Notes to Condensed Consolidated Financial Statements
April 29, 2017
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Chico’s FAS, Inc. and its wholly-owned subsidiaries (collectively, the “Company”) have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) for complete financial statements. In the opinion of management, such interim financial statements reflect all normal, recurring adjustments considered necessary to present fairly the condensed consolidated financial position, the results of operations and cash flows for the interim periods presented. All significant intercompany balances and transactions have been eliminated in consolidation. For further information, refer to the consolidated financial statements and notes thereto for the fiscal year ended
January 28, 2017
, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on
March 7, 2017
.
As used in this report, all references to “we,” “us,” “our,” and “the Company,” refer to Chico’s FAS, Inc. and all of its wholly-owned subsidiaries.
Our fiscal years end on the Saturday closest to January 31 and are designated by the calendar year in which the fiscal year commences. Operating results for the
thirteen
weeks ended
April 29, 2017
are not necessarily indicative of the results that may be expected for the entire year.
Adoption of New Accounting Pronouncements
In the first quarter of 2017, we adopted the guidance of Accounting Standard Update (“ASU”) 2016-09,
Improvements to Employee Share-Based Payment Accounting
, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The provision of ASU 2016-09 related to the recognition of excess tax benefits and deficiencies in the income statement was adopted on a prospective basis whereas the provision related to the classification in the statement of cash flows was adopted retrospectively and the prior periods were adjusted accordingly. The Company has elected to continue estimating forfeitures of share-based awards when determining compensation cost to be recognized each period. The adoption of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.
Chico’s FAS, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 29, 2017
(Unaudited)
Note 2. New Accounting Pronouncements
In October 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-16,
Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory.
ASU 2016-16 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. ASU 2016-16 requires companies to recognize the income tax effects of intercompany sales or transfers of other assets in the income statement as income tax expense (benefit) in the period the sale or transfer occurs. Additionally, companies would evaluate whether the tax effects of the intercompany sales of transfers of non-inventory assets should be included in their estimates of annual effective tax rates by using today's interim guidance on income tax accounting. ASU 2016-16 will require modified retrospective transition with a cumulative catch-up adjustment to opening retained earnings in the period of adoption, which we expect to implement in fiscal 2018. At
April 29, 2017
, the Company had
$6.1 million
in assets related to the transfer of intra–entity asset transfers.
In February 2016, the FASB issued ASU No. 2016-02,
Leases
, which replaces the existing guidance in Accounting Standard Codification 840, Leases. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 and should be applied on a modified retrospective basis. ASU 2016-02 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset and for operating leases, the lessee would recognize straight-line total rent expense. Upon adoption of the standard in fiscal 2019, we expect to record material right–of–use assets and lease liabilities on the balance sheet approximating the present value of the payments.
In January 2016, the FASB issued ASU No. 2016-01,
Recognition and Measurement of Financial Assets and Financial Liabilities
, under which entities will no longer be able to recognize unrealized holding gains and losses on equity securities they classify as available-for-sale in other comprehensive income but instead recognize the change in fair value in net income. The standard is effective for interim and annual reporting periods beginning after December 15, 2017. We do not anticipate adoption to have a material impact to our consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers
. The update outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB approved a one year deferral of the effective date, to make it effective for annual and interim reporting periods beginning after December 15, 2017. The standard allows for either a full retrospective or a modified retrospective transition method. The FASB has issued subsequent ASUs related to ASU No. 2014-09, which detail amendments to the ASU, implementation considerations, narrow-scope improvements and practical expedients. Through our evaluation of the impact of this ASU, we have identified certain changes that are expected to be made to our accounting policies, including: the timing of our recognition of advertising expenses, whereby certain expenses that are currently amortized over their expected period of future benefit will be expensed the first time the advertisement appears, and presentation of estimated merchandise returns as both an asset, equal to the inventory value net of processing costs, and a corresponding return liability, compared to the current practice of recording an estimated net return liability. We plan to adopt this ASU beginning in the first quarter of fiscal 2018 with a cumulative adjustment to retained earnings as opposed to retrospectively adjusting prior periods. We are continuing to evaluate the impact this ASU, and related amendments and interpretive guidance, will have on our consolidated financial statements.
Note 3. Restructuring and Strategic Charges
During the fourth quarter of fiscal 2014, we initiated a restructuring program, including the acceleration of domestic store closures and an organizational realignment, to ensure that resources align with long-term growth initiatives. In fiscal 2015, in connection with the restructuring program, we completed an evaluation of the Boston Proper brand, completed the sale of the Boston Proper direct-to-consumer business, and closed its stores.
Chico’s FAS, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 29, 2017
(Unaudited)
During the first quarter of fiscal 2016, we expanded our restructuring program to include components of our strategic initiatives that further align the organizational structure with long-term growth initiatives and to reduce cost of goods sold ("COGS") and selling, general and administrative expenses ("SG&A") through strategic initiatives. These strategic initiatives include realigning marketing and digital commerce, improving supply chain efficiency, reducing non-merchandise expenses, optimizing marketing spend, and transition of executive leadership. In connection with this program, during the first quarter of fiscal 2016, we recorded pre-tax restructuring and strategic charges of $
3.7 million
, primarily related to severance charges, continuing employee-related costs and consulting fees, which are included in restructuring and strategic charges in the accompanying condensed statement of income. Effective in the third quarter of fiscal 2016, we substantially completed our restructuring program and did
not
record any similar charges for the thirteen weeks ended
April 29, 2017
. We have closed
114
stores in connection with our restructuring program through the
first
quarter of fiscal
2017
, including
20
Boston Proper stores.
A summary of the pre-tax restructuring and strategic charges is presented in the table below:
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
|
April 30, 2016
|
|
|
|
|
(in thousands)
|
Continuing employee-related costs
|
|
$
|
1,015
|
|
Severance charges
|
|
1,184
|
|
Lease termination charges
|
|
221
|
|
Outside services & other
|
|
1,231
|
|
Total restructuring and strategic charges, pre-tax
|
|
$
|
3,651
|
|
As of
April 29, 2017
, a reserve of
$1.8 million
related to restructuring and strategic activities was included in other current and deferred liabilities in the accompanying condensed consolidated balance sheets. A roll-forward of the reserve is presented as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Employee-related Costs
|
|
Severance Charges
|
|
Lease Termination Charges
|
|
Outside Services
& Other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Beginning Balance, January 28, 2017
|
$
|
671
|
|
|
$
|
2,413
|
|
|
$
|
846
|
|
|
$
|
7,299
|
|
|
$
|
11,229
|
|
Payments
|
(159
|
)
|
|
(1,780
|
)
|
|
(200
|
)
|
|
(7,299
|
)
|
|
(9,438
|
)
|
Ending Balance, April 29, 2017
|
$
|
512
|
|
|
$
|
633
|
|
|
$
|
646
|
|
|
$
|
—
|
|
|
$
|
1,791
|
|
Note 4. Stock-Based Compensation
For the
thirteen
weeks ended
April 29, 2017
and
April 30, 2016
, stock-based compensation expense was
$5.8 million
and
$5.5 million
, respectively. As of
April 29, 2017
, approximately
4.1 million
shares remain available for future grants of equity awards under our 2012 Omnibus Stock and Incentive Plan.
Chico’s FAS, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 29, 2017
(Unaudited)
Restricted Stock Awards
Restricted stock award activity for the
thirteen
weeks ended
April 29, 2017
was as follows:
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
Unvested, beginning of period
|
2,463,186
|
|
|
$
|
13.87
|
|
Granted
|
1,172,690
|
|
|
14.22
|
|
Vested
|
(796,926
|
)
|
|
15.10
|
|
Forfeited
|
(58,141
|
)
|
|
14.37
|
|
Unvested, end of period
|
2,780,809
|
|
|
13.65
|
|
Performance-based Stock Units
For the
thirteen
weeks ended
April 29, 2017
, we granted performance-based restricted stock units (“PSUs”), contingent upon the achievement of a Company-specific performance goal during fiscal
2017
. Any units earned as a result of the achievement of this goal will be settled in unvested shares of our common stock on the first anniversary of the grant date, with shares vesting on the second and third anniversary dates.
Performance-based restricted stock unit activity for the
thirteen
weeks ended
April 29, 2017
was as follows:
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
Unvested, beginning of period
|
652,248
|
|
|
$
|
13.28
|
|
Granted
|
601,052
|
|
|
13.93
|
|
Vested
|
(273,227
|
)
|
|
13.54
|
|
Forfeited
|
(51,222
|
)
|
|
12.84
|
|
Unvested, end of period
|
928,851
|
|
|
13.65
|
|
Stock Option Awards
For the
thirteen
weeks ended
April 29, 2017
and
April 30, 2016
, we did not grant any stock options.
Stock option activity for the
thirteen
weeks ended
April 29, 2017
was as follows:
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise Price
|
Outstanding, beginning of period
|
577,246
|
|
|
$
|
13.58
|
|
Granted
|
—
|
|
|
—
|
|
Exercised
|
(8,000
|
)
|
|
10.15
|
|
Forfeited or expired
|
(40,667
|
)
|
|
15.25
|
|
Outstanding and exercisable at April 29, 2017
|
528,579
|
|
|
13.51
|
|
Note 5. Income Taxes
The provision for income taxes is based on a current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events. Our effective income tax rate may fluctuate from quarter to quarter as a result of a variety of factors, including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items, and the mix of earnings.
Chico’s FAS, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 29, 2017
(Unaudited)
For the
thirteen
weeks ended
April 29, 2017
and
April 30, 2016
, the effective tax rate was
38.2%
and
37.9%
, respectively. This
30 basis point
increase includes the impact of the adoption of the new share-based payment accounting standard (the "Standard")
.
The impact of the Standard was a
50 basis point
increase in the effective tax rate for the
thirteen
weeks ended
April 29, 2017
.
Note 6. Earnings Per Share
In accordance with relevant accounting guidance, unvested share-based payment awards that include non-forfeitable rights to dividends, whether paid or unpaid, are considered participating securities. As a result, such awards are required to be included in the calculation of earnings per common share pursuant to the “two-class” method. For us, participating securities are composed entirely of unvested restricted stock awards and PSUs that have met their relevant performance criteria.
Earnings per share (“EPS”) is determined using the two-class method when it is more dilutive than the treasury stock method. Basic EPS excludes dilution and is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period, including participating securities. Diluted EPS reflects the dilutive effect of potential common shares from non-participating securities such as stock options and PSUs.
The following table sets forth the computation of basic and diluted EPS shown on the face of the accompanying condensed consolidated statements of operations (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
April 29, 2017
|
|
April 30, 2016
|
|
|
|
|
Numerator
|
|
|
|
Net income
|
$
|
33,619
|
|
|
$
|
31,084
|
|
Net income and dividends declared allocated to participating securities
|
(741
|
)
|
|
(646
|
)
|
Net income available to common shareholders
|
$
|
32,878
|
|
|
$
|
30,438
|
|
Denominator
|
|
|
|
Weighted average common shares outstanding – basic
|
126,050
|
|
|
131,594
|
|
Dilutive effect of non-participating securities
|
53
|
|
|
95
|
|
Weighted average common and common equivalent shares outstanding – diluted
|
126,103
|
|
|
131,689
|
|
Net income per share:
|
|
|
|
Basic
|
$
|
0.26
|
|
|
$
|
0.23
|
|
Diluted
|
$
|
0.26
|
|
|
$
|
0.23
|
|
For the thirteen weeks ended
April 29, 2017
and
April 30, 2016
,
0.4 million
and
0.9 million
potential shares of common stock, respectively, were excluded from the diluted per share calculation relating to non-participating securities, because the effect of including these potential shares was antidilutive.
Note 7. Fair Value Measurements
Our financial instruments consist of cash, money market accounts, marketable securities, assets held in our non-qualified deferred compensation plan, accounts receivable and payable, and debt. Cash, accounts receivable and accounts payable are carried at cost, which approximates their fair value due to the short-term nature of the instruments.
Marketable securities are classified as available-for-sale and as of
April 29, 2017
generally consist of
U.S. government agencies, corporate bonds, municipal securities, and commercial paper with
$28.2 million
of securities with maturity dates within one year or less and
$22.4 million
with maturity dates over one year and less than two years.
We consider all marketable securities available-for-sale, including those with maturity dates beyond 12 months, and therefore classify these securities within current assets on the condensed consolidated balance sheets as they are available to support current operational liquidity needs. Marketable securities are carried at fair value, with the unrealized holding gains and losses, net of income taxes, reflected in accumulated other comprehensive income until realized. For the purposes of computing realized and unrealized gains and losses, cost is determined on a specific identification basis.
Chico’s FAS, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 29, 2017
(Unaudited)
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Entities are required to use a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:
|
|
|
|
|
|
Level 1
|
—
|
Unadjusted quoted prices in active markets for identical assets or liabilities
|
|
|
|
|
|
Level 2
|
—
|
Unadjusted quoted prices in active markets for similar assets or liabilities, or; Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or; Inputs other than quoted prices that are observable for the asset or liability
|
|
|
|
|
|
Level 3
|
—
|
Unobservable inputs for the asset or liability
|
We measure certain financial assets at fair value on a recurring basis, including our marketable securities, which are classified as available-for-sale securities, certain cash equivalents, specifically our money market accounts, and assets held in our non-qualified deferred compensation plan. The money market accounts are valued based on quoted market prices in active markets. Our marketable securities are generally valued based on other observable inputs for those securities (including market corroborated pricing or other models that utilize observable inputs such as interest rates and yield curves) based on information provided by independent third party pricing entities, except for U.S. government securities which are valued based on quoted market prices in active markets. The investments in our non-qualified deferred compensation plan are valued using quoted market prices and are included in other assets on our condensed consolidated balance sheets.
From time to time, we measure certain assets at fair value on a non-recurring basis, including evaluation of long-lived assets, goodwill and other intangible assets for impairment using Company-specific assumptions which would fall within Level 3 of the fair value hierarchy. We estimate the fair value of assets held for sale using market values for similar assets which would fall within Level 2 of the fair value hierarchy.
To assess the fair value of long-term debt, we utilize a discounted future cash flow model using current borrowing rates for similar types of debt of comparable maturities.
Fair value calculations contain significant judgments and estimates, which may differ from actual results due to, among other things, economic conditions, changes to the business model or changes in operating performance.
During the quarter ended
April 29, 2017
, we did not make any transfers between Level 1 and Level 2 financial instruments. Furthermore, as of
April 29, 2017
,
January 28, 2017
and
April 30, 2016
, we did not have any Level 3 financial instruments. We conduct reviews on a quarterly basis to verify pricing, assess liquidity, and determine if significant inputs have changed that would impact the fair value hierarchy disclosure.
Chico’s FAS, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 29, 2017
(Unaudited)
In accordance with the provisions of the guidance, we categorized our financial instruments, which are valued on a recurring basis, based on the priority of the inputs to the valuation technique for the instruments, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|
Balance as of April 29, 2017
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
(in thousands)
|
Financial Assets:
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
Money market accounts
|
$
|
375
|
|
|
$
|
375
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
Municipal securities
|
6,774
|
|
|
—
|
|
|
6,774
|
|
|
—
|
|
U.S. government agencies
|
20,024
|
|
|
—
|
|
|
20,024
|
|
|
—
|
|
Corporate bonds
|
17,336
|
|
|
—
|
|
|
17,336
|
|
|
—
|
|
Commercial paper
|
6,495
|
|
|
—
|
|
|
6,495
|
|
|
—
|
|
Non Current Assets
|
|
|
|
|
|
|
|
Deferred compensation plan
|
7,733
|
|
|
7,733
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
58,737
|
|
|
$
|
8,108
|
|
|
$
|
50,629
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
Long-term debt
1
|
$
|
79,801
|
|
|
$
|
—
|
|
|
$
|
80,120
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 28, 2017
|
|
|
|
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
Money market accounts
|
$
|
471
|
|
|
$
|
471
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
Municipal securities
|
5,634
|
|
|
—
|
|
|
5,634
|
|
|
—
|
|
U.S. government agencies
|
23,071
|
|
|
—
|
|
|
23,071
|
|
|
—
|
|
Corporate bonds
|
15,799
|
|
|
—
|
|
|
15,799
|
|
|
—
|
|
Commercial paper
|
5,866
|
|
|
—
|
|
|
5,866
|
|
|
—
|
|
Non Current Assets
|
|
|
|
|
|
|
|
Deferred compensation plan
|
7,523
|
|
|
7,523
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
58,364
|
|
|
$
|
7,994
|
|
|
$
|
50,370
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
Long-term debt
1
|
$
|
84,785
|
|
|
$
|
—
|
|
|
$
|
85,139
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Balance as of April 30, 2016
|
|
|
|
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
Money market accounts
|
$
|
135
|
|
|
$
|
135
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
Municipal securities
|
1,535
|
|
|
—
|
|
|
1,535
|
|
|
—
|
|
U.S. government agencies
|
19,823
|
|
|
—
|
|
|
19,823
|
|
|
—
|
|
Corporate bonds
|
24,892
|
|
|
—
|
|
|
24,892
|
|
|
—
|
|
Commercial paper
|
4,229
|
|
|
—
|
|
|
4,229
|
|
|
—
|
|
Non Current Assets
|
|
|
|
|
|
|
|
Deferred compensation plan
|
7,785
|
|
|
7,785
|
|
|
—
|
|
|
—
|
|
Total
|
$
|
58,399
|
|
|
$
|
7,920
|
|
|
$
|
50,479
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
Long-term debt
1
|
$
|
89,735
|
|
|
$
|
—
|
|
|
$
|
90,156
|
|
|
$
|
—
|
|
1
The carrying value of long-term debt includes the current and long-term portions and the remaining unamortized debt issuance costs.
Chico’s FAS, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 29, 2017
(Unaudited)
Note 8. Debt
In fiscal 2015, we entered into a credit agreement (the "Agreement") providing for a term loan of
$100.0 million
and a revolving credit facility of
$100.0 million
. The term loan and revolving credit facility mature on May 4, 2020 and accrue interest by reference, at our election, at either an adjusted eurodollar rate tied to LIBOR or an Alternate Base Rate plus an interest rate margin, as defined in the Agreement. The Agreement contains customary representations, warranties, and affirmative covenants, including the requirement to maintain certain financial ratios. The Company was in compliance with the applicable ratio requirements and other covenants at
April 29, 2017
. As of
April 29, 2017
, we had total available borrowing capacity of
$100.0 million
under our revolving credit facility.
The following table provides additional detail on our outstanding debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 29, 2017
|
|
January 28, 2017
|
|
April 30, 2016
|
|
(in thousands)
|
Credit Agreement, net
|
$
|
79,801
|
|
|
$
|
84,785
|
|
|
$
|
89,735
|
|
Less: current portion
|
(15,000
|
)
|
|
(16,250
|
)
|
|
(10,000
|
)
|
Total long-term debt
|
$
|
64,801
|
|
|
$
|
68,535
|
|
|
$
|
79,735
|
|
Note 9. Share Repurchases
During the
thirteen
weeks ended
April 29, 2017
, under our
$300 million
share repurchase program announced in November 2015, we repurchased
0.7 million
shares at a total cost of approximately
$9.5 million
, at a weighted average of
$13.65
per share. As of
April 29, 2017
, the Company has
$154.1 million
remaining for future repurchases under the program. However, we have no continuing obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of our stock price, market conditions and other considerations.
Note 10. Commitments and Contingencies
In July 2015, the Company was named as a defendant in Altman v. White House Black Market, Inc., a putative class action filed in the United States District Court for the Northern District of Georgia. The Complaint alleges that the Company, in violation of federal law, published more than the last five digits of a credit or debit card number or an expiration date on customers' receipts. The Company denies the material allegations of the complaint. Its motion to dismiss was denied on July 13, 2016, but the Company continues to believe that the case is without merit. It will continue to vigorously defend the matter. At this time, it is not possible to predict whether the proceeding will be permitted to proceed as a class or the size of the putative class, and no assurance can be given that the Company will be successful in its defense on the merits or otherwise. No specific dollar amount in damages or other relief is specified in the Complaint, and the Company is unable to estimate any potential loss or range of loss. However, if the case were to proceed as a class action and the Company were to be unsuccessful in its defense on the merits, the ultimate resolution of the case could have a material adverse effect on the Company’s consolidated financial condition or results of operations.
In June 2015, the Company was named as a defendant in Ackerman v. Chico’s FAS, Inc., a putative representative Private Attorney General action filed in the Superior Court of California, County of Los Angeles. The Complaint alleges numerous violations of California law related to wages, meal periods, rest periods, wage statements and failure to reimburse business expenses, among other things. Plaintiff subsequently amended her complaint to make the same allegations on a class action basis. In June 2016, the parties submitted a proposed settlement of the matter to the court. The court granted preliminary approval on August 26, 2016, and settlement notices were distributed. On May 16, 2017, the court finally approved the settlement substantially on the terms submitted by the parties. The settlement will not have a material adverse effect on the Company’s consolidated financial condition or results of operations.
In July 2016, the Company was named as a defendant in Calleros v. Chico’s FAS, Inc., a putative class action filed in the Superior Court of California, County of Santa Barbara. Plaintiff alleges that the Company failed to comply with California law requiring it to provide consumers cash for gift cards with a stored value of less than $10.00. Following voluntary mediation of the matter in November of 2016, the parties entered into a settlement agreement, which was approved preliminarily by the court on March 28, 2017. If finally approved, the settlement will not have a material adverse effect on the Company’s consolidated financial condition or results of operations.
Chico’s FAS, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 29, 2017
(Unaudited)
Other than as noted above, we are not currently a party to any legal proceedings other than claims and lawsuits arising in the normal course of business. All such matters are subject to uncertainties and outcomes may not be predictable. Consequently, the ultimate aggregate amount of monetary liability or financial impact with respect to these matters as of
April 29, 2017
are not estimable. However, while such matters could affect our consolidated operating results when resolved in future periods, management believes that upon final disposition, any monetary liability or financial impact to us would not be material to our annual consolidated financial statements.