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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 March 31, 2003
/ / 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: 0-25918
EVERLAST WORLDWIDE INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3672716
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1350 Broadway
Suite 2300
New York, NY 10018
(Address of Principal Executive Offices)
(212) 239-0990
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former
fiscal year if changed since last report)
Indicate by check 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 past 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 / /
The number of common equity shares outstanding as of May 10, 2003
was 3,008,236 shares of Common Stock, $.002 par value, and 100,000 shares of
Class A Common Stock, $.01 par value.
-1-
INDEX
PART I. FINANCIAL INFORMATION Page
----
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Item 3. Quantitative and Qualitative Disclosure About Market Risk 12
Item 4. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Current Reports on Form 8-K 12
SIGNATURES 13
-2-
EVERLAST WORLDWIDE INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2 0 0 3 2 0 0 2
---------- -------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,820,415 $ 2,530,452
Marketable equity securities 307,317 308,841
Accounts receivable - net 4,542,454 7,697,847
Inventories 13,008,257 11,460,160
Prepaid expenses and other current assets 763,189 819,053
------------ ------------
Total current assets 21,441,632 22,816,353
Restricted cash 1,006,826 1,003,701
Property and equipment, net 6,389,547 6,487,830
Goodwill 6,718,492 6,718,492
Trademarks, net 25,173,525 25,401,693
Other assets 1,453,523 1,418,683
------------ ------------
$ 62,183,545 $ 63,846,752
============ ============
LIABILITIES, REDEEMABLE PARTICIPATING PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to factor $ 3,909,594 $ 3,351,997
Current maturities of long term debt 365,970 363,028
Accounts payable 3,542,180 3,391,334
Income taxes payable 155,056 553,850
Accrued expenses and other current liabilities 312,111 794,543
Preferred stock dividend payable 17,100 1,450,808
------------ ------------
Total current liabilities 8,302,011 9,905,560
License deposits payable 569,132 563,526
Long term debt, net of current maturities 3,147,705 3,227,324
------------ ------------
Total liabilities 12,018,848 13,696,410
------------ ------------
Series A redeemable participating preferred stock 35,000,000 35,000,000
------------ ------------
Stockholders' equity:
Common stock, par value $.002; 19,000,000 shares
authorized; 3,182,236 issued, 3,008,236 outstanding 6,364 6,364
Class A common stock, par value $.01; 100,000 shares
authorized; 100,000 shares issued and outstanding 1,000 1,000
Paid-in capital 11,662,825 11,662,825
Retained earnings 4,221,057 4,205,179
Accumulated other comprehensive income 670 2,193
------------ ------------
15,891,916 15,877,561
Less treasury stock, at cost (174,000 common shares) (727,219) (727,219)
------------ ------------
15,164,697 15,150,342
------------ ------------
$ 62,183,545 $ 63,846,752
============ ============
See accompanying notes to financial statements
- 3 -
EVERLAST WORLDWIDE INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended
March 31,
--------------------------------
2 0 0 3 2 0 0 2
------------- -------------
(Unaudited) (Unaudited)
Net sales $ 12,355,283 $ 15,734,596
Cost of goods sold 8,920,042 10,637,256
------------ ------------
Gross profit 3,435,241 5,097,340
Net license revenues 1,648,838 1,384,667
------------ ------------
5,084,079 6,482,007
------------ ------------
Operating expenses:
Selling and shipping 3,036,444 2,802,460
General and administrative 1,386,864 1,510,655
Amortization 228,168 233,878
------------ ------------
4,651,476 4,546,993
------------ ------------
Income from operations 432,603 1,935,014
------------ ------------
Other (income) expense:
Interest expense 236,912 151,102
Investment income (12,647) (6,611)
------------ ------------
224,265 144,491
------------ ------------
Income before provision for income taxes 208,338 1,790,523
Provision for income taxes 175,360 846,540
------------ ------------
Net income 32,978 943,983
Redeemable preferred stock dividend 17,100 559,395
------------ ------------
Net income available to common shareholders $ 15,878 $ 384,588
============ ============
Basic earnings per share $ .01 $ .12
============ ============
Diluted earnings per share $ .00 $ .09
============ ============
- 4 -
See accompanying notes to financial statement
EVERLAST WORLDWIDE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
March 31,
-----------------------------
2 0 0 3 2 0 0 2
----------- ------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 32,978 $ 943,983
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 142,587 130,657
Amortization 228,168 233,878
Interest income on restricted cash (3,125) --
Changes in assets (increase) decrease:
Accounts receivable 3,155,393 550,959
Inventory (1,548,097) 868,388
Prepaid expenses and other current assets 55,864 (237,216)
Other assets (34,839) (24,772)
Changes in liabilities increase (decrease):
Accounts payable, accrued expenses
and other current liabilities (730,380) (861,286)
License deposits payable 5,606 103,469
----------- -----------
Net cash provided by operating activities 1,304,155 1,708,060
----------- -----------
Cash flows used by investing activities:
Acquisition of property and equipment (44,304) (66,555)
----------- -----------
Net cash used by investing activities: (44,304) (66,555)
----------- -----------
Cash flows from financing activities:
Payment of preferred stock dividend (1,450,808) (1,702,164)
Due to factor 557,597 (1,150,285)
Repayment of long term debt (76,677) (19,329)
----------- -----------
Net cash used by financing activities: (969,888) (2,871,778)
----------- -----------
Net increase (decrease) in cash and cash equivalents 289,963 (1,230,273)
Cash and cash equivalents, beginning of period 2,530,452 3,100,026
----------- -----------
Cash and cash equivalents, end of period $ 2,820,415 $ 1,869,753
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 236,912 $ 148,070
Income taxes 500,348 654,860
- 5 -
See accompanying notes to financial statements.
EVERLAST WORLDWIDE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003 AND 2002
1. The Company and basis of presentation:
The consolidated financial statements presented herein as of March 31,
2003 and for the three months ended March 31, 2003 and 2002 are
unaudited and, in the opinion of management, include all adjustments
(consisting only of normal and recurring adjustments) necessary for a
fair presentation of financial position and results of operations. Such
financial statements do not include all of the information and footnote
disclosures normally included in audited financial statements prepared
in accordance with generally accepted accounting principles. The
accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q. The results
of operations for the three month period ended March 31, 2003 are not
necessarily indicative of the results that may be expected for any other
interim period or the full year ending December 31, 2003. The Company
has reviewed the status of its legal contingencies and believes there
are no material changes from that disclosed in form 10-K for the year
ended December 31, 2002.
2. Earnings per share:
Basic earnings per share amounts are computed based on the weighted
average number of shares actually outstanding during the period. Diluted
earnings per share amounts are based on an increased number of shares
that would be outstanding assuming the exercise of dilutive stock
options and contingent consideration pursuant to the merger agreement
dated October 24, 2000. For purposes of the diluted computation, the
number of shares that would be issued from the exercise of stock options
has been reduced by the number of shares which could have been purchased
from the proceeds at the average market price of the Company's stock on
March 31, 2003 and 2002.
The number of shares used in the computation of basic earnings per share
was 3,108,236 and 3,098,936 at March 31, 2003 and 2002, respectively.
The number of shares used in the computation of diluted earnings per
share was 4,539,626 and 4,340,348 at March 31, 2003 and 2002,
respectively.
3. Inventories:
Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market.
March 31, 2003 December 31, 2002
-------------- -----------------
Raw materials $ 1,920,685 $ 2,067,637
Work-in-process 2,499,498 2,181,506
Finished goods 8,588,074 7,211,017
------------ ------------
$ 13,008,257 $ 11,460,160
============ ============
4. Reclassification:
Certain items on the 2002 financial statements have been reclassified to
conform to 2003 presentations.
5. Redeemable participating preferred stock dividend:
The percentage of net income, as defined in the Company's October 24,
2000 Merger Agreement, to be paid to holders of Series A Redeemable
Participating Preferred Stock ("the Preferred Stock") for the annual
dividend is as follows:
-6-
Twelve months ending December 31, 2003 51.9%
2004 44.4%
2005 37.0%
2006 29.6%
2007 22.2%
2008 14.8%
2009 7.4%
The mandatory redemption requirements are as follows:
Twelve months ending December 31, 2003 $5,000,000
2004 5,000,000
2005 5,000,000
2006 5,000,000
2007 5,000,000
2008 5,000,000
2009 5,000,000
6. Accounting for stock based compensation:
The Company applies APB Opinion 25 to account for employee stock
option plans. Accordingly, no compensation cost has been recognized
in 2003 and 2002. Had compensation cost been determined on the basis
of FASB Statement 123, net income and earnings per share would have
been reduced as follows:
2003 2002
---- ----
Net income as reported $32,978 $943,983
Deduct: total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects 9,082 8,347
------- --------
Pro forma net income $23,896 $935,636
======= ========
Earnings per share:
Basic - as reported $.01 $.12
==== ====
Basic - pro forma $.00 $.12
==== ====
Diluted - as reported $.00 $.09
==== ====
Diluted - pro forma $.00 $.09
==== ====
7. Recent pronouncements:
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements Nos. 4, 44 and 64, Amendment of FASB Statement No. 13 and
Technical Corrections. SFAS No. 145 requires gains and losses on
extinguishment of debt to be classified as a component of income
from continuing operations rather than as an extraordinary item, and
to reclassify such items for all periods presented.
In June 2002, the FASB approved SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS No. 146 is
effective after December 31, 2002, and addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies EITF issue No. 94-3, Liability Recognition
-7-
for Certain Employee Termination Benefits and Other Costs to Exit an
Activity. The primary difference between SFAS No. 146 and EITF 94-3
concerns the timing of liability recognition.
As of December 2002, the Company adopted SFAS No. 148, Accounting
for Stock-Based Compensation-Transaction and Disclosure, an
Amendment of FASB No. 123. SFAS No. 148 revises the methods
permitted by SFAS No. 123 of measuring compensation expense for
stock-based employee compensation plans. The Company uses the
intrinsic value method prescribed in Accounting Principles Board
Option No. 25, as permitted under SFAS No. 123. Therefore, this
change did not have a material effect on the financial statements.
SFAS No. 148 requires the Company to disclose pro forma information
related to stock-based compensation, in accordance with SFAS No.
123, on a quarterly basis in addition to the current annual basis
disclosure.
In November 2002, the FASB issued interpretation No. 45 (FIN 45),
which expands previously issued accounting guidance and disclosure
requirements for certain guarantees. FIN 45 requires the Company to
recognize an initial liability for the fair value of an obligation
assumed by issuing a guarantee. The provision for initial
recognition and measurement of the liability will be applied on a
prospective basis to guarantees issued or modified after December
31, 2002.
In January 2003, the FASB issued FIN 46, "Consolidation of Variable
Interest Entitles," which addresses consolidation by business
enterprises of variable interest entities that either; (1) do not
have sufficient equity investment at risk to permit the entity to
finance its activities without additional subordinated financial
support, or (2) the equity investors lack an essential
characteristic of a controlling financial interest. FIN 46 requires
disclosure of Variable Interest Entities (VIEs) in financial
statements issued after January 31, 2003, if it is reasonably
possible that as of the transition date: (1) the company will be the
primary beneficiary of an existing VIE that will require
consolidation or, (2) the company will hold a significant variable
interest in, or have significant involvement with, an existing VIE.
Any VIEs created after January 31, 2003, are immediately subject to
the consolidation guidance in FIN 46.
The Company will adopt these statements as of the respective
effective dates, and does not expect them to have a material impact
on its consolidated financial position or results of operation.
-8-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIS REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS. FACTORS
THAT MAY CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE COMPANY'S
EXPANSION INTO NEW MARKETS, COMPETITION, TECHNOLOGICAL ADVANCES AND AVAILABILITY
OF MANAGERIAL PERSONNEL.
GENERAL
Everlast Worldwide Inc. is a Delaware corporation organized on July
6, 1992. The Company is engaged in the design, manufacture, marketing and sale
of women's activewear and sportswear; and the design, manufacture, marketing and
sale of men's activewear, sportswear and outerwear (the "Apparel Products") each
featuring the widely-recognized Everlast(R) trademark. As a result of the merger
(the "Merger") of Everlast Holding Corp., the parent company of Everlast World's
Boxing Headquarters Corp. ("Everlast Corp."), into Active Apparel New Corp., a
wholly-owned subsidiary of the Company, the Company became a manufacturer of
sporting goods related to the sport of boxing such as boxing gloves, heavy bags,
speed bags, boxing trunks, and miscellaneous gym equipment that are sold through
sporting goods stores, mass merchandisers, catalog operations, gymnasiums, and
martial arts studios. The Company's wholly-owned subsidiary, Everlast Corp.,
licenses the Everlast(R) trademark to numerous companies that source and
manufacture products such as men's, women's and children's apparel, footwear,
cardiovascular equipment, back to school stationery, eyewear, sports bags, hats
and other accessories.
The financial statements of the Company and the notes thereto
contain detailed information that should be referred to in conjunction with this
discussion.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS
The Company's management applies the following critical accounting
policies in the preparation of the Company's consolidated financial statements:
o REVENUE RECOGNITION POLICY. Revenues from royalty and finders
agreements are recognized when earned by applying contractual
royalty rates to quarterly point of sale data, among other criteria,
received from the Company's licensees. The Company's royalty
recognition policy provides for recognition of royalties in the
quarter earned, although a large portion of such royalty payments
are actually received during the month following the end of a
quarter. Revenues are not recognized unless collectibility is
reasonably assured.
o DEFERRED TAXES. Deferred taxes are determined based on the
differences between the financial statement and tax bases of assets
and liabilities, using enacted tax rates in effect for the year in
which the differences are expected to reverse. Valuation allowances
are established when necessary to reduce deferred tax assets to the
amounts expected to be realized. In assessing the need for a
valuation allowance management considers estimates of future taxable
income and ongoing prudent and feasible tax planning strategies. In
accordance with APB Opinion 23, the Company does not accrue income
taxes on the undistributed earnings of a subsidiary which is a
"DISC" since the repayment of the earnings of the DISC is not
expected in the foreseeable future. If circumstances change and it
becomes apparent that some or all of the undistributed earnings of
the DISC will be remitted in the foreseeable future, then taxes will
be accrued.
-9-
o VALUATION OF GOODWILL, LONG-LIVED ASSETS AND INTANGIBLE ASSETS. The
Company periodically evaluates goodwill, long-lived assets and
intangible assets for potential impairment indicators. Judgements
regarding the existence of impairment indicators are based on
estimated future cash flows, market conditions, and legal factors.
Future events could cause the Company to conclude that impairment
indicators exist and that the net book value of goodwill, long-lived
assets and intangible assets is impaired. Any resulting impairment
loss could have a material adverse impact on the Company's financial
condition and results of operations.
CONTINGENCIES AND LITIGATION. Management evaluates contingent
liabilities including threatened or pending litigation in accordance
with SFAS No. 5, "Accounting for Contingencies" and records accruals
when the outcome of these matters is deemed probable and the
liability could be reasonably estimated. Management makes these
assessments based on the facts and circumstances and in some
instances based in part on the advice of outside legal counsel.
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 2003 COMPARED TO QUARTER ENDED MARCH 31, 2002
Net sales decreased to $12,355,283 for the three months ended March
31, 2003 from $15,734,596 for the three months ended March 31, 2002, a decrease
of $3,379,313 or 21.5%. This decrease in sales was principally attributable to
lower sales order volume from retailers, in response to general economic
conditions.
Gross profit decreased to $3,435,241 for the three months ended
March 31, 2003 from $5,097,340 for the three months ended March 31, 2002, a
decrease of $1,662,099 or 32.6%. Gross profit decreased as a percentage of net
sales to 27.8% from 32.4%. This decrease as a percentage of net sales was
primarily due to a change in the Company's sales mix and the decrease in net
sales as it relates to the fixed portion of manufacturing expenses compared to
the three months ended March 31, 2002.
Net license revenues were $1,648,838 for the three months ended
March 31, 2003 as compared to $1,384,667 for the three months ended March 31,
2002, an increase of $264,171 or 19.1%. The increase in license revenues was
primarily due to new license agreements and increased revenues on existing
licenses.
Selling and shipping expenses increased to $3,036,444 for the three
months ended March 31, 2003 from $2,802,460 for the three months ended March 31,
2002, an increase of $233,984 or 8.3%. Selling and shipping expenses as a
percentage of net sales increased to 24.6% from 17.8%. This increase as a
percentage of net sales was primarily attributable to the decrease in sales as
it relates to the fixed portion of selling and shipping expenses.
General and administrative expenses decreased to $1,386,864 for the
three months ended March 31, 2003 from $1,510,655 for the three months ended
March 31, 2002, a decrease of $123,791, or 8.2%. General and administrative
expenses as a percentage of net sales increased to 11.2% from 9.6%. This
increase as a percentage of net sales was primarily attributable to the decrease
in sales as it relates to the fixed nature of general and administrative
expenses.
Amortization expense decreased to $228,168 for the three months
ended March 31, 2003 from $233,878 for the three months ended March 31, 2002, a
decrease of $5,710, or 2.4%.
Interest expense increased to $236,912 for the three months ended
March 31, 2003 from $151,102 for the three months ended March 31, 2002, an
increase of $85,810 or 56.8%. The increase is attributable to the increase in
the Company's net borrowings from its factor as a result of the annual
redemption requirements of the Preferred Stock.
-10-
Operating income decreased to $432,603 for the three months ended
March 31, 2003 from $1,935,014 for the three months ended March 31, 2002, a
decrease of $1,502,411, or 77.6% for the reasons stated in the preceding
paragraphs. Operating income as a percentage of net sales was 3.5% for the three
months ended March 31, 2003 as compared to 12.3% for the three months ended
March 31, 2002. This decrease was primarily due to decreased net sales, the
fixed nature of certain operating expenses, and lower gross profit percentage on
net sales.
The Company earned $12,647 of investment income for the three months
ended March 31, 2003 as compared to $6,611 for the three months ended March 31,
2002, an increase of $6,036, or 91.3%. This increase is attributable to an
increase in cash equivalents and restricted cash.
The Company incurred a tax provision of $175,360 for the three
months ended March 31, 2003 as compared to $846,540 for the three months ended
March 31, 2002, a decrease of $671,180.
The Company had net income of $32,978 for the three months ended
March 31, 2003 as compared to $943,983 for the three months ended March 31,
2002, a decrease of $911,005, or 96.5% for the reasons stated in the preceding
paragraphs.
As a result of the Merger, the Company is required to pay a dividend
equal to the product of 2/3 of the sum of the net after tax profits, as defined,
reduced in proportion to the redeemed Preferred Stock. The dividend payable for
the three months ended March 31, 2003 is $17,100 as compared to $559,395 for the
three months ended March 31, 2002, a decrease of $542,295, or 96.9%. The 2003
dividend will be equal to 51.9% of net after tax profits, as defined.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the three months ended
March 31, 2003 was $1,304,155 compared to $1,708,060 for the three months ended
March 31, 2002. This decrease was primarily attributable to a decrease in
accounts receivable that was offset by a decrease in net income and an increase
in inventory. Net cash used for investing activities for the three months ended
March 31, 2003 was $44,304 compared to $66,555 for the three months ended March
31, 2002.
Net cash used for financing activities for the three months ended
March 31, 2003 was $969,888 compared to $2,871,778 for the three months ended
March 31, 2002, a decrease of $1,901,890. This decrease was primarily
attributable to the lower payment of the dividend on the Preferred Stock and
increased borrowings from the factor.
During the three months ended March 31, 2003, the Company's primary
need for funds was to finance working capital and the payment of the Preferred
Stock dividend. The Company has relied primarily upon cash and cash equivalents
on hand, cash flow from operations and advances drawn against factored
receivables and accounts receivable to finance its operations. At March 31,
2003, cash and cash equivalents were $2,820,415 compared to $2,530,452 at
December 31, 2002, an increase of $289,963; working capital was $13,139,621
compared to $12,910,793 at December 31, 2002 an increase of $228,828. These
increases were primarily attributable to income generated before the non-cash
charges for depreciation and amortization.
The balance due to the factor represents the excess of advances made
by the factor over the receivables assigned to the factor. At March 31, 2003,
due to factor was $3,909,594 as compared to 3,351,997 at December 31, 2002. This
increase is the result of increased borrowings from the factor. The Company's
inventories increased to $13,008,257 at March 31, 2003 as compared to
$11,460,160 at December 31, 2002 due to an increase in finished goods inventory
in expectation of increased demand.
-11-
On April 16, 2002, the Company redeemed its industrial revenue bonds
in the amount of $3,350,000. To redeem the industrial revenue bonds the Company
borrowed $3,350,000 from the factor, secured by the Apparel Products inventory.
On October 7, 2002, the Company obtained a loan from GMAC Business Credit, LLC
in the amount of $3,350,000 secured by a first mortgage lien on the Moberly
facility and a standby letter of credit in the amount of $1,000,000. The
interest rate on the loan is a variable rate of LIBOR plus 4% (currently at
5.3%). To secure the letter of credit the Company deposited $1,000,000 of
restricted cash with the factor.
Management anticipates it will maintain sufficient cash, cash
equivalent balances, short term investments and a net surplus position with the
factor, although no assurance to that effect can be given. Positive cash flow,
if it occurs, will create working capital to fund the Company's anticipated
growth over the next 12 months, the mandatory redemption requirements of the
Preferred Stock due on December 31, 2003 and the Preferred Stock dividend due on
March 31, 2004. If a positive cash flow does not occur, there will be a decrease
in cash, cash equivalent balances and short term investments and/or borrowings
with the factor and/or other lenders will increase.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no changes in financial market risk as originally
discussed in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002.
ITEM 4. CONTROLS AND PROCEDURES
Based on their evaluation, as of a date within 90 days of the filing
of this Form 10-Q, the Company's Chief Executive Officer and Chief Financial
Officer have concluded the Company's disclosure controls and procedures (as
defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934)
are effective. There have been no significant changes in internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
PART II. OTHER INFORMATION
Item 6. Exhibits and Current Reports on Form 8-K
(a) Exhibits
99.1 Statement under oath of Chief Executive Officer dated
May 15, 2003 filed herewith
99.2 Statement under oath of Chief Financial Officer dated
May 15, 2003 filed herewith
(b) Current Reports on Form 8-K
None
-12-
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.
EVERLAST WORLDWIDE INC.
Date: May 15, 2003 By: /s/ George Q Horowitz
------------- --------------------------
Name: George Q Horowitz
Title: Chief Executive Officer,
President, and Treasurer
By: /s/ Matthew F. Mark
--------------------------
Name: Matthew F. Mark
Title: Chief Financial Officer,
Chief Accounting Officer,
And Vice President Finance
-13-
Certification of Principal Executive Officer
Section 302 Certification
I, George Q Horowitz, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Everlast
Worldwide Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during
the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the
"Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls;
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003 /s/ George Q Horowitz
----------------------------------
George Q Horowitz
Chief Executive Officer
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Certification of Principal Financial Officer
Section 302 Certification
I, Matthew F. Mark, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Everlast
Worldwide Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during
the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the
"Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls;
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003 /s/ Matthew F. Mark
------------------------
Matthew F. Mark
Chief Financial Officer
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