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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 July 31, 2002
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File Number 0-21764
 

 
PERRY ELLIS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
 
Florida
 
59-1162998
(State or other jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
3000 N.W. 107 Avenue
   
Miami, Florida
 
33172
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s Telephone Number, Including Area Code: (305) 592-2830
 
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 such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x    No  ¨
 
The number of shares outstanding of the registrant’s common stock is 6,416,390 (as of September 12, 2002).
 


Table of Contents
PERRY ELLIS INTERNATIONAL, INC.
 
INDEX
 
    
PAGE

PART I: FINANCIAL INFORMATION
    
Item 1:
    
  
1
  
2
  
3
  
4
Item 2:
    
  
19
Item 3:
    
  
26
Item 4:
    
  
27
  
28
  
29
  
30


Table of Contents
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
    
July 31, 2002

    
January 31, 2002

 
ASSETS
                 
Current Assets:
                 
Cash and cash equivalents
  
$
28,037,263
 
  
$
1,303,978
 
Accounts receivable, net
  
 
53,390,781
 
  
 
50,370,245
 
Inventories, net
  
 
33,192,190
 
  
 
45,409,047
 
Deferred income taxes
  
 
2,485,355
 
  
 
2,384,316
 
Prepaid income taxes
  
 
1,372,454
 
  
 
—  
 
Other current assets
  
 
3,231,176
 
  
 
1,886,163
 
    


  


Total current assets
  
 
121,709,219
 
  
 
101,353,749
 
Property and equipment, net
  
 
27,361,145
 
  
 
10,897,334
 
Intangible assets, net
  
 
142,307,981
 
  
 
117,938,894
 
Other
  
 
10,669,352
 
  
 
3,870,703
 
    


  


TOTAL
  
$
302,047,697
 
  
$
234,060,680
 
    


  


LIABILITIES & STOCKHOLDERS' EQUITY
                 
Current Liabilities:
                 
Accounts payable
  
$
10,451,666
 
  
$
5,966,369
 
Accrued expenses
  
 
5,625,220
 
  
 
3,259,602
 
Income taxes payable
  
 
—  
 
  
 
1,381,551
 
Accrued interest payable
  
 
4,861,960
 
  
 
3,808,997
 
Current portion—senior credit facility
  
 
—  
 
  
 
21,756,094
 
Unearned revenues
  
 
2,136,863
 
  
 
1,838,929
 
Other current liabilities
  
 
2,834,242
 
  
 
2,410,583
 
    


  


Total current liabilities
  
 
25,909,951
 
  
 
40,422,125
 
Senior subordinated notes payable, net
  
 
100,672,892
 
  
 
99,071,515
 
Senior secured notes payable, net
  
 
59,144,023
 
  
 
—  
 
Real estate mortgage
  
 
11,600,000
 
  
 
—  
 
Deferred income tax
  
 
8,688,608
 
  
 
6,749,832
 
    


  


Total long-term liabilities
  
 
180,105,523
 
  
 
105,821,347
 
    


  


Total liabilities
  
 
206,015,474
 
  
 
146,243,472
 
    


  


Minority Interest
  
 
623,516
 
  
 
613,671
 
    


  


Stockholders' Equity:
                 
Preferred stock $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding
  
 
—  
 
  
 
—  
 
Class A Common stock $.01 par value; 30,000,000 shares authorized; no shares issued or outstanding
  
 
—  
 
  
 
—  
 
Common stock $.01 par value; 30,000,000 shares authorized; 6,416,390 shares issued and outstanding as of July 31, 2002 and 6,337,440 shares issued and 6,286,740 shares outstanding as of January 31, 2002
  
 
64,164
 
  
 
63,374
 
Additional paid-in-capital
  
 
27,111,889
 
  
 
26,286,040
 
Retained earnings
  
 
68,333,698
 
  
 
61,386,243
 
Accumulated other comprehensive income
  
 
(101,044
)
  
 
(121,753
)
    


  


Total
  
 
95,408,707
 
  
 
87,613,904
 
Common stock in treasury at cost; 50,700 shares as of January 31, 2002
  
 
—  
 
  
 
(410,367
)
    


  


Total stockholders' equity
  
 
95,408,707
 
  
 
87,203,537
 
    


  


TOTAL
  
$
302,047,697
 
  
$
234,060,680
 
    


  


 
See Notes to Unaudited Consolidated Financial Statements

1


Table of Contents
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
    
Three Months Ended July 31,

    
Six Months Ended July 31,

    
2002

    
2001

    
2002

  
2001

Revenues
                               
Net sales
  
$
56,394,030
 
  
$
58,712,256
 
  
$
135,013,122
  
$
139,174,929
Royalty income
  
 
7,600,633
 
  
 
6,857,434
 
  
 
13,677,426
  
 
12,923,064
    


  


  

  

Total revenues
  
 
63,994,663
 
  
 
65,569,690
 
  
 
148,690,548
  
 
152,097,993
Cost of sales
  
 
42,535,834
 
  
 
45,111,237
 
  
 
100,467,933
  
 
105,892,846
    


  


  

  

Gross profit
  
 
21,458,829
 
  
 
20,458,453
 
  
 
48,222,615
  
 
46,205,147
Operating expenses
                               
Selling, general and administrative expenses
  
 
13,483,861
 
  
 
12,781,737
 
  
 
27,994,247
  
 
27,786,721
Depreciation and amortization
  
 
743,090
 
  
 
1,638,821
 
  
 
1,402,828
  
 
3,239,666
    


  


  

  

Total operating expenses
  
 
14,226,951
 
  
 
14,420,558
 
  
 
29,397,075
  
 
31,026,387
    


  


  

  

Operating income
  
 
7,231,878
 
  
 
6,037,895
 
  
 
18,825,540
  
 
15,178,760
Interest expense
  
 
3,786,193
 
  
 
3,647,085
 
  
 
7,652,924
  
 
7,738,853
    


  


  

  

Income before minority interest and income tax provision
  
 
3,445,685
 
  
 
2,390,810
 
  
 
11,172,616
  
 
7,439,907
Minority interest
  
 
(22,176
)
  
 
—  
 
  
 
9,844
  
 
—  
Share of income(loss) from unconsolidated subsidiary
  
 
—  
 
  
 
(7,515
)
  
 
—  
  
 
24,534
Income taxes
  
 
1,286,608
 
  
 
896,388
 
  
 
4,215,319
  
 
2,779,934
    


  


  

  

Net income
  
$
2,181,253
 
  
$
1,486,907
 
  
$
6,947,453
  
$
4,684,507
    


  


  

  

Net income per share
                               
Basic
  
$
0.34
 
  
$
0.23
 
  
$
1.09
  
$
0.71
    


  


  

  

Diluted
  
$
0.34
 
  
$
0.23
 
  
$
1.08
  
$
0.71
    


  


  

  

Weighted average number of shares outstanding
                               
Basic
  
 
6,384,932
 
  
 
6,579,537
 
  
 
6,386,341
  
 
6,579,919
Diluted
  
 
6,449,468
 
  
 
6,594,699
 
  
 
6,451,341
  
 
6,594,705
 
See Notes to Unaudited Consolidated Financial Statements
 

2


Table of Contents
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
    
Six Months Ended July 31,

 
    
2002

    
2001

 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net income
  
$
6,947,453
 
  
$
4,684,507
 
Adjustments to reconcile net income to net cash provided by operating activities:
                 
Depreciation and amortization
  
 
1,073,142
 
  
 
3,010,280
 
Amortization of debt issue cost
  
 
393,698
 
  
 
309,674
 
Amortization of bond discount
  
 
165,973
 
  
 
82,000
 
Deferred income taxes
  
 
1,837,737
 
  
 
—  
 
Minority interest
  
 
9,844
 
  
 
—  
 
Other
  
 
20,710
 
  
 
(25,888
)
Changes in operating assets and liabilities (net of effects of acquisitions):
                 
Accounts receivable, net
  
 
(3,020,536
)
  
 
9,591,940
 
Inventories
  
 
14,407,999
 
  
 
5,932,620
 
Other current assets and prepaid income taxes
  
 
(2,742,217
)
  
 
425,759
 
Other assets
  
 
(2,212,635
)
  
 
(458,937
)
Accounts payable and accrued expenses
  
 
4,883,846
 
  
 
(1,336,995
)
Income taxes payable
  
 
(1,381,551
)