Retail Ventures Inc. (RVI, Financial) filed Quarterly Report for the period ended 2010-05-01.
Retail Ventures Inc. has a market cap of $407.46 million; its shares were traded at around $8.31 with and P/S ratio of 0.25. RVI is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Net cash provided by operating activities was $18.4 million for the three months ended May 1, 2010 as compared to $6.0 million provided by operating activities for the three months ended May 2, 2009. The increase of $12.4 million in net cash provided by operating activities is primarily due to a $20.3 million increase in income, after adjusting for non-cash charges, partially offset by a $8.5 million decrease in the change in working capital assets and liabilities.
DSW paid $7.5 million during the quarter for capital expenditures which includes previous expenditures that were accrued at January 30, 2010. During the three months ended May 1, 2010 the Company incurred capital expenditures of $9.2 million. Of this amount, the Company incurred $4.8 million related to stores, $3.0 million related to information technology and infrastructure and $1.4 million related to supply chain projects and warehouses.
DSW expects to spend approximately $50 million for capital expenditures in fiscal 2010. DSWs future investments will depend primarily on the number of stores it opens and remodels, infrastructure and information technology programs that it undertakes and the timing of these expenditures. DSW plans to open approximately ten stores in fiscal 2010. During fiscal 2009, the average investment required to open a typical new DSW store was approximately $1.4 million, prior to construction and tenant allowances. Of this amount, gross inventory typically accounted for $0.5 million, fixtures and leasehold improvements typically accounted for $0.7 million and new store advertising and other new store expenses typically accounted for $0.2 million.
DSW has a $150 million secured revolving credit facility with a term of five years that will expire on July 5, 2010. Under this facility, DSW and its subsidiaries are named as co-borrowers. The facility has borrowing base restrictions and provides for borrowings at variable interest rates based on LIBOR, the prime rate and the Federal Funds effective rate, plus a margin. DSWs obligations under this facility are secured by a lien on substantially all of its and one of its subsidiarys personal property and a pledge of its shares of DSW Shoe Warehouse, Inc. In addition, the secured revolving credit facility contains usual and customary restrictive covenants relating to the management and the operation of the business. These covenants, among other things, restrict DSWs ability to grant liens on its assets, incur additional indebtedness, open or close stores, pay cash dividends and redeem its stock, enter into transactions with affiliates and merge or consolidate with another entity. In addition, if at any time DSW utilizes over 90% of its borrowing capacity under the facility, DSW must comply with a fixed charge coverage ratio test set forth in the facility documents. DSW intends to refinance the credit facility on a long-term basis. As of May 1, 2010 and January 30, 2010, $138.7 million and $132.6 million, respectively, were available under the $150 million secured revolving credit facility and no direct borrowings were outstanding. Net restricted assets as of May 1, 2010 and January 30, 2010 were $209.8 million and $197.4 million, respectively.
On August 10, 2006, Retail Ventures announced the pricing of its 6.625% Mandatorily Exchangeable Notes due September 15, 2011, or PIES in the aggregate principal amount of $125,000,000. The closing of the transaction took place on August 16, 2006. On September 15, 2006, Retail Ventures closed on the exercise by the sole underwriter of its entire option to purchase an additional aggregate principal amount of $18,750,000 of PIES. The $143,750,000 PIES bear a coupon at an annual rate of 6.625% of the principal amount, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2006 and ending on September 15, 2011. Except to the extent RVI exercises its cash settlement option, the PIES are mandatorily exchangeable, on the maturity date, into Class A Common Shares of DSW, no par value per share, which are issuable upon exchange of DSW Class B Common Shares, no par value per share, beneficially owned by RVI. On the maturity date, each holder of the PIES will receive a number of DSW Class A Common Shares per $50.00 principal amount of PIES equal to the exchange ratio described in the RVI prospectus filed with the SEC on August 11, 2006, or if RVI elects, the cash equivalent thereof or a combination of cash and DSW Class A Common Shares. The exchange ratio is equal to the number of DSW Class A Common Shares determined as follows: (i) if the applicable market value of DSW Class A Common Shares equals or exceeds $34.95, the exchange ratio will be 1.4306 shares; (ii) if the applicable market value of DSW Class A Common Shares is less than $34.95 but greater than $27.41, the exchange ratio will be between 1.4306 and 1.8242 shares; and (iii) if the applicable market value of DSW Class A Common Shares is less than or equal to $27.41, the exchange ratio will be 1.8242 shares, subject to adjustment as provided in the PIES. The maximum aggregate number of DSW Class A Common Shares deliverable upon exchange of the PIES is 5,244,575 DSW Class A Common Shares, subject to adjustment as provided in the PIES.
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Retail Ventures Inc. has a market cap of $407.46 million; its shares were traded at around $8.31 with and P/S ratio of 0.25. RVI is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Change in Fair Value of Derivative Instruments. During the first quarter of fiscal 2010 and fiscal 2009, the Company recorded a non-cash charge of $7.6 million and less than $0.1 million related to the change in the fair value of warrants. During the first quarter of fiscal 2010 and fiscal 2009, the Company recorded a non-cash charge of $23.7 million and $1.3 million, respectively, related to the change in the fair value of the conversion feature of the PIES. The change in the fair value of the derivatives is primarily due to the increases in the RVI and DSW stock prices.Net cash provided by operating activities was $18.4 million for the three months ended May 1, 2010 as compared to $6.0 million provided by operating activities for the three months ended May 2, 2009. The increase of $12.4 million in net cash provided by operating activities is primarily due to a $20.3 million increase in income, after adjusting for non-cash charges, partially offset by a $8.5 million decrease in the change in working capital assets and liabilities.
DSW paid $7.5 million during the quarter for capital expenditures which includes previous expenditures that were accrued at January 30, 2010. During the three months ended May 1, 2010 the Company incurred capital expenditures of $9.2 million. Of this amount, the Company incurred $4.8 million related to stores, $3.0 million related to information technology and infrastructure and $1.4 million related to supply chain projects and warehouses.
DSW expects to spend approximately $50 million for capital expenditures in fiscal 2010. DSWs future investments will depend primarily on the number of stores it opens and remodels, infrastructure and information technology programs that it undertakes and the timing of these expenditures. DSW plans to open approximately ten stores in fiscal 2010. During fiscal 2009, the average investment required to open a typical new DSW store was approximately $1.4 million, prior to construction and tenant allowances. Of this amount, gross inventory typically accounted for $0.5 million, fixtures and leasehold improvements typically accounted for $0.7 million and new store advertising and other new store expenses typically accounted for $0.2 million.
DSW has a $150 million secured revolving credit facility with a term of five years that will expire on July 5, 2010. Under this facility, DSW and its subsidiaries are named as co-borrowers. The facility has borrowing base restrictions and provides for borrowings at variable interest rates based on LIBOR, the prime rate and the Federal Funds effective rate, plus a margin. DSWs obligations under this facility are secured by a lien on substantially all of its and one of its subsidiarys personal property and a pledge of its shares of DSW Shoe Warehouse, Inc. In addition, the secured revolving credit facility contains usual and customary restrictive covenants relating to the management and the operation of the business. These covenants, among other things, restrict DSWs ability to grant liens on its assets, incur additional indebtedness, open or close stores, pay cash dividends and redeem its stock, enter into transactions with affiliates and merge or consolidate with another entity. In addition, if at any time DSW utilizes over 90% of its borrowing capacity under the facility, DSW must comply with a fixed charge coverage ratio test set forth in the facility documents. DSW intends to refinance the credit facility on a long-term basis. As of May 1, 2010 and January 30, 2010, $138.7 million and $132.6 million, respectively, were available under the $150 million secured revolving credit facility and no direct borrowings were outstanding. Net restricted assets as of May 1, 2010 and January 30, 2010 were $209.8 million and $197.4 million, respectively.
On August 10, 2006, Retail Ventures announced the pricing of its 6.625% Mandatorily Exchangeable Notes due September 15, 2011, or PIES in the aggregate principal amount of $125,000,000. The closing of the transaction took place on August 16, 2006. On September 15, 2006, Retail Ventures closed on the exercise by the sole underwriter of its entire option to purchase an additional aggregate principal amount of $18,750,000 of PIES. The $143,750,000 PIES bear a coupon at an annual rate of 6.625% of the principal amount, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2006 and ending on September 15, 2011. Except to the extent RVI exercises its cash settlement option, the PIES are mandatorily exchangeable, on the maturity date, into Class A Common Shares of DSW, no par value per share, which are issuable upon exchange of DSW Class B Common Shares, no par value per share, beneficially owned by RVI. On the maturity date, each holder of the PIES will receive a number of DSW Class A Common Shares per $50.00 principal amount of PIES equal to the exchange ratio described in the RVI prospectus filed with the SEC on August 11, 2006, or if RVI elects, the cash equivalent thereof or a combination of cash and DSW Class A Common Shares. The exchange ratio is equal to the number of DSW Class A Common Shares determined as follows: (i) if the applicable market value of DSW Class A Common Shares equals or exceeds $34.95, the exchange ratio will be 1.4306 shares; (ii) if the applicable market value of DSW Class A Common Shares is less than $34.95 but greater than $27.41, the exchange ratio will be between 1.4306 and 1.8242 shares; and (iii) if the applicable market value of DSW Class A Common Shares is less than or equal to $27.41, the exchange ratio will be 1.8242 shares, subject to adjustment as provided in the PIES. The maximum aggregate number of DSW Class A Common Shares deliverable upon exchange of the PIES is 5,244,575 DSW Class A Common Shares, subject to adjustment as provided in the PIES.
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