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 October 31, 2013

 

¨

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 ¨

Accelerated filer x

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 November 19, 2013 were 18,766,839 and 6,638,262, respectively.

      

      

   

   

                       

 

   


   

MOVADO GROUP, INC.

Index to Quarterly Report on Form 10-Q

October 31, 2013

   

 

    Page

Part I

Financial Information (Unaudited)

   

   

   

   

   

Item 1.

Consolidated Balance Sheets at October 31, 2013, January 31, 2013 and October 31, 2012  

 

 3

   

   

   

   

   

   

Consolidated Statements of Operations for the three months and nine months ended October 31, 2013 and 2012  

 

 4

   

   

   

   

   

   

Consolidated Statements of Comprehensive Income for the three months and nine months ended October 31, 2013 and 2012  

 

 5

   

   

   

   

   

   

Consolidated Statements of Cash Flows for the nine months ended October 31, 2013 and 2012  

 

 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  

 

 25

   

   

   

   

   

Item 4.

Controls and Procedures  

 

 26

   

   

   

   

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)

   

 

   

October 31,
2013

   

   

January 31,
2013

   

   

October 31,
2012

   

ASSETS

   

   

   

      

   

   

   

   

   

   

   

Current assets:

   

   

   

      

   

   

   

   

   

   

   

Cash and cash equivalents

$

163,146

      

      

$

167,889

   

   

$

164,813

      

Trade receivables

   

123,215

      

      

   

64,300

   

   

   

107,138

      

Inventories

   

175,542

      

      

   

164,354

   

   

   

169,668

      

Other current assets

   

35,429

      

      

   

37,556

   

   

   

34,339

      

Total current assets

   

497,332

      

      

   

434,099

   

   

   

475,958

      

   

   

   

   

   

   

   

   

   

   

   

   

Property, plant and equipment, net

   

46,512

      

      

   

44,501

   

   

   

35,541

      

Deferred income taxes

   

21,881

      

      

   

22,749

   

   

   

26,863

      

Other non-current assets

   

29,266

      

      

   

25,013

   

   

   

24,009

      

Total assets

$

594,991

      

      

$

526,362

   

   

$

562,371

      

LIABILITIES AND EQUITY

   

   

   

      

   

   

   

   

   

   

   

Current liabilities:

   

   

   

      

   

   

   

   

   

   

   

Accounts payable

$

36,620

      

      

$

22,075

   

   

$

29,770

      

Accrued liabilities

   

51,172

      

      

   

51,136

   

   

   

63,494

      

Deferred and current income taxes payable

   

15,272

      

      

   

275

   

   

   

12,842

      

Total current liabilities

   

103,064

      

      

   

73,486

   

   

   

106,106

      

   

   

   

   

   

   

   

   

   

   

   

   

Deferred and non-current income taxes payable

   

3,930

      

      

   

5,637

   

   

   

4,548

      

Other non-current liabilities

   

25,329

      

      

   

21,547

   

   

   

20,318

      

Total liabilities

   

132,323

      

      

   

100,670

   

   

   

130,972

      

   

   

   

   

   

   

   

   

   

   

   

   

Commitments and contingencies (Note 7)

   

   

   

      

   

   

   

   

   

   

   

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; 26,639,590, 26,440,975 and 26,399,239 shares issued, respectively

   

266

      

      

   

264

   

   

   

264

      

Class A Common Stock, $0.01 par value, 30,000,000 shares authorized; 6,638,262, 6,632,967 and 6,632,967 shares issued and outstanding, respectively

   

66

      

      

   

66

   

   

   

66

      

Capital in excess of par value

   

163,907

      

      

   

159,696

   

   

   

158,912

      

Retained earnings

   

311,174

      

      

   

272,094

   

   

   

284,514

      

Accumulated other comprehensive income

   

103,974

      

      

   

102,271

   

   

   

96,110

      

Treasury Stock, 7,870,381, 7,634,649 and 7,708,527 shares, respectively, at cost

   

(119,312

)

      

   

(110,701

   

   

(111,569

Total Movado Group, Inc. shareholders’ equity

   

460,075

      

      

   

423,690

   

   

   

428,297

      

Noncontrolling interests

   

2,593

      

      

   

2,002

   

   

   

3,102

      

Total equity

   

462,668

      

      

   

425,692

   

   

   

431,399

      

Total liabilities and equity

$

594,991

      

      

$

526,362

   

   

$

562,371

      

See Notes to Consolidated Financial Statements

   

   

   

 

 

 3 

   


   

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

   

 

   

Three Months Ended October 31,

   

   

Nine Months Ended October 31,

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

Net sales

$

189,685

      

      

$

160,202

      

   

$

437,996

      

      

$

381,884

      

Cost of sales

   

88,415

      

      

   

69,783

      

   

   

201,989

      

      

   

166,682

      

Gross profit

   

101,270

      

      

   

90,419

      

   

   

236,007

      

      

   

215,202

      

Selling, general and administrative

   

67,186

      

      

   

65,429

      

   

   

174,878

      

      

   

170,975

      

Operating income

   

34,084

      

      

   

24,990

      

   

   

61,129

      

      

   

44,227

      

Other income (Note 11)

   

—  

      

      

   

—  

      

   

   

1,526

      

      

   

—  

      

Interest expense

   

(114

      

   

(69

   

   

(294

)

      

   

(287

Interest income

   

14

      

      

   

66

      

   

   

53

      

      

   

84

      

Income before income taxes

   

33,984

      

      

   

24,987

      

   

   

62,414

      

      

   

44,024

      

Provision for / (benefit from) income taxes (Note 8)

   

10,570

      

      

   

(9,866

)  

   

   

18,166

      

      

   

(5,744

)  

Net income

   

23,414

      

      

   

34,853

      

   

   

44,248

      

      

   

49,768

      

Less: Net income attributed to noncontrolling interests

   

395

      

      

   

380

      

   

   

564

      

      

   

604

      

Net income attributed to Movado Group, Inc.

$

23,019

      

      

$

34,473

      

   

$

43,684

      

      

$

49,164

      

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Basic income per share:

   

   

   

      

   

   

   

   

   

   

   

      

   

   

   

Weighted basic average shares outstanding

   

25,495

      

      

   

25,304

      

   

   

25,528

      

      

   

25,204

      

Net income per share attributed to Movado Group, Inc.

$

0.90

      

      

$

1.36

      

   

$

1.71

      

      

$

1.95

      

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Diluted income per share:

   

   

   

      

   

   

   

   

   

   

   

      

   

   

   

Weighted diluted average shares outstanding

   

25,842

      

      

   

25,710

      

   

   

25,855

      

      

   

25,598

      

Net income per share attributed to Movado Group, Inc.

$

0.89

      

      

$

1.34

      

   

$

1.69

      

      

$

1.92

      

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Dividends declared per share

$

0.08

      

      

$

0.05

      

   

$

0.18

      

      

$

0.65

      

See Notes to Consolidated Financial Statements

   

   

 

 

 4 

   


   

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

   

 

   

Three Months Ended October 31,

   

   

Nine Months Ended October 31,

   

   

2013

   

   

2012

   

   

2013

   

   

2012

   

Comprehensive income, net of taxes:

   

   

   

      

   

   

   

   

   

   

   

      

   

   

   

Net income including noncontrolling interests

$

23,414

      

      

$

34,853

      

   

$

44,248

      

      

$

49,768

      

Net unrealized gain on investments

   

97

      

      

   

38

   

   

   

210

      

      

   

14

   

Net change in hedging contracts

   

—  

   

   

   

990

   

   

   

—  

   

   

   

990

   

Foreign currency translation adjustments

   

5,813

      

      

   

11,439

   

   

   

1,520

   

      

   

(2,792

Comprehensive income including noncontrolling interests

   

29,324

      

      

   

47,320

   

   

   

45,978

      

      

   

47,980

      

Less: Comprehensive income attributable to noncontrolling interests

   

444

      

      

   

488

   

   

   

591

      

      

   

628

      

Total comprehensive income attributable to Movado Group, Inc.

$

28,880

      

      

$

46,832

   

   

$

45,387

      

      

$

47,352

      

See Notes to Consolidated Financial Statements

   

   

 

 

 5 

   


   

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

   

 

   

Nine Months Ended October 31,

   

   

2013

   

      

2012

   

Cash flows from operating activities:

   

   

   

      

   

   

   

Net income including noncontrolling interests

$

44,248

      

      

$

49,768

   

Adjustments to reconcile net income to net cash provided by operating activities:

   

   

   

      

   

   

   

Depreciation and amortization

   

8,693

      

      

   

8,036

   

Transactional losses

   

309

      

      

   

—  

   

Write-down of inventories

   

1,871

      

      

   

1,777

   

Deferred income taxes

   

(872

      

   

(19,088

)

Stock-based compensation

   

2,699

      

      

   

2,065

   

Excess tax benefit from stock-based compensation

   

(583

      

   

—  

   

Gain on sale of an asset held for sale

   

(1,526

      

   

—  

   

Changes in assets and liabilities:

   

   

   

      

   

   

   

Trade receivables

   

(58,713

      

   

(44,384

)

Inventories

   

(12,787

      

   

(8,758

)

Other current assets

   

3,316

   

      

   

(2,648

)

Accounts payable

   

14,432

      

      

   

(3,830

)

Accrued liabilities

   

1,581

   

      

   

10,939

   

Income taxes payable

   

15,563

      

      

   

12,349

   

Other non-current assets

   

(4,360

      

   

(2,465

)

Other non-current liabilities

   

2,745

      

      

   

2,029

   

Net cash provided by operating activities

   

16,616

   

      

   

5,790

   

Cash flows from investing activities:

   

   

   

      

   

   

   

Capital expenditures

   

(11,895

      

   

(6,524

)

Trademarks

   

(225

      

   

(251

)

Proceeds from sale of an asset held for sale

   

2,196

      

      

   

—  

   

Net cash (used in) investing activities

   

(9,924

      

   

(6,775

)

Cash flows from financing activities:

   

   

   

      

   

   

   

Stock options exercised and other changes

   

(249

      

   

1,695

   

Excess tax benefit from stock-based compensation

   

583

      

      

   

—  

   

Dividends paid

   

(4,604

      

   

(16,345

)

Distribution of noncontrolling interest earnings

   

—  

   

   

   

(234

)

Stock repurchase

   

(7,450

      

   

—  

   

Net cash (used in) financing activities

   

(11,720

      

   

(14,884

)

   

   

   

   

   

   

   

   

Effect of exchange rate changes on cash and cash equivalents

   

285

   

      

   

(1,519

)

Net (decrease) in cash and cash equivalents

   

(4,743

      

   

(17,388

)

Cash and cash equivalents at beginning of period

   

167,889

      

      

   

182,201

   

Cash and cash equivalents at end of period

$

163,146

      

      

$

164,813

   

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 fiscal 2013 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, 2013 is derived from the audited annual financial statements, which are included in the Company’s 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 table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of October 31, 2013 (in thousands):

   

 

   

Fair Value at October 31, 2013

   

   

Level 1

   

      

Level 2

   

      

Level 3

   

      

Total

   

Assets:

   

   

   

      

   

   

   

      

   

   

   

      

   

   

   

Available-for-sale securities

$

496

      

      

$

—  

      

      

$

—  

      

      

$

496

      

SERP assets – employer

   

1,329

      

      

   

—  

      

      

   

—  

      

      

   

1,329

      

SERP assets – employee

   

19,999

      

      

   

—  

      

      

   

—  

      

      

   

19,999

      

Hedge derivatives

   

—  

      

      

   

1,391

      

      

   

—  

      

      

   

1,391

      

Total

$

21,824

      

      

$

1,391

      

      

$

—  

      

      

$

23,215

      

Liabilities:

   

   

   

      

   

   

   

      

   

   

   

      

   

   

   

SERP liabilities – employee

$

19,999

      

      

$

—  

      

      

$

—  

      

      

$

19,999

      

Hedge derivatives

   

—  

      

      

   

93

      

      

   

—  

      

      

   

93

      

Total

$

19,999

      

      

$

93

      

      

$

—  

      

      

$

20,092

      

The fair values of the Company’s available-for-sale securities are based on quoted prices. The hedge derivatives are entered into by the Company principally to reduce its exposure to the Swiss franc 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 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.

   

   

 

 

 7 

   


   

   

NOTE 2 – EQUITY

The components of equity for the nine months ended October 31, 2013 and 2012 are as follows (in thousands):

   

 

   

Movado Group, Inc. Shareholders’ Equity

   

   

   

   

   

   

   

   

Common
Stock

   

      

Class A
Common
Stock

   

      

Capital in
Excess of
Par Value

   

      

Retained
Earnings

   

   

Treasury
Stock

   

   

Accumulated
Other
Comprehensive
Income

   

   

Noncontrolling
Interests

   

   

Total

   

Balance, January 31, 2013

$

264

   

   

$

66

   

   

$

159,696

   

   

$

272,094

   

   

$

(110,701

)

   

$

102,271

   

   

$

2,002

   

   

$

425,692

   

Net income

   

   

   

   

   

   

   

   

   

   

   

   

   

43,684

   

   

   

   

   

   

   

   

   

   

   

564

   

   

   

44,248

   

Dividends declared

   

   

   

   

   

   

   

   

   

   

   

   

   

(4,604

)

   

   

   

   

   

   

   

   

   

   

   

   

   

   

(4,604

)

Stock repurchase

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

(7,450

)

   

   

   

   

   

   

   

   

   

   

(7,450

)

Stock options exercised, net of tax benefit of $583

   

2

   

   

   

   

   

   

   

1,493

   

   

   

   

   

   

   

(1,161

)

   

   

   

   

   

   

   

   

   

   

334

   

Supplemental executive retirement plan

   

   

   

   

   

   

   

   

   

19

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

19

   

Stock-based compensation expense

   

   

   

   

   

   

   

   

   

2,699

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

2,699

   

Net unrealized gain on investments, net of tax

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

210

   

   

   

   

   

   

   

210

   

Foreign currency translation adjustment (1)

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

1,493

   

   

   

27

   

   

   

1,520

   

Balance, October 31, 2013

$

266

   

   

$

66

   

   

$

163,907

   

   

$

311,174

   

   

$

(119,312

)

   

$

103,974

   

   

$

2,593

   

   

$

462,668

   

   

 

   

Common
Stock

   

      

Class A
Common
Stock

   

      

Capital in
Excess of
Par Value

   

      

Retained
Earnings

   

   

Treasury
Stock

   

   

Accumulated
Other
Comprehensive
Income

   

   

Noncontrolling
Interests

   

   

Total

   

Balance, January 31, 2012

$

261

   

   

$

66

   

   

$

153,331

   

   

$

251,695

   

   

$

(111,909

)

   

$

97,922

   

   

$

2,708

   

   

$

394,074

   

Net income

   

   

   

   

   

   

   

   

   

   

   

   

   

49,164

   

   

   

   

   

   

   

   

   

   

   

604

   

   

   

49,768

   

Dividends declared

   

   

   

   

   

   

   

   

   

   

   

   

   

(16,345

)

   

   

   

   

   

   

   

   

   

   

   

   

   

   

(16,345

)

Distribution of noncontrolling interest earnings

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

(234

)

   

   

(234

)

Stock options exercised, net of tax

   

3

   

   

   

   

   

   

   

2,671

   

   

   

   

   

   

   

(1,099

)

   

   

   

   

   

   

   

   

   

   

1,575

   

Supplemental executive retirement plan

   

   

   

   

   

   

   

   

   

120

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

120

   

Stock-based compensation expense

   

   

   

   

   

   

   

   

   

2,065

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

2,065

   

Net unrealized gain on investments, net of tax

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

14

   

   

   

   

   

   

   

14

   

Net change in hedging contracts, net of tax

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

990

   

   

   

   

   

   

   

990

   

Stock donation

   

   

   

   

   

   

   

   

   

725

   

   

   

   

   

   

   

1,439

   

   

   

   

   

   

   

   

   

   

   

2,164

   

Foreign currency translation adjustment (1)

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

(2,816

)

   

   

24

   

   

   

(2,792

)

Balance, October 31, 2012

$

264

   

   

$

66

   

   

$

158,912

   

   

$

284,514

   

   

$

(111,569

)

   

$

96,110

   

   

$

3,102

   

   

$

431,399

   

 

(1)

The currency translation adjustment is not adjusted for income taxes to the extent that they relate to permanent investments 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.

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

 

 

 8 

   


   

The Company divides its business into two major geographic locations: United States operations, and International, the latter of 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 were principally conducted in Europe, the Americas (excluding the United States), the Middle East and Asia and accounted for 19.5%, 9.6%, 7.2% and 7.2%, respectively, of the Company’s total net sales for the three months ended October 31, 2013. For the three months ended October 31, 2012, the Company’s international operations were principally conducted in Europe, the Americas (excluding the United States), Asia and the Middle East and accounted for 20.0%, 11.5%, 7.7% and 6.4%, respectively, of the Company’s total net sales.

The Company’s international operations were principally conducted in Europe, the Americas (excluding the United States), the Middle East and Asia and accounted for 19.4%, 10.6%, 8.0% and 7.8%, respectively, of the Company’s total net sales for the nine months ended October 31, 2013. For the nine months ended October 31, 2012, the Company’s international operations were principally conducted in Europe, the Americas (excluding the United States), Asia and the Middle East and accounted for 19.8%, 12.5%, 9.0% and 6.9%, respectively, of the Company’s total net sales. Substantially all of the Company’s international assets are located in Switzerland.

Operating Segment Data for the Three Months Ended October 31, 2013 and 2012 (in thousands):

   

 

   

Net Sales

   

   

Operating Income

   

   

2013

   

      

2012

   

      

2013

   

      

2012

   

Wholesale

$

174,946

      

      

$

147,280

      

      

$

31,056

      

      

$

22,756

      

Retail

   

14,739

      

      

   

12,922

      

      

   

3,028

      

      

   

2,234

      

Consolidated total

$

189,685

      

      

$

160,202

      

      

$

34,084

      

      

$

24,990

      

Operating Segment Data for the Nine Months Ended October 31, 2013 and 2012 (in thousands):

   

 

   

Net Sales

   

      

Operating Income

   

   

2013

   

      

2012

   

      

2013

   

      

2012

   

Wholesale

$

398,677

      

      

$

345,252

      

      

$

54,062

      

      

$

37,665

      

Retail

   

39,319

      

      

   

36,632

      

      

   

7,067

      

      

   

6,562

      

Consolidated total

$

437,996

      

      

$

381,884

      

      

$

61,129

      

      

$

44,227

      

   

 

   

Total Assets

   

   

October 31,
2013

   

      

January 31,
2013

   

      

October 31,
2012

   

Wholesale

$

574,047

      

      

$

507,672

      

      

$

542,588

      

Retail

   

20,944

      

      

   

18,690

      

      

   

19,783

      

Consolidated total

$

594,991

      

      

$

526,362

      

      

$

562,371

      

Geographic Location Data for the Three Months Ended October 31, 2013 and 2012 (in thousands):

   

 

   

Net Sales

   

      

Operating Income 

   

   

2013

   

      

2012

   

      

2013

   

      

2012

   

United States

$

107,214

      

      

$

87,231

      

      

$

12,300

      

      

$

3,972

   

International

   

82,471

      

      

   

72,971

      

      

   

21,784

      

      

   

21,018

   

Consolidated total

$

189,685

      

      

$

160,202

      

      

$

34,084

      

      

$

24,990

   

United States and International net sales are net of intercompany sales of $104.1 million and $93.2 million for the three months ended October 31, 2013 and 2012, respectively.

 

 

 9 

   


   

Geographic Location Data for the Nine Months Ended October 31, 2013 and 2012 (in thousands):

   

 

   

Net Sales

   

      

Operating Income / (Loss)

   

   

2013

   

      

2012

   

      

2013

   

      

2012

   

United States

$

237,612

      

      

$

198,032

      

      

$

14,821

      

      

$

(3,529

)

International

   

200,384

      

      

   

183,852

      

      

   

46,308

      

      

   

47,756

   

Consolidated total

$

437,996

      

      

$

381,884

      

      

$

61,129

      

      

$

44,227

   

United States and International net sales are net of intercompany sales of $258.5 million and $211.5 million for the nine months ended October 31, 2013 and 2012, respectively.

   

 

   

      

Total Assets

   

   

      

October 31,
2013

   

      

January 31,
2013

   

      

October 31,
2012

   

United States

      

$

261,463

      

      

$

208,273

      

      

$

248,062

      

International

      

   

333,528

      

      

   

318,089

      

      

   

314,309

      

Consolidated total

      

$

594,991

      

      

$

526,362

      

      

$

562,371

      

   

 

   

      

Long-Lived Assets

   

   

      

October 31,
2013

   

      

January 31,
2013

   

      

October 31,
2012

   

United States

      

$

25,064

      

      

$

26,682

      

      

$

26,010

      

International

      

   

21,448

      

      

   

17,819

      

      

   

9,531

      

Consolidated total

      

$

46,512

      

      

$

44,501

      

      

$

35,541

      

   

   

NOTE 4 – INVENTORIES

Inventories consisted of the following (in thousands):

   

 

   

October 31,
2013

   

   

January 31,
2013

   

      

October 31,
2012

   

Finished goods

$

110,247

   

   

$

101,830

   

   

$

104,531

   

Component parts

   

56,665

   

   

   

53,061

   

   

   

55,892

   

Work-in-process

   

8,630

   

   

   

9,463

   

   

   

9,245

   

   

$

175,542

   

   

$

164,354

   

   

$

169,668

   

   

   

NOTE 5 – DEBT AND LINES OF CREDIT

On July 17, 2009, the Company, together with Movado Group Delaware Holdings Corporation, Movado Retail Group, Inc. and Movado LLC (together with the Company, the “Borrowers”), each a wholly-owned domestic subsidiary of the Company, entered into an Amended and Restated Loan and Security Agreement (the “Original Loan Agreement”) with Bank of America, N.A. and Bank Leumi USA, as lenders (“Lenders”), and Bank of America, N.A., as agent (in such capacity, the “Agent”). The parties amended the Original Loan Agreement by entering into Amendment No. 1 thereto (“First Amendment”) on April 5, 2011 and Amendment No. 2 thereto (“Second Amendment”) on March 12, 2012 (the Original Loan Agreement, as so amended, the “Loan Agreement”). The Loan Agreement provides for a $25.0 million asset based senior secured revolving credit facility (the “Facility”), including a $15.0 million letter of credit subfacility, and provides that Borrowers are entitled to request that Lenders increase the Facility up to $50 million subject to any additional terms and conditions the parties may agree upon. The maturity date of the Facility is March 12, 2015.

Availability under the Facility is determined by reference to a borrowing base which is based on the sum of a percentage of eligible accounts receivable and eligible inventory of the Borrowers. $10.0 million in availability is blocked unless the Borrowers have achieved for the most recently ended four fiscal quarter periods a consolidated fixed charge coverage ratio of at least 1.25 to 1.0 with domestic EBITDA greater than $10.0 million. The Borrowers are not currently subject to the availability block. The availability block, if applicable, will be reduced by the amount by which the borrowing base exceeds $25.0 million, up to a maximum reduction of $5.0 million. Availability under the Facility may be further reduced by certain reserves established by the Agent in its good faith credit judgment. The Second Amendment reduced the Lenders’ total commitment under the Loan Agreement from $55 million to $25

 

 

 10