Item 2.02 Results of Operations and Financial Condition.
Ascena Retail Group, Inc. (the "Company") currently estimates that revenue for
its 2021 fiscal first quarter ended October 31, 2020 will be in the range of
$565-$585 million, down from $1,061 million in the fiscal first quarter of the
prior year. As a result of the sales decline, the Company expects to report a
significant decline in its operating income for the 2021 fiscal first quarter.
As previously disclosed, on July 23, 2020, the Company and certain of the
Company's direct and indirect subsidiaries commenced voluntary cases (the
"Chapter 11 Cases") under chapter 11 of title 11 of the United States Code in
the United States Bankruptcy Court for the Eastern District of Virginia (the
"Bankruptcy Court"). In connection with the Chapter 11 Cases, the Company
obtained new debtor-in-possession ("DIP") financing, which is discussed in more
detail in Note 2 to the Company's Annual Report on Form 10-K for the fiscal year
ended August 1, 2020 (the "2020 Form 10-K"). The Company ended the fiscal first
quarter with outstanding pre-petition term loan debt of approximately $1,109
million and outstanding borrowings under its new DIP term loan credit facility
of approximately $312 million. Additionally, the Company currently estimates
that it will report cash and cash equivalents as of October 31, 2020 in the
range of $375-$385 million. The Chapter 11 Cases could have a material effect on
the Company's cash and debt balances.
The revenue data for the three months ended October 31, 2020 and the cash and
debt balances as of October 31, 2020 are preliminary and have been prepared on
the basis of currently available information. The estimated 2021 fiscal first
quarter information presented above is subject to the completion of the
Company's standard procedures for the preparation and completion of its
quarterly financial statements. Given that these reviews are ongoing, the
Company may make further adjustments and there can be no assurance that final
results as of and for the three months ended October 31, 2020 will not differ
materially from the estimates provided herein. In addition, the Company's
independent registered public accounting firm has not audited or reviewed, and
does not express an opinion or any other form of assurance with respect to, this
data.
We caution that trading in our securities, including our common stock, during
the pendency of the Chapter 11 Cases is highly speculative and poses substantial
risks. The outcome of the Chapter 11 Cases are subject to a high degree of
uncertainty and are dependent upon factors that are outside of the Company's
control, including actions of the Bankruptcy Court and the Company's creditors.
There can be no assurance that the Company will confirm and consummate a plan of
reorganization with respect to the Chapter 11 Cases. We expect that our equity
holders could experience a complete loss on their investment, depending on the
outcome of the Chapter 11 Cases. The terms of the restructuring support
agreement contemplates that the Company's common stock will be canceled. Refer
to the 2020 Form 10-K for a detailed discussion of the Chapter 11 Cases.
The information in Item 2.02 of this Current Report on Form 8-K shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities
of that section, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act, except as
expressly set forth by specific reference in such filing.
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