<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-Q
------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 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 August 29, 1999 the Registrant had 3,509,773 shares of Class A Common
Stock, par value $0.01 per share, outstanding and 9,502,298 shares of Common
Stock, par value $0.01 per share, outstanding.
--------------------------------------------------------------------------------
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<PAGE> 2
09/11/00
MOVADO GROUP, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
JULY 31, 2000
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I Financial Information
Item 1. Consolidated Balance Sheets at July 31, 2000,
January 31, 2000 and July 31, 1999 3
Consolidated Statements of Income for the six
months ended July 31, 2000 and 1999 and the three
months ended July 31, 2000 and 1999
4
Consolidated Statements of Cash Flows for the six
months ended July 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II Other Information
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security
Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit Index 17
</TABLE>
2
<PAGE> 3
09/11/00
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
JULY 31, JANUARY 31, JULY 31,
2000 2000 1999
---- ---- ----
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $8,191 $26,615 $32,628
Trade receivables, net 109,928 103,795 104,641
Inventories 100,749 77,075 118,143
Other current assets 21,232 19,341 20,120
-------- -------- --------
Total current assets 240,100 226,826 275,532
Plant, property and equipment, net 29,006 27,593 26,728
Other assets 14,178 12,767 13,021
-------- -------- --------
$283,284 $267,186 $315,281
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable to banks $29,990 $13,500 $47,950
Current portion of long-term debt 5,000 5,000 5,000
Accounts payable 22,040 17,562 17,857
Accrued liabilities 20,675 26,602 15,081
Deferred and current taxes payable 6,343 5,432 8,790
-------- -------- --------
Total current liabilities 84,048 68,096 94,678
Long-term debt 45,000 45,000 50,000
Deferred and non-current foreign income taxes 4,594 5,105 6,286
Other liabilities 1,227 1,170 1,627
-------- -------- --------
Total liabilities 134,869 119,371 152,591
-------- -------- --------
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; 9,505,298, 9,496,529 and
9,472,425 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 66,199 66,113 65,403
Retained earnings 122,588 118,615 114,242
Accumulated other comprehensive income (14,106) (16,462) (6,629)
Treasury stock, 1,437,270, 920,690 and 488,490 shares,
respectively, at cost (26,396) (20,581) (10,456)
-------- -------- --------
148,415 147,815 162,690
-------- -------- --------
$283,284 $267,186 $315,281
======== ======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE> 4
MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31, THREE MONTHS ENDED JULY 31,
------------------------- ---------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $129,512 $117,191 $76,173 $69,538
Costs and expenses:
Cost of sales 51,685 46,935 30,387 28,317
Selling, general and administrative 68,672 61,001 37,627 33,961
-------- -------- ------- -------
Operating income 9,155 9,255 8,159 7,260
Net interest expense 3,079 2,665 1,853 1,518
Gain on disposition of business - 4,752 - -
-------- -------- ------- -------
Income before income taxes 6,076 11,342 6,306 5,742
Provision for income taxes 1,519 2,609 1,576 1,320
-------- -------- ------- -------
Net income $4,557 $8,733 $4,730 $4,422
======== ======== ======= =======
Basic income per share $0.39 $0.69 $0.41 $0.35
======== ======== ======= =======
Diluted income per share $0.38 $0.67 $0.40 $0.34
======== ======== ======= =======
Dividends declared per share $0.05 $0.05 $0.025 $0.025
======== ======== ======= =======
Average shares outstanding 11,806 12,687 11,632 12,604
Dilutive effect of stock options 173 393 117 393
-------- -------- ------- -------
Average shares outstanding assuming dilution 11,979 13,080 11,749 12,997
======== ======== ======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE> 5
MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31,
-------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,557 $ 8,733
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 2,634 2,533
Deferred and non-current foreign income taxes (477) 808
Provision for losses on accounts receivable 513 437
Provision for losses on inventory 129 -
Gain on disposition of business - (4,752)
Changes in current assets and liabilities:
Trade receivables (7,165) 4,051
Inventories (24,137) (16,136)
Other current assets (2,000) (826)
Accounts payable 4,659 (6,323)
Accrued liabilities (5,536) (8,036)
Deferred & current taxes payable 517 (1,106)
Other non-current assets 2,350 (1,126)
Other non-current liabilities 55 (180)
------- -------
Net cash used in operating activities (23,901) (21,923)
------- -------
Cash flows from investing activities:
Capital expenditures (3,883) (6,010)
Proceeds from disposition of business - 28,409
Goodwill, trademarks and other intangibles (538) (1,019)
------- -------
Net cash (used in) provided by investing activities (4,421) 21,380
------- -------
Cash flows from financing activities:
Repayment of Senior Notes - (5,000)
Net proceeds from bank borrowings 16,490 40,750
Principal payments under capital leases - (69)
Stock options exercised 7 301
Dividends paid (577) (632)
Purchase of treasury stock (5,814) (7,468)
------- -------
Net cash provided by financing activities 10,106 27,882
------- -------
Effect of exchange rate changes on cash and cash equivalents (208) (337)
------- -------
Net (decrease) increase in cash and cash equivalents (18,424) 27,002
Cash and cash equivalents at beginning of period 26,615 5,626
------- -------
Cash and cash equivalents at end of period $ 8,191 $32,628
======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<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 - RECLASSIFICATION
Certain prior year amounts have been reclassified to conform to the current
presentation.
NOTE 2 - INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31, JANUARY 31, JULY 31,
2000 2000 1999
---- ---- ----
<S> <C> <C> <C>
Finished goods $60,141 $50,565 $75,257
Work-in-process and component parts 40,608 26,510 42,886
-------- ------- --------
$100,749 $77,075 $118,143
-------- ------- --------
</TABLE>
NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION
The following is provided as supplemental information to the consolidated
statements of cash flows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JULY 31,
--------------
2000 1999
---- ----
<S> <C> <C>
Cash paid during the period for:
Interest $3,115 $2,995
Income taxes $3,236 $3,310
</TABLE>
6
<PAGE> 7
NOTE 4 - COMPREHENSIVE INCOME
The components of comprehensive income are as follows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31, THREE MONTHS ENDED JULY 31,
------------------------- ---------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $4,557 $8,733 $4,730 $4,422
Foreign currency translation adjustment 2,356 (623) 4,879 (2,887)
------ ------ ------ ------
Comprehensive income $6,913 $8,110 $9,609 $1,535
====== ====== ====== ======
</TABLE>
NOTE 5 - 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 July 31, 2000 and 1999 are as
follows (in thousands):
<TABLE>
<CAPTION>
NET SALES OPERATING PROFIT
--------- ----------------
FOR THE SIX MONTHS ENDED JULY 31,
---------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Wholesale $110,476 $102,163 $ 11,209 $ 11,023
Other 19,036 15,028 (2,054) (1,768)
-------- -------- -------- --------
Consolidated total $129,512 $117,191 $ 9,155 $ 9,255
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
NET SALES OPERATING PROFIT
--------- ----------------
FOR THE THREE MONTHS ENDED JULY 31,
-----------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Wholesale $65,495 $60,585 $ 9,004 $ 7,543
Other 10,678 8,953 (845) (283)
------- ------- ------- -------
Consolidated total $76,173 $69,538 $ 8,159 $ 7,260
======= ======= ======= =======
</TABLE>
7
<PAGE> 8
NOTE 6 - BANK CREDIT AGREEMENT
On June 22, 2000, the Company amended its revolving and working capital lines
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 line 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.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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 SIX MONTHS ENDED JULY 31, 2000 AS COMPARED TO THE
SIX MONTHS ENDED JULY 31, 1999.
Net sales: Comparative net sales by product class were as follows:
<TABLE>
<CAPTION>
Six Months Ended July 31,
2000 1999
---- ----
<S> <C> <C>
Concord, Movado, Coach and ESQ
Domestic $85,440 $80,386
International 25,036 21,777
Other 19,036 15,028
-------- --------
Net Sales $129,512 $117,191
======== ========
</TABLE>
Net sales increased by $12.3 million or 10.5% for the six months ended July 31,
2000 as compared to the six months ended July 31, 1999. Domestic wholesale sales
of our brands increased by $5.1 million or 6.3% while international wholesale
sales increased by $3.3 million or 15.0%. All of our brands posted mid to high
single digit domestic sales increases. International sales increases were led by
growth in our Concord and Coach Watch brands. International sales were
negatively impacted by approximately $ 2.2 million due to changes in currency
translation rates.
9
<PAGE> 10
Other net sales, which include our Company outlet stores, Movado Boutiques and
our after sales service business, increased by $4.0 million or 26.7%. 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 six months ended July 31, 2000 was $77.8
million (60.1% of net sales) as compared to $70.3 million (60.0% of net sales)
for the six months ended July 31, 1999. Gross profit for the six months ended
July 31, 2000 increased $7.5 million or 10.7% to $77.8 million from $70.3
million in the first six months of the prior year. This increase was
attributable to sales increases. Gross margin for the six months ended July 31,
2000 was 60.1% of sales, approximately consistent with a gross margin of 60.0%
for the first six months of last year.
Selling, General and Administrative. Selling, general and administrative
expenses for the six months ended July 31, 2000 were $68.7 million or 53.0% of
net sales, a 12.6% increase over the $61.0 million or 52.1% of net sales in the
first six months of last year. The 12.6% increase was primarily attributable to
expenses associated with several of the Company's growth initiatives. These
include the opening of four additional outlet stores, the opening of the
Company's fifth Movado Boutique, additions to the Company's ESQ and Coach sales
staffs in connection with the expansion of these brands and addition of
personnel in anticipation of launching the new Tommy Hilfiger watch line in
Spring 2001.
Interest Expense. Net interest expense increased $0.4 million or 15.5%. The
increase in interest costs reflects higher interest rates on borrowings under
the Company's bank lines of credit and a reduction in interest income due to
lower invested cash balances. These factors were somewhat mitigated by lower
average working capital employed in the business as well as 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 $1.5 million for the six months ended July
31, 2000 decreased as compared to $2.6 million for the six months ended July 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 a 25% rate for fiscal 2001 as compared to a 23% rate for
fiscal 2000. The Company believes that the near term future effective tax rate
will be 25%, which reflects the Company's current expectation that domestic
earnings will gradually increase as a percentage of the overall earnings mix.
However, there can be no assurance of this result as it is dependent on a number
of factors, including the mix of foreign to domestic earnings, local statutory
tax rates and the Company's ability to utilize net operating loss carryforwards
in certain jurisdictions.
10
<PAGE> 11
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2000 AS COMPARED TO
THE THREE MONTHS ENDED JULY 31, 1999.
Net sales: Comparative net sales by product class were as follows:
<TABLE>
<CAPTION>
Three Months Ended July 31,
2000 1999
---- ----
<S> <C> <C>
Concord, Movado, Coach and ESQ
Domestic $51,026 $47,807
International 14,469 12,778
Other 10,678 8,953
------- -------
Net Sales $76,173 $69,538
======= =======
</TABLE>
Net sales increased by $6.6 million or 9.5% for the three months ended July 31,
2000 as compared to the three months ended July 31, 1999. Domestic wholesale
sales of our brands increased by $3.2 million or 6.7% and international
wholesale sales increased by $1.7 million or 13.2%. Domestic sales increases
were led by increases in Movado and Concord brands offset by a decline in sales
of our Coach Watch brand. Prior year second quarter sales of Coach Watch
included significant initial shipments to a major chain jeweler whereas
there were no significant door expansions in this year's second quarter. ESQ
sales were consistent with last year's second quarter sales, which included
significant liquidation sales at less than normal gross margins that were not
repeated this year. International sales increases were led by our Movado,
Concord and Coach Watch brands. International sales were negatively impacted by
approximately $1.1 million due to changes in foreign currency translation rates.
Other net sales, which include our Company outlet stores, Movado Boutiques and
our after sales service business, increased by $1.7 million or 19.3%. Growth in
the other sales category was attributable to both comparable store sales
increases in our outlets and Boutiques and new store openings.
Gross Margin. Gross profit for the three months ended July 31, 2000 was $45.8
million (60.1% of net sales) as compared to $41.2 million (59.3% of net sales)
for the three months ended July 31, 1999. The 80 basis point increase in gross
margin for the quarter primarily relates to reduced levels of liquidation sales
and product cost reductions in the component procurement and assembly aspects of
our supply chain operation.
Selling, General and Administrative. Selling, general and administrative
expenses for the three months ended July 31, 2000 were $37.6 million or 49.4% of
net sales, a 10.8% increase over the $34.0 million or 48.8% of net sales in the
second quarter of last year. The 10.8% increase was primarily attributable to
increases in brand marketing and advertising expenses, increase in variable
expenses associated with sales growth and expenses associated with several of
the Company's growth initiatives. These include the opening of four additional
outlet stores, the opening of the Company's fifth Movado Boutique, additions to
the Company's ESQ and Coach sales staffs in connection with the expansion of
these brands and addition of personnel in anticipation of launching the new
Tommy Hilfiger watch line in Spring 2001.
11
<PAGE> 12
Interest Expense. Net interest expense for the three months ended July 31, 2000
increased $0.3 million or 22.1%. The increase in interest costs reflects higher
interest rates on borrowings under the Company's bank lines of credit and a
reduction in interest income for the quarter due to lower invested cash
balances. These factors were somewhat mitigated by lower average working capital
employed in the business as well as 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 $1.6 million for the three months ended July
31, 2000 increased as compared to $1.3 million for the three months ended July
31, 1999. Taxes were recorded at a 25% rate for fiscal 2001 as compared to a 23%
rate for fiscal 2000. The Company believes that the near term future effective
tax rate will be 25%, which reflects the Company's current expectation that
domestic earnings will gradually increase as a percentage of the overall
earnings mix. However, there can be no assurance of this result as it is
dependent on a number of factors, including the mix of foreign to domestic
earnings, local statutory tax rates and the Company's ability to utilize net
operating loss carryforwards in certain jurisdictions.
LIQUIDITY AND FINANCIAL POSITION
Cash flows used in operating activities for the six months ended July 31, 2000
were $23.9 million as compared to the use of $21.9 million for the six months
ended July 31, 1999. The increase in cash used in operating activities was the
result of increased seasonal inventory in anticipation of second half sales
growth and an increase in accounts receivable due to sales growth.
The Company used $4.4 million of cash for investing activities for the six
months ended July 31, 2000 as compared to generating $21.4 million in cash for
the six months ended July 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
six months were $3.9 million compared to $6.0 million in the prior years with
the reduction being attributable to lower information system outlays as the
Company nears completion of implementation of a new enterprise wide information
system.
Cash generated from financing activities amounted to $10.1 million for the six
months ended July 31, 2000 as compared to $27.9 million in cash generated from
financing activities for the comparable prior year period. The reduction is
attributable to reduced borrowings due to more effective working capital
management and use of internal cash resources to fund operations.
At July 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 July
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.
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
12
<PAGE> 13
revolving line of credit and $15.0 million of uncommitted working capital lines.
At July 31, 2000, the Company had $30 million of outstanding borrowings under
its bank lines as compared to $48 million at July 31, 1999.
Under a series of share repurchase authorizations approved by the Board of
Directors, the Company has maintained a discretionary buy-back program. Current
year purchases under the repurchase program amounted to $5.9 million. The
Company has remaining open Board authorization of $6 million for additional
repurchase of its common shares.
The Company paid dividends of $577,000 for the first six months of fiscal 2001
compared to $632,000 in the first six 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 July 31, 2000 amounted to $8 million compared to
$32 million at July 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 July 31, 2000 was 35% as compared to 38.9 at July 31, 1999.
YEAR 2000
The Company experienced no significant problems relating to the Year 2000 issue
in the first six 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.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 20, 2000 the Company held its annual meeting of shareholders
at the offices of Simpson, Thacher & Bartlett located at 425
Lexington Avenue, New York, New York.
The following matters were voted upon at the meeting:
(i) The election of the following directors, constituting the
entire board of directors:
Margaret Hayes Adame
Richard Cote
Efraim Grinberg
Gedalio Grinberg
Alan H. Howard
Donald Oresman
Leonard L. Silverstein
(ii) A proposal to ratify the selection of PricewaterhouseCoopers
LLP as the Company's independent public accountants for the
fiscal year ending January 31, 2001;
With respect to the above referenced proposals that were voted on at
the annual shareholders meeting, the following votes were tabulated.
There were no broker non-votes.
Proposal (i) on election of directors:
<TABLE>
<CAPTION>
Nominee For Witheld/Against Exception/Abstain
------- --- --------------- -----------------
<S> <C> <C> <C>
Margaret Hayes Adame............................................ 33,636,541 214,652 50,162
Richard Cote................................................... 33,635,174 216,019 50,162
Efraim Grinberg................................................. 33,636,439 214,754 50,162
Gedalio Grinberg................................................ 33,636,439 214,754 50,162
Alan H. Howard.................................................. 33,635,041 216,152 50,162
Donald Oresman.................................................. 33,586,879 264,314 50,162
Leonard L. Silverstein.......................................... 33,636,174 215,019 50,162
Proposal (ii) on ratification of appointment of accountants.... 33,838,080 13,002 111
</TABLE>
14
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Credit agreement dated June 22, 2000 among the
Registrant, the Chase Manhattan Bank as
Administrative Agent, and as Swingline Bank, and as
Issuing Bank, Fleet Bank, N.A. as Syndication Agent,
the Bank of New York as Documentation Agent and the
other Lenders Signatory thereto.
27 Financial Data Schedule for the six months ended July
31, 2000, submitted to the Securities and Exchange
Commission in electronic format.
(b) Reports on Form 8-K
None
15
<PAGE> 16
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)
Dated: September 14, 2000 By: /s/ Kenneth J. Adams
---------------------
Kenneth J. Adams
Senior Vice President and
Chief Financial Officer
(Chief Financial Officer and
Principal Accounting Officer)
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.1 Credit agreement dated June 22, 2000 among the
Registrant, the Chase Manhattan Bank as
Administrative Agent, and as Swingline Bank, and as
Issuing Bank, Fleet Bank, N.A. as Syndication Agent,
the Bank of New York as Documentation Agent and the
other Lenders Signatory thereto.
27 Financial Data Schedule for the three months ended
July 31, 2000, submitted to the Securities and
Exchange Commission in electronic format.
</TABLE>
17
