UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 2006
OR
[ ] 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: 0-10345
CACHE, INC.
(Exact name of registrant as specified in its Charter)
FLORIDA 59-1588181
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1440 BROADWAY, NEW YORK, NEW YORK 10018
---------------------------------------- -----
(Address of principal executive offices) (zip code)
212-575-3200
------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
(Former name, address and former fiscal year, if changed since last report)
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
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).
Large Accelerated Accelerated Filer Non-Accelerated Filer
|_| |X| |_|
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
As of July 31 2006, 15,791,003 common shares were outstanding.
CACHE, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of July 1, 2006,
December 31, 2005 and July 2, 2005 3
Condensed Consolidated Statements of Income for the twenty-six and
thirteen weeks ended July 1, 2006 and July 2, 2005 4
Condensed Consolidated Statements of Cash Flows for the twenty-six
weeks ended July 1, 2006 and July 2, 2005 6
Notes to the Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Item 4. Controls and Procedures 18
PART II. OTHER INFORMATION
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
2
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CACHE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
July 1, December 31, July 2,
ASSETS 2006 2005 2005
---------------- ---------------- ----------------
Current assets:
Cash and cash equivalents $ 35,578,000 $ 16,753,000 $ 17,166,000
Marketable securities 20,426,000 36,520,000 25,964,000
Receivables, net 3,176,000 5,734,000 3,511,000
Inventories 30,147,000 32,785,000 30,165,000
Deferred income taxes, net 720,000 691,000 662,000
Prepaid expenses and other current assets 5,850,000 4,777,000 1,141,000
---------------- ---------------- ----------------
Total current assets 95,897,000 97,260,000 78,609,000
Equipment and leasehold improvements, net 50,781,000 52,760,000 49,502,000
Other assets 434,000 864,000 856,000
---------------- ---------------- ----------------
Total assets $ 147,112,000 $ 150,884,000 $ 128,967,000
================ ================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,569,000 $ 18,404,000 $ 11,370,000
Accrued compensation 1,542,000 2,624,000 1,427,000
Accrued liabilities 13,420,000 12,446,000 9,487,000
---------------- ---------------- ----------------
Total current liabilities 26,531,000 33,474,000 22,284,000
Other liabilities 15,450,000 16,309,000 14,557,000
Deferred income taxes, net 1,926,000 2,105,000 2,246,000
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, par value $.01; authorized, 20,000,000 shares;
15,791,003, 15,770,553 and 15,726,553 shares issued
and outstanding 158,000 158,000 157,000
Additional paid-in capital 36,278,000 35,455,000 34,988,000
Retained earnings 66,769,000 63,383,000 54,735,000
---------------- ---------------- ----------------
Total stockholders' equity
103,205,000 98,996,000 89,880,000
---------------- ---------------- ----------------
Total liabilities and stockholders' equity
$ 147,112,000 $ 150,884,000 $ 128,967,000
================ ================ ================
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
3
CACHE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWENTY-SIX WEEKS ENDED
(UNAUDITED)
July 1, July 2,
2006 2005
---------------- ----------------
Net sales $ 135,503,000 $ 129,763,000
Cost of sales, including occupancy and buying
costs 71,024,000 72,264,000
---------------- ----------------
Gross profit 64,479,000 57,499,000
---------------- ----------------
Expenses
Store operating expenses 44,725,000 41,871,000
General and administrative expenses 9,734,000 8,160,000
Lillie Rubin exit costs 5,662,000 ---
---------------- ----------------
Total expenses 60,121,000 50,031,000
---------------- ----------------
Operating income 4,358,000 7,468,000
Interest income 1,193,000 400,000
---------------- ----------------
Income before income taxes 5,551,000 7,868,000
Income taxes 2,165,000 3,111,000
---------------- ----------------
Net income $ 3,386,000 $ 4,757,000
================ ================
Basic earnings per share $0.21 $0.30
================ ================
Diluted earnings per share $0.21 $0.30
================ ================
Basic weighted average shares outstanding 15,781,000 15,700,000
================ ================
Diluted weighted average shares outstanding 16,151,000 15,830,000
================ ================
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these
financial statements.
4
CACHE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THIRTEEN WEEKS ENDED
(UNAUDITED)
July 1, July 2,
2006 2005
---------------- ----------------
Net sales $ 71,682,000 $ 66,970,000
Cost of sales, including occupancy and buying
costs 36,385,000 36,604,000
---------------- ----------------
Gross profit 35,297,000 30,366,000
---------------- ----------------
Expenses
Store operating expenses 22,671,000 21,278,000
General and administrative expenses 4,910,000 4,371,000
Lillie Rubin exit costs 5,662,000 ---
---------------- ----------------
Total expenses 33,243,000 25,649,000
---------------- ----------------
Operating income 2,054,000 4,717,000
Interest income 664,000 243,000
---------------- ----------------
Income before income taxes 2,718,000 4,960,000
Income taxes 1,060,000 1,960,000
---------------- ----------------
Net income $ 1,658,000 $ 3,000,000
================ ================
Basic earnings per share $0.11 $0.19
================ ================
Diluted earnings per share $0.10 $0.19
================ ================
Basic weighted average shares outstanding 15,785,000 15,712,000
================ ================
Diluted weighted average shares outstanding 16,168,000 15,950,000
================ ================
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these
financial statements.
5
CACHE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED
(UNAUDITED)
July 1, July 2,
2006 2005
--------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,386,000 $ 4,757,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,408,000 4,606,000
Decrease in deferred income taxes (208,000) (872,000)
Amortization of deferred rent (634,000) (599,000)
Other, net (24,000) (24,000)
Stock-based compensation 602,000 ---
Lillie Rubin exit costs 3,653,000 ---
Change in assets and liabilities:
Decrease in receivables 2,558,000 3,034,000
Decrease in inventories 2,363,000 2,131,000
Decrease (increase) in prepaid expenses and other
current assets (1,073,000) 807,000
Decrease in accounts payable (6,835,000) (5,685,000)
Excess tax benefits from stock options (29,000) ---
Decrease (increase) in accrued liabilities
and accrued compensation 149,000 (1,057,000)
--------------- -----------------
Net cash provided by operating activities 9,316,000 7,098,000
--------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of marketable securities 48,098,000 15,971,000
Purchases of marketable securities (32,004,000) (16,061,000)
Payments for equipment and leasehold
improvements (6,835,000) (6,973,000)
--------------- -----------------
Net cash provided by (used in) investing
activities 9,259,000 (7,063,000)
--------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of stock options 221,000 283,000
Excess tax benefits from stock options 29,000 ---
--------------- -----------------
Net cash provided by financing activities 250,000 283,000
--------------- -----------------
Net increase in cash and equivalents 18,825,000 318,000
Cash and equivalents, at beginning of period 16,753,000 16,848,000
--------------- -----------------
Cash and equivalents, at end of period $ 35,578,000 $ 17,166,000
=============== =================
Supplemental disclosure of cash flow information:
Income taxes paid $ 3,839,000 $ 3,410,000
Accrued equipment and leasehold improvements $ 1,869,000 $ 945,000
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these
financial statements.
6
CACHE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
References to the "Company," "we," "us," or "our" means Cache, Inc., together
with its wholly-owned subsidiaries, except as expressly indicated or unless the
context otherwise requires. We operate two chains of women's apparel specialty
stores of which 272 stores are operated under the trade name "Cache" and 37
stores are operated under the trade name "Lillie Rubin", as of July 1, 2006.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X and do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States. However, in the opinion of our management, all
known adjustments necessary for a fair presentation of the results of the
interim periods have been made. These adjustments consist primarily of normal
recurring accruals and estimates that impact the carrying value of assets and
liabilities. Actual results may materially differ from these estimates.
These condensed consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements for the year ended
December 31, 2005, which are included in the Company's Annual Report on Form
10-K with respect to such period filed with the Securities and Exchange
Commission. All significant intercompany accounts and transactions have been
eliminated. The December 31, 2005 condensed consolidated balance sheet amounts
are derived from the Company's audited consolidated financial statements.
The Company's Fiscal Year ("Fiscal Year" or "Fiscal") refers to the 52 or 53
weeks, as applicable, ending the Saturday nearest to December 31. The years
ended December 30, 2006 ("Fiscal 2006") and December 31, 2005 ("Fiscal 2005")
are each 52 week years as compared to the year ended January 1, 2005 ("Fiscal
2004"), that was a 53 week year.
2. STOCK BASED COMPENSATION
Effective January 1, 2006, the Company began recording compensation expense
associated with stock options in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 123R, Share-Based Payment, as interpreted by
SEC Staff Accounting Bulletin No. 107. Prior to January 1, 2006, we had
accounted for stock options according to the provisions of Accounting Principles
Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations, and therefore no related compensation expense was
recorded for awards granted with no intrinsic value. We adopted the modified
prospective transition method provided for under SFAS No. 123R, and,
consequently, have not retroactively adjusted results from prior periods. Under
this transition method, compensation cost associated with stock options
recognized in Fiscal 2006 includes: 1) quarterly amortization related to the
remaining unvested portion of all stock option awards granted prior to January
1, 2006, based on the grant date fair value estimated in accordance with the
original provisions of SFAS No. 123; and 2) quarterly amortization related to
all stock option awards granted subsequent to January 1, 2006, when granted,
based on the grant-date fair value estimated in accordance with the provisions
of SFAS No. 123R.
The Company's 2000 Stock Option Plan provides for the granting of either
incentive stock options ("ISO's") or non-qualified options to purchase up to
825,000 shares of common stock. As of July 1, 2006, there were 67,032 shares
under the 2000 plan available for future grant. The Company's 2003 Stock Option
Plan provides for the granting of either ISO's or non-qualified options to
purchase up to 1,350,000 shares of common stock. As of July 1, 2006, there were
152,500 shares under the 2003 plan available for future grant. All of the
Company's prior stock option plans have expired as to the ability to grant new
options.
7
Stock awards outstanding under the Company's current plans have generally been
granted at prices which are equal to the market value of our stock on the date
of grant, generally vest over four years and expire no later than ten years
after the grant date. Effective January 1, 2006, we recognize compensation
expense ratably over the vesting period, net of estimated forfeitures. As of
July 1, 2006, there was $1.5 million of total unrecognized compensation cost
related to non-vested options, which is expected to be recognized over a
remaining weighted-average vesting period of 1.5 years. The total intrinsic
value of options exercised during the 26 and 13 week periods ended July 1, 2006
was approximately $146,000 and $81,000.
A summary of the changes in stock options outstanding during the 26 week period
ended July 1, 2006 is presented below:
TOTAL OUTSTANDING CURRENTLY EXERCISABLE
---------------------------------------------------------- --------------------------------------
NUMBER AGGREGATE NUMBER
OF AVERAGE AVERAGE INTRINSIC OF AVERAGE AVERAGE
OPTIONS PRICE (1) LIFE (2) VALUE (3) OPTIONS PRICE (1) LIFE (2)
---------- ---------- ---------- ----------- --------- ----------- ---------
December 31, 2005 1,481,500 $10.85 7.45 $9,579,495 742,250 $8.80 6.92
Granted --- --- --- ---
Canceled/forfeited (9,000) 12.65 --- ---
Exercised (20,450) 10.72 (20,450) 10.72
---------- ---------- --------- -----------
July 1, 2006 1,452,050 $10.84 6.95 $9,431,555 721,800 $8.74 6.41
========== ========== ========== =========== ========= =========== =========
(1) - Weighted-average exercise price.
(2) - Weighted-average contractual life remaining in years.
(3) - The aggregate intrinsic values in the table above are based on the
Company's closing stock price as of the last business day of the
periods ended December 31, 2005 and July 1, 2006, which was $17.32
and $17.34, respectively.
A summary of the activity for the non-vested share awards during the 26 week
period ended July 1, 2006 is presented below:
FAIR
VALUE
COMMON AT
STOCK GRANT
OPTIONS DATE
------------- ------------
Non-vested--December 31, 2005 739,250 $12.92
Granted --- ---
Vested --- ---
Cancelled/forfeited (9,000) $12.65
------------- ------------
Non-vested--July 1, 2006 730,250 $12.92
============= ============
Prior to the adoption of SFAS No. 123R, we presented all tax benefits resulting
from the exercise of stock options as operating cash flows in the Condensed
Consolidated Statement of Cash Flows. SFAS No. 123R requires that cash flows
resulting from tax deductions in excess of the cumulative compensation cost
recognized for options exercised ("excess tax benefits") be classified as
financing cash flows. For the 26 and 13 week periods ended July 1, 2006, there
was $29,000 of excess tax benefits realized from the exercise of stock options.
During the 26 and 13 week periods ended July 1, 2006, the Company recognized
approximately $602,000 ($367,000 after tax or $0.02 per diluted share) and
$272,000 ($166,000 after tax or $0.01 per diluted share) in share-based
compensation expense. The grant date fair value is calculated using the Black
Scholes option
8
valuation model. No compensation cost was recognized prior to January 1, 2006.
Had compensation cost for our share-based compensation plans been determined
consistent with SFAS No. 123R, the Company's net income and earnings per share
would have been reduced to the following pro forma amounts (in thousands, except
per share data):
Twenty-six Thirteen
Weeks Ended Weeks Ended
July 2, July 2,
2005 2005
------------- -------------
Net earnings as reported: $4,757,000 $3,000,000
Add share-based employee compensation expense included --- ---
in reported net income, net of taxes
Deduct employee compensation expense determined under a (504,000) (249,000)
fair value based method, net of related tax effects
Pro forma net earnings $4,253,000 $2,751,000
Basic earnings per share:
As reported $0.30 $0.19
Pro forma $0.27 $0.18
Diluted earnings per share:
As reported $0.30 $0.19
Pro forma $0.27 $0.17
There were no options granted during the 26 and 13 week periods ended July 1,
2006. There were 105,000 options granted during the 26 and 13 week periods ended
July 2, 2005.
3. BASIC AND DILUTED EARNINGS
In accordance with SFAS No. 128, "Earnings Per Share", basic earnings per share
has been computed based upon the weighted average of common shares outstanding.
Diluted earnings per share gives effect to outstanding stock options.
Earnings per common share has been computed as follows:
13 Weeks Ended 26 Weeks Ended
---------------------------- ----------------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net income $1,658,000 $3,000,000 $3,386,000 $4,757,000
Basic weighted number of average
shares outstanding 15,785,000 15,712,000 15,781,000 15,700,000
Incremental shares from assumed
issuances of stock options 383,000 238,000 370,000 130,000
Diluted weighted average number of
shares outstanding 16,168,000 15,950,000 16,151,000 15,830,000
Net income per share - Basic $0.11 $0.19 $0.21 $0.30
- Diluted $0.10 $0.19 $0.21 $0.30
9
Options to purchase 10,000 common shares with an exercise price of $18.30 per
share were excluded from the computation of diluted earnings per share, for the
13 and 26 week periods in fiscal 2005 and 2006, because the exercise price was
greater than the market price.
4. RECENT ACCOUNTING PRONOUNCEMENTS
On October 6, 2005, the FASB issued FASB Staff Position ("FSP") No. FAS 13-1
"Accounting for Rental Costs Incurred during a Construction Period." The FASB
has concluded that rental costs incurred during and after a construction period
are for the right to control the use of a leased asset and must be recognized as
rental expense. Such costs were previously capitalized as construction costs, if
the company had a policy to do so. The FSP is effective for reporting periods
beginning after December 15, 2005. The Company expects that the implementation
of FSP No. FAS 13-1 will decrease net income by approximately $500,000 for the
fiscal year ended December 30, 2006. During the 26 week period ended July 1,
2006, the Company incurred $121,000 of such costs.
On November 3, 2005, FASB issued FSP Nos. FAS 115-1 and FAS 124-1, "The Meaning
of Other-Than-Temporary Impairment and Its Application to Certain Investments."
This FSP addresses the determination as to when an investment is considered
impaired, whether that impairment is other than temporary, and the timing and
measurement of an impairment loss. The FSP is required to be applied to
reporting periods beginning after December 15, 2005 and was adopted by the
Company in the first quarter of fiscal 2006. The impact of the adoption of this
FSP did not have a material impact on its consolidated financial statements.
In July, 2006, FASB issued Interpretation No. 48 ("FIN 48"), "Accounting for
Uncertainty in Income Taxes," which clarifies the accounting for uncertainty in
income taxes recognized in the financial statements in accordance with FASB No.
109, ACCOUNTING FOR INCOME TAXES. FIN 48 provides guidance on the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosures and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006. We are currently evaluating the impact of this standard on
our consolidated financial statements.
5. EQUIPMENT AND LEASEHOLD IMPROVEMENTS
July 1, December 31, July 2,
2006 2005 2005
-------------- -------------- --------------
Leasehold improvements $ 54,650,000 $ 51,827,000 $ 48,553,000
Furniture, fixtures and equipment 55,009,000 51,715,000 48,144,000
-------------- -------------- --------------
109,659,000 103,542,000 96,697,000
Less: accumulated depreciation
and amortization (58,878,000) (50,782,000) (47,195,000)
-------------- -------------- --------------
$ 50,781,000 $ 52,760,000 $ 49,502,000
============== ============== ==============
10
6. ACCRUED LIABILITIES
July 1, December 31, July 2,
2006 2005 2005
-------------- -------------- --------------
Operating expenses $ 4,408,000 $ 2,894,000 $ 2,733,000
Other taxes 1,714,000 2,540,000 1,124,000
Group insurance 654,000 598,000 558,000
Sales return reserve 415,000 803,000 443,000
Leasehold additions 1,869,000 859,000 945,000
Other customer deposits and credits 4,360,000 4,752,000 3,684,000
-------------- -------------- --------------
$ 13,420,000 $ 12,446,000 $ 9,487,000
============== ============== ==============
7. BANK DEBT
During November 2005, the Company reached an agreement with its bank to extend
the maturity of the Amended Revolving Credit Facility until November 30, 2008.
Pursuant to the newly Amended Revolving Credit Facility, $17,500,000 is
available until expiration at November 30, 2008. The amounts outstanding under
the credit facility bear interest at a maximum per annum rate equal to the
bank's prime rate, currently 8.25% at July 31, 2006, less 0.25%. The agreement
contains selected financial and other covenants. Effective upon the occurrence
of an Event of Default under the Amended Revolving Credit Facility, the Company
grants to the bank a security interest in the Company's inventory and certain
receivables. The Company has at all times been in compliance with all loan
covenants.
There have been no borrowings against the line of credit during fiscal 2006 and
fiscal 2005. There were outstanding letters of credit of $2.6 million, $1.0
million and $3.0 million, pursuant to the Revolving Credit Facility, at July 1,
2006, December 31, 2005 and July 2, 2005, respectively.
8. LILLIE RUBIN EXIT COSTS
During the quarter ended July 1, 2006, the Company recorded a pre-tax charge of
$5.7 million for asset impairment and store closing costs for the exit of the
Lillie Rubin business. Included in the exit costs is a write down of leasehold
improvements, furniture and fixtures on 19 stores in the amount of $4.1 million,
write down of intangibles of $455,000, write down of supplies of $275,000,
severance accrual of $384,000, as well as an accrual of $1.6 million for
contractual termination costs negotiated prior to July 1, 2006. These costs were
partially offset by the reversal of $1.2 million of deferred rent accruals. The
Company does not expect to incur significant additional exit costs upon the
closing of these properties during the third quarter. The Company has closed 11
of the stores as of August 8, 2006 and anticipates the closing of the remaining
stores by the end of September.
The following is a summary of the activity in the reserve for exit costs:
BALANCE CHARGES CASH PAYMENTS BALANCE END OF
BEGINNING OF YEAR PERIOD
----------------- ------------- --------------- ----------------
Contractual termination costs $ --- $1,624,000 $90,000 $1,534,000
Severance --- 384,000 81,000 301,000
Impairment of long lived assets
and supplies --- 4,830,000
Reversal of deferred rent liability --- (1,176,000)
11
9. CONTINGENCIES
The Company is exposed to a number of asserted and unasserted potential claims.
Management does not believe it is reasonably possible that resolution of these
matters will result in a material loss. We have not provided any third party
financial guarantees as of and for the 26 and 13 week periods ended July 1,
2006.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information and current statements contained in this
Form 10-Q, certain matters discussed herein, including, without limitation,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" are forward-looking statements that involve risks and uncertainties,
including, without limitation, the effect of economic and market conditions and
competition, the ability to open new stores and expand into new markets, and
risks relating to foreign importing operations, which could cause actual results
to differ materially.
RECENT DEVELOPMENTS
On May 15, 2006, we announced plans to exit the Lillie Rubin business,
consisting of 39 stores at July 1,2006, and to introduce a new concept, Cache
Luxe. The Company intends to convert 20 Lillie Rubin locations to Cache Luxe
stores and 1 Lillie Rubin location to Cache stores. The Company closed 9 stores
in July and will close 9 stores in August and September. The Company anticipates
converting the remaining 20 Lillie Rubin stores to Cache Luxe by the end of
September.
All of the Cache Luxe locations will be in malls that also contain a Cache
store. The Cache Luxe concept will enable the Company to offer a larger
selection of casual and evening apparel, as well as accessories at higher price
points. In addition, Cache stores located in malls containing a Cache store will
have increased capacity to offer an expanded casual assortment.
RESULTS OF OPERATIONS
The following table sets forth our results of operations for the 13 and 26 week
periods ended July 1, 2006 and July 2, 2005, expressed as a percentage of net
sales.
13 Weeks Ended 26 Weeks Ended
-------------------------------- ------------------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
-------------- ------------- ------------- -------------
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 50.8 54.7 52.4 55.7
Gross profit 49.2 45.3 47.6 44.3
Store operating expenses 31.6 31.8 33.0 32.3
General and administrative
expenses 6.8 6.5 7.2 6.3
Lillie Rubin exit costs 7.9 0.0 4.2 0.0
Operating income 2.9 7.0 3.2 5.8
Other income 0.9 0.4 0.9 0.3
Income before income taxes 3.8 7.4 4.1 6.1
Income taxes 1.5 2.9 1.6 2.4
Net income 2.3 4.5 2.5 3.7
12
We use a number of key indicators of financial condition and operating
performance to evaluate the performance of our business, some of which are set
forth in the following table:
13 Weeks Ended 26 Weeks Ended
---------------------------- -------------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
------------ ----------- ---------- -----------
Total store count at end of period 309 297 309 297
Net sales growth 7.0% 7.9% 4.4% 8.8%
Comparable store sales growth 6.0% 5.0% 4.0% 3.0%
Average sales per transaction growth 1.1% 7.0% 3.8% 3.3%
Average number of transactions growth 4.9% (2.4%) (1.1%) (0.5%)
Net sales per average square foot $117 $114 $224 $222
Total square footage (in thousands) 611 600 611 600
NET SALES
Net sales increased to $135.5 million from $129.8 million, an increase of $5.7
million or 4.4%, over the prior year 26 week period. Comparable store sales at
Cache stores (sales for stores open at least one year or more) increased $6.5
million or 6%, during the 26 week period. Comparable store sales at Lillie Rubin
stores decreased $2.2 million or 20%, during the 26 week period. Net sales from
non-comparable stores increased $1.4 million, during the current 26 week period.
The increase in net sales in FY 2006 at Cache stores reflected a 5% increase in
average dollars per transaction, as well as a 1% increase in sales transactions.
Dress sales helped to increase sales above FY 2005 levels.
Net sales increased to $71.7 million from $67.0 million, an increase of $4.7
million, or 7.0%, over the same 13 week period last year. This reflects $4.4
million of additional net sales as a result of 8% increase in comparable store
sales at Cache stores. Net sales at Lillie Rubin stores decreased $0.8 million
or 16.6%, during the 13 week period. Net sales increased $1.1 million, as a
result of additional sales from non-comparable stores, during the current 13
week period. The increase in net sales in FY 2006 at Cache stores reflected a 2%
increase in average dollars per transaction, as well as a 5% increase in sales
transactions. Dress sales helped to increase sales above FY 2005 levels, as
Easter shifted into the Company's second quarter in FY 2006 from the first
quarter in FY 2005.
GROSS PROFIT
Gross profit increased to $64.5 million from $57.5 million, an increase of $7.0
million or 12.2%, over the prior year 26 week period. This increase was
primarily due to higher net sales. As a percentage of net sales, gross profit
increased to 47.6% from 44.3%. The increase in gross profit as a percentage of
net sales was primarily due to lower promotional activity, as well as higher
initial markup. The Company expects gross margins to improve during the
remainder of Fiscal 2006 and beyond, due to the establishment of an internal
production and sourcing department.
Gross profit increased to $35.3 million from $30.4 million, an increase of $4.9
million, or 16.2%, over the same 13 week period last year. This increase was
primarily due to higher net sales. As a percentage of net sales, gross profit
increased to 49.2% from 45.3%. The increase in gross profit as a percentage of
net sales was primarily due to the same factors as for the 26 week period.
13
STORE OPERATING EXPENSES
Store operating expenses increased to $44.7 million from $41.9 million, an
increase of $2.8 million or 6.7%, over the prior year 26 week period. This
increase is primarily attributable to the increase in the number of stores open.
As a percentage of net sales, store operating expenses increased to 33.0% from
32.3% for the 26 week period, primarily due to higher payroll, depreciation,
property taxes and advertising expenses. This increase reflects the impact of
newer stores, which have not achieved a mature sales volume level as compared to
the existing store base. The increase in store operating expenses was
principally due to the higher payroll ($621,000), higher depreciation expense
($790,000), higher property taxes ($274,000) and advertising expenses ($255,000)
in FY 2006 as compared to FY 2005, primarily due to the increase in stores open.
Store operating expenses increased to $22.7 million from $21.3 million, an
increase of $1.4 million or 6.5% over the same 13 week period last year. This
increase is primarily due to an increase in the number of stores open. As a
percentage of sales, store operating expenses decreased to 31.6% from 31.8%
primarily due to the increase in sales volume.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased to $9.7 million from $8.2 million,
an increase of $1.5 million or 19.3%, over the same 26 week period last year. As
a percentage of net sales, general and administrative expenses increased to 7.2%
from 6.3%, primarily due to higher travel ($238,000) and professional fees
($122,000), as compared to last year, as well as due to higher payroll expense
which included compensation from stock options of $602,000 related to the
adoption of FAS No. 123R.
General and administrative expenses increased to $4.9 million from $4.4 million,
an increase of $539,000 or 12.3%, above the same 13 week period last year. As a
percentage of net sales, general and administrative expenses increased to 6.8%
from 6.5% for the 13 week period, primarily due to the same factors as for the
26 week period.
LILLIE RUBIN EXIT COSTS
During the quarter ended July 1, 2006 the Company recorded a pre-tax charge of
$5.7 million for the exit of the Lillie Rubin business. The charge is comprised
of leasehold improvement, furniture and fixtures write down of $4.1 million,
write down of intangibles of $455,000, write down of supplies of $275,000,
severance charges of $384,000, as well as an accrual of $1.6 million for
contractual termination costs negotiated prior to July 1, 2006. These costs were
partially offset by the reversal of $1.2 million of deferred rent accruals. As a
percent of sales, Lillie Rubin exit costs were 7.9% and 4.2%, for the 13 and 26
week periods in Fiscal 2006.
INTEREST INCOME
Interest income increased to $1.2 million from $400,000, an increase of $800,000
over the prior period, primarily due to higher average cash balances, as well as
higher interest rates.
Interest income increased to $664,000 from $243,000 in the same 13 week period
last year.
INCOME TAXES
Income taxes decreased to $2.2 million from $3.1 million, as compared to the 26
week period last year. The decrease was primarily attributable to lower taxable
income in fiscal 2006. The estimated effective tax rate for the 26 week periods
in fiscal 2006 and fiscal 2005 were 39.0% and 39.5%, respectively.
Income taxes decreased to $1.1 million from $2.0 million, as compared to the
same 13 week period last year. The estimated effective tax rate for the 13 week
periods in fiscal 2006 and fiscal 2005 were 39.0% and 39.5%, respectively.
14
NET INCOME
As a result of the factors discussed above, net income decreased to $3.4 million
from $4.8 million for the prior year 26 week period.
Net income decreased to $1.7 million from $3.0 million below the same 13 week
period last year.
LIQUIDITY AND CAPITAL RESOURCES
Our cash requirements are primarily for working capital, the construction of new
stores, the remodeling of existing stores, and to improve and enhance our
information technology systems. During the 26 week period ended July 1, 2006, we
generated $9.3 million of cash flow from operations as compared to $7.1 million
generated in the same period in Fiscal 2005. We expect to continue to meet our
cash requirements primarily through cash flows from operating activities,
existing cash and cash equivalents, and short-term investments. In addition, we
have available a $17.5 million revolving credit facility (the "credit facility")
with Bank of America Retail Finance, under which we have not had outstanding
borrowings for several years. At July 1, 2006, we had working capital of $69.4
million, cash and marketable securities of $56.0 million and no third party debt
outstanding.
The following table sets forth our cash flows for the period indicated:
----------------------------
Twenty-six weeks ended
----------------------------
July 1, July 2,
2006 2005
----------- -----------
Net cash from operating activities........ $9,316,000 $7,098,000
Net cash from investing activities........ 9,259,000 (7,063,000)
Net cash from financing activities........ 250,000 283,000
----------- -----------
Net increase in cash and cash equivalents. $18,825,000 $318,000
=========== ===========
During the 26 week period ended July 1, 2006, we increased our cash and cash
equivalents by $18.8 million, primarily due to net matured investments of $16.1
million, net income of $3.4 million (which includes depreciation expense of $5.4
million), a reduction in inventories of $2.4 million and receivables of $2.6
million, partially offset by prepaid expense increase of $1.1 million, a
reduction in accounts payable of $6.8 million and expenditures for our new store
expansion and remodeling program totaling $6.8 million. The Company recorded a
charge of $5.7 million for the exit of the Lillie Rubin business, which is
comprised of $3.7 million of non-cash charges and $2.0 million of cash charges.
The cash charges will be paid out in the third quarter. The exit of Lillie Rubin
should be finalized by the end of the third quarter.
We plan to open approximately 18 to 20 new stores during Fiscal 2006. Ten new
stores were opened in the second quarter and two new stores opened in the first
quarter of Fiscal 2006. We anticipate opening an additional 7 new stores during
the remainder of the year. We renovated 8 existing stores in Fiscal 2006. We
spent $6.8 million through July 1, 2006 and expect to spend an additional $7
million to $8 million in 2006, for both new store and existing store
construction and remodeling.
INFLATION
We do not believe that our sales revenue or operating results have been
materially impacted by inflation during the past three fiscal years. There can
be no assurance, however, that our sales revenue or operating results will not
be impacted by inflation in the future.
15
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements or transactions with
unconsolidated, limited purpose entities. In the normal course of its business,
we enter into operating leases for store locations and utilize letters of credit
principally for the importation of merchandise. We do not have any undisclosed
material transactions or commitments involving related persons or entities.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our accounting policies are more fully described in Note 1 of Notes to
Consolidated Financial Statements in our Fiscal 2005 10-K. As disclosed in Note
1 of Notes to Consolidated Financial Statements, the preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America ("GAAP") requires management to make estimates and
assumptions about future events that affect the amounts reported in the
consolidated financial statements and accompanying notes. Since future events
and their effects cannot be determined with absolute certainty, actual results
will differ from those estimates. We evaluate our estimates and judgments on an
ongoing basis and predicates those estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances. Actual results will differ from these under different
assumptions or conditions.
Our management believes the following critical accounting policies, among
others, affect its more significant judgments and estimates used in preparation
of the Consolidated Financial Statements.
INVENTORIES. Our inventories are valued at lower of cost or market using the
retail inventory method. Under the retail inventory method ("RIM"), the
valuation of inventories at cost and the resulting gross margins are calculated
by applying a calculated cost to retail ratio to the retail value of
inventories. RIM is an averaging method that has been widely used in the retail
industry due to its practicality. Additionally, it is recognized that the use of
RIM will result in valuing inventories at the lower of cost or market if
markdowns are currently taken as a reduction of the retail value of inventories.
Inherent in the RIM calculation are certain significant management judgments
including, among others, merchandise markon, markups, and markdowns, which
significantly impact the ending inventory valuation at cost as well as the
resulting gross margins. We take markdowns due to changes in fashion and style,
based on the following factors: (i) supply on hand, and (ii) our expectations as
to future sales. We do not anticipate any significant change in our markdown
strategy that would cause a change in our earnings. We believe that our RIM
provides an inventory valuation, which results in a carrying value at the lower
of cost or market.
FINITE-LONG LIVED ASSETS. The Company's judgment regarding the existence of
impairment indicators is based on market and operational performance. We assess
the impairment of long-lived assets, primarily fixed assets, whenever events or
changes in circumstances indicate that the carrying value may not be
recoverable. Factors we consider important which could trigger an impairment
review include the following:
o significant changes in the manner of our use of assets or the strategy
for our overall business;
o significant negative industry or economic trends;
o store closings;
o underperforming stores; or
o underperforming business trends.
In the evaluation of the fair value and future benefits of finite long-lived
assets, we perform an analysis by store of the anticipated undiscounted future
net cash flows of the related finite long-lived assets. If the carrying value of
the related asset exceeds the undiscounted cash flows, the carrying value is
reduced to its fair value. Various factors including future sales growth and
profit margins are included in this analysis. To the extent these future
projections or strategies change, the conclusion regarding impairment may differ
from the current estimates. During the quarter ended July 1, 2006, the Company
recorded a charge of $5.7 million related to the
16
exit of the Lillie Rubin store chain. $4.1 million of this charge relates to the
impairment of fixed assets. No impairment charges were incurred in Fiscal 2003,
2004 and 2005, respectively.
SELF INSURANCE. We are self-insured for losses and liabilities related
primarily to employee health and welfare claims. Losses are accrued based upon
our estimates of the aggregate liability for claims incurred using certain
actuarial assumptions followed in the insurance industry and based on Company
experience. Adjustments to earnings resulting from changes in historical loss
trends have been insignificant for fiscal 2003, 2004 and 2005. Further, we do
not anticipate any significant change in loss trends, settlements or other costs
that would cause a significant change in our earnings.
REVENUE RECOGNITION. Sales are recognized at the "point of sale," which occurs
when merchandise is sold in an "over-the-counter" transaction or upon receipt by
a customer. Sales of merchandise via our website are recognized at the expected
time of delivery to the customer. Our customers have the right to return
merchandise. Sales are reported net of actual and estimated returns. We maintain
a reserve for potential product returns and record, as a reduction to sales, a
provision for estimated product returns, which is determined based on historical
experience. Charges or credits to earnings resulting from revisions to estimates
on our sales return provision were approximately $66,000, $20,000 and $(29,000)
for Fiscal 2003, 2004 and 2005, respectively. Amounts billed to customers for
shipping and handling fees are included in net sales at the time of shipment.
Costs incurred for shipping and handling are included in cost of sales.
INCOME TAXES. The Company accounts for income taxes in accordance with SFAS No.
109, "Accounting for Income Taxes." This statement requires the Company to
recognize deferred tax liabilities and assets for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
carrying amounts and tax bases of assets and liabilities, using applicable tax
rates for the years in which the differences are expected to reverse. The
Company reserves for tax contingencies when it is probable that a liability has
been incurred and the contingent amount is reasonably estimable. These reserves
are based upon the Company's best estimation of the potential exposures
associated with the timing and amount of deductions as well as various tax
filing positions. Due to the complexity of these examination issues, $325,000
has been accrued to date.
SEASONALITY. We experience seasonal and quarterly fluctuations in net sales and
operating income. Quarterly results of operations may fluctuate significantly as
a result of a variety of factors, including the timing of new store openings,
fashion trends and shifts in timing of certain holidays. Our business is subject
to seasonal influences, characterized by highest sales during the fourth quarter
(October, November and December) and lowest sales during the third quarter
(July, August and September).
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the following types of market risk-fluctuations in the
purchase price of merchandise, as well as other goods and services: the value of
foreign currencies in relation to the U.S. dollar; and changes in interest
rates. Due to our inventory turn rate and its historical ability to pass through
the impact of any generalized changes in its cost of goods sold to its customers
through pricing adjustments, commodity and other product risks are not expected
to be material. We purchase substantially all merchandise in U.S. dollars.
Our exposure to market risk for changes in interest rates relates to cash, cash
equivalents and marketable securities. As of July 1, 2006, our cash, cash
equivalents and marketable securities consisted primarily of funds invested in
money market accounts, which bear interest at a variable rate and U.S. treasury
instruments, which bear interest at a fixed rate. Due to the average maturity
and the conservative nature of our investment portfolio, we believe a sudden
change in interest rates would not have a material effect on the value of our
investment portfolio. As the interest rates on a material portion of our cash,
cash equivalents and marketable securities are variable, a change in interest
rates earned on our investment portfolio would impact interest income along with
cash flows, but would not materially impact the fair market value of the related
underlying instruments.
17
ITEM 4. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures designed to ensure that
information required to be disclosed by us in our Exchange Act reports is
recorded, processed, summarized and reported on a timely basis and that such
information is accumulated and communicated to our management, including the
Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), as
appropriate, to allow timely decisions regarding the required disclosure. As of
the end of the period covered by this Form 10-Q, an evaluation was performed
under the supervision and with the participation of our management, including
the CEO and the CFO, of the effectiveness of the design and operation of these
disclosure controls and procedures. Based on that evaluation, the CEO and the
CFO concluded that our disclosure controls and procedures were effective.
In connection with the preparation of the Annual Report on Form 10-K, as of
December 31, 2005, an evaluation was performed under the supervision and with
the participation of the Company's management, including the CEO and CFO, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act). In performing
this assessment, management reviewed the lack of resources in the accounting and
finance department. As a result of this review, management concluded that the
lack of resources resulted in an ineffective review, monitoring and analysis of
schedules, reconciliations and financial statement disclosures, resulting in
several adjustments to the current financial statements, which caused a material
weakness as of December 31, 2005.
We have subsequently implemented a more thorough review process to ensure the
accuracy of accounting calculations supporting the amounts reflected in our
financial statements and also to ensure that all significant accounts are
properly reconciled on a frequent and timely basis. The remaining remediation
steps will be completed during the third quarter.
There have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act), during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
18
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
Dated: August 10, 2006
CACHE, INC.
BY: /s/ Brian Woolf
------------------------------------
Brian Woolf
Chairman and Chief
Executive Officer
(Principal Executive
Officer)
BY: /s/ Margaret Feeney
------------------------------------
Margaret Feeney
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
19
EXHIBIT 31.1
CERTIFICATION
I, Brian Woolf, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Cache, Inc.
(Cache);
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of Cache as of, and for, the periods presented in this
quarterly report;
4. Cache's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
controls over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to
Cache, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the
period which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) evaluated the effectiveness of Cache's disclosure controls and
procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
as of the end of the period covered by this quarterly report
based on such evaluation;
d) disclosed in this report any changes in Cache's internal control
over financial reporting that occurred during Cache's second
quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over
financial reporting; and
5. Cache's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to Cache's auditors and the audit committee of Cache's Board of
Directors;
a) all significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect Cache's ability
to record, process, summarize and report financial information;
and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in Cache's internal
controls over financial reporting.
August 10, 2006 By: /s/ Brian Woolf
--------------------------------
Brian Woolf
Chairman and Chief
Executive Officer
(Principal Executive
Officer)
20
EXHIBIT 31.2
CERTIFICATION
I, Margaret Feeney, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Cache, Inc.
(Cache);
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of Cache as of, and for, the periods presented in this
quarterly report;
4. Cache's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
controls over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to
Cache, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the
period which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) evaluated the effectiveness of Cache's disclosure controls and
procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
as of the end of the period covered by this quarterly report
based on such evaluation;
d) disclosed in this report any changes in Cache's internal control
over financial reporting that occurred during Cache's second
quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over
financial reporting; and
5. Cache's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to Cache's auditors and the audit committee of Cache's Board of
Directors;
a) all significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect Cache's ability
to record, process, summarize and report financial information;
and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in Cache's internal
controls over financial reporting.
August 10, 2006 By: /s/ Margaret Feeney
--------------------------------
Margaret Feeney
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
21
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to, and solely for the purposes of, 18 U.S.C. Section 1350 (Section 906
of the Sarbanes-Oxley Act of 2002), each of the undersigned hereby certifies in
the capacity and on the date indicated below that:
1. The Quarterly Report of Cache, Inc. on Form 10-Q for the period ending
July 1, 2006 as filed with the Securities and Exchange Commission on
the date hereof (the "Report") fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of Cache, Inc.
August 10, 2006 BY: /s/ Brian Woolf
--------------------------------
Brian Woolf
Chairman and Chief
Executive Officer
(Principal Executive
Officer)
August 10, 2006 By: /s/ Margaret Feeney
--------------------------------
Margaret Feeney
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
22