MOVADO GROUP, INC.
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(Exact name of registrant as specified in its charter)
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New York
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(State or other jurisdiction of incorporation)
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1-16497
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13-2595932
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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650 From Road, Suite 375
Paramus, NJ
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07652-3556
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(Address of principal executive offices)
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(Zip Code)
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(201) 267-8000
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(Registrant’s Telephone Number, Including Area Code)
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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item
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2.02. Results of Operations and Financial Condition.
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Exhibit No.
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Description
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MOVADO GROUP, INC.
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By:
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/s/ Timothy F. Michno
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Name: Timothy F. Michno
Title: General Counsel
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CONTACT:
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ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200
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·
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Net sales increased 17.2% to $138.3 million compared to $118.0 million in the second quarter of fiscal 2013 driven by growth in every brand category.
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Gross profit was $74.8 million, or 54.1% of sales, compared to $65.8 million, or 55.7% of sales, in the second quarter last year. The decrease in gross margin percentage was primarily the result of a shift in channel and product mix, partially offset by the leverage gained on certain fixed costs and the favorable impact of changes in foreign currency exchange rates.
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Operating expenses increased $2.8 million, or 5.0%, to $57.8 million compared to $55.0 million in the second quarter last year. This increase was primarily the result of higher marketing expense and other operating expenses, partially offset by lower compensation expense primarily related to the accrual for performance-based compensation.
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Operating income increased to $17.0 million, or 12.3% of net sales compared to operating income of $10.7 million, or 9.1% of net sales in the second quarter of fiscal 2013.
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The Company recorded a tax provision of $4.3 million, which equates to an effective tax rate of 25.3% compared to an effective tax rate of 23.6% in the second quarter of fiscal 2013. As mentioned above, the Company recorded a $1.0 million tax benefit, or $0.04 per diluted share, related to certain items which equates to an adjusted effective tax rate of 31.2% for the second quarter of fiscal 2014. The effective tax rate for second quarter fiscal 2013 was impacted by the application of guidelines related to accounting for income taxes in interim periods as well as accounting for valuation allowances.
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Net income was $12.5 million, or $0.48 per diluted share compared to $8.1 million, or $0.32 per diluted share, in the second quarter of fiscal 2013. Excluding the $1.0 million tax benefit, or $0.04 per diluted share, discussed above, adjusted net income was $11.5 million, or $0.44 per diluted share.
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EBITDA increased to $20.1 million compared to EBITDA of $13.4 million in the second quarter of fiscal 2013. (See attached table for GAAP and Non-GAAP measures.)
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Net sales increased 12.0% to $248.3 million compared to $221.7 million in the first six months of fiscal 2013 driven by growth in every brand category.
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Gross profit was $134.7 million, or 54.3% of sales, compared to $124.8 million, or 56.3% of sales in the same period last year. The decrease in gross margin percentage was primarily the result of a shift in channel and product mix, partially offset by the favorable impact of changes in foreign currency exchange rates and the leverage gained on certain fixed costs.
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Operating expenses increased $2.2 million, or 2.0%, to $107.7 million versus $105.5 million in the same period last year. This increase was primarily the result of higher marketing expenses and other operating expenses, partially offset by lower compensation expense primarily related to the accrual for performance-based compensation.
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Operating income increased to $27.0 million, or 10.9% of net sales compared to operating income of $19.2 million, or 8.7% of net sales in the first six months of fiscal 2013.
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The Company recorded a tax provision in the first six months of fiscal 2014 of $7.6 million, which equates to an effective tax rate of 26.7% compared to an effective tax rate of 21.7% for the first six months of fiscal 2013. As mentioned above, the Company recorded a $1.0 million tax benefit, or $0.04 per diluted share, related to certain items which equates to an adjusted effective tax rate of 30.2% for the first six months of fiscal 2014. The effective tax rate for the first six months of fiscal 2013 was impacted by the application of guidelines related to accounting for income taxes in interim periods as well as accounting for valuation allowances.
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Net income was $20.7 million, or $0.80 per diluted share compared to $14.7 million, or $0.58 per diluted share, in the first six months of fiscal 2013. Excluding the $1.0 million tax benefit, or $0.04 per diluted share, discussed above, and the $1.5 million pre-tax gain, or $0.04 per diluted share, related to the sale of a building in Switzerland in the first quarter of fiscal 2014, adjusted net income was $18.6 million, or $0.72 per diluted share.
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EBITDA was $32.8 million compared to EBITDA of $24.9 million in the same period of fiscal 2013. (See attached table for GAAP and Non-GAAP measures.)
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MOVADO GROUP, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except per share data)
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(Unaudited)
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Three Months Ended
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Six Months Ended
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July 31,
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July 31,
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2013
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2012
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2013
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2012
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Net sales
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$ | 138,301 | $ | 118,027 | $ | 248,311 | $ | 221,682 | ||||||||
Cost of sales
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63,483 | 52,269 | 113,574 | 96,899 | ||||||||||||
Gross profit
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74,818 | 65,758 | 134,737 | 124,783 | ||||||||||||
Selling, general and administrative
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57,778 | 55,009 | 107,692 | 105,546 | ||||||||||||
Operating income
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17,040 | 10,749 | 27,045 | 19,237 | ||||||||||||
Other income
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- | - | 1,526 | - | ||||||||||||
Interest expense
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(115 | ) | (73 | ) | (180 | ) | (218 | ) | ||||||||
Interest income
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16 | 2 | 39 | 18 | ||||||||||||
Income before income taxes
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16,941 | 10,678 | 28,430 | 19,037 | ||||||||||||
Provision for income taxes
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4,287 | 2,524 | 7,597 | 4,122 | ||||||||||||
Net income
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12,654 | 8,154 | 20,833 | 14,915 | ||||||||||||
Less: Net income attributed to noncontrolling interests
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200 | 96 | 169 | 224 | ||||||||||||
Net income attributed to Movado Group, Inc.
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$ | 12,454 | $ | 8,058 | $ | 20,664 | $ | 14,691 | ||||||||
Per Share Information:
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Net income attributed to Movado Group, Inc.
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$ | 0.48 | $ | 0.32 | $ | 0.80 | $ | 0.58 | ||||||||
Weighted diluted average shares outstanding
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25,846 | 25,506 | 25,859 | 25,450 |
MOVADO GROUP, INC.
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GAAP and Non-GAAP Measures
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(In thousands)
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(Unaudited)
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Three Months Ended
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Six Months Ended | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2013
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2012
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2013
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2012
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Operating income (GAAP)
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$ | 17,040 | $ | 10,749 | $ | 27,045 | $ | 19,237 | ||||||||
Depreciation and amortization
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3,013 | 2,641 | 5,769 | 5,692 | ||||||||||||
EBITDA (non-GAAP)
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$ | 20,053 | $ | 13,390 | $ | 32,814 | $ | 24,929 | ||||||||
MOVADO GROUP, INC.
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CONSOLIDATED BALANCE SHEETS
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(In thousands)
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(Unaudited)
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July 31,
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January 31,
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July 31,
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2013
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2013
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2012
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ASSETS | ||||||||||||
Cash and cash equivalents
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$ | 151,516 | $ | 167,889 | $ | 156,338 | ||||||
Trade receivables
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77,346 | 64,300 | 59,714 | |||||||||
Inventories
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179,939 | 164,354 | 170,414 | |||||||||
Other current assets
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38,426 | 37,556 | 22,634 | |||||||||
Total current assets
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447,227 | 434,099 | 409,100 | |||||||||
Property, plant and equipment, net
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47,296 | 44,501 | 32,333 | |||||||||
Deferred income taxes
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21,667 | 22,749 | 14,529 | |||||||||
Other non-current assets
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27,451 | 25,013 | 23,512 | |||||||||
Total assets
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$ | 543,641 | $ | 526,362 | $ | 479,474 | ||||||
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LIABILITIES AND EQUITY | ||||||||||||
Accounts payable
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$ | 31,169 | $ | 22,075 | $ | 24,364 | ||||||
Accrued liabilities
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40,902 | 51,136 | 41,302 | |||||||||
Deferred and current income taxes payable
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5,150 | 275 | 3,438 | |||||||||
Total current liabilities
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77,221 | 73,486 | 69,104 | |||||||||
Deferred and non-current income taxes payable
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3,880 | 5,637 | 7,438 | |||||||||
Other non-current liabilities
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24,542 | 21,547 | 19,447 | |||||||||
Noncontrolling interests
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2,149 | 2,002 | 2,614 | |||||||||
Shareholders' equity
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435,849 | 423,690 | 380,871 | |||||||||
Total liabilities and equity
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$ | 543,641 | $ | 526,362 | $ | 479,474 |
MOVADO GROUP, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In thousands)
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(Unaudited)
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Six Months Ended | ||||||||
July 31, | ||||||||
2013
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2012
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Cash flows from operating activities:
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Net income
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$ | 20,833 | $ | 14,915 | ||||
Depreciation and amortization
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5,769 | 5,692 | ||||||
Other non-cash adjustments
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(362 | ) | 2,722 | |||||
Changes in working capital
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(25,889 | ) | (24,945 | ) | ||||
Changes in non-current assets and liabilities
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(546 | ) | (477 | ) | ||||
Net cash (used in) operating activities
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(195 | ) | (2,093 | ) | ||||
Cash flows from investing activities:
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Capital expenditures
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(10,206 | ) | (2,446 | ) | ||||
Proceeds from sale of an asset held for sale
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2,196 | - | ||||||
Trademarks
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(164 | ) | (110 | ) | ||||
Net cash (used in) investing activities
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(8,174 | ) | (2,556 | ) | ||||
Cash flows from financing activities:
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Dividends paid
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(2,549 | ) | (15,083 | ) | ||||
Stock repurchase
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(3,310 | ) | - | |||||
Other financing
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(143 | ) | 424 | |||||
Net cash (used in) financing activities
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(6,002 | ) | (14,659 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
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(2,002 | ) | (6,555 | ) | ||||
Net change in cash and cash equivalents
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(16,373 | ) | (25,863 | ) | ||||
Cash and cash equivalents at beginning of period
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167,889 | 182,201 | ||||||
Cash and cash equivalents at end of period
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$ | 151,516 | $ | 156,338 | ||||
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