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EX-32.2 - EX-32.2 - MOVADO GROUP INCmov-ex322_8.htm
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EX-31.2 - EX-31.2 - MOVADO GROUP INCmov-ex312_7.htm
EX-31.1 - EX-31.1 - MOVADO GROUP INCmov-ex311_9.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended April 30, 2017

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      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      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  

Accelerated filer  

Non-accelerated filer  

Smaller reporting company  

Emerging growth company  

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

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

The number of shares outstanding of the registrant’s Common Stock and Class A Common Stock as of May 18, 2017 were 16,328,703 and 6,651,950, respectively.

 

 

 


 

MOVADO GROUP, INC.

Index to Quarterly Report on Form 10-Q

April 30, 2017

 

 

 

 

 

Page

Part I

 

Financial Information (Unaudited)

 

3

 

 

 

Item 1.

 

 

Consolidated Balance Sheets at April 30, 2017, January 31, 2017 and April 30, 2016

 

3

 

 

 

 

 

Consolidated Statements of Operations for the three months ended April 30, 2017 and April 30, 2016

 

4

 

 

 

 

 

Consolidated Statements of Comprehensive (Loss) / Income for the three months ended April 30, 2017 and April 30, 2016

 

5

 

 

 

 

 

Consolidated Statements of Cash Flows for the three months ended April 30, 2017 and April 30, 2016

 

6

 

 

 

 

 

Notes to Consolidated Financial Statements

 

7

 

 

 

Item 2.

 

 

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

 

18

 

 

 

Item 3.

 

 

Quantitative and Qualitative Disclosures About Market Risk

 

24

 

 

 

Item 4.

 

 

Controls and Procedures

 

25

 

Part II

 

 

Other Information

 

26

 

 

 

Item 1.

 

 

Legal Proceedings

 

26

 

 

 

Item 1A.

 

 

Risk Factors

 

26

 

 

 

Item 2.

 

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

26

 

 

 

Item 6.

 

 

Exhibits

 

28

 

Signature

 

29

 

 

 

 

 


 

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,

 

 

2017

 

 

2017

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

233,594

 

 

$

256,279

 

 

$

203,909

 

Trade receivables, net

 

66,457

 

 

 

66,847

 

 

 

75,771

 

Inventories

 

160,376

 

 

 

153,167

 

 

 

178,388

 

Other current assets

 

32,555

 

 

 

28,487

 

 

 

36,472

 

Total current assets

 

492,982

 

 

 

504,780

 

 

 

494,540

 

Property, plant and equipment, net

 

31,962

 

 

 

34,173

 

 

 

37,247

 

Deferred and non-current income taxes

 

24,864

 

 

 

24,837

 

 

 

20,697

 

Other non-current assets

 

45,233

 

 

 

44,012

 

 

 

41,578

 

Total assets

$

595,041

 

 

$

607,802

 

 

$

594,062

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Loans payable to bank, current

$

5,000

 

 

$

5,000

 

 

$

 

Accounts payable

 

22,981

 

 

 

27,192

 

 

 

27,677

 

Accrued liabilities

 

37,530

 

 

 

35,061

 

 

 

37,191

 

Income taxes payable

 

1,349

 

 

 

4,149

 

 

 

893

 

Total current liabilities

 

66,860

 

 

 

71,402

 

 

 

65,761

 

Loans payable to bank

 

25,000

 

 

 

25,000

 

 

 

35,000

 

Deferred and non-current income taxes payable

 

3,312

 

 

 

3,322

 

 

 

3,008

 

Other non-current liabilities

 

35,349

 

 

 

34,085

 

 

 

30,875

 

Total liabilities

 

130,521

 

 

 

133,809

 

 

 

134,644

 

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;

   27,286,230, 27,176,656 and 27,124,011 shares issued and outstanding,

   respectively

 

273

 

 

 

272

 

 

 

271

 

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

   6,651,950, 6,644,105 and 6,644,105 shares issued and outstanding,

   respectively

 

67

 

 

 

66

 

 

 

66

 

Capital in excess of par value

 

186,628

 

 

 

185,354

 

 

 

180,562

 

Retained earnings

 

408,778

 

 

 

415,919

 

 

 

393,113

 

Accumulated other comprehensive income

 

74,893

 

 

 

76,780

 

 

 

86,171

 

Treasury Stock, 10,943,527, 10,869,321 and 10,742,285 shares,

   respectively, at cost

 

(206,119

)

 

 

(204,398

)

 

 

(201,397

)

Total Movado Group, Inc. shareholders' equity

 

464,520

 

 

 

473,993

 

 

 

458,786

 

Noncontrolling interests

 

 

 

 

 

 

 

632

 

Total equity

 

464,520

 

 

 

473,993

 

 

 

459,418

 

Total liabilities and equity

$

595,041

 

 

$

607,802

 

 

$

594,062

 

 

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,

 

 

2017

 

 

2016

 

Net sales

$

99,265

 

 

$

114,063

 

Cost of sales

 

50,128

 

 

 

52,746

 

Gross profit

 

49,137

 

 

 

61,317

 

Selling, general, and administrative

 

52,785

 

 

 

55,939

 

Operating (loss) / income

 

(3,648

)

 

 

5,378

 

Interest expense

 

(356

)

 

 

(375

)

Interest income

 

122

 

 

 

57

 

(Loss) / Income before income taxes

 

(3,882

)

 

 

5,060

 

Provision for income taxes (Note 9)

 

277

 

 

 

1,723

 

Net (loss) / income

 

(4,159

)

 

 

3,337

 

Less: Net income attributed to noncontrolling interests

 

 

 

 

29

 

Net (loss) / income attributed to Movado Group, Inc.

$

(4,159

)

 

$

3,308

 

 

 

 

 

 

 

 

 

Basic income per share:

 

 

 

 

 

 

 

Weighted basic average shares outstanding

 

23,075

 

 

 

23,073

 

Net (loss) / income per share attributed to Movado Group, Inc.

$

(0.18

)

 

$

0.14

 

 

 

 

 

 

 

 

 

Diluted income per share:

 

 

 

 

 

 

 

Weighted diluted average shares outstanding

 

23,075

 

 

 

23,349

 

Net (loss) / income per share attributed to Movado Group, Inc.

$

(0.18

)

 

$

0.14

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

0.13

 

 

$

0.13

 

 

See Notes to Consolidated Financial Statements

 

 

4


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) / INCOME

(In thousands)

(Unaudited)

 

 

Three Months Ended April 30,

 

 

2017

 

 

2016

 

Comprehensive (loss) / income, net of taxes:

 

 

 

 

 

 

 

Net (loss) / income including noncontrolling interests

$

(4,159

)

 

$

3,337

 

Net unrealized (loss) / gain on investments, net of tax (benefit) of $(6)

   and $2, respectively

 

(12

)

 

 

6

 

Net change in effective portion of hedging contracts, net of tax (benefit)

   of $(26) and $(46), respectively

 

(145

)

 

 

(232

)

Foreign currency translation adjustments

 

(1,730

)

 

 

17,900

 

Comprehensive (loss) / income including noncontrolling interests

 

(6,046

)

 

 

21,011

 

Less: Comprehensive income attributed to noncontrolling interests

 

 

 

 

37

 

Total comprehensive (loss) / income attributed to Movado Group, Inc.

$

(6,046

)

 

$

20,974

 

 

See Notes to Consolidated Financial Statements

 

 

5


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended April 30,

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net (loss) / income including noncontrolling interests

$

(4,159

)

 

$

3,337

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

2,885

 

 

 

2,901

 

Transactional (gains) / losses

 

(712

)

 

 

111

 

Write-down of inventories

 

359

 

 

 

359

 

Deferred income taxes

 

(64

)

 

 

69

 

Stock-based compensation

 

1,243

 

 

 

2,409

 

Cost savings initiative

 

6,334

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Trade receivables

 

493

 

 

 

(3,603

)

Inventories

 

(7,953

)

 

 

(11,287

)

Other current assets

 

(3,833

)

 

 

(4,944

)

Accounts payable

 

(4,155

)

 

 

(360

)

Accrued liabilities

 

(3,981

)

 

 

(3,378

)

Income taxes payable

 

(2,800

)

 

 

(5,595

)

Other non-current assets

 

(1,489

)

 

 

(3,351

)

Other non-current liabilities

 

1,278

 

 

 

2,248

 

Net cash (used in) operating activities

 

(16,554

)

 

 

(21,084

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(397

)

 

 

(538

)

Short-term investment

 

 

 

 

(156

)

Restricted cash deposits

 

 

 

 

(1,070

)

Trademarks and other intangibles

 

(40

)

 

 

(226

)

Net cash (used in) investing activities

 

(437

)

 

 

(1,990

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Repayments of bank borrowings

 

 

 

 

(5,000

)

Stock options exercised and other changes

 

(692

)

 

 

(1,204

)

Dividends paid

 

(2,982

)

 

 

(2,983

)

Stock repurchase

 

(1,028

)

 

 

(943

)

Net cash (used in) financing activities

 

(4,702

)

 

 

(10,130

)

Effect of exchange rate changes on cash and cash equivalents

 

(992

)

 

 

8,925

 

Net (decrease) in cash and cash equivalents

 

(22,685

)

 

 

(24,279

)

Cash and cash equivalents at beginning of period

 

256,279

 

 

 

228,188

 

Cash and cash equivalents at end of period

$

233,594

 

 

$

203,909

 

 

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, 2017 (the “2017 Annual Report on Form 10-K”). The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. Actual results could differ from those estimates. 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, 2017 is derived from the audited annual financial statements, which are included in the Company’s 2017 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 – RECLASSIFICATIONS

Certain reclassifications were made to prior years’ financial statement amounts and related note disclosures to conform to fiscal 2018 presentation. As a result of the adoption of ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” excess tax benefits and deficiencies related to share­based compensation are reported as operating activities in the statement of cash flows.

 

 

NOTE 2 – 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, 2017 and 2016 and January 31, 2017:

 

 

  

 

  

Fair Value at April 30, 2017

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

291

 

 

$

 

 

$

 

 

$

291

 

Short-term investment

 

Other current assets

 

 

147

 

 

 

 

 

 

 

 

 

147

 

SERP assets - employer

 

Other non-current assets

 

 

1,241

 

 

 

 

 

 

 

 

 

1,241

 

SERP assets - employee

 

Other non-current assets

 

 

32,421

 

 

 

 

 

 

 

 

 

32,421

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

205

 

 

 

 

 

 

205

 

Total

 

$

34,100

 

 

$

205

 

 

$

 

 

$

34,305

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

32,421

 

 

$

 

 

$

 

 

$

32,421

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

162

 

 

 

 

 

 

162

 

Total

 

$

34,421

 

 

$

162

 

 

$

 

 

$

32,583

 

 

7


 

 

  

 

  

Fair Value at January 31, 2017

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

309

 

 

$

 

 

$

 

 

$

309

 

Short-term investment

 

Other current assets

 

 

154

 

 

 

 

 

 

 

 

 

154

 

SERP assets - employer

 

Other non-current assets

 

 

1,091

 

 

 

 

 

 

 

 

 

1,091

 

SERP assets - employee

 

Other non-current assets

 

 

30,831

 

 

 

 

 

 

 

 

 

30,831

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

145

 

 

 

 

 

 

145

 

Total

 

$

32,385

 

 

$

145

 

 

$

 

 

$

32,530

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

30,831

 

 

$

 

 

$

 

 

$

30,831

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

211

 

 

 

 

 

 

211

 

Total

 

$

30,831

 

 

$

211

 

 

$

 

 

$

31,042

 

 

 

  

 

  

Fair Value at April 30, 2016

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

281

 

 

$

 

 

$

 

 

$

281

 

Short-term investment

 

Other current assets

 

 

159

 

 

 

 

 

 

 

 

 

159

 

SERP assets - employer

 

Other non-current assets

 

 

1,185

 

 

 

 

 

 

 

 

 

1,185

 

SERP assets - employee

 

Other non-current assets

 

 

27,073

 

 

 

 

 

 

 

 

 

27,073

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

719

 

 

 

 

 

 

719

 

Total

 

$

28,698

 

 

$

719

 

 

$

 

 

$

29,417

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

27,073

 

 

$

 

 

$

 

 

$

27,073

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

199

 

 

 

 

 

 

199

 

Total

 

$

27,073

 

 

$

199

 

 

$

 

 

$

27,272

 

 

The fair values of the Company’s available-for-sale securities are based on quoted prices. The fair value of the short-term investment, which is a guaranteed investment certificate, is based on its purchase price plus one half of a percent calculated annually. 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, Euro and Japanese Yen exchange rate risks. Fair values of the Company’s hedge derivatives are calculated based on quoted foreign exchange rates and quoted interest rates. The carrying amount of debt approximated fair value as of April 30, 2017.

 

 

8


 

NOTE 3 – EQUITY

The components of equity for the three months ended April 30, 2017 and 2016 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, 2017

 

$

272

 

 

$

66

 

 

$

185,354

 

 

$

415,919

 

 

$

(204,398

)

 

$

76,780

 

 

$

 

 

$

473,993

 

Net (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,159

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,159

)

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,982

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,982

)

Stock repurchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,028

)

 

 

 

 

 

 

 

 

 

 

(1,028

)

Stock options exercised

 

 

1

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

(693

)

 

 

 

 

 

 

 

 

 

 

(692

)

Supplemental executive

   retirement plan

 

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

1,243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,243

 

Net unrealized loss on

   investments, net of tax

   benefit of $6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

 

(12

)

Net change in effective

   portion of hedging contracts,

   net of tax benefit of $26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(145

)

 

 

 

 

 

 

(145

)

Foreign currency translation

   adjustment (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,730

)

 

 

 

 

 

 

(1,730

)

Balance, April 30, 2017

 

$

273

 

 

$

67

 

 

$

186,628

 

 

$

408,778

 

 

$

(206,119

)

 

$

74,893

 

 

$

 

 

$

464,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2016

 

$

270

 

 

$

66

 

 

$

178,118

 

 

$

392,788

 

 

$

(199,195

)

 

$

68,505

 

 

$

595

 

 

$

441,147

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,308

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

3,337

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,983

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,983

)

Stock repurchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(943

)

 

 

 

 

 

 

 

 

 

 

(943

)

Stock options exercised, net of

   tax of $103

 

 

1

 

 

 

 

 

 

 

(49

)

 

 

 

 

 

 

(1,259

)

 

 

 

 

 

 

 

 

 

 

(1,307

)

Supplemental executive

   retirement plan

 

 

 

 

 

 

 

 

 

 

84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

2,409

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,409

 

Net unrealized gain on

   investments, net of

   tax of $2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

6

 

Net change in effective

   portion of hedging contracts,

   net of tax benefit of $46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(232

)

 

 

 

 

 

 

(232

)

Foreign currency translation

   adjustment (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,892

 

 

 

8

 

 

 

17,900

 

Balance, April 30, 2016

 

$

271

 

 

$

66

 

 

$

180,562

 

 

$

393,113

 

 

$

(201,397

)

 

$

86,171

 

 

$

632

 

 

$

459,418

 

 

(1)

Each share of common stock is entitled to one vote per share on all matters submitted to a vote of the shareholders.

(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 4 – SEGMENT AND GEOGRAPHIC INFORMATION

The Company follows accounting guidance which 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 and licensed brands, in addition to revenue generated from after-sales service activities and shipping. The Retail segment includes the Company’s retail outlet locations.

The Company divides its business into two major geographic locations: United States operations, and International, which includes the results of all non-U.S. 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 26.6%, 10.4%, 9.8% and 8.1%, respectively, of the Company’s total net sales for the three months ended April 30, 2017. For the three months ended April 30, 2016, the Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 23.4%, 10.0%, 8.5% and 5.4%, 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, 2017 and 2016 (in thousands):

 

 

Net Sales

 

 

2017

 

 

2016

 

Wholesale:

 

 

 

 

 

 

 

Luxury brands category

$

33,142

 

 

$

42,036

 

Licensed brands category

 

51,369

 

 

 

56,840

 

After-sales service and all other

 

2,649

 

 

 

3,082

 

Total Wholesale

 

87,160

 

 

 

101,958

 

Retail

 

12,105

 

 

 

12,105

 

Consolidated total

$

99,265

 

 

$

114,063

 

 

 

Operating (Loss) / Income (3)

 

 

2017

 

 

2016

 

Wholesale

$

(4,488

)

 

$

4,569

 

Retail

 

840

 

 

 

809

 

Consolidated total

$

(3,648

)

 

$

5,378

 

 

 

Total Assets

 

 

April 30,

2017

 

  

January 31,

2017

 

  

April 30,

2016

 

Wholesale

$

570,552

 

 

$

584,518

 

 

$

570,014

 

Retail

 

24,489

 

 

 

23,284

 

 

 

24,048

 

Consolidated total

$

595,041

 

 

$

607,802

 

 

$

594,062

 

Geographic Location Data for the Three Months Ended April 30, 2017 and 2016 (in thousands):

 

 

Net Sales

 

  

Operating (Loss) / Income (3)

 

 

2017

 

  

2016

 

  

2017

 

  

2016

 

United States (1)

$

44,795

 

 

$

60,057

 

 

$

(9,781

)

 

$

(1,393

)

International (2)

 

54,470

 

 

 

54,006

 

 

 

6,133

 

 

 

6,771

 

Consolidated total

$

99,265

 

 

$

114,063

 

 

$

(3,648

)