-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FesqDc9StJ27sSoG8lpTmGdlFOsj8xtdCjXT+kqmNoRlxsWS4vtJXl5G53HAhMgN 4GEOAhjNJLF0Lp8Pjy2/Og== /in/edgar/work/20000614/0000950170-00-000997/0000950170-00-000997.txt : 20000919 0000950170-00-000997.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950170-00-000997 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERRY ELLIS INTERNATIONAL INC CENTRAL INDEX KEY: 0000900349 STANDARD INDUSTRIAL CLASSIFICATION: [2320 ] IRS NUMBER: 591162998 STATE OF INCORPORATION: FL FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21764 FILM NUMBER: 654910 BUSINESS ADDRESS: STREET 1: 3000 NW 107TH AVENUE CITY: MIAMI STATE: FL ZIP: 33172 BUSINESS PHONE: 3055922830 FORMER COMPANY: FORMER CONFORMED NAME: SUPREME INTERNATIONAL CORP DATE OF NAME CHANGE: 19940531 10-Q 1 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended April 30, 2000 OR [ ] Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 0-21764 PERRY ELLIS INTERNATIONAL, INC. (Exact Name of Registrant as Specified in its Charter) Florida 59-1162998 (State or other jurisdiction of (IRS Employer Identification Incorporation or organization) Number) 3000 N.W. 107 Avenue Miami, Florida 33172 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (305) 592-2830 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 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 [X] No [ ] The number of shares outstanding of the registrant's common stock is 6,739,374 (as of June 2, 2000). PERRY ELLIS INTERNATIONAL, INC. INDEX PART I: FINANCIAL INFORMATION Item 1: Consolidated Balance Sheets as of April 30, 2000 (Unaudited) and January 31, 2000 1 Consolidated Statements of Income (Unaudited) for the three months ended April 30, 2000 and April 30, 1999 2 Consolidated Statements of Cash Flow (Unaudited) for the three months ended April 30, 2000 and April 30, 1999 3 Notes to Consolidated Financial Statements 4 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II: OTHER INFORMATION 8 Signature 9 PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
April 30, 2000 January 31, 2000 ------------ ------------ (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 255,133 $ 225,631 Accounts receivable, net 67,592,605 46,006,774 Inventories 39,738,947 36,003,285 Deferred income taxes 1,960,103 1,960,103 Prepaid income taxes -- 1,856,815 Other current assets 1,953,949 2,340,166 ------------ ------------ Total current assets 111,500,737 88,392,774 Property and equipment, net 9,334,786 8,930,393 Intangible assets, net 122,108,644 123,047,545 Other 4,436,729 4,502,476 ------------ ------------ TOTAL $247,380,896 $224,873,188 ============ ============ LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 5,239,478 $ 5,763,401 Accrued expenses 3,705,179 3,919,581 Income taxes payable 208,019 -- Accrued interest payable 1,288,299 4,410,631 Other current liabilities 3,388,952 3,648,068 ------------ ------------ Total current liabilities 13,829,927 17,741,670 Senior subordinated notes payable, net 99,029,667 98,988,667 Deferred income tax 2,841,084 2,841,084 Long term debt-senior credit agreement 42,012,693 18,031,496 Long term debt-term loan 10,000,000 11,250,000 ------------ ------------ Total liabilities 167,713,371 148,852,917 ------------ ------------ Stockholders' Equity: Preferred stock-$.01 par value; 1,000,000 shares authorized; no shares issued or outstanding -- -- Class A Common Stock-$.01 par value; 30,000,000 shares authorized; no shares issued or outstanding -- -- Common stock-$.01 par value; 30,000,000 shares authorized; 6,739,374 and 6,731,874 shares issued and outstanding as of April 30, 2000 and January 31, 2000, respectively 67,393 67,318 Additional paid-in-capital 29,058,081 29,000,655 Retained earnings 50,542,051 46,952,298 ------------ ------------ Total stockholders' equity 79,667,525 76,020,271 ------------ ------------ TOTAL $247,380,896 $224,873,188 ============ ============
See Notes to Consolidated Financial Statements. 1 PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended April 30, -------------------------- 2000 1999 ----------- ----------- Revenues Net Sales $78,232,412 $59,478,771 Royalty Income 6,092,556 2,316,518 ----------- ----------- Total Revenues 84,324,968 61,795,289 Cost of Sales 58,871,648 44,172,579 ----------- ----------- Gross Profit 25,453,320 17,622,710 ----------- ----------- Operating Expenses Selling, General and Administrative Expenses 14,307,428 10,179,795 Depreciation and Amortization 1,502,212 978,599 ----------- ----------- Total Operating Expenses 15,809,640 11,158,394 ----------- ----------- Operating Income 9,643,680 6,464,316 Interest Expense 3,866,382 1,947,989 ----------- ----------- Income Before Income Tax Provision 5,777,298 4,516,327 Income Tax Provision 2,187,535 1,624,539 ----------- ----------- Net Income $ 3,589,763 $ 2,891,788 =========== =========== Net Income Per Share Basic $ 0.53 $ 0.43 =========== =========== Diluted $ 0.53 $ 0.43 =========== =========== Weighted Average Number of Shares Outstanding Basic 6,732,354 6,723,374 =========== =========== Diluted 6,835,903 6,803,228 =========== ===========
See Notes to Consolidated Financial Statements. 2 PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
Three Months Ended April 30, ------------------------------- 2000 1999 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,589,763 $ 2,891,788 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,410,049 978,599 Amortization of debt issue cost 110,133 -- Amortization of bond discount 41,000 49,381 Changes in operating assets and liabilities (net of acquisitions): Accounts receivable, net (21,585,831) (14,528,133) Inventories (3,735,662) 4,810,357 Other current assets 2,199,439 (481,827) Other assets (41,396) 428,013 Accounts payable and accrued expenses (530,306) 2,099,738 Accrued interest payable (3,122,332) 1,104,358 Other current liabilities (259,116) (1,486,408) ------------- ------------- Net cash used in operating activities (21,924,259) (4,134,134) ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (799,442) (139,550) Payment on purchase of intangible assets (35,495) (99,500) Payment for acquired businesses -- (100,403,221) ------------- ------------- Net cash used in investing activities (834,937) (100,642,271) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from (repayments of) long-term loan (1,250,000) 15,000,000 Net proceeds from (repayments of) senior credit facility 23,981,197 (5,420,811) Net proceeds from senior subordinated notes -- 98,852,000 Debt issuance costs (3,475,000) Proceeds from exercise of stock options 57,501 95,274 ------------- ------------- Net cash provided by financing activities 22,788,698 105,051,463 ------------- ------------- NET INCREASE IN CASH 29,502 275,058 CASH AT BEGINNING OF PERIOD 225,631 173,493 ------------- ------------- CASH AT END OF PERIOD $ 255,133 $ 448,551 ============= ============= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 6,964,273 $ 706,628 ============= ============= Income taxes $ 130,000 $ 1,896,580 ============= =============
See Notes to Consolidated Financial Statements. 3 PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES Item 1. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and changes in cash flows in conformity with generally accepted accounting principles. The unaudited consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended January 31, 2000. In the opinion of management, the unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of the interim periods presented and all adjustments are of a normal and recurring nature. The results of operations for the three months ended April 30, 2000 are not necessarily indicative of the results which may be expected for the entire fiscal year. Certain amounts in the prior period have been reclassified to conform to the current period's presentation. 2. INVENTORIES Inventories are stated at the lower of cost or market on a first-in first-out basis and consist principally of finished goods. 3. LETTER OF CREDIT FACILITIES Borrowings and availability under letter of credit facilities consist of the following as of: April 30, January 31, 2000 2000 ------------ ------------ Total letter of credit facilities $ 52,000,000 $ 52,000,000 Outstanding letters of credit (32,183,173) (33,300,358) ------------ ------------ Total Available $ 19,816,827 $ 18,699,642 ============ ============ 4. SEGMENT INFORMATION In accordance with SFAS No. 131, Disclosure About Segments of an Enterprise and Related Information, our principal segments are grouped between the generation of revenues from products and royalties. The Licensing segment derives its revenues from royalties associated from the use of its brand names, principally Perry Ellis, John Henry, Manhattan and Munsingwear. The Product segment derives its revenues from the design, import and distribution of apparel to department stores and other retail outlets, principally throughout the United States. Trademark costs have been allocated among the divisions where the brands are shared. Shared selling, general and administrative expenses are allocated amongst the segments based upon gross profit contribution. 4 Three Months Ended April 30, -------------------------- 2000 1999 ----------- ----------- Revenues: Product $78,232,412 $59,478,771 Licensing 6,092,556 2,316,518 ----------- ----------- Total Revenues $84,324,968 $61,795,289 =========== =========== Operating Income Product $ 5,674,614 $ 4,765,777 Licensing 3,969,065 1,698,538 ----------- ----------- Total Operating Income $ 9,643,679 $ 6,464,315 =========== =========== Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITON AND RESULTS OF OPERATIONS Perry Ellis International, Inc., (the "Company"), cautions readers that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements which may be deemed to have been made in this report or which are otherwise made by or on behalf of the Company. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "will", "expect", "believe", "anticipate", "intend", "could", "would", "estimate", or "continue" or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. Factors which may affect the Company's results include, but are not limited to, risk related to fashion trends; the retail industry; reliance on key customers; contract manufacturing; foreign sourcing; imports and export restrictions; competition; seasonality; rapid expansion of business; dependence on key personnel and other factors discussed herein and in the Company's other filings with the Securities and Exchange Commission. Results of Operations Three months ended April 30, 2000 as compared to three months ended April 30, 1999. Total Revenues. Total revenues consist of net sales and royalty income. Total revenues grew $22.5 million or 36.5% to $84.3 million for the three months ended April 30, 2000 from $61.8 million for the three months ended April 30, 1999. The increase reflects increases in both product sales and royalty income. Net sales. Net sales increased $18.7 million or 31.5% to $78.2 million for the three months ended April 30, 2000 from $59.5 million in the year ago period. The increase in sales was the result of significant increases in the private label business and, to a lesser extent, increases in our branded merchandise. Within branded products, the largest increases in net sales were experienced in the John Henry, Andrew Fezza, PNB Nation and PING brand names. 5 Royalty Income. Royalty income increased $3.8 million to $6.1 million for the three months ended April 30, 2000. The increase is primarily attributed to income generated from our prior year acquisitions of the John Henry/Manhattan and Perry Ellis brand names in the quarter ended April 30, 1999. Cost of sales. Cost of sales for the three month period ended April 30, 2000 was $58.9 million, or 75.3% of net sales as compared to $44.2 million or 74.3% of net sales for the three months ended April 30, 1999. The increase in cost of sales as a percentage of net sales is a result of product mix and the increase in private label business which typically generates a lower profit margin. Gross Profit. Gross profit was $25.5 million for the three month period ended April 30, 2000, compared to $17.6 million for the period ended April 30, 1999. The increase in gross profit reflects the increase in royalty income which has no associated cost of sales and increased gross profit from higher wholesale sales. Selling, general and administrative expenses. Selling, general and administrative expenses, excluding depreciation and amortization, for the three months ended April 30, 2000 were $14.3 million or 17.0% of total revenues as compared to $10.2 million or 16.5% of total revenue for the three months ended April 30, 1999. The increase in selling, general and administrative costs was due to increased shipping, advertising expenses and other variable selling and design expenses associated with the higher wholesale sales and to a lesser extent to payroll expenses associated with the expanded licensing operations. Depreciation and amortization. Depreciation and amortization for the three months ended April 30, 2000 increased $0.5 million to $1.5 million from the comparable period reflecting the additional amortization resulting from the brand acquisitions in 1999. Interest Expense. Interest expense increased $1.9 million for the three months ended April 30, 2000, to $3.9 million from the comparable period a year ago. The increase is primarily attributable to the additional interest resulting from the $100 million subordinated debt offering as well as increased borrowings under the revolving credit agreement to support the increase in sales. Income taxes. During the three month period ended April 30, 2000, the effective tax rate increased to 37.9% compared to 36.0% for the three month period ended April 30, 1999. The increased tax rate is attributable to the loss of graduated rates and an unusually low estimate in the prior year. Net income. Net income increased $0.7 million or 24.1% to $3.6 million or 4.3% of total revenues for the three months ended April 30, 2000 as compared to $2.9 million or 4.7% of total revenues for the three months ended April 30, 1999. Liquidity and Capital Resources The Company relies primarily upon cash flow from operations and borrowings under its senior credit facility to finance operations and expansion. Cash used in operating activities was $21.9 million in the three months ended April 30, 2000 compared to $4.1 million in the year ago period. The Company's increased usage of cash from operations is attributable to increased 6 accounts receivable of $21.5 million commensurate with increased sales, and increased inventory levels of $3.7 million which reflects higher anticipated sales in the next period. In addition, the Company paid a semi-annual bond interest payment during the current period resulting in a net usage of $3.1 million. This cash usage was offset by an increase in net income and non cash depreciation and amortization which increased to $5.2 million from $3.9 million in the prior year. Net cash used in investing activities was $0.8 million for the three months ended April 30, 2000 which primarily reflects purchases of property and equipment. Net cash provided by financing activities for the three months ended April 30, 2000 totaled $22.8 million which was primarily the result of an increase of $24.0 million in borrowings under the Company's senior credit facility to support the cash used in operations. The Company has a senior credit facility consisting of a revolving credit facility of up to an aggregate amount of $75 million and a term loan in the aggregate amount of $15 million. The senior credit facility expires in October 2002. Borrowings are limited under the terms of borrowing base calculation. Interest on borrowings is variable, based upon the Company's option of selecting a LIBOR plus 1.75% or the bank's prime rate. The facility contains covenants which require the Company to maintain certain financial and net worth ratios and restricts the payment of dividends. The facility is secured by the Company's assets. Management believes that the combination of borrowing availability under the senior credit facility, existing working capital and funds anticipated to be generated from operating activities will be sufficient to meet the Company's anticipated operating and capital needs in the foreseeable future. Effects of Inflation and Foreign Currency Fluctuations The Company does not believe that inflation or foreign currency fluctuations significantly affected its results of operations for the three months ended April 30, 2000 and 1999. MARKET RISK IN THE LOANS The Company is subject to market risk associated principally with changes in interest rates. Interest rate exposure is principally limited to borrowings under the senior credit facility. 7 PART II: OTHER INFORMATION Item 1. Legal Proceedings Not applicable Item 2. Changes in Securities Not applicable. Item 3. Defaults Upon Senior Securities Not applicable Item 4. Submission of Matters to a vote of Security Holders Not applicable Item 5. Other Information Not applicable Item 6. Exhibits and Reports on Form 8-K Exhibits Financial Data Schedule (for SEC only) (a) Reports on Form 8-K None (b) 27.1 8 SIGNATURE Pursuant to the requirements 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. Date: June 14, 2000 By: /s/Neal S. Nackman ------------------------- Chief Financial Officer 9 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 27.1 Financial Data Schedule EX-27.1 2 0002.txt FINANCIAL DATA SCHEDULE
5 3-MOS JAN-31-2001 FEB-01-2000 APR-30-2000 255,133 0 68,020,570 (427,965) 39,738,947 111,500,737 14,067,832 (4,733,046) 247,380,896 13,829,927 99,029,667 0 0 67,393 79,600,132 247,380,896 78,232,412 84,324,968 58,871,648 58,871,648 15,809,640 0 3,866,382 5,777,298 2,187,535 3,589,763 0 0 0 3,589,763 0.53 0.53
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