<PAGE> 1
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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 OCTOBER 31, 2000
[ ] 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 0-22378
MOVADO GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW YORK 13-2595932
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
125 CHUBB AVENUE, LYNDHURST, NEW JERSEY 07071
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (201) 460-4800
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 [X] No [ ]
Indicate the number of shares outstanding of each of the Issuer's classes
of Common Stock, as of the latest practicable date.
As of December 11, 2000 the Registrant had 3,509,773 shares of Class A
Common Stock, par value $0.01 per share, outstanding and 9,520,172 shares of
Common Stock, par value $0.01 per share, outstanding.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
MOVADO GROUP, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Part I Financial Information
Item 1. Consolidated Balance Sheets at October 31, 2000, January 31,
2000 and October 31, 1999................................. 2
Consolidated Statements of Income for the nine months ended
October 31, 2000 and 1999 and the three months ended
October 31, 2000 and 1999................................. 3
Consolidated Statements of Cash Flows for the nine months
ended October 31, 2000 and 1999........................... 4
Notes to Consolidated Financial Statements.................. 5
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition........................ 7
Part II Other Information
Item 1. Legal Proceedings........................................... 11
Item 6. Exhibits and Reports on Form 8-K............................ 11
Signatures............................................................. 12
Exhibit Index.......................................................... 13
</TABLE>
1
<PAGE> 3
PART 1 -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31, OCTOBER 31,
2000 2000 1999
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $ 11,161 $ 26,615 $ 15,328
Trade receivables, net.................................. 138,531 103,795 129,974
Inventories............................................. 86,170 77,075 110,215
Other current assets.................................... 21,450 19,341 16,669
-------- -------- --------
Total current assets............................ 257,312 226,826 272,186
Plant, property and equipment, net........................ 29,683 27,593 27,371
Other assets.............................................. 14,277 12,767 13,231
-------- -------- --------
$301,272 $267,186 $312,788
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable to banks.................................. $ 37,840 $ 13,500 $ 20,000
Current portion of long-term debt....................... 5,000 5,000 5,000
Accounts payable........................................ 19,902 17,562 18,736
Accrued liabilities..................................... 28,187 26,602 25,632
Deferred and current taxes payable...................... 9,522 5,432 12,210
-------- -------- --------
Total current liabilities....................... 100,451 68,096 81,578
Long-term debt............................................ 45,000 45,000 50,000
Deferred and noncurrent foreign income taxes.............. 4,771 5,105 5,481
Other liabilities......................................... 1,279 1,170 1,487
-------- -------- --------
Total liabilities............................... 151,501 119,371 138,546
-------- -------- --------
Shareholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares
authorized; no shares issued......................... -- -- --
Common stock, $0.01 par value, 20,000,000 shares
authorized; 9,513,172, 9,496,529 and 9,490,754 shares
issued, respectively................................. 95 95 95
Class A Common stock, $0.01 par value, 10,000,000 shares
authorized; 3,509,733, 3,509,733 and 3,509,773 shares
issued and outstanding, respectively................. 35 35 35
Capital in excess of par value.......................... 66,266 66,113 65,558
Retained earnings....................................... 134,858 118,615 127,699
Accumulated other comprehensive income.................. (23,573) (16,462) (6,320)
Treasury stock, 1,556,670, 920,690 and 539,290 shares,
respectively, at cost................................ (27,910) (20,581) (12,825)
-------- -------- --------
149,771 147,815 174,242
-------- -------- --------
$301,272 $267,186 $312,788
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 4
MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
-------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net Sales........................................ $234,634 $216,223 $105,122 $99,032
Costs and expenses:
Cost of sales.................................. 91,613 84,326 39,927 37,391
Selling, general and administrative............ 115,394 103,630 46,723 42,629
-------- -------- -------- -------
Operating income................................. 27,627 28,267 18,472 19,012
Net interest expense............................. 4,808 3,797 1,729 1,132
Gain on disposition of business.................. -- 4,752 -- --
-------- -------- -------- -------
Income before income taxes....................... 22,819 29,222 16,743 17,880
Provision for income taxes....................... 5,705 6,722 4,186 4,113
-------- -------- -------- -------
Net income....................................... $ 17,114 $ 22,500 $ 12,557 $13,767
======== ======== ======== =======
Basic income per share........................... $ 1.46 $ 1.78 $ 1.09 $ 1.10
======== ======== ======== =======
Diluted income per share......................... $ 1.44 $ 1.73 $ 1.07 $ 1.07
======== ======== ======== =======
Dividends declared per share..................... $ 0.075 $ 0.075 $ 0.025 $ 0.025
======== ======== ======== =======
Average shares outstanding....................... 11,702 12,610 11,497 12,463
Dilutive effect of stock options................. 206 404 286 403
-------- -------- -------- -------
Average shares outstanding assuming dilution..... 11,908 13,014 11,783 12,866
======== ======== ======== =======
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 5
MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 17,114 $ 22,500
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization.......................... 4,328 3,527
Deferred and noncurrent foreign income taxes........... 28 115
Provision for losses on accounts receivable............ 716 799
Provision for losses on inventory...................... 378 --
Gain on disposition of business........................ -- (4,752)
Changes in current assets and liabilities:
Trade receivables.................................... (37,408) (21,821)
Inventories.......................................... (12,255) (8,852)
Other current assets................................. (7,169) 492
Accounts payable..................................... 3,107 (5,975)
Accrued liabilities.................................. 2,245 2,348
Deferred & current taxes payable..................... 4,108 2,471
Other noncurrent assets.............................. 1,602 2,580
Other noncurrent liabilities......................... 108 (312)
-------- --------
Net cash used in operating activities..................... (23,098) (6,880)
-------- --------
Cash flows from investing activities:
Capital expenditures...................................... (7,004) (7,770)
Proceeds from disposition of business..................... -- 28,409
Goodwill, trademarks and other intangibles................ (741) (1,255)
-------- --------
Net cash (used in) provided by investing activities....... (7,745) 19,384
-------- --------
Cash flows from financing activities:
Repayment of Senior Notes................................. -- (5,000)
Net proceeds from bank borrowings......................... 24,340 12,800
Principal payments under capital leases................... -- (69)
Stock options exercised................................... 79 301
Dividends paid............................................ (863) (942)
Purchase of treasury stock................................ (7,328) (9,837)
-------- --------
Net cash provided by (used in) financing activities....... 16,228 (2,747)
-------- --------
Effect of exchange rate changes on cash and cash
equivalents............................................... (839) (55)
-------- --------
Net (decrease) increase in cash and cash equivalents........ (15,454) 9,702
Cash and cash equivalents at beginning of period............ 26,615 5,626
-------- --------
Cash and cash equivalents at end of period.................. $ 11,161 $ 15,328
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 6
MOVADO GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying 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 financial statements included in the Company's
fiscal 2000 Annual Report filed on Form 10-K. In the opinion of management, the
accompanying financial statements reflect all adjustments, consisting of only
normal and recurring adjustments, necessary for a fair presentation of the
financial position and results of operations for the periods presented. These
consolidated financial statements should be read in conjunction with the
aforementioned annual report.
NOTE 1 -- INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31, OCTOBER 31,
2000 2000 1999
----------- ----------- -----------
<S> <C> <C> <C>
Finished goods.................................... $48,387 $50,565 $ 71,816
Work-in-process and component parts............... 37,783 26,510 38,399
------- ------- --------
$86,170 $77,075 $110,215
======= ======= ========
</TABLE>
NOTE 2 -- SUPPLEMENTAL CASH FLOW INFORMATION
The following is provided as supplemental information to the consolidated
statements of cash flows (in thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31,
------------------
2000 1999
------- -------
<S> <C> <C>
Cash paid during the period for:
Interest................................................. $4,861 $4,846
Income taxes............................................. $3,165 $4,524
</TABLE>
NOTE 3 -- COMPREHENSIVE INCOME
The components of comprehensive income are as follows (in thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
------------------ ------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income.................................. $17,114 $22,500 $12,557 $13,767
Foreign currency translation adjustment..... (7,111) (4,132) (9,467) 1,024
------- ------- ------- -------
Comprehensive income........................ $10,003 $18,368 $ 3,090 $14,791
======= ======= ======= =======
</TABLE>
5
<PAGE> 7
MOVADO GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- SEGMENT INFORMATION
In fiscal 1999, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," which requires reporting
certain financial information according to the "management approach." This
approach requires reporting information regarding operating segments on the
basis used internally by management to evaluate segment performance. The Company
conducts its business primarily in two operating segments: "Wholesale" and
"Other". The Company's wholesale segment includes the designing, manufacturing
and distribution of quality watches. Other includes the Company's retail and
service center operations. Operating segment data as of October 31, 2000 and
1999 are as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE THREE MONTHS
ENDED OCTOBER 31, ENDED OCTOBER 31,
--------------------------------------- --------------------------------------
NET SALES OPERATING PROFIT NET SALES OPERATING PROFIT
------------------- ----------------- ------------------ -----------------
2000 1999 2000 1999 2000 1999 2000 1999
-------- -------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wholesale............ $205,078 $191,008 $31,608 $31,320 $ 94,601 $88,651 $20,399 $20,297
Other................ 29,556 25,215 (3,981) (3,053) 10,521 10,381 (1,927) (1,285)
-------- -------- ------- ------- -------- ------- ------- -------
Consolidated total... $234,634 $216,223 $27,627 $28,267 $105,122 $99,032 $18,472 $19,012
======== ======== ======= ======= ======== ======= ======= =======
</TABLE>
NOTE 5 -- BANK CREDIT AGREEMENT
On June 22, 2000, the Company amended its revolving and working capital
lines of credit with its domestic bank group to provide for a three year $100.0
million unsecured revolving line of credit and $15.0 million of uncommitted
working capital lines of credit. These new facilities replace the $90.0 million
unsecured revolving line of credit and $31.6 million of uncommitted working
capital lines of credit.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
FORWARD LOOKING STATEMENTS
Statements included under Management's Discussion and Analysis of Financial
Condition and Results of Operations, in this report, as well as statements in
future filings by the Company with the Securities and Exchange Commission
("SEC"), in the Company's press releases and oral statements made by or with the
approval of an authorized executive officer of the Company, which are not
historical in nature, are intended to be, and are hereby identified as, "forward
looking statements" for purposes of the safe harbor provided by Section 21E of
the Securities Exchange Act of 1934. The Company cautions readers that forward
looking statements include, without limitation, those relating to the Company's
future business prospects, revenues, working capital, liquidity, capital needs,
plans for future operations, effective tax rates, margins, interest costs, and
income, as well as assumptions relating to the foregoing. Forward looking
statements are subject to certain risks and uncertainties, some of which cannot
be predicted or quantified. Actual results and future events could differ
materially from those indicated in the forward looking statements due to several
important factors herein identified, among others, and other risks and factors
identified from time to time in the Company's reports filed with the SEC
including, without limitation, the following: general economic and business
conditions which may impact disposable income of consumers, competitive products
and pricing, ability to enforce intellectual property rights, seasonality,
availability of alternative sources of supply in the case of loss of any
significant supplier, the Company's dependence on key officers, continued
availability to the Company of financing and credit on favorable terms and
success of hedging strategies in respect of currency exchange rate fluctuations.
Results of Operations for the nine months ended October 31, 2000 as compared
to the nine months ended October 31, 1999.
Net Sales. Comparative net sales by product class were as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Concord, Movado, Coach and ESQ
Domestic............................................. $164,513 $151,087
International........................................ 40,565 39,921
Other.................................................. 29,556 25,215
-------- --------
Net Sales.............................................. $234,634 $216,223
======== ========
</TABLE>
Net sales increased by $18.4 million or 8.5% for the nine months ended
October 31, 2000 as compared to the nine months ended October 31, 1999. Domestic
wholesale sales of our brands increased by $13.4 million or 8.9% while
international wholesale sales increased by $.6 million or 1.6%. All of our
domestic brands posted sales increases led by double digit gains in our Movado
and ESQ brands. International sales increases were led by growth in our Concord
and Coach Watch brands. International sales were negatively impacted by
approximately $4.3 million due to changes in currency translation rates.
Other net sales, which include our Company outlet stores, Movado Boutiques
and our after sales service business, increased by $4.3 million or 17.2%. Growth
in the other sales category was primarily attributable to comparable store sales
increases in our outlets and Boutiques and new store openings.
Gross Margin. Gross profit for the nine months ended October 31, 2000 was
$143.0 million (61.0% of net sales) as compared to $131.9 million (61.0% of net
sales) for the nine months ended October 31, 1999, an increase of $11.1 million
or 8.4%. This increase was attributable to sales increases.
Selling, General and Administrative. Selling, general and administrative
expenses for the nine months ended October 31, 2000 were $115.4 million or 49.2%
of net sales, an 11.4% increase over the $103.6 million or 47.9% of net sales in
the first nine months of last year. The 11.4% increase was primarily
attributable to an
7
<PAGE> 9
increase in advertising and marketing expenses to promote retail sell-through of
our brands as well as the factors discussed below in the review of the three
month results of operations.
Interest Expense. Net interest expense increased $1.0 million or 26.6%.
The increase in interest costs reflects higher interest rates on borrowings
under the Company's bank lines of credit, an increase in average outstanding
working capital borrowings and a reduction in interest income due to lower
invested cash balances. These factors were somewhat mitigated by reduced
interest costs on long-term debt due to the repayment of $5.0 million of Senior
Notes in January 2000.
Income Taxes. Income tax expense of $5.7 million for the nine months ended
October 31, 2000 decreased as compared to $6.7 million for the nine months ended
October 31, 1999. Income taxes in the prior year also included a provision for
taxes of $1.1 million on the gain of the Company's sale of its Piaget
distribution business. Taxes were recorded at the Company's expected annual
effective tax rate for fiscal 2001 of 25% as compared to a 23% rate for fiscal
2000.
Results of Operations for the three months ended October 31, 2000 as compared
to the three months ended October 31, 1999.
Net sales. Comparative net sales by product class were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
-------------------
2000 1999
-------- -------
<S> <C> <C>
Concord, Movado, Coach and ESQ
Domestic.............................................. $ 79,072 $70,507
International......................................... 15,529 18,144
Other................................................... 10,521 10,381
-------- -------
Net Sales............................................... $105,122 $99,032
======== =======
</TABLE>
Net sales increased by $6.1 million or 6.2% for the three months ended
October 31, 2000 as compared to the three months ended October 31, 1999.
Domestic wholesale sales of our brands increased by $8.6 million or 12.2% led by
double digit increases in the Movado and ESQ brands. Concord sales increased at
a low single digit percentage rate and were negatively impacted by delays in
product deliveries due to extended lead times in the manufacturing of certain
components. International sales decreased by $2.6 million or 14.4% due primarily
to the negative impact of changes in foreign currency translation rates of
approximately $2.2 million. International sales of Concord were also negatively
impacted by delays in product deliveries due to extended lead times in the
manufacturing of certain components. Sales of Coach Watch for the three months
ended October 31, 2000 increased at a double digit rate led by significant
increases in international sales due to increased penetration of the Japan and
duty free channels.
Other net sales, which include our Company outlet stores, Movado Boutiques
and our after sales service business, increased by $.1 million or 1.3%. Growth
in the other sales category was attributable to both comparable store sales
increases in our Boutiques and new store openings in our Outlets and Boutiques
of $.9 million or 9.5%. Prior year third quarter sales included $0.8 million in
sales from discontinued brands.
Gross Margin. Gross profit for the three months ended October 31, 2000 was
$65.2 million (62.0% of net sales) as compared to $61.6 million (62.2% of net
sales) for the three months ended October 31, 1999, an increase of $3.6 million
or 5.8%. This increase was attributable to sales increases.
Selling, General and Administrative. Selling, general and administrative
expenses for the three months ended October 31, 2000 were $46.7 million or 44.5%
of net sales, a 9.6% increase over the $42.6 million or 43.1% of net sales in
the third quarter of last year. The 9.6% increase was attributable to expenses
in connection with the ongoing implementation of the Company's growth
initiatives, increases in certain variable costs resulting from sales growth and
increases in certain general and administrative costs. Additional expenses
associated with the Company's growth initiatives included the opening of
additional outlet stores, expenses related to the opening of two Movado
Boutiques, expenses associated with the planned launch of the new
8
<PAGE> 10
Tommy Hilfiger watch line in Spring 2001 and initial expenses associated with
the Company's new Moonachie, New Jersey distribution center. Variable cost
increases associated with sales growth were primarily in the areas of selling
commissions and product distribution costs. General and administrative cost
increases were primarily related to depreciation of new information systems
implemented in Fiscal 2001 and certain employee benefit costs.
Interest Expense. Net interest expense for the three months ended October
31, 2000 increased $0.6 million or 52.7%. The increase in interest costs
reflects higher interest rates on borrowings under the Company's bank lines of
credit, an increase in average bank borrowings and a reduction in interest
income for the quarter due to lower invested cash balances. These factors were
somewhat mitigated by lower interest costs on long-term debt due to the
repayment of $5.0 million of Senior Notes in January 2000.
Income Taxes. Income tax expense of $4.2 million for the three months
ended October 31, 2000 increased as compared to $4.1 million for the three
months ended October 31, 1999. Taxes were recorded at the Company's expected
annual effective tax rate for fiscal 2001 of 25% as compared to a 23% rate for
fiscal 2000.
LIQUIDITY AND FINANCIAL POSITION
Cash flows used in operating activities for the nine months ended October
31, 2000 were $23.1 million as compared to the use of $6.9 million for the nine
months ended October 31, 1999. The increase in cash used in operating activities
was primarily attributable to increases in accounts receivable and inventory
associated with sales growth.
The Company used $7.7 million of cash for investing activities for the nine
months ended October 31, 2000 as compared to generating $19.4 million in cash
from investing activities for the nine months ended October 31, 1999. Cash
generated from investing activities in the prior year resulted primarily from
the sale of the Piaget distribution business in February 1999 for $28.4 million.
Capital expenditures for the first nine months were $7.0 million compared to
$7.8 million in the prior year with the reduction attributable to lower
information system outlays as the Company nears completion of implementation of
a new enterprise wide information system offset somewhat by increases in
expenditures for retail expansion.
Cash generated from financing activities amounted to $16.2 million for the
nine months ended October 31, 2000 as compared to $2.7 million used in financing
activities for the comparable prior year period. The increase is attributable to
increased bank borrowings due to a reduction in cash balances available to fund
working capital requirements. This increase is offset somewhat by a reduction in
share repurchase activity and the absence, in the first nine months of fiscal
2001, of a sinking fund requirement associated with the Company's Senior Notes.
At October 31, 2000, the Company had two series of Senior Notes
outstanding. Senior Notes due January 31, 2005 which were originally issued in a
private placement completed in fiscal 1994. These notes have required annual
principal payments of $5.0 million since January 1998. The Company repaid $5.0
million principal amount of these notes in the fourth quarter of fiscal 2000 and
is scheduled to repay an additional $5.0 million in the fourth quarter of fiscal
2001. At October 31, 2000, $25 million in principal amount of these notes
remained outstanding.
During fiscal 1999, the Company issued $25 million of Series A Senior Notes
under a Note Purchase and Private Shelf Agreement dated November 30, 1998. This
agreement allows for the issuance for up to two years from the date of the
agreement of Senior Promissory Notes in the aggregate principal amount of up to
$50 million with maturities up to 12 years from their original date of issuance.
These notes bear interest at 6.90%, mature on October 30, 2010 and are subject
to annual repayments of $5.0 million commencing October 31, 2006. The Company is
presently negotiating an extension of the shelf debt facility and expects to
complete an extension before the end of fiscal 2001.
During the second quarter of fiscal 2001, the Company completed the renewal
of its revolving credit and working capital lines with its bank group. The new
agreement provides for a three-year $100 million unsecured revolving line of
credit and $15.0 million of uncommitted working capital lines. At October 31,
2000, the
9
<PAGE> 11
Company had $37.8 million of outstanding borrowings under its bank lines as
compared to $20.0 million at October 31, 1999. The increase in borrowings at the
end of the third quarter as compared to the prior year period was primarily the
result of a reduction in cash balances available to fund seasonal working
capital requirements.
Under a series of share repurchase authorizations approved by the Board of
Directors, the Company has maintained a discretionary buy-back program. Current
year repurchases under this program amounted to $7.3 million. The Company has
remaining Board authorization to spend up to $4.5 million more for the
repurchase of additional shares of its common stock.
The Company paid dividends of $863,000 for the first nine months of fiscal
2001 compared to $942,000 in the first nine months of last year. The decrease is
attributable to a reduction in outstanding shares related to the share
repurchase programs described above.
Cash and cash equivalents at October 31, 2000 amounted to $11.2 million
compared to $15.3 million at October 31, 1999. The reduction in cash related
primarily to the funding of the Company's share repurchase program, repayment of
$5 million of long-term debt in January 2000 and reduction of bank borrowings.
Debt to total capitalization at October 31, 2000 was 33.9% as compared to 25.5%
at October 31, 1999.
YEAR 2000
The Company experienced no significant problems relating to the Year 2000
issue in the first nine months of this year. The Company does not foresee any
problems for the remainder of 2000; however, if not all Year 2000 issues have
been identified or foreseen, there can be no assurance that such issues will not
materially adversely impact the Company's results of operations or adversely
affect the Company's relationships with customers, vendors, or others.
10
<PAGE> 12
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule for the nine months ended October 31, 2000,
submitted to the Securities and Exchange Commission in electronic format.
(b) Reports on Form 8-K
None
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOVADO GROUP, INC.
(Registrant)
By: /s/ KENNETH J. ADAMS
------------------------------------
Senior Vice President and
Chief Financial Officer
(Chief Financial Officer and
Principal Accounting Officer)
Dated: December 15, 2000
12
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
27 Financial Data Schedule for the nine months ended October
31, 2000, submitted to the Securities and Exchange
Commission in electronic format.
</TABLE>
13
