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EX-32.2 - EX-32.2 - MOVADO GROUP INCmov-ex322_7.htm
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EX-31.2 - EX-31.2 - MOVADO GROUP INCmov-ex312_11.htm
EX-31.1 - EX-31.1 - MOVADO GROUP INCmov-ex311_8.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, 2018

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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,’’ “accelerated filer,’’ “smaller reporting company,’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer         

Accelerated filer                  

Non-accelerated filer (Do not check if a smaller reporting company)  

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 22, 2018 were 16,470,139 and 6,626,950, respectively.

 

 

 


MOVADO GROUP, INC.

Index to Quarterly Report on Form 10-Q

April 30, 2018

 

 

 

 

 

Page

Part I

 

Financial Information (Unaudited)

 

3

 

 

 

Item 1.

 

 

Consolidated Balance Sheets at April 30, 2018, January 31, 2018 and April 30, 2017

 

3

 

 

 

 

 

Consolidated Statements of Operations for the three months ended April 30, 2018 and April 30, 2017

 

4

 

 

 

 

 

Consolidated Statements of Comprehensive Loss for the three months ended April 30, 2018 and April 30, 2017

 

5

 

 

 

 

 

Consolidated Statements of Cash Flows for the three months ended April 30, 2018 and April 30, 2017

 

6

 

 

 

 

 

Notes to Consolidated Financial Statements

 

7

 

 

 

Item 2.

 

 

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

 

20

 

 

 

Item 3.

 

 

Quantitative and Qualitative Disclosures About Market Risk

 

26

 

 

 

Item 4.

 

 

Controls and Procedures

 

27

 

Part II

 

 

Other Information

 

28

 

 

 

Item 1.

 

 

Legal Proceedings

 

28

 

 

 

Item 1A.

 

 

Risk Factors

 

28

 

 

 

Item 2.

 

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

28

 

 

 

Item 6.

 

 

Exhibits

 

30

 

Signature

 

31

 

 

 

 

 


 

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,

 

 

2018

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

176,959

 

 

$

214,811

 

 

$

233,594

 

Trade receivables, net

 

79,965

 

 

 

83,098

 

 

 

66,457

 

Inventories

 

159,032

 

 

 

151,676

 

 

 

160,376

 

Other current assets

 

36,213

 

 

 

32,015

 

 

 

32,555

 

Total current assets

 

452,169

 

 

 

481,600

 

 

 

492,982

 

Property, plant and equipment, net

 

23,560

 

 

 

24,671

 

 

 

31,962

 

Deferred and non-current income taxes

 

8,157

 

 

 

6,443

 

 

 

24,864

 

Goodwill

 

58,484

 

 

 

60,269

 

 

 

 

Other intangibles, net

 

21,720

 

 

 

23,124

 

 

 

1,386

 

Other non-current assets

 

48,042

 

 

 

49,273

 

 

 

43,847

 

Total assets

$

612,132

 

 

$

645,380

 

 

$

595,041

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Loans payable to bank, current

$

 

 

$

25,000

 

 

$

5,000

 

Accounts payable

 

29,333

 

 

 

24,364

 

 

 

22,981

 

Accrued liabilities

 

43,972

 

 

 

47,943

 

 

 

37,530

 

Income taxes payable

 

4,650

 

 

 

2,989

 

 

 

1,349

 

Total current liabilities

 

77,955

 

 

 

100,296

 

 

 

66,860

 

Loans payable to bank

 

 

 

 

 

 

 

25,000

 

Deferred and non-current income taxes payable

 

32,998

 

 

 

33,063

 

 

 

3,312

 

Other non-current liabilities

 

40,231

 

 

 

41,686

 

 

 

35,349

 

Total liabilities

 

151,184

 

 

 

175,045

 

 

 

130,521

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

 

 

 

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;

   27,579,421, 27,342,802 and 27,286,230 shares issued and outstanding,

   respectively

 

276

 

 

 

273

 

 

 

273

 

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

   6,626,950, 6,641,950 and 6,651,950 shares issued and outstanding,

   respectively

 

66

 

 

 

66

 

 

 

67

 

Capital in excess of par value

 

194,792

 

 

 

189,808

 

 

 

186,628

 

Retained earnings

 

391,526

 

 

 

388,739

 

 

 

408,778

 

Accumulated other comprehensive income

 

85,004

 

 

 

100,343

 

 

 

74,893

 

Treasury Stock, 11,093,282, 11,046,671 and 10,943,527 shares,

   respectively, at cost

 

(210,716

)

 

 

(208,894

)

 

 

(206,119

)

Total Movado Group, Inc. shareholders' equity

 

460,948

 

 

 

470,335

 

 

 

464,520

 

Total liabilities and equity

$

612,132

 

 

$

645,380

 

 

$

595,041

 

 

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,

 

 

2018

 

 

2017

 

Net sales

$

127,149

 

 

$

99,265

 

Cost of sales

 

59,625

 

 

 

50,128

 

Gross profit

 

67,524

 

 

 

49,137

 

Selling, general, and administrative

 

59,385

 

 

 

52,785

 

Operating income / (loss)

 

8,139

 

 

 

(3,648

)

Interest expense

 

(222

)

 

 

(356

)

Interest income

 

57

 

 

 

122

 

Income / (loss) before income taxes

 

7,974

 

 

 

(3,882

)

(Benefit) / provision for income taxes (Note 10)

 

(141

)

 

 

277

 

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

$

8,115

 

 

$

(4,159

)

 

 

 

 

 

 

 

 

Basic income per share:

 

 

 

 

 

 

 

Weighted basic average shares outstanding

 

23,097

 

 

 

23,075

 

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

$

0.35

 

 

$

(0.18

)

 

 

 

 

 

 

 

 

Diluted income per share:

 

 

 

 

 

 

 

Weighted diluted average shares outstanding

 

23,448

 

 

 

23,075

 

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

$

0.35

 

 

$

(0.18

)

 

 

 

 

 

 

 

 

Dividends declared per share

$

0.20

 

 

$

0.13

 

 

See Notes to Consolidated Financial Statements

 

 

4


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

Three Months Ended April 30,

 

 

2018

 

 

2017

 

Comprehensive income / (loss), net of taxes:

 

 

 

 

 

 

 

Net income / (loss)

$

8,115

 

 

$

(4,159

)

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

   $(5) and $(6), respectively

 

14

 

 

 

(12

)

Net change in effective portion of hedging contracts, net of tax

   (benefit) of $(25) and $(26), respectively

 

(127

)

 

 

(145

)

Foreign currency translation adjustments

 

(15,226

)

 

 

(1,730

)

Total other comprehensive (loss), net of taxes

$

(15,339

)

 

$

(1,887

)

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

$

(7,224

)

 

$

(6,046

)

 

See Notes to Consolidated Financial Statements

 

 

5


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended April 30,

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income / (loss)

$

8,115

 

 

$

(4,159

)

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

 

 

 

 

 

 

 

Depreciation and amortization

 

3,383

 

 

 

2,885

 

Transactional (gains)

 

(242

)

 

 

(712

)

Write-down of inventories

 

483

 

 

 

359

 

Deferred income taxes

 

(1,553

)

 

 

(64

)

Stock-based compensation

 

1,214

 

 

 

1,243

 

Cost savings initiative

 

 

 

 

6,334

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Trade receivables

 

443

 

 

 

493

 

Inventories

 

(11,548

)

 

 

(7,953

)

Other current assets

 

(6,583

)

 

 

(3,833

)

Accounts payable

 

5,690

 

 

 

(4,155

)

Accrued liabilities

 

(3,315

)

 

 

(3,981

)

Income taxes payable

 

1,722

 

 

 

(2,800

)

Other non-current assets

 

988

 

 

 

(1,489

)

Other non-current liabilities

 

(1,417

)

 

 

1,278

 

Net cash (used in) operating activities

 

(2,620

)

 

 

(16,554

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(1,686

)

 

 

(397

)

Trademarks and other intangibles

 

(168

)

 

 

(40

)

Net cash (used in) investing activities

 

(1,854

)

 

 

(437

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Repayments of bank borrowings

 

(25,000

)

 

 

 

Stock options exercised and other changes

 

3,105

 

 

 

(692

)

Dividends paid

 

(4,604

)

 

 

(2,982

)

Stock repurchase

 

(1,186

)

 

 

(1,028

)

Net cash (used in) financing activities

 

(27,685

)

 

 

(4,702

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

(5,693

)

 

 

(992

)

Net (decrease) in cash, cash equivalents, and restricted cash

 

(37,852

)

 

 

(22,685

)

Cash, cash equivalents, and restricted cash at beginning of period

 

215,411

 

 

 

256,879

 

Cash, cash equivalents, and restricted cash at end of period

$

177,559

 

 

$

234,194

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash:

 

 

 

 

 

 

 

Cash and cash equivalents

$

176,959

 

 

$

233,594

 

Restricted cash included in other non-current assets

 

600

 

 

 

600

 

Cash, cash equivalents, and restricted cash

$

177,559

 

 

$

234,194

 

 

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, 2018 (the “2018 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, 2018 is derived from the audited annual financial statements, which are included in the Company’s 2018 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

As discussed below in Note 2 Changes to Critical Accounting Policies, certain reclassifications were made to prior years’ financial statement amounts and related note disclosures to conform to fiscal 2019 presentation.

 

 

NOTE 2 - CHANGES TO CRITICAL ACCOUNTING POLICIES

Revenue

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) which supersedes nearly all existing revenue recognition guidance. Subsequent to the issuance of Topic 606, the FASB clarified the guidance through several Accounting Standard Updates; hereinafter the collection of revenue guidance is referred to as “ASC 606”.

 

On February 1, 2018, the Company adopted ASC 606 using the modified retrospective method and the Company recognized a reduction of $0.7 million to opening retained earnings as the cumulative effect of adopting the new revenue standard. This adjustment did not have a material impact on the Company’s Consolidated Financial Statements. (See Note 17 - Revenue for additional disclosures required by ASC 606).

Statement of Cash Flows

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) — Restricted Cash,” which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. With this standard, amounts generally described as restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. We adopted this guidance on February 1, 2018, and the guidance has been retrospectively applied to all periods presented. The changes to the beginning of period balance presented in the consolidated statement of cash flows are as follows (in thousands):

 

 

 

January 31, 2018

 

January 31, 2017

 

 

 

 

 

 

 

As previously

 

 

 

 

 

As previously

 

 

 

 

As adjusted

 

 

reported

 

 

As adjusted

 

 

reported

 

Cash and cash equivalents

 

$

214,811

 

$

214,811

 

$

256,279

 

$

256,279

 

Restricted funds included in other non-current

   assets

 

 

600

 

 

 

 

600

 

 

 

Beginning of period balance presented in the

   statement of cash flows

 

$

215,411

 

$

214,811

 

$

256,879

 

$

256,279

 

 

 

7


 

NOTE 3 – 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, 2018 and 2017 and January 31, 2018:

 

 

  

 

  

Fair Value at April 30, 2018

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

251

 

 

$

 

 

$

 

 

$

251

 

Short-term investment

 

Other current assets

 

 

157

 

 

 

 

 

 

 

 

 

157

 

SERP assets - employer

 

Other non-current assets

 

 

1,008

 

 

 

 

 

 

 

 

 

1,008

 

SERP assets - employee

 

Other non-current assets

 

 

37,210

 

 

 

 

 

 

 

 

 

37,210

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

124

 

 

 

 

 

 

124

 

Total

 

$

38,626

 

 

$

124

 

 

$

 

 

$

38,750

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

37,210

 

 

$

 

 

$

 

 

$

37,210

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

704

 

 

 

 

 

 

704

 

Total

 

$

37,210

 

 

$

704

 

 

$

 

 

$

37,914

 

 

 

  

 

  

Fair Value at January 31, 2018

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

275

 

 

$

 

 

$

 

 

$

275

 

Short-term investment

 

Other current assets

 

 

164

 

 

 

 

 

 

 

 

 

164

 

SERP assets - employer

 

Other non-current assets

 

 

994

 

 

 

 

 

 

 

 

 

994

 

SERP assets - employee

 

Other non-current assets

 

 

38,577

 

 

 

 

 

 

 

 

 

38,577

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

544

 

 

 

 

 

 

544

 

Total

 

$

40,010

 

 

$

544

 

 

$

 

 

$

40,554

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

38,577

 

 

$

 

 

$

 

 

$

38,577

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

46

 

 

 

 

 

 

46

 

Total

 

$

38,577

 

 

$

46

 

 

$

 

 

$

38,623

 

 

 

  

 

  

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

 

$

32,421

 

 

$

162

 

 

$

 

 

$

32,583

 

 

8


 

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 and Euro exchange rate risks. Fair values of the Company’s hedge derivatives are calculated based on quoted foreign exchange rates and quoted interest rates.

 

 

NOTE 4 – EQUITY

The components of equity for the three months ended April 30, 2018 and 2017 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

 

 

Total

 

Balance, January 31, 2018

 

$

273

 

 

$

66

 

 

$

189,808

 

 

$

388,739

 

 

$

(208,894

)

 

$

100,343

 

 

$

470,335

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,115

 

 

 

 

 

 

 

 

 

 

 

8,115

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,604

)

 

 

 

 

 

 

 

 

 

 

(4,604

)

Adoption of new revenue recognition

   standard (Topic 606)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(724

)

 

 

 

 

 

 

 

 

 

 

(724

)

Stock repurchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,186

)

 

 

 

 

 

 

(1,186

)

Stock options exercised

 

 

3

 

 

 

 

 

 

 

3,738

 

 

 

 

 

 

 

(636

)

 

 

 

 

 

 

3,105

 

Supplemental executive

   retirement plan

 

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

1,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,214

 

Net unrealized gain on

   investments, net of tax of $5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

14

 

Net change in effective

   portion of hedging contracts,

   net of tax benefit of $25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(127

)

 

 

(127

)

Foreign currency translation

   adjustment (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,226

)

 

 

(15,226

)

Balance, April 30, 2018

 

$

276

 

 

$

66

 

 

$

194,792

 

 

$

391,526

 

 

$

(210,716

)

 

$

85,004

 

 

$

460,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

Stock (1)

 

 

Class A

Common

Stock (2)

 

 

Capital in

Excess of

Par Value

 

 

Retained

Earnings

 

 

Treasury

Stock

 

 

Accumulated

Other

Comprehensive

Income

 

 

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 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

 

 

(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.

 

 

9


 

NOTE 5 – 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.

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 owned 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 32.5%, 10.8%, 10.4% and 7.9%, respectively, of the Company’s total net sales for the three months ended April 30, 2018. For the three months ended April 30, 2017, 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. 

 

Operating Segment Data for the Three Months Ended April 30, 2018 and 2017 (in thousands):

 

 

Net Sales

 

 

2018

 

 

2017

 

Wholesale:

 

 

 

 

 

 

 

Owned brands category

$

41,583

 

 

$

33,142

 

Licensed brands category

 

65,850

 

 

 

51,369

 

After-sales service and all other

 

4,666

 

 

 

2,649

 

Total Wholesale

 

112,099

 

 

 

87,160

 

Retail

 

15,050

 

 

 

12,105

 

Consolidated total

$

127,149

 

 

$

99,265

 

 

 

Operating Income / (Loss) (3) (4)

 

 

2018

 

 

2017

 

Wholesale

$

6,366

 

 

$

(4,488

)

Retail

 

1,773

 

 

 

840

 

Consolidated total

$

8,139

 

 

$

(3,648

)

 

 

 

Total Assets

 

 

April 30,

2018

 

  

January 31,

2018

 

  

April 30,

2017

 

Wholesale

$

587,052

 

 

$

621,965

 

 

$

570,552

 

Retail

 

25,080

 

 

 

23,415

 

 

 

24,489

 

Consolidated total

$

612,132

 

 

$

645,380

 

 

$

595,041

 

Geographic Location Data for the Three Months Ended April 30, 2018 and 2017 (in thousands):

 

 

Net Sales

 

  

Operating (Loss) / Income (3) (4)

 

 

2018

 

  

2017

 

  

2018

 

  

2017

 

United States (1)

$

48,843

 

 

$

44,795

 

 

$

(5,982

)

 

$

(9,781

)

International (2)

 

78,306

 

 

 

54,470

 

 

 

14,121