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 |
13-2595932 |
(Commission File Number)
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(I.R.S. Employer Identification No.)
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650 FROM ROAD , SUITE 375 PARAMUS, NEW JERSEY |
07652-3556 |
(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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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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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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☐
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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 2.02.
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Results of Operations and Financial Condition.
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Item 2.05. | Costs Associated with Exit or Disposal Activities. |
Item 9.01.
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Financial Statements and Exhibits.
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Exhibit No.
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Description
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99.1 | Press Release issued March 20, 2017 announcing fourth quarter and fiscal year 2017 results for the periods ended January 31, 2017. |
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MOVADO GROUP, INC.
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By: |
/s/ Sallie A. DeMarsilis |
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Name:
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Sallie A. DeMarsilis
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Title:
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Chief Financial Officer
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CONTACT: |
ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200
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— | Net sales decreased 8.7% to $130.8 million compared to $143.3 million in the fourth quarter of fiscal 2016. Net sales on a constant dollar basis decreased 7.5% compared to net sales in the fourth quarter of fiscal 2016. |
— | Gross profit was $64.7 million, or 49.5% of sales, compared to $75.4 million, or 52.6% of sales in the same period last year. Adjusted gross profit for the fourth quarter of fiscal 2016, which excludes a $0.1 million adjustment in expenses related to operating efficiency initiatives and other items, was $75.3 million, or 52.5% of sales. The decrease in adjusted gross margin percentage was primarily driven by an unfavorable shift in channel and product mix, partially offset by the favorable impact of changes in foreign currency exchange rates. |
— | Operating expenses decreased $6.6 million or 10.3% to $57.2 million in the fourth quarter of fiscal 2017 from $63.8 million in the fourth quarter last year. For the fourth quarter of fiscal 2016, adjusted operating expenses were $62.4 million, which excludes $1.4 million of expenses related to operating efficiency initiatives and other items. The decrease in adjusted operating expenses was primarily the result of lower performance based compensation and payroll related expenses, the favorable impact of foreign currency exchange rates and a decrease in other operating expenses, partially offset by higher marketing expenses. |
— | Operating income in the fourth quarter was $7.4 million compared to operating income of $11.5 million in the prior year period. Adjusted operating income for the fourth quarter of fiscal 2016, excluding $1.3 million of expenses related to operating efficiency initiatives and other items, was $12.9 million. |
— | The tax provision was $1.9 million compared to both a tax provision and an adjusted tax provision of $2.9 million in the fourth quarter of fiscal 2016. |
— | Net income was $5.2 million, or $0.22 per diluted share, compared to net income of $7.9 million, or $0.34 per diluted share, for the same period in the prior year. Adjusted net income in the fourth quarter of fiscal 2016, excluding $1.3 million of expenses, net of tax, related to operating efficiency |
— | Net sales decreased 7.1% to $552.8 million compared to net sales of $594.9 million in fiscal 2016. Net sales on a constant dollar basis decreased 6.0% compared to net sales in fiscal 2016. |
— | Gross profit was $294.8 million, or 53.3% of sales, compared to gross profit of $316.9 million, or 53.3% of sales, last year. Adjusted gross profit for fiscal 2016, which excludes $0.6 million in charges related to operating efficiency initiatives and other items, was $317.6 million, or 53.4% of sales. The decrease in adjusted gross margin percentage was primarily driven by reduced leverage of certain fixed costs as a result of lower net sales, mostly offset by the favorable impact of changes in foreign currency exchange rates. |
— | Operating expenses decreased $6.0 million or 2.4% to $240.8 million in fiscal 2017 from operating expenses of $246.8 million last year. For fiscal 2017, adjusted operating expenses were $239.0 million, which excludes $1.8 million of expenses related to the COO’s retirement in the first quarter. For fiscal 2016, adjusted operating expenses were $243.4 million, which excludes $3.4 million of expenses related to operating efficiency initiatives and other items. The decrease in adjusted operating expenses was primarily the result of lower performance based compensation, lower depreciation and amortization expense, and the favorable impact of foreign currency exchange rates. |
— | Operating income for fiscal 2017 was $54.0 million as compared to operating income of $70.1 million for fiscal 2016. Adjusted operating income for fiscal 2017, which excludes $1.8 million of expenses related to the COO’s retirement in the first quarter of fiscal 2017, was $55.8 million. Adjusted operating income for fiscal 2016, excluding $4.0 million of expenses related to operating efficiency initiatives and other items, was $74.1 million. |
— | The effective tax rate for fiscal 2017 was 31.7% compared to 33.8% in the prior year. The adjusted effective tax rate for fiscal 2017 was 31.9% as compared to the adjusted effective tax rate of 32.1% in fiscal 2016. The decrease in the adjusted effective tax rate is primarily due to the mix of global pre-tax income. |
— | Net income was $35.1 million, or $1.51 per diluted share, for fiscal 2017 compared to net income of $45.1 million, or $1.90 per diluted share, for the prior year. Adjusted net income in fiscal 2017, which excludes $1.1 million in expenses, net of tax, related to the COO’s retirement in the first quarter of fiscal 2017, as well as $0.9 million, net of tax, related to the impairment charge on a long-term investment in a privately held company in the third quarter of fiscal 2017, was $37.1 million or $1.59 per diluted share. Adjusted net income in fiscal 2016, which excludes $3.9 million of expenses, net of tax, related to operating efficiency initiatives and other items, was $49.0 million or $2.06 per diluted share. |
Three Months Ended
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Twelve Months Ended
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January 31,
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January 31,
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|||||||||||||||
2017
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2016
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2017
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2016
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|||||||||||||
Net sales
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$
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130,785
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$
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143,264
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$
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552,752
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$
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594,923
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||||||||
Cost of sales
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66,098
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67,913
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257,935
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277,993
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||||||||||||
Gross profit
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64,687
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75,351
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294,817
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316,930
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||||||||||||
Operating expenses
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57,246
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63,807
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240,836
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246,823
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||||||||||||
Operating income
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7,441
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11,544
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53,981
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70,107
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||||||||||||
Other expense
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-
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-
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(1,282
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)
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-
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|||||||||||
Interest expense
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(425
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)
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(382
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)
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(1,464
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)
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(1,109
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)
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||||||||
Interest income
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81
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22
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219
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127
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||||||||||||
Income before income taxes
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7,097
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11,184
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51,454
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69,125
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||||||||||||
Provision for income taxes
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1,865
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2,902
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16,315
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23,360
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||||||||||||
Net income
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5,232
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8,282
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35,139
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45,765
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Less: Net income attributed to noncontrolling interests
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-
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394
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78
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671
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||||||||||||
Net income attributed to Movado Group, Inc.
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$
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5,232
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$
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7,888
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$
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35,061
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$
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45,094
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Per Share Information:
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Net income attributed to Movado Group, Inc.
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$
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0.22
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$
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0.34
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$
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1.51
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$
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1.90
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Weighted diluted average shares outstanding
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23,334
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23,317
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23,267
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23,774
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As Reported
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% Change
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|||||||||||||||
Three Months Ended
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% Change
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Constant
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||||||||||||||
January 31,
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As Reported
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Dollar
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||||||||||||||
2017
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2016
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|||||||||||||||
Total Net sales
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$
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130,785
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$
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143,264
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-8.7
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%
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-7.5
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%
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||||||||
As Reported
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% Change
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|||||||||||||||
Twelve Months Ended
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% Change
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Constant
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||||||||||||||
January 31,
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As Reported
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Dollar
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||||||||||||||
2017
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2016
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|||||||||||||||
Total Net sales
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$
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552,752
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$
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594,923
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-7.1
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%
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-6.0
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%
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Net Sales
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Gross Profit
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Operating Income
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Pre-tax Income
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Provisions for Income Taxes
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Net Income Attributed to Movado Group, Inc.
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EPS
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||||||||||||||||||||||
Three Months Ended
January 31, 2017
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||||||||||||||||||||||||||||
As Reported (GAAP)
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$
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130,785
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$
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64,687
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$
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7,441
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$
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7,097
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$
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1,865
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$
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5,232
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$
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0.22
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||||||||||||||
Three Months Ended
January 31, 2016
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||||||||||||||||||||||||||||
As Reported (GAAP)
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$
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143,264
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$
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75,351
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$
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11,544
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$
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11,184
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$
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2,902
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$
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7,888
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$
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0.34
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||||||||||||||
Operating Efficiency Initiatives and Other Items (1)
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-
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(72
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)
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1,326
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1,326
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(7
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)
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1,333
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0.06
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Adjusted Results (Non-GAAP)
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$
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143,264
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$
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75,279
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$
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12,870
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$
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12,510
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$
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2,895
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$
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9,221
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$
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0.40
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||||||||||||||
Twelve Months Ended
January 31, 2017
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||||||||||||||||||||||||||||
As Reported (GAAP)
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$
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552,752
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$
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294,817
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$
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53,981
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$
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51,454
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$
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16,315
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$
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35,061
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$
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1.51
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||||||||||||||
Impairment of a Long-Term Investment (2)
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-
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-
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-
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1,282
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398
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884
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0.03
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|||||||||||||||||||||
Retirement Charge (3)
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-
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-
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1,806
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1,806
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687
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1,119
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0.05
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|||||||||||||||||||||
Adjusted Results (Non-GAAP)
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$
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552,752
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$
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294,817
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$
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55,787
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$
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54,542
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$
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17,400
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$
|
37,064
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$
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1.59
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||||||||||||||
Twelve Months Ended
January 31, 2016
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||||||||||||||||||||||||||||
As Reported (GAAP)
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$
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594,923
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$
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316,930
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$
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70,107
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$
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69,125
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$
|
23,360
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$
|
45,094
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$
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1.90
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||||||||||||||
Operating Efficiency Initiatives and Other Items (1)
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-
|
621
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3,996
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3,996
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127
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3,869
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0.16
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|||||||||||||||||||||
Adjusted Results (Non-GAAP)
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$
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594,923
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$
|
317,551
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$
|
74,103
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$
|
73,121
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$
|
23,487
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$
|
48,963
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$
|
2.06
|
|
January 31,
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January 31,
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||||||
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2017
|
2016
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||||||
ASSETS
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||||||||
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||||||||
Cash and cash equivalents
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$
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256,279
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$
|
228,188
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||||
Trade receivables, net
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66,847
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71,030
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||||||
Inventories
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153,167
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162,465
|
||||||
Other current assets
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28,487
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27,352
|
||||||
Total current assets
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504,780
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489,035
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||||||
|
||||||||
Property, plant and equipment, net
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34,173
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38,553
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||||||
Deferred and non-current income taxes
|
24,837
|
20,323
|
||||||
Other non-current assets
|
44,012
|
37,259
|
||||||
Total assets
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$
|
607,802
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$
|
585,170
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||||
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LIABILITIES AND EQUITY
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||||||||
|
||||||||
Loans payable to bank, current
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$
|
5,000
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$
|
5,000
|
||||
Accounts payable
|
27,192
|
27,308
|
||||||
Accrued liabilities
|
28,241
|
28,570
|
||||||
Accrued payroll and benefits
|
6,820
|
11,047
|
||||||
Income taxes payable
|
4,149
|
6,257
|
||||||
Total current liabilities
|
71,402
|
78,182
|
||||||
|
||||||||
Loans payable to bank
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25,000
|
35,000
|
||||||
Deferred and non-current income taxes payable
|
3,322
|
2,640
|
||||||
Other non-current liabilities
|
34,085
|
28,201
|
||||||
Noncontrolling interests
|
-
|
595
|
||||||
Shareholders' equity
|
473,993
|
440,552
|
||||||
Total liabilities and equity
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$
|
607,802
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$
|
585,170
|
Twelve Months Ended
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||||||||
January 31,
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||||||||
2017
|
2016
|
|||||||
Cash flows from operating activities:
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||||||||
Net income
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$
|
35,139
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$
|
45,765
|
||||
Depreciation and amortization
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11,507
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13,156
|
||||||
Other non-cash adjustments
|
9,873
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5,367
|
||||||
Operating efficiency initiatives and other items
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-
|
3,996
|
||||||
Changes in working capital
|
3,969
|
5,290
|
||||||
Changes in non-current assets and liabilities
|
(2,070
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)
|
1,016
|
|||||
Net cash provided by operating activities
|
58,418
|
74,590
|
||||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
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(5,920
|
)
|
(8,070
|
)
|
||||
Restricted cash deposits
|
(1,156
|
)
|
(435
|
)
|
||||
Short-term investment
|
(152
|
)
|
-
|
|||||
Trademarks and other intangibles
|
(328
|
)
|
(650
|
)
|
||||
Net cash (used in) investing activities
|
(7,556
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)
|
(9,155
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from bank borrowings
|
3,000
|
50,000
|
||||||
Repayments of bank borrowings
|
(13,000
|
)
|
(10,000
|
)
|
||||
Dividends paid
|
(11,930
|
)
|
(10,312
|
)
|
||||
Stock repurchase
|
(3,864
|
)
|
(48,748
|
)
|
||||
Purchase of incremental ownership of joint venture
|
(1,320
|
)
|
(4,267
|
)
|
||||
Other financing
|
(561
|
)
|
(395
|
)
|
||||
Net cash (used in) financing activities
|
(27,675
|
)
|
(23,722
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
4,904
|
(13,377
|
)
|
|||||
Net change in cash and cash equivalents
|
28,091
|
28,336
|
||||||
Cash and cash equivalents at beginning of year
|
228,188
|
199,852
|
||||||
Cash and cash equivalents at end of year
|
$
|
256,279
|
$
|
228,188
|