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Other Charges
3 Months Ended
May 05, 2018
Other Charges Net Related To Proxy Context And Proposed Merger And Management And Organizational Changes [Abstract]  
Other Charges

10.

OTHER CHARGES

In the first quarter of fiscal 2018 the Company received notification from a stockholder group of the nomination of a slate of alternative nominees for election to the Company’s Board of Directors at the Annual Meeting of Stockholders that was held on May 23, 2018 (the “2018 Proxy Contest”).  During the three months ended May 5, 2018 the Company incurred $886,000 of charges related to the proxy solicitation.

During the fourth quarter of fiscal 2015 the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with the Company’s largest shareholder, Orchestra, a France-based retailer of children’s wear, to complete a proposed business combination (“the Merger”). During the second quarter of fiscal 2017 the parties determined that is was in the best interest of their respective stockholders to terminate the Merger and on July 27, 2017, the Company, Orchestra, and certain other affiliates of Orchestra entered into a Termination Agreement (“the Termination Agreement”).   In connection with the Termination Agreement, Orchestra and the Company agreed to reimburse each other for certain costs incurred in connection with their effort to implement the Merger Agreement.  During the three months ended April 29, 2017 the Company incurred $814,000 of charges related to the proposed merger.

In an effort to improve revenue and profitability over the last several years the Company has engaged in a series of management and organizational changes.  In connection therewith, the Company retained a consulting firm to review its costs and business strategy. Also, the Company’s Board of Directors authorized changes to the Company’s chief executive function including the resignation of Anthony M. Romano as our Chief Executive Officer and President (“Former CEO”),  the September 17, 2017 appointment of B. Allen Weinstein, an independent member of our Board since 2010, as Interim Chief Executive Officer (“Interim CEO”), and the January 2, 2018 appointment of Melissa Payner-Gregor, an independent  member of our board since 2009, (replacing Mr. Weinstein) as Interim CEO.  The Company also paid one-time retention bonuses with service conditions to certain key management personnel which are being recorded over the service period, while reducing its overall headcount to create a more efficient and effective operating structure. During the three months ended May 5, 2018 and April 29, 2017 the Company incurred $264,000 and $3,000, respectively, of charges related to these management and organizational changes.

A summary of the charges incurred in connection with the proposed business combination and the management and organizational changes is as follows (in thousands):

 

 

 

Three Months Ended

 

 

 

May 5, 2018

 

 

April 29, 2017

 

 

 

 

 

 

 

 

 

 

Proxy Contest and Proposed Merger

 

 

 

 

 

 

 

 

Proxy contest

 

$

886

 

 

$

 

Proposed merger

 

 

 

 

 

814

 

Total proxy solicitation and proposed merger

 

 

886

 

 

 

814

 

 

 

 

 

 

 

 

 

 

Management and Organizational Changes

 

 

 

 

 

 

 

 

Severance and related benefits

 

 

252

 

 

 

3

 

Consulting fees

 

 

12

 

 

 

 

Total management and organizational changes

 

 

264

 

 

 

3

 

 

 

 

 

 

 

 

 

 

Total other charges

 

$

1,150

 

 

$

817