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EXCEL - IDEA: XBRL DOCUMENT - MOVADO GROUP INCFinancial_Report.xls

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2015

¨

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: 1-16497

 

MOVADO GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

New York

 

13-2595932

(State or Other Jurisdiction

of Incorporation or Organization)

 

(IRS Employer

Identification No.)

 

 

 

650 From Road, Ste. 375

Paramus, New Jersey

 

07652-3556

(Address of Principal Executive Offices)

 

(Zip Code)

(201) 267-8000

(Registrant’s telephone number, including area code)

 

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 that past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,’’ “accelerated filer’’ and “smaller reporting company’’ in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  x

Accelerated filer  ¨

Non-accelerated filer  ¨

Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

The number of shares outstanding of the registrant’s Common Stock and Class A Common Stock as of May 21, 2015 were 17,114,255 and 6,644,105, respectively.

 

 

 

 

 


 

MOVADO GROUP, INC.

Index to Quarterly Report on Form 10-Q

April 30, 2015

 

 

 

 

  

Page

Part I

 

Financial Information (Unaudited)

 

 

 

  

 

Item 1.

  

Consolidated Balance Sheets at April 30, 2015, January 31, 2015 and April 30, 2014

  

3

 

  

 

  

 

Consolidated Statements of Operations for the three months ended April 30, 2015 and April 30, 2014

  

4

 

  

 

  

 

Consolidated Statements of Comprehensive (Loss) \ Income for the three months ended April 30, 2015 and April 30, 2014

  

5

 

  

 

  

 

Consolidated Statements of Cash Flows for the three months ended April 30, 2015 and April 30, 2014

  

6

 

  

 

  

 

Notes to Consolidated Financial Statements

  

7

 

  

Item 2.

  

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

16

 

  

Item 3.

  

 

Quantitative and Qualitative Disclosures About Market Risk

  

22

 

  

Item 4.

  

 

Controls and Procedures

  

23

Part II

  

 

Other Information

  

23

 

  

 

Item 1.

  

Legal Proceedings

  

23

 

  

 

Item 1A.

  

Risk Factors

  

23

 

  

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

  

23

 

 

 

Item 6.

 

Exhibits

 

25

 

Signature

  

26

 

 

 

 


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MOVADO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

April 30,

 

 

January 31,

 

 

April 30,

 

 

2015

 

 

2015

 

 

2014

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

185,828

 

 

$

199,852

 

 

$

137,827

 

Short-term investments

 

 

 

 

 

 

 

34,063

 

Trade receivables

 

73,472

 

 

 

74,106

 

 

 

77,395

 

Inventories

 

183,904

 

 

 

170,788

 

 

 

184,443

 

Other current assets

 

43,960

 

 

 

40,532

 

 

 

47,228

 

Total current assets

 

487,164

 

 

 

485,278

 

 

 

480,956

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

44,354

 

 

 

46,673

 

 

 

46,806

 

Deferred income taxes

 

13,536

 

 

 

13,550

 

 

 

15,058

 

Other non-current assets

 

39,483

 

 

 

37,522

 

 

 

32,064

 

Total assets

$

584,537

 

 

$

583,023

 

 

$

574,884

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Loans payable to bank

$

25,000

 

 

$

 

 

$

 

Accounts payable

 

25,647

 

 

 

27,767

 

 

 

25,644

 

Accrued liabilities

 

37,899

 

 

 

30,933

 

 

 

36,854

 

Deferred and current income taxes payable

 

1,352

 

 

 

7,372

 

 

 

5,777

 

Total current liabilities

 

89,898

 

 

 

66,072

 

 

 

68,275

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred and non-current income taxes payable

 

3,505

 

 

 

3,470

 

 

 

3,792

 

Other non-current liabilities

 

30,484

 

 

 

29,196

 

 

 

27,244

 

Total liabilities

 

123,887

 

 

 

98,738

 

 

 

99,311

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock, $0.01 par value, 5,000,000 shares authorized; no shares

   issued

 

 

 

 

 

 

 

 

Common Stock, $0.01 par value, 100,000,000 shares authorized;

   26,926,331,26,849,080 and 26,753,324 shares issued, respectively

 

269

 

 

 

268

 

 

 

268

 

Class A Common Stock, $0.01 par value, 30,000,000 shares authorized;

   6,644,105,6,642,184 and 6,638,262 shares issued and outstanding,

   respectively

 

66

 

 

 

66

 

 

 

66

 

Capital in excess of par value

 

176,524

 

 

 

174,826

 

 

 

168,067

 

Retained earnings

 

358,992

 

 

 

358,006

 

 

 

321,176

 

Accumulated other comprehensive income

 

95,221

 

 

 

98,854

 

 

 

111,832

 

Treasury Stock, 9,662,176, 8,784,497 and 8,081,423 shares, respectively,

   at cost

 

(172,515

)

 

 

(149,811

)

 

 

(128,657

)

Total Movado Group, Inc. shareholders' equity

 

458,557

 

 

 

482,209

 

 

 

472,752

 

Noncontrolling interests

 

2,093

 

 

 

2,076

 

 

 

2,821

 

Total equity

 

460,650

 

 

 

484,285

 

 

 

475,573

 

Total liabilities and equity

$

584,537

 

 

$

583,023

 

 

$

574,884

 

 

See Notes to Consolidated Financial Statements

 

 

 

3


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended April 30,

 

 

2015

 

 

2014

 

Net sales

$

120,461

 

 

$

120,921

 

Cost of sales

 

58,012

 

 

 

55,770

 

Gross profit

 

62,449

 

 

 

65,151

 

Selling, general, and administrative

 

55,574

 

 

 

54,230

 

Operating income

 

6,875

 

 

 

10,921

 

Interest expense

 

(152

)

 

 

(94

)

Interest income

 

53

 

 

 

35

 

Income before income taxes

 

6,776

 

 

 

10,862

 

Provision for income taxes (Note 9)

 

3,135

 

 

 

3,433

 

Net income

 

3,641

 

 

 

7,429

 

Less: Net income attributed to noncontrolling interests

 

19

 

 

 

64

 

Net income attributed to Movado Group, Inc.

$

3,622

 

 

$

7,365

 

 

 

 

 

 

 

 

 

Basic income per share:

 

 

 

 

 

 

 

Weighted basic average shares outstanding

 

24,279

 

 

 

25,325

 

Net income per share attributed to Movado Group, Inc.

$

0.15

 

 

$

0.29

 

 

 

 

 

 

 

 

 

Diluted income per share:

 

 

 

 

 

 

 

Weighted diluted average shares outstanding

 

24,569

 

 

 

25,696

 

Net income per share attributed to Movado Group, Inc.

$

0.15

 

 

$

0.29

 

 

 

 

 

 

 

 

 

Dividends declared per share

$

0.11

 

 

$

0.10

 

 

See Notes to Consolidated Financial Statements

 

 

 

4


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) \ INCOME

(In thousands)

(Unaudited)

 

 

Three Months Ended April 30,

 

 

2015

 

 

2014

 

Comprehensive (loss) \ income, net of taxes:

 

 

 

 

 

 

 

Net income including noncontrolling interests

$

3,641

 

 

$

7,429

 

Net unrealized gain on investments, net of tax of $4 and $39, respectively

 

10

 

 

 

70

 

Net change in effective portion of hedging contracts, net of tax benefit of $100 and $0, respectively

 

(508

)

 

 

-

 

Foreign currency translation adjustments

 

(3,137

)

 

 

8,131

 

Comprehensive income including noncontrolling interests

 

6

 

 

 

15,630

 

Less: Comprehensive income attributable to noncontrolling interests

 

17

 

 

 

135

 

Total comprehensive (loss) \ income attributable to Movado Group, Inc.

$

(11

)

 

$

15,495

 

 

See Notes to Consolidated Financial Statements

 

 

 

5


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended April 30,

 

 

2015

 

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income including noncontrolling interests

$

3,641

 

 

$

7,429

 

Adjustments to reconcile net income to net cash (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

2,981

 

 

 

3,022

 

Transactional (gains) \ losses

 

(774

)

 

 

1,097

 

Write-down of inventories

 

330

 

 

 

302

 

Deferred income taxes

 

283

 

 

 

155

 

Stock-based compensation

 

1,520

 

 

 

1,180

 

Excess tax benefit from stock-based compensation

 

(42

)

 

 

(858

)

Operating efficiency initiatives and other items

 

2,670

 

 

-

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Trade receivables

 

685

 

 

 

(8,092

)

Inventories

 

(14,205

)

 

 

(1,034

)

Other current assets

 

(3,959

)

 

 

(2,775

)

Accounts payable

 

(2,079

)

 

 

(8,228

)

Accrued liabilities

 

4,044

 

 

 

(5,950

)

Income taxes payable

 

(5,914

)

 

 

1,473

 

Other non-current assets

 

(1,641

)

 

 

(1,477

)

Other non-current liabilities

 

1,286

 

 

 

1,703

 

Net cash (used in) operating activities

 

(11,174

)

 

 

(12,053

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(1,461

)

 

 

(1,523

)

Trademarks

 

(94

)

 

 

(20

)

Net cash (used in) investing activities

 

(1,555

)

 

 

(1,543

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Stock options exercised and other changes

 

(513

)

 

 

(1,324

)

Excess tax benefit from stock-based compensation

 

42

 

 

 

858

 

Proceeds from bank borrowings

 

25,000

 

 

-

 

Dividends paid

 

(2,636

)

 

 

(2,523

)

Stock repurchase

 

(22,154

)

 

 

(5,312

)

Net cash (used in) financing activities

 

(261

)

 

 

(8,301

)

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(1,034

)

 

 

2,065

 

Net (decrease) in cash and cash equivalents

 

(14,024

)

 

 

(19,832

)

Cash and cash equivalents at beginning of period

 

199,852

 

 

 

157,659

 

Cash and cash equivalents at end of period

$

185,828

 

 

$

137,827

 

 

See Notes to Consolidated Financial Statements

 

 

 

6


 

MOVADO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

BASIS OF PRESENTATION

The accompanying interim unaudited consolidated financial statements have been prepared by Movado Group, Inc. (the “Company”), in a manner consistent with that used in the preparation of the annual audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015 (the “2015 Annual Report on Form 10-K”). In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the financial position and results of operations for the periods presented. The consolidated balance sheet data at January 31, 2015 is derived from the audited annual financial statements, which are included in the Company’s 2015 Annual Report on Form 10-K and should be read in connection with these interim unaudited financial statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year.

 

 

NOTE 1 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

Level 3 – Unobservable inputs based on the Company’s assumptions.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands) as of April 30, 2015 and 2014 and January 31, 2015:

 

 

  

 

  

Fair Value at April 30, 2015

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

327

 

 

$

 

 

$

 

 

$

327

 

Long-term investment

 

Other non-current assets

 

 

 

 

 

 

 

 

1,264

 

 

 

1,264

 

SERP assets - employer

 

Other non-current assets

 

 

1,520

 

 

 

 

 

 

 

 

 

1,520

 

SERP assets - employee

 

Other non-current assets

 

 

26,047

 

 

 

 

 

 

 

 

 

26,047

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

866

 

 

 

 

 

 

866

 

Total

 

$

27,894

 

 

$

866

 

 

$

1,264

 

 

$

30,024

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

26,047

 

 

$

 

 

$

 

 

$

26,047

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

690

 

 

 

 

 

 

690

 

Total

 

$

26,047

 

 

$

690

 

 

$

 

 

$

26,737

 

 

 

  

 

  

Fair Value at January 31, 2015

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

314

 

 

$

 

 

$

 

 

$

314

 

Long-term investment

 

Other non-current assets

 

 

 

 

 

 

 

 

1,240

 

 

 

1,240

 

SERP assets - employer

 

Other non-current assets

 

 

1,351

 

 

 

 

 

 

 

 

 

1,351

 

SERP assets - employee

 

Other non-current assets

 

 

24,811

 

 

 

 

 

 

 

 

 

24,811

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

1,298

 

 

 

 

 

 

1,298

 

Total

 

$

26,476

 

 

$

1,298

 

 

$

1,240

 

 

$

29,014

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

24,811

 

 

$

 

 

$

 

 

$

24,811

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

71

 

 

 

 

 

 

71

 

Total

 

$

24,811

 

 

$

71

 

 

$

 

 

$

24,882

 

7


 

 

  

 

  

Fair Value at April 30, 2014

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

687

 

 

$

 

 

$

 

 

$

687

 

Time deposits

 

Short-term investments

 

 

34,063

 

 

 

 

 

 

 

 

 

34,063

 

SERP assets - employer

 

Other non-current assets

 

 

1,273

 

 

 

 

 

 

 

 

 

1,273

 

SERP assets - employee

 

Other non-current assets

 

 

22,478

 

 

 

 

 

 

 

 

 

22,478

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

772

 

 

 

 

 

 

772

 

Total

 

$

58,501

 

 

$

772

 

 

$

 

 

$

59,273

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

22,478

 

 

$

 

 

$

 

 

$

22,478

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

10

 

 

 

 

 

 

10

 

Total

 

$

22,478

 

 

$

10

 

 

$

 

 

$

22,488

 

The fair values of the Company’s available-for-sale securities are based on quoted prices. The fair value of the long-term investment is based on the purchase price plus eight percent calculated annually. Time deposits are classified as short-term investments and held to original maturity. The assets related to the Company’s defined contribution supplemental executive retirement plan (“SERP”) consist of both employer (employee unvested) and employee assets which are invested in investment funds with fair values calculated based on quoted market prices. The SERP liability represents the Company’s liability to the employees in the plan for their vested balances. The hedge derivatives are entered into by the Company principally to reduce its exposure to Swiss franc and Euro currency exchange rate risk. Fair values of the Company’s hedge derivatives are calculated based on quoted foreign exchange rates, quoted interest rates and market volatility factors.

The following table presents a reconciliation of the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of April 30, 2015 and 2014 and January 31, 2015.  Level 3 consists of a long-term investment.

 

 

 

April 30,

2015

 

 

January 31,

2015

 

 

April  30,

2014

 

Balance, beginning of fiscal year

 

$

1,240

 

 

$

 

 

$

 

Purchase of long-term investment

 

 

 

 

 

1,200

 

 

 

 

Interest income

 

 

24

 

 

 

40

 

 

 

 

Balance, end of period

 

$

1,264

 

 

$

1,240

 

 

$

 

 

 

8


NOTE 2 – EQUITY

The components of equity for the three months ended April 30, 2015 and 2014 are as follows (in thousands):

 

 

 

Movado Group, Inc. Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Common Stock (1)

 

 

Class A Common Stock (2)

 

 

Capital in Excess of Par Value

 

 

Retained Earnings

 

 

Treasury Stock

 

 

Accumulated Other Comprehensive Income

 

 

Noncontrolling Interests

 

 

Total

 

Balance, January 31, 2015

 

$

268

 

 

$

66

 

 

$

174,826

 

 

$

358,006

 

 

$

(149,811

)

 

$

98,854

 

 

$

2,076

 

 

$

484,285

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,622

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

3,641

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,636

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,636

)

Stock repurchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,154

)

 

 

 

 

 

 

 

 

 

 

(22,154

)

Stock options exercised, net of

   tax benefit of $42

 

 

1

 

 

 

 

 

 

 

78

 

 

 

 

 

 

 

(550

)

 

 

 

 

 

 

 

 

 

 

(471

)

Supplemental executive

   retirement plan

 

 

 

 

 

 

 

 

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

1,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,520

 

Net unrealized gain on

   investments, net of tax of $4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

 

10

 

Net change in effective portion

   of hedging contracts, net of

   tax benefit of $100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(508

)

 

 

 

 

 

 

(508

)

Foreign currency translation

   adjustment (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,135

)

 

 

(2

)

 

 

(3,137

)

Balance, April 30, 2015

 

$

269

 

 

$

66

 

 

$

176,524

 

 

$

358,992

 

 

$

(172,515

)

 

$

95,221

 

 

$

2,093

 

 

$

460,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (1)

 

 

Class A Common Stock (2)

 

 

Capital in Excess of Par Value

 

 

Retained Earnings

 

 

Treasury Stock

 

 

Accumulated Other Comprehensive Income

 

 

Noncontrolling Interests

 

 

Total

 

Balance, January 31, 2014

 

$

266

 

 

$

66

 

 

$

165,342

 

 

$

316,334

 

 

$

(122,406

)

 

$

103,702

 

 

$

2,686

 

 

$

465,990

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,365

 

 

 

 

 

 

 

 

 

 

 

64

 

 

 

7,429

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,523

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,523

)

Stock repurchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,312

)

 

 

 

 

 

 

 

 

 

 

(5,312

)

Stock options exercised, net of

   tax benefit of $858

 

 

2

 

 

 

 

 

 

 

856

 

 

 

 

 

 

 

(1,324

)

 

 

 

 

 

 

 

 

 

 

(466

)

Supplemental executive

   retirement plan

 

 

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

1,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,180

 

Net unrealized gain on

   investments, net of tax of $39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70

 

 

 

 

 

 

 

70

 

Stock donation

 

 

 

 

 

 

 

 

 

 

671

 

 

 

 

 

 

 

385

 

 

 

 

 

 

 

 

 

 

 

1,056

 

Foreign currency translation

   adjustment (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,060

 

 

 

71

 

 

 

8,131

 

Balance, April 30, 2014

 

$

268

 

 

$

66

 

 

$

168,067

 

 

$

321,176

 

 

$

(128,657

)

 

$

111,832

 

 

$

2,821

 

 

$

475,573

 

 

(1) Each share of common stock is entitled to one vote per share.

 

(2) Each share of class A common stock is entitled to 10 votes per share on all matters submitted to a vote of the shareholders. Each holder of class A  common stock is entitled to convert, at any time, any and all of such shares into the same number of shares of common stock. Each share of class A common stock is converted automatically into common stock in the event that the beneficial or record ownership of such shares of class A common stock is transferred to any person, except to certain family members or affiliated persons deemed “permitted transferees” pursuant to the Company’s Restated Certificate of Incorporation as amended. The class A common stock is not publicly traded and consequently, there is currently no established public trading market for these shares.

 

(3) The currency translation adjustment is not adjusted for income taxes to the extent that it relates to permanent investments of earnings in international subsidiaries.

 

 

NOTE 3 – SEGMENT INFORMATION

The Company follows accounting guidance related to disclosures about segments of an enterprise and related information. This guidance requires disclosure of segment data based on how management makes decisions about allocating resources to segments and measuring their performance.

9


The Company conducts its business in two operating segments: Wholesale and Retail. The Company’s Wholesale segment includes the designing, manufacturing and distribution of watches of quality luxury brands or licensed brands, in addition to revenue generated from after-sales service activities and shipping. The Retail segment includes the Company’s outlet stores.

The Company divides its business into two major geographic locations: United States operations, and International, which includes the results of all other Company operations. The allocation of geographic revenue is based upon the location of the customer. The Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 18.6%, 11.0%, 8.7% and 8.1%, respectively, of the Company’s total net sales for the three months ended April 30, 2015. For the three months ended April 30, 2014, the Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 20.3%, 12.8%, 8.1% and 7.4%, respectively, of the Company’s total net sales. Substantially all of the Company’s International assets are located in Switzerland and Hong Kong.

 

Operating Segment Data for the Three Months Ended April 30, 2015 and 2014 (in thousands):

 

 

Net Sales

 

 

2015

 

 

2014

 

Wholesale:

 

 

 

 

 

 

 

Luxury brands category

$

44,903

 

 

$

44,220

 

Licensed brands category

 

60,842

 

 

 

61,729

 

After-sales service and all other

 

3,852

 

 

 

3,736

 

Total Wholesale

 

109,597

 

 

 

109,685

 

Retail

 

10,864

 

 

 

11,236

 

Consolidated total

$

120,461

 

 

$

120,921

 

 

 

Operating Income

 

 

2015

 

 

2014

 

Wholesale

$

5,925

 

 

$

9,375

 

Retail

 

950

 

 

 

1,546

 

Consolidated total

$

6,875

 

 

$

10,921

 

 

 

Total Assets

 

 

April 30,
2015

 

  

January 31,
2015

 

  

April  30,
2014

 

Wholesale

$

563,947

 

 

$

562,462

 

 

$

553,833

 

Retail

 

20,590

 

 

 

20,561

 

 

 

21,051

 

Consolidated total

$

584,537

 

 

$

583,023

 

 

$

574,884

 

Geographic Location Data for the Three Months Ended April 30, 2015 and 2014 (in thousands):

 

 

Net Sales

 

  

Operating Income / (Loss) 

 

 

2015

 

  

2014

 

  

2015

 

  

2014

 

United States (1)

$

64,584

 

 

$

62,279

 

 

$

2,429

 

 

$

(