<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended October 31, 1999
--------------------------------------------------
OR
[ ] 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)
<TABLE>
<S> <C>
Delaware 41-1590959
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
512 Seventh Avenue, New York, New York 10018
- --------------------------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
</TABLE>
(212) 403-0500
----------------------------------------------------
(Registrant's 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 X No
------ --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of December 1, 1999.
Common Stock, $.01 par value per share: 6,717,921 shares.
<PAGE>
<TABLE>
<CAPTION>
Part I FINANCIAL INFORMATION Page No.
<S> <C> <C>
Item 1. Financial Statements *
Condensed Consolidated Balance Sheets -
October 31, 1999 and January 31, 1999.........................3
Condensed Consolidated Statements of Operations -
For the Three Months Ended
October 31, 1999 and 1998.....................................4
Condensed Consolidated Statements of Operations -
For the Nine Months Ended
October 31, 1999 and 1998.....................................5
Condensed Consolidated Statements of Cash Flows -
For the Nine Months Ended
October 31, 1999 and 1998.....................................6
Notes to Condensed Consolidated Financial Statements..................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations...........................................................11
</TABLE>
* The Balance Sheet at January 31, 1999 has been taken from the audited
financial statements at that date. All other financial statements are
unaudited.
Part II OTHER INFORMATION
Exhibit 10 Amendment, dated October 1, 1999, to the Employment
Agreement, dated February 1, 1994, between the Registrant
and Morris Goldfarb
-2-
<PAGE>
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
ASSETS OCTOBER 31, JANUARY 31,
1999 1999
---- ----
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 477 $ 7,241
Accounts receivable 56,256 12,280
Allowance for doubtful accounts and sales discounts (4,536) (1,667)
Inventories - net 25,487 16,355
Prepaid income taxes 767
Prepaid expenses and other current assets 1,482 935
-------- ---------
Total current assets 79,166 35,911
PROPERTY, PLANT AND EQUIPMENT, NET 3,166 3,777
DEFERRED INCOME TAXES 3,615 3,615
OTHER ASSETS 2,725 1,567
-------- --------
$ 88,672 $ 44,870
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 27,382 $ 2,712
Current maturities of obligations under capital leases 123 181
Income taxes payable 2,924
Accounts payable 8,887 2,605
Accrued expenses 5,786 2,631
Accrued nonrecurring charges 2,450 545
--------- ----------
Total current liabilities 47,552 8,674
OTHER LONG-TERM LIABILITIES 462 621
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, 1,000,000 shares authorized; no shares
issued and outstanding in all periods
Common stock - $.01 par value; authorized, 20,000,000
shares; issued and outstanding, 6,717,921 shares
on October 31, 1999 and January 31, 1999 67 67
Additional paid-in capital 24,767 24,767
Retained earnings 15,824 10,741
------- --------
40,658 35,575
------- --------
$ 88,672 $ 44,870
======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE>
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED OCTOBER 31,
------------------------------
(Unaudited)
1999 1998
---- ----
<S> <C> <C>
Net sales $74,544 $61,210
Cost of goods sold 54,009 45,952
------- -------
Gross profit 20,535 15,258
Selling, general and administrative expenses 9,361 7,196
-------- --------
Operating income 11,174 8,062
Interest and financing charges, net 954 1,127
--------- --------
Income before minority interest 10,220 6,935
and income taxes
Minority interest in loss of joint venture 1,303 419
-------- ----------
Income before income taxes 11,523 7,354
Income taxes 4,606 2,928
-------- ---------
Net income $ 6,917 $ 4,426
======== =========
INCOME PER COMMON SHARE:
Basic:
Net income per common share $ 1.03 $ .68
========= ========
Weighted average number of shares outstanding 6,717,921 6,526,386
========= =========
Diluted:
Net income per common share $ 1.01 $ .66
========= ========
Weighted average number of shares outstanding 6,867,529 6,751,744
========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
NINE MONTHS ENDED OCTOBER 31,
----------------------------
(Unaudited)
1999 1998
---- ----
<S> <C> <C>
Net sales $116,260 $101,902
Cost of goods sold 85,407 77,543
-------- --------
Gross profit 30,853 24,359
Selling, general and administrative expenses 23,020 20,268
-------- ---------
Operating income 7,833 4,091
Interest and financing charges, net 1,482 1,949
--------- ----------
Income before minority interest 6,351 2,142
and income taxes
Minority interest in loss of joint venture 2,116 1,012
--------- ----------
Income before income taxes 8,467 3,154
Income taxes 3,384 1,248
--------- ----------
Net income $ 5,083 $ 1,906
========= =========
INCOME PER COMMON SHARE:
Basic:
------
Net income per common share $ .76 $ .29
======== ========
Weighted average number of shares outstanding 6,717,921 6,520,676
========= =========
Diluted:
--------
Net income per common share $ .75 $ .27
======== ========
Weighted average number of shares outstanding 6,806,789 6,989,565
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED OCTOBER 31,
-----------------------------
(Unaudited)
-----------
1999 1998
------ ------
<S> <C> <C>
Cash flows from operating activities
Net income $ 5,083 $ 1,906
Adjustments to reconcile net income to
net cash used in operating activities
Depreciation and amortization 1,054 1,040
Minority Interest (2,116) (1,012)
Changes in operating assets and liabilities:
Accounts receivable (41,107) (31,105)
Inventories (9,132) (6,836)
Income taxes 3,691 37
Prepaid expenses and other current assets (547) 447
Other assets (42) (268)
Accounts payable and accrued expenses 9,437 5,419
Accrued nonrecurring charges 1,838 (55)
Other long term liabilities 47
-------- --------
Net cash used in operating activities (31,841) (30,380)
-------- --------
Cash flows from investing activities
Capital expenditures (443) (1,547)
Investment in joint venture by minority partner 1,000 250
-------- -------
Net cash provided by (used in) investing activities 557 (1,297)
-------- --------
Cash flows from financing activities
Increase in notes payable, net 24,670 26,545
Payments for capital lease obligations (150) (175)
Proceeds from exercise of stock options 40
-------- -------
Net cash from financing activities 24,520 26,410
-------- -------
Net decrease in cash and cash equivalents (6,764) (5,267)
Cash and cash equivalents at beginning of period 7,241 5,842
---------- --------
Cash and cash equivalents at end of period $ 477 $ 575
============ =========
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for
Interest $ 1,229 $ 1,864
Income taxes (276) 1,337
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General Discussion
The amounts that pertain to January 31, 1999 have been derived from audited
financial statements. The results for the nine month period ended October 31,
1999 are not necessarily indicative of the results expected for the entire
fiscal year. 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 periods presented
have been reflected.
The Company consolidates the accounts of all its majority-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 Company's Form 10-K filed with
the Securities and Exchange Commission for the year ended January 31, 1999.
Note 2 - Inventories
Inventories consist of:
<TABLE>
<CAPTION>
October 31, January 31,
1999 1999
---------- ---------
(in thousands)
<S> <C> <C>
Finished products $ 19,884 $ 12,939
Work-in-process 513 115
Raw materials 5,090 3,301
------- -------
$ 25,487 $ 16,355
====== ======
</TABLE>
Note 3 - Net Income Per Common Share
Basic earnings per share amounts have been computed using the weighted average
number of common shares outstanding during each year. Diluted earnings per share
amounts are computed using the weighted average number of common shares and the
dilutive potential common shares outstanding during the year.
-7-
<PAGE>
Note 4 - Nonrecurring Charges
On November 18, 1999, the Company announced that BET Design Studio, LLC, a joint
venture with Black Entertainment Television, Inc., would be dissolved. In
connection with this decision, a $1.9 million provision (including $950,000
allocable to Black Entertainment Television's ownership interest) was recorded
to cover the costs of dissolving the joint venture. This amount is included in
the current portion of Accrued nonrecurring charges.
Included in a 1995 non-recurring charge was approximately $2.0 million to sell
or liquidate a factory located in Indonesia. During the year ended January 31,
1998, the Company applied approximately $1.6 million of the reserve as a
reduction of the Indonesian property, plant and equipment, since the Company
cannot assure any recoveries in connection with its disposition. In December
1997, the factory began to manufacture luggage, and as a result, the Company has
since discontinued its plan to sell or liquidate the factory. However, due to
the political and economic instability experienced in Indonesia, management
determined that the $462,000 nonrecurring balance with respect to its Indonesian
assets should be maintained. The remaining nonrecurring balance ($338,000)
relates to the reserve associated with the closure of the Company's domestic
factory that was completed by January 31, 1995.
Based on current estimates, management believes that existing accruals are
adequate. Other long-term liabilities include $250,000 and $317,000 of the above
described nonrecurring charges at October 31, 1999 and January 31, 1999,
respectively.
The status of the provision at the end of the period was:
<TABLE>
<CAPTION>
Balance 1999 Balance
January 31, 1999 Activity October 31, 1999
---------------- -------- ----------------
(in thousands)
<S> <C> <C> <C>
Closure of Domestic Facility $ 400 $ (62) $ 338
Uncertainty of Indonesian Assets 462 462
Closure of BET Design Studio, LLC 1,900 1,900
--------- -------- --------
$ 862 $ 1,838 $ 2,700
========= ======== =========
</TABLE>
-8-
<PAGE>
Note 5 - Notes Payable
The Company's loan agreement, which expires on May 31, 2002, provides for a
maximum line of credit in amounts that range from $45 million to $65 million
during each year of the loan term. The amounts available include direct
borrowings that range from $30 million to $50 million during each year of the
loan term. The balance of the credit line may be used for letters of credit. All
amounts available for borrowing are subject to borrowing base formulas and
overadvances specified in the agreement. As of October 31, 1999, direct
borrowings of $23.6 million were included in Notes payable.
BET Design Studio utilized an asset-based credit facility with The CIT Group.
Direct borrowings bear interest at the prevailing prime rate plus 50 basis
points (9.0% at December 1, 1999). As of October 31, 1999, $2.2 million of
direct borrowings under this facility were included in Notes payable. To support
overadvances, both partners opened stand-by letters of credit in the amount of
$750,000 under which The CIT Group is the beneficiary.
Black Entertainment Television, Inc. ("BET") advanced $600,000 to BET Design
Studio under a lending agreement. Borrowings under this agreement bear interest
at 12.0% during the first twelve months of the agreement and 14% thereafter.
Notes payable also includes foreign notes payable by PT Balihides, the Company's
Indonesian subsidiary. The foreign notes payable represent maximum borrowings as
of October 31, 1999 under a line of credit of approximately $1.5 million with an
Indonesian bank.
-9-
<PAGE>
Note 6 - Segments
The Company's reportable segments are business units that offer different
products and are managed separately. The company operates in two segments,
licensed and non-licensed apparel. The provision taken in connection with the
dissolution of BET Design Studio (see Note 4) is included in the non-licensed
segment. The following information is presented for the three and nine month
periods indicated below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED OCTOBER 31,
------------------------------
1999 1998
---- ----
Non- Non-
Licensed Licensed Licensed Licensed
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 27,385 $ 47,159 $ 22,154 $ 39,056
Cost of goods sold 18,570 35,439 16,259 29,693
------- -------- -------- --------
Gross profit 8,815 11,720 5,895 9,363
Selling, general and administrative 2,729 6,632 1,900 5,296
-------- --------- --------- ---------
Operating income 6,086 5,088 3,995 4,067
Interest expense 337 617 311 816
-------- --------- --------- ---------
Income before minority
interest and income taxes 5,749 4,471 3,684 3,251
Minority interest 1,303 419
--------- --------- ---------- ----------
Income before income taxes $ 5,749 $ 5,774 $ 3,684 $ 3,670
======== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED OCTOBER 31,
-----------------------------
1999 1998
---- ----
Non- Non-
Licensed Licensed Licensed Licensed
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 46,772 $ 69,488 $ 36,642 $ 65,260
Cost of goods sold 32,898 52,509 27,112 50,431
------- -------- -------- --------
Gross profit 13,874 16,979 9,530 14,829
Selling, general and administrative 7,260 15,760 5,956 14,312
------- -------- --------- --------
Operating income 6,614 1,219 3,574 517
Interest expense 394 1,088 463 1,486
------- -------- --------- --------
Income before minority
interest and income taxes 6,220 131 3,111 (969)
Minority interest 2,116 1,012
-------- --------- --------- ---------
Income before income taxes $ 6,220 $ 2,247 $ 3,111 $ 43
======== ========== ========= ===========
</TABLE>
Note 7 - Comprehensive Income
Comprehensive income is the change in equity during a period from transactions
in events and circumstances unrelated to net income (e.g., foreign currency
translation gains and losses). For the nine month periods ended October 31, 1999
and 1998, comprehensive income was not material.
-10-
<PAGE>
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Statements in this Quarterly Report on Form 10-Q concerning the Company's
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 matters, 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 foreign manufacturers, the nature of the apparel industry,
including changing consumer demand and tastes, seasonality, customer acceptance
of new products, the impact of competitive products and pricing, dependence on
existing management, general economic conditions, as well as other risks
detailed in the Company's filings with the Securities and Exchange Commission,
including this Quarterly Report on Form 10-Q.
Results of Operations
Net sales for the three months ended October 31, 1999 were $74.5 million
compared to $61.2 million for the same period last year. The increase in net
sales during the quarter was attributable to increases in sales of both
non-licensed apparel ($8.1 million) and licensed apparel ($5.2 million). For the
nine months ended October 31, 1999, net sales were $116.3 million compared to
$101.9 million for the same period in the prior year. The increase in net sales
in the nine month period was also attributable to increases in sales of both
licensed apparel ($10.1 million) and non-licensed apparel ($4.3 million).
Gross profit was $20.5 million, or 27.5% of net sales, for the three months
ended October 31, 1999, compared to $15.3 million, or 24.9% of net sales, in the
same period last year, and was $30.9 million, or 26.5% of net sales, for the
nine months ended October 31, 1999, compared to $24.4 million, or 23.9% of net
sales, for the same period last year. As a percentage of net sales, gross profit
of licensed apparel increased due to increased sales of higher-margin products.
Gross profit as a percentage of net sales of non-licensed apparel increased due
to lower volume of sales of prior season merchandise.
Selling, general and administrative expenses were $9.4 million for the three
months ended October 31, 1999, compared to $7.2 million in the three months
ended October 31, 1998, and were $23.0 million for the nine months ended October
31, 1999, compared to $20.3 million for the same period last year.
Selling, general and administrative expenses for both the three and nine month
periods ended October 31, 1999 include a $1.5 million provision recorded during
the three months ended October 31, 1999 to cover the costs of dissolving the
Company's BET Design Studio joint venture with Black Entertainment Television.
The Company incurred other selling, general and administrative expenses relating
to BET Design Studio of $1.0 million in the three months ended October 31, 1999,
which was basically unchanged from the same period of the prior year. For the
nine months ended October 31, 1999, the Company incurred other selling, general
and administrative expenses relating to BET Design Studio of $2.6 million,
compared to $2.1 million in the nine months ended October 31, 1998.
-11-
<PAGE>
Excluding BET Design Studio expenses and provision for its dissolution, selling,
general and administrative expenses were $6.8 million, or 9.3% of net sales, in
the three months ended October 31, 1999 compared to $6.2 million, or 10.2% of
net sales, in the same period in the prior year, and were $18.8 million, or
16.5% of net sales, for the nine months ended October 31, 1999, compared to
$18.1 million, or 17.9% of net sales, in the same period in the prior year.
Interest expense and financing charges for the three months ended October 31,
1999 were $1.0 million compared to $1.1 million in the comparable period last
year and were $1.5 million for the nine months ended October 31, 1999, compared
to $1.9 million in the same period in the prior year. The decrease in interest
expense results from the Company's ability to be in a non-borrowing basis longer
in the current fiscal (3 months) than in the comparable period of the prior year
(1.3 months).
Income taxes of $4.6 million for the three months ended October 31, 1999 reflect
an effective tax rate of 40% compared to income taxes of $2.9 million (same
effective tax rate) in the comparable period in the prior year. For the nine
months ended October 31, 1999, income taxes of $3.4 million also reflects an
effective tax rate of 40%, compared to income taxes of $1.2 million (same
effective tax rate) in the same period last year.
As a result of the foregoing, for the three months ended October 31, 1999, the
Company had net income of $6.9 million, or $1.01 per diluted share, compared to
net income of $4.4 million, or $.66 per diluted share, for the comparable period
in the prior year. For the nine months ended October 31, 1999, the Company had
net income of $5.1 million, or $.75 per diluted share, compared to net income of
$1.9 million, or $.27 per diluted share, for the same period in the prior year.
Liquidity and Capital Resources
The Company's loan agreement, which expires on May 31, 2002, provides for a
maximum line of credit in amounts that range from $45 million to $65 million
during each year of the loan term. The amounts available include direct
borrowings that range from $30 million to $50 million during each year of the
loan term. The balance of the credit line may be used for letters of credit. All
amounts available for borrowing are subject to borrowing base formulas and
overadvances specified in the agreement.
-12-
<PAGE>
Direct borrowings bear interest at the agent's prime rate (8.5% as of December
1, 1999) or LIBOR plus 250 basis points (8.98% at December 1, 1999) at the
election of the Company. All borrowings are collateralized by the assets of the
Company. The loan agreement requires the Company, among other covenants, to
maintain certain earnings and tangible net worth levels, and prohibits the
payment of cash dividends. As of October 31, 1999, direct borrowings amounted to
$23.6 million, and contingent liability under open letters of credit was
approximately $5.9 million. The amount borrowed under the line of credit varies
based upon the Company's seasonal requirements.
In November 1999, the Company dissolved BET Design Studio, a joint venture with
Black Entertainment Television ("BET") started in February 1997 to provide a
BET-branded clothing and accessory line. As of October 31, 1999, BET and the
Company had each contributed $2.5 million to this joint venture. During November
1999, BET and the Company each contributed an additional $300,000 to the joint
venture.
BET Design Studio utilized an asset-based credit facility with The CIT Group.
Direct borrowings bear interest at the prevailing prime rate plus 50 basis
points (9.0% at December 1, 1999). As of October 31, 1999, there were $2.2
million of direct borrowings and $232,000 of contingent liability under open
letters of credit. To support overadvances, both partners opened stand-by
letters of credit in the amount of $750,000 under which The CIT Group is the
beneficiary.
BET advanced $600,000 to BET Design Studio under a lending agreement. Borrowings
under this agreement bear interest at 12.0% during the first twelve months of
the agreement and 14% thereafter.
PT Balihides, the Company's Indonesian subsidiary, has a separate credit
facility with an Indonesian bank. The foreign notes payable represent maximum
borrowings as of October 31, 1999 under a line of credit of approximately $1.5
million.
Year 2000 Compliance
The Company believes that advanced information processing is essential to
maintaining its competitive position. The Company participates in the electronic
data interchange program maintained by many of its larger customers, including
Federated Department Stores, Wal-Mart and J. C. Penney Co. This program allows
the Company to receive customer orders, provide advanced shipping notices,
monitor store inventory and track orders on-line from the time such orders are
placed through delivery. The Company is also able to notify certain of its
customers' warehouses in advance as to shipments.
The Company completed an upgrade of its accounting systems in July 1998 to
ensure proper processing of transactions relating to the Year 2000 and beyond
and has completed testing its computer operating systems.
-13-
<PAGE>
All costs associated with Year 2000 compliance have been funded with working
capital and have been expensed as incurred. The Company has expended
approximately $150,000 to complete its Year 2000 compliance. Of this amount,
$60,000 was expended during fiscal 1999 and $90,000 was incurred during the nine
month period ended October 31, 1999.
Based on current information, the Company believes that Y2K issues will not have
a material adverse effect on the Company, its business or its financial
condition. There can, however, be no assurances that Y2K remediation by the
Company or third parties will be properly and timely completed, and failure to
do so could have a material adverse effect on the Company, its business and its
financial condition. The Company believes that the greatest risk presented by
Y2K issues is from third parties, such as suppliers, financial institutions,
utility providers, and others who may not have adequately addressed the problem.
A failure of any such third party's computer or other applicable systems in
sufficient magnitude could materially and adversely affect the Company. The
Company is not presently able to quantify this risk.
The Company is unable to assess a reasonable worst case Y2K scenario given a
number of factors outside of the Company's direct or indirect control, including
among others, the uncertainty of the readiness of vendors and customers. The
Company recognizes the risks in its ability to conduct business if other key
suppliers in utilities, communications, transportation, banking and government,
both domestic (local, state and federal) and foreign, are not Y2K ready. The
Company is monitoring news and progress reports pertaining to those critical
services to determine the effect on the Company's ability to conduct business
as a result of Y2K issues on the economy if those and other key suppliers in
utilities, communications, transportation, banking and government, both
domestic (local, state and federal) and foreign, cease to function. At this
time the Company has not developed any contingency plans.
Effect of Recently Issued Accounting Pronouncements
Derivatives
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 ("SFAS NO. 133"), "Accounting for Derivative Instruments and Hedging
Activities," which is effective for fiscal years beginning after June 15, 2000.
SFAS No. 133 will require the Company to recognize all derivatives on the
balance sheet at fair value. Adoption of SFAS No. 133 is not expected to have a
material effect on the Company's financial statements.
Part II OTHER INFORMATION
<TABLE>
<S> <C>
Exhibit 10 Amendment, dated October 1, 1999, to the Employment
Agreement, dated February 1, 1994, between the Registrant
and Morris Goldfarb
</TABLE>
-14-
<PAGE>
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.
G-III APPAREL GROUP, LTD.
(Registrant)
<TABLE>
<S> <C>
Date: December 10, 1999 By: /s/ Morris Goldfarb
----------------------------
Morris Goldfarb
Chief Executive Officer
Date: December 10, 1999 By: /s/ Wayne S. Miller
---------------------------
Wayne S. Miller
Chief Financial Officer
</TABLE>
<PAGE>
October 1, 1999
Mr. Morris Goldfarb
Dear Mr. Goldfarb:
This letter, when accepted by you, shall constitute an amendment to the
Employment Agreement (the "Agreement"), dated February 1, 1994, between G-III
Apparel Group, Ltd. (the "Company") and you.
The Company and you hereby agree that Section 2 of the Agreement shall
be amended to read as follows:
2. Term. The term of this Agreement and of the term of employment (the
"Employment Term") shall terminate on January 31, 2003; provided, however, that
on each January 31st which shall be two years prior to the end of the then
Employment Term, the term of this Agreement and the Employment Term shall be
automatically extended for an additional one-year period unless prior to such
January 31st either party shall have given written notice to the other that the
term of this Agreement and the Employment Term shall not be extended any
further.
Except as modified herein, all terms and provisions of the Agreement
continue in full force and effect.
Very truly yours,
G-III APPAREL GROUP, LTD.
By: /s/ Wayne S. Miller
-------------------------------------
Accepted and agreed to:
/s/ Morris Goldfarb
- ---------------------------
Morris Goldfarb
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> OCT-31-1999
<PERIOD-TYPE> 9-MOS
<CASH> 477
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<ALLOWANCES> (4,536)
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<CURRENT-ASSETS> 79,166
<PP&E> 13,377
<DEPRECIATION> (10,211)
<TOTAL-ASSETS> 88,672
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<COMMON> 67
0
0
<OTHER-SE> 40,591
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<SALES> 116,260
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<CGS> 85,407
<TOTAL-COSTS> 85,407
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<INCOME-TAX> 3,384
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<CHANGES> 0
<NET-INCOME> 5,083
<EPS-BASIC> 0.76
<EPS-DILUTED> 0.75
</TABLE>
