UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 2013
CHEROKEE INC.
(Exact name of registrant as specified in its charter)
Delaware |
|
1-18640 |
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95-4182437 |
(State or Other Jurisdiction of |
|
(Commission |
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(I.R.S. Employer |
5990 Sepulveda Boulevard
Sherman Oaks, California 91411
(Address of Principal Executive Offices) (Zip Code)
(818) 908-9868
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On April 30, 2013, Cherokee Inc. issued a press release announcing its financial results for the fiscal quarter and fiscal year ended February 2, 2013. A copy of the press release is attached hereto as Exhibit 99.1.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.1, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
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Description |
99.1 |
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Press release of Cherokee Inc., dated April 30, 2013. |
Exhibit 99.1
Cherokee Inc. |
|
Addo Communications, Inc. |
5990 Sepulveda Blvd., Suite 600 |
|
12121 Wilshire Blvd, Suite 775 |
Sherman Oaks, CA 91411 |
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Los Angeles, CA 90025 |
(818) 908-9868 |
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(310) 829-5400 |
Contact: Jason Boling, CFO |
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Contact: Patricia Nir/Kimberly Esterkin |
For Immediate Release:
Cherokee Inc. Reports Fourth Quarter and Fiscal Year 2013 Financial Results
SHERMAN OAKS, CA (April 30, 2013) Cherokee Inc. (NASDAQ: CHKE), a global marketer of style-focused lifestyle brands, today reported financial results for the fourth quarter and full year ended February 2, 2013.
Net revenues for the quarter were $6.0 million, consistent with the prior-year period. SG&A expenses, which include the amortization of trademarks, totaled $4.3 million, an increase from $3.5 million in the prior-year period. For the quarter, net income totaled $1.1 million or $0.13 per diluted share, compared with $1.5 million, or $0.18 per diluted share, in the fourth quarter of 2012.
For Fiscal Year 2013, net revenues totaled $26.6 million, an increase of 3.7%, from $25.6 million in the prior year period. SG&A expenses totaled $15.5 million, up from $14.9 million in 2012. The uptick in SG&A during the quarter and fiscal year was primarily related to increased costs associated with product development, professional fees, and additional costs related to employee stock compensation.
For the year, net income totaled $6.8 million, or $0.81 per diluted share, compared with $7.5 million or $0.89 per diluted share in Fiscal 2012. Net income for the previous year time period takes into account a tax benefit from the California Franchise Tax Board received in FY 2012. Excluding the Franchise Tax Board refund, fiscal year 2012 earnings per share would have been $0.72.
Fiscal 2013 was a pivotal year for the Cherokee Group, said Cherokee Inc. Chief Executive Officer Henry Stupp. We continued to see progress including the expansion of our portfolio of apparel categories, brands and geographies as well as the addition of retail and financial experts to our Board and senior management team. The continued growth of our namesake Cherokee brand, particularly at Target, along with the addition of Liz Lange, Cherokee School Uniforms, and àle by Alessandra drove our success and expansion over the past year.
Through our 360 degree licensing approach, we saw consistent branding and product quality across our many partner countries and, as a result, have been able to deploy our brands faster and in more markets than even before. Most notably, after renewing our relationship with leading UK retailer Tesco one year ago, we are proud to announce that an enhanced premium collection of Cherokee mens, womens, and childrens apparel is now available at 279 Tesco stores throughout the UK and Central Europe.
Mr. Stupp concluded, We have made much progress over the past twelve months, although our work is far from complete. We will continue to strengthen our retail partnerships, expand our category offerings, and develop new partnerships to further propel the Cherokee Group toward continued success. The investments we make over the coming years will be made with our customers, partners, and stockholders interests in mind to ensure that we maintain a solid financial position while also generating value.
At February 2, 2013, the Company had cash and cash equivalents of $2.4 million, compared to $7.4 million at January 28, 2012. The $5.0 million difference in cash and cash equivalents resulted from the Companys prepayment of all outstanding principal and interest from its former loan agreement with U.S. Bank.
Conference Call
The Company will host a conference call today at 1:30 PMPT / 4:30 p.m. ET. To participate in the call, please dial (877) 407-0784 (U.S.) or (201) 689-8560 (International) ten minutes prior to the start time and use conference ID: 411100. The earnings call will also be broadcast live over the Internet and can be accessed on the Investor Relations section of the Companys Web site at http://www.cherokeegroup.com. A slide presentation will accompany the prepared remarks and has been posted along with the webcast link on Cherokees website.
For those unable to participate during the live broadcast, a replay will be through Tuesday, May 7, 2013, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (877) 870-5176 (U.S.) or (858) 384-5517 (International) and use conference ID: 411100.
About Cherokee Inc.
Cherokee Inc. is a global marketer and manager of a portfolio of Fashion and Lifestyle brands including Cherokee®, Carole Little®, Liz Lange® and Sideout®, in multiple consumer product categories and sectors around the world. The Companys annual global retail sales of owned brands are approaching $2 billion with license agreements with premier retailers and manufacturers covering over 40 countries around the world including Target Stores (U.S. and Canada), Tesco (U.K., Ireland and certain Central European countries), Zellers (Canada), RT-Mart (Peoples Republic of China), Pick n Pay (South Africa), Falabella (Chile, Peru and Colombia), Arvind Mills (India and certain Middle Eastern countries), Shufersal LTD.(Israel), Comercial Mexicana (Mexico), Eroski (Spain), Nishimatsuya (Japan), Magnit (Russia), Landmark Groups Max Stores (certain Middle East and North Africa countries), and the TJX Companies (U.S., Canada and Europe).
Statements included within this news release may contain forward-looking statements for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. When used, the words anticipates, believes, expects, may, should and similar expressions are intended to identify such forward-looking statements. Forward-looking statements included in this press release (including, without limitation, express or implied statements regarding potential future business development) involve known and unknown risk
and uncertainties that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the effect of global economic conditions, the financial condition of the apparel and retail industry, adverse changes in licensee or consumer acceptance of products bearing the Companys brands, the ability and/or commitment of the Companys licensees to design, manufacture and market Cherokee, Liz Lange, Completely Me, Sideout and Carole Little branded products, the Companys dependence on Target for most of the Companys revenues and the Companys dependence on its key management personnel. The risks included here are not exhaustive. A further list and description of these risks, uncertainties and other matters can be found in the Companys Annual Report on Form 10-K for Fiscal Year 2012, and in its periodic reports on Forms 10-Q and 8-K. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. The Company disclaims any intent or obligation to update any of the forward-looking statements contained herein to reflect future events and developments. This release also includes a discussion of non-GAAP financial measures as that term is defined in Regulation G, including earnings per share excluding certain tax benefits. The most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the companys financial results prepared in accordance with GAAP are included in the earnings release which is posted on the companys web site at http://www.cherokeegroup.com.
CHEROKEE INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share and per share amounts)
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February 2, |
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January 28, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
2,424 |
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$ |
7,421 |
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Receivables |
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5,147 |
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5,320 |
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Income taxes receivable |
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779 |
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1,378 |
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Prepaid expenses and other current assets |
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426 |
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152 |
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Deferred tax asset |
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48 |
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63 |
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Total current assets |
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8,824 |
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14,334 |
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Trademarks, net |
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22,131 |
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5,596 |
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Deferred tax asset |
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1,693 |
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1,600 |
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Property and equipment, net |
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945 |
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733 |
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Other assets |
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59 |
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Total assets |
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$ |
33,652 |
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$ |
22,263 |
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Liabilities and Stockholders Equity |
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|
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Current liabilities: |
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|
|
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Accounts payable and other accrued payables |
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$ |
1,125 |
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$ |
831 |
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Short term debt |
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3,291 |
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500 |
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Income taxes payable |
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1,316 |
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1,077 |
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Accrued dividends |
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840 |
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1,677 |
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Deferred revenue current |
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80 |
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320 |
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Accrued compensation payable |
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63 |
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268 |
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Total current liabilities |
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6,715 |
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4,673 |
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Long term liabilities: |
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Long term debt |
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13,228 |
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6,438 |
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Other non-current |
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183 |
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401 |
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Total liabilities |
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20,126 |
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11,512 |
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Commitments and Contingencies (Note 6) |
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Stockholders Equity |
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Preferred stock, $.02 par value, 1,000,000 shares authorized, none issued and outstanding |
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Common stock, $.02 par value, 20,000,000 shares authorized, 8,400,168 shares issued and outstanding at February 2, 2013 and 8,387,167 issued and outstanding at January 28, 2012 |
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167 |
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167 |
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Additional paid-in capital |
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20,249 |
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19,271 |
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Retained deficit |
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(6,890 |
) |
(8,687 |
) | ||
Total stockholders equity |
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13,526 |
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10,751 |
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Total liabilities and stockholders equity |
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$ |
33,652 |
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$ |
22,263 |
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CHEROKEE INC.
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share amounts)
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Year Ended |
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February 2, |
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January 28, |
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January 29, |
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Royalty revenues |
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$ |
26,558 |
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$ |
25,604 |
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$ |
30,777 |
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Selling, general and administrative expenses |
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13,973 |
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13,575 |
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16,397 |
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Amortization of trademarks |
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1,491 |
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1,371 |
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1,474 |
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Operating income |
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11,094 |
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10,658 |
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12,906 |
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Other income (expense): |
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Interest expense |
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(240 |
) |
(252 |
) |
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Interest income |
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18 |
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25 |
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13 |
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Total other income (expense), net |
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(222 |
) |
(227 |
) |
13 |
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Income before income taxes |
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10,872 |
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10,431 |
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12,919 |
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Income tax provision |
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4,039 |
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2,921 |
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5,200 |
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Net income |
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$ |
6,833 |
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$ |
7,510 |
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$ |
7,719 |
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Net income per common share attributable to common stockholders: |
|
|
|
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|
|
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Basic earnings per share |
|
$ |
0.81 |
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$ |
0.89 |
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$ |
0.87 |
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Diluted earnings per share |
|
$ |
0.81 |
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$ |
0.89 |
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$ |
0.87 |
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Weighted average common shares outstanding attributable to common stockholders: |
|
|
|
|
|
|
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Basic |
|
8,394 |
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8,454 |
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8,836 |
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Diluted |
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8,411 |
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8,457 |
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8,874 |
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Dividends declared per common share |
|
$ |
0.60 |
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$ |
0.80 |
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$ |
0.80 |
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CHEROKEE INC.
Non-GAAP Financial Metrics
The following table shows the Companys GAAP financial metrics reconciled to non-GAAP financial metrics included in this release.
|
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Year Ended |
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|
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February 2, |
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January 28, |
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GAAP Diluted Earnings per share |
|
$ |
0.81 |
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$ |
0.89 |
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|
|
|
|
|
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California Franchise Tax Board refund |
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|
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(0.17 |
) | ||
Non-GAAP Diluted Earnings Per Share |
|
$ |
0.81 |
|
$ |
0.72 |
|