-----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, LyLuOB4AcFfH7l7Hfrjk0MewCmhT/uTBxFwEVDQwXsv9FnalOd6yOGdDsNfaSfSL ikqafmCxp3lq/RWosexAWg== 0000950123-96-005456.txt : 19961009 0000950123-96-005456.hdr.sgml : 19961009 ACCESSION NUMBER: 0000950123-96-005456 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961008 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAUTICA ENTERPRISES INC CENTRAL INDEX KEY: 0000093736 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 952431048 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06708 FILM NUMBER: 96640528 BUSINESS ADDRESS: STREET 1: 40 WEST 57TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125415990 MAIL ADDRESS: STREET 1: 40 W 57TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: STATE O MAINE INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC COAST KNITTING MILLS INC DATE OF NAME CHANGE: 19751124 10-Q 1 NAUTICA ENTERPRISES, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) (x) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended August 31, 1996 or ( ) Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from_____to_____ Commission file number 0-6708 Nautica Enterprises, Inc. - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware 95-2431048 - ------------------------------------------------------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 40 West 57th Street, New York, N.Y. 10019 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code (212)541-5990 - -------------------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 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 for 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 --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court Yes No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS The number of shares of Common Stock outstanding as of October 2, 1996 was 40,032,715. 2 NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES AUGUST 31, 1996 (Unaudited) INDEX Page No. Part I - Financial Information: Item 1. Financial Statements (Unaudited): Condensed Consolidated Balance Sheets As at August 31, 1996 and February 29, 1996................. 2 Condensed Consolidated Statements of Earnings For the Six and Three Month Periods Ended August 31, 1996 and 1995.................................... 3 Condensed Consolidated Statements of Cash Flows For the Six Month Periods Ended August 31, 1996 and 1995.................................... 4 Notes to Condensed Consolidated Financial Statements.................................................. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................... 6 Part II - Other Information............................................ 9 3 NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
August 31, February 29, ASSETS 1996 1996 ------------------ --------------- Current assets: Cash and cash equivalents $ 55,096,454 $ 61,047,522 Accounts receivable - net 67,790,733 45,704,169 Inventories 67,064,154 54,235,489 Prepaid expenses and other current assets 4,426,931 5,290,473 Deferred tax benefit 3,636,137 3,636,137 ---------------- ------------- Total current assets 198,014,409 169,913,790 Property, plant and equipment, net of accumulated depreciation and amortization 37,406,673 30,712,102 Other assets 9,516,597 8,713,957 ---------------- ------------- $ 244,937,679 $ 209,339,849 ================ ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 50,000 $ 50,000 Accounts payable - trade 25,350,700 15,440,362 Accrued expenses and other current liabilities 23,707,371 19,140,265 Income taxes payable 5,161,516 1,370,934 ---------------- ------------- Total current liabilities 54,269,587 36,001,561 Long-term debt -net 150,000 200,000 Stockholders' equity: Preferred stock - par value $.01, authorized, 2,000,000 shares; no shares issued Common stock - par value $.10, authorized, 100,000,000 shares; issued 41,601,085 shares at August 31, 1996 and 41,354,806 shares at February 29, 1996 4,160,108 4,135,480 Additional paid-in capital 53,445,850 52,836,972 Retained earnings 133,462,694 116,716,396 ------------------ ----------------- 191,068,652 173,688,848 Less: Common stock in treasury - at cost; 1,570,070 shares at August 31, 1996 and February 29, 1996 550,560 550,560 ------------------ ----------------- Total stockholders' equity 190,518,092 173,138,288 ------------------ ----------------- $ 244,937,679 $ 209,339,849 ================== =================
The accompanying notes are an integral part of these statements. -2- 4 NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Six Months Ended Three Months Ended August 31, August 31, ------------------------------------ ------------------------------------ 1996 1995 1996 1995 ---------------- ---------------- ----------------- --------------- Net Sales $ 179,480,714 $ 142,002,588 $ 103,342,954 $ 80,554,130 Cost of goods sold 97,783,152 79,851,107 56,263,198 45,115,750 ---------------- ---------------- ----------------- --------------- Gross profit 81,697,562 62,151,481 47,079,756 35,438,380 Selling, general and administrative expenses 56,583,019 44,702,968 29,540,472 23,185,871 Net royalty (income) (1,582,401) (787,261) (810,081) (374,811) ---------------- ---------------- ----------------- --------------- Operating profit 26,696,944 18,235,774 18,349,365 12,627,320 Interest income, net 1,213,554 1,270,332 509,124 558,566 ---------------- ---------------- ----------------- --------------- Earnings before provision for income taxes 27,910,498 19,506,106 18,858,489 13,185,886 Provision for income taxes 11,164,200 7,802,448 7,543,400 5,275,283 ---------------- ---------------- ----------------- --------------- Net earnings $ 16,746,298 $ 11,703,658 $ 11,315,089 $ 7,910,603 ================ ================ ================= =============== Earnings per share of common stock $ 0.39 $ 0.28 $ 0.26 $ 0.19 ================ ================ ================= =============== Weighted average number of shares of common stock outstanding 43,026,414 42,409,254 43,018,171 42,398,670 ================ ================ ================= =============== Cash dividends per common share none none none none ================ ================ ================= ===============
The accompanying notes are an integral part of these statements. -3- 5 Nautica ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended August 31, -------------------------------------------- 1996 1995 ----------------- ----------------- Cash flows from operating activities: Net earnings $ 16,746,298 $ 11,703,658 ----------------- ----------------- Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 3,124,545 2,244,675 Increase (decrease) in cash flows as a result of changes in asset and liability account balances: Accounts receivable, net (22,086,564) (16,237,666) Inventories (12,828,665) (17,834,503) Prepaid expenses and other current assets 863,542 1,598,647 Other assets (1,062,068) (173,896) Accounts payable 9,910,338 3,733,754 Accrued expenses and other current liabilities 4,567,106 2,901,430 Income taxes payable 3,790,582 2,224,034 ----------------- ----------------- Total adjustments (13,721,184) (21,543,525) ----------------- ----------------- Net cash provided by (used in) operating activities 3,025,114 (9,839,867) ----------------- ----------------- Cash flows from investing activities: Purchase of property, plant and equipment (9,559,688) (5,765,478) ----------------- ----------------- Net Cash used in investing activities (9,559,688) (5,765,478) ----------------- ----------------- Cash flows from financing activities: Principal payments on long-term debt (50,000) (50,000) Proceeds from issuance of common stock 633,506 531,412 ----------------- ----------------- Net cash provided by financing activities 583,506 481,412 ----------------- ----------------- Decrease in cash and cash equivalents (5,951,068) (15,123,933) Cash and cash equivalents at beginning of period 61,047,522 49,153,556 ================= ================= Cash and cash equivalents at end of period $ 55,096,454 $ 34,029,623 ================= ================= Supplemental Information: Cash payments for the periods ended: Interest expense $ 4,489 $ 5,400 ================= ================= Income taxes $ 7,374,513 $ 6,425,853 ================= =================
The accompanying notes are an integral part of these statements. -4- 6 NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 1996 (Unaudited) NOTE 1- The accompanying financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These statements include all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation of financial position and results of operations. The financial statements included herein should be read in conjunction with the financial statements and notes thereto included in the latest annual report on Form 10-K. NOTE 2- The results of operations for the six and three month periods ended August 31, 1996 and 1995 are not necessarily indicative of the results to be expected for the full year. NOTE 3- The Company utilized the last-in, first-out "Lifo" method for inventories as at August 31, 1996 and February 29, 1996 and for the six and three month periods ended August 31, 1996 and 1995. The "Lifo" inventory for the six and three month periods ended August 31, 1996 and 1995 are based upon end of year estimates. Inventories at August 31, 1996 and February 29, 1996 consist primarily of finished goods. NOTE 4- On April 29, 1996 the Board of Directors declared a two-for-one stock split of the Company's common stock effected in the form of a stock dividend paid on May 28, 1996 to the stockholders of record on May 13, 1996. All share and per share data have been adjusted to reflect the stock split. - 5 - 7 NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AUGUST 31, 1996 (Unaudited) RESULTS OF OPERATIONS For the Six Months Ended August 31, 1996: Consolidated net sales increased 26.4% to $179.5 million in the six months ended August 31, 1996 as compared to $142.0 million in the comparable prior year period. The increase is due primarily to increased sales of Nautica products through its wholesale and retail operations. Nautica's wholesale sales increased primarily due to the expansion of Nautica's in-store shop program, sales to new retail customers and to additional locations of existing customers. The increase in Nautica's wholesale sales is primarily due to increased unit volume rather than price increases. The increase in retail sales is attributable to the opening of new stores and to an increase in comparable store sales. Consolidated gross profit increased in the six months ended August 31, 1996 to 45.5% of net sales, as compared to 43.8% in the comparable prior year period. The net increase resulted primarily from a shift to the higher margin Nautica wholesale products and to an increase in retail operations. Selling, general and administrative expenses as a percentage of net sales remained constant at 31.5% for the six months ended August 31, 1996 as compared to the prior year period. Net royalty income increased by $795,000 in the six months ended August 31, 1996 as compared to the comparable prior year period. The increase is a result of increased royalty revenue from new and existing licenses. Higher cash balances offset by a lower rate of return on investments resulted in comparable interest income during the period. The provision for income taxes remained constant at 40.0% of earnings before income taxes for the six month period ended August 31, 1996 as compared to the comparable prior year period. Net earnings increased 43.1% to $16.7 million in the six months ended August 31, 1996 from $11.7 million in the comparable prior year period as a result of the factors discussed above. -6- 8 For the Three Months Ended August 31, 1996: Consolidated net sales increased 28.3% to $103.3 million in the three months ended August 31, 1996 as compared to $80.6 million in the comparable prior year period. The increase is due primarily to increased sales of Nautica products through its wholesale and retail operations. Nautica's wholesale sales increased primarily due to the expansion of Nautica's in-store shop program, sales to new retail customers and to additional locations of existing customers. The increase in Nautica's wholesale sales is primarily due to increased unit volume rather than price increases. The increase in retail sales is attributable to the opening of new stores and to an increase in comparable store sales. Consolidated gross profit increased in the three months ended August 31, 1996 to 45.6% of net sales, as compared to 44.0% in the comparable prior year period. The net increase resulted primarily from a shift to the higher margin Nautica wholesale products and to an increase in retail operations. Selling, general and administrative expenses as a percentage of net sales decreased to 28.6% in the three months ended August 31, 1996 as compared to 28.8% in the comparable prior year period. The decrease as a percentage of net sales resulted from economies of scale achieved with sales growth. Net royalty income increased by $435,000 in the three months ended August 31, 1996 as compared to the comparable prior year period. The increase is a result of increased royalty revenue from new and existing licenses. Higher cash balances offset by a lower rate of return on investments resulted in comparable interest income during the period. The provision for income taxes remained constant at 40.0% of earnings before income taxes for the three month period ended August 31, 1996 as compared to the comparable prior year period. Net earnings increased 43.0% to $11.3 million in the three months ended August 31, 1996 from $7.9 million in the comparable prior year period as a result of the factors discussed above. - 7 - 9 LIQUIDITY AND CAPITAL RESOURCES During the six months ended August 31, 1996, the Company generated cash from operating activities of approximately $3.0 million. Increases in accounts receivable and inventory of $22.1 and $12.8 million, respectively, resulting from increased sales levels, were financed by cash generated from net earnings, increases in accounts payable, accrued expenses and income taxes payable. During the six months ended August 31, 1995, the Company used cash in its operating activities of approximately $9.8 million. The cash used was principally attributable to increases in accounts receivable and inventory of $16.2 and $17.8 million, respectively, which were offset by net earnings of $11.7 million plus increases in accounts payable, accrued expenses and income taxes payable aggregating $8.9 million. The increase in inventory is primarily the result of stocking more basic inventory to fill EDI orders resulting from increased demand for the anchor group of Nautica products and to fill increased orders for shipments to be made in the future. Accounts receivable increases were primarily due to increased sales and normal seasonality. During the six months ended August 31, 1996, the Company's principal investing activities related to the expansion of the Company's warehouse and distribution facilities and the continued expansion of Nautica in-store shops. Expenditures for the Company's warehouse and distribution facilities are substantially completed. The Company expects to continue to incur capital expenditures to expand the in-store shop programs. At August 31, 1996 there were no other material commitments for capital expenditures. The Company has $80.0 million in lines of credit with two commercial banks available for short-term borrowings and letters of credit. These lines are collateralized by wholesale inventory and accounts receivable. At August 31, 1996 and February 29, 1996, respectively, letters of credit outstanding under the lines were $51.2 million and $32.5 million and there were no short-term borrowings outstanding. Historically, the Company has experienced its lowest level of sale's in the first quarter and its highest level in the third quarter. This pattern has resulted primarily from the timing of shipments to retail customers for spring and fall seasons. In the future, the timing of seasonal shipments may vary by quarter. INFLATION AND CURRENCY FLUCTUATIONS The Company believes that inflation and the effect of fluctuations of the dollar against foreign currencies has not had a material effect on the cost of imports or the Company's results of operations. - 8 - 10 PART II OTHER INFORMATION Items 1 through 9. - All items are inapplicable except: Item 4. Submission of Matters to a Vote of Security-Holders (a) The Annual Meeting of Stockholders of Nautica Enterprises, Inc. was held on July 1, 1996. (b) The directors named in the Proxy Statement constituting the entire Board of Directors were elected to one year terms expiring in 1997, as follows:
FOR WITHHELD Harvey Sanders 34,380,672 205,590 David Chu 34,380,750 205,512 George Greenberg 34,380,472 205,790 Robert B. Bank 34,371,776 214,486 Israel Rosenzweig 34,380,750 205,512 Charles Scherer 34,380,414 205,848 Ronald G. Weiner 34,380,414 205,848
(c) At the Annual Meeting, the stockholders voted upon a proposal to amend the Company's Certificate of Incorporation to increase the authorized shares of Common Stock from 50,000,000 to 100,000,000, as follows: For the proposal 32,110,006 Against the proposal 2,351,288 Withheld 79,882 Broker non-vote 45,086
(d) At the Annual Meeting, the stockholders voted upon a proposal to adopt the Nautica Enterprises, Inc. 1996 Stock Incentive Plan, as follows: For the proposal 16,305,236 Against the proposal 15,097,378 Withheld 100,096 Broker non-vote 3,083,552
The Notice of Annual Meeting of Stockholders and Proxy Statement for Nautica Enterprises, Inc. dated June 3, 1996 was filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Act and is incorporated herein by reference. Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 27. Financial Data Schedule (b) Reports on Form 8-K. None - 9 - 11 SIGNATURES 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. NAUTICA ENTERPRISES, INC. Date: October 7, 1996 By: /s/ Harvey Sanders ---------------------------------- Harvey Sanders Chairman of the Board and President Date: October 7, 1996 By: /s/ Neal S. Nackman --------------------------------- Neal S. Nackman V.P. Finance and Chief Accounting Officer - 10 - 12 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 27 FINANCIAL DATA SCHEDULE EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF THE COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS FEB-28-1997 MAR-1-1996 AUG-31-1996 55,096,454 0 69,109,376 (1,318,643) 67,064,154 198,014,409 51,282,543 (13,875,870) 244,937,679 54,269,587 150,000 0 0 4,160,108 186,357,984 244,937,679 179,480,714 181,063,115 97,783,152 97,783,152 0 0 0 27,910,498 11,164,200 16,746,298 0 0 0 16,746,298 0.39 0.39
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