ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction of incorporation or organization)
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30-0641353
(I.R.S. Employer Identification No.)
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933 MacArthur Boulevard, Mahwah, New Jersey
(Address of principal executive offices)
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07430
(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.01 par value
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The NASDAQ Global Select Market
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Page
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PART I
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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PART II
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
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Item 15.
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Exhibits, Financial Statement Schedules
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Fiscal 2016
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Fiscal 2015
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Fiscal 2014
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||||||
Net sales:
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(millions)
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||||||||||
ANN
(a)
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$
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2,330.9
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$
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—
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$
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—
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Justice
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1,106.3
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1,276.8
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1,384.3
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Lane Bryant
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1,130.3
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1,095.9
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1,080.0
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maurices
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1,101.3
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1,060.6
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971.4
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dressbarn
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993.3
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1,023.6
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1,022.5
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Catherines
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333.3
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346.0
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332.4
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Total net sales
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$
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6,995.4
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$
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4,802.9
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$
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4,790.6
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Fiscal 2016
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Fiscal 2015
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Fiscal 2014
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||||||
Operating income (loss):
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(millions)
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||||||||||
ANN
(a)
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$
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13.3
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$
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—
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$
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—
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Justice
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29.0
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(62.8
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)
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99.3
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Lane Bryant
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20.6
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(308.0
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)
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(4.3
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)
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maurices
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105.6
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125.9
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86.0
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dressbarn
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(13.6
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)
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10.7
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39.4
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Catherines
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16.3
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31.0
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24.4
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Unallocated acquisition and integration expenses
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(77.4
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)
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(31.7
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)
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(34.0
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)
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Total operating income (loss)
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$
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93.8
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$
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(234.9
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)
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$
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210.8
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(a)
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The results of
ANN
for the post-acquisition period from August 22, 2015 to July 30, 2016 are included within the Company's consolidated results of operations for Fiscal 2016.
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•
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Stores increase ecommerce sales by providing customers opportunities to view, touch and/or try on physical merchandise before ordering online;
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•
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Particular colors or sizes of merchandise not available in a store can be ordered online by our store associates and shipped from our ecommerce fulfillment center or another store directly to the customer;
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•
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Our websites increase store sales as in-store customers have often pre-shopped online before shopping in the store, including verification of which stores have merchandise in stock;
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•
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Ecommerce sales can be returned to our stores, creating mismatches between revenues and returns between the two channels;
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•
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Increased integration of brand specific merchandise planning, procurement and allocation functions serving stores and ecommerce channels together; and
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•
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The Company's marketing and loyalty programs become increasingly integrated to maintain customer relationships and improve traffic and conversion rates both in-store and online.
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•
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ANN
segment
– www.anntaylor.com
,
www.LOFT.com
and
www.louandgrey.com
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•
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Justice
segment
– www.shopjustice.com
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•
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Lane Bryant
segment
– www.lanebryant.com
and
www.cacique.com
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•
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maurices
segment
– www.maurices.com
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•
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dressbarn
segment
– www.dressbarn.com
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•
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Catherines
segment
– www.catherines.com
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Type of Facility
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ANN
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Justice
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Lane Bryant
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maurices
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dressbarn
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Catherines
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Total
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Strip Shopping Centers
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56
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209
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383
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568
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600
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362
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2,178
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Enclosed Malls
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348
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518
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190
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349
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52
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6
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1,463
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Outlet Malls and Outlet Strip Centers
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265
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113
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115
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56
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157
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2
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708
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Lifestyle Centers and Downtown Locations
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353
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97
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84
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20
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—
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3
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557
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Total
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1,022
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937
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772
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993
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809
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373
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4,906
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Fiscal 2016
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|||||||||||||||||||
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ANN
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Justice
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Lane
Bryant
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maurices
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dressbarn
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Catherines
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Total
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|||||||
Beginning of Period
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—
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978
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765
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951
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824
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377
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3,895
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Stores added from
ANN
Acquisition
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1,039
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—
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—
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—
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—
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—
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1,039
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Opened
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21
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8
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30
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52
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15
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3
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129
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Closed
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(38
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)
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(49
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)
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(23
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)
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(10
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)
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(30
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)
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(7
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)
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(157
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)
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End of Period
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1,022
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937
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772
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993
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809
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373
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4,906
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Fiscal 2015
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||||||||||||||||
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Justice
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Lane
Bryant
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maurices
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dressbarn
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Catherines
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Total
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||||||
Beginning of Period
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997
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771
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922
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820
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386
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3,896
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Opened
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30
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35
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41
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|
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34
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—
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140
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Closed
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(49
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)
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(41
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)
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(12
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)
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(30
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)
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(9
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)
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(141
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)
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End of Period
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978
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765
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951
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824
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377
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3,895
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Name
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Age
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Positions
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Elliot S. Jaffe
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90
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Co-founder and Non-Executive Chairman of the Board
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David Jaffe
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57
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President and Chief Executive Officer
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John Pershing
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45
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Executive Vice President, Chief Human Resources Officer
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Duane D. Holloway
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44
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Executive Vice President, General Counsel and Assistant Secretary
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Robb Giammatteo
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44
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Executive Vice President and Chief Financial Officer
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Ernest LaPorte
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64
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Senior Vice President, Chief Accounting Officer
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•
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unsuccessful, delayed or more costly integration;
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•
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demands on management related to the increase in our size and the loss of key employees;
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•
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the diversion of management’s attention from the management of daily operations to the integration of operations;
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•
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expected cost savings not being achieved in full, or taking longer or requiring greater investment to achieve; and
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•
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not achieving the anticipated omni-channel growth potential.
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•
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financial or political instability or terrorist acts in any of the countries in which our merchandise is manufactured, or the channels through which it passes;
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•
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fluctuations in the value of the U.S. Dollar against foreign currencies or restrictions on the transfer of funds to and from foreign countries;
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•
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inability of our manufacturers to comply with local laws, including labor laws, health and safety laws or labor practices;
|
•
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increased security and regulatory requirements and inspections applicable to imported goods;
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•
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imposition or increases of duties, taxes and other charges on imports or exports;
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•
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imposition of new legislation relating to import quotas or other restrictions that may limit the quantity of our merchandise that may be imported into the United States from countries in regions where we do business;
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•
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impact of natural disasters, extreme weather, public health concerns or other catastrophes on our foreign sourcing offices and vendor manufacturing operations;
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•
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delays in shipping due to port security or congestion issues, labor disputes or shortages, local business practices, vendor compliance with applicable import regulations or weather conditions;
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•
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violations under the U.S. Foreign Corrupt Practices Act or similar laws or regulations; and
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•
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increased costs of transportation.
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•
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computer system failures, including but not limited to, inadequate system capacity, human error, change in programming, website downtimes, system upgrades or migrations, Internet service or power outages;
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•
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cyber incidents, including but not limited to, security breaches and computer viruses;
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•
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reliance on third-party computer hardware/software fulfillment and delivery providers;
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•
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unfavorable federal or state regulations or laws;
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•
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violations of federal, state or other applicable laws, including those related to online privacy;
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•
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disruptions in telecommunication systems, power outages or other technical failures;
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•
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credit card fraud;
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•
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constantly evolving technology;
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•
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liability for online content; and
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•
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natural or man-made disasters or adverse weather conditions.
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•
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identify suitable markets and sites for store locations;
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•
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address the different operational characteristics present in each country to which we expand, including employment and labor, transportation, logistics, finance, real estate, lease provisions and local reporting or legal requirements;
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•
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negotiate acceptable lease terms, in some cases in locations in which the relative rights and obligations of landlords and tenants differ significantly from the customs and practices in the U.S.;
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•
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hire, train and retain competent store personnel;
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•
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gain and retain acceptance from foreign customers who may have different preferences and purchasing trends;
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•
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manage inventory effectively to meet the needs of new and existing stores on a timely basis;
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•
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expand infrastructure to accommodate growth;
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•
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manage foreign government regulations;
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•
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manage foreign currency exchange risk effectively; and
|
•
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achieve acceptable operating margins from new stores.
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Fiscal Years
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Leases Expiring
|
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Number with
Renewal Options
|
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Number without
Renewal Options
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2017
|
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855
|
|
225
|
|
630
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2018
|
|
879
|
|
488
|
|
391
|
2019
|
|
665
|
|
418
|
|
247
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2020
|
|
418
|
|
249
|
|
169
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2021
|
|
438
|
|
235
|
|
203
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2022 and thereafter
|
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1,651
|
|
687
|
|
964
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Total
|
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4,906
|
|
2,302
|
|
2,604
|
|
|
Fiscal 2016
|
|
Fiscal 2015
|
||||
Fiscal
|
|
High
|
|
Low
|
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High
|
|
Low
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First Quarter
|
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$14.20
|
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$10.73
|
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$17.54
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$11.85
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Second Quarter
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$13.98
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$7.56
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$13.51
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$10.52
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Third Quarter
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$11.06
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$6.48
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$15.36
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$11.52
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Fourth Quarter
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$9.44
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$6.59
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$17.41
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$12.56
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Period
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Total
Number of
Shares
Purchased
|
|
Average Price
Paid per
Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
(a)
|
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Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Plans or Programs
(a)
|
|
||||
|
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|
|
|
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Month # 1 (April 24, 2016 – May 21, 2016)
|
|
|
—
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|
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$—
|
|
|
—
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|
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$181 million
|
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Month # 2 (May 22, 2016 – June 25, 2016)
|
|
|
—
|
|
|
$—
|
|
|
—
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|
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$181 million
|
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Month # 3 (June 26, 2016 – July 30, 2016)
|
|
|
—
|
|
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$—
|
|
|
—
|
|
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$181 million
|
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•
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Overview.
This section includes recent developments, our objectives and risks, and a summary of our financial performance for Fiscal 2016. In addition, this section includes a discussion of transactions affecting comparability that we believe are important in understanding our operational results and financial condition, and in anticipating future trends.
|
•
|
Results of operations.
This section provides an analysis of our operational results for Fiscal 2016, Fiscal 2015 and Fiscal 2014.
|
•
|
Financial condition and liquidity.
This section provides an analysis of our cash flows for Fiscal 2016, Fiscal 2015 and Fiscal 2014, as well as a discussion of our financial condition and liquidity as of July 30, 2016. The discussion of our financial condition and liquidity includes (i) our available financial capacity under our revolving credit agreement, (ii) a summary of our outstanding debt and commitments as of July 30, 2016, (iii) a summary of our capital spending, and (iv) a summary of our contractual and other obligations as of July 30, 2016.
|
•
|
Market risk management.
This section discusses how we manage our risk exposures related to interest rates, foreign currency exchange rates and our investments, as well as the underlying market conditions as of July 30, 2016.
|
•
|
Critical accounting policies.
This section discusses accounting policies considered to be important to our operational results and financial condition, which require significant judgment and estimation on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are summarized in Note 3 to our accompanying consolidated financial statements.
|
•
|
Recently issued accounting pronouncements.
This section discusses the potential impact to our reported operational results and financial condition of accounting standards that have been recently issued.
|
•
|
Stores increase ecommerce sales by providing customers opportunities to view, touch and/or try on physical merchandise before ordering online;
|
•
|
Particular colors or sizes of merchandise not available in a store can be ordered online by our store associates and shipped from our ecommerce fulfillment center or another store directly to the customer;
|
•
|
Our websites increase store sales as in-store customers have often pre-shopped online before shopping in the store, including verification of which stores have merchandise in stock;
|
•
|
Ecommerce sales can be returned to our stores, creating mismatches between revenues and returns between the two channels;
|
•
|
Increased integration of brand specific merchandise planning, procurement and allocation functions serving stores and ecommerce channels together; and
|
•
|
The Company's marketing and loyalty programs become increasingly integrated to maintain customer relationship and improve traffic and conversion rate both in-store and online.
|
•
|
Net sales for Fiscal 2016 increased
$2.193 billion
, or
45.6%
, primarily due to the effect of the
ANN
Acquisition. For the legacy ascena brands, net sales were down
2.9%
;
|
•
|
Comparable sales for the legacy ascena brands decreased by
5%
, mainly caused by the anticipated decrease at
Justice
related principally to its new selling strategy. Comparable sales were down at all of our segments, with the exception of
Lane Bryant
which had a 1% increase in comparable sales during Fiscal 2016;
|
•
|
Gross margin rate increased by
60
basis points to
56.2%
primarily due to higher margin rates at
Justice
. Gross Margin was negatively impacted in Fiscal 2016 by approximately
$130 million
of non-cash expenses for purchase accounting adjustments;
|
•
|
BD&O, SG&A and Depreciation and amortization expense were negatively impacted by $35 million of non-cash purchase accounting adjustments, bringing the total non-cash purchase accounting adjustments, when combined with the $130 million discussed above, to
$165 million
;
|
•
|
$77.4 million
of Acquisition and integration expenses for Fiscal 2016, compared to
$31.7 million
for Fiscal 2015; and
|
•
|
Net loss per diluted share of
$0.06
in Fiscal 2016, compared to net loss per diluted share of
$1.46
for Fiscal 2015.
|
•
|
We were in a net debt position (total debt less cash and cash equivalents and short-term investments) of
$1.275 billion
as of the end of Fiscal 2016, compared to a net cash and investments position of
$147.5 million
as of the end of Fiscal 2015 primarily due to the term loan debt from the
ANN
Acquisition and our use of cash to support our capital expenditures;
|
•
|
Cash from operations was
$445.4 million
for Fiscal 2016, compared to
$431.3 million
for Fiscal 2015;
|
•
|
We used $1.495 billion of cash, net of cash acquired, for the
ANN
Acquisition and
$366.5 million
for capital expenditures for Fiscal 2016, compared to
$312.5 million
for capital expenditures for Fiscal 2015;
|
•
|
We used $18.6 million of available cash to purchase shares of our common stock for Fiscal 2016;
|
•
|
We borrowed $1.8 billion during the first quarter of Fiscal 2016 to fund the
ANN
Acquisition. We repurchased
$72.0 million
of the term loan for
$68.4 million
, made scheduled principal payments of
$9.0 million
and ended the year with an outstanding term loan principal balance of
$1.719 billion
; and
|
•
|
Net repayments under our revolving credit agreement totaled
$116.0 million
for Fiscal 2016, compared to net repayments of
$56.0 million
for Fiscal 2015.
|
|
Fiscal Years Ended
|
||||||||||
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
(millions)
|
||||||||||
Purchase accounting adjustments related to the
ANN
Acquisition:
|
|
|
|
|
|
||||||
Non-cash inventory expense associated with the purchase accounting write-up of
ANN
's inventory to fair market value
|
$
|
(126.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Depreciation and amortization related to the
ANN
purchase accounting adjustments to property and equipment and customer relationships
(a)
|
(30.8
|
)
|
|
—
|
|
|
—
|
|
|||
Impact of
ANN
purchase accounting adjustments on deferred revenue
(a)
|
(3.2
|
)
|
|
—
|
|
|
—
|
|
|||
Impact of
ANN
purchase accounting adjustments for leases
(a)
|
(4.3
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition and integration expenses
(b)
|
(77.4
|
)
|
|
(31.7
|
)
|
|
(34.0
|
)
|
|||
Gain on extinguishment of debt (see Note 11)
|
0.8
|
|
|
—
|
|
|
—
|
|
|||
Impairment of
Lane Bryant
's goodwill and intangible assets (see Note 6)
|
—
|
|
|
(306.4
|
)
|
|
—
|
|
|||
Impairment of
maurices
' intangible assets (see Note 6)
|
—
|
|
|
—
|
|
|
(13.0
|
)
|
|||
Justice
Pricing Lawsuits (see Note 14)
|
—
|
|
|
(50.8
|
)
|
|
—
|
|
|||
Accelerated depreciation associated with the Company’s supply chain and technology integration efforts and the closure of
Brothers
(c)
(see Note 8)
|
—
|
|
|
(6.5
|
)
|
|
(8.6
|
)
|
|||
Certain costs related to the closure of
Brothers
(c)
|
—
|
|
|
(1.9
|
)
|
|
—
|
|
|
|
Fiscal Years Ended
|
|
|
|
|
|||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
$ Change
|
|
% Change
|
|||||||
|
|
(millions, except per share data)
|
|
|
|||||||||||
Net sales
|
|
$
|
6,995.4
|
|
|
$
|
4,802.9
|
|
|
$
|
2,192.5
|
|
|
45.6
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of goods sold
|
|
(3,066.7
|
)
|
|
(2,133.7
|
)
|
|
(933.0
|
)
|
|
43.7
|
%
|
|||
Cost of goods sold as % of net sales
|
|
43.8
|
%
|
|
44.4
|
%
|
|
|
|
|
|
|
|||
Gross margin
|
|
3,928.7
|
|
|
2,669.2
|
|
|
1,259.5
|
|
|
47.2
|
%
|
|||
Gross margin as % of net sales
|
|
56.2
|
%
|
|
55.6
|
%
|
|
|
|
|
|
|
|||
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Buying, distribution and occupancy expenses
|
|
(1,286.5
|
)
|
|
(856.9
|
)
|
|
(429.6
|
)
|
|
50.1
|
%
|
|||
Buying, distribution and occupancy expenses as % of net sales
|
|
18.4
|
%
|
|
17.8
|
%
|
|
|
|
|
|
|
|||
Selling, general and administrative expenses
|
|
(2,112.3
|
)
|
|
(1,490.9
|
)
|
|
(621.4
|
)
|
|
41.7
|
%
|
|||
SG&A expenses as % of net sales
|
|
30.2
|
%
|
|
31.0
|
%
|
|
|
|
|
|
|
|||
Acquisition and integration expenses
|
|
(77.4
|
)
|
|
(31.7
|
)
|
|
(45.7
|
)
|
|
144.2
|
%
|
|||
Impairment of goodwill
|
|
—
|
|
|
(261.7
|
)
|
|
261.7
|
|
|
(100.0
|
)%
|
|||
Impairment of intangible assets
|
|
—
|
|
|
(44.7
|
)
|
|
44.7
|
|
|
(100.0
|
)%
|
|||
Depreciation and amortization expense
|
|
(358.7
|
)
|
|
(218.2
|
)
|
|
(140.5
|
)
|
|
64.4
|
%
|
|||
Total other operating expenses
|
|
(3,834.9
|
)
|
|
(2,904.1
|
)
|
|
(930.8
|
)
|
|
32.1
|
%
|
|||
Operating income (loss)
|
|
93.8
|
|
|
(234.9
|
)
|
|
328.7
|
|
|
(139.9
|
)%
|
|||
Operating income (loss) as % of net sales
|
|
1.3
|
%
|
|
(4.9
|
)%
|
|
|
|
|
|
|
|||
Interest expense
|
|
(103.3
|
)
|
|
(6.0
|
)
|
|
(97.3
|
)
|
|
NM
|
|
|||
Interest and other income, net
|
|
0.4
|
|
|
0.3
|
|
|
0.1
|
|
|
33.3
|
%
|
|||
Gain on extinguishment of debt
|
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
NM
|
|
|||
Loss before (provision) benefit for income taxes
|
|
(8.3
|
)
|
|
(240.6
|
)
|
|
232.3
|
|
|
(96.6
|
)%
|
|||
(Provision) benefit for income taxes
|
|
(3.6
|
)
|
|
3.8
|
|
|
(7.4
|
)
|
|
(194.7
|
)%
|
|||
Effective tax rate
(a)
|
|
(43.4
|
)%
|
|
1.6
|
%
|
|
|
|
|
|
|
|||
Net loss
|
|
$
|
(11.9
|
)
|
|
$
|
(236.8
|
)
|
|
$
|
224.9
|
|
|
(95.0
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
$
|
(0.06
|
)
|
|
$
|
(1.46
|
)
|
|
$
|
1.40
|
|
|
(95.9
|
)%
|
Diluted
|
|
$
|
(0.06
|
)
|
|
$
|
(1.46
|
)
|
|
$
|
1.40
|
|
|
(95.9
|
)%
|
|
|
Fiscal Years Ended
|
|
|
|
|
|
||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
$ Change
|
|
% Change
|
|||||||
|
|
(millions)
|
|
|
|
|
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
ANN
|
|
$
|
2,330.9
|
|
|
$
|
—
|
|
|
$
|
2,330.9
|
|
|
NM
|
|
Justice
|
|
1,106.3
|
|
|
1,276.8
|
|
|
(170.5
|
)
|
|
(13.4
|
)%
|
|||
Lane Bryant
|
|
1,130.3
|
|
|
1,095.9
|
|
|
34.4
|
|
|
3.1
|
%
|
|||
maurices
|
|
1,101.3
|
|
|
1,060.6
|
|
|
40.7
|
|
|
3.8
|
%
|
|||
dressbarn
|
|
993.3
|
|
|
1,023.6
|
|
|
(30.3
|
)
|
|
(3.0
|
)%
|
|||
Catherines
|
|
333.3
|
|
|
346.0
|
|
|
(12.7
|
)
|
|
(3.7
|
)%
|
|||
Total net sales
|
|
$
|
6,995.4
|
|
|
$
|
4,802.9
|
|
|
$
|
2,192.5
|
|
|
45.6
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Comparable sales
(a)(b)
|
|
|
|
|
|
|
|
|
|
(5
|
)%
|
•
|
a decrease of
$150.8 million
, or
13%
, in comparable sales during Fiscal 2016 mainly as a result of an anticipated decrease in customer transactions, which was caused by the less promotional selling model;
|
•
|
incremental revenues of
$24.9 million
due to the inclusion of the 53rd week in Fiscal 2016;
|
•
|
a
$28.8 million
decrease in non-comparable stores sales, caused by
41
net store closures during Fiscal 2016; and
|
•
|
a
$15.8 million
decrease in wholesale, licensing operations and other revenues.
|
•
|
an increase of
$12.7 million
, or
1%
, in comparable sales during Fiscal 2016;
|
•
|
incremental revenues of
$18.2 million
due to the inclusion of the 53rd week in Fiscal 2016;
|
•
|
a
$2.7 million
decrease in non-comparable stores sales, as the positive effect of
30
new store openings was more than offset by
23
store closings in Fiscal 2016; and
|
•
|
a
$6.2 million
increase in other revenues.
|
•
|
a decrease of
$16.2 million
, or
2%
, in comparable sales during Fiscal 2016;
|
•
|
incremental revenues of
$18.0 million
due to the inclusion of the 53rd week in Fiscal 2016;
|
•
|
a
$36.0 million
increase in non-comparable stores sales, caused by
42
net store openings during Fiscal 2016; and
|
•
|
a
$2.9 million
increase in other revenues.
|
•
|
a decrease of
$45.5 million
, or
5%
, in comparable sales during Fiscal 2016;
|
•
|
incremental revenues of
$16.5 million
due to the inclusion of the 53rd week in Fiscal 2016;
|
•
|
a
$0.9 million
decrease in non-comparable stores sales, as the positive effect of
15
new store openings was more than offset by
30
store closings in Fiscal 2016; and
|
•
|
a
$0.4 million
decrease in other revenues.
|
•
|
an decrease of
$14.2 million
, or
4%
, in comparable sales during Fiscal 2016;
|
•
|
incremental revenues of
$4.8 million
due to the inclusion of the 53rd week in Fiscal 2016;
|
•
|
a
$3.8 million
decrease in non-comparable stores sales, caused by
4
net store closures during Fiscal 2016; and
|
•
|
a
$0.5 million
increase in other revenues.
|
|
|
Fiscal Years Ended
|
|
|
|
|
|||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
$ Change
|
|
% Change
|
|||||||
|
|
(millions)
|
|
|
|
|
|||||||||
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
ANN
|
|
$
|
13.3
|
|
|
$
|
—
|
|
|
13.3
|
|
|
NM
|
|
|
Justice
|
|
29.0
|
|
|
(62.8
|
)
|
|
91.8
|
|
|
(146.2
|
)%
|
|||
Lane Bryant
|
|
20.6
|
|
|
(308.0
|
)
|
|
328.6
|
|
|
(106.7
|
)%
|
|||
maurices
|
|
105.6
|
|
|
125.9
|
|
|
(20.3
|
)
|
|
(16.1
|
)%
|
|||
dressbarn
|
|
(13.6
|
)
|
|
10.7
|
|
|
(24.3
|
)
|
|
(227.1
|
)%
|
|||
Catherines
|
|
16.3
|
|
|
31.0
|
|
|
(14.7
|
)
|
|
(47.4
|
)%
|
|||
Unallocated acquisition and integration expenses
|
|
(77.4
|
)
|
|
(31.7
|
)
|
|
(45.7
|
)
|
|
144.2
|
%
|
|||
Total operating income (loss)
|
|
$
|
93.8
|
|
|
$
|
(234.9
|
)
|
|
$
|
328.7
|
|
|
(139.9
|
)%
|
|
|
Fiscal Years Ended
|
|
|
|
|
|||||||||
|
|
July 25,
2015 |
|
July 26,
2014 |
|
$ Change
|
|
% Change
|
|||||||
|
|
(millions, except per share data)
|
|
|
|||||||||||
Net sales
|
|
$
|
4,802.9
|
|
|
$
|
4,790.6
|
|
|
$
|
12.3
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of goods sold
|
|
(2,133.7
|
)
|
|
(2,130.6
|
)
|
|
(3.1
|
)
|
|
0.1
|
%
|
|||
Cost of goods sold as % of net sales
|
|
44.4
|
%
|
|
44.5
|
%
|
|
|
|
|
|
|
|||
Gross margin
|
|
2,669.2
|
|
|
2,660.0
|
|
|
9.2
|
|
|
0.3
|
%
|
|||
Gross margin as % of net sales
|
|
55.6
|
%
|
|
55.5
|
%
|
|
|
|
|
|
|
|||
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Buying, distribution and occupancy expenses
|
|
(856.9
|
)
|
|
(832.3
|
)
|
|
(24.6
|
)
|
|
3.0
|
%
|
|||
Buying, distribution and occupancy expenses as % of net sales
|
|
17.8
|
%
|
|
17.4
|
%
|
|
|
|
|
|
|
|||
Selling, general and administrative expenses
|
|
(1,490.9
|
)
|
|
(1,376.3
|
)
|
|
(114.6
|
)
|
|
8.3
|
%
|
|||
SG&A expenses as % of net sales
|
|
31.0
|
%
|
|
28.7
|
%
|
|
|
|
|
|
|
|||
Acquisition and integration expenses
|
|
(31.7
|
)
|
|
(34.0
|
)
|
|
2.3
|
|
|
(6.8
|
)%
|
|||
Impairment of goodwill
|
|
(261.7
|
)
|
|
—
|
|
|
(261.7
|
)
|
|
NM
|
|
|||
Impairment of intangible assets
|
|
(44.7
|
)
|
|
(13.0
|
)
|
|
(31.7
|
)
|
|
243.8
|
%
|
|||
Depreciation and amortization expense
|
|
(218.2
|
)
|
|
(193.6
|
)
|
|
(24.6
|
)
|
|
12.7
|
%
|
|||
Total other operating expenses
|
|
(2,904.1
|
)
|
|
(2,449.2
|
)
|
|
(454.9
|
)
|
|
18.6
|
%
|
|||
Operating (loss) income
|
|
(234.9
|
)
|
|
210.8
|
|
|
(445.7
|
)
|
|
(211.4
|
)%
|
|||
Operating (loss) income as % of net sales
|
|
(4.9
|
)%
|
|
4.4
|
%
|
|
|
|
|
|
|
|||
Interest expense
|
|
(6.0
|
)
|
|
(6.5
|
)
|
|
0.5
|
|
|
(7.7
|
)%
|
|||
Interest income and other income (expense), net
|
|
0.3
|
|
|
(0.8
|
)
|
|
1.1
|
|
|
(137.5
|
)%
|
|||
(Loss) income from continuing operations before benefit (provision) for income taxes
|
|
(240.6
|
)
|
|
203.5
|
|
|
(444.1
|
)
|
|
(218.2
|
)%
|
|||
Benefit (provision) for income taxes from continuing operations
|
|
3.8
|
|
|
(65.3
|
)
|
|
69.1
|
|
|
(105.8
|
)%
|
|||
Effective tax rate
(a)
|
|
1.6
|
%
|
|
32.1
|
%
|
|
|
|
|
|
|
|||
(Loss) income from continuing operations
|
|
(236.8
|
)
|
|
138.2
|
|
|
(375.0
|
)
|
|
(271.3
|
)%
|
|||
Loss from discontinued operations, net of taxes
(b)
|
|
—
|
|
|
(4.8
|
)
|
|
4.8
|
|
|
(100.0
|
)%
|
|||
Net (loss) income
|
|
$
|
(236.8
|
)
|
|
$
|
133.4
|
|
|
$
|
(370.2
|
)
|
|
(277.5
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Net (loss) income per common share - basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
(1.46
|
)
|
|
$
|
0.86
|
|
|
$
|
(2.32
|
)
|
|
(269.8
|
)%
|
Discontinued operations
|
|
—
|
|
|
(0.03
|
)
|
|
0.03
|
|
|
(100.0
|
)%
|
|||
Total net (loss) income per basic common share
|
|
$
|
(1.46
|
)
|
|
$
|
0.83
|
|
|
$
|
(2.29
|
)
|
|
(275.9
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Net (loss) income per common share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
(1.46
|
)
|
|
$
|
0.84
|
|
|
$
|
(2.30
|
)
|
|
(273.8
|
)%
|
Discontinued operations
|
|
—
|
|
|
(0.03
|
)
|
|
0.03
|
|
|
(100.0
|
)%
|
|||
Total net (loss) income per diluted common share
|
|
$
|
(1.46
|
)
|
|
$
|
0.81
|
|
|
$
|
(2.27
|
)
|
|
(280.2
|
)%
|
|
|
Fiscal Years Ended
|
|
|
|
|
|
||||||||
|
|
July 25,
2015 |
|
July 26,
2014 |
|
$ Change
|
|
% Change
|
|||||||
|
|
(millions)
|
|
|
|
|
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Justice
|
|
$
|
1,276.8
|
|
|
$
|
1,384.3
|
|
|
$
|
(107.5
|
)
|
|
(7.8
|
)%
|
Lane Bryant
|
|
1,095.9
|
|
|
1,080.0
|
|
|
15.9
|
|
|
1.5
|
%
|
|||
maurices
|
|
1,060.6
|
|
|
971.4
|
|
|
89.2
|
|
|
9.2
|
%
|
|||
dressbarn
|
|
1,023.6
|
|
|
1,022.5
|
|
|
1.1
|
|
|
0.1
|
%
|
|||
Catherines
|
|
346.0
|
|
|
332.4
|
|
|
13.6
|
|
|
4.1
|
%
|
|||
Total net sales
|
|
$
|
4,802.9
|
|
|
$
|
4,790.6
|
|
|
$
|
12.3
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Comparable sales
(a)
|
|
|
|
|
|
|
|
|
|
(1
|
)%
|
•
|
a decrease of $118.1 million, or 10%, in comparable sales during Fiscal 2015 mainly as a result of decreased store performance which was negatively impacted by reduced promotional activity;
|
•
|
a $16.7 million increase in non-comparable stores sales, as the positive effect of 30 new store openings was offset in part by 49 store closings in Fiscal 2015; and
|
•
|
a $6.1 million decrease in wholesale, licensing operations and other revenues.
|
•
|
an increase of $19.7 million, or 2%, in comparable sales during Fiscal 2015;
|
•
|
a $2.7 million decrease in non-comparable stores sales, caused by 6 net store closures during Fiscal 2015; and
|
•
|
a $1.1 million decrease in other revenues.
|
•
|
an increase of $49.5 million, or 5%, in comparable sales during Fiscal 2015;
|
•
|
a $40.4 million increase in non-comparable stores sales, primarily driven by an increase related to 29 net new store openings in Fiscal 2015; and
|
•
|
a $0.7 million decrease in other revenues.
|
•
|
a decrease of $12.8 million, or 1%, in comparable sales during Fiscal 2015;
|
•
|
an $11.3 million increase in non-comparable stores sales, caused by 4 net store openings in Fiscal 2015; and
|
•
|
a $2.6 million increase in other revenues.
|
•
|
an increase of $15.8 million, or 5%, in comparable sales during Fiscal 2015;
|
•
|
a $4.2 million decrease in non-comparable stores sales, primarily driven by a decrease related to 9 store closings in Fiscal 2015; and
|
•
|
a $2.0 million increase in other revenues.
|
|
|
Fiscal Years Ended
|
|
|
|
|
|||||||||
|
|
July 25,
2015 |
|
July 26,
2014 |
|
$ Change
|
|
% Change
|
|||||||
|
|
(millions)
|
|
|
|
|
|||||||||
Operating (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Justice
|
|
$
|
(62.8
|
)
|
|
$
|
99.3
|
|
|
$
|
(162.1
|
)
|
|
(163.2
|
)%
|
Lane Bryant
|
|
(308.0
|
)
|
|
(4.3
|
)
|
|
(303.7
|
)
|
|
7,062.8
|
%
|
|||
maurices
|
|
125.9
|
|
|
86.0
|
|
|
39.9
|
|
|
46.4
|
%
|
|||
dressbarn
|
|
10.7
|
|
|
39.4
|
|
|
(28.7
|
)
|
|
(72.8
|
)%
|
|||
Catherines
|
|
31.0
|
|
|
24.4
|
|
|
6.6
|
|
|
27.0
|
%
|
|||
Unallocated acquisition and integration expenses
|
|
(31.7
|
)
|
|
(34.0
|
)
|
|
2.3
|
|
|
(6.8
|
)%
|
|||
Total operating (loss) income
|
|
$
|
(234.9
|
)
|
|
$
|
210.8
|
|
|
$
|
(445.7
|
)
|
|
(211.4
|
)%
|
|
|
July 30,
2016 |
|
July 25,
2015 |
|
$ Change
|
||||||
|
|
(millions)
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
371.8
|
|
|
$
|
240.6
|
|
|
$
|
131.2
|
|
Short-term investments
(a)
|
|
1.8
|
|
|
13.4
|
|
|
(11.6
|
)
|
|||
Total debt
|
|
(1,648.5
|
)
|
|
(106.5
|
)
|
|
(1,542.0
|
)
|
|||
Net (debt) cash and investments
(b)
|
|
$
|
(1,274.9
|
)
|
|
$
|
147.5
|
|
|
$
|
(1,422.4
|
)
|
Equity
|
|
$
|
1,863.3
|
|
|
$
|
1,518.1
|
|
|
$
|
345.2
|
|
(a)
|
Short-term investments include restricted cash of
$1.8 million
as of July 30, 2016 and
$13.4 million
as of July 25, 2015 which are included within Prepaid expenses and other current assets in the accompanying consolidated financial statements.
|
(b)
|
“Net debt” is defined as total debt less cash and cash equivalents and short-term investments.
|
|
|
Fiscal Years Ended
|
||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
||||
|
|
(millions)
|
||||||
Net cash provided by operating activities
|
|
$
|
445.4
|
|
|
$
|
431.3
|
|
Net cash used in investing activities
|
|
(1,835.7
|
)
|
|
(298.1
|
)
|
||
Net cash provided by (used in) financing activities
|
|
1,521.5
|
|
|
(49.5
|
)
|
||
Net increase in cash and cash equivalents
|
|
$
|
131.2
|
|
|
$
|
83.7
|
|
|
|
Fiscal Years Ended
|
||||||
|
|
July 25,
2015 |
|
July 26,
2014 |
||||
|
|
(millions)
|
||||||
Net cash provided by operating activities
|
|
$
|
431.3
|
|
|
$
|
374.7
|
|
Net cash used in investing activities
|
|
(298.1
|
)
|
|
(462.7
|
)
|
||
Net cash (used in) provided by financing activities
|
|
(49.5
|
)
|
|
58.5
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
83.7
|
|
|
$
|
(29.5
|
)
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Fiscal
2017
|
|
Fiscal 2018-
2019
|
|
Fiscal 2020-
2021
|
|
Fiscal 2022
and
Thereafter
|
|
Total
|
||||||||||
|
|
(millions)
|
||||||||||||||||||
Long-term debt
|
|
$
|
54.0
|
|
|
$
|
180.0
|
|
|
$
|
180.0
|
|
|
$
|
1,305.0
|
|
|
$
|
1,719.0
|
|
Interest payments on long-term debt
|
|
89.2
|
|
|
165.0
|
|
|
146.1
|
|
|
70.9
|
|
|
471.2
|
|
|||||
Operating leases
|
|
613.3
|
|
|
979.2
|
|
|
712.8
|
|
|
745.8
|
|
|
3,051.1
|
|
|||||
Inventory purchase commitments
|
|
932.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
932.3
|
|
|||||
Other commitments
|
|
49.5
|
|
|
29.9
|
|
|
22.4
|
|
|
—
|
|
|
101.8
|
|
|||||
Total
|
|
$
|
1,738.3
|
|
|
$
|
1,354.1
|
|
|
$
|
1,061.3
|
|
|
$
|
2,121.7
|
|
|
$
|
6,275.4
|
|
•
|
Long-term debt
represents mandatory repayments of outstanding borrowings under our borrowing agreements as of July 30, 2016. In August 2016, the Company repaid $100 million, which was applied to the remaining mandatory quarterly repayments due in the second half of calendar 2016 and all required repayments for calendar 2017, such that the Company is not required to make its next quarterly repayment until calendar 2018. The table above does not reflect the effect of the $100 million payment.
|
•
|
Interest payments on long-term debt
represent interest payments related to our borrowing agreements. Interest payments on our Amended Revolving Credit Agreement, if any, were calculated based on the outstanding balance and the interest rates in effect as of July 30, 2016, as if the borrowings remain outstanding until mandatory repayment is required at expiration in August 2020. Interest payments on our Term Loan were calculated based on the interest rates in effect as of July 30, 2016 and the estimated outstanding balance, giving effect to the contractual repayments in future periods. In addition, such amounts do not reflect the August 2016 principal repayment of $100 million discussed above;
|
•
|
Operating lease obligations
represent the estimated minimum lease rental payments for the Company's real estate and operating equipment in various locations around the world and do not include incremental rentals based on a percentage of sales. Although such amounts are generally non-cancelable, certain leases are cancelable if specified sales levels are not achieved or co-tenancy requirements are not being satisfied. All future minimum rentals under these cancelable leases have been included in the above table. In addition to such amounts, the Company is normally required to pay taxes, insurance and occupancy costs relating to its leased real estate properties, which are not included in the table above; and
|
•
|
Inventory purchase commitments
represent the Company's
agreements to purchase fixed or minimum quantities of goods at determinable prices. While a portion of these commitments may be canceled at the Company's option up to 30 days prior to the vendor’s scheduled shipment date, such commitments are generally not canceled and are included in the table above.
|
•
|
Other commitments
represent contractual payments primarily related to information technology services. While these commitments may be canceled at the Company's option for a termination fee, such commitments are generally not canceled and are included in the table above.
|
|
|
(a)
|
|
(b)
|
|
(c)
|
||||
Plan Category
|
|
Number of Securities
to be Issued upon
Exercise of
Outstanding Options
|
|
Weighted-Average
Exercise Price of
Outstanding Options
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(a)
)
|
||||
Equity compensation plans approved by security holders
|
|
14,813,432
|
|
|
$
|
14.33
|
|
|
23,621,126
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
14,813,432
|
|
|
$
|
14.33
|
|
|
23,621,126
|
|
Exhibit
Number
|
|
Description
|
2.1
|
|
Agreement and Plan of Merger, dated as of May 1, 2012, among the Company, Colombia Acquisition Corp. and Charming Shoppes, Inc. is incorporated by reference to Exhibit 2.1 to the Form 8-K filed on May 2, 2012.
|
|
|
|
2.2
|
|
Agreement and Plan of Merger, dated as of May 17, 2015, among the Company, Avian Acquisition Corp. and ANN INC., is incorporated by reference to Exhibit 2.1 to the Form 8-K filed on May 18, 2015.
|
|
|
|
3(i).1
|
|
Second Amended and Restated Certificate of Incorporation of Ascena Retail Group, Inc. is incorporated by reference to Annex II to the Proxy Statement dated November 18, 2010.
|
|
|
|
3(i).2
|
|
Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Ascena Retail Group, Inc. is incorporated by reference to Exhibit 3.1 to the Form 8-K filed on January 3, 2011.
|
|
|
|
3(ii).1
|
|
By-Laws of Ascena Retail Group, Inc., as amended and restated, are incorporated by reference to Exhibit 3.1 to the Form 8-K filed on March 6, 2015.
|
|
|
|
3(ii).2
|
|
Amendment to Amended and Restated By-Laws of Ascena Retail Group, Inc., adopted November 2, 2015, is incorporated by reference to Exhibit 3.1 to the Form 8-K filed on November 3, 2015.
|
|
|
|
10.1
|
|
2016 Omnibus Incentive Plan is incorporated by reference to Annex A to the Proxy Statement dated November 3, 2015.*
|
|
|
|
10.2
|
|
Amended and Restated Executive 162(m) Bonus Plan, effective as of December 12, 2013, is incorporated by reference to Annex A to the Proxy Statement dated November 5, 2013.*
|
|
|
|
10.3
|
|
Employment Agreement dated May 2, 2002 with Elliot S. Jaffe is incorporated by reference to Exhibit 10(u)(u) to the Form 10-K filed for the fiscal year ended July 27, 2002.*
|
|
|
|
10.4
|
|
Amendment dated July 10, 2006 to Employment Agreement dated May 2, 2002 with Elliot S. Jaffe is incorporated by reference to Exhibit 99.1 to the Form 8-K filed on July 13, 2006.*
|
|
|
|
10.5
|
|
Employment Agreement dated March 5, 2014 with David Jaffe is incorporated by reference to Exhibit 10.1 to the Form 8-K filed on March 6, 2014.*
|
|
|
|
10.6
|
|
Employment Letter dated January 23, 2015 with John Pershing is incorporated by reference to Exhibit 10.6 to the Form 10-K filed for the fiscal year ended July 25, 2015.*
|
|
|
|
10.7
|
|
Employment Letter dated July 20, 2015 with Robb Giammatteo is incorporated by reference to Exhibit 10.7 to the Form 10-K filed for the fiscal year ended July 25, 2015.*
|
|
|
|
10.8
|
|
Employment Letter dated July 26, 2005 with Gene Wexler is incorporated by reference to Exhibit 10.25 to the Form 10-K filed for the fiscal year ended July 30, 2005.*
|
|
|
|
10.9
|
|
Supplemental Retirement Benefit Agreement dated August 29, 2006 with Mrs. Roslyn Jaffe is incorporated by reference to Exhibit 99.1 to the Form 8-K filed on August 30, 2006.*
|
|
|
|
10.10
|
|
Amendment and Restatement of the Company's Executive Severance Plan effective as of December 9, 2015, is incorporated by reference to Exhibit 10.1 to the Form 8-K filed on December 11, 2015.*
|
|
|
|
10.11
|
|
Form of Indemnification Agreement, adopted January 1, 2011, for Members of the Board of Directors and certain executive officers is incorporated by reference to Exhibit 10.24 to the Form 10-K filed for the fiscal year ended July 30, 2011.*
|
|
|
|
10.12
|
|
Amendment and Restatement Agreement dated as of July 24, 2015 and effective as of August 21, 2015, among the Company, the Borrowing Subsidiaries, the Loan Parties, the Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent, is incorporated by reference to Exhibit 10.1 to the Form 8-K filed on August 27, 2015.
|
|
|
|
Exhibit
Number
|
|
Description
|
10.13
|
|
Term Credit Agreement dated as of August 21, 2015 among the Company, AnnTaylor Retail, Inc., the Lenders and Goldman Sachs Bank USA, as Administrative Agent, is incorporated by reference to Exhibit 10.2 to the Form 8-K filed on August 27, 2015.
|
|
|
|
10.14
|
|
Employment Letter dated December 4, 2015 with Duane D. Holloway, filed herewith as Exhibit 10.14.*
|
|
|
|
14
|
|
Code of Ethics for the Chief Executive Officer and Senior Financial Officers is incorporated by reference to Exhibit 14 to the Form 10-K filed for the fiscal year ended July 26, 2003.
|
|
|
|
21
|
|
Subsidiaries of the Registrant, filed herewith.
|
|
|
|
23
|
|
Consent of Independent Registered Public Accounting Firm, filed herewith.
|
|
|
|
31.1
|
|
Section 302 Certification of President and Chief Executive Officer, filed herewith.
|
|
|
|
31.2
|
|
Section 302 Certification of Chief Financial Officer, filed herewith.
|
|
|
|
32.1
|
|
Section 906 Certification of President and Chief Executive Officer, filed herewith.**
|
|
|
|
32.2
|
|
Section 906 Certification of Chief Financial Officer, filed herewith.**
|
101.INS
|
|
XBRL Instance Document†
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document†
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document†
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document†
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document†
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document†
|
|
|
Ascena Retail Group, Inc.
|
|
|
|
|
|
Date: September 19, 2016
|
|
by
|
/s/ DAVID JAFFE
|
|
|
|
David Jaffe
|
|
|
|
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ ELLIOT S. JAFFE
|
|
|
|
|
Elliot S. Jaffe
|
|
Non-Executive Chairman of the Board and Founder
|
|
September 19, 2016
|
|
|
|
|
|
/s/ DAVID JAFFE
|
|
|
|
|
David Jaffe
|
|
Director, President and Chief Executive Officer (Principal Executive Officer)
|
|
September 19, 2016
|
|
|
|
|
|
/s/ KATIE J. BAYNE
|
|
|
|
|
Katie J. Bayne
|
|
Director
|
|
September 19, 2016
|
|
|
|
|
|
/s/ KATE BUGGELN
|
|
|
|
|
Kate Buggeln
|
|
Director
|
|
September 19, 2016
|
|
|
|
|
|
/s/ STEVEN L. KIRSHENBAUM
|
|
|
|
|
Steven L. Kirshenbaum
|
|
Director
|
|
September 19, 2016
|
|
|
|
|
|
/s/ KATHERINE L. KRILL
|
|
|
|
|
Katherine L. Krill
|
|
Director
|
|
September 19, 2016
|
|
|
|
|
|
/s/ RANDY L. PEARCE
|
|
|
|
|
Randy L. Pearce
|
|
Director
|
|
September 19, 2016
|
|
|
|
|
|
/s/ CARL S. RUBIN
|
|
|
|
|
Carl S. Rubin
|
|
Director
|
|
September 19, 2016
|
|
|
|
|
|
/s/ ROBB GIAMMATTEO
|
|
|
|
|
Robb Giammatteo
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
|
September 19, 2016
|
|
|
|
|
|
/s/ ERNEST LAPORTE
|
|
|
|
|
Ernest LaPorte
|
|
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
|
September 19, 2016
|
|
Page
|
|
|
Consolidated Financial Statements:
|
|
Consolidated Balance Sheets
|
F-
2
|
Consolidated Statements of Operations
|
F-
3
|
Consolidated Statements of Comprehensive (Loss) Income
|
F-
4
|
Consolidated Statements of Cash Flows
|
F-
5
|
Consolidated Statements of Equity
|
F-
6
|
Notes to Consolidated Financial Statements
|
F-
7
|
Reports of Independent Registered Public Accounting Firm
|
F-
41
|
Supplementary Information:
|
|
Quarterly Financial Information (Unaudited)
|
F-
43
|
Selected Financial Information
|
F-
44
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
|
(millions, except per share data)
|
||||||||||
Net sales
|
|
$
|
6,995.4
|
|
|
$
|
4,802.9
|
|
|
$
|
4,790.6
|
|
Cost of goods sold
|
|
(3,066.7
|
)
|
|
(2,133.7
|
)
|
|
(2,130.6
|
)
|
|||
Gross margin
|
|
3,928.7
|
|
|
2,669.2
|
|
|
2,660.0
|
|
|||
|
|
|
|
|
|
|
||||||
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
|||
Buying, distribution and occupancy expenses
|
|
(1,286.5
|
)
|
|
(856.9
|
)
|
|
(832.3
|
)
|
|||
Selling, general and administrative expenses
|
|
(2,112.3
|
)
|
|
(1,490.9
|
)
|
|
(1,376.3
|
)
|
|||
Acquisition and integration expenses
|
|
(77.4
|
)
|
|
(31.7
|
)
|
|
(34.0
|
)
|
|||
Impairment of goodwill
|
|
—
|
|
|
(261.7
|
)
|
|
—
|
|
|||
Impairment of intangible assets
|
|
—
|
|
|
(44.7
|
)
|
|
(13.0
|
)
|
|||
Depreciation and amortization expense
|
|
(358.7
|
)
|
|
(218.2
|
)
|
|
(193.6
|
)
|
|||
Total other operating expenses
|
|
(3,834.9
|
)
|
|
(2,904.1
|
)
|
|
(2,449.2
|
)
|
|||
Operating income (loss)
|
|
93.8
|
|
|
(234.9
|
)
|
|
210.8
|
|
|||
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(103.3
|
)
|
|
(6.0
|
)
|
|
(6.5
|
)
|
|||
Interest income and other income (expense), net
|
|
0.4
|
|
|
0.3
|
|
|
(0.8
|
)
|
|||
Gain on extinguishment of debt
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|||
(Loss) income from continuing operations before (provision) benefit for income taxes
|
|
(8.3
|
)
|
|
(240.6
|
)
|
|
203.5
|
|
|||
(Provision) benefit for income taxes from continuing operations
|
|
(3.6
|
)
|
|
3.8
|
|
|
(65.3
|
)
|
|||
(Loss) income from continuing operations
|
|
(11.9
|
)
|
|
(236.8
|
)
|
|
138.2
|
|
|||
Loss from discontinued operations, net of taxes
(a)
|
|
—
|
|
|
—
|
|
|
(4.8
|
)
|
|||
Net (loss) income
|
|
$
|
(11.9
|
)
|
|
$
|
(236.8
|
)
|
|
$
|
133.4
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income per common share - basic:
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
(0.06
|
)
|
|
$
|
(1.46
|
)
|
|
$
|
0.86
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
(0.03
|
)
|
|||
Total net (loss) income per basic common share
|
|
$
|
(0.06
|
)
|
|
$
|
(1.46
|
)
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income per common share – diluted:
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
(0.06
|
)
|
|
$
|
(1.46
|
)
|
|
$
|
0.84
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
(0.03
|
)
|
|||
Total net (loss) income per diluted common share
|
|
$
|
(0.06
|
)
|
|
$
|
(1.46
|
)
|
|
$
|
0.81
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
192.2
|
|
|
162.6
|
|
|
160.6
|
|
|||
Diluted
|
|
192.2
|
|
|
162.6
|
|
|
165.1
|
|
|
Fiscal Years Ended
|
||||||||||
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
(millions)
|
||||||||||
Net (loss) income
|
$
|
(11.9
|
)
|
|
$
|
(236.8
|
)
|
|
$
|
133.4
|
|
Other comprehensive loss, net of tax
:
|
|
|
|
|
|
|
|
|
|||
Net actuarial loss on a defined benefit pension plan, net of income tax benefit of $2.5 million
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustment
(a)
|
(1.3
|
)
|
|
(10.4
|
)
|
|
(1.0
|
)
|
|||
Total other comprehensive loss
|
(5.1
|
)
|
|
(10.4
|
)
|
|
(1.0
|
)
|
|||
Total comprehensive (loss) income
|
$
|
(17.0
|
)
|
|
$
|
(247.2
|
)
|
|
$
|
132.4
|
|
|
Fiscal Years Ended
|
||||||||||
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
(millions)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|||
Net (loss) income
|
$
|
(11.9
|
)
|
|
$
|
(236.8
|
)
|
|
$
|
133.4
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization expense
|
358.7
|
|
|
218.2
|
|
|
193.6
|
|
|||
Deferred income tax benefit
|
(26.8
|
)
|
|
(6.6
|
)
|
|
(17.8
|
)
|
|||
Deferred rent and other occupancy costs
|
(74.4
|
)
|
|
(39.1
|
)
|
|
(38.2
|
)
|
|||
Gain on extinguishment of debt
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on sale of assets
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|||
Amortization of acquisition-related inventory write-up
|
126.9
|
|
|
—
|
|
|
—
|
|
|||
Non-cash stock-based compensation expense
|
26.2
|
|
|
18.2
|
|
|
30.6
|
|
|||
Non-cash impairment of tangible assets
|
13.3
|
|
|
10.8
|
|
|
4.2
|
|
|||
Non-cash impairment of goodwill
|
—
|
|
|
261.7
|
|
|
—
|
|
|||
Non-cash impairment of intangible assets
|
—
|
|
|
44.7
|
|
|
13.0
|
|
|||
Non-cash interest expense, net
|
11.3
|
|
|
0.9
|
|
|
1.3
|
|
|||
Other non-cash income, net
|
(0.9
|
)
|
|
(2.4
|
)
|
|
(2.7
|
)
|
|||
Excess tax benefits from stock-based compensation
|
(1.5
|
)
|
|
—
|
|
|
(4.2
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|||
Inventories
|
111.4
|
|
|
63.9
|
|
|
(12.3
|
)
|
|||
Accounts payable, accrued liabilities and income tax liabilities
|
(133.6
|
)
|
|
54.2
|
|
|
32.8
|
|
|||
Deferred income
|
7.8
|
|
|
7.7
|
|
|
10.0
|
|
|||
Lease-related liabilities
|
52.5
|
|
|
32.6
|
|
|
46.2
|
|
|||
Other balance sheet changes, net
|
(12.8
|
)
|
|
4.9
|
|
|
5.0
|
|
|||
Changes in net assets related to discontinued operations
|
—
|
|
|
—
|
|
|
(20.2
|
)
|
|||
Net cash provided by operating activities
|
445.4
|
|
|
431.3
|
|
|
374.7
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Cash paid for the acquisition of ANN INC., net of cash acquired (Note 5)
|
(1,494.6
|
)
|
|
—
|
|
|
—
|
|
|||
Capital expenditures
|
(366.5
|
)
|
|
(312.5
|
)
|
|
(477.5
|
)
|
|||
Proceeds from the sale of assets
|
—
|
|
|
8.9
|
|
|
42.2
|
|
|||
Purchases of investments
|
(1.1
|
)
|
|
(22.3
|
)
|
|
(27.5
|
)
|
|||
Proceeds from sales and maturities of investments
|
26.5
|
|
|
27.8
|
|
|
0.1
|
|
|||
Net cash used in investing activities
|
(1,835.7
|
)
|
|
(298.1
|
)
|
|
(462.7
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Proceeds from term loan, net of original issue discount
|
1,764.0
|
|
|
—
|
|
|
—
|
|
|||
Redemptions and principal repayments of term loan
|
(77.4
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from revolver borrowings
|
1,510.5
|
|
|
832.3
|
|
|
1,249.2
|
|
|||
Repayments of revolver borrowings
|
(1,626.5
|
)
|
|
(888.3
|
)
|
|
(1,212.8
|
)
|
|||
Payment of deferred financing costs
|
(42.6
|
)
|
|
(2.2
|
)
|
|
—
|
|
|||
Purchases and retirements of common stock
|
(18.6
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from stock options exercised and employee stock purchases
|
10.6
|
|
|
8.7
|
|
|
17.9
|
|
|||
Excess tax benefits from stock-based compensation
|
1.5
|
|
|
—
|
|
|
4.2
|
|
|||
Net cash provided by (used in) financing activities
|
1,521.5
|
|
|
(49.5
|
)
|
|
58.5
|
|
|||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
131.2
|
|
|
83.7
|
|
|
(29.5
|
)
|
|||
Cash and cash equivalents at beginning of period
|
240.6
|
|
|
156.9
|
|
|
186.4
|
|
|||
|
|
|
|
|
|
||||||
Cash and cash equivalents at end of period
|
$
|
371.8
|
|
|
$
|
240.6
|
|
|
$
|
156.9
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
AOCI
|
|
|
Total
Equity
|
||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
|
(millions)
|
|||||||||||||||||||||
Balance, July 27, 2013
|
159.5
|
|
|
$
|
1.6
|
|
|
$
|
592.8
|
|
|
$
|
963.2
|
|
|
$
|
(1.2
|
)
|
|
$
|
1,556.4
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
133.4
|
|
|
—
|
|
|
133.4
|
|
|||||
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
(1.0
|
)
|
|||||
Shares issued and equity grants made pursuant to stock-based compensation plans
|
2.3
|
|
|
—
|
|
|
49.4
|
|
|
—
|
|
|
—
|
|
|
49.4
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
(0.5
|
)
|
|||||
Balance, July 26, 2014
|
161.8
|
|
|
$
|
1.6
|
|
|
$
|
642.2
|
|
|
$
|
1,096.1
|
|
|
$
|
(2.2
|
)
|
|
$
|
1,737.7
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(236.8
|
)
|
|
—
|
|
|
(236.8
|
)
|
|||||
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.4
|
)
|
|
(10.4
|
)
|
|||||
Shares issued and equity grants made pursuant to stock-based compensation plans
|
1.4
|
|
|
—
|
|
|
27.6
|
|
|
—
|
|
|
—
|
|
|
27.6
|
|
|||||
Balance, July 25, 2015
|
163.2
|
|
|
$
|
1.6
|
|
|
$
|
669.8
|
|
|
$
|
859.3
|
|
|
$
|
(12.6
|
)
|
|
$
|
1,518.1
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.9
|
)
|
|
—
|
|
|
(11.9
|
)
|
|||||
Common stock issued in connection with the acquisition of ANN INC. (Note 5)
|
31.2
|
|
|
0.3
|
|
|
344.6
|
|
|
—
|
|
|
—
|
|
|
344.9
|
|
|||||
Total other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.1
|
)
|
|
(5.1
|
)
|
|||||
Shares issued and equity grants made pursuant to stock-based compensation plans
|
1.9
|
|
|
—
|
|
|
35.9
|
|
|
—
|
|
|
—
|
|
|
35.9
|
|
|||||
Purchases and retirements of common stock
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
(18.6
|
)
|
|
|
|
(18.6
|
)
|
||||||
Balance, July 30, 2016
|
194.2
|
|
|
$
|
1.9
|
|
|
$
|
1,050.3
|
|
|
$
|
828.8
|
|
|
$
|
(17.7
|
)
|
|
$
|
1,863.3
|
|
Buildings and improvements
|
5-40 years
|
Distribution center equipment and machinery
|
3-20 years
|
Leasehold improvements
|
Shorter of the useful life or expected term of the lease
|
Furniture, fixtures, and equipment
|
2-10 years
|
Information technology
|
2-10 years
|
|
Preliminary Allocation as of the acquisition date
|
|
Measurement-Period Adjustments
|
|
Preliminary Allocation, as adjusted through July 30, 2016
|
||||||
|
(millions)
|
||||||||||
Cash and cash equivalents
|
$
|
257.6
|
|
|
$
|
—
|
|
|
$
|
257.6
|
|
Inventories
|
398.3
|
|
|
—
|
|
|
398.3
|
|
|||
Prepaid expenses and other current assets
|
100.8
|
|
|
17.7
|
|
|
118.5
|
|
|||
Property and equipment
|
451.0
|
|
|
2.3
|
|
|
453.3
|
|
|||
Goodwill
|
953.2
|
|
|
6.4
|
|
|
959.6
|
|
|||
Other intangible assets (Note 6):
|
|
|
|
|
|
||||||
Trade names
|
815.0
|
|
|
—
|
|
|
815.0
|
|
|||
Customer relationships
|
51.5
|
|
|
—
|
|
|
51.5
|
|
|||
Favorable leases
|
49.0
|
|
|
(10.6
|
)
|
|
38.4
|
|
|||
Other assets
|
3.5
|
|
|
—
|
|
|
3.5
|
|
|||
Total assets acquired
|
3,079.9
|
|
|
15.8
|
|
|
3,095.7
|
|
|||
|
|
|
|
|
|
||||||
Accounts payable
|
155.6
|
|
|
—
|
|
|
155.6
|
|
|||
Accrued expenses and other current liabilities
(a)
|
197.0
|
|
|
12.0
|
|
|
209.0
|
|
|||
Deferred income
|
46.0
|
|
|
—
|
|
|
46.0
|
|
|||
Lease-related liabilities
|
176.6
|
|
|
(1.6
|
)
|
|
175.0
|
|
|||
Deferred income taxes
|
374.1
|
|
|
—
|
|
|
374.1
|
|
|||
Other non-current liabilities
|
33.4
|
|
|
5.4
|
|
|
38.8
|
|
|||
Total liabilities assumed
|
982.7
|
|
|
15.8
|
|
|
998.5
|
|
|||
|
|
|
|
|
|
||||||
Total net assets acquired
|
$
|
2,097.2
|
|
|
$
|
—
|
|
|
$
|
2,097.2
|
|
(a)
|
As part of the
ANN
Acquisition, the Company assumed employee-related obligations of approximately
$100 million
, including approximately
$95 million
paid during Fiscal 2016. The remaining approximately
$5 million
is expected to be paid in the first half of Fiscal 2017.
|
|
For the period from August 22, 2015 to July 30, 2016
|
||
|
(millions)
|
||
Net sales
|
$
|
2,330.9
|
|
Net loss
|
$
|
(40.3
|
)
|
|
Fiscal Years Ended
|
||||||
|
July 30,
2016 |
|
July 25,
2015 |
||||
|
(millions, except per share data)
(unaudited)
|
||||||
Pro forma net sales
|
$
|
7,119.1
|
|
|
$
|
7,332.6
|
|
Pro forma net income (loss)
|
$
|
70.3
|
|
|
$
|
(254.0
|
)
|
Pro forma net income (loss) per common share:
|
|
|
|
||||
Basic
|
$
|
0.36
|
|
|
$
|
(1.31
|
)
|
Diluted
|
$
|
0.36
|
|
|
$
|
(1.31
|
)
|
|
|
ANN
|
|
Justice
|
|
Lane Bryant
|
|
maurices
|
|
Catherines
|
|
Total
|
||||||||||||
|
|
(millions)
|
||||||||||||||||||||||
Balance at July 26, 2014
|
|
$
|
—
|
|
|
$
|
103.6
|
|
|
$
|
319.1
|
|
|
$
|
130.7
|
|
|
$
|
28.0
|
|
|
$
|
581.4
|
|
Impairment losses
(a)
|
|
—
|
|
|
—
|
|
|
(261.7
|
)
|
|
—
|
|
|
—
|
|
|
(261.7
|
)
|
||||||
Balance at July 25, 2015
|
|
—
|
|
|
103.6
|
|
|
57.4
|
|
|
130.7
|
|
|
28.0
|
|
|
319.7
|
|
||||||
Acquisition-related activity (Note 5)
|
|
733.9
|
|
|
65.8
|
|
|
68.6
|
|
|
70.0
|
|
|
21.3
|
|
|
959.6
|
|
||||||
Balance at July 30, 2016
|
|
$
|
733.9
|
|
|
$
|
169.4
|
|
|
$
|
126.0
|
|
|
$
|
200.7
|
|
|
$
|
49.3
|
|
|
$
|
1,279.3
|
|
|
|
July 30, 2016
|
|
July 25, 2015
|
||||||||||||||||||||
Description
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Intangible assets subject to amortization
:
|
|
(millions)
|
||||||||||||||||||||||
Proprietary technology
|
|
$
|
5.3
|
|
|
$
|
(5.3
|
)
|
|
$
|
—
|
|
|
$
|
5.8
|
|
|
$
|
(5.8
|
)
|
|
$
|
—
|
|
Customer relationships
|
|
54.2
|
|
|
(19.9
|
)
|
|
34.3
|
|
|
2.7
|
|
|
(2.7
|
)
|
|
—
|
|
||||||
Favorable leases
|
|
38.2
|
|
|
(7.1
|
)
|
|
31.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Trade names
|
|
5.3
|
|
|
(5.3
|
)
|
|
—
|
|
|
5.3
|
|
|
(5.3
|
)
|
|
—
|
|
||||||
Total intangible assets subject to amortization
|
|
103.0
|
|
|
(37.6
|
)
|
|
65.4
|
|
|
13.8
|
|
|
(13.8
|
)
|
|
—
|
|
||||||
Intangible assets not subject to amortization
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Brands and trade names
|
|
1,192.4
|
|
|
—
|
|
|
1,192.4
|
|
|
377.4
|
|
|
—
|
|
|
377.4
|
|
||||||
Franchise rights
|
|
10.9
|
|
|
—
|
|
|
10.9
|
|
|
10.9
|
|
|
—
|
|
|
10.9
|
|
||||||
Total intangible assets not subject to amortization
|
|
1,203.3
|
|
|
—
|
|
|
1,203.3
|
|
|
388.3
|
|
|
—
|
|
|
388.3
|
|
||||||
Total intangible assets
|
|
$
|
1,306.3
|
|
|
$
|
(37.6
|
)
|
|
$
|
1,268.7
|
|
|
$
|
402.1
|
|
|
$
|
(13.8
|
)
|
|
$
|
388.3
|
|
|
Expected Amortization
|
||
|
(millions)
|
||
2017
|
$
|
12.5
|
|
2018
|
9.4
|
|
|
2019
|
7.0
|
|
|
2020
|
5.4
|
|
|
Total
|
$
|
34.3
|
|
|
|
July 30,
2016 |
|
July 25,
2015 |
||||
|
|
(millions)
|
||||||
ANN
|
|
$
|
198.6
|
|
|
$
|
—
|
|
Justice
|
|
107.5
|
|
|
136.0
|
|
||
Lane Bryant
|
|
125.8
|
|
|
126.5
|
|
||
maurices
|
|
102.0
|
|
|
103.8
|
|
||
dressbarn
|
|
86.8
|
|
|
93.3
|
|
||
Catherines
|
|
28.6
|
|
|
29.7
|
|
||
Total inventories
|
|
$
|
649.3
|
|
|
$
|
489.3
|
|
|
|
July 30,
2016 |
|
July 25,
2015 |
||||
|
|
(millions)
|
||||||
Property and Equipment:
|
|
|
|
|
|
|
||
Land
|
|
$
|
32.0
|
|
|
$
|
30.4
|
|
Buildings and improvements
|
|
250.8
|
|
|
189.3
|
|
||
Leasehold improvements
|
|
948.7
|
|
|
652.7
|
|
||
Furniture, fixtures and equipment
|
|
718.2
|
|
|
572.7
|
|
||
Information technology
|
|
572.1
|
|
|
356.2
|
|
||
Construction in progress
|
|
155.1
|
|
|
148.6
|
|
||
|
|
2,676.9
|
|
|
1,949.9
|
|
||
Less: accumulated depreciation
|
|
(1,046.8
|
)
|
|
(779.9
|
)
|
||
Property and equipment, net
|
|
$
|
1,630.1
|
|
|
$
|
1,170.0
|
|
|
Fiscal Years Ended
|
||||||||||
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
(millions)
|
||||||||||
Justice
|
$
|
2.4
|
|
|
$
|
6.4
|
|
|
$
|
0.3
|
|
Lane Bryant
|
2.8
|
|
|
0.6
|
|
|
0.9
|
|
|||
maurices
|
2.2
|
|
|
2.6
|
|
|
1.1
|
|
|||
dressbarn
|
5.9
|
|
|
1.2
|
|
|
1.9
|
|
|||
Total impairment charges
|
$
|
13.3
|
|
|
$
|
10.8
|
|
|
$
|
4.2
|
|
|
|
July 30,
2016 |
|
July 25,
2015 |
||||
|
|
(millions)
|
||||||
Prepaid expenses
|
|
$
|
132.1
|
|
|
$
|
45.6
|
|
Accounts and other receivables
|
|
84.7
|
|
|
70.8
|
|
||
Short-term investments
|
|
1.8
|
|
|
13.4
|
|
||
Other current assets
|
|
0.3
|
|
|
1.7
|
|
||
Total prepaid expenses and other current assets
|
|
$
|
218.9
|
|
|
$
|
131.5
|
|
|
|
July 30,
2016 |
|
July 25,
2015 |
||||
|
|
(millions)
|
||||||
Accrued salary, wages and related expenses
|
|
$
|
183.8
|
|
|
$
|
176.9
|
|
Accrued operating expenses
|
|
161.6
|
|
|
202.1
|
|
||
Sales and other taxes payable
|
|
34.1
|
|
|
14.2
|
|
||
Other
|
|
34.2
|
|
|
10.0
|
|
||
Total accrued expenses and other current liabilities
|
|
$
|
413.7
|
|
|
$
|
403.2
|
|
Debt consists of the following:
|
July 30,
2016 |
|
July 25,
2015 |
||||
|
(millions)
|
||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
116.0
|
|
Less: unamortized debt issuance costs
(a)
|
(5.8
|
)
|
|
(3.8
|
)
|
||
|
(5.8
|
)
|
|
112.2
|
|
||
|
|
|
|
||||
Term loan
|
1,719.0
|
|
|
—
|
|
||
Less: unamortized debt issuance costs
(b)
|
(30.1
|
)
|
|
(5.7
|
)
|
||
unamortized original issue discount
(b)
|
(34.6
|
)
|
|
—
|
|
||
|
1,654.3
|
|
|
(5.7
|
)
|
||
|
|
|
|
||||
Less: current portion
|
(54.0
|
)
|
|
—
|
|
||
Total long-term debt
|
$
|
1,594.5
|
|
|
$
|
106.5
|
|
Fiscal Year
|
|
Amount
|
||
|
|
(millions)
|
||
2017
(a)
|
|
$
|
54.0
|
|
2018
(a)
|
|
90.0
|
|
|
2019
|
|
90.0
|
|
|
2020
|
|
90.0
|
|
|
2021
|
|
90.0
|
|
|
Thereafter
|
|
1,305.0
|
|
|
Total maturities
|
|
$
|
1,719.0
|
|
Level 1
|
Quoted prices for identical instruments in active markets;
|
Level 2
|
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are recently traded (not active); and
|
Level 3
|
Instruments with little, if any, market activity are valued using significant unobservable inputs or valuation techniques.
|
|
Fair Value Measurements
|
|
As of July 30, 2016
|
|
As of July 25, 2015
|
||||||||||||
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|||||||||
|
|
|
(millions)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Available-for-sale investments
(a)
|
Level 1
|
|
$
|
1.8
|
|
|
$
|
1.8
|
|
|
$
|
13.4
|
|
|
$
|
13.4
|
|
|
|
|
$
|
1.8
|
|
|
$
|
1.8
|
|
|
$
|
13.4
|
|
|
$
|
13.4
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Term Loan
(b)
|
Level 2
|
|
$
|
1,719.0
|
|
|
$
|
1,682.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Revolving credit facility
(c)
|
Level 2
|
|
—
|
|
|
—
|
|
|
116.0
|
|
|
116.0
|
|
||||
|
|
|
$
|
1,719.0
|
|
|
$
|
1,682.5
|
|
|
$
|
116.0
|
|
|
$
|
116.0
|
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
|
(millions)
|
||||||||||
Domestic
|
|
$
|
(56.0
|
)
|
|
$
|
(303.1
|
)
|
|
$
|
144.7
|
|
Foreign
|
|
47.7
|
|
|
62.5
|
|
|
58.8
|
|
|||
Total (loss) income from continuing operations before (provision) benefit for income taxes
|
|
$
|
(8.3
|
)
|
|
$
|
(240.6
|
)
|
|
$
|
203.5
|
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
Current:
|
|
(millions)
|
||||||||||
Federal
|
|
$
|
7.7
|
|
|
$
|
(20.8
|
)
|
|
$
|
15.2
|
|
State and local
|
|
10.2
|
|
|
8.8
|
|
|
13.5
|
|
|||
Foreign
|
|
12.5
|
|
|
14.8
|
|
|
12.3
|
|
|||
|
|
30.4
|
|
|
2.8
|
|
|
41.0
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
(21.7
|
)
|
|
0.9
|
|
|
24.9
|
|
|||
State and local
|
|
(3.2
|
)
|
|
(6.5
|
)
|
|
(0.2
|
)
|
|||
Foreign
|
|
(1.9
|
)
|
|
(1.0
|
)
|
|
(0.4
|
)
|
|||
|
|
(26.8
|
)
|
|
(6.6
|
)
|
|
24.3
|
|
|||
Total provision (benefit) for income taxes from continuing operations
|
|
$
|
3.6
|
|
|
$
|
(3.8
|
)
|
|
$
|
65.3
|
|
|
Fiscal Years Ended
|
||||||||||
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
(millions)
|
||||||||||
(Benefit) provision for income taxes from continuing operations at the U.S. federal statutory rate
|
$
|
(2.9
|
)
|
|
$
|
(84.3
|
)
|
|
$
|
71.2
|
|
Increase (decrease) due to:
|
|
|
|
|
|
||||||
State and local income taxes, net of federal benefit
|
2.4
|
|
|
4.1
|
|
|
8.8
|
|
|||
Tax benefit related to deferred compensation
|
—
|
|
|
(13.7
|
)
|
|
—
|
|
|||
Goodwill impairment
|
—
|
|
|
91.6
|
|
|
—
|
|
|||
Net change relating to uncertain income tax benefits
|
3.3
|
|
|
(0.7
|
)
|
|
(2.3
|
)
|
|||
Indefinitely reinvested foreign earnings
|
0.1
|
|
|
1.7
|
|
|
(11.6
|
)
|
|||
Other – net
|
0.7
|
|
|
(2.5
|
)
|
|
(0.8
|
)
|
|||
Total provision (benefit) for income taxes from continuing operations
|
$
|
3.6
|
|
|
$
|
(3.8
|
)
|
|
$
|
65.3
|
|
|
|
July 30, 2016
(a)
|
|
July 25,
2015 |
||||
Deferred tax assets:
|
|
(millions)
|
||||||
Inventories
|
|
$
|
31.4
|
|
|
$
|
18.7
|
|
Tax credits and net operating loss carryforwards
|
|
38.3
|
|
|
18.7
|
|
||
Accrued payroll and benefits
|
|
91.5
|
|
|
78.3
|
|
||
Legal reserve
|
|
—
|
|
|
21.0
|
|
||
Share-based compensation
|
|
24.8
|
|
|
23.7
|
|
||
Straight-line rent
|
|
57.3
|
|
|
45.7
|
|
||
Federal benefit of uncertain tax positions
|
|
19.4
|
|
|
14.7
|
|
||
Other
|
|
37.4
|
|
|
19.2
|
|
||
Total deferred tax assets
|
|
300.1
|
|
|
240.0
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Depreciation
|
|
148.9
|
|
|
113.0
|
|
||
Amortization
|
|
512.8
|
|
|
168.6
|
|
||
Foreign unremitted earnings
|
|
40.1
|
|
|
32.8
|
|
||
Other
|
|
22.7
|
|
|
14.0
|
|
||
Total deferred tax liabilities
|
|
724.5
|
|
|
328.4
|
|
||
Valuation allowance
|
|
(12.9
|
)
|
|
(4.9
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(437.3
|
)
|
|
$
|
(93.3
|
)
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016
|
|
July 25,
2015
|
|
July 26,
2014
|
||||||
|
|
(millions)
|
||||||||||
Unrecognized tax benefit beginning balance
|
|
$
|
34.1
|
|
|
$
|
29.9
|
|
|
$
|
31.2
|
|
Additions related to the
ANN
Acquisition
|
|
9.6
|
|
|
—
|
|
|
—
|
|
|||
Additions related to current period tax positions
|
|
2.2
|
|
|
1.6
|
|
|
1.5
|
|
|||
Additions related to tax positions in prior years
|
|
1.0
|
|
|
6.7
|
|
|
4.3
|
|
|||
Reductions related to prior period tax positions
|
|
(3.0
|
)
|
|
(3.2
|
)
|
|
—
|
|
|||
Reductions related to settlements with taxing authorities
|
|
—
|
|
|
(0.3
|
)
|
|
(1.5
|
)
|
|||
Reductions related to expiration of statute of limitations
|
|
(0.7
|
)
|
|
(0.6
|
)
|
|
(5.6
|
)
|
|||
Unrecognized tax benefit ending balance
|
|
$
|
43.2
|
|
|
$
|
34.1
|
|
|
$
|
29.9
|
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016
|
|
July 25,
2015
|
|
July 26,
2014
|
||||||
|
|
(millions)
|
||||||||||
Accrued interest and penalties beginning balance
|
|
$
|
11.5
|
|
|
$
|
13.8
|
|
|
$
|
16.5
|
|
Additions related to the
ANN
Acquisition
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|||
Additions (reductions) charged to expense, net
|
|
1.4
|
|
|
(2.3
|
)
|
|
(2.7
|
)
|
|||
Accrued interest and penalties ending balance
|
|
$
|
17.2
|
|
|
$
|
11.5
|
|
|
$
|
13.8
|
|
A summary of occupancy costs follows:
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
|
(millions)
|
||||||||||
Base rentals
|
|
$
|
608.1
|
|
|
$
|
404.4
|
|
|
$
|
395.5
|
|
Percentage rentals
|
|
33.7
|
|
|
20.5
|
|
|
23.2
|
|
|||
Other occupancy costs, primarily CAM and real estate taxes
|
|
210.5
|
|
|
143.6
|
|
|
133.5
|
|
|||
Total
|
|
$
|
852.3
|
|
|
$
|
568.5
|
|
|
$
|
552.2
|
|
Fiscal Years
|
Minimum Operating
Lease Payments
(a) (b)
|
||
|
(millions)
|
||
2017
|
$
|
613.3
|
|
2018
|
531.9
|
|
|
2019
|
447.3
|
|
|
2020
|
388.8
|
|
|
2021
|
324.0
|
|
|
Thereafter
|
745.8
|
|
|
Total future minimum rentals
|
$
|
3,051.1
|
|
|
|
Fiscal Years Ended
|
|||||||
|
|
July 30,
2016
(a)
|
|
July 25,
2015
(a)
|
|
July 26,
2014
|
|||
|
|
(millions)
|
|||||||
Basic
|
|
192.2
|
|
|
162.6
|
|
|
160.6
|
|
Dilutive effect of stock options, restricted stock and restricted stock units
|
|
—
|
|
|
—
|
|
|
4.5
|
|
Diluted shares
|
|
192.2
|
|
|
162.6
|
|
|
165.1
|
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
|
(millions)
|
||||||||||
Compensation expense
|
|
$
|
26.2
|
|
|
$
|
18.2
|
|
|
$
|
30.6
|
|
Income tax benefit
|
|
$
|
(10.1
|
)
|
|
$
|
(6.8
|
)
|
|
$
|
(11.5
|
)
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
Expected term (years)
|
|
3.1
|
|
|
3.9
|
|
|
3.9
|
|
|||
Expected volatility
|
|
35.4
|
%
|
|
38.8
|
%
|
|
40.0
|
%
|
|||
Risk-free interest rate
|
|
1.5
|
%
|
|
1.8
|
%
|
|
1.5
|
%
|
|||
Expected dividend yield
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Weighted-average grant date fair value
|
|
$
|
4.14
|
|
|
$
|
4.97
|
|
|
$
|
7.11
|
|
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise Price
|
|
Weighted-
Average Remaining Contractual
Terms
|
|
Aggregate
Intrinsic
Value
(a)
|
|||||
|
|
(thousands)
|
|
|
|
|
(years)
|
|
(millions)
|
||||
Options outstanding – July 25, 2015
|
|
14,103.9
|
|
|
$
|
14.13
|
|
|
5.1
|
|
$
|
17.3
|
|
Granted
|
|
3,556.3
|
|
|
12.89
|
|
|
|
|
|
|
||
Exercised
|
|
(1,305.2
|
)
|
|
6.99
|
|
|
|
|
|
|
||
Canceled/Forfeited
|
|
(1,541.6
|
)
|
|
15.39
|
|
|
|
|
|
|
||
Options outstanding – July 30, 2016
|
|
14,813.4
|
|
|
$
|
14.33
|
|
|
4.8
|
|
$
|
0.9
|
|
Options vested and expected to vest at July 30, 2016
(b)
|
|
14,667.1
|
|
|
$
|
14.34
|
|
|
4.8
|
|
$
|
0.8
|
|
Options exercisable at July 30, 2016
|
|
8,202.4
|
|
|
$
|
14.02
|
|
|
4.2
|
|
$
|
0.7
|
|
(a)
|
The intrinsic value is the amount by which the market price at the end of the period of the underlying share of stock exceeds the exercise price of the stock option.
|
(b)
|
The number of options expected to vest takes into consideration estimated expected forfeitures.
|
|
Service-based
Restricted Equity Awards
|
|
Performance-based
Restricted Equity Awards
|
|
Market-based
Restricted Equity Awards
|
|||||||||||||||
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value Per
Share
|
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value Per
Share
|
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value Per
Share
|
|||||||||
|
(thousands)
|
|
|
|
(thousands)
|
|
|
|
(thousands)
|
|
|
|
||||||||
Nonvested at July 25, 2015
|
1,101.9
|
|
|
$
|
16.13
|
|
|
449.1
|
|
|
$
|
17.20
|
|
|
184.8
|
|
|
$
|
16.84
|
|
Granted
|
1,783.9
|
|
|
12.72
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Vested
|
(420.2
|
)
|
|
15.90
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Canceled/Forfeited
|
(206.8
|
)
|
|
14.49
|
|
|
(449.1
|
)
|
|
17.20
|
|
|
(184.8
|
)
|
|
16.84
|
|
|||
Nonvested at July 30, 2016
|
2,258.8
|
|
|
$
|
13.62
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Service-based
Restricted Equity Awards
|
||
Total unrecognized compensation expense at July 30, 2016 (millions)
|
$
|
15.8
|
|
Weighted-average period expected to be recognized over (years)
|
2.8
|
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
Service-based Restricted Equity Awards:
|
|
|
|
|
|
|
|
|
|
|||
Weighted-average grant date fair value of awards granted
|
|
$
|
12.72
|
|
|
$
|
13.96
|
|
|
$
|
19.23
|
|
Total fair value of awards vested (millions)
|
|
4.9
|
|
|
7.1
|
|
|
12.9
|
|
|||
|
|
|
|
|
|
|
||||||
Performance-based Restricted Equity Awards:
|
|
|
|
|
|
|
|
|||||
Weighted-average grant date fair value of awards granted
|
|
$
|
—
|
|
|
$
|
13.75
|
|
|
$
|
20.06
|
|
Total fair value of awards vested (millions)
|
|
—
|
|
|
1.4
|
|
|
2.6
|
|
|||
|
|
|
|
|
|
|
||||||
Market-based Restricted Equity Awards:
|
|
|
|
|
|
|
|
|||||
Weighted-average grant date fair value of awards granted
|
|
$
|
—
|
|
|
$
|
13.34
|
|
|
$
|
19.46
|
|
Total fair value of awards vested (millions)
|
|
—
|
|
|
—
|
|
|
0.6
|
|
•
|
ANN
segment – consists primarily of the specialty retail, outlet and ecommerce operations of the
Ann Taylor
and
LOFT
brands.
|
•
|
Justice
segment – consists of the specialty retail, outlet, ecommerce and licensing operations of the
Justice
brand.
|
•
|
Lane Bryant
segment – consists of the specialty retail, outlet and ecommerce operations of the
Lane Bryant
brand and its
Cacique
intimates label.
|
•
|
maurices
segment – consists of the specialty retail, outlet and ecommerce operations of the
maurices
brand.
|
•
|
dressbarn
segment – consists of the specialty retail, outlet and ecommerce operations of the
dressbarn
brand.
|
•
|
Catherines
segment – consists of the specialty retail and ecommerce operations of the
Catherines
brand.
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
Net sales:
|
|
(millions)
|
||||||||||
ANN
(a)
|
|
$
|
2,330.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Justice
|
|
1,106.3
|
|
|
1,276.8
|
|
|
1,384.3
|
|
|||
Lane Bryant
|
|
1,130.3
|
|
|
1,095.9
|
|
|
1,080.0
|
|
|||
maurices
|
|
1,101.3
|
|
|
1,060.6
|
|
|
971.4
|
|
|||
dressbarn
|
|
993.3
|
|
|
1,023.6
|
|
|
1,022.5
|
|
|||
Catherines
|
|
333.3
|
|
|
346.0
|
|
|
332.4
|
|
|||
Total net sales
|
|
$
|
6,995.4
|
|
|
$
|
4,802.9
|
|
|
$
|
4,790.6
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
|||
ANN
(a)(b)
|
|
$
|
13.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Justice
|
|
29.0
|
|
|
(62.8
|
)
|
|
99.3
|
|
|||
Lane Bryant
|
|
20.6
|
|
|
(308.0
|
)
|
|
(4.3
|
)
|
|||
maurices
|
|
105.6
|
|
|
125.9
|
|
|
86.0
|
|
|||
dressbarn
|
|
(13.6
|
)
|
|
10.7
|
|
|
39.4
|
|
|||
Catherines
|
|
16.3
|
|
|
31.0
|
|
|
24.4
|
|
|||
Unallocated acquisition and integration expenses
|
|
(77.4
|
)
|
|
(31.7
|
)
|
|
(34.0
|
)
|
|||
Total operating income (loss)
|
|
$
|
93.8
|
|
|
$
|
(234.9
|
)
|
|
$
|
210.8
|
|
(a)
|
The results of
ANN
for the post-acquisition period from August 22, 2015 to July 30, 2016 are included within the Company's consolidated results of operations for Fiscal 2016.
|
(b)
|
The results of
ANN
for Fiscal 2016 include approximately
$165 million
of non-cash expenses for purchase accounting adjustments, primarily related to the
$127 million
write-up of inventory to its fair value.
|
|
|
Fiscal Years Ended
|
||||||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
Depreciation and amortization expense:
|
|
(millions)
|
||||||||||
ANN
(a)
|
|
$
|
128.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Justice
|
|
72.1
|
|
|
70.2
|
|
|
60.7
|
|
|||
Lane Bryant
|
|
43.0
|
|
|
46.8
|
|
|
45.6
|
|
|||
maurices
|
|
51.3
|
|
|
43.3
|
|
|
39.5
|
|
|||
dressbarn
|
|
55.2
|
|
|
50.7
|
|
|
40.5
|
|
|||
Catherines
|
|
9.1
|
|
|
7.2
|
|
|
7.3
|
|
|||
Total depreciation and amortization expense
|
|
$
|
358.7
|
|
|
$
|
218.2
|
|
|
$
|
193.6
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures
(b)
:
|
|
|
|
|
|
|
|
|
|
|||
ANN
(a)
|
|
$
|
57.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Justice
|
|
19.8
|
|
|
51.5
|
|
|
93.5
|
|
|||
Lane Bryant
|
|
30.5
|
|
|
47.9
|
|
|
53.5
|
|
|||
maurices
|
|
70.4
|
|
|
56.3
|
|
|
54.0
|
|
|||
dressbarn
|
|
20.2
|
|
|
47.6
|
|
|
93.5
|
|
|||
Catherines
|
|
10.4
|
|
|
6.2
|
|
|
7.3
|
|
|||
Corporate
(c)
|
|
158.2
|
|
|
103.0
|
|
|
175.7
|
|
|||
Total capital expenditures
|
|
$
|
366.5
|
|
|
$
|
312.5
|
|
|
$
|
477.5
|
|
|
|
Fiscal Years Ended
|
|||||||
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
|||
|
|
(millions)
|
|||||||
Apparel
|
|
87
|
%
|
|
84
|
%
|
|
83
|
%
|
Accessories and other
|
|
13
|
%
|
|
16
|
%
|
|
17
|
%
|
Total net sales
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Fiscal Years Ended
|
||||||||||
Cash Interest and Taxes:
|
|
July 30,
2016 |
|
July 25,
2015 |
|
July 26,
2014 |
||||||
|
|
(millions)
|
||||||||||
Cash paid for interest
|
|
$
|
76.3
|
|
|
$
|
4.6
|
|
|
$
|
4.6
|
|
Cash (received) paid for income taxes
|
|
$
|
(9.2
|
)
|
|
$
|
(5.9
|
)
|
|
$
|
42.1
|
|
Fiscal Year Ended July 30, 2016
|
|
Fourth
Quarter
(a)(b)(d)(e)
|
|
Third
Quarter
(a)(d)(e)
|
|
Second
Quarter
(a)(c)(d)(e)
|
|
First
Quarter
(a)(c)(d)(e)
|
||||||||
|
|
(millions, except per share data)
|
||||||||||||||
Net sales
|
|
$
|
1,812.3
|
|
|
$
|
1,669.3
|
|
|
$
|
1,841.8
|
|
|
$
|
1,672.0
|
|
Gross margin
|
|
1,041.3
|
|
|
1,016.7
|
|
|
968.0
|
|
|
902.7
|
|
||||
Net income (loss)
|
|
13.8
|
|
|
15.0
|
|
|
(22.6
|
)
|
|
(18.1
|
)
|
||||
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.07
|
|
|
$
|
0.08
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.10
|
)
|
Diluted
|
|
$
|
0.07
|
|
|
$
|
0.08
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.10
|
)
|
Fiscal Year Ended July 25, 2015
|
|
Fourth
Quarter
(e)(f)(g)(h)
|
|
Third
Quarter
(e)(h)
|
|
Second
Quarter
(e)(h)
|
|
First
Quarter
(e)(h)
|
||||||||
|
|
(millions, except per share data)
|
||||||||||||||
Net sales
|
|
$
|
1,169.8
|
|
|
$
|
1,150.3
|
|
|
$
|
1,288.6
|
|
|
$
|
1,194.2
|
|
Gross margin
|
|
637.6
|
|
|
675.1
|
|
|
662.0
|
|
|
694.5
|
|
||||
Net (loss) income
|
|
(323.4
|
)
|
|
24.4
|
|
|
8.7
|
|
|
53.5
|
|
||||
Net (loss) income per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(1.98
|
)
|
|
$
|
0.15
|
|
|
$
|
0.05
|
|
|
$
|
0.33
|
|
Diluted
|
|
$
|
(1.98
|
)
|
|
$
|
0.15
|
|
|
$
|
0.05
|
|
|
$
|
0.32
|
|
(a)
|
Fiscal 2016 includes the post-acquisition results of
ANN
which was acquired on August 21, 2015.
ANN
's first, second and third quarters of Fiscal 2016 ended October 31, 2015, January 30, 2016 and April 30, 2016, respectively, whereas the first, second and third quarters of Fiscal 2016 for the Company's other segments ended October 24, 2015, January 23, 2016 and April 23, 2016, respectively. The effect of the one-week reporting period difference is not material. All segments of the Company are on the same fiscal calendar at the end of Fiscal 2016.
|
(c)
|
During the third quarter of Fiscal 2016, the Company determined that, for the first six months of Fiscal 2016, an expense for
ANN
which should have been classified as Buying, distribution and occupancy expenses, had been incorrectly classified as Cost of goods sold. As a result, the Company restated its prior period information by reclassifying these costs of $6.6 million for the first quarter of Fiscal 2016 and $9.9 million for the second quarter of Fiscal 2016 to Buying, distribution and occupancy expenses from Cost of goods sold, thereby increasing Gross margin. This change had no effect on Net income (loss) or Net income (loss) per common share for any period.
|
(g)
|
In the
fourth quarter of Fiscal 2015, the Company established a legal reserve of approximately $51 million in connection with the
Justice
pricing lawsuits. Refer to Note 14 to the consolidated financial statements for additional information.
|
|
|
Fiscal Years Ended
(a)
|
||||||||||||||||||
|
|
July 30,
2016
(b)(c)(g)
|
|
July 25,
2015
(c)(d)(e)(f)
|
|
July 26,
2014
(c)(d)(f)
|
|
July 27,
2013
(c)(f)(g)
|
|
July 28,
2012
(c)(h)
|
||||||||||
|
|
(millions, except for share data)
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
||||||||||||||||||
Net sales
|
|
$
|
6,995.4
|
|
|
$
|
4,802.9
|
|
|
$
|
4,790.6
|
|
|
$
|
4,714.9
|
|
|
$
|
3,353.3
|
|
Impairment of goodwill
|
|
—
|
|
|
(261.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impairment of intangible assets
|
|
—
|
|
|
(44.7
|
)
|
|
(13.0
|
)
|
|
—
|
|
|
—
|
|
|||||
Depreciation and amortization expense
|
|
(358.7
|
)
|
|
(218.2
|
)
|
|
(193.6
|
)
|
|
(176.0
|
)
|
|
(107.4
|
)
|
|||||
Operating income (loss)
|
|
93.8
|
|
|
(234.9
|
)
|
|
210.8
|
|
|
265.3
|
|
|
292.6
|
|
|||||
(Loss) income from continuing operations
|
|
(11.9
|
)
|
|
(236.8
|
)
|
|
138.2
|
|
|
155.2
|
|
|
171.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income from continuing operations per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
(0.06
|
)
|
|
$
|
(1.46
|
)
|
|
$
|
0.86
|
|
|
$
|
0.99
|
|
|
$
|
1.12
|
|
Diluted
|
|
(0.06
|
)
|
|
(1.46
|
)
|
|
0.84
|
|
|
$
|
0.95
|
|
|
$
|
1.08
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
$
|
371.8
|
|
|
$
|
240.6
|
|
|
$
|
156.9
|
|
|
$
|
186.4
|
|
|
$
|
164.3
|
|
Working capital
(i)(j)
|
|
226.3
|
|
|
232.2
|
|
|
291.7
|
|
|
306.3
|
|
|
325.6
|
|
|||||
Total assets
(i)(j)
|
|
5,506.3
|
|
|
2,906.2
|
|
|
3,118.6
|
|
|
2,865.2
|
|
|
2,800.0
|
|
|||||
Total debt
(j)
|
|
1,648.5
|
|
|
106.5
|
|
|
166.8
|
|
|
129.1
|
|
|
319.5
|
|
|||||
Total equity
|
|
$
|
1,863.3
|
|
|
$
|
1,518.1
|
|
|
$
|
1,737.7
|
|
|
$
|
1,556.4
|
|
|
$
|
1,340.9
|
|
Incentive Compensation:
|
Annually, you will be eligible for a target bonus of 60% of your base salary (pays up to a maximum of 200%) which is based on a combination of individual performance, Ascena company results. The bonus is weighted 40% for the Fall season, 40% for Spring season and 20% for individual performance. The bonus will be paid out in two portions following the end of each six month fiscal season (Fall and Spring) and will be prorated based on your start date. The bonus stipulates that you must be employed by Ascena at the time of the bonus payout.
|
Annual Equity Award:
|
Equity is generally awarded in the first quarter of the fiscal year (typically in September). You will be eligible to be considered for equity in Fall 2016 (subject to Board of Directors approval). The price and timing of your equity grant will be
|
Sign-On Bonus:
|
You will receive a one-time sign-on bonus of $125,000, payable, less applicable taxes, with your first paycheck.
|
New Hire Equity Award:
|
You will be recommended to receive the equivalent of $57,000 in non-qualified stock options of Ascena Common Stock (symbol ASNA). This recommendation will be made at the next, regularly scheduled, quarterly Compensation Committee Meeting of the Board of Directors. As of the date of this approval, these options will be granted and the price will be determined. Vesting will begin on the one year anniversary of the approval date, and these options will be vested over 3 years with equal vested at the end of each year.
|
New Hire Equity Award:
|
You will be recommended to receive the equivalent of $57,000 in restricted stock units (RSUs) of Ascena Common Stock (symbol ASNA). This recommendation will be made at the next, regularly scheduled, quarterly Compensation Committee Meeting of the Board of Directors. These RSUs will have a 3 year vesting schedule, with equal vesting at the end of each year.
|
Benefits:
|
You will be entitled to participate in Ascena Retail Group, Inc. benefit plans the first of the month coincident with or next following your first 30 days of employment and subject to the eligibility of such plans. Currently, these benefits include medical/pharmacy, dental, vision and life insurance. Enrollment information on these benefits will be forwarded to you from the Benefits Department prior to your eligibility date.
|
401(k) Retirement Plan:
|
Upon completion of your eligibility requirements, you will be eligible to participate in the 401(k) Plan. You must work 1 year, 1,000 hours and be at least age 21. The plan allows you the opportunity to defer as much as 75%, up to the IRS limit, into
|
Executive Retirement Plan:
|
Non-qualified Deferred Compensation: You will be eligible to participate in the Executive Retirement Plan (ERP), on the first calendar quarter following your date of hire. The ERP is a non-qualified deferred compensation plan for executives, sponsored by Ascena Retail Group, Inc. The ERP provides you with the following benefits:
|
Time Off Awards:
|
Vacation: You will accrue vacation time with each paycheck (based on all hours paid) beginning immediately upon hire and will be eligible for up to 20 days’ vacation annually. Any accrued but unused vacation will be paid upon termination.
|
Associate Discount:
|
You will be eligible to receive a discount at all dressbarn, maurices, Justice, Lane Bryant, Catherines, Ann Taylor, LOFT and Lou & Grey locations. Refer to the associate discount policy for additional details.
|
Relocation:
|
You will be eligible for relocation benefits under the provision of the Tier I Relocation Policy (attached).
|
|
or for termination without Cause. If you are terminated without Cause you will
|
|
$ Value at Offer
|
Annualized Base Salary
|
$400,000
|
Incentive Cash Bonus – (60%) Target Annually
|
$240,000
|
Total Cash Compensation
|
$640,000
|
New Hire Sign-on Bonus
|
$125,000
|
New Hire Stock Option Grant
Non-Qualified Stock Options with 3 year vesting schedule
|
$57,000
|
New Hire Restricted Stock Grant
RSUs with 3 year vesting schedule
|
$57,000
|
2017 Long Term Incentive Plan Bonus
Cash-Settled LTIP Opportunity
|
$57,000
|
2018 Long Term Incentive Plan Bonus
Cash-Settled LTIP Opportunity
|
$114,000
|
Executive Retirement Plan (ERP)
Non-Qualified Deferred Compensation
100% Company Match up to 5%
Eligible for 401(k) after 1 year of employment
|
$40,550
|
Benefits
(estimated at 10% of base pay)
|
$40,000
|
Total Annualized Compensation
|
$1,130,550
|
|
|
State of Incorporation
|
Subsidiaries of Ascena Retail Group, Inc.
|
|
or Formation
|
|
|
|
The Dress Barn, Inc.
|
|
Connecticut
|
|
|
|
Maurices Incorporated
|
|
Delaware
|
|
|
|
Tween Brands, Inc. d/b/a “Justice”
|
|
Delaware
|
|
|
|
Charming Shoppes, Inc.
|
|
Pennsylvania
|
|
|
|
GC Fulfillment, LLC
|
|
Delaware
|
|
|
|
Etna Retail DC, LLC
|
|
Delaware
|
|
|
|
Ascena Trade Services, LLC
|
|
Delaware
|
|
|
|
ANN INC.
|
|
Delaware
|
|
|
|
Subsidiaries of The Dress Barn, Inc.
|
|
|
|
|
|
DBX Inc.
|
|
New York
|
|
|
|
Dress Barn Credit Management, LLC
|
|
Virginia
|
|
|
|
933 Inspiration, LLC
|
|
Delaware
|
|
|
|
Subsidiaries of Maurices Incorporated
|
|
|
|
|
|
Maurices Credit Management, Inc.
|
|
Virginia
|
|
|
|
Duluth Holdings, LLC
|
|
Minnesota
|
|
|
|
Duluth Real Estate, LLC
|
|
Delaware
|
|
|
|
Subsidiaries of Tween Brands, Inc.
|
|
|
|
|
|
Tween Brands Store Planning, Inc.
|
|
Ohio
|
|
|
|
Tween Brands Purchasing, Inc.
|
|
Ohio
|
|
|
|
Tween Brands Direct Services, Inc.
|
|
Ohio
|
|
|
|
Tween Brands Direct, LLC
|
|
Ohio
|
|
|
|
Tween Brands Agency, Inc.
|
|
Ohio
|
|
|
|
Tween Brands Investment, LLC
|
|
Ohio
|
|
|
|
Too G.C., LLC
|
|
Ohio
|
|
|
|
Tween Brands Service Co.
|
|
Ohio
|
|
|
|
Ascena Global Sourcing Hong Kong Limited
|
|
Hong Kong
|
|
|
|
Worldwide Retail Holdings, Inc.
|
|
Delaware
|
|
|
|
Worldwide Retail Holdings, B.V.
|
|
Netherlands
|
|
|
|
Ascena Holdings, B.V.
|
|
Netherlands
|
Worldwide Retail Holdings, Cooperatief UA
|
|
Netherlands
|
|
|
|
Tween Brands Canada Stores Ltd.
|
|
Ontario, Canada
|
|
|
|
Ascena Global Sourcing (Shanghai) Limited
|
|
Shanghai, China
|
|
|
|
Maurices Canada Stores, Ltd.
|
|
Ontario, Canada
|
|
|
|
Dress Barn Canada Stores, Ltd.
|
|
Ontario, Canada
|
|
|
|
Kirkstone Company Limited
|
|
Hong Kong
|
|
|
|
CSI Trade Services Limited
|
|
Hong Kong
|
|
|
|
FSHC, LLC
|
|
Delaware
|
|
|
|
Huambo Limited
|
|
Hong Kong
|
|
|
|
Saddle Sound Company Limited
|
|
Hong Kong
|
|
|
|
Trimoland Limited
|
|
Hong Kong
|
|
|
|
Yardarm Trading Limited
|
|
Hong Kong
|
|
|
|
LB International Sales Limited
|
|
Hong Kong
|
|
|
|
Kirkstone India Private Limited
|
|
India
|
|
|
|
Subsidiaries of Charming Shoppes, Inc.
|
|
|
|
|
|
C.S.A.C. LLC
|
|
Delaware
|
|
|
|
C.S.F. Corp.
|
|
Delaware
|
|
|
|
C.S.I.C., Inc.
|
|
Delaware
|
|
|
|
Catalog Fulfillment Co, Inc.
|
|
Arizona
|
|
|
|
Catalog Receivables LLC
|
|
Delaware
|
|
|
|
Catalog Seller LLC
|
|
Delaware
|
|
|
|
Catherines Partners-Washington, G.P.
|
|
Washington
|
|
|
|
Catherines Stores Corporation
|
|
Tennessee
|
|
|
|
Catherines Woman Delaware, Inc.
|
|
Delaware
|
|
|
|
Catherines Woman Michigan, Inc.
|
|
Michigan
|
|
|
|
Catherines, Inc.
|
|
Delaware
|
|
|
|
Catherines.com, Inc.
|
|
Tennessee
|
|
|
|
CCTM, Inc.
|
|
Delaware
|
|
|
|
Charm-Fin Stores, Inc.
|
|
Delaware
|
|
|
|
Charming Direct, Inc.
|
|
Delaware
|
|
|
|
Charming Shoppes Interactive, Inc.
|
|
Delaware
|
|
|
|
Charming Shoppes of Delaware, Inc.
|
|
Pennsylvania
|
|
|
|
Charming Shoppes Receivables Corp.
|
|
Delaware
|
|
|
|
Charming Shoppes Seller, Inc.
|
|
Delaware
|
|
|
|
Charming Shoppes Street, Inc.
|
|
Delaware
|
|
|
|
Chestnut Acquisition Sub, Inc.
|
|
Delaware
|
|
|
|
Crosstown Traders, Inc.
|
|
Delaware
|
|
|
|
CS Holdco II Inc.
|
|
Delaware
|
|
|
|
CS Investment Company
|
|
Delaware
|
|
|
|
CSD Acquisition Corp.
|
|
Delaware
|
|
|
|
CSGC, Inc.
|
|
Ohio
|
|
|
|
Lane Bryant Charities, Inc.
|
|
Pennsylvania
|
|
|
|
CSI Industries, Inc.
|
|
Delaware
|
|
|
|
CSIM, Inc.
|
|
Delaware
|
|
|
|
CSPE, LLC
|
|
Pennsylvania
|
|
|
|
Fashion Apparel Sourcing, Inc.
|
|
Delaware
|
|
|
|
Fashion Bug of California, Inc.
|
|
California
|
|
|
|
Fashion Service LLC
|
|
Delaware
|
|
|
|
Fashion Service Fulfillment Corporation
|
|
Delaware
|
|
|
|
FB Distro, Inc.
|
|
Indiana
|
|
|
|
FBGC, Inc.
|
|
Ohio
|
|
|
|
Fashion Bug Retail Companies, LLC
|
|
Delaware
|
|
|
|
Charming Sales Co. Two, Inc.
|
|
Wisconsin
|
|
|
|
Charming Sales Co. Four, Inc.
|
|
Wisconsin
|
|
|
|
Charming Sales Co. Three, Inc.
|
|
Wisconsin
|
|
|
|
Charming Sales Co. One, Inc.
|
|
Wisconsin
|
|
|
|
Home ETC, Inc.
|
|
Delaware
|
|
|
|
KAFCO Development Co., Inc.
|
|
Pennsylvania
|
|
|
|
Lane Bryant of Pennsylvania, Inc.
|
|
Pennsylvania
|
|
|
|
Lane Bryant Purchasing Corp.
|
|
Ohio
|
|
|
|
Lane Bryant, Inc.
|
|
Delaware
|
|
|
|
Lane Bryant Woman Catalog, Inc.
|
|
Delaware
|
|
|
|
LOS #8257, LLC
|
|
Arizona
|
|
|
|
Modern Woman Holdings, Inc.
|
|
Delaware
|
|
|
|
Modern Woman Specialty, Inc.
|
|
California
|
|
|
|
Petite Sophisticate, Inc.
|
|
Delaware
|
|
|
|
PSTM, Inc.
|
|
Delaware
|
|
|
|
Rolla #2685 Development Co., Inc.
|
|
Missouri
|
|
|
|
Shoetrader, Inc.
|
|
Pennsylvania
|
|
|
|
Sonsi, Inc.
|
|
Delaware
|
|
|
|
Spirit of America, Inc.
|
|
Deleware
|
|
|
|
White Marsh Distribution, LLC
|
|
Maryland
|
|
|
|
Winks Lane, Inc.
|
|
Pennsylvania
|
|
|
|
Yucca #2524 Development Co., Inc.
|
|
California
|
Subsidiaries of ANN INC.
|
|
|
|
|
|
AnnTaylor, Inc.
|
|
Delaware
|
|
|
|
Annco, Inc.
|
|
Delaware
|
|
|
|
AnnTaylor Retail, Inc.
|
|
Florida
|
|
|
|
ANN Cards Services, Inc.
|
|
Florida
|
|
|
|
AnnTaylor Distribition Services, Inc.
|
|
Delaware
|
|
|
|
ANN Canada Inc.
|
|
Canada (federal)
|
|
|
|
AnnTaylor Sourcing Far East Limited
|
|
Hong Kong
|
|
|
|
AnnTaylor of Puerto Rico, Inc.
|
|
Puerto Rico
|
|
|
|
AnnTaylor Trading (Shanghai) Co., Ltd.
|
|
Shanghai, China
|
Date: September 19, 2016
|
|
/s/ David Jaffe
|
|
David Jaffe
|
|
President, Chief Executive Officer and Director
|
Date: September 19, 2016
|
|
/s/ Robb Giammatteo
|
|
Robb Giammatteo
|
|
Executive Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ David Jaffe
|
|
David Jaffe
|
|
President, Chief Executive Officer and Director
|
|
September 19, 2016
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Robb Giammatteo
|
|
Robb Giammatteo
|
|
Executive Vice President and Chief Financial Officer
|
|
September 19, 2016
|