BASIS OF PRESENTATION

3 Months Ended

Mar. 29, 2014

BASIS OF PRESENTATION

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

References to the “Company,” “we,” “us,” or “our” mean Cache, Inc., together with its wholly-owned subsidiaries, except as expressly indicated or unless the context otherwise requires. Under the trade name “Cache”, we operated 242 women’s apparel specialty stores, as of March 29, 2014.

The following unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The accompanying condensed consolidated financial statements include all known adjustments necessary for a fair presentation of the results of the interim periods as required by accounting principles generally accepted in the United States. These adjustments consist primarily of normal recurring accruals and estimates that impact the carrying value of assets and liabilities. Actual results may materially differ from these estimates.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 28, 2013, which are included in the Company’s Annual Report on Form 10-K with respect to such period filed with the Securities and Exchange Commission. All significant intercompany accounts and transactions have been eliminated. The December 28, 2013 condensed consolidated balance sheet amounts are derived from the Company’s audited consolidated financial statements as adjusted (see below).

The Company’s fiscal year (“fiscal year” or “fiscal”) refers to the applicable 52- or 53-week period. The year ended December 28, 2013 (“fiscal 2013”) was a 52-week year and the year ending January 3, 2015 (“fiscal 2014”) is a 53-week year.

Change in Accounting Principle

Effective December 29, 2013, the Company elected to change its method of accounting for its retail finished goods inventory from the retail inventory method (“RIM”) to the lower of cost or market, with cost being determined on the first-in, first-out method. The RIM method does not track the valuation of inventory and the cost of goods sold at the individual item level, but instead calculates the valuation of inventory and cost of goods sold by applying a calculated cost to retail relationship to the value of retail inventories and cost of goods sold. The Company believes the method of tracking cost at the individual item level is a preferable method as it matches the actual merchandise costs with the respective revenues and is the method most widely used in the retail industry.  The cumulative effect of this accounting change as of December 30, 2012 was decreases of $737,000 in inventories, $123,000 in deferred tax assets and $860,000 in retained earnings.  The effect of this accounting change on the Company’s financial statements as of December 28, 2013 and March 30, 2013 and for the 13-week period ended March 30, 2013 are presented below.

	As reported					As adjusted			As reported					As adjusted
	December 28,					December 28,			March 30,					March 30,
	2013			Adjustments		2013			2013		Adjustments			2013
Condensed Consolidated Balance Sheets
Inventories, net	$	23,673,000		$	1,268,000	$	24,941,000		$	26,894,000	$	(182,000	)	$	26,712,000
Retained earnings (accumulated deficit)	(4,504,000		)	1,268,000		(3,236,000		)	11,425,000		(182,000		)	11,243,000

	As reported						As adjusted
	March 30,						March 30,
	2013			Adjustments			2013
Condensed Consolidated Statement of Operations
Cost of sales, including buying and occupancy	$	37,114,000		$	(555,000	)	$	36,559,000
Loss before income taxes	(8,278,000		)	555,000			(7,723,000		)
Income tax provision	10,227,000			(123,000		)	10,104,000
Net loss	(18,505,000		)	678,000			(17,827,000		)
Basic loss per share	(1.38		)				(1.33		)
Diluted loss per share	(1.38		)				(1.33		)

	As reported						As adjusted
	March 30,						March 30,
	2013			Adjustments			2013
Condensed Consolidated Statement of Cash Flows
Net loss	$	(18,505,000	)	$	678,000		$	(17,827,000	)
Deferred income taxes	10,201,000		)	(123,000		)	10,078,000		)
Inventories	(5,648,000		)	(555,000		)	(6,203,000		)