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CPI CORP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations(Edgar Glimpses Via Acquire Media NewsEdge) Management's Discussion and Analysis of Financial Condition and Results of Operations is designed to provide the reader of the financial statements with a narrative on the Company's results of operations, financial position and liquidity, significant accounting policies and critical estimates, and the future impact of accounting standards that have been issued but are not yet effective. Management's Discussion and Analysis is presented in the following sections: Executive Overview; Results of Operations; Liquidity and Capital Resources; and Accounting Pronouncements and Policies. The reader should read Management's Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the interim consolidated financial statements and related notes thereto contained elsewhere in this document. All references to earnings per share relate to diluted earnings per common share unless otherwise noted. EXECUTIVE OVERVIEW The Company's Operations CPI Corp. is a long-standing leader, based on sittings, number of locations and related revenues, in the professional portrait photography of young children, individuals and families. From a single studio opened by our predecessor company in 1942, we have grown to 3,073 studios throughout the U.S., Canada, Mexico and Puerto Rico, principally under lease and license agreements with Walmart and license agreements with Sears and Toys "R" Us. CPI is the sole operator of portrait studios in Walmart stores and supercenters in all 50 states in the U.S., Canada, Mexico and Puerto Rico, as well as Babies "R" Us stores in the U.S. The Company has provided professional portrait photography for Sears' customers since 1959 and has been the only Sears portrait studio operator since 1986. Additionally, in connection with the Bella Pictures® Acquisition in fiscal year 2010, the Company now offers customers high-quality wedding photography and videography services and products in most major U.S. markets through a national network of certified photographers and videographers. Management has determined the Company operates as a single reporting segment offering similar products and services in all locations. As of the end of the second quarter in fiscal years 2011 and 2010, the Company's studio counts were: July 23, 2011 July 24, 2010 Within Walmart stores:United States and Puerto Rico 1,535 1,534 Canada 257 258 Mexico 106 104 Within Sears stores:United States and Puerto Rico 853 858 Canada 110 110 Within Babies "R" Us stores in the United States 150 134 Locations not within above host stores 62 35 Total 3,073 3,033 Locations not within Walmart, Sears or Babies "R" Us stores include 14 free-standing SPS studio locations, 21 Kiddie Kandids mall locations, 19 Shooting Star locations (located within Buy Buy Baby stores) and 8 Portrait Gallery locations. As of Augsut 30, 2011, the Company operated a total of 180 Kiddie Kandids locations and plans to open an additional 16 locations by the end of September 2011. The Company continues to seek opportunities from its digital platform to create diversified revenue streams, drive productivity and profitability gains, leverage its manufacturing capacity and efficiency and implement aggressive, targeted marketing campaigns. Such opportunities may be limited if the economy worsens in the foreseeable future. 15 RESULTS OF OPERATIONS A summary of consolidated results of operations and key statistics follows: in thousands, except share and per share data 12 Weeks Ended 24 Weeks Ended July 23, 2011 July 24, 2010 July 23, 2011 July 24, 2010 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net sales $ 70,864 $ 76,414 $ 159,502 $ 171,913 Cost and expenses: Cost of sales (exclusive of depreciation and amortization shown below) 5,917 5,844 12,311 12,366 Selling, general and administrative expenses 67,007 68,880 140,555 142,701 Depreciation and amortization 3,738 4,355 7,754 8,820 Other charges and impairments 1,719 (1,052 ) 4,896 (756 ) 78,381 78,027 165,516 163,131 (Loss) income from operations (7,517 ) (1,613 ) (6,014 ) 8,782 Interest expense 651 1,073 1,319 2,333 Other income (expense), net (36 ) (51 ) 96 665 (Loss) income from operations before income tax (benefit) expense (8,204 ) (2,737 ) (7,237 ) 7,114 Income tax (benefit) expense (1,905 ) (920 ) (1,600 ) 2,391 Net (loss) income (6,299 ) (1,817 ) (5,637 ) 4,723 Net loss attributable to noncontrolling interest (55 ) - (140 ) - NET (LOSS) INCOME ATTRIBUTABLE TO CPI CORP. $ (6,244 ) $ (1,817 ) $ (5,497 ) $ 4,723 NET (LOSS) INCOME PER COMMON SHARE Net (loss) income per common share attributable to CPI Corp. - diluted $ (0.89 ) $ (0.25 ) $ (0.78 ) $ 0.65 Weighted average number of common and common equivalent shares outstanding-diluted 7,040,441 7,318,746 7,016,291 7,249,318 12 weeks ended July 23, 2011 compared to 12 weeks ended July 24, 2010 The Company reported net losses of $6.2 million and $1.8 million, or ($0.89) and ($0.25) per diluted share, for the 12-week second quarters ended July 23, 2011, and July 24, 2010, respectively. Earnings in the period were significantly affected by comparable store sales declines, initial dilution associated with the Bella Pictures® ("Bella") operations and other charges and impairments. Foreign currency translation effects and the Kiddie Kandids studio operations did not have a material impact on the Company's net earnings in the second quarter of 2011. Net sales totaled $70.9 million and $76.4 million in the second quarters of fiscal 2011 and 2010, respectively. ? Net sales for the second quarter of fiscal 2011 decreased $5.5 million, or 7%, to $70.9 million from the $76.4 million reported in the fiscal 2010 second quarter. Net sales for the 2011 second quarter were positively impacted by the result of the late Easter holiday in the current year ($2.7 million), net studio openings ($1.6 million), Bella sales ($1.2 million), foreign currency translation ($900,000), and other items ($800,000). Excluding the above impacts, comparable same-store sales in the quarter decreased approximately 17%. Net sales from the Company's PictureMe Portrait Studio® (PMPS) brand, on a comparable same-store basis, excluding impacts of net revenue recognition change, foreign currency translation and other items totaling $2.5 million, decreased 16% in the second quarter of 2011 to $33.4 million from $39.7 million in the second quarter of 2010. The decrease in PMPS sales for the second quarter was the result of an 18% decrease in the number of sittings, offset in part by a 2% increase in average sale per customer sitting. Net sales from the Company's Sears Portrait Studio (SPS) brand, on a comparable same-store basis, excluding impacts of net revenue recognition change and other items totaling $800,000, decreased 18% in the second quarter of 2011 to $26.4 million from $32.2 million in the second quarter of 2010. The decrease in SPS sales for the second quarter was the result of a 14% decline in the number of sittings and a 5% decline in average sale per customer sitting versus the prior-year quarter. 16 Net sales from the Company's Kiddie Kandids (KK) studio operations increased 58% in the second quarter of 2011 to $4.9 million from $3.1 million in the second quarter of 2010. The Bella operations contributed approximately $1.2 million in net sales in the second quarter of 2011. Costs and expenses were $78.4 million in the second quarter of 2011, compared with $78.0 million in the comparable prior-year period. ? Cost of sales, excluding depreciation and amortization expense, increased to $5.9 million in the second quarter of 2011, from $5.8 million in the second quarter of 2010 primarily due to incremental costs associated with the Bella operations; offset in part by lower overall production levels. ? Selling, general and administrative (SG&A) expense declined to $67.0 million in the second quarter of 2011, from $68.9 million in the second quarter of 2010, as the benefits of reduced studio and corporate employment costs, employee insurance and host store commissions were offset in part by costs incurred in connection with the KK and Bella operations, which increased SG&A expense by $1.4 million and $1.5 million, respectively, in the 2011 second quarter. ? Depreciation and amortization expense was $3.7 million in the second quarter of 2011, compared with $4.4 million in the second quarter of 2010. Depreciation expense decreased as a result of the full depreciation of certain digital assets throughout fiscal 2010. ? In the second quarter of 2011, the Company recognized a charge of $1.7 million in other charges and impairments, compared with a net credit of $1.1 million in the second quarter of 2010. The current-quarter charges primarily related to severance and litigation costs. The prior-year net credit primarily related to the gain on sale of the Brampton, Ontario facility and an early termination fee received from Walmart in relation to certain early PMPS store closures, offset in part by costs incurred in connection with the Kiddie Kandids asset acquisition. Interest expense declined $422,000 in the second quarter of fiscal 2011 to $651,000 from $1.1 million in the second quarter of fiscal 2010. The decrease is primarily a result of lower average borrowings and favorable interest rates as a result of the new credit facility, offset in part by a change in the interest rate swap value, which expired in the third quarter of fiscal year 2010. Income tax benefit was $1.9 million and $920,000 in the second quarters of 2011 and 2010, respectively. The resulting effective tax rates were 23% and 34% in 2011 and 2010, respectively. The decrease in the effective tax rate in 2011 is due primarily to a higher income ratio in lower tax jurisdictions, a decrease in Canadian rates and an increase in U.S. tax credits. 24 weeks ended July 23, 2011 compared to 24 weeks ended July 24, 2010 The Company reported a net loss of $5.5 million, or ($0.78) per diluted share, for the 24-week period ended July 23, 2011, compared to net income of $4.7 million, or $0.65 per diluted share, for the 24-week period ended July 24, 2010. Earnings in the period were significantly affected by comparable store sales declines, start-up costs and initial dilution associated with the Bella operations and other charges and impairments, offset in part by the positive KK studio operations contribution. Foreign currency translation effects did not have a material impact on the Company's net earnings in the first half of 2011. Net sales totaled $159.5 million and $171.9 million in the first half of fiscal 2011 and 2010, respectively. ? Net sales for the first half of fiscal 2011 decreased $12.4 million, or 7%, to $159.5 million from the $171.9 million reported in the fiscal 2010 first half. Net sales for the 2011 first half were positively impacted by net studio openings ($7.0 million), Bella sales ($2.1 million), foreign currency translation ($1.6 million), net revenue recognition change ($800,000) and E-commerce ($800,000) and negatively impacted by other items ($500,000). Excluding the above impacts, comparable same-store sales in the first half decreased approximately 14%. Net sales from the Company's PMPS brand, on a comparable same-store basis, excluding impacts of foreign currency translation and other items totaling $1.6 million, decreased 12% in the first half of 2011 to $83.1 million from $94.6 million in the first half of 2010. The decrease in PMPS sales for the first half was the result of a 16% decrease in the number of sittings, offset in part by a 5% increase in average sale per customer sitting. 17 Net sales from the SPS brand, on a comparable same-store basis, excluding the negative impact of studio closings and the positive impact of other items totaling ($300,000), decreased 16% in the first half of 2011 to $61.2 million from $73.3 million in the first half of 2010. The decrease in SPS sales for the first half was the result of a 12% decline in the number of sittings and a 5% decline in average sale per customer sitting versus the prior-year period. Net sales from the Company's Kiddie Kandids (KK) studio operations increased 238% in the first half of 2011 to $10.4 million from $3.1 million in the first half of 2010. The Bella operations contributed approximately $2.1 million in net sales in the first half of 2011. Costs and expenses were $165.5 million in the first half of 2011, compared with $163.1 million in the comparable prior-year period. ? Cost of sales, excluding depreciation and amortization expense, was fairly constant at $12.3 million and $12.4 million in the first half of 2011 and 2010, respectively, primarily due to incremental costs associated with the Bella operations, offset in part by lower overall production levels. ? Selling, general and administrative (SG&A) expense declined to $140.6 million in the first half of 2011, from $142.7 million in the first half of 2010, as the benefits of reduced studio and corporate employment costs, employee insurance, host store commissions and advertising were offset in part by costs incurred in connection with the KK and Bella operations, which increased SG&A expense by $5.7 million and $3.4 million, respectively, in the first half of 2011, and increased payroll tax expense as a result of higher unemployment tax rates. ? Depreciation and amortization expense was $7.8 million in the first half of 2011, compared with $8.8 million in the first half of 2010. Depreciation expense decreased as a result of the full depreciation of certain digital assets throughout fiscal 2010. ? In the first half of 2011, the Company recognized a charge of $4.9 million in other charges and impairments, compared with a net credit of $756,000 in the first half of 2010. The current-year charges primarily related to litigation costs, severance and costs incurred in connection with the Bella Pictures® Acquisition. The prior-year net credit primarily related to the gain on sale of the Brampton, Ontario facility and an early termination fee received from Walmart in relation to certain early PMPS store closures, offset in part by costs incurred in connection with the Kiddie Kandids asset acquisition. Interest expense declined $1.0 million in the first half of fiscal 2011 to $1.3 million from $2.3 million in the first half of fiscal 2010. The decrease is primarily a result of lower average borrowings and favorable interest rates as a result of the new credit facility, offset in part by a change in the interest rate swap value, which expired in the third quarter of fiscal year 2010. Income tax (benefit) expense was ($1.6 million) and $2.4 million in the first half of 2011 and 2010, respectively. The resulting effective tax rates were 22% and 34% in 2011 and 2010, respectively. The decrease in the effective tax rate in 2011 is due primarily to a higher income ratio in lower tax jurisdictions, a decrease in Canadian rates and an increase in U.S. tax credits. LIQUIDITY AND CAPITAL RESOURCES The following table presents a summary of the Company's cash flows for the first half of 2011 and 2010: in thousands 24 Weeks Ended July 23, 2011 July 24, 2010 (Unaudited) (Unaudited) Net cash (used in) provided by: Operating activities $ (2,373 ) $ 11,649 Financing activities 2,059 (16,544 ) Investing activities (2,393 ) (5,786 ) Effect of exchange rate changes on cash (20 ) (271 ) Net decrease in cash $ (2,727 ) $ (10,952 ) 18 Net Cash (Used In) Provided By Operating Activities Net cash (used in) provided by operating activities was ($2.4 million) and $11.6 million during the first half of 2011 and 2010, respectively. The change in cash used in the first half of 2011 compared to cash provided from the first half of 2010 is primarily due to an increase in cash used as a result of the change in net operating loss and the timing of payments related to changes in the various balance sheet accounts totaling approximately $11.3 million, an increase in taxes paid of $2.0 million and an increase in litigation spend of $3.0 million. These increases are offset in part by reduced interest paid of $2.3 million. Net Cash Provided By (Used In) Financing Activities Net cash provided by (used in) financing activities was $2.1 million and ($16.5 million) in the first half of 2011 and 2010, respectively. The change in cash related to financing activities is primarily attributable to the net borrowings of $7.3 million under the revolving credit facility in the first half of 2011 compared to repayments of $13.6 million of long-term debt under the Company's former credit facility in the first half of 2010, the Company's repurchase of $1.1 million of its common stock in the first half of 2011, an increase in cash dividends paid of $555,000 and an increase in the surrender of employee shares for taxes of $507,000. On August 30, 2010, the Company entered into the Credit Agreement (the "Credit Agreement") with the financial institutions that are or may from time to time become parties thereto and Bank of America, N.A., as administrative agent for the lenders, and as swing line lender and issuing lender. The Credit Agreement makes available to the Company a revolving credit facility which includes letters of credit and replaces the Company's former facility. The Credit Agreement is a four-year revolving credit facility, expiring in August 2014, in an amount of up to $105 million, with a sub-facility for letters of credit in an amount not to exceed $25 million. In addition, the Company, at its option, may choose to increase the revolving commitment up to an additional $20 million. The credit facility provides the Company greater flexibility to pursue financial and strategic opportunities. The obligations of the Company under the Credit Agreement are secured by (i) a guaranty from certain material direct and indirect domestic subsidiaries of the Company, and (ii) a lien on substantially all of the assets of the Company and such subsidiaries. The revolving loans under the Credit Agreement bear interest, at the Company's option, at either the London Interbank Offered Rate ("LIBOR") plus a spread ranging from 2.25% to 3.0%, or an alternative base rate plus a spread ranging from 1.25% to 2.0%. The alternative base rate is the greater of Bank of America, N.A. prime rate, the Federal Funds rate plus 0.5% or the one month British Bankers' Association LIBOR plus 1.0% (the "Base Rate"). The Company is also required to pay a non-use fee of 0.4% to 0.5% per annum on the unused portion of the revolving loans and letter of credit fees of 2.25% to 3.0% per annum. The interest rate spread in the case of LIBOR and Base Rate loans and the payment of the non-use and letter of credit fees is dependent on the Company's Total Funded Debt to EBITDA ratio, as defined in the Credit Agreement. Interest on each Base Rate loan is payable quarterly in arrears and at maturity. Interest on each LIBOR loan is payable on the last day of each Interest Period, as defined in the Credit Agreement, relating to such loan, upon a repayment of such loan and at maturity. The Credit Agreement and related loan documents contain terms and provisions (including representations, covenants and conditions) customary for transactions of this type. The financial covenants include a leverage ratio test (as defined, Total Funded Debt to EBITDA) and an interest coverage ratio test (as defined, EBITDA minus capital expenditures to interest expense). Other covenants include limitations on lines of business, additional indebtedness, liens and negative pledge agreements, incorporation of other debt covenants, guarantees, investments and advances, cancellation of indebtedness, restricted payments, modification of certain agreements and instruments, inconsistent agreements, leases, consolidations, mergers and acquisitions, sale of assets, subsidiary dividends, and transactions with affiliates. The Credit Agreement also contains customary events of default, including nonpayment of the principal of any loan or letter of credit obligation, interest, fees or other amounts; inaccuracy of representations and warranties; violation of covenants; certain bankruptcy events; cross-defaults to other material obligations and other indebtedness (if any); change of control of events; material judgments; certain ERISA-related events; and the invalidity of the loan documents (including the collateral documents). If an event of default occurs and is continuing under the Credit Agreement, the lenders may terminate their obligations thereunder and may accelerate the payment by the Company and the subsidiary guarantors of all of the obligations due under the Credit Agreement and the other loan documents. As of July 23, 2011, the Company had $56.2 million outstanding under its credit facility. In 2010, the Company used the proceeds from the new credit facility to pay down the remaining debt on the former facility. The Company incurred approximately $1.5 million in issuance costs in 2010 associated with the new credit facility. These fees are being amortized over the life of the revolving commitment. 19 The Company was in compliance with all the covenants under its Credit Agreement as of July 23, 2011. As part of the Company's former credit facility, the Company had entered into an interest rate swap agreement to manage the interest rate risk on a portion of its term loan. This swap agreement expired on September 17, 2010. The fixed rate gain related to this agreement was $1.4 million for the first half of fiscal year 2010, which is included in Interest expense for such period. Net Cash Used In Investing Activities Net cash used in investing activities was $2.4 million during the first half of 2011 compared to $5.8 million during the first half of 2010. The net decrease in cash used was primarily attributable to the decrease in capital spend of $4.2 million due in part to the acquisition of certain Kiddie Kandids assets in the first half of 2010, a $1.6 million decrease in proceeds received from the sale of certain assets held for sale and the liquidation of the Rabbi Trust of $760,000 in the second quarter of 2011. Off-Balance Sheet Arrangements Other than standby letters of credit primarily used to support the Company's various large deductible insurance programs, the Company has no additional significant off-balance sheet arrangements. Commitments and Contingencies Standby Letters of Credit As of July 23, 2011, the Company had standby letters of credit outstanding in the principal amount of $14.5 million primarily used in conjunction with the Company's various large deductible insurance programs. Liquidity Cash flows from operations, cash and cash equivalents and the borrowing capacity under the Company's revolving credit facility, represent expected sources of funds in 2011 that the Company expects will meet its obligations and commitments, including debt service, annual dividends to shareholders, planned capital expenditures, which are estimated to approximate $8.0 million for fiscal year 2011, and normal operating needs. ACCOUNTING PRONOUNCEMENTS AND POLICIES Application of Critical Accounting Policies The application of certain of the accounting policies utilized by the Company requires significant judgments or a complex estimation process that can affect the results of operations and financial position of the Company, as well as the related footnote disclosures. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable. If actual amounts are ultimately different from previous estimates, the revisions are included in the Company's results of operations for the period in which the actual amounts become known. The Company's critical accounting policies are discussed in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section in the Company's 2010 Annual Report on Form 10-K, and below. Long-Lived Asset Recoverability In accordance with ASC Topic 360, "Property, Plant and Equipment" ("ASC Topic 360") long-lived assets, primarily property and equipment, are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. The impairment tests, as prescribed under ASC Topic 360, are a two-step process. If the carrying value of the asset exceeds the expected future cash flows (undiscounted and without interest) from the asset, impairment is indicated. The impairment loss recognized is the excess of the carrying value of the asset over its fair value. As of July 23, 2011, no impairment was indicated. 20 Recoverability of Goodwill and Acquired Intangible Assets The Company accounts for goodwill under ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC Topic 350") which requires the Company to test goodwill for impairment on an annual basis, and between annual tests whenever events or changes in circumstances indicate the carrying amount may not be recoverable. ASC Topic 350 prescribes a two-step process for impairment testing of goodwill. The first step is a screen for impairment, which compares the reporting unit's estimated fair value to its carrying value. If the carrying value exceeds the estimated fair value in the first step, the second step is performed in which the Company's goodwill is written down to its implied fair value, which the Company would determine based upon a number of factors, including operating results, business plans and anticipated future cash flows. The Company performs its annual goodwill impairment test at the end of its second quarter, or more frequently if circumstances indicate the potential for impairment. As of July 23, 2011, the Company has goodwill recorded of approximately $22.0 million, which relates primarily to one goodwill reporting unit - PMPS. At the end of the Company's 2011 second fiscal quarter, the Company completed its annual impairment test and concluded that the estimated fair value of its PMPS reporting unit substantially exceeded its carrying value, and therefore, no impairment was indicated. Key items of consideration in the annual impairment test included the Company's market capitalization relative to the carrying value of its net assets, estimates of future cash flows, the most significant assumption being the Company's expectation of future PMPS studio sales levels, and other relevant factors. If market conditions at the studio or host store levels significantly deteriorate, which would result in lower than expected PMPS studio sales, the Company may be required to record a non-cash impairment charge, which could be significant, and would adversely affect the Company's financial position and results of operations. The Company also reviews its intangible assets with definite useful lives, consisting primarily of the PMPS host agreement, under ASC Topic 360, which requires the Company to review for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of intangible assets with definite useful lives is measured by a comparison of the carrying amount of the asset to the estimated future undiscounted cash flows expected to be generated by such assets. If such assets are considered to be impaired, the impairment is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets, which is determined on the basis of discounted cash flows. As of July 23, 2011, the Company considered possible impairment triggering events, including projected cash flow data, as well as other relevant factors, and concluded that no impairment was indicated at that date. However, if market conditions at the studio or host store levels significantly deteriorate, which would result in lower than expected PMPS studio sales, or if there are changes in circumstances, assumptions or estimates, including historical and projected cash flow data, utilized by the Company in its evaluation of the recoverability of its intangible assets with definite useful lives, it is possible that the Company would be required to write-down its intangible assets and record a non-cash impairment charge, which could be significant, and would adversely affect the Company's financial position and results of operations. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION The statements contained in this report that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve risks and uncertainties. The Company identifies forward-looking statements by using words such as "preliminary," "plan," "expect," "looking ahead," "anticipate," "estimate," "believe," "should," "intend" and other similar expressions. Management wishes to caution the reader that these forward-looking statements, such as the Company's outlook with respect to the integration of the Bella Pictures® business, portrait studios, net income, future cash requirements, cost savings, compliance with debt covenants, valuation allowances, reserves for charges and impairments, capital expenditures and other similar statements, are only predictions or expectations; actual events or results may differ materially as a result of risks facing the Company. Such risks include, but are not limited to: the Company's dependence on Walmart, Sears and Toys "R" Us, the approval of the Company's business practices and operations by Walmart, Sears and Toys "R" Us, the termination, breach, limitation or increase of the Company's expenses by Walmart under the lease and license agreements and Sears and Toys "R" Us under the license agreements, the integration of the Bella Pictures® operations into the Company and the continued development and operation of the Bella Pictures® business, customer demand for the Company's products and services, the development and operation of the Kiddie Kandids business, the economic recession and resulting decrease in consumer spending, manufacturing interruptions, dependence on certain suppliers, competition, dependence on key personnel, fluctuations in operating results, a significant increase in piracy of the Company's photographs, widespread equipment failure, compliance with debt covenants, restrictions on the Company's business imposed by agreements governing its debt, implementation of marketing and operating strategies, outcome of litigation and other claims, impact of declines in global equity markets to the pension plan, impact of foreign currency translation and other risks as may be described in the Company's filings with the Securities and Exchange Commission, including its Form 10-K for the fiscal year ended February 5, 2011, as originally filed on April 21, 2011. The risks described above do not include events that the Company does not currently anticipate or that it currently deems immaterial, which may also affect its results of operations and financial condition. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled "Risk Factors" included in the Company's 2010 Annual Report on Form 10-K for the fiscal year ended February 5, 2011, as originally filed on April 21, 2011, with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. 21 |