# Citi Trends Inc: Form 10-Q for the period ended Nov 2, 2013

- Company: [Citi Trends Inc](/companies/ctrn.md) (CIK 1318484)
- Form: 10-Q
- Filed: 2013-12-11
- Accepted by EDGAR: Dec 11, 2013, 10:01 ET
- Period: 2013-11-02
- Accession: 0001104659-13-089558
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1318484/000110465913089558/a13-21193_110q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1318484/000110465913089558/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2013-11-02.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2013-08-04 to 2013-11-02 | $145.4m | us-gaap:SalesRevenueGoodsNet |
| Revenue | 9 months, 2013-02-03 to 2013-11-02 | $465.0m | us-gaap:SalesRevenueGoodsNet |
| Cost of revenue | 3 months, 2013-08-04 to 2013-11-02 | $92.1m | us-gaap:CostOfGoodsSold |
| Cost of revenue | 9 months, 2013-02-03 to 2013-11-02 | $294.9m | us-gaap:CostOfGoodsSold |
| Gross profit | 3 months, 2013-08-04 to 2013-11-02 | $53.3m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2013-02-03 to 2013-11-02 | $170.1m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2013-08-04 to 2013-11-02 | $52.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2013-02-03 to 2013-11-02 | $156.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2013-08-04 to 2013-11-02 | −$3.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2013-02-03 to 2013-11-02 | −$2.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2013-08-04 to 2013-11-02 | $49.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2013-02-03 to 2013-11-02 | $145.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2013-08-04 to 2013-11-02 | −$1.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2013-02-03 to 2013-11-02 | −$1.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2013-08-04 to 2013-11-02 | −$1.7m | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Net income | 9 months, 2013-02-03 to 2013-11-02 | −$1.0m | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Diluted EPS | 3 months, 2013-08-04 to 2013-11-02 | −$0.11 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2013-02-03 to 2013-11-02 | −$0.07 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2013-08-04 to 2013-11-02 | −$0.11 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2013-02-03 to 2013-11-02 | −$0.07 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2013-08-04 to 2013-11-02 | 14,815,107 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2013-02-03 to 2013-11-02 | 14,789,320 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2013-02-03 to 2013-11-02 | $35.9m | us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations |
| Capital expenditure | 9 months, 2013-02-03 to 2013-11-02 | $7.8m | us-gaap:PaymentsToAcquireProductiveAssets |
| Cash and equivalents | at 2013-11-02 | $47.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2013-11-02 | $207.9m | us-gaap:AssetsCurrent |
| Total assets | at 2013-11-02 | $295.9m | us-gaap:Assets |
| Current liabilities | at 2013-11-02 | $90.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2013-11-02 | $99.2m | us-gaap:Liabilities |
| Shareholders' equity | at 2013-11-02 | $196.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 23,927 characters.

### Forward-Looking Statements

Except for specific historical information, many of the matters discussed in this Form 10-Q may express or imply projections of revenues or expenditures, statements of plans and objectives for future operations, growth or initiatives, statements of future economic performance, or statements regarding the outcome or impact of pending or threatened litigation. These, and similar statements, are forward-looking statements concerning matters that involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from those expressed or implied by these statements. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. The words “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “objective,” “forecast,” “goal,” “intend,” “will likely result,” or “will continue” and similar words and expressions generally identify forward-looking statements. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in the forward-looking statements.

The factors that may result in actual results differing from such forward-looking information include, but are not limited to: transportation and distribution delays or interruptions; changes in freight rates; the Company’s ability to negotiate effectively the cost and purchase of merchandise; inventory risks due to shifts in market demand; the Company’s ability to gauge fashion trends and changing consumer preferences; changes in consumer spending on apparel; changes in product mix; interruptions in suppliers’ businesses; a deterioration in general economic conditions caused by acts of war or terrorism or other factors; temporary changes in demand due to weather patterns; seasonality of the Company’s business; delays associated with building, opening and operating new stores; delays associated with building, opening or expanding new or existing distribution centers; and other factors described in the section titled “Item 1A. Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013 and in Part II, “Item 1A. Risk Factors” and elsewhere in the Company’s Quarterly Reports on Form 10-Q and any amendments thereto and in the other documents the Company files with the SEC, including reports on Form 8-K.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. Except as may be required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this Form 10-Q or to reflect the occurrence of unanticipated events. Readers are advised, however, to read any further disclosures the Company may make on related subjects in its public disclosures or documents filed with the SEC, including reports on Form 8-K.

### Overview

We are a value-priced retailer of urban fashion apparel and accessories for the entire family. Our merchandise offerings are designed to appeal to the preferences of fashion conscious consumers, particularly African-Americans. We operated 505 stores in both urban and rural markets in 29 states as of November 2, 2013.

We measure performance using key operating statistics. One of the main performance measures we use is comparable store sales growth. We define a comparable store as a store that has been opened for an entire fiscal year. Therefore, a store will not be considered a comparable store until its 13th month of operation at the earliest or until its 24th month at the latest. As an example, stores opened in fiscal 2012 and fiscal 2013 are not considered comparable stores in fiscal 2013. Relocated and expanded stores are included in the comparable store sales results. We also use other operating statistics, most notably average sales per store, to measure our performance. As we typically occupy existing space in established shopping centers rather than sites built specifically for our stores, store square footage (and therefore sales per square foot) varies by store. We focus on overall store sales volume as the critical driver of profitability.

In addition to sales, we measure gross profit as a percentage of sales and store operating expenses, with a particular focus on labor, as a percentage of sales. These results translate into store level contribution, which we use to evaluate overall performance of each individual store. Finally, we monitor corporate expenses against budgeted amounts. All of the statistics discussed above are critical components of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA (comprised of EBITDA, as adjusted for non-cash asset impairment expense and infrequent significant items, such as the gain on sale of our former distribution center in fiscal 2013), which are considered our most important operating statistics. Although EBITDA and Adjusted EBITDA provide useful information on an operating cash flow basis, they are limited measures in that they exclude the impact of cash requirements for capital expenditures, income taxes and interest expense. Therefore, EBITDA and Adjusted EBITDA should be used as supplements to results of operations and cash flows as reported under U.S. GAAP and should not be used as a singular measure of operating performance or as a substitute for U.S. GAAP results. Provided below is a reconciliation of net income to EBITDA and to Adjusted EBITDA for the thirty-nine and thirteen week periods ended November 2, 2013 and October 27, 2012:

|  | Thirty-Nine Weeks Ended November 2, 2013 | October 27, 2012 | Thirteen Weeks Ended November 2, 2013 | October 27, 2012 |
| --- | ---: | ---: | ---: | ---: |
| Net loss | $(1,001) | $(1,521) | $(1,672) | $(3,700) |
| Plus: |  |  |  |  |
| Interest expense | 145 | 163 | 49 | 50 |
| Income tax expense | — | — | — | — |
| Depreciation and amortization | 16,716 | 18,153 | 5,454 | 5,970 |
| Less: |  |  |  |  |
| Interest income | (213) | (194) | (78) | (66) |
| Income tax benefit | (1,201) | (1,736) | (1,643) | (2,869) |
| EBITDA | 14,446 | 14,865 | 2,110 | (615) |
| Asset impairment | 1,237 | 660 | 556 | 660 |
| Gain on sale of former distribution center | (1,526) | — | (1,526) | — |
| Adjusted EBITDA | $14,157 | $15,525 | $1,140 | $45 |

### Accounting Periods

The following discussion contains references to fiscal years 2013 and 2012, which represent fiscal years ending or ended on February 1, 2014 and February 2, 2013, respectively. Fiscal 2013 has a 52-week accounting period and fiscal 2012 had a 53-week accounting period. This discussion and analysis should be read with the unaudited condensed consolidated financial statements and the notes thereto.

### Results of Operations

The following discussion of the Company’s financial performance is based on the unaudited condensed consolidated financial statements set forth herein. The nature of the Company’s business is seasonal. Historically, sales in the first and fourth quarters have been higher than sales achieved in the second and third quarters of the fiscal year. Expenses and, to a greater extent, operating income, vary by quarter. Results of a period shorter than a full year may not be indicative of results expected for the entire year. Furthermore, the seasonal nature of the Company’s business may affect comparisons between periods.

### Thirty-nine Weeks Ended November 2, 2013 and October 27, 2012

*Net Sales.* Net sales decreased $14.0 million, or 2.9%, to $465.0 million in the thirty-nine weeks ended November 2, 2013 from $479.0 million in the thirty-nine weeks ended October 27, 2012. The sales comparison to the prior year for the thirty-nine weeks ended November 2, 2013 is affected by the calendar shift created by fiscal 2012 having 53 weeks. The thirty-nine weeks ended November 2, 2013 began and ended one week later on the calendar than the thirty-nine weeks ended October 27, 2012. This calendar shift had a significant impact on the thirty-nine week sales comparison because the beginning and ending weeks of the period affected by the shift had varying levels of sales volume. In the thirty-nine weeks ended November 2, 2013, the comparison of sales to last year’s fiscal thirty-nine weeks was adversely affected by $8.9 million due to the difference in the sales levels of such beginning and ending weeks. In addition to the effect of the calendar shift, sales declined $4.6 million due to a 1.0% decrease in comparable store sales on a comparable weeks basis. This sales decrease in the 500 comparable stores was reflected in an average unit sale that was 8% lower, partially offset by a 5% increase in the number of customer transactions and a 2% increase in the average number of items per transaction. Comparable store sales changes by major merchandise class were as follows in the thirty-nine weeks ended November 2, 2013: Accessories +15%; Home +15%; Kids 0%; Men’s -6%; and Ladies’ -12%. Lastly, the eleven stores closed in 2012 and 2013, net of five new stores, accounted for a decrease of $0.5 million in sales.

*Gross Profit.* Gross profit decreased $0.2 million, or 0.1%, to $170.1 million in the thirty-nine weeks ended November 2, 2013 from $170.3 million in the thirty-nine weeks ended October 27, 2012. The decrease in gross profit is a result of the decrease in sales discussed above, almost entirely offset by an increase in the gross margin to 36.6% from 35.5% in last year’s first thirty-nine weeks. The higher gross margin was due primarily to an 80 basis points increase in the core merchandise margin (initial mark-up, net of markdowns) as a result of the need for a lower level of markdowns this year due to a much more conservative inventory level in 2013. The remainder of the gross margin improvement was due to lower freight costs resulting from a change to a new carrier with lower rates and lower shipping volume associated with the reduction in inventory levels.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses increased $1.3 million, or 0.8%, to $156.0 million in the first thirty-nine weeks of 2013 from $154.7 million in the first thirty-nine weeks of 2012. As a percentage of sales, selling, general and administrative expenses increased to 33.5% in the first thirty-nine weeks of fiscal 2013 from 32.3% in the first thirty-nine weeks of fiscal 2012, due to (1) the deleveraging effect associated with the $14.0 million decline in sales discussed above; in particular, the calendar shift that adversely impacted the sales comparison by $8.9 million had very little effect on expenses, resulting in expense deleverage of approximately 60 basis points, and (2) higher incentive compensation in the first thirty-nine weeks of this year totaling $1.1 million due to improved financial performance relative to budget in 2013.

*Depreciation and Amortization.* Depreciation and amortization expense decreased $1.5 million, or 7.9%, to $16.7 million in the thirty-nine weeks ended November 2, 2013 from $18.2 million in the thirty-nine weeks ended October 27, 2012, due to the slowing of our store opening pace in 2012 and 2013 in relation to previous years.

*Asset Impairment.* Impairment charges for property and equipment at certain underperforming stores increased $0.5 million to $1.2 million in the first thirty-nine weeks of 2013 from $0.7 million in the first thirty-nine weeks of 2012.

*Gain on Sale of Former Distribution Center.* During the third quarter, we sold a previously closed distribution center in Savannah, Georgia for $2.9 million, resulting in a gain of $1.5 million.

*Income Tax Benefit.* Income tax benefit decreased $0.5 million to $1.2 million in this year’s first thirty-nine weeks from $1.7 million in the first thirty-nine weeks of 2012 due to a reduction in pretax loss, partially offset by an increase in the effective income tax rate to 54.5% from 53.3%. The income tax rate for the first thirty-nine weeks of 2013 was higher than the rate for last year’s first thirty-nine weeks because of a benefit from Work Opportunity Tax Credits (WOTC), which were were not available in last year’s first thirty-nine weeks. In 2012, Congress did not extend WOTC legislation allowing for such benefits until after the third quarter, therefore, no benefit from such credits was recorded through the third quarter of 2012. The benefit from WOTC in 2013 was partially offset by an increase in income tax expense of $0.4 million which resulted from an increase in a valuation allowance in the second quarter of 2013. Such increase occurred when the Company concluded that its ability to utilize certain tax credits in one state was no longer more likely than not.

*Net Loss.* Net loss decreased to $1.0 million in the first thirty-nine weeks of 2013 from $1.5 million in the first thirty-nine weeks of 2012 due to the factors discussed above.

### Thirteen Weeks Ended November 2, 2013 and October 27, 2012

*Net Sales.* Net sales decreased $3.6 million, or 2.4%, to $145.4 million in the third quarter of 2013 from $149.0 million in the third quarter of 2012. Sales comparisons to the prior year for each quarter of 2013 are affected by the calendar shift created by fiscal 2012 having 53 weeks. Each of the first three quarters in 2013 begins and ends one week later on the calendar than the same quarter of 2012. This calendar shift can have a significant impact on quarterly sales comparisons if the beginning and ending weeks of the period affected by the shift have varying levels of sales volume. In the third quarter of 2013, the comparison of sales to last year’s third quarter was adversely impacted by $3.4 million due to the difference in the sales levels of such beginning and ending weeks. In addition to the effect of the calendar shift, the eleven stores closed in 2012 and 2013, net of five new stores, accounted for a decrease of $0.9 million in sales. Partially offsetting these sales decreases, comparable store sales improved 0.6%, or $0.7 million, on a comparable weeks basis. This sales increase in the 500 comparable stores was reflected in a 6% increase in the number of customer transactions, partially offset by an average unit sale that was more than 5% lower than the previous year. Comparable store sales changes by major merchandise class were as follows in the third quarter of 2013: Home +15%; Accessories +13%; Kids -1%; Men’s -2%; and Ladies’ -9%.

*Gross Profit.* Gross profit increased $2.1 million, or 4.1%, to $53.3 million in the third quarter of 2013 from $51.2 million in last year’s third quarter. The increase in gross profit is a result of an improvement in the gross margin to 36.7% from 34.4% in last year’s third quarter, partially offset by the decrease in sales discussed above. The higher gross margin was due primarily to an increase in the core merchandise margin (initial mark-up, net of markdowns) of 150 basis points as a result of the need for a lower level of markdowns this year due to a much more conservative inventory level in 2013. The remainder of the gross margin improvement was due to lower freight costs resulting from a change to a new carrier with lower rates and lower shipping volume associated with the reduction in inventory levels.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses increased $1.0 million, or 2.0%, to $52.1 million in the third quarter of 2013 from $51.1 million in last year’s third quarter. As a percentage of sales, selling, general and administrative expenses increased to 35.9% in the third quarter of 2013 from 34.3% in the third quarter of 2012, due to (1) the deleveraging effect associated with the $3.6 million decline in sales discussed above; in particular, the calendar shift that adversely impacted the sales comparison by $3.4 million had very little effect on expenses, resulting in expense deleverage of approximately 80 basis points, and (2) higher incentive compensation in the third quarter of this year totaling $0.8 million due to improved financial performance relative to budget in 2013.

*Depreciation and Amortization.* Depreciation and amortization expense decreased $0.5 million, or 8.6%, to $5.5 million in the third quarter of 2013 from $6.0 million in the third quarter of 2012, due to the slowing of our store opening pace in 2012 and 2013 in relation to previous years.

*Asset Impairment.* Impairment charges for property and equipment at certain underperforming stores decreased $0.1 million to $0.6 million in the third quarter of 2013 from $0.7 million in the third quarter of 2012.

*Gain on Sale of Former Distribution Center.* During the third quarter, we sold a previously closed distribution center in Savannah, Georgia for $2.9 million, resulting in a gain of $1.5 million.

*Income Tax Benefit.* Income tax benefit decreased $1.3 million to $1.6 million in this year’s third quarter from $2.9 million in the third quarter of 2012 due to a decrease in pretax loss, partially offset by an increase in the effective income tax rate to 49.6% from 43.7%. The increase in the effective tax rate is due primarily to WOTC benefits, which were not available in the third quarter of 2012, as federal legislation to renew the program was not extended by Congress until later.

*Net Loss.* Net loss decreased to $1.7 million in the third quarter of 2013 from $3.7 million in the third quarter of 2012 due to the factors discussed above.

### Liquidity and Capital Resources

Our cash requirements are primarily for working capital, opening of new stores, remodeling of our existing stores and the improvement of our information systems. In recent years, we have met these cash requirements using cash flow from operations and short-term trade credit. We expect to be able to meet future cash requirements with cash flow from operations, short-term trade credit, existing balances of cash and investment securities and, if necessary, borrowings under our revolving credit facility.

*Current Financial Condition.* As of November 2, 2013, we had total cash and cash equivalents of $47.6 million compared to $37.3 million as of February 2, 2013. Additionally, we had $18.2 million and $20.1 million of short-term and long-term investment securities, respectively, as of November 2, 2013, compared to $12.8 million and $5.8 million, respectively, as of February 2, 2013. These securities are comprised of bank certificates of deposit and obligations of the U.S. Treasury, states and municipalities. Inventory represented 41.6% of our total assets as of November 2, 2013, compared to 48.4% of total assets as of February 2, 2013. Management’s ability to manage our inventory can have a significant impact on our cash flows from operations during a given interim period or fiscal year. In addition, inventory purchases can be seasonal in nature, such as the purchase of warm-weather or Christmas-related merchandise.

*Cash Flows From Operating Activities*. Net cash provided by operating activities was $35.9 million in the thirty-nine weeks ended November 2, 2013 compared to $0.8 million in the same period of 2012. Sources of cash provided during the thirty-nine weeks ended November 2, 2013 included net income adjusted for noncash expenses such as depreciation and amortization, asset impairment, gain on sale of a former distribution center, loss on disposal of property and equipment, deferred income taxes and stock-based compensation expense, totaling $17.0 million (compared to $18.7 million in the thirty-nine weeks ended October 27, 2012). The other significant sources of cash in the thirty-nine weeks ended November 2, 2013 included (1) an $18.3 million decrease in inventory (compared to an increase of $15.2 million in the thirty-nine weeks ended October 27, 2012) due to an effort to maintain a much more conservative level of inventory this year in light of the challenging sales environment in recent years, and (2) a $4.0 million increase in accrued compensation (compared to a decrease of $1.6 million in the thirty-nine weeks ended October 27, 2012) due primarily to our balance sheet as of the end of the third quarter of 2013 including accrued payroll for two weeks, while our 2012 year-end balance sheet included accrued payroll for only one week due to the timing of our bi-weekly payroll. In addition, accrued compensation increased as a result of higher incentive compensation accruals this year due to improved financial performance relative to budget in 2013.

A decrease in accounts payable of $3.8 million (compared to $11.8 million in the thirty-nine weeks ended October 27, 2012) partially offset the sources of cash discussed above. This reduction in payables was related to the decrease in inventory, although at a lower rate than inventory due to the fact that the decline in inventory was more heavily weighted towards next-season-buy (NSB) merchandise. Such merchandise is purchased at heavy discounts near the end of a season and held until the beginning of the same season the following year. As a result, it tends to have a lower level of accounts payable associated with it since it has often been paid for well before it is ultimately sold. Therefore, when NSB inventory declines, there is not a similar rate of decline in payables.

*Cash Flows From Investing Activities.* Cash used in investing activities was $24.6 million in the thirty-nine weeks ended November 2, 2013 compared to $5.7 million in the thirty-nine weeks ended October 27, 2012. Cash used for purchases of property and equipment totaled $7.8 million and $5.8 million in the first thirty-nine weeks of 2013 and 2012, respectively. Purchases of investment securities, net of sales/redemptions, used cash of $19.7 million, while proceeds from the sale of our former distribution center provided cash of $2.9 million in the thirty-nine weeks ended November 2, 2013.

*Cash Flows From Financing Activities.* Cash flows from financing activities were insignificant in the first thirty-nine weeks of both 2013 and 2012.

### Cash Requirements

Our principal sources of liquidity consist of: (i) cash and cash equivalents (which equaled $47.6 million as of November 2, 2013); (ii) short-term and long-term investment securities (which equaled $18.2 million and $20.1 million, respectively, as of November 2, 2013); (iii) short-term trade credit; (iv) cash generated from operations on an ongoing basis as we sell our merchandise inventory; and (v) a $50 million revolving credit facility. Trade credit represents a significant source of financing for inventory purchases and arises from customary payment terms and trade practices with our vendors. Historically, our principal liquidity requirements have been for working capital and capital expenditure needs.

We believe that our existing sources of liquidity will be sufficient to fund our operations and anticipated capital expenditures for at least the next 12 months.

### Critical Accounting Policies

The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. There have been no material changes to the Critical Accounting Policies outlined in the Company’s Annual Report on Form 10-K for the year ended February 2, 2013.

## Market risk

As filed, 225 characters.

There have been no material changes in our market risk during the thirty-nine weeks ended November 2, 2013 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended February 2, 2013.

## Controls and procedures

As filed, 1,553 characters.

We have carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of November 2, 2013 pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer each concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information has been accumulated and communicated to our management, including the officers who certify our financial reports, as appropriate, to allow timely decisions regarding the required disclosures.

Our disclosure controls and procedures are designed to provide reasonable assurance that the controls and procedures will meet their objectives. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended November 2, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 189 characters.

There are no material changes to the Risk Factors described under the section “ITEM 1A. RISK FACTORS” in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013.

Filed Dec 11, 2013.
Source: SEC EDGAR, the filing index for accession 0001104659-13-089558. Last ingested by Listed: Nov 10, 2026, 06:46 ET. No prices; not investment advice.