10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 31, 2009
OR
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o |
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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 0-18183
G-III APPAREL GROUP, LTD.
(Exact name of registrant as specified in its charter)
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Delaware
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41-1590959 |
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(State or other jurisdiction of
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(I.R.S. Employer |
incorporation or organization)
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Identification No.) |
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512 Seventh Avenue, New York, New York
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10018 |
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(Address of Principal Executive Offices)
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(Zip Code) |
(212) 403-0500
(Registrants telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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 the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, 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 o No o
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.
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No þ
As of December 1, 2009, there were 16,862,069 shares of our common stock, par value $0.01 per
share, outstanding.
PART I FINANCIAL INFORMATION
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Item 1. |
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Financial Statements. |
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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October 31, |
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October 31, |
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January 31, |
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2009 |
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2008 |
|
|
2009 |
|
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|
(Unaudited) |
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|
(Unaudited) |
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|
(In thousands, except share and per share amounts) |
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ASSETS |
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CURRENT ASSETS |
|
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|
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Cash and cash equivalents |
|
$ |
16,633 |
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|
$ |
9,728 |
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|
$ |
2,508 |
|
Accounts receivable, net of allowance for doubtful accounts
and sales discounts of $35,979, $28,018 and $20,989,
respectively |
|
|
235,943 |
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|
217,686 |
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|
69,695 |
|
Inventories |
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|
127,087 |
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131,028 |
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|
116,612 |
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Deferred income taxes |
|
|
11,565 |
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|
15,616 |
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|
11,565 |
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Prepaid expenses and other current assets |
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|
5,660 |
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8,085 |
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|
10,319 |
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Total current assets |
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396,888 |
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382,143 |
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210,699 |
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PROPERTY AND EQUIPMENT, NET |
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8,455 |
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|
10,093 |
|
|
|
9,863 |
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DEFERRED INCOME TAXES |
|
|
11,640 |
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|
|
3,938 |
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|
11,640 |
|
OTHER ASSETS |
|
|
1,363 |
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|
2,241 |
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|
1,858 |
|
INTANGIBLES, NET |
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|
20,171 |
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|
25,138 |
|
|
|
21,406 |
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GOODWILL |
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25,900 |
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|
|
49,076 |
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|
25,494 |
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|
|
|
|
|
|
|
|
|
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$ |
464,417 |
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|
$ |
472,629 |
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|
$ |
280,960 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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CURRENT LIABILITIES |
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Notes payable |
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$ |
167,815 |
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$ |
170,659 |
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$ |
29,048 |
|
Income taxes payable |
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|
15,484 |
|
|
|
12,195 |
|
|
|
5,222 |
|
Accounts payable |
|
|
54,629 |
|
|
|
62,785 |
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|
|
51,463 |
|
Accrued expenses |
|
|
29,847 |
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|
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24,533 |
|
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|
19,299 |
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Contingent purchase price payable |
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|
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|
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4,935 |
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Deferred income taxes |
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|
1,578 |
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|
|
1,298 |
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|
1,578 |
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|
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|
|
|
|
|
|
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Total current liabilities |
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|
269,353 |
|
|
|
271,470 |
|
|
|
111,545 |
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|
DEFERRED INCOME TAXES |
|
|
6,648 |
|
|
|
7,086 |
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|
6,648 |
|
OTHER NON-CURRENT LIABILITIES |
|
|
785 |
|
|
|
615 |
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|
538 |
|
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|
|
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|
|
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TOTAL LIABILITIES |
|
|
276,786 |
|
|
|
279,171 |
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|
118,731 |
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STOCKHOLDERS EQUITY |
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Preferred stock; 1,000,000 shares authorized; No shares
issued and outstanding |
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Common stock $.01 par value; 40,000,000 shares authorized;
17,229,294, 16,905,502 and 17,063,002 shares issued |
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|
172 |
|
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|
169 |
|
|
|
171 |
|
Additional paid-in capital |
|
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102,215 |
|
|
|
98,592 |
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|
99,486 |
|
Accumulated other comprehensive income |
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|
(36 |
) |
|
|
|
|
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Retained earnings |
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|
86,250 |
|
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|
95,667 |
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63,542 |
|
Common stock held in treasury 367,225 shares at cost |
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(970 |
) |
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(970 |
) |
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(970 |
) |
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|
|
|
|
|
|
|
|
|
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187,631 |
|
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|
193,458 |
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|
|
162,229 |
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|
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|
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|
|
|
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$ |
464,417 |
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|
$ |
472,629 |
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|
$ |
280,960 |
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|
|
|
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|
|
|
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|
The accompanying notes are an integral part of these statements.
3
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months Ended October 31, |
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2009 |
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2008 |
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(Unaudited) |
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|
(In thousands, except per share amounts) |
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|
|
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|
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Net sales |
|
$ |
363,540 |
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$ |
351,599 |
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|
|
|
|
|
|
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Cost of goods sold |
|
|
237,912 |
|
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|
239,080 |
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|
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|
|
|
|
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Gross profit |
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|
125,628 |
|
|
|
112,519 |
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|
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|
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Selling, general and administrative expenses |
|
|
66,738 |
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|
58,937 |
|
Depreciation and amortization |
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|
1,303 |
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|
1,900 |
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|
|
|
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Operating profit |
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|
57,587 |
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|
51,682 |
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Interest and financing charges, net |
|
|
1,891 |
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|
2,496 |
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|
|
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Income before income taxes |
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|
55,696 |
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|
49,186 |
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|
|
|
|
|
|
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|
Income tax expense |
|
|
23,393 |
|
|
|
20,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income |
|
$ |
32,303 |
|
|
$ |
28,836 |
|
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|
|
|
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NET INCOME PER COMMON SHARE: |
|
|
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|
|
|
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Basic: |
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
Net income per common share |
|
$ |
1.93 |
|
|
$ |
1.74 |
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|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
Weighted average number of shares outstanding |
|
|
16,770 |
|
|
|
16,526 |
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|
|
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Diluted: |
|
|
|
|
|
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|
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|
|
|
|
|
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|
Net income per common share |
|
$ |
1.87 |
|
|
$ |
1.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Weighted average number of shares outstanding |
|
|
17,238 |
|
|
|
17,160 |
|
|
|
|
|
|
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|
The accompanying notes are an integral part of these statements.
4
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended October 31, |
|
|
|
2009 |
|
|
2008 |
|
|
|
(Unaudited) |
|
|
|
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
607,029 |
|
|
$ |
540,458 |
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
409,371 |
|
|
|
381,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
197,658 |
|
|
|
158,938 |
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
150,817 |
|
|
|
118,625 |
|
Depreciation and amortization |
|
|
4,091 |
|
|
|
5,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
42,750 |
|
|
|
35,058 |
|
|
|
|
|
|
|
|
|
|
Interest and financing charges, net |
|
|
3,599 |
|
|
|
4,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
39,151 |
|
|
|
30,897 |
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
16,443 |
|
|
|
12,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
22,708 |
|
|
$ |
18,096 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME PER COMMON SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share |
|
$ |
1.36 |
|
|
$ |
1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding |
|
|
16,740 |
|
|
|
16,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share |
|
$ |
1.33 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding |
|
|
17,011 |
|
|
|
16,990 |
|
|
|
|
|
|
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|
The accompanying notes are an integral part of these statements.
5
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended October 31, |
|
|
|
2009 |
|
|
2008 |
|
|
|
(Unaudited) |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
22,708 |
|
|
$ |
18,096 |
|
Adjustments to reconcile net income to net cash used in
operating activities, net of assets and liabilities
acquired: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,091 |
|
|
|
5,255 |
|
Stock based compensation |
|
|
1,387 |
|
|
|
914 |
|
Deferred financing charges |
|
|
484 |
|
|
|
691 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
(166,248 |
) |
|
|
(145,368 |
) |
Inventories |
|
|
(10,475 |
) |
|
|
(45,799 |
) |
Income taxes, net |
|
|
10,262 |
|
|
|
7,950 |
|
Prepaid expenses and other current assets |
|
|
4,659 |
|
|
|
2,086 |
|
Other assets, net |
|
|
11 |
|
|
|
(708 |
) |
Accounts payable, accrued expenses and other
liabilities |
|
|
13,961 |
|
|
|
42,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(119,160 |
) |
|
|
(114,378 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(1,448 |
) |
|
|
(1,611 |
) |
Acquisition of Andrew Marc, net of cash acquired |
|
|
|
|
|
|
(43,051 |
) |
Acquisition of Wilsons, net of cash acquired |
|
|
|
|
|
|
(22,842 |
) |
Contingent purchase price paid |
|
|
(5,341 |
) |
|
|
(4,904 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(6,789 |
) |
|
|
(72,408 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from notes payable, net |
|
|
138,767 |
|
|
|
170,659 |
|
Repayment of term loan |
|
|
|
|
|
|
(13,060 |
) |
Proceeds from exercise of stock options |
|
|
854 |
|
|
|
346 |
|
Tax benefit from exercise of stock options |
|
|
489 |
|
|
|
228 |
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
140,110 |
|
|
|
158,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
(36 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
14,125 |
|
|
|
(28,613 |
) |
Cash and cash equivalents at beginning of period |
|
|
2,508 |
|
|
|
38,341 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
16,633 |
|
|
$ |
9,728 |
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
3,216 |
|
|
$ |
3,741 |
|
Income taxes |
|
|
5,396 |
|
|
|
4,721 |
|
|
|
|
|
|
|
|
|
|
Detail of Andrew Marc acquisition: |
|
|
|
|
|
|
|
|
Acquired intangibles |
|
|
|
|
|
$ |
34,451 |
|
Fair value of other assets acquired, net |
|
|
|
|
|
|
20,867 |
|
|
|
|
|
|
|
|
|
Fair value of total assets acquired |
|
|
|
|
|
|
55,318 |
|
Liabilities assumed |
|
|
|
|
|
|
(12,190 |
) |
|
|
|
|
|
|
|
|
Cash paid for acquisition |
|
|
|
|
|
|
43,128 |
|
Cash acquired |
|
|
|
|
|
|
77 |
|
|
|
|
|
|
|
|
|
Net cash paid for acquisition |
|
|
|
|
|
$ |
43,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Detail of Wilsons acquisition: |
|
|
|
|
|
|
|
|
Cash paid for acquisition |
|
|
|
|
|
$ |
22,929 |
|
Cash acquired |
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
|
|
Net cash paid for acquisition |
|
|
|
|
|
$ |
22,842 |
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these statements.
6
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Basis of Presentation
As used in these financial statements, the term Company refers to G-III Apparel Group, Ltd. and
its wholly-owned subsidiaries. The results for the three and nine month periods ended October 31,
2009 are not necessarily indicative of the results expected for the entire fiscal year, given the
seasonal nature of the Companys business. The accompanying financial statements included herein
are unaudited. In the opinion of management, all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation of the financial position, results of operations and
cash flows for the interim period presented have been reflected.
The Company consolidates the accounts of all its wholly-owned subsidiaries. All material
intercompany balances and transactions have been eliminated.
The accompanying financial statements should be read in conjunction with the financial statements
and notes included in the Companys Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended January 31, 2009.
Note 2 Inventories
Wholesale inventories are stated at the lower of cost (determined by the first-in, first out
method) or market. Retail inventories are valued at the lower of cost or market as determined by
the retail inventory method. Inventories consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, |
|
|
October 31, |
|
|
January 31, |
|
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished goods |
|
$ |
123,744 |
|
|
$ |
127,413 |
|
|
$ |
113,824 |
|
Raw materials and work-in-process |
|
|
3,343 |
|
|
|
3,615 |
|
|
|
2,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
127,087 |
|
|
$ |
131,028 |
|
|
$ |
116,612 |
|
|
|
|
|
|
|
|
|
|
|
Note 3 Contingent Purchase Price Payable
In July 2005, the Company acquired Marvin Richards and the operating assets of the Winlit
Group. The former principals of each of Marvin Richards and the Winlit Group were
entitled to receive additional purchase price based on the performance of these divisions through
January 31, 2009. Contingent payments in the aggregate amount of $5.3 million and $4.9 million
have been recorded based upon the performance of these divisions with respect to the fiscal years
ended January 31, 2009 and 2008, respectively. Fiscal 2009 was the final year the Company was
obligated to pay additional purchase price in connection with these acquisitions. Payments under
these obligations were completed in the second quarter of fiscal 2010.
Note 4 Net Income per Common Share
Basic net income per share has been computed using the weighted average number of common shares
outstanding during each period. Diluted net income per share, when applicable, is computed using
the weighted average number of common shares and potential dilutive common shares, consisting of
stock options, stock purchase warrants and unvested restricted stock awards outstanding during the
period. For the three months ended October 31, 2009 and 2008, approximately 265,000 and 238,000
shares, respectively, have been excluded from the diluted per share calculation as their inclusion
would be anti-dilutive. For the nine months ended October 31, 2009 and 2008, approximately 870,000
and 279,000 shares, respectively, have been excluded from the diluted per share calculation as
their inclusion would be anti-dilutive. The Company issued 166,292 shares and
223,998 shares of common stock related to the exercise of stock options and the
vesting of restricted stock grants during the nine months ended
October 31, 2009 and the twelve months ended January 31, 2009,
respectively.
7
Note 5 Notes Payable
The Company has a financing agreement with JPMorgan Chase Bank, N.A. as Agent for a consortium of
banks. The Companys financing agreement, which extends through July 2011, is a senior secured
revolving credit facility providing for borrowings in the aggregate principal amount of up to $250
million. Borrowings under this credit facility bear interest at the prime rate plus 0.75%, or
LIBOR plus 3.0%, at the Companys option. Amounts available under this facility are subject to
borrowing base formulas and over advances as specified in the financing agreement.
The financing agreement requires the Company, among other things, to maintain a maximum senior
leverage ratio and minimum fixed charge coverage ratio, as defined. It also limits payments for
cash dividends and stock redemptions to $1.5 million plus an additional amount based on the
proceeds of sales of equity securities. As of October 31, 2009, the Company was in compliance with
these covenants. The financing agreement is secured by all of the Companys assets.
Note 6 Segments
The Companys reportable segments are business units that offer different products and are managed
separately. The Company operates in three segments; wholesale licensed apparel, wholesale
non-licensed apparel and retail operations. The retail operations segment was added as a result of
the Companys acquisition of the Wilsons retail outlet chain in July 2008, now operating as AM
Retail Group, Inc. The Company had an insignificant retail operation prior to this acquisition and
the results of this operation are now included in the Companys retail operations segment.
Previously, the Companys retail operation was primarily included in the non-licensed apparel
segment. There is substantial intersegment cooperation, cost allocations and sharing of assets. As
a result, the Company does not represent that these segments, if operated independently, would
report the operating results below. The following information, in thousands, is presented for the
three and nine month periods indicated below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
Wholesale |
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
|
|
|
|
|
Wholesale |
|
|
Non- |
|
|
|
|
|
|
Wholesale |
|
|
Non- |
|
|
|
|
|
|
Licensed |
|
|
Licensed |
|
|
Retail |
|
|
Licensed |
|
|
Licensed |
|
|
Retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales (2) |
|
$ |
252,934 |
|
|
$ |
89,357 |
|
|
$ |
29,653 |
|
|
$ |
229,106 |
|
|
$ |
98,087 |
|
|
$ |
24,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (2) |
|
|
171,661 |
|
|
|
59,133 |
|
|
|
15,522 |
|
|
|
155,900 |
|
|
|
69,414 |
|
|
|
13,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
81,273 |
|
|
|
30,224 |
|
|
|
14,131 |
|
|
|
73,206 |
|
|
|
28,673 |
|
|
|
10,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
|
40,724 |
|
|
|
11,138 |
|
|
|
14,876 |
|
|
|
34,113 |
|
|
|
10,683 |
|
|
|
14,141 |
|
Depreciation and amortization |
|
|
210 |
|
|
|
782 |
|
|
|
311 |
|
|
|
691 |
|
|
|
986 |
|
|
|
223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss) |
|
$ |
40,339 |
|
|
$ |
18,304 |
|
|
$ |
(1,056 |
) |
|
$ |
38,402 |
|
|
$ |
17,004 |
|
|
$ |
(3,724 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
Note 6 Segments (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended October 31, |
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
Wholesale |
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
|
|
|
|
|
Wholesale |
|
|
Non- |
|
|
|
|
|
|
Wholesale |
|
|
Non- |
|
|
|
|
|
|
Licensed |
|
|
Licensed |
|
|
Retail |
|
|
Licensed |
|
|
Licensed |
|
|
Retail (1) |
|
|
Net sales (2) |
|
$ |
403,807 |
|
|
$ |
146,952 |
|
|
$ |
77,777 |
|
|
$ |
338,654 |
|
|
$ |
169,761 |
|
|
$ |
32,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (2) |
|
|
283,290 |
|
|
|
103,448 |
|
|
|
44,140 |
|
|
|
239,407 |
|
|
|
123,998 |
|
|
|
18,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
120,517 |
|
|
|
43,504 |
|
|
|
33,637 |
|
|
|
99,247 |
|
|
|
45,763 |
|
|
|
13,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
|
82,459 |
|
|
|
25,598 |
|
|
|
42,760 |
|
|
|
68,443 |
|
|
|
31,470 |
|
|
|
18,712 |
|
Depreciation and amortization |
|
|
629 |
|
|
|
2,572 |
|
|
|
890 |
|
|
|
2,073 |
|
|
|
2,858 |
|
|
|
324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss) |
|
$ |
37,429 |
|
|
$ |
15,334 |
|
|
$ |
(10,013 |
) |
|
$ |
28,731 |
|
|
$ |
11,435 |
|
|
$ |
(5,108 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Results for the retail operations segment for the nine months ended October 31, 2008
only include operations of the Wilsons retail outlet stores from July 8, 2008, the date the
Company acquired certain assets related to the Wilsons retail outlet business. |
|
(2) |
|
Net sales and cost of goods sold for the wholesale licensed apparel and wholesale
non-licensed apparel segments include an aggregate of $8.4 million and $21.5 of intersegment
sales to the Companys retail operations for the three and nine months ended October 31, 2009,
respectively. Intersegment sales for the prior comparable year were not significant. |
Included in finished goods inventory at October 31, 2009 are approximately $68.5 million, $19.9
million and $35.3 million of inventories for wholesale licensed apparel, wholesale non-licensed
apparel and retail operations, respectively. Included in finished goods inventory at October 31,
2008 are approximately $65.6 million, $29.7 million and $32.1 million of inventories for wholesale
licensed apparel, wholesale non-licensed apparel and retail operations, respectively. All other
assets are commingled.
Note 7 Recent Accounting Pronouncements
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification (ASC) and
the Hierarchy of Generally Accepted Accounting Principles a replacement of FASB Statement No.
162 (the Codification) (ASC Topic 105). SFAS No. 168 establishes the FASB Accounting Standards
Codification as the source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements in conformity with
generally accepted accounting principles. The Codification was effective for financial statements
issued for interim and annual periods ending after September 15, 2009. As a result of the adoption
of this pronouncement, this Quarterly Report on Form 10-Q for the quarter ending October 31, 2009
and all subsequent public filings will reference the Codification as the sole source of
authoritative literature. Accordingly, all accounting references have been updated and SFAS
references have been replaced with ASC references as if the SFAS has been adopted into the
Codification. The adoption of the Codification had no impact on our results of operations or our
financial position.
In May 2009, the FASB issued SFAS No. 165, Subsequent Events (ASC Topic 855). This pronouncement
establishes principles and requirements for subsequent events, which are events or transactions
that occur after the balance sheet date but before financial statements are issued or are available
to be issued. In particular, it sets forth (a) the period after the balance sheet date during
which management of a reporting entity shall evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, (b) the circumstances under which
an entity shall recognize events or transactions occurring after the balance sheet date in its
financial statements, and (c) the disclosures that an entity shall make about events or
transactions that occurred after the balance sheet date. The pronouncement was effective for
interim or annual financial periods ending after June 15, 2009. The implementation of this
standard did not have a material impact on our results of operations or our financial position. We evaluated events and
transactions that occurred after the balance sheet date through December 4, 2009, the date at which
we issued our financial statements.
9
|
|
|
Item 2. |
|
Managements Discussion and Analysis of Financial Condition and Results of Operations. |
Unless the context otherwise requires, G-III, us, we and our refer to G-III Apparel
Group, Ltd. and its subsidiaries. References to fiscal years refer to the year ended or ending on
January 31 of that year. For example, our fiscal year ending January 31, 2010 is referred to as
fiscal 2010.
Statements in this Quarterly Report on Form 10-Q concerning our business outlook or future economic
performance; anticipated revenues, expenses or other financial items; product introductions and
plans and objectives related thereto; and statements concerning assumptions made or expectations as
to any future events, conditions, performance or other matter, are forward-looking statements as
that term is defined under the Federal securities laws. Forward-looking statements are subject to
risks, uncertainties and other factors, which could cause actual results to differ materially from
those stated in such statements. Such risks, uncertainties and factors include, but are not
limited to, reliance on licensed product, reliance on foreign manufacturers, risks of doing
business abroad, the current economic and credit crisis, the nature of the apparel industry,
including changing consumer demand and tastes, customer concentration, seasonality, risks of
operating a retail business, customer acceptance of new products, the impact of competitive
products and pricing, dependence on existing management, possible disruption from acquisitions and
general economic conditions, as well as other risks detailed in the Companys filings with the
Securities and Exchange Commission, including this Quarterly Report on Form 10-Q.
Overview
G-III designs, manufactures, imports and markets an extensive range of outerwear, dresses,
sportswear and womens suits under licensed brands, our own proprietary brands and private retail
labels. G-III also operates 121 retail stores, 118 of which are outlet stores operated under the
Wilsons Leather name. While our products are sold at a variety of price points through a broad mix
of retail partners and our own outlet stores, a majority of our sales are concentrated with our ten
largest customers.
Our business is dependent on, among other things, retailer and consumer demand for our products.
We believe that significant economic uncertainty and a slowdown in the global macroeconomic
environment continue to negatively impact the level of consumer spending for discretionary items.
The current depressed economic environment has been characterized by a decline in consumer
discretionary spending that has disproportionately affected retailers and sellers of consumer
goods, particularly those whose goods are viewed as discretionary purchases, such as fashion
apparel and related products, such as ours. We cannot predict the direction in which this current
economic downturn will move. Continued uncertain macroeconomic conditions and concerns about the
access of retailers and consumers to credit may have a negative impact on our results for the
remainder of fiscal 2010 and beyond.
We operate in fashion markets that are intensely competitive. Our ability to continuously evaluate
and respond to changing consumer demands and tastes, across multiple market segments, distribution
channels and geographies is critical to our success. Although our portfolio of brands is aimed at
diversifying our risks in this regard, misjudging shifts in consumer preferences could have a
negative effect on our business. Our success in the future will depend on our ability to design
products that are accepted in the markets we serve, source the manufacture of our products on a
competitive basis, and continue to diversify our product portfolio and the markets we serve.
We have expanded our portfolio of proprietary and licensed brands over the past 15 years through
acquisitions and by entering into license agreements for new brands or for additional product
categories under previously licensed brands. We have made five acquisitions since July 2005, which
have helped to broaden our product offerings, expand our ability to serve different tiers of
distribution and add a retail component to our business.
Our two most recent acquisitions were made in fiscal 2009. In February 2008, we acquired Andrew
Marc, a supplier of fine outerwear and handbags for both men and women to upscale specialty and
department stores. As a result of this acquisition, we added Andrew Marc and Marc New York as
additional company-owned brands and Levis and Dockers as additional licensed brands. We believe
that the Andrew Marc brand can be leveraged into a variety of new categories to become a meaningful
lifestyle brand for us. Since we acquired Andrew Marc, we entered into agreements to license the
Andrew Marc and Marc New York brands for womens footwear, mens accessories, womens handbags and
mens cold weather accessories. We also launched a Marc New York dress line which began shipping
for the Fall 2009 season.
10
In July 2008, we acquired certain assets of Wilsons The Leather Experts, which had been a national
retailer of outerwear and accessories. The assets acquired included 116 outlet store leases,
inventory, distribution center operations and the Wilsons name and other related trademarks and
trade names.
Our retail operations segment, which consists almost entirely of our Wilsons retail outlet store
business, had an operating loss during fiscal 2009. It also had an operating loss for the first
nine months of fiscal 2010. We acquired Wilsons during the middle of the year when the merchandise
plan for the key Fall and Holiday seasons was already set. The difficult economic environment also
contributed to a weaker than expected performance by our Wilsons retail business during the 2008
Holiday season. We have undertaken the following initiatives to improve the performance of our
retail outlet business:
|
|
|
Improve the merchandise mix of outerwear at our stores, with increased emphasis
on leather outerwear and a stronger assortment of private label product; |
|
|
|
|
Emphasize presentation of product in our stores and training of our sales
associates; |
|
|
|
|
Incorporate an improved mix of private label and branded accessories; and |
|
|
|
|
Reduce overhead costs at the distribution center for our retail operations by
reducing our leased space by one-half at that distribution center. |
We continue to believe that the operation of the Wilsons retail outlet stores is part of our core
competency, as outerwear is expected to comprise approximately one-half of our annual net sales at
Wilsons. We expect to continue to implement these initiatives with a view to creating a store
concept that is capable of building growth over the long term.
Our acquisitions are part of our strategy to expand our product offerings and increase the
portfolio of proprietary and licensed brands that we offer through different tiers of retail
distribution and at a variety of price points. We believe that both Andrew Marc and the Wilsons
retail outlet business leverage our core strength in outerwear and provide us with new avenues for
growth. We also believe that these acquisitions complement our other licensed brands, G-III owned
labels and private label programs.
We market our products to department, specialty and mass merchant retail stores in the United
States. We also supply our outerwear to the Wilsons outlet stores and to the Wilsons e-commerce
business we acquired. In 2008, we re-launched a website for Andrew Marc product to further expand
our e-commerce presence.
We operate our business in three segments; wholesale licensed apparel, wholesale non-licensed
apparel and retail operations. The wholesale licensed apparel segment includes sales of apparel
brands licensed by us from third parties. The wholesale non-licensed apparel segment includes
sales of apparel under our own brands and private label brands. The retail segment consists almost
entirely of the Wilsons retail outlet stores we acquired in July 2008, now operating as AM Retail
Group, Inc. We had a nominal retail operation prior to the Wilsons acquisition.
The sale of licensed product has been a key element of our business strategy for many years. As
part of this strategy, we continue to add new fashion and sports apparel licenses. We have
expanded our relationship with Calvin Klein by adding licenses for womens performance wear in
December 2007 and for better womens sportswear in August 2008. We began limited shipments of
womens performance wear for the Spring 2008 season and expanded distribution for the Fall 2008
season. We began shipping womens better sportswear for the Spring 2009 season. In July 2008, we
entered into a license agreement to design and distribute Jessica Simpson dresses, which we also
began shipping for the Spring 2009 season. In November 2009, we extended our license related to
the Ellen Tracy brand for an additional four years through December 31, 2014.
We believe that consumers prefer to buy brands they know and we have continually sought licenses
that would increase the portfolio of name brands we can offer through different tiers of retail
distribution, for a wide array of products and at a variety of price points. We believe that brand
owners will look to consolidate the number of licensees they engage to develop product and they
will seek licensees with a successful track record of developing brands. We are continually having
discussions with licensors regarding new opportunities. It is our objective to continue to expand
our product offerings.
11
Significant trends that affect the apparel industry include the continuing consolidation of retail
chains, the desire on the part of retailers to consolidate vendors supplying them, the increased focus by department
stores on their own private label brands and a shift in consumer shopping preferences away from
traditional department stores to other mid-tier and specialty store venues. The weakness in the
economy and financial markets has reduced consumer confidence and consumer spending. There has
also been significant downward pressure on average retail prices for many categories of apparel, in
large part as a result of weakness in the economy.
A number of retailers have experienced significant financial difficulties, which in some cases has
resulted in bankruptcies, liquidations and/or store closings. The financial difficulties of a
retail customer of ours could result in reduced business with that customer. We may also assume
higher credit risk relating to receivables of a retail customer experiencing financial difficulty
that could result in higher reserves for doubtful accounts or increased write-offs of accounts
receivable.
We have attempted to respond to these trends by continuing to focus on selling products with
recognized brand equity, by attention to design, quality and value and by improving our sourcing
capabilities. We have also responded with the strategic acquisitions made by us and new license
agreements entered into by us that have added additional licensed and proprietary brands and helped
diversify our business by adding new product lines, additional distribution channels and a retail
component to our business. We believe that our broad distribution capabilities help us to respond
to the various shifts by consumers between distribution channels and that our operational
capabilities will enable us to continue to be a vendor of choice for our retail partners.
Results of Operations
Three months ended October 31, 2009 compared to three months ended October 31, 2008
Net sales for the three months ended October 31, 2009 increased to $363.5 million from
$351.6 million in the same period last year. Net sales of wholesale licensed apparel increased to
$252.9 million from $229.1 million primarily as a result of
an increase of $38.1 million in net
sales of Calvin Klein licensed product. Our Calvin Klein licensed product consists of mens and
womens outerwear, womens dresses, suits and performance wear, as well as Calvin Klein womens
sportswear which we launched earlier in fiscal 2010. This increase was offset in part by decreases
in net sales of our Kenneth Cole outerwear ($11.8 million) and
our sports divisions ($2.8 million).
Net sales of wholesale non-licensed apparel in the three months ended October 31, 2009 decreased to
$89.4 million from $98.1 million primarily due to a $12.1 million decrease in net sales of private
label product offset, in part, by an increase in net sales in our Andrew Marc division ($5.0
million) and Jessica Howard dress division ($1.8 million). Net sales of our retail operations were
$29.7 million for the three months ended October 31, 2009 compared to $24.4 million in the same
period last year as a result of an increase in outerwear sales.
Gross profit increased to $125.6 million, or 34.6% of net sales, for the three month period ended
October 31, 2009, from $112.5 million, or 32.0% of net sales, in the same period last year. The
gross profit percentage in our wholesale licensed apparel segment was 32.1% in the three month
period ended October 31, 2009 compared to 32.0% in the same period last year. The gross profit
percentage in our wholesale non-licensed apparel segment increased to 33.8% in the three month
period ended October 31, 2009 from 29.2% in the same period last year primarily as a result of
improved margins on increased sales volume in our Andrew Marc and Jessica Howard divisions. The
gross profit percentage for our retail operations segment was 47.7% for the three months ended
October 31, 2009 compared to 43.6% for the comparable period last year as a result of improved
margins on mens and womens outerwear. The gross profit percentage for retail sales are generally
higher than for wholesale sales.
Selling, general and administrative expenses increased $7.8 million to $66.7 million in the three
month period ended October 31, 2009 from $58.9 million in the same period last year. This increase
is primarily a result of increases in personnel costs ($5.1 million), outside warehousing ($1.1 million) and advertising and promotion
expenses ($732,000). Personnel costs increased
primarily due to an increase in accrued bonuses as a result of our improved profitability,
including bonuses to be paid to two executives who executed new employment agreements which provide
for performance bonuses based on company and divisional profitability. Outside warehousing costs
increased as a result of the increased shipping volume and advertising costs increased
because sales of licensed product increased and we typically pay an advertising fee under our
license agreements based on a percentage of sales of licensed product.
Depreciation and amortization decreased to $1.3 million in the three months ended October 31, 2009
from $1.9 million in the same period last year primarily as a result of certain intangible assets
that became fully amortized during fiscal 2009.
12
Interest and finance charges, net for the three months ended October 31, 2009 were approximately
$1.9 million compared to $2.5 million for the comparable period last year. The lower interest
expense is a result of the decrease in the prime rate and LIBOR.
Income tax expense for the three months ended October 31, 2009 was $23.4 million compared to $20.4
million for the same period last year. The effective tax rate for the three month period ended
October 31, 2009 was 42.0% compared to an effective tax rate of 41.4% in the same period last year.
The increase in the effective tax rate is primarily due to not recognizing the benefit of certain
state losses incurred by our AM Retail Group, Inc. subsidiary that operates our Wilsons retail
outlet stores.
Nine months ended October 31, 2009 compared to nine months ended October 31, 2008
Net sales for the nine months ended October 31, 2009 increased to $607.0 million from
$540.5 million in the same period last year. Net sales of wholesale licensed apparel increased to
$403.8 million from $338.7 million primarily attributable
to an increase of $74.0 million in net
sales of Calvin Klein licensed product. The increase in Calvin Klein net sales was primarily
attributable to increased sales of Calvin Klein dresses and sales of Calvin Klein sportswear which
began shipping in the first quarter of the current fiscal year. This increase in net sales of
wholesale licensed apparel was offset, in part, by decreases in net sales by our Kenneth Cole
outerwear divisions ($10.4 million). Net sales of wholesale non-licensed apparel in the nine months
ended October 31, 2009 decreased to $147.0 million from $169.8 million primarily due to a decrease
of $14.2 million in net sales of our private label outerwear and
$6.2 million in net sales of our
Jessica Howard dress division, offset in part by a $4.1 million increase in net sales of our Andrew
Marc product. Net sales of our retail operations were $77.8 million for the nine months ended
October 31, 2009 compared to $32.0 million in the same period last year. The Wilsons retail outlet
stores were acquired on July 11, 2008. All income statement items relating to our retail operations
for the prior period are included only from the date of acquisition.
Gross profit increased to $197.7 million for the nine month period ended October 31, 2009 from
$158.9 million in the same period last year. Gross profit as a percentage of net sales increased to
32.6% for the nine months ended October 31, 2009 compared to 29.4% in the prior year period. Gross
profit as a percentage of net sales increased primarily because we operated our retail operations
segment, which has a higher gross profit percentage than our wholesale segments, for the entire
period in fiscal 2010. The gross profit in our wholesale licensed apparel segment increased to
$120.5 million for the nine month period ended October 31, 2009 from $99.2 million in the same
period last year. The gross profit percentage in our wholesale licensed apparel segment increased
slightly to 29.8% from 29.3% in the same period last year. The gross profit in our wholesale
non-licensed apparel segment decreased to $43.5 million from $45.8 million in the same period last
year. The gross profit percentage in our wholesale non-licensed apparel segment increased to 29.6%
from 27.0% in the same period last year. This percentage increase is primarily attributable to
increased margins in our Andrew Marc division. The gross profit percentage in our retail
operations segment was 43.2% in the nine month period ended October 31, 2009 compared to 43.5% in
the comparable period last year.
Selling, general and administrative expenses increased $32.2 million to $150.8 million in the nine
month period ended October 31, 2009 from $118.6 million in the same period last year. Selling,
general and administrative expenses increased primarily as a result of expenses related to the
Wilsons retail business ($24.2 million), which were included for the entire period this year and
only from the date of acquisition (July 2008) for the prior period. In addition, there were
increases in personnel costs ($3.9 million), advertising and
promotion expenses ($2.8 million) and
outside warehousing ($1.4 million). Personnel costs increased due primarily to an increase in
accrued bonuses as a result of the improved profitability, including bonuses to be paid to two
executives who executed new employment agreements which provide for performance bonuses based on
company and divisional profitability. Advertising costs increased because sales of licensed
product increased and we typically pay an advertising fee under our license agreements based on a
percentage of sales of licensed product, and outside warehousing costs increased as a result of
increased shipping volume.
Depreciation and amortization decreased to $4.1 million in the nine months ended October 31, 2009
from $5.3 million in the same period last year primarily as a result of certain intangible assets
that became fully amortized during fiscal 2009.
Interest and finance charges, net for the nine months ended October 31, 2009 were $3.6 million
compared to $4.2 million for the same period last year. The lower interest expense is a result of
the decrease in the prime rate and LIBOR.
Income tax expense for the nine months ended October 31, 2009 was $16.4 million compared to
$12.8 million in the comparable period last year. The effective rate for the current period was
42.0% compared to 41.4% for the comparable prior period. The increase in the effective tax rate is
primarily due to not recognizing the benefit of certain state losses in our AM Retail Group, Inc.
subsidiary.
13
Liquidity and Capital Resources
Our primary cash requirements are to fund our seasonal build up in inventories and accounts
receivable, primarily during our second and third fiscal quarters each year. Due to the seasonality
of our business, we generally reach our maximum borrowing under our asset-based credit facility
during our third fiscal quarter. The primary sources to meet our operating cash requirements have
been borrowings under our credit facility and cash generated from operations.
The amount borrowed under the line of credit varies based on our seasonal requirements. At October
31, 2009, we had cash and cash equivalents of $16.6 million and outstanding borrowings of $167.8
million. At October 31, 2008, we had cash and cash equivalents of $9.7 million and outstanding
borrowings of $170.7 million.
Our contingent liability under open letters of credit was approximately $7.0 million as of October
31, 2009 compared to $7.3 million as of October 31, 2008.
Financing Agreement
Our financing agreement is a senior secured revolving credit facility providing for a maximum
revolving line of credit of $250 million. Borrowings under this credit facility, which extends
through July 2011, bear interest at the prime rate plus 0.75%, or LIBOR plus 3.0%, at our option.
Amounts available under this facility are subject to borrowing base formulas and over advances as
specified in the financing agreement.
The financing agreement requires us, among other things, to maintain a maximum senior leverage
ratio and minimum fixed charge coverage ratio, as defined. It also limits payments for cash
dividends and stock redemptions to $1.5 million plus an additional amount based on the proceeds of
sales of equity securities. As of October 31, 2009, we were in compliance with these covenants.
Cash from Operating Activities
We used $119.2 million of cash from operating activities during the nine months ended October 31,
2009, primarily as a result of an increase in accounts receivable of $166.2 million and an increase
in inventory of $10.5 million offset, in part, by our net income of $22.7 million, an increase of
$14.0 million in accounts payable and accrued expenses, an increase of $10.3 million in income
taxes payable and a decrease of $4.7 million in prepaid expenses.
The changes in these operating cash flow items are consistent with our seasonal pattern. Our
accounts receivable increased because a majority of our wholesale sales occur during our fall
shipping season. The increase in inventory is a result of anticipated fourth quarter wholesale
orders which constitutes the latter part of our fall shipping season, as well as a build up of
retail inventory in anticipation of the holiday shopping season. The increase in accrued expenses
is attributable to the high sales volume of licensed product for which royalty and advertising
payments, generally based on a percentage of sales, are accrued and accrued bonuses which increased
based on our improved profitability. The increase in income taxes is a result of our pretax income
through the nine months ended October 31, 2009. Prepaid expenses decreased primarily as a result
of minimum payments made under our licensing agreements for royalty and advertising being earned in
the third quarter.
Cash from Investing Activities
We used $6.8 million of cash in investing activities in the nine months ended October 31, 2009 of
which $5.3 million was for contingent payments earned as a result of the fiscal 2009 operating
results of the businesses acquired in 2005. Fiscal 2009 was the final year with respect to which
we were obligated to pay additional purchase price in connection with these acquisitions. We also
used $1.4 million during the nine months ended October 31, 2009 for capital expenditures for
renovations of various showrooms.
Cash from Financing Activities
Cash from financing activities provided $140.1 million in the nine months ended October 31, 2009,
primarily as a result of $138.8 million of increased borrowings under our line of credit.
14
Financing Needs
We believe that our cash on hand and cash generated from operations, together with funds available
from our line of credit, are sufficient to meet our expected operating and capital expenditure
requirements. We may seek to acquire other businesses in order to expand our product offerings.
We may need additional financing in order to complete one or more acquisitions. We cannot be
certain that we will be able to obtain additional financing, if required, on acceptable terms or at
all.
Critical Accounting Policies
Our discussion of results of operations and financial condition relies on our consolidated
financial statements that are prepared based on certain critical accounting policies that require
management to make judgments and estimates that are subject to varying degrees of uncertainty. We
believe that investors need to be aware of these policies and how they impact our financial
statements as a whole, as well as our related discussion and analysis presented herein. While we
believe that these accounting policies are based on sound measurement criteria, actual future
events can and often do result in outcomes that can be materially different from these estimates or
forecasts. The accounting policies and related estimates described in our Annual Report on Form
10-K for the year ended January 31, 2009 are those that depend most heavily on these judgments and
estimates. As of October 31, 2009, there have been no material changes to our critical accounting
policies.
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk. |
There are no material changes to the disclosure made with respect to these matters in our
Annual Report on Form 10-K for the year ended January 31, 2009.
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Item 4. |
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Controls and Procedures. |
As of the end of the period covered by this report, our management, including the Chief
Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures (as such term is defined in Rule
13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are designed to ensure that
information required to be disclosed by us in the reports that we file or submit under the Exchange
Act is (i) recorded, processed, summarized and reported, within the time periods specified in the
Commissions rules and forms and (ii) accumulated and communicated to our management, including our
principal executive and principal financial officers, as appropriate to allow timely decisions
regarding required disclosure, and thus, are effective in making known to them material information
relating to G-III required to be included in this report.
During our last fiscal quarter, there were no changes in our internal control over financial
reporting that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
15
PART II OTHER INFORMATION
In addition to the other information set forth in this report, you should carefully consider
the factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year
ended January 31, 2009, which could materially affect our business, financial condition or future
results. There have been no material changes to the risk factors as previously disclosed in our
Annual Report on Form 10-K. The risks described in our Annual Report on Form 10-K are not the only
risks facing our company. Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our business, financial
condition and/or operating results.
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31.1 |
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Certification by Morris Goldfarb, Chief Executive Officer of G-III Apparel
Group, Ltd., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, in
connection with G-III Apparel Group, Ltd.s Quarterly Report on Form 10-Q for the
fiscal quarter ended October 31, 2009. |
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31.2 |
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Certification by Neal S. Nackman, Chief Financial Officer of G-III
Apparel Group, Ltd., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, in
connection with G-III Apparel Group, Ltd.s Quarterly Report on Form 10-Q for the
fiscal quarter ended October 31, 2009. |
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32.1 |
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Certification by Morris Goldfarb, Chief Executive Officer of G-III
Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel
Group, Ltd.s Quarterly Report on Form 10-Q for the fiscal quarter ended October
31, 2009. |
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32.2 |
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Certification by Neal S. Nackman, Chief Financial Officer of G-III
Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel
Group, Ltd.s Quarterly Report on Form 10-Q for the fiscal quarter ended October
31, 2009. |
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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G-III APPAREL GROUP, LTD.
(Registrant)
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Date: December 4, 2009 |
By: |
/s/ Morris Goldfarb
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Morris Goldfarb |
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Chief Executive Officer |
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Date: December 4, 2009 |
By: |
/s/ Neal S. Nackman
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Neal S. Nackman |
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Chief Financial Officer |
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Exhibit 31.1
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Morris Goldfarb, certify that:
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I have reviewed this quarterly report on Form 10-Q of G-III Apparel Group, Ltd.; |
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2. |
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Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
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3. |
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Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
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4. |
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The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared; |
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b) |
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Designated such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; |
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c) |
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Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
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d) |
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Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and |
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The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
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All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and |
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b) |
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Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over financial
reporting. |
Date: December 4, 2009
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/s/ Morris Goldfarb
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Morris Goldfarb |
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Chief Executive Officer |
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Exhibit 31.2
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Neal S. Nackman, certify that:
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I have reviewed this quarterly report on Form 10-Q of G-III Apparel Group, Ltd.; |
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2. |
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Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
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3. |
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Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
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4. |
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The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
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Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared. |
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b) |
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Designated such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; |
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c) |
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Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
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d) |
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Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting, and |
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5. |
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The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
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a) |
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All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrants ability to record, process, summarize and
report financial information; and |
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b) |
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Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting. |
Date: December 4, 2009
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/s/ Neal S. Nackman
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Neal S. Nackman |
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Chief Financial Officer |
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Exhibit 32.1
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of G-III Apparel Group, Ltd. (the Company) on Form
10-Q for the quarterly period ended October 31, 2009, as filed with the Securities and Exchange
Commission (the Report), I, Morris Goldfarb, Chief Executive Officer of the Company, hereby
certify that, to my knowledge, (a) the Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and (b) the information contained in the Report
fairly presents, in all material respects, the financial condition and results of operations of the
Company.
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/s/ Morris Goldfarb
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Morris Goldfarb |
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Chief Executive Officer |
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Date: December 4, 2009
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
Exhibit 32.2
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of G-III Apparel Group, Ltd. (the Company) on Form
10-Q for the quarterly period ended October 31, 2009, as filed with the Securities and Exchange
Commission (the Report), I, Neal S. Nackman, Chief Financial Officer of the Company, hereby
certify that, to my knowledge, (a) the Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and (b) the information contained in the Report
fairly presents, in all material respects, the financial condition and results of operations of the
Company.
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/s/ Neal S. Nackman
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Neal S. Nackman |
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Chief Financial Officer |
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Date: December 4, 2009
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.