Basis of Presentation	6 Months Ended
Aug. 02, 2014
Basis of Presentation
Basis of Presentation	(1) Basis of Presentation The accompanying unaudited condensed consolidated financial statements as of August 2, 2014 and for the three and six month periods ended August 2, 2014 and August 3, 2013 have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and Article 10 of Regulation S-X. These consolidated financial statements include the accounts of Cherokee Inc. “Cherokee” or the “Company”, and its subsidiaries and have not been audited by independent registered public accountants but include all adjustments, consisting of normal recurring accruals, which in the opinion of management of Cherokee are necessary for a fair statement of the financial position and the results of operations for the periods presented. All material intercompany accounts and transactions have been eliminated during the consolidation process. The accompanying consolidated balance sheet as of February 1, 2014 has been derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. The results of operations for the three and six month periods ended August 2, 2014 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2015. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2014. As used herein, the term “First Quarter” refers to the three months ended May 3, 2014; the term “Second Quarter” refers to the three months ended August 2, 2014; the term “Six Months” refers to the six months ended August 2, 2014; the term “Fiscal 2015” refers to the fiscal year ending January 31, 2015; the term “Fiscal 2014” refers to the most recent past fiscal year ended February 1, 2014; and the term “Fiscal 2013” refers to the fiscal year ended February 2, 2013. Acquisition of Hawk and Tony Hawk Brands On January 10, 2014, Cherokee entered into an asset purchase agreement with Quiksilver, Inc. and Hawk Designs, Inc., to acquire various assets related to the “Hawk” and “Tony Hawk” signature apparel brands and related trademarks. As consideration for the acquisition, Cherokee paid a cash purchase price equal to $19,000. In connection with this acquisition, Cherokee entered into an amended retail license agreement with Kohl’s Department Stores. Pursuant to this agreement, Kohl’s is granted the exclusive right to sell Tony Hawk and Hawk-branded apparel and related products in the United States and has agreed to pay Cherokee a minimum royalty guarantee of $19,200 over four years ($4,800 per year). Acquisition of Cherokee School Uniforms; Amendment to Target Agreement On January 31, 2013, the Company entered into an asset purchase agreement pursuant to which the Company acquired various rights relating to the Cherokee brand in the category of school uniforms in exchange for a cash payment of $4,250. Cherokee previously sold such rights to the seller in July 1995. In connection with this acquisition, the Company entered into a multi-year amendment to the license agreement with Target Inc. (“Target”) to include the category of school uniforms. Pursuant to such amendment, Target agreed to pay Cherokee an annual royalty rate for its sales of Cherokee-branded children’s school uniforms products in the United States fixed at 2% of Target’s net sales of such products and subject to a minimum annual royalty of $800. Acquisition of Liz Lange and Completely Me by Liz Lange On September 4, 2012, the Company entered into an asset purchase agreement with LLM Management Co., LLC, pursuant to which the Company acquired various assets related to the “Liz Lange” and “Completely Me by Liz Lange” brands. As consideration for the acquisition, Cherokee agreed to pay a cash purchase price equal to $13,100, with $12,600 paid concurrently with the closing and $500 of which was placed in an escrow fund that was released on March 31, 2013. In addition, Cherokee paid an earn-out payment of $400 in March 2013 and paid an additional earn-out payment of $500 in March 2014. The aggregate of $900 in earn out consideration was payable upon satisfaction of certain revenues attributable to the assets during Fiscal 2013 and Fiscal 2014, as applicable. In addition, as part of the acquisition, Cherokee agreed to assume the seller’s obligations under various agreements, including a consulting agreement with Ms. Lange as well as certain existing license agreements relating to the assets.

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of August 2, 2014 and for the three and six month periods ended August 2, 2014 and August 3, 2013 have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and Article 10 of Regulation S-X. These consolidated financial statements include the accounts of Cherokee Inc. “Cherokee” or the “Company”, and its subsidiaries and have not been audited by independent registered public accountants but include all adjustments, consisting of normal recurring accruals, which in the opinion of management of Cherokee are necessary for a fair statement of the financial position and the results of operations for the periods presented. All material intercompany accounts and transactions have been eliminated during the consolidation process. The accompanying consolidated balance sheet as of February 1, 2014 has been derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. The results of operations for the three and six month periods ended August 2, 2014 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2015. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2014.

As used herein, the term “First Quarter” refers to the three months ended May 3, 2014; the term “Second Quarter” refers to the three months ended August 2, 2014; the term “Six Months” refers to the six months ended August 2, 2014; the term “Fiscal 2015” refers to the fiscal year ending January 31, 2015; the term “Fiscal 2014” refers to the most recent past fiscal year ended February 1, 2014; and the term “Fiscal 2013” refers to the fiscal year ended February 2, 2013.

Acquisition of Hawk and Tony Hawk Brands

On January 10, 2014, Cherokee entered into an asset purchase agreement with Quiksilver, Inc. and Hawk Designs, Inc., to acquire various assets related to the “Hawk” and “Tony Hawk” signature apparel brands and related trademarks. As consideration for the acquisition, Cherokee paid a cash purchase price equal to $19,000. In connection with this acquisition, Cherokee entered into an amended retail license agreement with Kohl’s Department Stores. Pursuant to this agreement, Kohl’s is granted the exclusive right to sell Tony Hawk and Hawk-branded apparel and related products in the United States and has agreed to pay Cherokee a minimum royalty guarantee of $19,200 over four years ($4,800 per year).

Acquisition of Cherokee School Uniforms; Amendment to Target Agreement

On January 31, 2013, the Company entered into an asset purchase agreement pursuant to which the Company acquired various rights relating to the Cherokee brand in the category of school uniforms in exchange for a cash payment of $4,250. Cherokee previously sold such rights to the seller in July 1995. In connection with this acquisition, the Company entered into a multi-year amendment to the license agreement with Target Inc. (“Target”) to include the category of school uniforms. Pursuant to such amendment, Target agreed to pay Cherokee an annual royalty rate for its sales of Cherokee-branded children’s school uniforms products in the United States fixed at 2% of Target’s net sales of such products and subject to a minimum annual royalty of $800.

Acquisition of Liz Lange and Completely Me by Liz Lange

On September 4, 2012, the Company entered into an asset purchase agreement with LLM Management Co., LLC, pursuant to which the Company acquired various assets related to the “Liz Lange” and “Completely Me by Liz Lange” brands. As consideration for the acquisition, Cherokee agreed to pay a cash purchase price equal to $13,100, with $12,600 paid concurrently with the closing and $500 of which was placed in an escrow fund that was released on March 31, 2013. In addition, Cherokee paid an earn-out payment of $400 in March 2013 and paid an additional earn-out payment of $500 in March 2014. The aggregate of $900 in earn out consideration was payable upon satisfaction of certain revenues attributable to the assets during Fiscal 2013 and Fiscal 2014, as applicable. In addition, as part of the acquisition, Cherokee agreed to assume the seller’s obligations under various agreements, including a consulting agreement with Ms. Lange as well as certain existing license agreements relating to the assets.