Company Quick10K Filing
Children's Place
Price79.02 EPS3
Shares16 P/E26
MCap1,251 P/FCF12
Net Debt-66 EBIT58
TEV1,185 TEV/EBIT21
TTM 2019-11-02, in MM, except price, ratios
10-Q 2020-10-31 Filed 2020-11-24
10-Q 2020-08-01 Filed 2020-09-03
10-Q 2020-05-02 Filed 2020-06-12
10-K 2020-02-01 Filed 2020-03-19
10-Q 2019-11-02 Filed 2019-12-11
10-Q 2019-08-03 Filed 2019-08-27
10-Q 2019-05-04 Filed 2019-05-29
10-K 2019-02-02 Filed 2019-03-21
10-Q 2018-11-03 Filed 2018-12-06
10-Q 2018-08-04 Filed 2018-08-28
10-Q 2018-05-05 Filed 2018-05-29
10-K 2018-02-03 Filed 2018-03-22
10-Q 2017-10-28 Filed 2017-11-21
10-Q 2017-07-29 Filed 2017-08-22
10-Q 2017-04-29 Filed 2017-05-24
10-K 2017-01-28 Filed 2017-03-23
10-Q 2016-10-29 Filed 2016-11-22
10-Q 2016-07-30 Filed 2016-08-31
10-Q 2016-04-30 Filed 2016-05-25
10-K 2016-01-30 Filed 2016-03-24
10-Q 2015-10-31 Filed 2015-12-08
10-Q 2015-08-01 Filed 2015-09-03
10-Q 2015-05-02 Filed 2015-05-20
10-K 2015-01-31 Filed 2015-03-26
10-Q 2014-11-01 Filed 2014-12-04
10-Q 2014-08-02 Filed 2014-09-02
10-Q 2014-05-03 Filed 2014-06-03
10-K 2014-02-01 Filed 2014-03-20
10-Q 2013-08-03 Filed 2013-09-03
10-Q 2013-05-04 Filed 2013-06-06
10-K 2013-02-02 Filed 2013-03-28
10-Q 2012-10-27 Filed 2012-11-29
10-Q 2012-07-28 Filed 2012-08-30
10-Q 2012-04-28 Filed 2012-05-31
10-K 2012-01-28 Filed 2012-03-23
10-Q 2011-10-29 Filed 2011-12-02
10-Q 2011-07-30 Filed 2011-09-07
10-Q 2011-04-30 Filed 2011-06-06
10-K 2011-01-29 Filed 2011-03-28
10-Q 2010-10-30 Filed 2010-12-02
10-Q 2010-07-31 Filed 2010-09-03
10-Q 2010-05-01 Filed 2010-06-04
10-K 2010-01-30 Filed 2010-03-26
8-K 2020-11-19
8-K 2020-10-05
8-K 2020-08-25
8-K 2020-06-28
8-K 2020-06-11
8-K 2020-05-22
8-K 2020-05-18
8-K 2020-05-14
8-K 2020-04-24
8-K 2020-03-31
8-K 2020-03-17
8-K 2020-03-17
8-K 2019-12-11
8-K 2019-10-22
8-K 2019-08-21
8-K 2019-05-15
8-K 2019-05-08
8-K 2019-04-04
8-K 2019-03-21
8-K 2019-03-01
8-K 2018-12-06
8-K 2018-11-08
8-K 2018-11-02
8-K 2018-08-23
8-K 2018-05-17
8-K 2018-05-09
8-K 2018-03-22
8-K 2018-03-20
8-K 2018-01-08
8-K 2018-01-02

PLCE 10Q Quarterly Report

Part I. Financial Information
Item 1.Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1.Legal Proceedings.
Item 1A.Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-31.1 exhibit3112020q3.htm
EX-31.2 exhibit3122020q3.htm
EX-32 exhibit322020q3.htm

Children's Place Earnings 2020-10-31

Balance SheetIncome StatementCash Flow
1.41.10.80.60.30.02012201420172020
Assets, Equity
0.60.50.30.20.0-0.12012201420172020
Rev, G Profit, Net Income
0.10.0-0.0-0.1-0.1-0.22012201420172020
Ops, Inv, Fin

plce-20201031
000104185901-30Large Accelerated FilerFalseFalse2020Q3FALSESecaucusNJ0.100.100.10100,000100,000100,00014,64114,76215,31014,58614,71115,2601.001.001.001,0001,0001,00055515000010418592020-02-022020-10-31xbrli:shares00010418592020-11-20iso4217:USD00010418592020-10-3100010418592020-02-0100010418592019-11-02iso4217:USDxbrli:shares00010418592020-08-022020-10-3100010418592019-08-042019-11-0200010418592019-02-032019-11-0200010418592019-02-0200010418592018-02-042018-11-03xbrli:pure0001041859plce:A2015250MShareRepurchaseProgramMemberDomainDomainDomain2020-10-310001041859us-gaap:RetainedEarningsMember2020-02-022020-10-310001041859us-gaap:RetainedEarningsMember2019-02-032019-11-020001041859us-gaap:RestrictedStockUnitsRSUMember2020-08-022020-10-310001041859us-gaap:RestrictedStockUnitsRSUMember2019-08-042019-11-020001041859us-gaap:RestrictedStockUnitsRSUMember2020-02-022020-10-310001041859us-gaap:RestrictedStockUnitsRSUMember2019-02-032019-11-020001041859plce:PerformanceAwardsMember2020-08-022020-10-310001041859plce:PerformanceAwardsMember2019-08-042019-11-020001041859plce:PerformanceAwardsMember2020-02-022020-10-310001041859plce:PerformanceAwardsMember2019-02-032019-11-020001041859us-gaap:CostOfSalesMember2020-08-022020-10-310001041859us-gaap:CostOfSalesMember2019-08-042019-11-020001041859us-gaap:CostOfSalesMember2020-02-022020-10-310001041859us-gaap:CostOfSalesMember2019-02-032019-11-020001041859plce:DeferredAndRestrictedStockDeferredAwardsMember2020-02-010001041859plce:DeferredAndRestrictedStockDeferredAwardsMember2020-02-022020-10-310001041859plce:DeferredAndRestrictedStockDeferredAwardsMember2020-10-310001041859plce:PerformanceAwardsMember2020-02-010001041859plce:PerformanceAwardsMember2020-10-310001041859us-gaap:LandAndLandImprovementsMember2020-10-310001041859us-gaap:LandAndLandImprovementsMember2020-02-010001041859us-gaap:LandAndLandImprovementsMember2019-11-020001041859us-gaap:BuildingAndBuildingImprovementsMember2020-10-310001041859us-gaap:BuildingAndBuildingImprovementsMember2020-02-010001041859us-gaap:BuildingAndBuildingImprovementsMember2019-11-020001041859plce:MaterialHandlingEquipmentMember2020-10-310001041859plce:MaterialHandlingEquipmentMember2020-02-010001041859plce:MaterialHandlingEquipmentMember2019-11-020001041859us-gaap:LeaseholdImprovementsMember2020-10-310001041859us-gaap:LeaseholdImprovementsMember2020-02-010001041859us-gaap:LeaseholdImprovementsMember2019-11-020001041859plce:StoreFixturesAndEquipmentMember2020-10-310001041859plce:StoreFixturesAndEquipmentMember2020-02-010001041859plce:StoreFixturesAndEquipmentMember2019-11-020001041859us-gaap:ComputerSoftwareIntangibleAssetMember2020-10-310001041859us-gaap:ComputerSoftwareIntangibleAssetMember2020-02-010001041859us-gaap:ComputerSoftwareIntangibleAssetMember2019-11-020001041859us-gaap:ConstructionInProgressMember2020-10-310001041859us-gaap:ConstructionInProgressMember2020-02-010001041859us-gaap:ConstructionInProgressMember2019-11-020001041859plce:NumberOfStoresTestedForImpairmentMember2020-10-310001041859plce:NumberOfStoresTestedForImpairmentMember2019-11-020001041859plce:A2008CreditAgreementMember2020-10-310001041859plce:A2008CreditAgreementMemberus-gaap:PrimeRateMember2020-02-022020-10-310001041859plce:LiborMemberplce:A2008CreditAgreementMember2020-02-022020-10-310001041859plce:A2008CreditAgreementMember2020-02-022020-10-310001041859us-gaap:LetterOfCreditMemberplce:A2008CreditAgreementMember2020-02-022020-10-310001041859plce:A2008CreditAgreementMemberus-gaap:StandbyLettersOfCreditMember2020-02-022020-10-310001041859us-gaap:StandbyLettersOfCreditMember2020-10-310001041859us-gaap:StandbyLettersOfCreditMember2020-02-010001041859us-gaap:StandbyLettersOfCreditMember2019-11-0200010418592019-02-032020-02-010001041859srt:ScenarioForecastMember2021-07-312022-04-300001041859srt:ScenarioForecastMember2022-05-012023-04-300001041859srt:ScenarioForecastMember2023-05-012024-05-090001041859plce:ChildrensPlaceUsMember2020-10-310001041859plce:ChildrensPlaceCanadaMember2020-10-310001041859plce:ChildrensPlaceUsMember2019-11-020001041859plce:ChildrensPlaceCanadaMember2019-11-020001041859plce:ChildrensPlaceUsMember2020-08-022020-10-310001041859plce:ChildrensPlaceUsMember2019-08-042019-11-020001041859plce:ChildrensPlaceUsMember2020-02-022020-10-310001041859plce:ChildrensPlaceUsMember2019-02-032019-11-020001041859plce:ChildrensPlaceCanadaMember2020-08-022020-10-310001041859plce:ChildrensPlaceCanadaMember2019-08-042019-11-020001041859plce:ChildrensPlaceCanadaMember2020-02-022020-10-310001041859plce:ChildrensPlaceCanadaMember2019-02-032019-11-020001041859plce:ChildrensPlaceUsMember2020-02-010001041859plce:ChildrensPlaceCanadaMember2020-02-01
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
______________________________________________________
 FORM 10-Q
 (Mark One)
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2020
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from               to              

Commission file number 0-23071
______________________________________________________
 THE CHILDRENS PLACE, INC.
(Exact name of registrant as specified in its charter)
Delaware 31-1241495
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
500 Plaza Drive  
Secaucus, New Jersey 07094
(Address of Principal Executive Offices) (Zip Code)

(201) 558-2400
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.10 par value
Trading Symbol: PLCE
Name of each exchange on which registered: Nasdaq Global Select Market
___________________________________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one).
Large accelerated filer x
Accelerated filer o
  
Non-accelerated filer o
Smaller reporting company o
(Do not check if a smaller reporting company)
Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x
 
The number of shares outstanding of the registrant’s common stock with a par value of $0.10 per share, as of November 20, 2020 was 14,587,078 shares.


Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
 
QUARTERLY REPORT ON FORM 10-Q
 
FOR THE PERIOD ENDED OCTOBER 31, 2020
 
TABLE OF CONTENTS
 
  
 
 
Consolidated Statements of Changes in StockholdersEquity
 
 
  
  



Table of Contents
PART I. FINANCIAL INFORMATION

Item 1.CONSOLIDATED FINANCIAL STATEMENTS
1

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31,
2020
February 1,
2020
November 2,
2019
(unaudited)(unaudited)
(in thousands, except par value)
ASSETS   
Current assets:   
Cash and cash equivalents$64,456 $68,487 $66,059 
Accounts receivable31,376 32,812 39,471 
Inventories427,629 327,165 389,815 
Prepaid expenses and other current assets16,159 21,416 20,722 
Total current assets539,620 449,880 516,067 
Long-term assets:   
Property and equipment, net191,544 236,898 246,234 
Right-of-use assets297,206 393,820 418,151 
Tradenames, net72,692 73,291 73,386 
Deferred income taxes93,697 12,941 17,615 
Other assets12,184 14,567 14,269 
Total assets$1,206,943 $1,181,397 $1,285,722 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
LIABILITIES:   
Current liabilities:   
Revolving loan$179,360 $170,808 $184,179 
Current portion of long-term debt1,328   
Accounts payable283,943 213,115 235,491 
Current lease liabilities171,276 121,868 124,281 
Income taxes payable7,445 5,607 7,171 
Accrued expenses and other current liabilities133,407 83,609 109,476 
Total current liabilities776,759 595,007 660,598 
Long-term liabilities:   
Long-term debt76,307   
Long-term lease liabilities232,153 311,908 331,615 
Other tax liabilities6,821 6,782 5,050 
Income taxes payable17,589 17,589 18,939 
Other long-term liabilities19,945 14,924 15,081 
Total liabilities1,129,574 946,210 1,031,283 
COMMITMENTS AND CONTINGENCIES   
STOCKHOLDERS’ EQUITY:   
Preferred stock, $1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding   
Common stock, $0.10 par value, 100,000 shares authorized; 14,641, 14,762, and 15,310 issued; 14,586, 14,711, and 15,260 outstanding1,464 1,476 1,531 
Additional paid-in capital141,613 139,041 145,219 
Treasury stock, at cost (55, 51, and 50 shares)(3,095)(2,956)(2,886)
Deferred compensation3,095 2,956 2,886 
Accumulated other comprehensive loss(15,170)(13,545)(13,442)
Retained earnings (deficit)(50,538)108,215 121,131 
Total stockholders’ equity77,369 235,187 254,439 
Total liabilities and stockholders’ equity$1,206,943 $1,181,397 $1,285,722 
See accompanying notes to these consolidated financial statements.
2

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Thirteen Weeks EndedThirty-nine Weeks Ended
 October 31,
2020
November 2,
2019
October 31,
2020
November 2,
2019
(in thousands, except earnings and dividends per share)
Net sales$425,571 $524,796 $1,049,701 $1,357,647 
Cost of sales (exclusive of depreciation and amortization)279,506 326,671 856,229 868,701 
Gross profit 146,065 198,125 193,472 488,946 
Selling, general, and administrative expenses106,639 120,514 319,442 364,937 
Depreciation and amortization15,809 18,821 50,405 55,877 
Asset impairment charges294 839 37,929 1,308 
Operating income (loss)23,323 57,951 (214,304)66,824 
Interest expense(3,266)(2,221)(7,802)(6,341)
Interest income3 66 60 197 
Income (loss) before benefit for income taxes20,060 55,796 (222,046)60,680 
Provision (benefit) for income taxes6,740 12,748 (73,917)11,620 
Net income (loss)$13,320 $43,048 $(148,129)$49,060 
Earnings (loss) per common share
Basic$0.91 $2.78 $(10.13)$3.12 
Diluted$0.91 $2.77 $(10.13)$3.10 
Weighted average common shares outstanding
Basic14,639 15,497 14,628 15,720 
Diluted14,643 15,546 14,628 15,837 
Cash dividends declared per common share$ $0.56 $ $1.68 
 
See accompanying notes to these consolidated financial statements.

3

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)



 Thirteen Weeks EndedThirty-nine Weeks Ended
 October 31, 2020November 2, 2019October 31, 2020November 2, 2019
(in thousands)
Net income (loss)$13,320 $43,048 $(148,129)$49,060 
Other comprehensive income (loss):
Foreign currency translation adjustment216 1,773 (876)1,376 
Change in fair value of cash flow hedges, net of income taxes(949)30 (749)116 
Other comprehensive income (loss)(733)1,803 (1,625)1,492 
Total comprehensive income (loss) $12,587 $44,851 $(149,754)$50,552 
 
See accompanying notes to these consolidated financial statements.

4

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)


Thirteen Weeks Ended October 31, 2020
Accumulated
AdditionalRetainedOtherTotal
Common StockPaid-InDeferredEarningsComprehensiveTreasury Stock
Stockholders’
SharesAmountCapitalCompensation(Deficit)LossSharesValueEquity
(in thousands, except dividends per share)
BALANCE, August 1, 2020$14,637 $1,464 $138,350 $3,025 $(63,862)$(14,437)$(52)$(3,025)$61,515 
Vesting of stock awards— 
Stock-based compensation3,275 3,275 
Purchase and retirement of shares(12)(8)
Other comprehensive income (loss)(733)(733)
Deferral of common stock into
deferred compensation plan
70 (3)(70)— 
Net income 13,320 13,320 
BALANCE, October 31, 2020$14,641 $1,464 $141,613 $3,095 $(50,538)$(15,170)$(55)$(3,095)$77,369 


Thirty-nine Weeks Ended October 31, 2020
Accumulated
AdditionalRetainedOtherTotal
Common StockPaid-InDeferredEarningsComprehensiveTreasury Stock
Stockholders’
SharesAmountCapitalCompensation(Deficit)LossSharesValueEquity
(in thousands, except dividends per share)
BALANCE, February 1, 2020$14,762 $1,476 $139,041 $2,956 $108,215 $(13,545)(51)$(2,956)$235,187 
Vesting of stock awards171 17 (17)— 
Stock-based compensation7,388 7,388 
Purchase and retirement of shares(292)(29)(4,799)(10,624)(15,452)
Other comprehensive income (loss)(1,625)(1,625)
Deferral of common stock into
deferred compensation plan
139 (4)(139)— 
Net income (loss)(148,129)(148,129)
BALANCE, October 31, 2020$14,641 $1,464 $141,613 $3,095 $(50,538)$(15,170)$(55)$(3,095)$77,369 






















5

Table of Contents

THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)


Thirteen Weeks Ended November 2, 2019
Accumulated
AdditionalOtherTotal
Common StockPaid-InDeferredRetainedComprehensiveTreasury Stock
Stockholders’
SharesAmountCapitalCompensationEarningsLossSharesValueEquity
(in thousands, except dividends per share)
BALANCE, August 3, 2019$15,719 $1,572 $149,140 $2,816 $113,789 $(15,245)(49)$(2,816)$249,256 
Vesting of stock awards— 
Stock-based compensation2,351 2,351 
Purchase and retirement of shares(414)(41)(6,640)(26,657)(33,338)
Dividends declared ($0.56 per share)(8,681)(8,681)
Unvested dividends368 (368)— 
Other comprehensive income1,803 1,803 
Deferral of common stock into
deferred compensation plan
70 (1)(70)— 
Net income43,048 43,048 
BALANCE, November 2, 2019$15,309 $1,531 $145,219 $2,886 $121,131 $(13,442)$(50)$(2,886)$254,439 


Thirty-nine Weeks Ended November 2, 2019
Accumulated
AdditionalOtherTotal
Common StockPaid-InDeferredRetainedComprehensiveTreasury Stock
Stockholders’
SharesAmountCapitalCompensationEarningsLossSharesValueEquity
(in thousands, except dividends per share)
BALANCE, February 2, 2019$15,873 $1,588 $146,991 $2,685 $180,792 $(14,934)(47)$(2,685)$314,437 
ASC Topic 842 Adjustment(1,667)(1,667)
Vesting of stock awards470 46 (5)41 
Stock-based compensation13,622 13,622 
Purchase and retirement of shares(1,034)(103)(16,297)(79,666)(96,066)
Dividends declared ($0.56 per share)(26,480)(26,480)
Unvested dividends908 (908)— 
Other comprehensive income1,492 1,492 
Deferral of common stock into
deferred compensation plan
201 (3)(201)— 
Net income 49,060 49,060 
BALANCE, November 2, 2019$15,309 $1,531 $145,219 $2,886 $121,131 $(13,442)$(50)$(2,886)$254,439 
















6

Table of Contents


THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Thirty-nine Weeks Ended
 October 31,
2020
November 2,
2019
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income (loss)$(148,129)$49,060 
Reconciliation of net income (loss) to net cash provided by operating activities:  
Non-cash portion of operating lease expense81,582 112,316 
Depreciation and amortization50,405 55,877 
Stock-based compensation7,388 13,622 
Deferred taxes(80,778)745 
Asset impairment charges37,929 1,308 
Other399 175 
Changes in operating assets and liabilities:
Inventories(100,346)(86,440)
Accounts receivable and other assets2,522 (3,027)
Prepaid expenses and other current assets7,117 2,622 
Income taxes payable, net of prepayments1,667 10,888 
Accounts payable and other current liabilities120,784 63,641 
Other long-term liabilities(31,271)(120,221)
Net cash provided by (used in) operating activities(50,731)100,566 
CASH FLOWS FROM INVESTING ACTIVITIES:  
Capital expenditures(23,763)(42,396)
Acquisition of assets— (76,951)
Change in deferred compensation plan211 222 
Net cash used in investing activities(23,552)(119,125)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Repurchase of common stock, including shares surrendered for tax withholdings and transaction costs(15,452)(93,763)
Payment of dividends (26,480)
Borrowings under revolving loan356,316 750,981 
Repayments under revolving loan(347,764)(615,663)
Proceeds from term loan, net of discount78,750 — 
Payment of debt issuance costs(1,164)— 
Net cash provided by financing activities70,686 15,075 
Effect of exchange rate changes on cash and cash equivalents(434)407 
Net decrease in cash and cash equivalents(4,031)(3,077)
Cash and cash equivalents, beginning of period68,487 69,136 
Cash and cash equivalents, end of period$64,456 $66,059 
 
See accompanying notes to these consolidated financial statements.
7

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Thirty-nine Weeks Ended
 October 31,
2020
November 2,
2019
(in thousands)
OTHER CASH FLOW INFORMATION:  
Net cash paid during the period for income taxes$4,975 $74 
Cash paid during the period for interest6,177 6,233 
Increase (decrease) in accrued purchases of property and equipment(2,162)797 
 
See accompanying notes to these consolidated financial statements.

8

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.BASIS OF PRESENTATION
Description of Business
The Children’s Place, Inc. and subsidiaries (the “Company”, or “we”) is the largest pure-play children’s specialty apparel retailer in North America. The Company provides apparel, footwear, accessories, and other items for children. The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell trend right, high-quality merchandise predominately at value prices, primarily under our proprietary “The Children’s Place”, “Place”, “Baby Place”, and “Gymboree” brand names.
The Company classifies its business into two segments: The Children’s Place U.S. and The Children’s Place International.  Included in The Children’s Place U.S. segment are the Company’s U.S. and Puerto Rico-based stores and revenue from its U.S.-based wholesale business. Included in The Children’s Place International segment are its Canadian-based stores, revenue from the Company’s Canada wholesale business, as well as revenue from international franchisees. Each segment includes an e-commerce business located at www.childrensplace.com and www.gymboree.com.
Interim Financial Statements
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Accordingly, certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of October 31, 2020 and November 2, 2019, the results of its consolidated operations for the thirteen and thirty-nine weeks ended October 31, 2020 and November 2, 2019, consolidated cash flows for the thirty-nine weeks ended October 31, 2020 and November 2, 2019 and consolidated stockholders’ equity for the thirteen and thirty-nine weeks ended October 31, 2020 and November 2, 2019. The consolidated financial position as of February 1, 2020 was derived from audited financial statements.  Due to the seasonal nature of the Company’s business, the results of operations for the thirty-nine weeks ended October 31, 2020 and November 2, 2019 are not necessarily indicative of operating results for a full fiscal year.  These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020.
In December 2019, there was an outbreak of a new strain of coronavirus (“COVID-19”) that began in Wuhan, China and has since spread to the other regions of the world. In March 2020, the World Health Organization declared COVID-19 a global pandemic, and the President of the United States declared a national emergency. Federal, state, and local governments and health officials mandated and continue to mandate various restrictions, including closures of businesses and other activities, travel restrictions, restrictions on public gatherings, stay at home orders and advisories, quarantining of people who may have been exposed to the virus, and the adoption of remote or hybrid learning models for schools. The COVID-19 pandemic has significantly negatively affected the global economy, significantly disrupted global supply chains, and created significant disruption of the financial and retail markets, including a significant disruption in consumer demand for children’s clothing and accessories. As such, the comparability of the Company’s operating results has been affected by significant adverse impacts related to the COVID-19 pandemic.


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Terms that are commonly used in the Company’s notes to consolidated financial statements are defined as follows:
Third Quarter 2020 — The thirteen weeks ended October 31, 2020
Third Quarter 2019 — The thirteen weeks ended November 2, 2019
Year-To-Date 2020 — The thirty-nine weeks ended October 31, 2020
Year-To-Date 2019 — The thirty-nine weeks ended November 2, 2019
FASB — Financial Accounting Standards Board
SEC — U.S. Securities and Exchange Commission
U.S. GAAP — Generally Accepted Accounting Principles in the United States
FASB ASC — FASB Accounting Standards Codification, which serves as the source for authoritative U.S. GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative U.S. GAAP for SEC registrants
Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. FASB ASC 810--Consolidation is considered when determining whether an entity is subject to consolidation.
Fiscal Year
The Company’s fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to January 31.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and amounts of revenues and expenses reported during the period. Actual results could differ from the assumptions used and estimates made by management, which could have a material impact on the Company’s financial position or results of operations. Significant estimates inherent in the preparation of the consolidated financial statements include: reserves for the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived assets; fair value measurements; accounting for income taxes and related uncertain tax positions; insurance reserves; valuation of stock-based compensation awards and related estimated forfeiture rates, among others.
Reclassifications
Certain reclassifications have been made to prior period financial statements to conform to the current period presentation.
Inventories
Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined on an average cost basis. The Company capitalizes certain supply chain costs in inventory, and these costs are reflected within cost of sales as the inventories are sold. Inventory shrinkage is estimated in interim periods based upon the historical results of physical inventory counts in the context of current year facts and circumstances.
Impairment of Long-Lived Assets
The Company periodically reviews its long-lived assets when events indicate that their carrying value may not be recoverable. Such events include historical trends or projected trends of cash flow losses or a future expectation that the Company will sell or dispose of an asset significantly before the end of its previously estimated useful life. In reviewing for impairment, the Company groups its long-lived assets at the lowest possible level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
The Company reviews all stores that have reached comparable sales status, or sooner if circumstances should dictate, on at least an annual basis. The Company believes waiting this period of time allows a store to reach a maturity level where a more comprehensive analysis of financial performance can be performed. For each store that shows indications of impairment, the Company projects future cash flows over the remaining life of the lease, adjusted for lease payments, and compares the total undiscounted cash flows to the net book value of the related long-lived assets, including right-of-use (“ROU”) assets. If the undiscounted cash flows are less than the related net book value of the long-lived assets, they are written down to their fair market value. The Company primarily uses discounted future cash flows directly associated with those assets to determine fair market value of long-lived assets and ROU assets. In evaluating future cash flows, the Company considers external and internal factors. External factors comprise the local environment in which the store resides, including mall traffic and competition and their effect on sales trends, as well as macroeconomic factors, such as global pandemics. Internal factors
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include the Company’s ability to gauge the fashion taste of its customers, control variable costs such as cost of sales and payroll and, in certain cases, its ability to renegotiate lease costs.
Asset impairment charges during Year-To-Date 2020 were related to underperforming stores identified in our ongoing store portfolio evaluation primarily as a result of decreased net revenues and cash flow projections resulting from the COVID-19 pandemic.
Stock-based Compensation
The Company generally grants time vesting stock awards (“Deferred Awards”) and performance-based stock awards (“Performance Awards”) to employees at management levels.  The Company also grants Deferred Awards to its non-employee directors.  Deferred Awards are granted in the form of a defined number of restricted stock units that require each recipient to complete a service period. Deferred Awards generally vest ratably over three years, except for those granted to non-employee directors, which generally vest after one year. Performance Awards are granted in the form of restricted stock units which have performance criteria that must be achieved for the awards to vest (the “Target Shares”) in addition to a service period requirement. For Performance Awards, an employee may earn from 0% to 250% of their Target Shares based on the Company’s achievement of certain performance goals established at the beginning of the applicable performance period. The Performance Awards cliff vest, if earned, after completion of the applicable performance period, which is generally three years. The fair value of these Performance Awards granted is based on the closing price of our common stock on the grant date.
Stock-based compensation expense is recognized ratably over the related service period reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. Stock-based compensation expense, as it relates to Performance Awards, is also adjusted based on the probability that the performance criteria will be achieved.
Deferred Compensation Plan
The Company has a deferred compensation plan (the “Deferred Compensation Plan”), which is a nonqualified plan, for eligible senior level employees.  Under the plan, participants may elect to defer up to 80% of his or her base salary and/or up to 100% of his or her bonus to be earned for the year following the year in which the deferral election is made.  The Deferred Compensation Plan also permits members of the Board of Directors to elect to defer payment of all or a portion of their retainer and other fees to be earned for the year following the year in which a deferral election is made.  In addition, eligible employees and directors of the Company may also elect to defer payment of any shares of Company stock that is earned with respect to stock-based awards.  Directors may elect to have all or a certain portion of their fees earned for their service on the Board invested in shares of the Company’s common stock.  Such elections are irrevocable.  The Company is not required to contribute to the Deferred Compensation Plan, but at its sole discretion, can make additional contributions on behalf of the participants. Deferred amounts are not subject to forfeiture and are deemed invested among investment funds offered under the Deferred Compensation Plan, as directed by each participant.  Payments of deferred amounts (as adjusted for earnings and losses) are payable following separation from service or at a date or dates elected by the participant at the time the deferral is elected.  Payments of deferred amounts are generally made in either a lump sum or in annual installments over a period not exceeding 15 years.  All deferred amounts are payable in the form in which they were made, except for board fees invested in shares of the Company’s common stock, which will be settled in shares of Company common stock.  Earlier distributions are not permitted except in the case of an unforeseen hardship.
The Company has established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The assets of the rabbi trust are general assets of the Company and, as such, would be subject to the claims of creditors in the event of bankruptcy or insolvency.  Investments of the rabbi trust consist of mutual funds and Company common stock.  The Deferred Compensation Plan liability, excluding Company common stock, is included within other long-term liabilities and changes in the balance, except those relating to payments, are recognized as compensation expense within selling, general, and administrative expenses.  The value of the mutual funds is included in other assets and related earnings and losses are recognized as investment income or loss, which is included within selling, general, and administrative expenses.  Company stock deferrals are included within the equity section of the Company’s consolidated balance sheet as treasury stock and as a deferred compensation liability.  Deferred stock is recorded at fair market value at the time of deferral, and any subsequent changes in fair market value are not recognized.

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Fair Value Measurement and Financial Instruments
FASB ASC 820--Fair Value Measurement provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities.
This topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The three levels of the hierarchy are defined as follows:
Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities
Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly
Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities
Our cash and cash equivalents, accounts receivable, assets of the Company’s Deferred Compensation Plan, accounts payable, and revolving loan are all short-term in nature.  As such, their carrying amounts approximate fair value and fall within Level 1 of the fair value hierarchy. The Company stock included in the Deferred Compensation Plan is not subject to fair value measurement.
Our derivative assets and liabilities include foreign exchange forward contracts that are measured at fair value using observable market inputs such as forward rates, our credit risk, and our counterparties’ credit risks. Based on these inputs, our derivative assets and liabilities are classified within Level 2 of the fair value hierarchy.
Our assets measured at fair value on a nonrecurring basis include long-lived assets, such as intangible assets, fixed assets, and ROU assets. We review the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to fall within Level 3 of the fair value hierarchy.
Recently Issued Accounting Standards
Adopted in Fiscal 2020
In August 2018, the FASB issued guidance related to the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. We adopted this guidance in the first quarter of fiscal 2020. This adoption did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued guidance related to disclosure requirements for fair value measurement. The amendments modify current fair value measurement disclosure requirements by removing, adding, or modifying certain fair value measurement disclosures. We adopted this guidance in the first quarter of fiscal 2020. This adoption did not have a material impact on our consolidated financial statements.
In June 2016, the FASB issued guidance related to the accounting for financial instrument credit losses. The guidance provides more decision useful information about the expected credit losses on financial instruments by replacing the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. We adopted this guidance in the first quarter of fiscal 2020. This adoption did not have a material impact on our consolidated financial statements.
To Be Adopted After Fiscal 2020
In December 2019, the FASB issued guidance related to the accounting for income taxes. The guidance aims to simplify the accounting for income taxes by removing certain exceptions to the general principles within the current guidance and by clarifying and amending the current guidance. The guidance is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2020. We do not expect the guidance to have a material impact on our consolidated financial statements.
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2. REVENUES
Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
The following table presents our revenues disaggregated by geography:                                                                    
 Thirteen Weeks EndedThirty-nine Weeks Ended
 October 31,
2020
November 2,
2019
October 31,
2020
November 2,
2019
Net sales:(in thousands)
South$151,374 $176,091 $395,655 $475,801 
Northeast97,668 129,325 232,435 319,468 
West50,896 77,213 143,472 206,344 
Midwest61,740 69,957 139,243 173,912 
International and other63,893 72,210 138,896 182,122 
Total net sales$425,571 $524,796 $1,049,701 $1,357,647 

The Company recognizes revenue, including shipping and handling fees billed to customers, upon purchase at the Company’s retail stores or when received by the customer if the product was purchased via e-commerce, net of coupon redemptions and anticipated sales returns. The Company deferred approximately $7.4 million and $2.5 million as of October 31, 2020 and November 2, 2019, respectively, based upon estimated time of delivery, at which point control passes to the customer, and is recorded in accrued expenses and other current liabilities. Sales tax collected from customers is excluded from revenue.
For the sale of goods with a right of return, the Company recognizes revenue for the consideration it expects to be entitled to and calculates an allowance for estimated sales returns based upon the Company’s sales return experience. Adjustments to the allowance for estimated sales returns in subsequent periods are generally not material based on historical data, thereby reducing the uncertainty inherent in such estimates. The allowance for estimated sales returns, which is recorded in accrued expenses and other current liabilities, was approximately $1.7 million and $2.3 million as of October 31, 2020 and November 2, 2019, respectively.
Our private label credit card is issued to our customers for use exclusively at The Children’s Place stores and online at www.childrensplace.com and www.gymboree.com, and credit is extended to such customers by a third-party financial institution on a non-recourse basis to us. The private label credit card includes multiple performance obligations for the Company, including marketing and promoting the program on behalf of the bank and the operation of the loyalty rewards program. Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company. The upfront bonus is recognized as revenue and allocated between brand and reward obligations. As the license of the Company’s brand is the predominant item in the performance obligation, the amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur.
In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration, such as additional bonuses, including profit-sharing, over the life of the program. Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations. The amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In addition, the annual profit-sharing amount is estimated and recognized quarterly within an annual period when earned. The additional bonuses are amortized over the contract term based on anticipated progress against future targets and level of risk associated with achieving the targets.
The Company has a points-based customer loyalty program, in which customers earn points based on purchases and other promotional activities. These points can be redeemed for coupons to discount future purchases. A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program. The value of each point earned is recorded as deferred revenue and is included within accrued expenses and other current liabilities. The total contract liabilities related to this program were $2.5 million and $2.9 million as of October 31, 2020 and November 2, 2019, respectively.
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The Company’s policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise. The Company recognizes gift card breakage income in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property and is recorded within net sales. Prior to their redemption, gift cards are recorded as a liability, included within accrued expenses and other current liabilities. The total contract liability related to gift cards issued was $12.6 million and $14.7 million as of October 31, 2020 and November 2, 2019, respectively. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards:
 Contract Liability
(in thousands)
Balance at February 1, 2020$16,100 
Gift cards sold11,452 
Gift cards redeemed(12,740)
Gift card breakage(2,231)
Balance at October 31, 2020$12,581 
The Company has an international expansion program through territorial agreements with franchisees. The Company generates revenues from the franchisees from the sale of product and, in certain cases, sales royalties. The Company records net sales and cost of goods sold on the sale of product to franchisees when the franchisee takes ownership of the product. The Company records net sales for royalties when the applicable franchisee sells the product to their customers. Under certain agreements, the Company receives a fee from each franchisee for exclusive territorial rights and based on the opening of new stores. The Company records these territorial fees as deferred revenue and amortizes the fee into net sales over the life of the territorial agreement.

3. LEASES
We have operating leases for retail stores, corporate offices, distribution facilities, and certain equipment. Our leases have remaining lease terms of less than 1 year up to 10 years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the lease early.
The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. For operating leases, the ROU asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives. For finance leases, the ROU asset is initially measured at cost and subsequently amortized using the straight-line method generally from the lease commencement date to the earlier of the end of its useful life or the end of the lease term.
The discount rate is the rate implicit in the lease unless that rate cannot be readily determined. In that case, the Company is required to use its incremental borrowing rate. The discount rate for a lease is determined based on the information available at lease commencement. In general, the Company accounts for the underlying leased asset and applies a discount rate at the lease level. However, there are certain non-real estate leases for which the Company utilizes the portfolio method by aggregating similar leased assets based on the underlying lease term.
The Company has made an accounting policy election by class of underlying asset to not apply the recognition requirements of FASB ASC 842--Leases (“Topic 842”) to leases with an initial term of 12 months or less. Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.
The Company has lease agreements with lease and non-lease components. The Company has elected a policy to account for lease and non-lease components as a single component for all asset classes.
In certain leases, the Company has the right to exercise lease renewal options. Renewal option periods are included in the measurement of lease ROU assets and lease liabilities where the exercise is reasonably certain to occur.
As of October 31, 2020, the Company’s finance leases were not material to the consolidated balance sheets, consolidated statements of operations, or consolidated statements of cash flows.

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We have certain lease agreements structured with both a fixed base rent and a contingent rent based on a percentage of sales over contractual levels, others with only contingent rent based on a percentage of sales, and some with a fixed base rent adjusted periodically for inflation or changes in fair market value of the underlying real estate. Contingent rent is recognized as sales occur. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
We record all occupancy costs in cost of sales, except administrative office buildings, which are recorded in selling, general, and administrative expenses.
The following components of lease expense are included in the Company’s consolidated statements of operations.
 Thirteen Weeks EndedThirty-nine Weeks Ended
October 31, 2020November 2, 2019October 31, 2020November 2, 2019
(in thousands)
Operating lease cost$29,218 $36,348 $108,412 $112,316 
Variable lease cost (1)
16,871 16,754 36,696 47,520 
Total lease cost$46,089 $53,102 $145,108 $159,836 
( 1) Includes short term leases with lease periods of less than 12 months.

As of October 31, 2020, the weighted-average remaining operating lease term was 4.0 years, and the weighted-average discount rate for operating leases was 5.0%.
Cash paid for amounts included in the measurement of operating lease liabilities during Year-To-Date 2020 was approximately $92.9 million.
ROU assets obtained in exchange for new operating lease liabilities were approximately $41.4 million during Year-To-Date 2020.
As of October 31, 2020, the stated future minimum annual lease payments under operating lease agreements were as follows:
As of October 31, 2020
(in thousands)
Remainder of 2020 $96,913 
2021114,785 
202282,512 
202345,951 
202427,754 
Thereafter70,010 
Total lease payments$437,925 
Less: imputed interest$(34,496)
Present value of lease liabilities$403,429 



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4. INTANGIBLE ASSETS
The Company acquired certain intellectual property and related assets (the “Gymboree Assets”) of Gymboree Group, Inc. and related entities, which included the worldwide rights to the names “Gymboree” and “Crazy 8” and other intellectual property, including trademarks, domain names, copyrights, and customer databases. These intangible assets, inclusive of acquisition costs, are recorded in the long-term assets section of the consolidated balance sheets.
The Company̵