 --
Repayment of long term debt (291) --
Costs incurred in connection with debt financings (92) --
Transfers to affiliates (3,135) --
---------- ---------
22,302 48,000
---------- ---------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 12,602 (2,205)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 18,895 16,201
---------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 31,497 $ 13,996
========== =========
NON-CASH FINANCING ACTIVITIES:
Dividends to J.Crew Group, Inc. $ 9,320 $ --
========== =========
See notes to unaudited condensed consolidated financial statements.
12
J.CREW OPERATING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Thirteen and twenty-six weeks ended August 2, 2003 and August 3, 2002
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
include the accounts of J. Crew Operating Corp. and its wholly-owned
subsidiaries (collectively, "Operating Corp."). All significant
intercompany balances and transactions have been eliminated in
consolidation.
The condensed consolidated balance sheet as of August 2, 2003 and the
condensed consolidated statements of operations and cash flows for the
thirteen and twenty-six week periods ended August 2, 2003 and August 3,
2002 have been prepared by Operating Corp. and have not been audited. In
the opinion of management all adjustments, consisting of only normal
recurring adjustments, necessary for the fair presentation of the
financial position of Operating Corp. the results of its operations and
cash flows have been made.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted.
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Operating Corp.
consolidated financial statements for the fiscal year ended February 1,
2003.
The results of operations for the twenty-six-week period ended August 2,
2003 are not necessarily indicative of the operating results for the full
fiscal year.
2. Debt Financings
(a) On February 4, 2003, Operating Corp. entered into a credit agreement
with TPG-MD Investment, LLC, a related party, which provides for a
Tranche A loan to Operating Corp. in an aggregate principal amount of
$10.0 million and a Tranche B loan to Operating Corp. in an aggregate
principal amount of $10.0 million. The loans are due in February 2008
and bear interest at 5.0% per annum payable semi-annually in arrears
on January 31 and July 31, commencing on July 31, 2003. Interest will
compound and be capitalized and added to the principal amount on each
interest payment date. The outstanding amount of these loans is
convertible into common stock of Holdings at $6.82 per shares. These
loans are subordinated in right of payment to the prior payment of all
senior debt and are on the same terms as the 10-3/8% Senior
Subordinated Notes due 2008 of Operating Corp.
(b) The Loan and Security Agreement dated December 23, 2002, as amended,
by and among Wachovia Bank, N.A., as arranger, Congress Financial
Corporation, as administrative and collateral agent and a syndicate of
lenders (the "Congress Credit Facility") was further amended on April
4, 2003 to (a) consent to the formation of J.Crew Intermediate LLC and
the exchange offer; (b) carve-out from the EBITDA covenant for fiscal
2002 a $9.0 million one-time charge for non-current inventory; (c)
modify required EBITDA covenant levels and (d) eliminate the
supplemental loan availability in fiscal 2003.
(c) On April 8, 2003, Operating Corp. borrowed the real estate
availability of $5.8 million under the Congress Credit Facility. This
borrowing is repayable at $97,000 per month commencing June 1, 2003.
13
3. Stockholder's Deficit
On February 20, 2003, the Board of Directors of Operating Corp. declared a
dividend of $9,320,000 payable to J. Crew Group, Inc.
Forward-looking statements
Certain statements in this Report on Form 10-Q/A constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. We may also make written or oral forward-looking statements in our
periodic reports to the Securities and Exchange Commission on Forms 10-K, 10-Q,
8-K, etc., in press releases and other written materials and in oral statements
made by our officers, directors or employees to third parties. Statements that
are not historical facts, including statements about our beliefs and
expectations, are forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other important factors that
could cause the actual results, performance or achievements of the Company, or
industry results, to differ materially from historical results, any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such risks and uncertainties include, but are not
limited to, competitive pressures in the apparel industry, changes in levels of
consumer spending or preferences in apparel and acceptance by customers of the
Company's products, overall economic conditions, governmental regulations and
trade restrictions, acts of war or terrorism in the United States or worldwide,
political or financial instability in the countries where the Company's goods
are manufactured, postal rate increases, paper and printing costs, availability
of suitable store locations at appropriate terms, the level of the Company's
indebtedness and exposure to interest rate fluctuations, and other risks and
uncertainties described in this report and the Company's other reports and
documents filed or which may be filed, from time to time, with the Securities
and Exchange Commission. These statements are based on current plans, estimates
and projections, and therefore, you should not place undue reliance on them.
Forward-looking statements speak only as of the date they are made and we
undertake no obligation to update publicly any of them in light of new
information or future events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - J.CREW GROUP, INC.
RESULTS OF OPERATIONS - THIRTEEN WEEKS ENDED AUGUST 2, 2003 COMPARED TO THIRTEEN
WEEKS ENDED AUGUST 3, 2002.
Revenues for the thirteen weeks ended August 2, 2003 decreased to $167.1 million
from $167.6 million in the thirteen weeks ended August 3, 2002.
Revenues of J.Crew Retail increased to $100.6 million in the second quarter of
2003 from $94.1 million in the second quarter of 2002. This increase was due
primarily to sales from stores not open for a full fiscal year. Comparable store
sales in the second quarter of 2003 increased by 2% over the second quarter of
2002, as the difficult retail environment improved in the second quarter. The
number of stores open at August 2, 2003 increased to 155 from 146 at August 3,
2002.
Revenues of J.Crew Direct (which consists of the Internet and catalog
operations) decreased to $38.2 million in the second quarter of 2003 from $45.9
million in the second quarter of 2002. Internet revenues increased to $26.9
million in the second quarter of 2003 from $25.3 million in the second quarter
of 2002. Catalog revenues in the second quarter of 2003 decreased to $11.3
million from $20.6 million in the second quarter of 2002, as a result of a
decrease in catalog circulation, including the elimination of a clearance
catalog in July, and continuing efforts to migrate customers to the Internet.
Revenues of J.Crew Factory decreased to $20.4 million in the second quarter of
2003 from $20.9 million in the second quarter of 2002 due to a 3.6% decrease in
comparable store sales. There were 42 stores open at August 2, 2003 compared to
43 stores at August 3, 2002.
14
As we have disclosed in recent filings, management changed its strategy of
disposing of slow moving merchandise in fiscal 2003 to drive aggressive
in-season inventory liquidation across all channels. As a result of this change,
sales in the second half of the year, especially in the Direct business, will be
adversely affected by the low levels of prior season merchandise on hand at
August 2, 2003.
Other revenues, which consist of shipping and handling fees and royalties,
increased to $7.9 million in the second quarter of 2003 from $6.7 million in the
second quarter of 2002 due primarily to an increase in shipping and handling
fees of $1.1 million. This increase resulted from a change in our returns
processing in the second half of 2002.
Cost of goods sold, including buying and occupancy costs, increased as a
percentage of revenues to 70.6% in the second quarter of 2003 from 63.6% in the
second quarter of 2002. This increase is attributable primarily to a decrease of
630 basis points in merchandise margin. The decrease in merchandise margin
resulted from higher sales of prior season's merchandise (at discounted prices)
in the second quarter of 2003 compared to the second quarter of 2002 and higher
markdowns related to the sale of Spring 2003 merchandise. These results reflect
management's new strategy of disposing of slow moving merchandise in season and
reducing the amount of merchandise held in its Factory and Direct divisions for
disposition in future seasons. Inventories at August 2, 2003 were down $54
million or 39% from August 3, 2002.
Selling, general and administrative expenses decreased to $62.0 million in the
thirteen weeks ended August 2, 2003 from $62.5 million in the thirteen weeks
ended August 3, 2002. This decrease of $.5 million resulted from an increase in
general and administrative expenses of $1.9 million and a decrease of $2.4
million in selling expense. The increase in general and administrative expenses
resulted primarily from expenses associated with the additional retail stores in
operation in 2003 offset by a $1.6 million insurance recovery related to the
destruction of our World Trade Center Store on September 11, 2001. The reduction
in selling expense was due primarily to a decrease in catalog circulation in the
second quarter of 2003. As a percentage of revenues, selling, general and
administrative expenses decreased to 37.1% of revenues in the second quarter of
2003 from 37.3% in the second quarter of 2002.
Interest expense increased to $13.0 million in the second quarter of 2003 from
$9.5 million in the second quarter of 2002. This increase resulted primarily
from the increase in interest rate from 13 1/8% to 16% for the $120.3 million of
discount debentures exchanged in May 2003 and the accretion in fair value of the
16% discount notes. Average short-term borrowings under our working capital
credit facility in the second quarter of 2003 were $.5 million compared to $48.0
million in the second quarter of 2002. Non-cash interest expense was $7.9
million in the second quarter of 2003 compared to $4.9 million in 2002.
The net gain on exchange of debt of $41.1 million reflects the difference
between the fair value of the new 16% subordinated notes at date of issuance and
the carrying value of the old 13 1/8% discount debentures of $44.1 million less
the additional interest expense of 2 7/8% from October 15, 2002 to May 6, 2003
paid to the note holders who accepted the exchange offer ($1.9 million) and the
write-off of unamortized deferred financing costs related to the debentures
exchanged ($1.1 million).
No tax provision was attributed to the pre-tax income in the second quarter of
2003 since there are available NOL carryforwards to offset any required
provision. Furthermore, management projections indicate that the full fiscal
year will result in a pre-tax loss. The net loss for the second quarter of 2002
included a tax benefit calculated at a 35% rate. At February 1, 2003 the Company
established a valuation allowance to reduce the net deferred tax assets to their
estimated recoverable amount and the Company does not expect to recognize any
tax benefits in future results of operations until an appropriate level of
profitability is sustained.
RESULTS OF OPERATIONS - TWENTY-SIX WEEKS ENDED AUGUST 2, 2003 COMPARED TO
TWENTY-SIX WEEKS ENDED AUGUST 3, 2002.
Revenues for the twenty-six weeks ended August 2, 2003 decreased to $328.6
million from $334.7 million in the twenty-six weeks ended August 3, 2002, a
decrease of 1.8%.
15
Revenues of J.Crew Retail increased to $182.5 million in the first six months of
2003 from $179.8 million in the first six months of 2002. This increase was due
to sales from stores not open for a full fiscal year which offset a 4.3% decline
in comparable store sales. The Company believes that the decrease in comparable
store sales was largely attributable to the continuing slow economy and the
related difficult retail environment, primarily in the first quarter of 2003.
The number of stores open at August 2, 2003 increased to 155 from 146 at August
3, 2002.
Revenues of J.Crew Direct (which consists of the Internet and catalog
operations) decreased to $93.2 million in the first six months of 2003 from
$102.1 million in the first six months of 2002. Internet revenues increased to
$63.5 million in the first six months of 2003 from $56.5 million in the first
six months of 2002. Catalog revenues in the first six months of 2003 decreased
to $29.7 million from $45.6 million in the first six months of 2002, as a result
of a decrease in catalog circulation and continuing efforts to migrate customers
to the Internet.
Revenues of J.Crew Factory decreased to $36.1 million in the first six months of
2003 from $36.9 million in the first six months of 2002 due to a 4.6% decrease
in comparable store sales. There were 42 stores open at August 2, 2003 compared
to 43 stores at August 3, 2002.
As we have disclosed in recent filings, management changed its strategy of
disposing of slow moving merchandise in fiscal 2003 to drive aggressive
in-season inventory liquidation across all channels. As a result of this change,
sales in the second half of the year, especially in the Direct business, will be
adversely affected by the low levels of prior season merchandise on hand at
August 2, 2003.
Other revenues, which consist of shipping and handling fees and royalties,
increased to $16.8 million in the first six months of 2003 from $15.9 million in
the first six months of 2002 due primarily to an increase in shipping and
handling fees of $.8 million. This increase resulted from a change in our
returns processing in the second half of 2002.
Cost of goods sold, including buying and occupancy costs, increased as a
percentage of revenues to 68.0% in the first six months of 2003 from 61.8% in
the first six months of 2002. This increase is attributable primarily to a
decrease of 530 basis points in merchandise margin. The decrease in merchandise
margin resulted from higher sales of prior season's merchandise (at discounted
prices) in the first six months of 2003 compared to the first six months of 2002
and higher markdowns related to the sale of Spring 2003 merchandise. These
results reflect management's new strategy of disposing of slow moving
merchandise in season and reducing the amount of merchandise held in its Factory
and Direct divisions for disposition in future seasons. Inventories at August 2,
2003 were down $54 million or 39% from August 3, 2002.
Selling, general and administrative expenses decreased to $127.7 million in the
twenty-six weeks ended August 2, 2003 from $138.4 million in the twenty-six
weeks ended August 3, 2002. This decrease of $10.7 million resulted from a
decrease in general and administrative expenses of $6.3 million and a decrease
of $4.4 million in selling expense. The decrease in general and administrative
expenses resulted from (a) $4.8 million of severance charges relating to
headcount reductions and the departure of a former Chief Executive Officer in
the first six months of 2002 compared to $1.4 million of severance charges in
the first six months of 2003, (b) the effect of the cost reduction initiatives
implemented in the first quarter of 2002 in the first quarter of 2003 and (c) a
$1.6 million insurance recovery related to the destruction of our World Trade
Center store on September 11, 2001 less the expenses associated with additional
retail stores in operation in 2003. The reduction in selling expense was due
primarily to a decrease in catalog circulation in the first six months of 2003.
As a percentage of revenues, selling, general and administrative expenses
decreased to 38.9% of revenues in the first six months of 2003 from 41.4% in the
first six months of 2002.
Interest expense increased to $22.8 million in the first six months of 2003 from
$19.1 million in the first six months of 2002. This increase resulted primarily
from the increase in interest rate from 13 1/8% to 16% for $120.3 million of
discount debentures exchanged in May 2003 and the accretion in fair value of the
16% subordinated notes. Average short-term borrowings under our working capital
credit facility in the first six months of 2003 were $.2 million compared to
$41.8 million in the first six months of 2002. Non-cash interest expense in the
first six months of 2003 was $12.7 million in 2003 compared to $10.0 million in
2002.
16
The net gain on exchange of debt of $41.1 million reflects the difference
between the fair value of the new 16% subordinated notes at date of issuance and
the carrying value of the old 13 1/8% discount debentures of $44.1 million, less
the additional interest expense of 2 7/8% from October 15, 2002 to May 6, 2003
paid to the note holders who accepted the exchange offer ($1.9 million) and the
write-off of unamortized deferred financing costs related to the debentures
exchanged ($1.1 million).
No tax benefit was attributed to the pre-tax loss in the first six months of
2003 compared to a 35% tax benefit in the same period last year. At February 1,
2003 the Company established a valuation allowance to reduce the net deferred
tax assets to their estimated recoverable amount and the Company does not expect
to recognize any tax benefits in future results of operations until an
appropriate level of profitability is sustained.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operations decreased to $5.5 million in the first six months
of 2003 from $34.7 million in the first six months of 2002. This decrease in
cash used in operations resulted primarily from the decrease in working capital
requirements, primarily inventories, in the 2003 six month period compared to
the 2002 period.
Capital expenditures, net of construction allowances, were $4.8 million for the
first six months of 2003 compared to $15.5 million in the first six months of
2002. Capital expenditures for fiscal year 2003 are expected to be approximately
$10 million compared to $20.4 million in fiscal year 2002. Four new stores are
planned to open in fiscal 2003 compared to 16 in fiscal 2002.
There were no short-term borrowings under the working capital credit facility at
August 2, 2003 compared to $48.0 million at August 3, 2002. Long-term
indebtedness increased by $25.8 million in the first quarter of 2003 consisting
of $20.0 million of notes payable due in 2008 and $5.8 million under the
Congress Credit Facility repayable over a period of 60 months commencing June 1,
2003.
On May 6, 2003 the Company (through its wholly owned subsidiary, J.Crew
Intermediate LLC ("Intermediate")) completed an offer to exchange 16% Senior
Discount Contingent Principal Notes due 2008 of Intermediate for its outstanding
13 1/8% Senior Discount Debentures due 2008. Approximately 85% of the
outstanding debentures were tendered for exchange. The effect of the exchange
offer on interest expense in fiscal 2003 will be to increase total interest
expense by $2.6 million but decrease cash interest by $15.8 million.
Management believes that cash flow from operations and availability under the
Congress Credit Facility will provide adequate funds for the Company's
foreseeable working capital needs, planned capital expenditures and debt service
obligations. The Company's ability to fund its operations and make planned
capital expenditures, to make scheduled debt payments, to refinance indebtedness
and to remain in compliance with the financial covenants under its debt
agreements depends on its future operating performance and cash flow, which in
turn, are subject to prevailing economic conditions and to financial, business
and other factors, some of which are beyond its control.
SEASONALITY
The Company experiences two distinct selling seasons, spring and fall. The
spring season is comprised of the first and second quarters and the fall season
is comprised of the third and fourth quarters. Net sales are usually
substantially higher in the fall season and selling, general and administrative
expenses as a percentage of net sales are usually higher in the spring season.
Approximately 32% of annual net sales in fiscal year 2002 occurred in the fourth
quarter. The Company's working capital requirements also fluctuate throughout
the year, increasing substantially in September and October in anticipation of
the holiday season inventory requirements.
17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - J.CREW OPERATING CORP.
RESULTS OF OPERATIONS - THIRTEEN WEEKS ENDED AUGUST 2, 2003 COMPARED TO THIRTEEN
WEEKS ENDED AUGUST 3, 2002.
Revenues for the thirteen weeks ended August 2, 2003 decreased to $167.1 million
from $167.6 million in the thirteen weeks ended August 3, 2002.
Revenues of J.Crew Retail increased to $100.6 million in the second quarter of
2003 from $94.1 million in the second quarter of 2002. This increase was due
primarily to sales from stores not open for a full fiscal year. Comparable store
sales in the second quarter of 2003 increased by 2% over the first six months of
2002, as the difficult retail environment improved in the second quarter. The
number of stores open at August 2, 2003 increased to 155 from 146 at August 3,
2002.
Revenues of J.Crew Direct (which consists of the Internet and catalog
operations) decreased to $38.2 million in the second quarter of 2003 from $45.9
million in the second quarter of 2002. Internet revenues increased to $26.9
million in the second quarter of 2003 from $25.3 million in the second quarter
of 2002. Catalog revenues in the second quarter of 2003 decreased to $11.3
million from $20.6 million in the second quarter of 2002, as a result of a
decrease in catalog circulation, including the elimination of a clearance
catalog in July, and continuing efforts to migrate customers to the Internet.
Revenues of J.Crew Factory decreased to $20.4 million in the second quarter of
2003 from $20.9 million in the second quarter of 2002 due to a 3.6% decrease in
comparable store sales. There were 42 stores open at August 2, 2003 compared to
43 stores at August 3, 2002.
As we have disclosed in recent filings, management changed its strategy of
disposing of slow moving merchandise in fiscal 2003 to drive aggressive
in-season inventory liquidation across all channels. As a result of this change,
sales in the second half of the year, especially in the Direct business, will be
adversely affected by the low levels of prior season merchandise on hand at
August 2, 2003.
Other revenues, which consist of shipping and handling fees and royalties,
increased to $7.9 million in the second quarter of 2003 from $6.7 million in the
second quarter of 2002 due primarily to an increase in shipping and handling
fees of $1.1 million. This increase resulted from a change in our returns
processing in the second half of 2002.
Cost of goods sold, including buying and occupancy costs, increased as a
percentage of revenues to 70.6% in the second quarter of 2003 from 63.6% in the
second quarter of 2002. This increase is attributable primarily to a decrease of
630 basis points in merchandise margin. The decrease in merchandise margin
resulted from higher sales of prior season's merchandise (at discounted prices)
in the second quarter of 2003 compared to the second quarter of 2002 and higher
markdowns related to the sale of Spring 2003 merchandise. These results reflect
management's new strategy of disposing of slow moving merchandise in season and
reducing the amount of merchandise held in its Factory and Direct divisions for
disposition in future seasons. Inventories at August 2, 2003 were down $54
million or 39% from August 3, 2002.
Selling, general and administrative expenses decreased to $62.0 million in the
second quarter of 2003 from $62.2 million in the second quarter of 2002. This
decrease of $.2 million resulted from an increase in general and administrative
expenses of $2.2 million and a decrease of $2.4 million in selling expense. The
increase in general and administrative expenses resulted primarily from expenses
associated with the additional retail stores in operation in 2003 offset by a
$1.6 million insurance recovery related to the destruction of our World Trade
Center Store on September 11, 2001. The reduction in selling expense was due
primarily to a decrease in catalog circulation in the second quarter of 2003. As
a percentage of revenues, selling, general and administrative expenses were
37.1% of revenues in the second quarter of 2003 and 2002.
Interest expense decreased to $5.0 million in the second quarter of 2003 from
$5.1 million in the second quarter of 2002. This decrease resulted primarily
from the decrease in average short term borrowings in the second quarter of 2003
compared to 2002, net of the increase in long term debt of $25.8 million in
2003.
18
Average short-term borrowings under our working capital credit facility in the
second quarter of 2003 were $.5 million compared to $48.0 million in the second
quarter of 2002.
No tax benefit was attributed to the pre-tax loss in the second quarter of 2003
compared to a tax benefit of 35% in the second quarter of 2002. The Company does
not expect to recognize any tax benefits in future results of operations until
an appropriate level of profitability is sustained.
RESULTS OF OPERATIONS - TWENTY-SIX WEEKS ENDED AUGUST 2, 2003 COMPARED TO
TWENTY-SIX WEEKS ENDED AUGUST 3, 2002.
Revenues for the twenty-six weeks ended August 2, 2003 decreased to $328.6
million from $334.7 million in the twenty-six weeks ended August 3, 2002, a
decrease of 1.8%.
Revenues of J.Crew Retail increased to $182.5 million in the first six months of
2003 from $179.8 million in the first six months of 2002. This increase was due
to sales from stores not open for a full fiscal year which offset a 4.3% decline
in comparable store sales. The Company believes that the decrease in comparable
store sales was largely attributable to the continuing slow economy and the
related difficult retail environment, primarily in the first quarter of 2003.
The number of stores open at August 2, 2003 increased to 155 from 146 at August
3, 2002.
Revenues of J.Crew Direct (which consists of the Internet and catalog
operations) decreased to $93.2 million in the first six months of 2003 from
$102.1 million in the first six months of 2002. Internet revenues increased to
$63.5 million in the first six months of 2003 from $56.5 million in the first
six months of 2002. Catalog revenues in the first six months of 2003 decreased
to $29.7 million from $45.6 million in the first six months of 2002, as a result
of a decrease in catalog circulation and continuing efforts to migrate customers
to the Internet.
Revenues of J.Crew Factory decreased to $36.1 million in the first six months of
2003 from $36.9 million in the first six months of 2002 due to a 4.6% decrease
in comparable store sales. There were 42 stores open at August 2, 2003 compared
to 43 stores at August 3, 2002.
As we have disclosed in recent filings, management changed its strategy of
disposing of slow moving merchandise in fiscal 2003 to drive aggressive
in-season inventory liquidation across all channels. As a result of this change,
sales in the second half of the year, especially in the Direct business, will be
adversely affected by the low levels of prior season merchandise on hand at
August 2, 2003.
Other revenues, which consist of shipping and handling fees and royalties,
increased to $16.8 million in the first six months of 2003 from $15.9 million in
the first six months of 2002 due primarily to an increase in shipping and
handling fees of $.8 million. This increase resulted from a change in our
returns processing in the second half of 2002.
Cost of goods sold, including buying and occupancy costs, increased as a
percentage of revenues to 68.0% in the first six months of 2003 from 61.8% in
the first six months of 2002. This increase is attributable primarily to a
decrease of 530 basis points in merchandise margin. The decrease in merchandise
margin resulted from higher sales of prior season's merchandise (at discounted
prices) in the first six months of 2003 compared to the first six months of 2002
and higher markdowns related to the sale of Spring 2003 merchandise. These
results reflect management's new strategy of disposing of slow moving
merchandise in season and reducing the amount of merchandise held in its Factory
and Direct divisions for disposition in future seasons. Inventories at August 2,
2003 were down $54 million or 39% from August 3, 2002.
Selling, general and administrative expenses decreased to $127.7 million in the
twenty-six weeks ended August 2, 2003 from $138.0 million in the twenty-six
weeks ended August 3, 2002. This decrease of $10.3 million resulted from a
decrease in general and administrative expenses of $5.9 million and a decrease
of $4.4 million in selling expense. The decrease in general and administrative
expenses resulted from (a) $4.8 million of severance charges relating to
headcount reductions and the departure of a former Chief Executive Officer in
the first six months of 2002 compared to $1.4 million of severance charges in
the first
19
six months of 2003, (b) the effect of the cost reduction initiatives implemented
in the first quarter of 2002 in the first quarter of 2003 and (c) a $1.6 million
insurance recovery related to the destruction of our World Trade Center store on
September 11, 2001 less the expenses associated with additional retail stores in
operation in 2003. The reduction in selling expense was due primarily to a
decrease in catalog circulation in the first six months of 2003. As a percentage
of revenues, selling, general and administrative expenses decreased to 38.9% of
revenues in the first six months of 2003 from 41.2% in the first six months of
2002.
Interest expense decreased to $10.0 million in the first six months of 2003 from
$10.4 million in the first six months of 2002. This decrease resulted primarily
from the decrease in average short term borrowings in the first six months of
2003 compared to 2002, net of the increase in long term debt of $25.8 million in
2003. Average short-term borrowings under our short term credit facility in the
first six months of 2003 were $.2 million compared to $41.8 million in the first
six months of 2002.
No tax benefit was attributed to the pre-tax loss in the first six months of
2003 compared to a 35% tax benefit in the same period last year. The Company
does not expect to recognize any tax benefits in future results of operations
until an appropriate level of profitability is sustained.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's principal market risk relates to interest rate sensitivity, which
is the risk that future changes in interest rates will reduce net income or the
net assets of the Company. The Company's variable rate debt consists of
borrowings under the Congress Credit Facility. The interest rates are a function
of the bank prime rate or LIBOR. A one percentage point change in the base
interest rate would result in approximately $100,000 change in income before
taxes for each $10 million of borrowings.
The Company has a licensing agreement in Japan which provides for royalty
payments based on sales of J.Crew merchandise as denominated in yen. The Company
has entered into forward foreign exchange contracts from time to time in order
to minimize this risk. At August 2, 2003, there were no forward foreign exchange
contracts outstanding.
The Company enters into letters of credit primarily to facilitate the
international purchase of merchandise. The letters of credit are primarily
denominated in U.S. dollars. Outstanding letters of credit at August 2, 2003
were $53.7 million, including $3.5 million of standby letters of credit.
ITEM 4. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this Quarterly Report on Form 10-Q/A,
the Company's management, including the Chief Executive Officer and the Acting
Chief Financial Officer, conducted an evaluation of the effectiveness of
disclosure controls and procedures as provided in Rule 13a - 14 under the
Securities Exchange Act of 1934, as amended. Based on that evaluation, the Chief
Executive Officer and the Acting Chief Financial Officer concluded that the
disclosure controls and procedures are effective in ensuring that all material
information required to be filed in this Quarterly Report has been made know to
them in a timely fashion. There have been no significant changes in internal
controls, or in factors that could significantly affect internal controls,
subsequent to the date the Chief Executive Officer and the Acting Chief
Financial Officer completed their evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
20
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Indenture, dated as of May 6, 2003, between J.Crew
Intermediate LLC and U.S. Bank National Association, as
trustee relating to the 16% Senior Discount Contingent
Principal Notes due 2008. Incorporated by reference to
Exhibit 4.1 to the Company's Form 8-K filed on May 8,
2003.
4.2 Registration Rights Agreement, dated as of May 6, 2003,
between J.Crew Intermediate LLC and U.S. Bank National
Association on behalf of the Holders. Incorporated by
reference to Exhibit 4.2 to the Company's Form 8-K filed
on May 8, 2003.
4.3 First Supplemental Indenture, dated as of May 6, 2003,
between J.Crew Intermediate LLC and U.S. Bank National
Association relating to the 13 1/8% Senior Discount
Debentures due 2008. Incorporated by reference to the
Company's Form 8-K filed on May 8, 2003.
31.1* Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Acting Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of Chief Executive Officer and Acting Chief
Financial Officer pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed during the quarter
covered by this report:
Date of Report Item(s) Reported
-------------- ----------------
May 8, 2003 Item 5
May 13, 2003 Item 5
May 29, 2003 Item 7 and Item 9
The report on Form 8-K dated May 29, 2003 included the Company's
Condensed Consolidated Income Statements for the thirteen weeks
ended May 3, 2003 and May 4, 2002 and Condensed Consolidated
Balance Sheets at May 3, 2003 and May 4, 2002.
* Filed herewith.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature for each undersigned
company shall be deemed to relate only to matters having reference to such
company.
J. CREW GROUP, INC.
(Registrant)
Date: October 30, 2003 By: /s/ Millard S. Drexler
--------------------------------
Millard S. Drexler
Chairman of the Board and
Chief Executive Officer
Date: October 30, 2003 By: /s/ Nicholas Lamberti
--------------------------------
Nicholas Lamberti
Vice-President and
Corporate Controller
(Acting Chief Financial Officer)
J. CREW OPERATING CORP.
(Registrant)
Date: October 30, 2003 By: /s/ Millard S. Drexler
--------------------------------
Millard S. Drexler
Chairman of the Board and
Chief Executive Officer
Date: October 30, 2003 By: /s/ Nicholas Lamberti
--------------------------------
Nicholas Lamberti
Vice-President and
Corporate Controller
(Acting Chief Financial Officer)
22