UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
(Amendment
No. 1)
(Mark
One)
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þ
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the fiscal year ended January 29, 2005
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the transition period from ______ to ______
Commission
File No. 1-14035
Stage
Stores, Inc.
(Exact
name of registrant as specified in its charter)
|
NEVADA
(State
or other jurisdiction of incorporation or organization)
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91-1826900
(I.R.S.
Employer Identification No.)
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| |
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10201
MAIN STREET, HOUSTON, TEXAS
(Address
of principal executive offices)
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77025
(Zip
Code)
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Registrant's
telephone number, including area code:
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(800)
579-2302
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Securities
registered pursuant to Section 12(b) of the Act:
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NONE
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Securities
registered pursuant to Section 12(g) of the Act:
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Title
of each class
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Name
of each exchange on which
registered
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| |
|
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Common
Stock ($0.01 par value)
Series
A Warrants (Expiration Date August 23, 2006)
Series
B Warrants (Expiration Date August 23, 2006)
|
NASDAQ
NASDAQ
NASDAQ
|
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. Yes þ
No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this
Form 10-K. o
Indicate
by check mark whether the registrant is an accelerated filer (as defined in
Rule
12b-2 of the Act). Yes þ
No
o
As
of
July 31, 2004 (the last business day of the registrant's most recently completed
second quarter), the aggregate market value of the voting common stock of the
registrant held by non-affiliates of the registrant was $634,522,197 (based
upon
the closing price of the registrant’s common stock as reported by NASDAQ on July
30, 2004). As of April 6, 2005, there were 18,296,360 shares of the registrant’s
common stock outstanding.
EXPLANATORY
NOTE
This
Amendment on Form 10-K/A is being filed by Stage Stores, Inc. (the “Company”) to
amend the Company’s Annual Report on Form 10-K for the fiscal year ended January
29, 2005, as filed with the Securities and Exchange Commission on April 28,
2005. This Amendment on Form 10-K/A is being filed in response to a comment
received from the Staff of the Securities and Exchange Commission requesting
that the Company revise its disclosure in Item 9A Controls and Procedures of
Part II to state, in clear and unqualified language, the conclusions reached
by
the Company’s chief executive officer and the Company’s chief financial officer
on the effectiveness of both the Company’s disclosure controls and procedures
and the Company’s internal controls over financial reporting. Except for Item 9A
of Part II, no other information included in the original report on Form 10-K
is
amended by this Form 10-K/A.
PART
II
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ITEM
9A.
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CONTROLS
AND PROCEDURES
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Disclosure
Controls and Procedures
As
defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
1934
(the "Exchange Act"), the term "disclosure controls and procedures" means
controls and other procedures of an issuer that are designed to ensure that
information required to be disclosed by the issuer in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed
by
an issuer in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuer's management, including its principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.
The
Company's Chief Executive Officer and Chief Financial Officer evaluated the
effectiveness of the Company's disclosure controls and procedures. Based on
this
evaluation, they concluded that the Company's disclosure controls and procedures
were not effective as of January 29, 2005 due to the Company’s lease accounting
practices discussed below.
Management's
Report on Internal Control Over Financial Reporting
The
management of Stage Stores, Inc. and subsidiaries (the "Company") is responsible
for establishing and maintaining adequate internal control over financial
reporting for the Company as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act. This system is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting principles
generally accepted in the United States of America.
The
Company's internal control over financial reporting includes those policies
and
procedures that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of
the
assets of the Company; (ii) provide reasonable assurance that transactions
are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts
and
expenditures of the Company are being made only in accordance with
authorizations of management and the directors of the Company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company's assets that could have a
material effect on the financial statements.
Because
of its inherent limitations, a system of internal control over financial
reporting can provide only reasonable assurance and may not prevent or detect
misstatements. Further, because of changes in conditions, effectiveness of
internal controls over financial reporting may vary over time.
With
the
participation of the Company's Chief Executive Officer and Chief Financial
Officer, management conducted an evaluation of the effectiveness of the system
of internal control over financial reporting based on the framework in
Internal
Control-Integrated Framework,
published by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management determined that the Company's
system of internal control over financial reporting was not effective as of
January 29, 2005 due to the Company’s lease accounting practices discussed
below. In performing its evaluation, management reviewed the Company's lease
accounting practices in light of the views expressed by the Office of the Chief
Accountant of the Securities and Exchange Commission on February 7, 2005. As
a
result of this review, management concluded that the Company's controls over
the
selection and monitoring of appropriate assumptions and factors affecting lease
accounting practices were insufficient. Management determined that the Company's
rent, depreciation, and interest expense, property and equipment, finance lease
obligations, deferred rent credits and deferred income taxes in prior periods
had been misstated. On March 17, 2005, the Company's Audit Committee concluded
that it was appropriate to restate the Company's financial statements to reflect
the correction of these errors in the Company's lease accounting. Management
evaluated the impact of this restatement on the Company's assessment of internal
control over financial reporting and concluded that the control deficiency
related to lease accounting practices that resulted in incorrect lease
accounting represented a material weakness as of January 29, 2005. On April
27,
2005 the Company filed with the SEC the restated financial statements for the
years ended January 31, 2004 and February 1, 2003 and the twenty-two weeks
ended
February 2, 2002 and the first three quarters of the 2004 fiscal year.
A
material weakness in internal control over financial reporting is a control
deficiency (within the meaning of the Public Company Accounting Oversight
Board's ("PCAOB") Auditing Standard 2), or combination of control deficiencies,
that result in there being more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. PCAOB Auditing Standard 2 identifies a number of circumstances
that, because of their likely significant negative effect on internal control
over financial reporting, are to be regarded as at least significant
deficiencies, as well as strong indicators of a material weakness, including
the
restatement of previously issued financial statements to reflect the correction
of a misstatement.
Management's
assessment of the effectiveness of the Company's internal control over financial
reporting has been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their report which is included
herein.
Remediation
Steps to Address Material Weakness
To
remediate the material weakness in our internal control over financial reporting
for lease accounting practices, the Company has implemented additional review
procedures over the selection and monitoring of appropriate assumptions and
factors affecting lease accounting practices and therefore the remediation
has
been completed. No other material weaknesses were identified as a result of
management's assessment.
Change
in Internal Control Over Financial Reporting
There
were no changes in the Company's internal control over financial reporting
that
occurred during the fiscal quarter ended January 29, 2005 that have materially
affected, or are reasonably likely to materially affect, its internal control
over financial reporting.
|
/s/
JAMES R. SCARBOROUGH
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/s/
MICHAEL E. McCREERY
|
|
James
R. Scarborough
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Michael
E. McCreery
|
|
Chairman
and Chief Executive Officer
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Executive
Vice President and Chief
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| |
Financial
Officer
|
|
February
13, 2006
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February
13, 2006
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Report
of Independent Registered Public Accounting Firm
To
the
Board of Directors and Stockholders of
Stage
Stores, Inc.
Houston,
Texas
We
have
audited management’s assessment, included in the accompanying Management’s
Report on Internal Control over Financial Reporting, that management of Stage
Stores, Inc. and subsidiaries (the “Company”) did not maintain effective
internal control over financial reporting as of January 29, 2005, because of
the
effect of the material weakness identified in management’s assessment based on
criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The Company’s
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion
on
management’s assessment and an opinion on the effectiveness of the Company’s
internal control over financial reporting based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control
over
financial reporting, evaluating management’s assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing
such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinions.
A
company’s internal control over financial reporting is a process designed by, or
under the supervision of, the company’s principal executive and principal
financial officers, or persons performing similar functions, and effected by
the
company’s board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain
to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors
of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.
Because
of the inherent limitations of internal control over financial reporting,
including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may not be prevented
or
detected on a timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
A
material weakness is a significant deficiency, or combination of significant
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. The following material weakness has been identified and included
in
management’s assessment: The Company did not design or implement sufficient
controls over the selection and monitoring of appropriate assumptions and
factors affecting lease accounting. This material weakness resulted in the
restatement of the Company’s previously issued interim and annual financial
statements. This material weakness was considered in determining the nature,
timing, and extent of audit tests applied in our audit of the consolidated
financial statements as of and for the year ended January 29, 2005 of the
Company and this report does not affect our report on such financial
statements.
In
our
opinion, management’s assessment that the Company did not maintain effective
internal control over financial reporting as of January 29, 2005, is fairly
stated, in all material respects, based on the criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission. Also in our opinion, because of the effect of the
material weakness described above on the achievement of the objectives of the
control criteria, the Company has not maintained effective internal control
over
financial reporting as of January 29, 2005, based on the criteria established
in
Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
We
have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated financial statements as of
and
for the year ended January 29, 2005, of the Company and our report dated April
27, 2005, expressed an unqualified opinion on those financial
statements.
/s/
DELOITTE & TOUCHE LLP
Houston,
Texas
April
27,
2005 (February 13, 2006 as to the second sentence of the fourth paragraph in
Management’s Report on Internal Control over Financial
Reporting)
PART
IV
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ITEM
15.
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EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
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Exhibit
Number
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Description
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23*
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Consent
of Independent Registered Public Accounting
Firm.
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31.1*
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Certification
of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
under
the Securities Exchange Act of 1934, as
amended.
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31.2*
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Certification
of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
under
the Securities Exchange Act of 1934, as
amended.
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32*
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Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to
18
U.S.C. Section 1350.
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_________________________________________
*
Filed
electronically herewith.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15 (d) of the Securities Exchange Act
of
1934, the registrant has duly caused this report to be signed on its behalf
by
the undersigned, thereunto duly authorized.
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STAGE
STORES, INC.
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| |
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/s/
James R. Scarborough
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February
13, 2006
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James
R. Scarborough
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Chief
Executive Officer and President
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(Principal
Executive Officer)
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STAGE
STORES, INC.
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| |
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/s/
Michael E. McCreery
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February
13, 2006
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|
Michael
E. McCreery
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Executive
Vice President and Chief Financial Officer
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(Principal
Financial and Accounting Officer)
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Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
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*
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Director
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February
13, 2006
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Scott
Davido
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*
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Director
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February
13, 2006
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Michael
Glazer
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/s/
Michael E. McCreery
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Director
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February
13, 2006
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Michael
E. McCreery
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|
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|
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*
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Director
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February
13, 2006
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John
Mentzer
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|
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*
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Director
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February
13, 2006
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Margaret
Monaco
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*
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Director
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February
13, 2006
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William
Montgoris
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*
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Director
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February
13, 2006
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Sharon
Mosse
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*
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Director
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February
13, 2006
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Walter
Salmon
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/s/
James R. Scarborough
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Director
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February
13, 2006
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James
R. Scarborough
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(Constituting
a majority of the Board of Directors)
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*By:
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/s/
Michael E. McCreery
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Michael
E. McCreery
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Attorney-in-Fact
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8