s-3a

If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed without notice. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we and the selling stockholders are not soliciting offers to buy these securities, in any state where the offer or sale of these securities is not permitted.

Charlotte Russe and the selling stockholders are offering shares of common stock in a firmly underwritten offering. Charlotte Russe is offering 100,000 shares and the selling stockholders are offering 3,400,000 shares. Charlotte Russe will not receive any of the proceeds of shares of common stock sold by the selling stockholders.

Our common stock is traded on the Nasdaq National Market® under the symbol “CHIC.” On February 15, 2001, the last reported sale price for our common stock on the Nasdaq National Market was $29.75 per share.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 5.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The selling stockholders have granted the underwriters the right to purchase up to an additional 525,000 shares of common stock to cover any over-allotments. The underwriters can exercise this right at any time within thirty days after the offering. Banc of America Securities LLC expects to deliver the shares of common stock to investors on , 2001.

THE INSIDE FRONT COVER FEATURES A DESCRIPTION OF THE CHARLOTTE RUSSE CONCEPT AND ITS TARGET CUSTOMERS, ILLUSTRATED WITH AN EXTERIOR PERSPECTIVE OF THE STORE.

INSIDE THE GATE FOLD ARE DESCRIPTIONS OF THE RAMPAGE AND CHARLOTTE’S ROOM CONCEPTS AND THEIR TARGET CUSTOMERS, ILLUSTRATED WITH INTERIOR OR EXTERIOR PERSPECTIVES OF THE STORES.

THE BACK COVER DISPLAYS A MAP ILLUSTRATING THE EXPANSION OF OUR STORES BY STATE OVER THE PAST FIVE YEARS AND THE FIRST QUARTER OF 2001 AND THE PLANNED EXPANSION FOR FISCAL 2001.

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

The Charlotte Russe® stylized and non-stylized trademarks referred to in this prospectus are federally registered in the United States and the (HEART,MOON,STAR)

™ and Charlotte’s Room™ trademarks referred to in this prospectus are subject to pending applications for registration. These trademarks are the property of Charlotte Russe Holding, Inc. or its subsidiaries. The Rampage® trademark referred to in this prospectus is federally registered in the United States and is used by Charlotte Russe under a license agreement with Rampage Clothing Company. The use of the Rampage trademark by other parties, including other apparel manufacturers and retailers, should not be attributed to our business. All other trademarks or trade names referred to in this prospectus are the property of their respective owners.

You should read the following summary together with the more detailed information regarding Charlotte Russe and the common stock being offered in this offering and our consolidated financial statements and accompanying notes elsewhere in this prospectus. Our fiscal year consists of the 52 or 53 week period ending on the last Saturday in September. All references to fiscal years in this prospectus refer to the fiscal year ending in the calendar year indicated. For example, fiscal 2000 refers to the fiscal year ended September 30, 2000 and our current fiscal year refers to the fiscal year ended September 29, 2001. Our fiscal year ended September 30, 2000 included 53 weeks compared to 52 weeks for all other fiscal years for which we provide results of operations in this prospectus.

We are a rapidly growing, mall-based specialty retailer of fashionable, value priced apparel and accessories targeting young women between the ages of 15 and 35. We have two distinct, established store concepts, “Charlotte Russe” and “Rampage,” and we are currently developing an additional store concept, “Charlotte’s Room.” As of December 30, 2000, we operated a total of 151 stores throughout 23 states and Puerto Rico. Through our fashion content, merchandise mix, exciting store layout and design and striking merchandise presentation, we project fashion attitudes that appeal to customers from a broad range of socioeconomic, demographic and cultural profiles. In addition, our breadth of merchandise enables our customers to assemble coordinated and complete outfits that satisfy many of their lifestyle needs. We believe that our test-and-reorder strategy, together with our use of primarily domestic vendors, enables us to anticipate, identify and capitalize upon the fashion preferences of our target customers.

Our Charlotte Russe stores offer fashionable, affordable apparel and accessories that have been tested and accepted by the marketplace, thus appealing to women who prefer established fashion trends. Our Rampage stores feature emerging fashion trends and thus appeal to women with a flair for making fashion statements and who are willing to pay somewhat higher prices to create a cutting edge look. These two store concepts are located primarily in high-visibility, center court mall locations in spaces that average approximately 7,400 square feet. These stores, which are generally twice as large as those of most of our mall-based competitors, are designed to create an environment that is exciting to shop and accentuates the fashion, breadth and value of our merchandise selection. In addition to our apparel stores, we are developing and testing our Charlotte’s Room concept, which features accessories, novelty gifts and home décor items for the fashion-driven 11 to 19 year old customer. Our three test stores average approximately 3,500 square feet and are designed to create an ageless, playful shopping environment.

We opened our first Charlotte Russe store in 1975 in Carlsbad, California and slowly expanded to 35 stores in southern California, Arizona and Nevada by the end of fiscal 1996. In September 1996, we were acquired by two funds managed by Saunders Karp & Megrue, L.L.C., a private equity investment firm, and Bernard Zeichner, our Chairman, Chief Executive Officer and President.

We subsequently implemented a series of strategic initiatives to position us to support an accelerated store rollout. We hired a number of senior executives with national retail experience to complement our existing senior management team and significantly upgraded our management information systems, distribution systems and facilities. We also launched our second distinct retail concept by acquiring 16 stores in five states from Rampage Retailing, Inc. These initiatives, combined with superior store economics that on average have historically generated a cash return on investment of approximately 90% in the first year of operation, allowed us to significantly grow our store base and net sales.

Since our initial public offering in October 1999, we have continued to open new stores for our Charlotte Russe and Rampage concepts on an accelerated basis. In the last fiscal year, we opened 37 new Charlotte Russe and Rampage stores and introduced our Charlotte’s Room concept with the opening of three test stores. As of the fiscal year ended September 30, 2000, we operated 136 stores throughout 21 states and Puerto Rico, an increase of 101 stores since our acquisition in September 1996. Our net sales increased to $245.3 million in fiscal 2000 from $70.7 million in fiscal 1996, representing a compound annual growth rate of 36.5%. During the three months ended December 30, 2000, we added 15 new stores, entered two new states and increased our net sales to $93.0 million from $62.9 million in the comparable period in the prior fiscal year, representing a 47.8% increase.

As part of our expansion strategy, we intend to continue to open new stores for our two established concepts at a rapid rate. Our plan is to open at least 43 Charlotte Russe and Rampage stores during fiscal 2001. We have already opened 15 stores and have completed our site selection and evaluation for the remainder. Additionally, based on positive customer response to our three Charlotte’s Room test locations, we plan to expand our test of this concept to a total of 10 to 12 stores during the next 12 to 18 months. As a result of Charlotte Russe achieving critical market penetration on a national level, we recently launched a national print and regional outdoor marketing campaign to further enhance the value of this brand. We believe this expansion and marketing strategy will help us to become a leading national specialty retailer of fashion-forward, affordable apparel and accessories to youthful-minded women.

The elements of our business strategy combine to create a merchandise assortment and overall shopping experience that has broad consumer appeal, is highly portable and differentiates us from our competitors. The principal elements of our business strategy include:


	•	offering fashionable, quality merchandise at prices generally 20% to 30% below most of our direct mall-based competitors;

	•	maintaining distinct brand images based on fashion attitude, value pricing and quality, especially through our proprietary Charlotte Russe and private label merchandise;

	•	targeting a highly desirable market of 15 to 35 year old women, which represents a large and growing consumer segment of the United States population;

	•	offering a broad, exciting merchandise assortment that conveys a consistent fashion attitude;

	•	capitalizing on strong store economics, which we have consistently achieved across a variety of mall types throughout the United States;

	•	leveraging our highly experienced management team and existing infrastructure to support continued national expansion; and

	•	actively managing inventory through a test-and-reorder strategy designed to minimize our exposure to fashion cycles and to contribute to rapid inventory turnover and strong gross margins.

We are incorporated in Delaware, and our principal executive offices are located at 4645 Morena Boulevard, San Diego, CA 92117. Our telephone number is (858) 587-1500.

The number of shares of common stock that will be outstanding after this offering is based on the number of shares outstanding as of December 30, 2000 and excludes (i) 2,109,100 shares of our common stock subject to options outstanding as of such date at a weighted average exercise price of $4.13 per share and (ii) 1,965,440 shares of our common stock subject to warrants outstanding as of such date at an exercise price of $1.00 per share.

Investing in our common stock involves a high degree of risk. You should carefully consider the following factors, as well as other information contained in this prospectus, before deciding to invest in shares of our common stock. If any of the following risks actually occurs, our business, financial condition and operating results could suffer. In this case, the trading price of our common stock could decline and you could lose all or part of your investment.

We intend to continue to open new stores at a rapid rate, which could strain our resources and cause us to operate our business less effectively.

Our growth will largely depend on successfully opening and operating new stores. During fiscal 2000, we opened 40 new stores, of which 37 were Charlotte Russe and Rampage stores and three were Charlotte’s Room stores. The addition of these stores represented an increase of approximately 42% from the number of stores open at the end of fiscal 1999. We plan to open at least 43 new Charlotte Russe and Rampage stores during fiscal 2001, an increase of 32% from the end of the prior fiscal year for these chains. We intend to continue to increase our number of Charlotte Russe and Rampage stores by approximately 30% per year for at least the next few years. We also plan to expand our test of the Charlotte’s Room concept to a total of 10 to 12 stores during the next 12 to 18 months. Our planned expansion will require that we substantially increase our distribution center capacity after the current fiscal year and continually monitor and upgrade our management information and other systems. This rapid expansion also will place increased demands on our managerial, operational and administrative resources. These demands and needs will be even greater and require more complex solutions to the extent we expand the Charlotte’s Room concept beyond our current plans. These increased demands and operating complexities could cause us to operate our business less effectively, which in turn could cause deterioration in the financial performance of our individual stores and slow our new store growth.

Our planned expansion involves a number of risks that could prevent or delay the successful opening of new stores as well as impact the performance of our existing stores.

Our ability to open and operate new stores successfully depends on many factors, including, among others, our ability to:


	•	identify suitable store locations, the availability of which is outside of our control;

	•	negotiate acceptable lease terms, including desired tenant improvement allowances;

	•	source sufficient levels of inventory to meet the needs of new stores;

	•	hire, train and retain store personnel;

	•	successfully integrate new stores into our existing operations, particularly our new Charlotte’s Room locations; and

	•	satisfy the fashion preferences of new geographic areas.

In addition, many of our new stores will be opened in regions of the United States in which we currently have few or no stores. The expansion into new markets may present competitive, merchandising and distribution challenges that are different from those currently encountered in our existing markets. Further, our Charlotte’s Room concept may not gain market acceptance. Any of these challenges could adversely affect our business and results of operations. In addition, to the extent our new store openings are in existing markets, we may experience reduced net sales volumes in existing stores in those markets.

Our stores are heavily dependent on the customer traffic generated by shopping malls.

Most of our store locations are not sufficiently concentrated to make significant marketing expenditures cost effective. As a result, we depend heavily on locating our stores in prominent locations within successful shopping malls in order to generate customer traffic. We cannot control the development of new shopping malls, the availability or cost of appropriate locations within existing or new shopping malls or the success of individual shopping malls.

If at any time our comparable store sales and quarterly results of operations decline or do not meet the expectations of research analysts, the price of our common stock could decline substantially.

Our quarterly results of operations for our individual stores have fluctuated in the past and can be expected to continue to fluctuate in the future. For instance, our quarterly comparable store sales increases have ranged as high as 3.7% and as low as 0.6% over the past four quarters. Our net sales and operating results are typically lower in the second quarter of our fiscal year due to the traditional retail slowdown immediately following the winter holiday season. This trend will be even greater in fiscal 2001 as compared to the last fiscal year because sales for the week immediately following the Christmas season, a higher than average sales period, were included in our first quarter in fiscal 2001 rather than in our second quarter as in the prior fiscal year. Our comparable store sales and quarterly results of operations are affected by a variety of factors, including:


	•	the timing of new store openings and the relative proportion of new stores to mature stores;

	•	fashion trends;

	•	calendar shifts of holiday or seasonal periods;

	•	the effectiveness of our test-and-reorder strategy in maintaining appropriate inventory levels;

	•	changes in our merchandise mix;

	•	timing of promotional events;

	•	general economic conditions and, in particular, the retail sales environment;

	•	actions by competitors or mall anchor tenants;

	•	weather conditions; and

	•	the level of pre-opening expenses associated with new stores.

You should refer to the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information.

Our business and reputation may be adversely affected if our Rampage stores are associated with negative publicity related to the use of the Rampage trademark by other parties.

In connection with the acquisition of our Rampage stores, we acquired the exclusive right within the United States to use the Rampage trademark on exterior and interior signage identifying our Rampage stores, as well as the non-exclusive right within the United States to use the Rampage trademark for promotional and advertising materials. We do not, however, have the right to use the Rampage trademark on our merchandise. The right to market merchandise under the Rampage trademark was retained by Rampage Clothing Company. Further, nothing in our license agreement with Rampage Clothing Company prohibits the sale of merchandise bearing the Rampage trademark by other parties or the licensing of the Rampage trademark to other parties. In fact, Rampage Clothing Company has licensed the trademark to other parties. We believe a positive Rampage brand image is important to our success. Accordingly, if the merchandise sold by the Rampage Clothing Company or other parties under the Rampage trademark is of low quality or if the Rampage Clothing Company or these parties otherwise engage in activities that negatively affect the Rampage trademark or are otherwise inconsistent with our Rampage store concept, consumers could lose confidence in

our merchandise and our reputation and business could be materially adversely affected. You should refer to the section entitled “Business — Our intellectual property is important to our success” for more information.

Our success depends on our ability to identify and rapidly respond to consumer fashion tastes.

The apparel industry is subject to rapidly evolving fashion trends and shifting consumer demands. Accordingly, our success is heavily dependent both on the priority our target customers place on fashion and on our ability to anticipate, identify and capitalize upon emerging fashion trends. Current fashion tastes place significant emphasis on a fashionable look. In the past this emphasis has increased and decreased through fashion cycles and decreased emphasis has adversely affected our results. Although we rely on a test-and-reorder merchandise strategy to minimize our exposure to misjudging fashion tastes and to reduce inventory risks, we can not assure you that this strategy will continue to be successful. Our failure to anticipate, identify or react appropriately to changes in styles, trends, desired images or brand preferences could lead to, among other things, excess inventories and higher markdowns, as well as decreased appeal of our brands.

Our market share may be adversely impacted at any time by a significant number of competitors.

We operate in a highly competitive environment characterized by low barriers to entry. We compete against a diverse group of retailers, including national and local specialty retail stores, regional retail chains, traditional department stores and, to a lesser extent, mall merchandisers. Our market share and results of operations may be adversely impacted by this significant number of competitors. Also, many of our competitors also are larger and have substantially greater resources than we do.

We rely on our good relationships with vendors to implement our business strategy successfully.

Our business is dependent on continued good relations with our vendors. In particular, we believe that we generally are able to obtain attractive pricing and other terms from vendors because we are perceived as a desirable customer. Our test-and-reorder merchandise strategy also relies in large part on our ability to obtain merchandise from our vendors within three to six weeks from the date of order. Our failure to maintain good relations with our vendors could increase our exposure to changing fashion cycles, which may in turn lead to increased inventory markdown rates.

Our operations, as well as a substantial number of our stores, are concentrated in the Southwest, which makes us susceptible to adverse conditions in this region.

Our headquarters and distribution center are located in California, and a substantial number of our stores are located in California and the Southwest. As a result, our business is more susceptible to regional factors than the operations of more geographically diversified competitors. These factors include, among others, economic and weather conditions, demographic and population changes and fashion tastes. Further, a natural disaster or other catastrophic event, such as an earthquake, affecting southern California could significantly disrupt our operations.

The state of California is currently experiencing an energy crisis. As a result, energy costs, including natural gas and electricity, may increase significantly in the future. Because our operations, a substantial number of our stores, our national distribution facility and some of our vendors are based in California, our cost of goods sold and operating expenses may increase in the future. Any such increase could be material and could adversely affect our margins and our profitability. To date, we have not experienced material increases in either our cost of goods sold or overall operating expenses. Additionally, although the power outages associated with the energy crisis have not affected our operations to date, if they continue or become more severe, we could experience material disruptions in the future.

Our failure to retain our existing senior management team could adversely affect our business.

Our business requires disciplined execution at all levels of our organization in order to timely deliver and display fashionable merchandise in appropriate quantities in our stores. This execution requires experienced and talented management. We currently have a management team with a great deal of experience with us and

in apparel retailing. If we were to lose the benefit of this experience, and in particular if we were to lose the services of Bernard Zeichner, our President and Chief Executive Officer, or Harriet Bailiss-Sustarsic, our Executive Vice President and General Merchandise Manager, our business could be adversely affected. We do not maintain key man insurance on any of the members of our management team. You should refer to the section entitled “Management” for more information.

We rely on third parties for upgrading and maintaining our management information systems. If these third parties do not adequately perform these functions appropriately, our business could be disrupted.

The efficient operation of our business is heavily dependent on our information systems. In particular, we rely heavily on the automated sortation system used in our distribution center and the merchandise management system used to track sales and inventory. We also rely on a Lawson Software package for our accounting, financial reporting and human resource functions. We depend on our vendors to maintain and periodically upgrade these systems for the continued ability of these systems to support our business as we expand. The software programs supporting our automated sorting equipment and processing our inventory management information were licensed to us by independent software developers. The inability of these developers to continue to maintain and upgrade these software programs would disrupt our operations if we were unable to convert to alternate systems in an efficient and timely manner. You should refer to the section entitled “Business — We continually invest in and upgrade our management information systems” for more information.

A decline in general economic conditions would lead to reduced consumer demand for our apparel and accessories.

Consumer spending habits, including spending for the fashionable apparel and related accessories that we sell, are affected by, among other things, prevailing economic conditions, levels of employment, salaries and wage rates, consumer confidence and consumer perception of economic conditions. A general slowdown in the United States economy or an uncertain economic outlook would adversely affect consumer spending habits, which would likely cause us to delay or slow our expansion plans and result in lower net sales than expected on a quarterly or annual basis.

We are controlled by a small group of existing stockholders whose interests may differ from other stockholders.

Two investment funds managed by Saunders Karp & Megrue, L.L.C. will beneficially own approximately 67.04% of our common stock after the offering, or 65.49% if the underwriters exercise their over-allotment option in full. Accordingly, they will continue to have significant influence in determining the outcome of all matters submitted to stockholders for approval, including the election of directors and significant corporate transactions. The interests of these stockholders may differ from the interests of other stockholders and their concentration of ownership may have the effect of delaying or preventing a change in control that may be favored by other stockholders. As long as these funds own a majority of our common stock, they will have the power to elect our entire board of directors. In addition, under a stockholders agreement, these funds collectively have the power to (i) while they hold in the aggregate at least 25% of our outstanding common stock, nominate three directors and designate the chairman of the board of directors and (ii) while they hold in the aggregate at least 1,820,735 shares of our common stock, including shares of common stock issuable upon exercise of outstanding warrants, nominate two directors and include one director elected by these funds on each committee of the board of directors. You should refer to the sections entitled “Selling Stockholders” for more information.

The market price of our common stock may be materially adversely affected by market volatility.

The market price of our common stock has been, and is expected to continue to be, highly volatile, both because of actual and perceived changes in our financial results and prospects and because of general volatility in the stock market. The factors that could cause fluctuations in our stock price may include, among other factors discussed in this section, the following:


	•	actual or anticipated variations in comparable store sales or quarterly operating results;

	•	changes in financial estimates by research analysts;

	•	actual or anticipated changes in the United States economy or the retailing environment;

	•	changes in the market valuations of other specialty apparel or retail companies;

	•	announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures or other strategic initiatives; and

	•	actual or anticipated sales of common stock by existing stockholders, whether in the market or in subsequent public offerings.

The public sale of our common stock by existing stockholders could adversely affect the price of our common stock.

The market price of our common stock could decline as a result of market sales by our existing stockholders after this offering or the perception that such sales will occur. These sales also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

We have made statements under the captions “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and in other sections of this prospectus that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “intends,” “predicts,” “future,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties, and assumptions about us, may include, among other things, projections of our future financial performance, our anticipated growth strategies, anticipated trends in our business and consumer preferences, as well as projections relating to our anticipated rate of new store openings, anticipated store opening costs, capital expenditures, inventory turnover rates and vendor delivery times. These statements are only predictions based on our current expectations and projections about future events. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the caption entitled “Risk Factors.” You should specifically consider the numerous risks outlined under “Risk Factors.”

We estimate that the net proceeds from our sale of the 100,000 shares of common stock we are offering will be approximately $2.3 million, assuming a public offering price of $29.75 and after deducting estimated underwriting discounts and offering expenses payable by us. We intend to use all of the net proceeds for general corporate purposes. We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders.

Our common stock has been quoted on the Nasdaq National Market under the symbol “CHIC” since October 20, 1999. The following table sets forth, for the periods indicated, the high and low closing sales prices of the common stock as reported by the Nasdaq National Market.

We do not intend to declare or pay a cash dividend on our common stock in the foreseeable future. We currently intend to retain earnings to finance future operations and expansions. We are prohibited by the terms of our revolving credit facility from paying cash dividends without the prior written consent of the lender.

The following table sets forth our capitalization as of December 30, 2000 on an actual basis and as adjusted to reflect the sale of the 100,000 shares of common stock offered by us at an assumed public offering price of $29.75 per share, after deducting estimated underwriting discounts and offering expenses payable by us in this offering. This table contains unaudited information and should be read in conjunction with the consolidated financial statements and the accompanying notes thereto appearing elsewhere in this prospectus.

The number of shares of common stock outstanding excludes (i) 2,109,100 shares of our common stock subject to options outstanding as of December 30, 2000 at a weighted average exercise price of $4.13 per share and (ii) 1,965,440 shares of our common stock subject to warrants outstanding as of such date at an exercise price of $1.00 per share.

The selected consolidated financial data set forth below is qualified in its entirety by, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this prospectus. The selected consolidated balance sheet data as of September 25, 1999 and September 30, 2000 and the selected consolidated statement of income data for the three years in the period ended September 30, 2000 have been derived from our consolidated financial statements, which have been audited by Ernst & Young LLP, independent auditors, and are included elsewhere in this prospectus. The selected consolidated balance sheet data as of September 27, 1996, September 27, 1997 and September 26, 1998 and the selected consolidated statement of income data for each of the two years in the period ended September 27, 1997 were derived from audited financial statements that are not included in this prospectus. The selected consolidated balance sheet data as of December 25, 1999 and December 30, 2000 and the consolidated statement of income data for the three months ended December 25, 1999 and December 30, 2000 have been derived from unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which in the opinion of our management are necessary for the fair presentation of our consolidated financial position and results of operations for those periods. Our results for the three months ended December 30, 2000 are not necessarily indicative of the results that may be expected for the entire year or for any future period.

The following discussion should be read in conjunction with our consolidated financial statements and notes to those statements and other financial information appearing elsewhere in this prospectus.

We were founded in 1975 and opened our first store in Carlsbad, California. By September 1996, we had developed into a regional retailer with 35 stores in three states. On September 26, 1996, two funds managed by Saunders Karp & Megrue, L.L.C., a private equity investment firm, acquired the business from its founders with the intention of pursuing an accelerated national new store expansion program. Bernard Zeichner, who had joined us as President in May 1996, shared the belief that a significant opportunity existed to leverage the strength of our new store economics by further penetrating existing markets and expanding the chain into other regions of the country. We subsequently implemented a series of strategic initiatives to position us to support an accelerated store rollout. We hired a number of senior executives with national retail experience to complement our existing senior management team and significantly upgraded our management information systems, distribution systems and facilities. In September 1997, we launched our second distinct retail concept by acquiring 16 stores in five states from Rampage Retailing, Inc.

Our strong operating performance over the past two fiscal years reflects the benefits of the infrastructure building process that we undertook, the successful integration of the Rampage chain and the successful execution of our national expansion program for the Charlotte Russe and Rampage chains. We have leveraged this success to begin developing an additional retail concept known as Charlotte’s Room, which features accessories, novelty gifts and other home décor items for 11 to 19 year olds. Our net sales increased to $245.3 million for the fiscal year ended September 30, 2000 from $70.7 million for the fiscal year ended September 27, 1996, representing a compound annual growth rate of 36.5%. We also opened an aggregate of 101 new stores during this period. As of December 30, 2000, we operated 119 Charlotte Russe stores, 29 Rampage stores and three Charlotte’s Room stores throughout 23 states and Puerto Rico, an aggregate increase of 116 stores since our acquisition in September 1996.

The following table sets forth our operating results, expressed as a percentage of sales, and store information for the periods indicated.

Three Months Ended December 30, 2000 Compared to Three Months Ended December 25, 1999

Net Sales. Our net sales increased to $93.0 million from $62.9 million, an increase of $30.1 million, or 47.8%, over the same period last year. This increase is attributable primarily to $27.9 million of net sales for the 15 new stores opened during the three months ended December 30, 2000, as well as other stores opened in prior fiscal periods that did not qualify as comparable stores. Our comparable store sales increased by 3.7% and contributed $2.2 million to the net sales increase during the three months ended December 30, 2000. Further, our net sales for this quarter compared to same period last fiscal year were favorably impacted by the inclusion of sales for the full week immediately following Christmas, which is generally a higher than average sales period. This week was included in the second quarter of the prior fiscal year, which will affect the comparison of our operating results for the second quarter of fiscal 2001 to the same period in the prior fiscal year.

Gross Profit. Gross profit represents net sales less cost of goods sold, which includes buying, distribution and occupancy costs. Our gross profit increased to $31.3 million from $21.3 million, an increase of $10.0 million, or 47.1%, over the same period last year. This increase is the result of higher net sales partially offset by decreased gross profit margin. As a percentage of net sales, gross profit decreased to 33.7% from 33.9%. The decrease in gross profit as a percentage of net sales was principally due to increased markdown, freight and inventory shrink expenses, partially offset by higher initial markups and lower occupancy and distribution expenses.

Selling, General And Administrative Expenses. Our selling, general and administrative expenses increased to $17.6 million from $11.9 million, an increase of $5.7 million or 47.5% over the same period last year. This increase is attributable to new store expansion and increased corporate expenses. As a percentage of net sales, selling, general and administrative expenses were 18.9%, which is consistent with the same period of the prior year.

Amortization Of Goodwill And Other Intangibles. Our amortization of goodwill and other intangibles expense remained constant at $0.2 million during these two periods.

Income Taxes. Our effective tax rate of 40.5% compares to an effective tax rate of 41.5% for the same period of the prior year. Our effective tax rate exceeds statutory tax rates due to non-deductible amortization of goodwill associated with the acquisition of our business in September 1996. Since our amortization is a fixed amount, increases in pre-tax earnings reduce the effect of this tax difference as a percentage of pre-tax earnings.

Net Income. Our net income for the three months ended December 30, 2000 increased to $8.0 million from $4.9 million, an increase of $3.1 million, or 64.3%, over the same period last year. This increase was primarily due to an increase in gross profit and lower interest expense, partially offset by an increase in selling, general and administrative expenses. Our net income was also favorably impacted by the fiscal calendar shift mentioned above.

Net Sales. Our results for the fiscal year ended September 30, 2000 included 53 weeks of operations while our results for the fiscal year ended September 25, 1999 included 52 weeks of operations. Our net sales increased to $245.3 million from $177.5 million, an increase of $67.8 million, or 38.2%, over the prior fiscal year. This increase was attributable primarily to $63.0 million of net sales for the 40 new stores opened during fiscal 2000, as well as other stores opened in prior fiscal years that did not qualify as comparable stores. Our comparable store sales increased 2.8% and contributed $4.8 million to the net sales increase during fiscal 2000. If we exclude the additional week in fiscal 2000, our total sales would have increased 35.6% over the comparable 52-week period of the prior fiscal year.

Gross Profit. Gross profit represents net sales less cost of goods sold, which includes buying, distribution and occupancy costs. Our gross profit increased to $79.3 million from $58.3 million, an increase of $21.0 million, or 36.1%, over the prior fiscal year. This increase was the result of higher net sales, offset in part by decreased gross profit margins. As a percentage of net sales, gross profit decreased to 32.4% from 32.9%. The decrease as a percentage of net sales was principally due to higher markdowns, occupancy expenses and inventory shrink expenses, partially offset by higher initial markups and lower freight expenses.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased to $46.1 million from $34.1 million, an increase of $12.0 million, or 35.2%, over the prior fiscal year. This increase was attributable to new store expansion, increased corporate expenses and higher marketing expenses. As a percentage of net sales, selling, general and administrative expenses decreased to 18.8% from 19.2%, primarily due to the impact of leveraging corporate expenses over a higher sales base.

Amortization of Goodwill and Other Intangibles. Our amortization of goodwill and other intangibles expense remained constant at $0.9 million during these two fiscal years.

Income Taxes. Our effective tax rate of 40.5% compares to an effective tax rate of 42.0% for the prior fiscal year. Our effective tax rate exceeds statutory tax rates due to non-deductible amortization of goodwill associated with the acquisition of our business in September 1996.

Net Income. Our net income increased to $18.8 million from $11.5 million, an increase of $7.3 million, or 63.2%, over the prior fiscal year. This increase was primarily due to an increase in gross profit and was partially offset by an increase in selling, general and administrative expenses, an increase in income taxes and a $0.3 million charge relating to the early repayment of a secured bank credit facility.

Net Sales. Our net sales increased to $177.5 million from $134.1 million, an increase of $43.4 million, or 32.3%, over the prior fiscal year. This increase was attributable primarily to $35.3 million of net sales relating to the 22 new stores opened during fiscal 1999, as well as other stores opened in prior fiscal years that did not qualify as comparable stores. Our comparable store sales increased 6.7% and contributed $8.1 million to the net sales increase during fiscal 1999.

Gross Profit. Gross profit represents net sales less cost of goods sold, which includes buying, distribution and occupancy costs. Our gross profit increased to $58.3 million from $40.9 million, an increase of $17.4 million, or 42.4%, over the prior fiscal year. This increase was the result of higher net sales and improved gross profit margins. As a percentage of net sales, our gross profit rose to 32.9% from 30.5%. The increase in gross profit as a percentage of net sales was principally due to higher initial markups, improved inventory shrink expense and the impact of leveraging distribution center expenses over a higher sales base, partially offset by higher markdown expense.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased to $34.1 million from $27.0 million, an increase of $7.1 million, or 26.2%, over the prior fiscal year. This increase was attributable to new store expansion, increased corporate expenses and a $0.7 million impairment charge related to a plan to close two stores. The impairment loss included $0.5 million representing the net carrying value of leasehold improvements and $0.2 million for estimated unamortized landlord allowances. As a percentage of net sales, selling, general and administrative expenses decreased to 19.2% from 20.1%, primarily due to the impact of leveraging store operating expenses and corporate payroll expenses over a higher sales base. The decline in selling, general and administrative expenses as a percentage of net sales was partially offset by management bonus plan accruals, for which no comparable charge was incurred during the same period of the prior year.

Amortization of Goodwill and Other Intangibles. Our amortization of goodwill and other intangibles expense remained constant at $0.9 million during these two fiscal years.

Income Taxes. Our effective tax rate of 42.0% compares to an effective tax rate of 43.5% for the prior fiscal year. Our effective tax rate exceeds statutory tax rates due to non-deductible amortization of goodwill associated with the acquisition of our business in September 1996.

Net Income. Our net income increased to $11.5 million from $5.5 million, an increase of $6.0 million, or 108.5%, over the prior fiscal year. This increase was primarily due to an increase in gross profit and was partially offset by an increase in selling, general and administrative expenses, an increase in income taxes and a $0.5 million charge relating to the early repayment of our 12.5% subordinated debt in June 1999.

We have historically experienced and expect to continue to experience seasonal and quarterly fluctuations in our net sales and operating income. As is the case with many retailers of apparel and related merchandise, our business is subject to seasonal influences, characterized by strong sales during the back-to-school, Easter and winter holiday seasons. The strength of each of these three seasons generally provides relatively balanced sales during our first, third and fourth fiscal quarters. We typically experience lower net sales and net income during the second quarter of each fiscal year. Our 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.

The following table includes our unaudited quarterly results of operations data for the three months ended December 30, 2000 and for each of the eight quarters during the two-year period ended September 30, 2000. This data has been derived from our unaudited consolidated financial statements. The fourth quarter of the fiscal year ended September 30, 2000 includes an additional week of operations compared to the 13 weeks of operations for each of the other fiscal quarters presented below. We believe that this information has been prepared on the same basis as our audited consolidated financial statements and that all necessary adjustments, consisting only of normal recurring adjustments, have been included to present fairly the selected quarterly information when read in conjunction with our audited consolidated financial statements and the

notes to those statements included elsewhere in the prospectus. The operating results for any particular quarter are not necessarily indicative of the operating results for any future period.

[Continued from above table, first column(s) repeated]


								Fiscal Year
								2001

		Fiscal Year 2000

								Three
		Three Months Ended						Months
								Ended
		June 24,			Sept. 30,			Dec. 30,
		2000			2000			2000


		(dollars in thousands)




Statement of Operations Data:




	Net sales	$	58,695		$	76,366		$	93,043




	Gross profit		18,698			25,717			31,347




	Operating income		7,403			12,118			13,552




	Income before extraordinary item		4,356			7,222			8,048




	Net income		4,356			7,222			8,048




As a Percentage of Net Sales:




	Net sales		100.0	%		100.0	%		100.0	%




	Gross profit		31.9			33.7			33.7




	Operating income		12.6			15.9			14.6




	Net income		7.4			9.5			8.6




Operating Data:




	Comparable store sales increase		0.6	%		1.5	%		3.7	%




	Stores open at end of period		123			136			151

Our capital requirements result primarily from capital expenditures related to new store openings. We have historically satisfied our cash requirements principally through cash flow from operations, although we have also used borrowings under prior credit facilities in the past for acquisitions, including our acquisition and the acquisition of the Rampage stores. Due to the rapid turnover of our inventory, we generate trade payables and other accrued liabilities sufficient to offset our working capital requirements, and this allows us to generally operate with negative working capital. As of December 30, 2000, we had working capital of approximately $0.1 million.

During fiscal years 1998, 1999 and 2000, our net cash provided by operations was $9.7 million, $27.8 million and $27.8 million. Our net cash provided by operations was $20.8 million for the three months ended December 30, 2000 as compared to $10.5 million for the three months ended December 25, 1999. In fiscal 2000 and the three months ended December 30, 2000, our net cash provided by operations increased as a result of increased operating earnings and increased current liabilities. In fiscal 1998, our cash used in investing activities included $7.3 million related to the acquisition of sixteen stores from Rampage Retailing, Inc. Our cash used in investing activities related to new store openings and the construction of our distribution center and corporate facility was $8.5 million, $14.5 million and $24.0 million in fiscal 1998, 1999 and 2000 and $7.0 million for the three months ended December 30, 2000.

If we exclude the impact of financing activities related to the acquisition of the Rampage stores, we had net repayment of borrowings under our revolving credit facility and capital lease obligations of $2.6 million in fiscal 1998 and net borrowings of $1.0 million in fiscal 1999. During fiscal 1999, we repaid $11.0 million of our 12.5% subordinated debt owed to two funds managed by Saunders Karp & Megrue, L.L.C., although net borrowings under our revolving credit facility rose only $1.4 million during the same period. In fiscal 2000, we repaid the remaining $18.0 million balance under the revolving credit facility using the $13.5 million net proceeds of our initial public offering and cash flows from operations.

Based on our experience with store openings for our two established concepts, we estimate that the average net investment to open these new stores is approximately $450,000, which includes capital expenditures, net of landlord contributions, and initial inventory, net of payables. During the first year of

operations, our stores opened during the three year period ended September 25, 1999 generated store-level operating cash flow in excess of $400,000, representing an average cash return on investment of approximately 90%, although we can not assure you that our new Charlotte Russe and Rampage stores will attain these levels in the future. We opened our three Charlotte’s Room stores during fiscal 2000. Accordingly, we are unable to reasonably estimate the overall cash return on investment for Charlotte’s Room as a mature concept. After taking into account store remodeling, corporate capital projects and distribution center enhancements, total capital expenditures for fiscal 2001 are projected to be approximately $30.0 million.

Our unsecured revolving credit facility with Fleet National Bank, as agent, provides us with a $15.0 million revolving line of credit under which borrowed funds bear interest at either the Eurodollar rate plus 1.00% or the base rate of Fleet National Bank, at our option, subject to certain adjustments. At December 30, 2000, no outstanding balance existed under the revolving credit facility. The revolving credit facility requires that we maintain certain financial ratios such as: total liabilities to earnings before interest, taxes, depreciation and amortization; fixed charges coverage; and minimum net worth.

We believe that cash flows from operations, our current cash balance and funds available under our revolving credit facility will be sufficient to meet our working capital needs and contemplated capital expenditure requirements for fiscal 2001. If our cash flow from operations should decline significantly or if we should accelerate our store expansion program or decide to expand our Charlotte’s Room concept beyond our current plans, it may be necessary for us to seek additional sources of capital.

Our market risks relate primarily to changes in interest rates. We bear this risk in two specific ways. First, our revolving credit facility carries a variable interest rate that is tied to market indices and, therefore, our statement of income and our cash flows will be exposed to changes in interest rates. As of December 30, 2000, we had no borrowings against our credit facility. However, we may borrow additional funds under our revolving credit facility as needed.

The second component of interest rate risk involves the short-term investment of excess cash in short-term, investment-grade interest-bearing securities. These investments are considered to be cash equivalents and are shown that way on our balance sheet. If there are changes in interest rates, those changes would affect the investment income we earn on these investments and, therefore, impact our cash flows and results of operations.

We do not believe that inflation has had a material adverse impact on our business or operating results during the periods presented. We cannot assure you, however, that our business will not be affected by inflation in the future.

We are a rapidly growing, mall-based specialty retailer of fashionable, value-priced apparel and accessories targeting young women between the ages of 15 and 35. We have two distinct, established store concepts, “Charlotte Russe” and “Rampage,” and we are currently developing an additional store concept, “Charlotte’s Room.” As of December 30, 2000, we operated a total of 151 stores throughout 23 states and Puerto Rico. Through our fashion content, merchandise mix, exciting store layout and design, and striking merchandise presentation, we project fashion attitudes that appeal to customers across age and socioeconomic boundaries. Our Charlotte Russe stores offer fashionable, affordable apparel and accessories that have been tested and accepted by the marketplace, thus appealing to women who prefer established fashion trends. Our Rampage stores feature emerging fashion trends and thus appeal to women with a flair for making fashion statements and who are willing to pay somewhat higher prices to create a cutting-edge look. Our Charlotte Russe and Rampage stores are located predominantly in high-visibility, center court mall locations in spaces that average approximately 7,400 square feet. These stores, which are generally twice as large as those of most of our competitors, are designed to create an environment that is exciting to shop and accentuates the fashion, breadth and value of our merchandise selection. Our Charlotte’s Room stores feature accessories, gifts and home décor items for the fashion-driven 11 to 19 year olds. These stores average 3,500 square feet and are designed to create an ageless, playful shopping environment.

Our broad assortment of merchandise is centered around styles that are affordable, feminine and reflect the latest fashion trends. Our breadth of merchandise enables our customers to assemble coordinated and complete outfits that satisfy many of their lifestyle needs. Both our Charlotte Russe and Rampage store concepts offer merchandise at value-oriented prices, generally 20% to 30% less than prices for comparable items offered by most of our direct mall-based competitors. Over 80% of our Charlotte Russe merchandise is sold under the Charlotte Russe label and over 90% of our Rampage merchandise is sold under our proprietary (HEART,MOON,STAR)

label. The remainder of our merchandise at these stores consists of nationally-recognized brands popular with our customers.

We intend to become a leading national specialty retailer of affordable fashion-forward apparel and accessories to youthful-minded women. We intend to achieve this objective by continuing to pursue an aggressive store opening campaign of our proven concepts, Charlotte Russe and Rampage, broadening the test of our Charlotte’s Room concept and introducing a national marketing campaign for our Charlotte Russe brand.

Since our acquisition in September 1996, we have conducted an accelerated store opening program and have more than quadrupled our store base. As of December 30, 2000, we operated 151 stores throughout 23 states and Puerto Rico. Based on our successful track record, favorable demographic trends and a solid infrastructure, we believe we are positioned for continued growth over the next several years. We plan to continue to open new Charlotte Russe and Rampage stores at a rapid rate, with at least 43 new Charlotte Russe and Rampage stores planned for fiscal year 2001. We have already opened 15 stores and have completed our site selection and evaluation process for the remaining stores. We expect to open these new stores in existing markets as well as in markets in which we currently do not have a presence. Additionally, we intend to continue to develop our Charlotte’s Room concept. Based upon customer response to the first three test locations that we opened this past fiscal year, we plan to expand to a total of 10 to 12 stores during the next 12 to 18 months.

We have historically relied on exciting in-store graphics and window displays to convey our fashion-forward orientation. We intend to leverage these successful marketing efforts to promote brand awareness on a national level. Specifically, we recently launched a national print and regional outdoor marketing campaign to further enhance the value of our Charlotte Russe brand.

The elements of our business strategy combine to create a merchandise assortment that appeals to consumers from a broad range of socioeconomic, demographic and cultural profiles and that differentiates us from our competitors. We believe this broad consumer appeal, coupled with our superior new store cash returns on investment, creates a highly portable store concept and a significant opportunity for growth. The principal elements of our business strategy include the following:

Offer Consistent Value Pricing. We offer a broad assortment of fashionable, quality merchandise at prices generally 20% to 30% below most of our direct mall-based competitors. We employ this value-pricing strategy across both of our established store concepts, with an average sales price for apparel items at our Charlotte Russe and Rampage stores of approximately $18.00 and $29.00. Because our prices are affordable and our merchandise quality is comparable to higher priced specialty retailers and department stores, we create a strong perception of value that has enabled us to build a broad and loyal base of customers.

Maintain Distinct Brand Images. We have created focused and differentiated brand images based on fashion attitude, value pricing and quality. These images are consistently communicated through all aspects of our business, including merchandise assortments, in-store visual merchandising and marketing materials. We also enhance brand recognition by offering over 80% of our Charlotte Russe merchandise under the Charlotte Russe label and over 90% of our Rampage merchandise under our proprietary (HEART,MOON,STAR)

label. We believe that both of our established brands provide opportunities for expansion of our current merchandise categories and entry into new product categories. We intend to develop the Charlotte’s Room brand and any additional proprietary brands with distinct images so that they can be expanded in the same manner.

Target a Highly Desirable Market. Our Charlotte Russe and Rampage stores target women between the ages of 15 and 35, a broad and large group that is expected to grow over the next ten years. While our target customer base is expected to grow, a core group of our target market, the teenage and early twenties population, is expected to grow at a rate faster than that of the overall United States population according to the United States Census Bureau. We believe that an increase in minimum wage, higher employment and easier access to credit cards will continue to contribute to substantial growth in the buying power of our target market.

Offer Broad, Exciting Merchandise Assortment. Our merchandising strategy is founded on offering a broad assortment of apparel and accessories that conveys a consistent fashion attitude. Our merchandise includes ready-to-wear apparel such as knit and woven tops, dresses, shorts, pants and skirts, as well as accessories such as shoes, handbags and jewelry that enable our customers to create distinct ensembles complemented by color coordinated and fashion-forward items. Our merchandise assortment is voguish enough to attract teenage customers and yet stylish enough to retain those women as they mature into young adults. We maintain a fresh and exciting shopping environment by frequently introducing new merchandise into our stores and by regularly updating our merchandise displays. In addition, our stores provide a comfortable and spacious environment that accentuates the breadth of our merchandise offerings.

Capitalize on Strong Store Economics. Based on our experience with recent store openings for our two established concepts, we estimate that the average net investment to open these new stores is approximately $450,000, which includes capital expenditures, net of landlord contributions, and initial inventory, net of payables. During their first year of operations, our stores opened during fiscal years 1997 through 1999 generated average net sales of approximately $1.8 million and store-level operating cash flow in excess of $400,000, or more than 22.0% of net sales. Accordingly, these stores generated an average cash return on investment of approximately 90% in their first year of operations, although we cannot assure you that our new stores will obtain these levels in the future.

Leverage Highly Experienced Management Team. We believe our senior management team combines a unique blend of experience with the company and other national growth retailers. Following our acquisition in September 1996, Mr. Zeichner recruited eight members of our highly experienced management team, who have participated in the successful national expansion of retailers such as Contempo Casuals, Guess? and Price Club. As a group, these officers currently have an average of over 20 years of retail experience. These

new managers complemented our core group of buying and operations managers who had participated in the evolution and growth of the Charlotte Russe concept and who currently have an average of over 17 years of retail experience with us. The successful integration of these distinct skill sets has produced a unique corporate culture that leverages the talents of each group. We believe our management is positioned to capitalize on the strong economics of the Charlotte Russe and Rampage concepts and to successfully execute our national expansion program. We intend to continue to hire senior level executives to help manage the execution of our national expansion program for our Charlotte Russe and Rampage stores and the development of the Charlotte’s Room concept.

Actively Manage Inventory. The cornerstone of our merchandising strategy is our test-and-reorder philosophy. This strategy allows us to minimize our inventory risk by ordering small quantities of fashion merchandise to test customer acceptance before placing larger purchase commitments. Our test-and-reorder strategy is successful in large part because we deal primarily with domestic vendors, which in our experience has generally resulted in short lead times of three to six weeks. These short lead times, together with our ability to monitor store sales on a daily basis, permit us to quickly react to sell-through trends and fashion preferences. We have one of the highest inventory turn rates in the industry and we believe that our approach to managing our merchandise mix has contributed to strong gross margins and lower-than-average markdown rates.

We target young, fashion-conscious women. Our Charlotte Russe customer is a woman who desires understandable trends at substantial value. She is a hip teenager seeking the current fashion trends, as well as the fashionable working woman looking for career dressing. Regardless of her age, the Charlotte Russe customer is feminine and body conscious. Our Rampage stores cater to women with definitive fashion sense who set rather than follow trends. Our Rampage customer is hip, eclectic, body conscious and tapped into pop culture. She wants her look to be cutting-edge, while recognizing the value of competitive pricing. Our Charlotte’s Room customer is a fashion-driven 11 to 19 year old or a hip cross-over customer. She wants accessories and home décor items to satisfy her ever-changing lifestyle wants and needs.

Charlotte Russe. Our Charlotte Russe stores provide an exciting, fashionable assortment of merchandise that complements virtually every facet of our customers’ lifestyle. Our merchandise reflects established fashion trends and includes a broad offering of ready-to-wear apparel, including knit and woven tops, dresses, shorts, pants and skirts, as well as seasonal items such as prom dresses and outerwear. This product assortment allows us to be fashionable enough to attract teenage customers and yet stylish enough to retain customers as they become young working women. We believe Charlotte Russe stores offer a higher percentage of dresses as compared to other specialty retailers to better meet our customers’ broad lifestyle needs for casual, social, career and special occasion wear. Our typical dresses range in price from $19.99 to $60.00, although prices can be as high as $80.00 to $120.00 for special occasion dresses. By offering a product mix that reflects a more mature stage of the fashion cycle, our Charlotte Russe stores are able to learn from the experience of our Rampage stores with emerging trends in order to more quickly identify fashion that has a broad market appeal. Charlotte Russe stores also offer a broad assortment of accessories, such as lingerie, shoes, jewelry, handbags and cosmetics. Our expansive accessories category enables us to offer the convenience of one-stop shopping to our customers, enabling them to complement their ready-to-wear clothing with color coordinated items and fashion-forward accessories. Over 80% of the merchandise sold in these stores carries the Charlotte Russe label. Our average sales price for apparel items is $18.00, and the average sales price for all of our merchandise, including accessories, is $14.00.

Rampage. Our Rampage stores offer essentially the same breadth of ready-to-wear apparel as our Charlotte Russe stores, but the merchandise reflects emerging trends and therefore a more cutting-edge look. There is also less emphasis on the career customer in our Rampage stores. The retail prices for our typical dresses range from $38.00 to $68.00, although prices can be higher for special occasion dresses. Over 90% of the Rampage merchandise is offered under our proprietary (HEART,MOON,STAR)

label. We work with our vendors to design

a majority of the merchandise that is carried in our Rampage stores. We also have established a standard fit for all of our apparel to ensure consistent sizing among our merchandise. Our Rampage stores also offer specialty accessories that complement our higher-end merchandise. By offering the latest in emerging fashions, our Rampage stores are able to command price points that are higher than those of Charlotte Russe, but still below those of our competitors. The average sales price for apparel items in our Rampage stores is $29.00, and the average sales price for all of our merchandise, including accessories, is $24.00.

Charlotte’s Room. In addition to our apparel retail concepts, we are also developing and testing our Charlotte’s Room concept, which targets 11 to 19 year-olds. We offer a breadth of products that enable this customer to complement her fashionable appearance with fashion-forward accessories, as well as create a fresh and playful bedroom atmosphere expressive of her distinct personality. We carry a wide assortment of gifts and accessories, as well as a limited assortment of novelty apparel and sleepwear items.

Our visual merchandising strengthens our brand name and creates an exciting shopping environment.

Our merchandising presentation for our retail apparel concepts communicates a clear fashion point-of-view to our customers and encourages the purchase of coordinated outfits. Our visual merchandising team for the Charlotte Russe and Rampage stores also makes use of mannequins in store windows as well as on the selling floor to enhance our merchandise presentation.

Within our Charlotte Russe stores, we seek to create an inviting environment for our broad product offerings. We generally group our apparel merchandise by color and fashion trend and we typically present accessories as in-store boutiques. While shopping the store, our customer will observe that our merchandise extends to her various lifestyle needs, including casual, club and career wear, as well as lingerie, shoes and accessories. We believe that presenting apparel merchandise by color and fashion trend, when accompanied with boutiques of various accessories, creates an attractive atmosphere for our customers and that the breadth and depth of our product offerings makes us a destination location for their shopping needs.

At our Rampage stores, we employ an equally effective visual merchandising strategy in order to capture the interest of our customers. Our Rampage merchandise is generally grouped by color and fashion trend to keep the stores vibrant, hip and visually stimulating. Our stores are larger than most of our competitors, and we take advantage of our store size by providing an expansive and diverse offering of merchandise. Our store window displays and in-store graphics accentuate the fashion, quality and cutting-edge style of our merchandise.

As with our other concepts, we intend to build brand awareness for Charlotte’s Room from the inside out. Our unique store design uses blue, white and silver tones to create an ageless, playful environment. We reinforce our in-store atmosphere by incorporating the design into seasonal promotional programs, signage and window displays. We expect to leverage the experience and talent of our visual merchandising team to continue to refine our merchandising strategy for Charlotte’s Room.

We order primarily from domestic sources and utilize a test-and-reorder strategy.

All of our inventory is purchased from third party vendors. The cornerstone of our merchandising strategy is our test-and-reorder philosophy. This strategy allows us to manage our inventory risk by testing small quantities of fashion merchandise in our stores before placing larger purchase commitments. Our experienced buying staff uses sophisticated information systems to track the weekly sell-through of each merchandise item by classification, style, color and size, and then places appropriate reorders for popular merchandise. Accordingly, our test-and-reorder strategy enables us to quickly react to sell-through trends and fashion preferences.

Our test-and-reorder strategy is successful in large part because we deal with domestic vendors, which in management’s experience has generally resulted in short lead times of three to six weeks. Accordingly, we have established relationships with over 600 vendors to meet our ongoing fashion and inventory needs. We believe that we generally are able to obtain attractive pricing and other terms from vendors because of their desire to be associated with the Charlotte Russe and Rampage images and the rapid consumer feedback

provided by our test-and-reorder philosophy. We maintain a buying office in the CaliforniaMart in Los Angeles, the primary apparel center in southern California, to facilitate constant dialogue and feedback between our buying staff and our vendors. During the fiscal year ended September 30, 2000, our top five vendors accounted for approximately 9.5% of our total purchases and no single vendor accounted for more than 2.4% of our total purchases.

Our merchandise planning and allocation team works closely with our general merchandise manager, merchants and store personnel to meet the requirements of individual stores for appropriate merchandise in sufficient quantities. This team is also responsible for managing inventory levels, allocating merchandise to stores and replenishing inventory based upon information generated by our management information systems. Our planning department allocates merchandise for new store openings based on estimated units per square foot, and all new stores are fully stocked prior to opening. Our inventory control systems monitor current inventory levels at each store and for our operations as a whole. If necessary, we shift slow moving inventory to other stores for sell-through prior to instituting corporate-wide markdowns. We also monitor recent selling history within each store by merchandise classification, style, color and size.

The timely and efficient distribution of merchandise to our stores is critical to the success of our test-and-reorder strategy. We process all of our merchandise through our modern 125,000 square foot distribution center in San Diego, California, which we built and took possession of in April 1998. Our distribution facility employs an automated system for sorting apparel by store and facilitating packaging for display in our stores. We estimate that approximately 50% of our apparel merchandise is currently pre-ticketed by our vendors, and we expect that this percentage will continue to increase over the next fiscal year. This pre-ticketing by vendors allows us to ship merchandise more quickly, reduces labor costs and enhances inventory management. Our merchandise is generally shipped to stores within 24 hours of receipt at the distribution center for delivery on common carrier within one to three business days. Our merchandise is available for sale in our stores the same day it is received and, accordingly, the time period from receipt of goods at our distribution center to display in our stores is typically less than five days. Each store generally receives three to five merchandise shipments per week. We believe our current distribution operations are sufficient to accommodate our expected store growth, including our Charlotte’s Room test locations and expanded product offerings, through the end of this fiscal year. We are currently evaluating plans to expand our distribution capacity for future periods.

As of December 30, 2000, we operated 119 Charlotte Russe stores, 29 Rampage stores and three Charlotte’s Room stores throughout 23 states and Puerto Rico. The number of our stores located in each state is shown in the following map and store list according to the state or territory in which that store is located. All locations in the store list below are Charlotte Russe stores unless otherwise indicated.

Arizona (11)


	Arizona Mills (Tempe)†
	Arrowhead Center (Glendale)
	Fashion Square (Scottsdale)
	Fiesta Mall (Mesa)(*)
	Metro Center (Phoenix)
	Paradise Valley Mall (Phoenix)(*)
	Park Place (Tucson)
	Tucson Mall

California (46)


	Fresno Fashion Fair
	Los Angeles


	Beverly Center*
	Brea Mall
	Del Amo Fashion Center (Torrance)†(*)
	Fox Hills Mall (Culver City)
	Glendale Galleria†
	Laguna Hills Mall
	Lakewood Fashion Center
	Los Cerritos Center
	Main Place (Santa Ana)
	Mission Viejo*
	Montclair Plaza
	Montebello Town Center
	Moreno Valley Mall
	Northridge Fashion Center
	Ontario Mills
	Plaza at West Covina
	Santa Anita Fashion Park
	Sherman Oaks*
	South Coast Plaza
	(Costa Mesa)*

	Thousand Oaks Center

	Topanga Plaza (Canoga Park)†
	Westminster Mall
	Westside Pavillion*


	New Park Mall (Newark)
	San Diego


	Chula Vista Center
	Fashion Valley Center
	Grossmont Center (La Mesa)


	Mission Valley
	Plaza Camino Real (Carlsbad)
	North County Fair (Escondido)
	Parkway Plaza (El Cajon)
	Plaza Bonita (National City)
	University Towne Center


	Galleria at Roseville
	Great Mall of the Bay Area (Milpitas)
	Santa Rosa Plaza
	Serramonte Center (Daly City)

	Sun Valley (Concord)†

	Temecula Promenade
	Valley Plaza (Bakersfield)

Florida (19)


	Aventura Mall*
	Broward Mall (Plantation)
	Citrus Park Center (Tampa)
	Coral Square
	Countryside Mall (Clearwater)
	Dadeland Mall (Miami)*
	Edison Mall (Fort Meyers)
	Florida Mall (Orlando)†
	Melbourne Square
	Orange Park Mall
	Orlando Fashion Square
	Oviedo Marketplace
	Regency Square (Jacksonville)
	Seminole Town Center (Sanford)
	Shops at Sunset (South Miami)
	The Falls (Miami)*
	Tyrone Square (St. Petersburg)
	West Oaks Mall (Ococe)

Georgia (8)


	Arbor Place (Douglasville)
	Augusta Mall
	Mall of Georgia at Mill Creek†
	North Georgia Outlet (Dawsonville)
	Northlake Mall (Atlanta)
	Perimeter Mall (Atlanta)
	Town Center at Cobb (Kennesaw)

Illinois (6)


	Charlestown Mall
	Fox Valley Center (Aurora)
	Northbrook Court*
	Spring Hill Mall (West Dundee)
	Stratford Square (Bloomingdale)
	Water Tower Place (Chicago)*

Michigan (4)


	Fairlane (Dearborn)
	Genesee Valley Center (Flint)
	Great Lakes Crossing
	(Auburn Hill)
	River Town Crossings
	(Grandville)

New Jersey (4)


	Garden State Plaza (Paramus)*
	Hamilton Mall (Mays Landing)
	Jersey Gardens (Elizabeth)
	Quaker Bridge Mall
	(Lawrenceville)

New York (11)


	Palisades Center (West Nyack)†
	Roosevelt Field (Garden City)†
	Soho*
	Walden Galleria (Buffalo)
	Eastview Mall (Victor)
	Crossgates Mall (Albany)†
	Galleria at Crystal Run

	(Middletown)

	Carousel Center (Syracuse)

Nevada (4)


	Boulevard Mall (Las Vegas)†
	Galleria (Henderson)
	Meadows Mall (Las Vegas)

Pennsylvania (4)


	Franklin Mills (Philadelphia)
	Monroeville Mall
	Ross Park Mall (Pittsburgh)
	Oxford Valley Mall (Langhorne)

Puerto Rico (4)


	Plaza Carolina (Carolina)
	Plaza Del Sol (Sierra Bayamon)
	Plaza Las Americas (Hato Rey)†

Texas (14)


	Collin Creek Mall (Plano)
	Grapevine Mills
	Highland Mall (Austin)
	Houston Galleria*
	Katy Mills
	Lakeline Mall (Cedar Park)
	La Plaza Mall (McAllen)
	Northpark Mall (Dallas)*
	North East Mall (Hurst)
	Ridgmar Mall (Ft. Worth)
	Stonebriar Center (Frisco)†
	Town East Mall (Mesquite)
	Valley View (Dallas)

The following table highlights the number of stores, by geographic region, opened in each of the last five fiscal years:

We seek to locate our stores in large, commanding spaces in high traffic areas of strong regional malls.

Our stores provide a comfortable and spacious shopping environment that accentuates the breadth of our merchandise offering. To distinguish our stores, we also seek prominent center court locations with distinctive architectural features, such as high angled ceilings, which our store designers and visual merchandisers can use to create striking displays, facades and entrances. We believe that specialized store design features, including finished ceilings, classic lighting and detailed features, help create a differentiated store environment unique to young women apparel retailers in the mall. We have historically been able to locate and profitably operate our stores in a variety of malls catering to different socioeconomic, demographic and cultural profiles. Our Charlotte Russe and Rampage stores, which average approximately 7,400 square feet, are generally twice the size of those of most of our mall-based competitors. Our Charlotte’s Room stores currently average approximately 3,500 square feet.

We engage an independent real estate consultant to initially identify favorable store locations in existing or new markets. This consultant currently does not advise any other operators within the women’s apparel industry. Our site selection criteria includes:


	•	a careful assessment of mall traffic;

	•	the performance of other retailers within the mall and in particular those serving our target customers;

	•	the proposed location within the mall;

	•	population and demographic characteristics of the area; and

	•	projected profitability and cash return on investment.

Immediately after site approval, we simultaneously negotiate lease terms and begin planning the store layout and design. We typically open a new store within three months after lease execution and delivery of space. We also continually evaluate our stores to assess the need for remodeling or the timing of possible closure based on economic factors.

Our store operations are currently organized into a Western region with eight districts, an Eastern region with six districts and a Southeastern region with seven districts. Each region is managed by a regional manager and each district is managed by a district manager. Each district manager is responsible for an average of seven stores. Individual store personnel generally consists of a store manager, one or two assistant managers and seven to ten sales associates, the number of which generally increases during our peak selling seasons. Our store managers are responsible primarily for customer service training and hiring store level staff. Merchandise selections, inventory management and visual merchandising strategies for each store are determined at the corporate level. Our regional, district, and store managers receive a base compensation plus incentive compensation based on sales goals.

Our commitment to customer satisfaction and service is an integral part of building customer loyalty. We strive to hire enthusiastic sales personnel and provide them with extensive training to create a sales staff with a strong fashion sense, a focus on customer service and a willingness to assist customers with assembling, accessorizing and coordinating outfits.

Our standard training program for store managers includes an initial three week session at a store managed by one of our approved training managers, as well as frequent regional and district meetings. In addition, our training manual provides practical information and skill development for all store level positions. We develop new store managers by promoting from within and selectively hiring from other retail organizations. In anticipation of our continued store expansion, we will continue to increase the number of people in our store manager training program as appropriate to support our proposed expansion strategy.

We are committed to investing in and continually upgrading our management information systems, as we believe those systems are critical to implementing our expansion strategy in an efficient manner and to maintaining a competitive industry position. Our management information systems address, among others things, our stock keeping unit and classification inventory tracking, purchase order management, merchandise distribution, automated ticket making, general ledger, sales audit, accounts payable, fixed asset management, payroll, integrated financials and point-of-sale information. Our buying, allocation and distribution functions are supported by an ICM merchandising system that is tailored for Charlotte Russe and we utilize a Lawson Software package for our financial reporting and human resource functions. We believe our current systems are adequate to meet future expansion plans over the next several years.

Our sales are updated daily in the merchandise reporting system by polling sales information from each store’s point-of-sale terminal. Our point-of-sale system consists of registers providing price look-up, time and attendance, supply ordering, bill of lading tracking and automated charge card processing. We believe these features improve transaction accuracy, increase speed of checkout time and overall store efficiency and enable us to track the productivity of individual sales associates. Through automated nightly two-way electronic communication with each store, we upload sales information, payroll hours and messages to our host system and download new merchandise pricing, price changes for existing merchandise, carton receipts and system maintenance tasks to the point-of-sale devices. Based upon the evaluation of information obtained through daily polling, our planning department implements merchandising decisions regarding inventory levels, reorders, price changes and allocation of merchandise to stores.

We operated 151 stores throughout 23 states and Puerto Rico as of December 30, 2000. We currently lease all of our store locations. Most leases have an initial term of at least ten years and do not contain

options to extend the lease. Our leases, however, often allow for termination by us after three years if sales at that site do not exceed specified levels, although in some instances we are required to pay back a portion of any landlord allowances received. We lease space containing approximately 125,000 square feet for our executive offices and distribution center in San Diego, California. This lease is for a term of twelve years and is scheduled to expire on August 31, 2009. We believe our distribution facility is adequate for our operations through the end of this fiscal year, and we are currently evaluating plans to expand our distribution capacity in future periods. We also lease approximately 7,600 square feet at the CaliforniaMart in Los Angeles. This lease expires April 30, 2005.

We compete with other retailers primarily on the basis of timeliness of fashions, breadth of merchandise, brand recognition, pricing and quality.

We currently compete against a diverse group of retailers, including national and local specialty retail stores, regional retail chains, traditional retail department stores and, to a lesser extent, mass merchandisers. The primary competitors of Charlotte Russe are Express, Contempo Casuals, Wet Seal and Forever 21. The primary competitors of Rampage are bebe and Arden B. Our competitors sell a broad assortment of apparel and accessories that are similar and often identical to those we sell. Furthermore, our competitors may at times sell their merchandise at prices lower than what we charge for comparable merchandise. We believe that the principal bases upon which we compete in our industry are timeliness of fashions, breadth of merchandise, brand recognition, pricing and quality. We believe that we have a significant competitive advantage over our competitors because of our exciting shopping environment. Our stores are generally twice as large as most of our mall-based competitors and provide a feminine look that is exciting to shop and accentuates the value and breadth of our merchandise selection. We also believe that we have a competitive advantage because of high consumer recognition and acceptance of our brands, our strong presence in major shopping malls throughout the United States, our relationship with our vendors and the experience of our management. The retail and apparel industries, however, are highly competitive and characterized by relatively low barriers to entry.

We believe that our trademarks are important to our success. Our Charlotte Russe trademarks are registered with the United States Patent and Trademark Office. In addition, we have applications pending with the United States Patent and Trademark Office for our (HEART,MOON,STAR)

and Charlotte’s Room trademarks. In connection with the acquisition of our Rampage stores in September 1997, we acquired the exclusive right within the United States to use the Rampage trademark on exterior and interior signage identifying our Rampage stores, as well as the non-exclusive right within the United States to use the Rampage trademark for promotional and advertising materials. The right to market merchandise under the Rampage trademark was retained by Rampage Clothing Company and, accordingly, we do not have the right to use the Rampage trademark on our merchandise. Further, nothing in our license agreement prohibits the sale of merchandise bearing the Rampage trademark by other parties or the licensing of the Rampage trademark to other parties. In fact, Rampage Clothing Company has licensed the trademark to other parties. If the product quality or activities of the Rampage Clothing Company or these other parties negatively impact our business reputation, we have the right to rename our Rampage stores and terminate the license agreement upon thirty (30) days written notice. Furthermore, over 90% of the merchandise in our Rampage stores is sold under our proprietary (HEART,MOON,STAR)

label, and only a nominal amount is sold under the Rampage brand name. We pay a royalty under the license agreement equal to the greater of a stated dollar amount or a percentage of net sales during the fiscal year at stores operating under the Rampage name. The license agreement has an initial term of four years with an automatic option to renew for another four years. We may also extend the license for ten additional four-year periods. We may exercise each of these extension periods, however, only if our net sales for the last fiscal year of the then current four-year extension period exceed by 10% our net sales for the fiscal year ending immediately prior to the beginning of such extension period.

As of December 30, 2000, we employed 1,086 full-time and 2,021 part-time employees. Of our full-time employees, 167 were employed at our corporate offices, 141 were employed at our distribution center and 778 were employed at our store locations. The number of part-time employees fluctuates depending on our seasonal needs. None of our employees are represented by a labor union and we consider the relationship with our employees to be good.

We are party to various legal proceedings in the ordinary course of business. There are currently no material legal proceedings pending against us.

The following table sets forth information concerning our executive officers, directors and other key employees.

Bernard Zeichner has been our President since May 1996. Mr. Zeichner also serves as Chief Executive Officer and Chairman of the Board of Directors. Prior to joining us, he was President of the retail division of Guess? from 1993 to 1995. Prior to that, Mr. Zeichner was employed by Contempo Casuals, serving as President from 1982 to 1993 and as Chief Executive Officer from 1989 to 1993. From 1977 to 1982, Mr. Zeichner was Executive Vice President of Joske’s of Texas, a department store chain.

Harriet A. Bailiss-Sustarsic has been our Executive Vice President and General Merchandise Manager since October 1996. From 1993 to 1996, Ms. Sustarsic was Director of Merchandising for the knits division of Rampage Clothing Company, a junior apparel manufacturer. Previously, Ms. Sustarsic worked for Contempo Casuals from 1987 to 1993, starting as a buyer and rising to a Divisional Merchandise Manager. Ms. Sustarsic began her retail career in 1980 at The Broadway department store chain and served in various merchandising positions.

Daniel T. Carter joined us in June 1998 as our Executive Vice President and Chief Financial Officer. Prior to joining us, from September 1997 through May 1998, Mr. Carter was Chief Financial Officer for Advanced Marketing Services, a public company that wholesales books to Costco and Sam’s Club. From 1986 to September 1997, Mr. Carter was employed by The Price Company, the operator of Price Clubs, and follow-up entities, serving as Senior Vice President for PriceCostco and Chief Financial Officer for Price Enterprises. Mr. Carter is a Certified Public Accountant.

R. Tina Kernohan began her employment with us in June 1996 as Regional Manager and was promoted to Executive Vice President, Store Operations in October 1997. From 1991 to 1996, Ms. Kernohan held the title of District Manager at Miller’s Outpost, where she supervised the operation of 20 stores. Ms. Kernohan was employed by Contempo Casuals from 1974 to 1990, where she advanced from sales to regional management, supervising 40 stores across five states.

Paul R. Del Rossi has been a Director since January 2000. He served as President and Chief Executive Officer of General Cinema Theatres from 1983 to 1997 and currently serves as Chairman of the Board of Directors of General Cinema Theatres and General Cinema International. Prior to joining General Cinema, Mr. Del Rossi was Senior Vice President of the Venture Capital Group at The Boston Company and was a management consultant with Arthur D. Little. Mr. Del Rossi is also a director of the Massachusetts Chapter of the Cystic Fibrosis Foundation and the DeWolfe Companies and serves as a trustee of Babson College.

W. Thomas Gould has been a Director since January 2000. Mr. Gould began his career with Maas Brothers, a division of Allied Stores Corporation, in 1969 and in 1985 joined Younkers as President. During his employment at Younkers, Mr. Gould also served as both the Chief Executive Officer and Chairman of the Board of Directors until it merged with Proffitt’s, which is now owned by Saks Incorporated, in 1996. He then served as Vice Chairman of Proffitt’s until his retirement in April 1997. Mr. Gould also serves on the Board of Directors of Sentry Insurance Company.

Allan W. Karp has been a Director since September 1996. Mr. Karp is currently a member of Saunders Karp & Megrue Partners, L.L.C., which serves as the general partner of SKM Partners, L.P., which serves as the general partner of The SK Equity Fund, L.P. and the SK Investment Fund, L.P. Before founding Saunders Karp & Megrue, L.L.C., Mr. Karp was a Principal in the Merchant Banking Department at Morgan Stanley & Co., Inc. Mr. Karp also serves on the Board of Directors of Accessory Network Group, Inc., Constellation Concepts, Inc., Party Concepts, Inc., S.B. Restaurant Co., Souper Salad, Inc., SWH Corporation, Inc. and UpToDate, Inc.

David J. Oddi has been a Director since September 1996. Mr. Oddi is currently a member of Saunders Karp & Megrue Partners, L.L.C., which serves as the general partner of SKM Partners, L.P., which serves as the general partner of The SK Equity Fund, L.P. and the SK Investment Fund, L.P. Prior to joining Saunders Karp & Megrue, L.L.C. in 1994, Mr. Oddi was a financial analyst in the Leveraged Finance Group at Salomon Brothers Inc. Mr. Oddi also serves on the Board of Directors of The Children’s Place Retail Stores, Inc., Giftware Holdings, Inc., Pennsylvania Fashions, Inc., S.B. Restaurant Co., Inc., Souper Salad, Inc. and SWH Corporation, Inc.

Renee L. Bell joined us in October 1997 and has served as Vice President of the Rampage Buying division since May 1999. Ms. Bell has 12 years of buying experience and was previously a buyer at Rampage Clothing Company from 1994 to 1996, Contempo Casuals from 1993 to 1994, and bebe from 1991 to 1993. At bebe, Ms. Bell was also responsible for developing private label merchandise in the sportswear, leather, coats, accessory and jewelry categories.

Jennifer L. Bolinger began her employment with us in 1977 as a store sales associate, and has served as Vice President of Human Resources since September 1997. Ms. Bolinger also held various positions in store operations, including District Manager, leading up to her promotion to Director of Human Resources in 1993.

Sheri E. Coury began her employment with us in 1985 as a District Merchandiser, and has served as Vice President of Charlotte Russe Apparel since September 1997, overseeing all apparel merchandising for these stores. Ms. Coury came to us with over five years of previous retailing experience and has served in a variety of merchandising capacities for us over the past 14 years as the business has become a national retailer. Ms. Coury’s background encompasses a variety of merchandising functions, including visual operations, merchandising, and seven years as a buyer.

Graham P. Luck joined us in 1997 as Vice President of Design and Construction. Mr. Luck served as a Vice President at Guess? from 1994 to 1997. From November 1986 to July 1994, Mr. Luck served as Director of Store Planning and Operations at Contempo Casuals. During the course of his retail and construction career, Mr. Luck has been involved in all phases of store negotiation, design and construction in high-growth retail companies.

Rachel E. Luna began her employment with us in 1981 as a store sales associate, and has served as Vice President of Accessories for our Charlotte Russe and Rampage stores since September 1997. Ms. Luna currently oversees accessories merchandising for our Charlotte Russe and Rampage stores. During the past 15 years as we have developed our national presence, Ms. Luna has worked exclusively within the accessory,

Kalpana Makani joined us as Director of Management Information Systems in September 1996 and was named Vice President, Chief Information Officer in September 1997. Prior to joining us, Ms. Makani spent two years, from 1994 to 1996, as the Director of Management Information Systems at Guess? and 18 years, from 1981 to 1994 and 1974 to 1978, at Contempo Casuals where she served as Vice President of M.I.S. Ms. Makani received a Master’s Degree in Statistics and a Master’s Degree in Computer Science from the University of California at Berkeley.

Nancy E. Mamann has served as Vice President of Marketing since joining us in May 1999. Ms. Mamann served as Vice President of Marketing for Jonathan Martin from 1997 to 1999. For the previous six years, Ms. Mamann was the President of Brand Communications at Rampage Clothing Company. Ms. Mamann’s other experience includes Advertising Coordinator for Guess?, Advertising and Marketing Director for Jimmy’z, and Leon Max. Ms. Mamann has 17 years of marketing experience in both retail and wholesale environments and founded an advertising agency in 1989 that focused on the fashion and entertainment industries.

Jennifer D. Mitchell began her employment with us in 1983 and was named Vice President of Merchandise Planning and Allocations in September 1997. Ms. Mitchell was directly responsible for creating our Merchandise Planning and Allocation department in 1993. During her tenure at Charlotte Russe, Ms. Mitchell has served in several other capacities, including District Accessory Merchandiser, Assistant Apparel Buyer, and Office Manager.

Christopher M. Monier joined us in March 1997 and has served as Vice President of Administration since September 1997 and currently oversees all aspects of distribution, traffic, purchasing and loss prevention. Prior to joining us, Mr. Monier served in the distribution division of Skechers from 1995 to 1997. Prior to that time, Mr. Monier was a distribution center manager with Contempo Casuals. Mr. Monier, who holds a Bachelor of Science Degree in Industrial Engineering and Operation Research, has 19 years of experience in the design and management of distribution centers, including such other companies as LA. Gear and The Gap Stores.

Zina Rabinovich joined us in December 1996 and has served as Vice President, Controller since January 2000. Ms. Rabinovich currently oversees all areas of general accounting, financial reporting, treasury and income taxes. Prior to joining us, Ms. Rabinovich served as Assistant Controller for Hometown Buffet, a publicly-held restaurant company, from 1995 to 1996 after having served in various accounting positions at Woman’s World, a national specialty retailer, for the previous ten years.

Beth S. Sassower joined us in October 1995 as a buyer for Charlotte Russe Apparel. Ms. Sassower has served as a buyer, a Divisional Merchandise Manager and was recently promoted to Vice President Merchandise Manager for Charlotte Russe Apparel at the end of October 1999. Prior to her employment with us, Ms. Sassower worked for The Broadway department store chain from 1989 to 1995. During those years, she worked as a department manager, assistant buyer and as buyer for junior knits, wovens and sweaters and later as a buyer for Bridge Sportswear.

Teresa D. Sedlar joined us in January 2001 as Vice President of Imports. Prior to joining us, Ms. Sedlar had been Director of Global Sourcing for Marathon Designs since 2000. During 1999, Ms. Sedlar was Director of Sourcing for L.C.A. Intimates. From 1996 to 1998, Ms. Sedlar was Director of Imports for Authentic Fitness. From 1995 to 1996, Ms. Sedlar was Director of Imports for Chorus Line and, from 1987 to 1995, Ms. Sedlar was Director of Imports for Contempo Casuals. Ms. Sedlar has also worked as Director of Imports for various other wholesalers such as College Town and Commonwealth Trading.

The following table sets forth information regarding the beneficial ownership of our common stock as of February 16, 2001, and as adjusted to reflect the sale of the shares in this offering, for each selling stockholder. Percentage ownership is based on 20,398,660 shares outstanding as of December 30, 2000.


(1)	These shares include 549,272 shares of common stock held in a revocable trust and 869,250 shares of common stock subject to options exercisable within sixty (60) days after December 30, 2000. Mr. Zeichner is the trustee of the revocable trust.

(2)	These shares include 35,200 shares of common stock subject to options exercisable within sixty (60) days after December 30, 2000.

(3)	These shares include (a) 16,074,572 shares of common stock owned by The SK Equity Fund, L.P., (b) 167,336 shares of common stock owned by the SK Investment Fund, L.P. and (c) 1,965,440 shares of common stock which may be acquired by these funds pursuant to the exercise of warrants. SKM Partners, L.P. is the general partner of each of The SK Equity Fund, L.P. and the SK Investment Fund, L.P. Saunders Karp & Megrue, L.L.C. serves as the general partner of SKM Partners, L.P. An affiliate of these funds provides us with financial advisory services. The address for each of these entities is 262 Harbor Drive, Stamford, CT 06902.

The number of shares beneficially owned by each selling stockholder is determined in accordance with the rules of the Securities and Exchange Commission and are not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock with respect to which each selling stockholder has sole or shared voting of investment power and any shares of common stock that such selling stockholder has the right to acquire within sixty (60) days after December 30, 2000 through the exercise of any option, warrant or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of common stock.

The number of shares outstanding after the offering assumes that the underwriters do not exercise their over-allotment option.

This section is a general discussion of the material United States federal income and estate tax consequences of the ownership and disposition of our common stock by a non-United States holder. You are a non-United States holder if you are, for United States federal income tax purposes:


	•	an individual who is not a citizen or resident of the United States;

	•	a foreign corporation;

	•	a foreign partnership;

	•	an estate that is not subject to United States federal income taxation on its worldwide income; or

	•	a trust that is not subject to the primary supervision of a United States court or is not subject to the control of any U.S. person with respect to substantial trust decisions.

An individual may be treated as a resident of the United States in any calendar year for United States federal income tax purposes, instead of a nonresident, by, among other ways, being present in the United States on at least 31 days in that calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For purposes of this calculation, you would count all of the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year. Residents are taxed for United States federal income purposes as if they were United States citizens.

We do not, however, discuss all aspects of United States federal taxation that may be important to a particular non-United States holder in light of specific facts and circumstances relevant to that non-United States holder. Furthermore, in general this discussion does not address the tax consequences applicable to holders that are treated as partnerships or other pass through entities for United States federal income tax purposes. You should note that if a partnership holds common stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner of a partnership holding common stock, we suggest that you consult your tax advisor.

This summary does not address all aspects of United States federal taxation and, in particular, this discussion:


	•	assumes that you hold your common stock as a capital asset — that is, for investment purposes — and that you do not have a special tax status;

	•	does not consider tax consequences that depend upon your particular tax situation in addition to your ownership of the common stock, such as special rules that may apply to you if you hold our common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated transaction;

	•	does not consider special tax provisions that may be applicable to you if you have relinquished United States citizenship or residence, nor does it consider special tax provisions that may apply to certain non-United States holders such as financial institutions, insurance companies, tax-exempt organizations, broker-dealers and traders in securities;

	•	is based on current law and changes in the law may change the tax treatment of the common stock; and

	•	does not cover state, local or foreign law.

You should consult a tax advisor regarding the United States federal tax consequences of acquiring, holding and disposing of common stock in your particular circumstances, as well as any tax consequences that may arise under the laws of any state, local or foreign taxing jurisdiction.

We do not intend to declare or pay a cash dividend on our common stock in the foreseeable future. In the event we do, except as described below, if you are a non-United States holder of common stock, dividends paid to you are subject to withholding of United States federal income tax at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate. You must satisfy certification requirements in order to claim the benefit of a lower treaty rate. You can make this certification by providing a Form W-8BEN or appropriate substitute form to us, or our paying agent. If you hold the common stock through a financial institution or other agent acting on your behalf, you will be required to provide appropriate documentation to the agent. Your agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries.

If you are eligible for a reduced rate of United States withholding tax under a tax treaty, you may obtain a refund of any amounts withheld in excess of that rate by filing a refund claim with the United States Internal Revenue Service.

If you are a non-United States holder, you generally will not be subject to United States federal income tax on gain that you recognize on a disposition of common stock unless:


	•	the gain is “effectively connected” with your conduct of a trade or business in the United States and, if an income tax treaty applies, the gain is attributable to a permanent establishment that you maintain in the United States;

	•	you are an individual who is present in the United States for 183 or more days in the taxable year of the sale and other specific requirements are met; or

	•	we are or have been a United States real property holding corporation for federal income tax purposes and you held, directly or indirectly, at any time during the five-year period ending on the date of disposition, more than five percent (5%) of our common stock.

In general, we will be treated as a United States real property holding corporation if the fair market value of our “United States real property interests” equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests and our other assets used or held for use in a trade or business. We have not been, are not and do not anticipate becoming a United States real property holding corporation for United States federal income tax purposes.

Income or Gains Effectively Connected With a United States Trade or Business

The preceding discussion of the tax consequences of the purchase, ownership or disposition of common stock assumes that you are not engaged in a United States trade or business. If any dividends on common stock, or gain from the sale, exchange or other disposition of the stock is effectively connected with your conduct of a United States trade or business, then the income or gain will be subject to United States federal income tax on a net income basis at the regular graduated rates. If you are eligible for the benefits of a tax treaty between the United States and your country of residence, in general, any “effectively connected” income or gain will be subject to United States federal income tax only if it is also attributable to a permanent establishment maintained by you in the United States.

The payment of dividends that are effectively connected with your United States trade or business, and therefore included in your gross income, will not be subject to the 30% withholding tax. To claim this exemption from withholding, you must certify your qualification, which can be done by filing a Form W-8ECI. If you are a foreign corporation, your income that is effectively connected with a United States trade or business would generally be subject to an additional “branch profits tax.” The branch profits tax rate is generally 30%, although an applicable tax treaty might provide for a lower rate.

Our common stock held by an individual who is a non-United States holder, as specifically defined for United States federal estate tax purposes, at the time of death will be included in the gross estate of the holder for United States federal estate tax purposes, unless an applicable estate tax treaty or other treaty provides otherwise and, therefore, may be subject to United States federal estate tax.

The dividends paid to you may be subject to information reporting and United States backup withholding tax at a rate of 31%. If you are a non-United States holder, you will be exempt from such backup withholding tax if you provide a Form W-8BEN or otherwise meet documentary evidence requirements for establishing that you are a non-United States holder or otherwise establish an exemption.

The gross proceeds from the disposition of our common stock may be subject to information reporting and backup withholding tax at a rate of 31%. If you sell your common stock outside of the United States through a non-United States office of a non-United States broker and the sales proceeds are paid to you outside the United States, then United States backup withholding and information reporting requirements generally will not apply to that payment. However, United States information reporting, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if you sell your common stock through a non-United States office of a broker that:


	•	is a United States person;

	•	derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States;

	•	is a “controlled foreign corporation” as to the United States; or

	•	is a foreign partnership, if at any time during its tax year:


	—	one or more of its partners are United States persons who in the aggregate hold more than 50% of the income or capital interests in the partnership;

	—	at any time during its tax year, the foreign partnership is engaged in a United States trade or business,

unless the broker has documentary evidence in its files that you are a non-United States person and certain conditions are met or you otherwise establish an exemption.

If you receive payments of the proceeds of a sale of our common stock to or through a United States office of a broker, the payment is subject to both United States backup withholding and information reporting unless you provide a Form W-8BEN certifying that you are a non-United States person or you otherwise establish an exemption.

You generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed your income tax liability by filing a refund claim with the United States Internal Revenue Service.

Charlotte Russe and the selling stockholders are offering the shares of common stock described in this prospectus through a number of underwriters. Banc of America Securities LLC, Robertson Stephens, Inc., Bear, Stearns & Co. Inc. and CIBC World Markets Corp. are the representatives of the underwriters. We and the selling stockholders have entered into a firm commitment underwriting agreement with the representatives. Subject to the terms and conditions of the underwriting agreement, we and the selling stockholders have agreed to sell to the underwriters, and the underwriters have each agreed to purchase, the number of shares of common stock listed next to its name in the following table:

The underwriting agreement provides that the underwriters must buy all of the shares of common stock if they buy any of them. The underwriters will sell the shares of common stock to the public when and if the underwriters buy the shares from us and the selling stockholders.

The underwriters initially will offer shares to the public at the price specified on the cover page of this prospectus. The underwriters may allow to some dealers a concession of not more than $ per share. The underwriters may also allow, and any other dealers may reallow, a concession of not more than $ per share to some other dealers. If all the shares of common stock are not sold at the initial public offering price, the underwriters may change the offering price and the other selling terms. The common stock is offered subject to a number of conditions, including receipt and acceptance of the common stock by the underwriters and the right on the part of the underwriters to reject orders in whole or in part.

The selling stockholders have granted the underwriters an option to buy up to 525,000 additional shares of common stock. These additional shares would cover sales of shares by the underwriters that exceed the number of shares specified in the table above. The underwriters may exercise this option for thirty (30) days after the date of this prospectus. If the underwriters exercise this option, they will each purchase additional shares of common stock approximately in proportion to the amounts specified in the table above.

The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholders. These amounts are shown assuming no exercise and full exercise of the underwriters’ option to purchase additional shares of common stock.

The expenses of the offering, not including underwriting discounts and commissions, are estimated to be approximately $475,000 and will be paid by us.

We, our officers and directors and the selling stockholders have entered into lock-up agreements with the underwriters. Under these agreements, we may not issue any new shares of common stock and our officers and directors and the selling stockholders may not dispose of or hedge any common stock or securities convertible into or exchangeable for shares of common stock without the prior written consent of Banc of America Securities LLC. These restrictions will be in effect for a period of ninety (90) days after the date of this prospectus. At any time and without notice, Banc of America Securities LLC may, in its sole discretion, release all or some of the securities from these lock-up agreements.

We and the selling stockholders will indemnify the underwriters against some liabilities, including some liabilities under the Securities Act. If we or the selling stockholders are unable to provide this indemnification, we and the selling stockholders will contribute to payments the underwriters may be required to make in respect of those liabilities.

The common stock is quoted on the Nasdaq National Market under the symbol “CHIC.”

In connection with this offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of the common stock. These transactions may include:


	•	short sales;

	•	over allotment;

	•	purchases to cover positions created by short sales; and

	•	stabilizing transactions.

Short sales involve the sale by the underwriters of a greater number of shares of our common stock than they are required to purchase in this offering. In order to cover a short position, the underwriters may bid for and purchase shares of our common stock in the open market or may exercise their overallotment option. Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common stock while this offering is in progress.

The underwriters may also impose a penalty bid. This means that if the representatives purchase shares of our common stock in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by them.

As a result of these activities, the price of the common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the Nasdaq National Market, in the over-the-counter market or otherwise.

In connection with this offering, some underwriters and any selling group members who are qualified market makers on the Nasdaq National Market may engage in passive market making transactions in the common stock on the Nasdaq National Market in accordance with Rule 103 of Regulation M. Rule 103 permits passive market making during the period when Regulation M would otherwise prohibit market making activity by the participants in this offering. Passive market making may occur during the business day before the pricing of this offering, before the commencement of offers or sales of the common stock. Passive market makers must comply with applicable volume and price limitations and must be identified as a passive market maker. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for the security. If all independent bids are lowered below the bid of the passive market maker, however, the bid must then be lowered when purchase limits are exceeded. Net purchases by a passive market maker on each day are limited to a specified percentage of the passive market maker’s average daily trading volume in the common stock during a specified period and must be discontinued when that limit is reached. The underwriters and other dealers are not required to engage in passive market making and may end passive market making activities at any time.

The validity of the common stock offered by this prospectus will be passed upon for Charlotte Russe Holding, Inc. by Ropes & Gray, Boston, Massachusetts. Fried, Frank, Harris, Shriver & Jacobson (a partnership including professional corporations), New York, New York, has acted as counsel for the underwriters in connection with certain legal matters related to this offering.

The consolidated financial statements of Charlotte Russe Holding, Inc. at September 25, 1999 and September 30, 2000 and for each of the three years in the period ended September 30, 2000, appearing in this prospectus and the registration statement, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

We are subject to the reporting requirements of the Securities Exchange Act of 1934 and file annual and quarterly reports, proxy statements and other information with the Securities and Exchange Commission. We have also filed with the Commission a registration statement on Form S-3, including exhibits and schedules, under the Securities Act with respect to the common stock to be sold in this offering. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules that are part of the registration statement. If a contract, agreement or other document has been filed as an exhibit to the registration statement, we refer you to the copy of each such contract, agreement or other document filed as an exhibit to the registration statement for a more complete description of the matter involved. This registration statement and any reports, proxy statements and other information filed by us with the Commission pursuant to the informational requirements of the Exchange Act may be inspected and copied at the following public reference facilities of the Securities and Exchange Commission:

You can also request copies of these documents upon payment of a duplicating fee by writing to the Commission. You may call the Commission at 1-800-SEC-0330 for further information on the operation of its public reference rooms. Our filings are also available to you on the Internet web site maintained by the Commission at http://www.sec.gov.

The Securities and Exchange Commission allows us to “incorporate” into this prospectus information that we file with the Commission in other documents. This means that we can disclose important information to you by referring to other documents that contain that information. The information incorporated by reference is considered to be part of this prospectus. The information contained in the prospectus and information that we file with the Commission in the future and incorporate by reference in this prospectus automatically updates and supersedes previously filed information. This updated and superseded information shall not, except as so modified or superseded, constitute a part of this prospectus. We are incorporating by reference the following documents: (1) our Annual Report on Form 10-K for the fiscal year ended September 30, 2000 as filed with the Commission on December 21, 2000, (2) our Proxy Statement for the Annual Meeting of Stockholders on February 13, 2001, (3) our Quarterly Report on Form 10-Q for the quarter ended December 30, 2000, as filed with the Commission on February 9, 2001 and (4) the description of the common stock contained in our Registration Statement on Form 8-A filed under Section 12 of the Exchange Act, including any amendment or report updating such description. All other documents that we file with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the initial filing of this registration statement and prior to the termination of this offering shall also be deemed to be incorporated by reference in this prospectus and to be a part hereof from the respective dates of the filing of such documents.

We will provide without charge to each person to whom a copy of this prospectus is delivered, upon written or oral request of any such person, a copy of any and all of these documents, other than exhibits to those documents that are not specifically incorporated by reference into the documents. You may request copies by contacting Charlotte Russe, 4645 Morena Boulevard, San Diego, California 92117, Attention: Chief Financial Officer, Telephone Number (858) 587-1500.

We have audited the accompanying consolidated balance sheets of Charlotte Russe Holding, Inc. as of September 25, 1999 and September 30, 2000, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended September 30, 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Charlotte Russe Holding, Inc., at September 25, 1999 and September 30, 2000, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2000, in conformity with accounting principles generally accepted in the United States.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY



	Common Stock				Additional
					Paid-in			Deferred
	Shares		Amount		Capital			Compensation

Balance at September 27, 1997		18,300,000	$	183,000	$	18,739,981		$	—




Stock option transactions, net of tax benefit		—		—		(48,600	)		—




Net Income		—		—		—			—

Balance at September 26, 1998		18,300,000		183,000		18,691,381			—




Stock option transactions, net of tax benefit		10,800		108		36,692			—




Deferred compensation related to stock options		—		—		720,000			(720,000	)




Amortization of deferred compensation		—		—		—			60,000




Notes receivable from officers		—		—		—			—




Net Income		—		—		—			—

Balance at September 25, 1999		18,310,800		183,108		19,448,073			(660,000	)




Initial public offering of stock		1,450,000		14,500		13,519,000			—




Exercise of warrant by bank		376,180		3,762		(3,762	)		—




Repayment of notes receivable		—		—		—			—




Stock option transactions, net of tax benefit		156,500		1,565		785,845			—




Amortization of deferred compensation		—		—		—			144,000




Issuance of stock under employee stock purchase plan		25,932		259		231,314			—




Net income		—		—		—			—

Balance at September 30, 2000		20,319,412	$	203,194	$	33,980,470		$	(516,000	)

[Continued from above table, first column(s) repeated]


	Notes					Total
	Receivable			Retained		Stockholders’
	from Officers			Earnings		Equity

Balance at September 27, 1997	$	—		$	5,056,530	$	23,979,511




Stock option transactions, net of tax benefit		—			—		(48,600	)




Net Income		—			5,514,109		5,514,109

Balance at September 26, 1998		—			10,570,639		29,445,020




Stock option transactions, net of tax benefit		—			—		36,800




Deferred compensation related to stock options		—			—		—




Amortization of deferred compensation		—			—		60,000




Notes receivable from officers		(1,000,000	)		—		(1,000,000	)




Net Income		—			11,495,489		11,495,489

Balance at September 25, 1999		(1,000,000	)		22,066,128		40,037,309




Initial public offering of stock		—			—		13,533,500




Exercise of warrant by bank		—			—		—




Repayment of notes receivable		1,000,000			—		1,000,000




Stock option transactions, net of tax benefit		—			—		787,410




Amortization of deferred compensation		—			—		144,000




Issuance of stock under employee stock purchase plan		—			—		231,573




Net income		—			18,760,092		18,760,092

Balance at September 30, 2000	$	—		$	40,826,220	$	74,493,884

Charlotte Russe Holding, Inc. (the “Company”) was incorporated in Delaware in July 1996. On September 27, 1996, the Company was capitalized through the issuance of Common Stock and long-term debt. Effective September 27, 1996, the Company acquired all of the stock of Lawrence Merchandising Corporation, a California corporation, and its affiliates, Lawrence Merchandising Corporation of Nevada and Lawrence Merchandising Corporation of Nevada II, both Nevada corporations, (collectively, the “Predecessor” companies) for approximately $35 million in cash. In addition, the Company repaid $5 million of the Predecessor’s short-term borrowings concurrent with the consummation of the purchase transaction. The acquisition was accounted for using the purchase method of accounting. The excess of the aggregate purchase price over the fair value of net assets acquired of approximately $32.9 million was recognized as goodwill.

The Company operates in one segment, selling clothing and accessories for women through its mall-based retail stores that operate under the names Charlotte Russe, Rampage, and Charlotte’s Room. As of September 30, 2000, the Company operated 136 mall-based retail stores in 21 states and Puerto Rico.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company’s fiscal year is the 52/53 week period ending on the last Saturday in September. The fiscal year ended September 30, 2000 contained 53 weeks while the fiscal years ended September 25, 1999 and September 26, 1998 each contained 52 weeks.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

The Company considers all liquid investments with maturities of three months or less when purchased to be cash equivalents.

Inventories are accounted for by the retail inventory method. The cost of inventory is determined at the lower of the first-in, first-out (FIFO) method or market.

Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally five to seven years. Leasehold improvements are amortized on a straight-line basis over the estimated useful lives of the respective assets or the term of the lease, whichever is less. Depreciation expense for the years ended September 26, 1998, September 25, 1999 and September 30, 2000 was $3,798,194, $4,910,019 and $6,758,446, respectively.

Goodwill represents the excess of the cost over the fair value of net assets acquired by the Company. Goodwill is amortized on a straight-line basis over 40 years. The amortization period was determined based upon the following factors, among others: operating history, brand name recognition, merchandising strategy, vendor network, proven portability to new markets and demographics of the junior women’s market. Accumulated amortization for goodwill at September 25, 1999 and September 30, 2000 was $2,471,179 and $3,299,563, respectively.

Other intangibles, included in Other Assets in the accompanying balance sheet, result from the Company’s acquisition of the assets of Rampage Retailing, Inc. (Rampage) and represent amounts attributable to a license agreement allowing the Company to utilize the Rampage name and other intangibles. These assets are stated at cost and are amortized using the straight-line method over the estimated useful life of 20 years. The amortization period was primarily determined based on the expectation that the Rampage license renewal options would be exercised. (See Note 6). Accumulated amortization for other intangibles at September 25, 1999 and September 30, 2000 was $133,960 and $200,944, respectively.

Debt issuance costs are amortized to interest expense using the straight-line method over the life of the related debt. Unamortized issuance costs remaining upon early retirement of debt are expensed. Accumulated amortization at September 25, 1999 and September 30, 2000 was $488,898 and $13,476, respectively.

Rent expense on noncancellable leases containing known future scheduled rent increases are recorded on a straight-line basis over the term of the respective leases. The excess rent expense over rent paid is accounted for as deferred rent.

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

In accordance with Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of, whenever events or changes in circumstances indicate that the carrying amount of its assets might not be recoverable, the Company, using its best estimates based upon reasonable and supportable assumptions and projections, reviews the carrying value of long-lived assets for impairment. Impairment for long-lived assets to be held is measured by comparing the carrying amount of the asset to its fair value. Impairment is reviewed at the lowest levels for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. The Company performs such analysis on an individual store basis and estimates fair values based on sales prices for comparable assets. The Company measures impairment for long-lived assets to be disposed of at the lower

of the carrying amount or net realizable value (fair market value less cost to dispose). The Company has identified two under-performing stores and plans to close these locations by the end of fiscal 2001. Accordingly, the Company recorded an impairment loss of $722,000, which is included in selling, general and administrative expenses in fiscal 1999. The impairment loss included $537,000 representing the net carrying value of leasehold improvements that will be abandoned net of the expected future cash flows. In addition, the impairment loss included $185,000 for the estimated unamortized landlord allowances that are refundable upon closure. Employee termination benefits related to the store closures will be insignificant. The operating results for the two stores was not significant for the years ended September 26, 1998, September 25, 1999 and September 30, 2000.

Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, establishes the use of the fair value based method of accounting for stock-based compensation arrangements, under which compensation cost is determined using the fair value of stock-based compensation determined as of the grant date, and is recognized over the periods in which the related services are rendered. SFAS No. 123 also permits companies to elect to continue using the current intrinsic value accounting method specified in Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees, to account for stock-based compensation. The Company has decided to retain the current intrinsic value based method, and has disclosed the pro forma effect of using the fair value based method to account for its stock-based compensation.

Retail merchandise sales are recognized at the point of sale, less estimated sales returns. A reserve is provided for anticipated returns based on prior experience.

Costs incurred in connection with the opening of a new store are expensed as incurred.

Basic earnings per share is computed based on the weighted average outstanding common shares. Dilutive earnings per share is computed based on the weighted average outstanding shares and potentially dilutive stock options and warrants.

Financial instruments, including cash and cash equivalents, accounts payable, accrued expenses, income tax payable and capital lease obligations are carried at cost, which management believes approximates fair value because of the short-term maturity of these instruments. Interest on long-term debt is primarily based on variable rates; therefore, management believes the carrying amounts for the outstanding borrowings approximate fair value. There was no long-term debt at September 30, 2000.

In fiscal 1999, the Company adopted SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components. The Company did not have any component of other comprehensive income for any periods presented.

Advertising costs are expensed as incurred and were $241,603, $379,116 and $106,314, for the years ended September 26, 1998, September 25, 1999 and September 30, 2000, respectively.

Certain amounts in the prior years financial statements have been reclassified to conform with the fiscal 2000 presentation.

In April 1999, the Company loaned $1,000,000 under a note agreement to its President and Chief Executive Officer. The full amount of the note was secured by a pledge of 750,000 shares of Common Stock of the Company, plus any shares obtained by the officer in the future. The entire amount of outstanding principal and accrued interest was repaid in October 1999.

At September 30, 2000, the Company has an unsecured $15.0 million revolving credit agreement. Interest on the revolving facility is payable quarterly at either (i) the Bank’s Base Rate, as defined, or (ii) the Bank’s Eurodollar Rate plus 1.00%, at the Company’s option, subject to certain adjustments. All outstanding borrowings under the revolving credit facility are due on the maturity date, December 23, 2004. At September 30, 2000, there was no outstanding debt under the revolving credit facility. The bank credit agreement requires that the Company maintain certain financial ratios and restricts future liens and indebtedness, sales of assets and dividend payments. As of September 30, 2000, the Company is in compliance with the terms of the bank credit agreement.

During fiscal 2000, the Company repaid the outstanding balance of a prior $32 million secured revolving credit facility primarily through proceeds from the Company’s initial public offering and from operational cash flows. In connection with the repayment of this borrowing and termination of the related agreement, unamortized deferred financing costs were written off in December 1999 resulting in an extraordinary item charge of $311,314, net of taxes.

In connection with the original bank credit agreement, the Company issued warrants to purchase approximately 413,560 shares of the Company’s Common Stock at $1.00 per share. The number of shares of Common Stock issuable under the warrant increased by an aggregate of 216 shares pursuant to certain anti-dilution provisions. On October 19, 1999, the warrants were exercised in conjunction with the Company’s

initial public offering in a cashless transaction resulting in the issuance of 376,180 shares of the Company’s Common Stock.

Pursuant to the terms of the bank credit agreement, the Company can issue up to $5.0 million of documentary or standby letters of credit. The Company is charged a fee equal to the Bank’s Eurodollar Rate for the average daily face amount of outstanding letters of credit and customary issuance and amendment charges. Fees are paid quarterly in arrears and charges are paid as incurred. At September 25, 1999 and September 30, 2000, there were outstanding letters of credit in the amount of $1.6 million and $1.4 million, respectively.

The Company had two senior subordinated note agreements with affiliated investors that were paid off in June 1999. Interest accrued at 12.5% and was due semi-annually. Principal was due upon maturity of the notes, September 27, 2003. The Company recognized interest expense of $1,371,000 and $1,349,900 for the years ended September 26, 1998 and September 25, 1999, respectively.

In conjunction with the issuance of the two senior subordinated notes, the Company issued warrants to purchase approximately 1,964,410 shares of Common Stock at $1 per share. The number of shares of Common Stock issuable under these warrants increased by an aggregate of 1,030 shares pursuant to certain anti-dilution provisions. The warrants are exercisable immediately and expire on September 27, 2006. The warrants were valued at approximately $722,000, which were included in deferred financing costs and were being amortized on a straight-line basis over the term of the notes. The fair value of the warrants was estimated at the date of grant using the minimum value method with the following assumptions: risk free interest rate of 6.0%; an expected warrant life of 7.5 years; and no annual dividends.

In connection with the repayment of all outstanding principal under the two agreements in June 1999, the Company incurred a prepayment fee of $255,200, which was charged to income in the accompanying statement of income for the year ended September 25, 1999 and accounted for as an extraordinary item. In addition, unamortized warrant issue costs of approximately $263,900, were written off in June 1999 resulting in total extraordinary item charges of $519,100, net of taxes.

The Company leases its retail stores, distribution center, and office facilities under various operating leases that expire between 2001 and 2013. Under certain retail store leases, the Company is required to pay the greater of a minimum lease payment or 5% to 11% of annual sales volume. Rent expense, including reimbursement of our proportional share of common area maintenance expenses, for the years ended September 26, 1998, September 25, 1999 and September 30, 2000 was $17,049,570, $22,837,051 and $32,266,022, respectively, including $610,267, $1,122,680 and $1,343,794, respectively, of contingent rentals.

The following is a summary of the annual future minimum capital and operating lease commitments as of September 30, 2000:

In conjunction with the acquisition of Rampage assets on September 30, 1997, the Company entered into a license agreement enabling the Company to operate stores under the Rampage name. The license fee is calculated as the greater of an annual fee (ranging between $300,000 to $450,000) or a percent of sales at stores operating under the Rampage name (ranging between 1.0% and 1.5%). The license agreement is for an initial term of four years with an automatic option to renew for another four years. The agreement may be renewed for ten additional four-year periods, provided certain conditions are met. Currently, management believes the license agreement will be renewed for at least four additional periods. License fees are recorded monthly based on the greater of a percentage of sales or the annual fee, as defined. License fees incurred during the years ended September 26, 1998, September 25, 1999 and September 30, 2000 were $354,526, $451,723 and $608,439, respectively and are included in selling, general and administrative expenses.

In 1996, the Company established a Long-Term Incentive Plan (the 1996 Plan). The 1996 Plan provides for the issuance of shares of Common Stock under incentive and non qualified stock options. Options vest ratably at 20% per year over five years from the date of the grant, subject to certain acceleration provisions and are exercisable for a period of up to ten years from the date of grant. Incentive stock options are granted at prices that approximate the fair value of the common shares at the date of grant as determined by the Board of Directors.

In May 1999, the Company established a 1999 Long-Term Incentive Plan (the 1999 Plan). The 1999 Plan provides for the issuance of shares of Common Stock under non-qualified stock options and stock appreciation rights. The exercise price of options shall not be less than 85% of the fair market value at the date of grant, or 110% in the case of any person possessing 10% combined voting power of all classes of stock of the Company. The Company’s Board of Directors determines the vesting and other provisions of option and stock appreciation rights granted under the 1999 Plan.

Pursuant to the terms of the grant in October 1996, upon completion of the Company’s initial public offering on October 19, 1999, vesting for options to purchase 274,500 shares of Common Stock related to the

President and CEO was accelerated and the options became fully vested. The Company has determined the stock option award to be a fixed award and as such, no compensation expense was recorded.

In July 1999, the Company’s Board of Directors resolved that no further stock option grants will be made from the 1996 Plan or the 1999 Plan.

The Company’s Board of Directors and stockholders adopted the 1999 Equity Incentive Plan, effective as of the completion of its initial public offering. The 1999 Equity Incentive Plan permits the grant of options that qualify as incentive stock options and non-qualified options. The option exercise price of each option shall be determined by the compensation committee of the Board of Directors. In the case of incentive stock options, however, the exercise price shall not be less than 100% of the fair market value of the shares on the date of grant, or 110% in the case of incentive stock options granted to an individual with ownership in excess of certain limits. Subject to adjustment for stock splits and similar events, the total number of shares of Common Stock that can be issued under the 1999 Equity Incentive Plan is 750,000 shares. The terms of these options will be substantially the same as other options previously issued.

A summary of the Company’s stock option activity and related information for the plans is as follows:

The following table summarizes information about stock options outstanding as of September 30, 2000:

The weighted average fair value of options granted was $1.30, $2.56 and $11.19 for the years ended September 26, 1998, September 25, 1999 and September 30, 2000, respectively.

The Company has recorded deferred compensation in connection with the grants of certain stock options to employees during the year ended September 25, 1999. The options were granted at the then deemed fair value of $7 per share. In conjunction with the Company’s initial public offering registration statement, the Company revised the estimate of the deemed fair value of its Common Stock resulting in $720,000 of deferred compensation. The deemed fair value per share represents a discount from the initial public offering per share price and is attributable to restrictions on the availability of these shares for sale (vesting provisions) and improved operating results since the date of their grant. The deferred compensation is being amortized ratably over the vesting period of the respective options. No deferred compensation was recorded for option grants prior to this period which were granted at exercise prices equal to the deemed fair value, as determined by the Company’s Board of Directors based on valuation analyses of publicly traded peer companies.

Pro forma information regarding net income is required by SFAS No. 123, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that Statement. For options granted through October 18, 1999, the fair value of options granted were estimated at the date of grant using the minimum value option pricing model with the following weighted-average assumptions: risk free interest rate of 6%, dividend yield of 0%, and weighted-average expected life of the option of five years. For options granted from October 19, 1999 to September 30, 2000, the fair value of the options was estimated at the date of grant using the Black-Scholes method for option pricing with the following weighted average assumptions: risk-free interest rate of 6%, dividend yield of 0%, expected volatility of 70% and weighted average expected life of the option of five years.

The minimum value option-pricing model is similar to the Black-Scholes option valuation model that was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable, except that it excludes the factor of volatility. In addition, option valuation models require the input of highly subjective assumptions. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the vesting period of the related options. The Company’s pro forma information follows:

On September 27, 1999, the Company approved the adoption of the 1999 Employee Stock Purchase Plan (“the Plan”), which authorized up to 350,000 shares of Common Stock for employee purchase through payroll deductions at 85% of fair market value. All employees of the Company who have completed at least six months of employment and work at least 20 hours per week, are eligible to participate, except for

employees who own Common Stock or options on such common stock which represents 5% or more of the Company. During fiscal 2000 there were 25,932 shares issued under the Plan.

In connection with the completion of its initial public offering on October 19, 1999, the Company approved a 100-for-1 stock split. In addition, the Company’s certificate of incorporation was amended upon completion of its initial public offering, to authorize the issuance of up to 100,000,000 shares of Common Stock and 3,000,000 shares of Preferred Stock. Consequently, the stock option data and per share data, throughout the consolidated financial statements and the notes to the consolidated financial statements, have been restated to reflect the stock split.

A reconciliation of the calculated income tax provision based on statutory tax rates in effect and the effective tax rate follows:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:

The Company expensed a management fee of $250,000 to its majority stockholder during each of the three years ended September 30, 2000. This fee terminates at any time when the majority stockholder owns in

the aggregate less than 1,820,735 shares of common stock, including shares of common stock issuable upon exercise of outstanding warrants.

The Company’s majority stockholder and its CEO have entered into a stockholders agreement. This agreement provides that (1) as long as the majority stockholder owns more than 25% but less than 50% of the Company’s outstanding shares, it will have the right to nominate three directors and (2) as long as the majority stockholder owns at least 1,820,735 shares of common stock, including shares of common stock issuable upon exercise of outstanding warrants, it will have the right to nominate two directors. The stockholders agreement grants the Company’s CEO certain tag along rights in the event of a private sale by the majority stockholder of their shares of common stock. The stockholders agreement also grants, subject to limitations and exceptions, demand and piggyback registration rights to the majority stockholder and piggyback registration rights to the CEO.

For the years ended September 26, 1998, September 25, 1999 and September 30, 2000, the Company purchased approximately $24,000, $89,000 and $275,000, respectively, of merchandise from a company primarily owned by family members of one of our officers.

The Company has an Internal Revenue Code Section 401(k) profit-sharing plan (the Plan) for eligible employees. The Plan is funded by employee contributions and provides for the Company to make discretionary contributions. The Company matches 25% of participants contributions up to 4% of eligible compensation. Amounts contributed and expensed under this plan were $30,648, $50,062 and $65,000 for the years ended September 26, 1998, September 25, 1999 and September 30, 2000, respectively.

A reconciliation of the numerators and denominators used in basic and diluted earnings per share is as follows:

The accompanying unaudited consolidated financial statements of Charlotte Russe Holding, Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Certain information and footnote disclosures required by accounting principles generally accepted in the United States, for complete financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited financial statements contain all material adjustments, consisting of normal recurring accruals, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated, and have been prepared in a manner consistent with the audited financial statements as of September 30, 2000.

Due to the seasonal nature of the Company’s business, the results of operations for the three month period ended December 30, 2000 are not necessarily indicative of the results of a full fiscal year.

These financial statements should be read in conjunction with the audited financial statements and the footnotes for the fiscal year ended September 30, 2000 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

In accordance with Statement of Financial Accounting Standards No. 128, “Earnings Per Share,” the following table reconciles income and share amounts utilized to calculate basic and diluted net income per common share.

The following table sets forth the various expenses in connection with the sale and distribution of the securities being registered, other than the underwriting discounts and commissions. All amounts shown are estimates, except the Securities and Exchange Commission Registration Fee and the National Association of Securities Dealers, Inc. Filing Fee.

Section 145 of the Delaware General Corporation Law authorizes a court to award, or the board of directors of a corporation to grant, indemnity to directors and officers in terms sufficiently broad to permit indemnification under certain circumstances for liabilities, including reimbursement for expenses incurred, arising under the Securities Act of 1933.

As permitted by the Delaware General Corporation Law, the Registrant’s Certificate of Incorporation provides that its directors shall not be liable to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that the exculpation from liabilities is not permitted under the Delaware General Corporation Law as in effect at the time such liability is determined. As permitted by the Delaware General Corporation Law, the By-Laws provide that the Registrant shall indemnify its directors to the full extent permitted by the laws of the State of Delaware.

The Registrant currently has an insurance policy in place covering its directors and officers from losses arising from the performance of their duties with or on behalf of the Registrant. The maximum aggregate coverage amount under such policy on an annual basis is $10 million and such policy is in effect until October 19, 2001. The Registrant has also obtained additional policies of insurance under which coverage is provided (a) to its directors and officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful act and (b) to the Registrant with respect to payments which may be made by the Registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law.

The Registrant has also entered into indemnification agreements with its directors and officers obligating the Registrant to indemnify such directors and officers against losses incurred in connection with certain claims in their capacities as agents of the Registrant. The Underwriting Agreement provides for the indemnification of officers and directors of the Registrant by the Underwriters against certain liabilities.

All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because they are not required under the related instructions or are inapplicable as the information has been provided in the consolidated financial statements or related notes thereto.

(a) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions described under “Item 15 — Indemnification of Directors and Officers” above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.


	(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

	(2) For the purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

	(3) For purposes of determining any liability under the Securities Act of 1933, each filing of the annual report of the Registrant pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and, where applicable, each filing of an annual report of an employee benefit plan pursuant to Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be the initial bona fide offering thereof.

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California on this 16th day of February, 2001.


	By:	/s/ BERNARD ZEICHNER



	Bernard Zeichner
	Chief Executive Officer and President

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.






Delaware	5621	33-0724325
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)


	Per Share	Total

Offering Price	$	$




Discounts and Commissions to Underwriters	$	$




Offering Proceeds to Charlotte Russe	$	$




Offering Proceeds to the Selling Stockholders	$	$


Summary
Risk Factors
Special Note Regarding Forward-Looking Statements
Use of Proceeds
Price Range of Common Stock and Dividend Policy
Capitalization
Selected Consolidated Financial and Operating Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business
Management
Selling Stockholders
Important United States Tax Consequences to Non-United States Holders of Common Stock
Underwriting
Validity of Common Stock
Experts
Available Information
Incorporation of Documents by Reference
Index to Consolidated Financial Statements
Exhibit 1.1
Exhibit 5.1
Exhibit 23.1


Total		3,500,000 shares

Common stock outstanding after the offering		20,508,660 shares

Use of proceeds		We intend to use all of the net proceeds for general corporate purposes. We will not receive any proceeds from the sale of common stock by the selling stockholders.

Nasdaq National Market symbol		CHIC



						Charlotte Russe
			Predecessor

			Fiscal															Three Months
			Year			Fiscal Year Ended												Ended
			Ended
			Sept. 27,			Sept. 27,			Sept. 26,			Sept. 25,			Sept. 30,			Dec. 25,			Dec. 30,
			1996			1997			1998			1999			2000(1)			1999			2000


																		(unaudited)

			(dollars in thousands, except per share data and sales per square foot)




Statement of Income Data:




Net sales			$	70,663		$	81,543		$	134,091		$	177,459		$	245,260		$	62,931		$	93,043




Cost of goods sold				43,774			50,723			93,142			119,141			165,917			41,623			61,696

Gross profit				26,889			30,820			40,949			58,318			79,343			21,308			31,347




Selling, general and administrative expenses				15,266			17,168			26,989			34,062			46,055			11,916			17,571




Amortization of goodwill and other intangibles				—			815			895			895			895			224			224




Predecessor shareholders’ salaries				8,000			1,200			—			—			—			—			—

Operating income				3,623			11,637			13,065			23,361			32,393			9,168			13,552




Interest (expense) income, net				42			(2,279	)		(3,026	)		(2,376	)		(70	)		(196	)		41




Other charges, net				(143	)		(315	)		(280	)		(270	)		(270	)		(65	)		(67	)

Income before income taxes and extraordinary item				3,522			9,043			9,759			20,715			32,053			8,907			13,526




Income taxes(2)				—			3,987			4,245			8,701			12,982			3,697			5,478

Income before extraordinary item				3,522			5,056			5,514			12,014			19,071			5,210			8,048




Extraordinary loss from early debt retirement				—			—			—			(519	)		(311	)		(311	)		—

Net income			$	3,522		$	5,056		$	5,514		$	11,495		$	18,760		$	4,899		$	8,048

Earnings per share(3):




	Basic earnings per share:




		Income before extraordinary item		—		$	0.28		$	0.30		$	0.66		$	0.95		$	0.26		$	0.40

		Net income		—		$	0.28		$	0.30		$	0.63		$	0.93		$	0.25		$	0.40

	Diluted earnings per share:




		Income before extraordinary item		—		$	0.25		$	0.27		$	0.57		$	0.83		$	0.23		$	0.35

		Net income		—		$	0.25		$	0.27		$	0.54		$	0.82		$	0.22		$	0.35

Weighted average shares outstanding(3):




	Basic						18,300			18,300			18,304			20,084			19,675			20,348




	Diluted						19,992			20,668			21,234			22,845			22,562			23,044




Selected Operating Data:




Number of stores open at end of period				35			41			74			96			136			109			151




Average square footage per store(4)				8,290			8,206			7,601			7,541			7,380			7,443			7,335




Sales per square foot(5)			$	247		$	268		$	272		$	282		$	286		$	81		$	87




Comparable store sales increase (decrease)(6)				4.7	%		5.1	%		(5.8	)%		6.7	%		2.8	%		6.4	%		3.7	%




Average store sales (in thousands)(7)			$	2,048		$	2,222		$	2,095		$	2,138		$	2,129		$	606		$	637






DANIEL S. EVANS, ESQ. Ropes & Gray One International Place Boston, Massachusetts 02110-2624 (617) 951-7000		VALERIE FORD JACOB, ESQ. Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 (212) 859-8000


	Page

Prospectus Summary		1




Risk Factors		5




Special Note Regarding Forward-Looking Statements		10




Use of Proceeds		11




Price Range of Common Stock and Dividend Policy		11




Capitalization		12




Selected Consolidated Financial and Operating Data		13




Management’s Discussion and Analysis of Financial Condition and Results of Operations		15




Business		21




Management		32




Selling Stockholders		35




Important United States Tax Consequences to Non-United States Holders of Common Stock		36




Underwriting		39




Validity of Common Stock		40




Experts		41




Available Information		41




Incorporation of Documents by Reference		41




Index to Consolidated Financial Statements		F-1


Common stock offered by Charlotte Russe		100,000 shares

Common stock offered by selling stockholders		3,400,000 shares



	As of December 30, 2000

	Actual		As Adjusted(8)


	(unaudited)




Balance Sheet Data:




Working capital	$	71	$	2,541




Total assets		124,641		126,995




Total long-term debt		—		—




Total stockholders’ equity		83,131		85,601



(1)	Our results of operations for fiscal 2000 included 53 weeks compared to 52 weeks for all other fiscal years presented in this prospectus.


(2)	The Predecessor had elected S corporation status for federal and state income tax reporting purposes. Accordingly, the income of the Predecessor was included in the tax returns of the stockholders and no provision for income taxes was made. We have elected to operate as a C corporation since our inception.

(3)	See Notes 1 and 12 of notes to the consolidated financial statements for the method used to calculate the net income per share and weighted average shares outstanding.

(4)	Our average square footage per store is based on all open stores at the end of the period.


(5)	Our sales per square foot consists of net sales, divided by the time weighted average of gross square footage of all open stores.


(6)	Our comparable store percentages are based on net sales and stores are considered comparable beginning on the first day of the month following the fourteenth full month of sales.

(7)	Our average store sales are based on the time weighted average of all open stores in the period.


(8)	This column reflects our receipt of the estimated net proceeds from the sale of shares offered by us at an assumed public offering price of $29.75 per share and the after-tax effect of the exercise of stock options for 10,000 shares. See “Use of Proceeds.”


		High			Low

FISCAL 2000




	First Quarter (From October 20, 1999)	$	17	3/8	$	11	7/8




	Second Quarter		21	3/4		10	5/8




	Third Quarter		18	1/8		8	3/16




	Fourth Quarter		14	3/8		10




FISCAL 2001




	First Quarter		16	5/16		10	7/8




	Second Quarter (Through February 15, 2001)		30	15/16		15	7/8



			As of December 30, 2000

			Actual			As Adjusted


			(in thousands)




Total long-term debt			$	—		$	—





Stockholder’s equity:




	Preferred stock, par value $0.01 per share; 3,000,000 shares authorized, none issued and outstanding, actual and as adjusted			—			—




	Common stock, par value $0.01 per share; 100,000,000 shares authorized and 20,398,660 shares issued and outstanding; 20,508,660 shares issued and outstanding as adjusted			204			205




	Additional paid-in capital			34,533			37,002




	Deferred compensation			(480	)		(480	)




	Retained earnings			48,874			48,874

		Total stockholders’ equity		83,131			85,601

		Total capitalization	$	83,131		$	85,601


(1)	Our results of operations for the fiscal year ended September 30, 2000 included 53 weeks compared to 52 weeks for all other fiscal years presented in this prospectus.

(2)	The Predecessor had elected S corporation status for federal and state income tax reporting purposes. Accordingly, the income of the Predecessor was included in the tax returns of the stockholders and no provision for income taxes was made. We have elected to operate as a C corporation since our inception.

(3)	See Notes 1 and 12 of the notes to the consolidated financial statements for the method used to calculate the net income per share and weighted average shares outstanding.

(4)	Our average square footage per store is based on all open stores at the end of the period.

(5)	Our sales per square foot consists of net sales divided by the time weighted average of gross square footage of all open stores.


(6)	Our comparable store percentages are based on net sales, and stores are considered comparable beginning on the first day of the month following the fourteenth full month of sales.


(7)	Our average store sales are based on the time weighted average of all open stores in the period.



		Fiscal Year 1999												Fiscal Year 2000


		Three Months Ended												Three Months Ended

		Dec. 28,			Mar. 27,			June 26,			Sept. 25			Dec. 25,			Mar. 25,
		1998			1999			1999			1999			1999			2000


		(dollars in thousands)




Statement of Operations Data:




	Net sales	$	46,007		$	35,689		$	44,682		$	51,081		$	62,931		$	47,268




	Gross profit		15,150			10,625			14,607			17,936			21,308			13,620




	Operating income		6,385			2,784			5,798			8,394			9,168			3,704




	Income before extraordinary item		3,223			1,204			2,951			4,636			5,210			2,283




	Net income		3,223			1,204			2,432			4,636			4,899			2,283




As a Percentage of Net Sales:




	Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%




	Gross profit		32.9			29.8			32.7			35.1			33.9			28.8




	Operating income		13.9			7.8			13.0			16.4			14.6			7.8




	Net income		7.0			3.4			5.4			9.1			7.8			4.8




Operating Data:




	Comparable store sales increase		4.4	%		4.5	%		11.3	%		6.3	%		6.4	%		3.0	%




	Stores open at end of period		80			82			85			96			109			112


									Northeast
		California			Southwest		Southeast		& Other		Total

Store Count as of October 1, 1995			26			7		—		—		33




Fiscal 1996




	Stores Opened		0			2		—		—		2

			26			9		—		—		35





Fiscal 1997




	Stores Opened		3			1		2		1		7




	Stores Closed		(1	)		0		0		0		(1	)

			28			10		2		1		41





Fiscal 1998




	Stores Acquired (Rampage)		7			2		3		4		16




	Stores Opened		4			4		9		0		17

			39			16		14		5		74





Fiscal 1999




	Stores Opened		1			3		9		9		22

			40			19		23		14		96





Fiscal 2000




	Stores Opened		4			9		6		21		40

			44			28		29		35		136





Fiscal 2001 (Through First Quarter)




	Stores Opened		2			3		1		9		15

Store Count as of December 30, 2000			46			31		30		44		151


Banc of America Securities LLC	Robertson Stephens


Bear, Stearns & Co. Inc.	CIBC World Markets


	Flatiron Crossing (Broomfield)


	Crystal Mall (Waterford)
	Danbury Fair*
	Meriden Square


Name		Age		Position

Executive Officers and Directors




	Bernard Zeichner		56	Chairman of the Board, Chief Executive Officer and President




	Harriet A. Bailiss-Sustarsic		43	Executive Vice President, General Merchandise Manager




	Daniel T. Carter		44	Executive Vice President, Chief Financial Officer




	R. Tina Kernohan		47	Executive Vice President, Store Operations




	Paul R. Del Rossi		58	Director




	W. Thomas Gould		54	Director




	Allan W. Karp		45	Director




	David J. Oddi		31	Director




Other Key Employees




	Renee L. Bell		39	Vice President, Rampage Apparel




	Jennifer L. Bolinger		44	Vice President, Human Resources




	Sheri E. Coury		41	Vice President, Charlotte Russe Apparel




	Graham P. Luck		47	Vice President, Design and Construction




	Rachel E. Luna		36	Vice President, Charlotte Russe and Rampage Accessories




	Kalpana Makani		56	Vice President, Chief Information Officer




	Nancy E. Mamann		41	Vice President, Marketing




	Jennifer D. Mitchell		35	Vice President, Merchandise Planning and Allocation




	Christopher M. Monier		42	Vice President, Administration




	Zina Rabinovich		48	Vice President, Controller




	Beth S. Sassower		34	Vice President, Charlotte Russe Apparel




	Teresa D. Sedlar		48	Vice President, Imports



	Shares Beneficially							Shares Beneficially
	Owned Prior							Owned After
	to Offering					Number of		Offering
						Shares
Name of Selling Stockholder	Number		Percent			Offered		Number		Percent

Bernard Zeichner(1)		1,418,522		6.67	%		250,000		1,168,522		5.47	%




R. Tina Kernohan(2)		35,894		*			10,000		25,894		*




Saunders Karp & Megrue, L.L.C.(3)		18,207,348		81.41	%		3,140,000		15,067,348		67.04	%


		Number
Underwriter		of Shares

Banc of America Securities LLC




Robertson Stephens, Inc.




Bear, Stearns & Co. Inc.




CIBC World Markets Corp.

	Total		3,500,000


	No Exercise	Full Exercise

Per share underwriting discounts and commissions	$	$




Total underwriting discounts and commissions to be paid by Charlotte Russe	$	$




Total underwriting discounts and commissions to be paid by the selling stockholders	$	$


Washington, D.C. Room 1024, Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C., 20549		New York, New York Seven World Trade Center Suite 1300 New York, New York 10048		Chicago, Illinois 500 West Madison Street Suite 1400 Chicago, Illinois 60661


	Page

Report of Ernst & Young LLP, Independent Auditors		F-2




Consolidated Balance Sheets as of September 25, 1999 and September 30, 2000		F-3




Consolidated Statements of Income for the years ended September 26, 1998, September 25, 1999 and September 30, 2000		F-4




Consolidated Statement of Stockholders’ Equity for the years ended September 26, 1998, September 25, 1999 and September 30, 2000		F-5




Consolidated Statements of Cash Flows for the years ended September 26, 1998, September 25, 1999 and September 30, 2000		F-6




Notes to Consolidated Financial Statements		F-7




INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Consolidated Balance Sheets as of September 30, 2000 and December 30, 2000 (unaudited)		F-19




Consolidated Statement of Income (unaudited) for the three months ended December 25, 1999 and December 30, 2000		F-20




Consolidated Statement of Cash Flows (unaudited) for the three months ended December 25, 1999 and December 30, 2000		F-21




Notes to Consolidated Financial Statements (unaudited)		F-22


			September 25,			September 30,
			1999			2000

Assets




Current assets:




	Cash and cash equivalents		$	2,982,025		$	3,829,352




	Inventories			11,193,914			15,026,508




	Other current assets			2,454,230			2,115,376




	Deferred tax assets			2,450,000			2,160,000

		Total current assets		19,080,169			23,131,236




Fixed assets, net				37,028,566			54,273,890




Goodwill, net				30,446,323			29,617,939




Other assets				2,013,962			1,482,345

		Total assets	$	88,569,020		$	108,505,410

Liabilities and Stockholders’ Equity




Current liabilities:




	Accounts payable trade		$	11,893,255		$	12,767,401




	Accounts payable other			4,620,881			4,780,008




	Accrued payroll and related expense			2,338,833			2,009,179




	Income and sales taxes payable			1,890,342			3,494,327




	Other current liabilities			5,554,516			4,705,033

		Total current liabilities		26,297,827			27,755,948




Notes payable to bank				18,000,000			—




Deferred rent				1,991,252			3,677,480




Other liabilities				442,632			278,098




Deferred tax liabilities				1,800,000			2,300,000

		Total liabilities		48,531,711			34,011,526
Commitments




Stockholders’ equity:




	Preferred Stock $0.01 par value, 3,000,000 shares authorized, none issued and outstanding			—			—




	Common Stock $0.01 par value, 100,000,000 shares authorized, issued and outstanding shares 18,310,800 at September 25, 1999 and 20,319,412 at September 30, 2000			183,108			203,194




	Additional paid-in capital			19,448,073			33,980,470




	Deferred compensation			(660,000	)		(516,000	)




	Notes receivable from officers			(1,000,000	)		—




	Retained earnings			22,066,128			40,826,220

		Total stockholders’ equity		40,037,309			74,493,884

		Total liabilities and stockholders’ equity	$	88,569,020		$	108,505,410



			Years Ended

			September 26,		September 25,			September 30,
			1998		1999			2000

Net sales			$	134,091,459	$	177,459,298		$	245,260,066




Cost of goods sold, including buying, distribution and occupancy costs				93,142,372		119,141,254			165,916,833

Gross profit				40,949,087		58,318,044			79,343,233




Selling, general and administrative expenses				26,988,510		34,061,732			46,054,762




Amortization of goodwill and other intangibles				895,360		895,368			895,368

Operating income				13,065,217		23,360,944			32,393,103




Other expenses:




	Interest expense, net			3,025,378		2,375,889			69,937




	Other charges, net			280,354		270,074			270,382

		Total other expenses		3,305,732		2,645,963			340,319

Income before income taxes and extraordinary item				9,759,485		20,714,981			32,052,784




Income taxes				4,245,376		8,700,392			12,981,378

Income before extraordinary item				5,514,109		12,014,589			19,071,406




Extraordinary loss from early debt retirement				—		(519,100	)		(311,314	)

Net income			$	5,514,109	$	11,495,489		$	18,760,092

Basic earnings per share:




	Income before extraordinary item		$	0.30	$	0.66		$	0.95

	Net income		$	0.30	$	0.63		$	0.93

Diluted earnings per share:




	Income before extraordinary item		$	0.27	$	0.57		$	0.83

	Net income		$	0.27	$	0.54		$	0.82

Weighted average shares outstanding:




	Basic			18,300,000		18,304,000			20,084,000

	Diluted			20,668,000		21,234,000			22,845,000


	Capital			Operating
	Leases			Leases

Year ending September:




2001	$	104,436		$	26,605,872




2002		28,548			26,538,509




2003		—			26,161,500




2004		—			26,122,963




2005		—			24,918,323




Thereafter		—			93,395,941

Total minimum lease payments	$	132,984		$	223,743,108

Less amount representing interest		(8,357	)

Present value of net minimum lease payments, including $96,553 which is current	$	124,627


				Weighted Average
	Options			Exercise Price

Outstanding at September 27, 1997		1,758,000		$	1.16




Granted		216,000			3.65




Cancelled		(201,000	)		1.58

Outstanding at September 26, 1998		1,773,000			1.41




Granted		120,000			7.00




Cancelled		(57,600	)		1.00




Exercised		(10,800	)		1.00

Outstanding at September 25, 1999		1,824,600			1.80




Granted		270,000			11.19




Cancelled		(10,500	)		11.00




Exercised		(156,500	)		1.02

Outstanding at September 30, 2000		1,927,600		$	3.12

Exercisable, September 26, 1998		319,200		$	1.17




Exercisable, September 25, 1999		648,600		$	1.31




Exercisable, September 30, 2000		1,130,800		$	1.50



	Options Outstanding
							Options Exercisable
			Weighted Average
	Number		Remaining		Weighted Average		Number		Weighted Average
Exercise Prices	Outstanding		Contractual Life		Exercise Price		Outstanding		Exercise Price

$1.00		1,098,100		6.0	$	1.00		790,450	$	1.00




$2.00 – $3.50		423,000		6.6	$	2.53		305,550	$	2.29




$4.00 – $7.00		147,000		8.3	$	6.45		34,800	$	6.07




$11.00 – $13.50		259,500		9.1	$	11.19		—		—


			September 30,			December 30,
			2000			2000

			(audited)			(unaudited)




Assets




Current assets:




	Cash and cash equivalents		$	3,829,352		$	17,801,635




	Inventories			15,026,508			12,474,598




	Other current assets			2,115,376			2,118,622




	Deferred tax assets			2,160,000			2,250,000

		Total current assets		23,131,236			34,644,855




Fixed assets, net				54,273,890			59,213,351




Goodwill, net				29,617,939			29,410,843




Other assets				1,482,345			1,372,111

		Total assets	$	108,505,410		$	124,641,160


Liabilities and Stockholders’ Equity




Current liabilities:




	Accounts payable trade		$	12,767,401		$	13,266,186




	Accounts payable other			4,780,008			740,607




	Accrued payroll and related expense			2,009,179			3,000,884




	Income and sales taxes payable			3,494,327			8,887,969




	Other current liabilities			4,705,033			8,678,450

		Total current liabilities		27,755,948			34,574,096




Notes payable to bank				—			—




Deferred rent				3,677,480			4,186,526




Other liabilities				278,098			250,025




Deferred tax liabilities				2,300,000			2,500,000

		Total liabilities		34,011,526			41,510,647
Commitments




Stockholders’ equity:




	Preferred Stock $0.01 par value, 3,000,000 shares authorized, none issued and outstanding			—			—




	Common Stock $0.01 par value, 100,000,000 shares authorized, issued and outstanding shares — 20,319,412 at September 30, 2000 and 20,398,660 at December 30, 2000			203,194			203,986




	Additional paid-in capital			33,980,470			34,532,220




	Deferred compensation			(516,000	)		(480,000	)




	Retained earnings			40,826,220			48,874,307

		Total stockholders’ equity		74,493,884			83,130,513

		Total liabilities and stockholders’ equity	$	108,505,410		$	124,641,160



			Three Months Ended

			December 25,			December 30,
			1999			2000

Net sales			$	62,931,088		$	93,042,701




Cost of goods sold, including buying, distribution and occupancy costs				41,623,082			61,696,052

Gross profit				21,308,006			31,346,649




Selling, general and administrative expenses				11,915,826			17,570,488




Amortization of goodwill and other intangibles				223,842			223,842

Operating income				9,168,338			13,552,319




Other expenses:




	Interest income (expense), net			(196,124	)		40,593




	Other charges, net			(65,262	)		(66,715	)

		Total other expenses		(261,386	)		(26,122	)

Income before income taxes and extraordinary item				8,906,952			13,526,197




Income taxes				3,696,385			5,478,110

Income before extraordinary item				5,210,567			8,048,087




Extraordinary loss from early debt retirement				(311,314	)		—

Net income			$	4,899,253		$	8,048,087

Basic earnings per share:




	Income before extraordinary item		$	0.26		$	0.40

	Net income		$	0.25		$	0.40

Diluted earnings per share:




	Income before extraordinary item		$	0.23		$	0.35

	Net income		$	0.22		$	0.35

Weighted average shares outstanding:




	Basic			19,675,418			20,347,509

	Diluted			22,561,611			23,044,248



		For the Three Months Ended

		December 25,			December 30,
		1999			2000

Income before extraordinary item		$	5,210,567		$	8,048,087

Net income		$	4,899,253		$	8,048,087

Income before extraordinary item per share:




	Basic	$	0.26		$	0.40




	Effect of dilutive securities stock options		(0.01	)		(0.02	)




	Effect of dilutive securities warrants		(0.02	)		(0.03	)

Diluted		$	0.23		$	0.35

Net income:




	Basic	$	0.25		$	0.40




	Effect of dilutive securities stock options		(0.01	)		(0.02	)




	Effect of dilutive securities warrants		(0.02	)		(0.03	)

Diluted		$	0.22		$	0.35

Weighted average number of shares:




	Basic		19,675,418			20,347,509




	Effect of dilutive securities stock options		959,953			879,467




	Effect of dilutive securities warrants		1,926,240			1,817,272

Diluted			22,561,611			23,044,248


Item		Amount

Securities and Exchange Commission Registration Fee		$	29,000




National Association of Securities Dealer, Inc. Filing Fee			12,000




Nasdaq National Market Listing Fee			5,000




Blue Sky Fees and Expenses			10,000




Transfer Agent and Registrar Fees			—




Accounting Fees and Expenses			50,000




Legal Fees and Expenses			125,000




Printing Expenses			135,000




Miscellaneous			109,000

	Total	$	475,000


Exhibit		Description

	1.1	Form of Underwriting Agreement
	5.1	Opinion of Ropes & Gray
	23.1	Consent of Ernst & Young LLP
	23.2	Consent of Ropes & Gray (See Exhibit 5.1)
	24	Power of Attorney (See Signature Page)*


Signature	Title	Date

/s/ BERNARD ZEICHNER Bernard Zeichner	Chief Executive Officer, President and Director (Principal Executive Officer)	February 16, 2001
/s/ DANIEL T. CARTER* Daniel T. Carter	Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)	February 16, 2001
/s/ ALLAN W. KARP* Allan W. Karp	Director	February 16, 2001
/s/ DAVID J. ODDI* David J. Oddi	Director	February 16, 2001
/s/ PAUL R. DEL ROSSI* Paul R. Del Rossi	Director	February 16, 2001
/s/ W. THOMAS GOULD* W. Thomas Gould	Director	February 16, 2001
*By: /s/ DANIEL T. CARTER

Daniel T. Carter for himself and as Attorney in Fact