<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
/x/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended August 31, 1995 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 0-6708
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Nautica Enterprises, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 95-2431048
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
40 West 57th Street, New York, N.Y. 10019
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (212)541-5990
------------------------------
- --------------------------------------------------------------------------------
(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
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court
Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of Common Stock outstanding as of October 10, 1995
was 19,851,617.
<PAGE> 2
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
AUGUST 31, 1995
(Unaudited)
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information:
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets
As at August 31, 1995 and February 28, 1995............................ 2
Condensed Consolidated Statements of Earnings
For the Six Month and Three Month Periods Ended
August 31, 1995 and 1994.............................................. 3
Condensed Consolidated Statements of Cash Flows
For the Six Month Periods Ended
August 31, 1995 and 1994.............................................. 4
Notes to Condensed Consolidated Financial Statements.................... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................... 6
Part II - Other Information....................................................... 9
</TABLE>
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NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
August 31, February 28,
1995 1995
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 34,029,623 $ 49,153,556
Accounts receivable - net 53,600,467 37,362,801
Inventories 66,710,568 48,876,065
Prepaid expenses and other current assets 3,791,332 5,389,979
Deferred tax benefit 2,511,279 2,511,279
------------ ------------
Total current assets 160,643,269 143,293,680
Property, plant and equipment, net of
accumulated depreciation and amortization 22,485,214 18,759,795
Other assets 6,271,311 6,302,031
------------ ------------
$189,399,794 $168,355,506
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 50,000 $ 50,000
Accounts payable - trade 16,268,135 12,534,381
Accrued expenses and other current liabilities 18,533,089 15,631,659
Income taxes payable 2,813,149 589,115
------------ ------------
Total current liabilities 37,664,373 28,805,155
Long-term debt - net 200,000 250,000
Stockholders' equity:
Preferred stock - par value $.01, authorized
2,000,000 shares; no shares issued
Common stock - par value $.10, authorized
50,000,000 shares; issued 20,580,562
at August 31, 1995 and 20,416,110 shares at
February 28, 1995 2,058,056 2,041,611
Additional paid-in capital 53,594,181 53,079,214
Retained earnings 96,433,744 84,730,086
------------ ------------
152,085,981 139,850,911
Less:
Common stock in treasury - at cost
785,035 shares at August 31,1995
and February 28, 1995 550,560 550,560
------------ ------------
Total stockholders' equity 151,535,421 139,300,351
------------ ------------
$189,399,794 $168,355,506
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 4
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NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED Three Months Ended
AUGUST 31, August 31,
-------------------------------- -----------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $142,002,588 $107,839,570 $80,554,130 $63,285,678
------------ ------------ ----------- -----------
Cost and expenses:
Cost of goods sold 79,851,107 61,062,477 45,115,750 35,786,308
Designing, selling, shipping, general
and administrative expenses 44,702,968 35,065,820 23,185,871 19,223,225
------------ ------------ ----------- -----------
124,554,075 96,128,297 68,301,621 55,009,533
------------ ------------ ----------- -----------
Earnings from operations 17,448,513 11,711,273 12,252,509 8,276,145
------------ ------------ ----------- -----------
Other income (expense):
Interest income, net 1,270,332 835,727 558,566 489,043
Royalty and licensing income, net 787,261 385,705 374,811 276,180
Other -0- (736,458) -0- (736,458)
------------ ------------ ----------- -----------
2,057,593 484,974 933,377 28,765
------------ ------------ ----------- -----------
Earnings before provision for income taxes 19,506,106 12,196,247 13,185,886 8,304,910
Provision for income taxes 7,802,448 4,063,418 5,275,283 2,478,418
------------ ------------ ----------- -----------
Net earnings $ 11,703,658 $ 8,132,829 $ 7,910,603 $ 5,826,492
============ ============ =========== ===========
Earnings per share of common stock $ .55 $ .39 $ .37 $ .28
============ ============ =========== ===========
Weighted average number of shares of
common stock outstanding 21,204,627 20,768,291 21,199,335 20,778,315
============ ============ =========== ===========
Cash dividends per common share none none none none
============ ============ =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 5
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NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
AUGUST 31,
--------------------------------
1995 1994
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 11,703,658 $ 8,132,829
------------ ------------
Adjustments to reconcile net earnings to net cash used
by operating activities:
Depreciation and amortization 2,244,675 1,630,322
Increase (decrease) in cash flows as a result of changes
in asset and liability account balances:
Accounts receivable (16,237,666) (9,703,572)
Inventories (17,834,503) (13,498,000)
Prepaid expenses and other current assets 1,598,647 558,877
Deferred tax benefit -0- 100,000
Other assets (173,896) (164,916)
Accounts payable 3,733,754 8,336,206
Accrued expenses and other current liabilities 2,901,430 623,844
Income taxes payable 2,224,034 (2,194,460)
------------ ------------
Total adjustments (21,543,525) (14,311,699)
------------ ------------
Net cash used by operating activities (9,839,867) (6,178,870)
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (5,765,478) (1,997,872)
Long-term investment -0- (2,500,000)
------------ ------------
Net cash used in investing activities (5,765,478) (4,497,872)
------------ ------------
Cash flows from financing activities:
Principal payments on long-term debt (50,000) (50,000)
Proceeds from common stock options 531,412 156,405
------------ ------------
Net cash provided by financing activities 481,412 106,405
------------ ------------
Decrease in cash and cash equivalents (15,123,933) (10,570,337)
Cash and cash equivalents at beginning of period 49,153,556 44,854,155
------------ ------------
Cash and cash equivalents at end of period $ 34,029,623 $ 34,283,818
============ ============
Supplemental Information:
Cash payments for the periods ended:
Interest expense $ 30,248 $ 14,656
============ ============
Income taxes $ 6,425,853 $ 6,115,071
============ ============
</TABLE>
The accompanying notes are an integral part of these statments.
<PAGE> 6
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NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1995
(Unaudited)
NOTE 1 - The accompanying financial statements have been prepared
without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations. These statements include all adjustments,
consisting only of normal recurring accruals, considered necessary
for a fair presentation of financial position and results of
operations. The financial statements included herein should be
read in conjunction with the financial statements and notes
thereto included in the latest annual report on Form 10-K.
NOTE 2 - The results of operations for the six month and three month
periods ended August 31, 1995 and 1994 are not necessarily
indicative of the results to be expected for the full year.
NOTE 3 - The Company utilized the last-in, first-out "Lifo" method for
inventories as at August 31, 1995 and February 28, 1995 and for
the six and three month periods ended August 31, 1995 and 1994.
The "Lifo" inventory for the six and three month periods ended
August 31, 1995 and 1994 are based upon end of year estimates.
Inventories at August 31, 1995 and February 28, 1995 consist
primarily of finished goods.
NOTE 4 - All share and per share data have been adjusted to
reflect a three-for-two stock split, effected in the form of a 50%
stock dividend, which was issued on July 6, 1995.
<PAGE> 7
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NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AUGUST 31, 1995
(Unaudited)
RESULTS OF OPERATIONS
For the Six Months Ended August 31, 1995:
Consolidated net sales increased 31.7% to $142.0 million in the six
months ended August 31, 1995 as compared to $107.8 million in the comparable
prior year period. This increase is due primarily to increased sales of Nautica
products through its wholesale and retail operations. Nautica's wholesale sales
increased primarily due to the expansion of Nautica's shop-within-a-store
program, sales to new retail customers and to additional retail locations of
existing customers, and the continued growth of the basic stock replenishment
program for the Anchor group of Nautica products. The increase in Nautica's
wholesale sales is primarily due to increased unit volume rather than price
increases. The increase in retail sales is attributable to the opening of new
stores and to an increase in comparable store sales.
Consolidated gross profit increased slightly in the six months ended
August 31, 1995 to 43.8% of net sales, as compared to 43.4% in the comparable
prior year period. The net increase resulted primarily from a shift in sales mix
to higher margin products.
Designing, selling, shipping and general and administrative expenses as
a percentage of net sales decreased to 31.5% in the six months ended August 31,
1995 as compared to 32.5% in the comparable prior year period. The overall net
decrease, as a percentage of sales, resulted from economies of scale achieved
with sales growth.
Operating profit increased 49.0% to $17.4 million (12.3% of net sales)
in the six months ended August 31, 1995 as compared to $11.7 million (10.9% of
net sales) in the comparable prior year period as a result of the factors
discussed above.
Net royalty income increased approximately $402,000 in the six months
ended August 31, 1995 as compared to the comparable prior year period. The
increase is a result of increased royalty revenue from new and existing
licensees.
Interest income increased approximately $435,000 in the six months
ended August 31, 1995 as compared to the comparable prior year period due to
higher average cash balances during the period and to an increase in the rate of
return on investments. In the prior year period other expense of $736,458
represents a write-off of costs associated with the Company's evaluation of its
warehouse and distribution facilities.
The provision for income taxes increased to 40.0% of earnings before
income taxes for the six month period ended August 31, 1995 as compared to 33.3%
in the comparable prior year period. The prior year's rate was unusually low due
to tax relief provided by the State of Maine which reduced the corporate tax
rate and to the inclusion of a one time refund of taxes previously paid.
Net earnings increased approximately 44% to $11.7 million in the six
months ended August 31, 1995 from $8.1 million in the comparable prior year
period as a result of the factors discussed above.
<PAGE> 8
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For the Three Months Ended August 31, 1995:
Consolidated net sales increased 27.3% to $80.6 million in the three
months ended August 31, 1995 as compared to $63.3 million in the comparable
prior year period. This increase is due primarily to increased sales of Nautica
products through its wholesale and retail operations. Nautica's wholesale sales
increased primarily due to the expansion of Nautica's shop-within-a-store
program, sales to new retail customers and to additional retail locations of
existing customers, and the continued growth of the basic stock replenishment
program for the Anchor group of Nautica products. The increase in Nautica's
wholesale sales is primarily due to increased unit volume rather than price
increases. The increase in retail sales is attributable to the opening of new
stores and to an increase in comparable store sales.
Consolidated gross profit increased slightly in the three months ended
August 31, 1995 to 44.0% of net sales, as compared to 43.5% in the comparable
prior year period. The net increase resulted primarily from a shift in sales mix
to higher margin products.
Designing, selling, shipping and general and administrative expenses,
as a percentage of net sales decreased to 28.8% in the three months ended August
31, 1995 as compared to 30.4% in the comparable prior year period. The net
decrease resulted primarily from decreases in selling and marketing expenses as
a percentage of net sales due to economies of scale achieved with sales growth.
Operating profit increased 48% to $12.3 million (15.2% of net sales) in
the three months ended August 31, 1995 as compared to $8.3 million (13.1% of net
sales) in the comparable prior year period as a result of the factors discussed
above.
Net royalty income increased approximately $99,000 in the three months
ended August 31, 1995 as compared to the comparable prior year period. The
increase is a result of increased royalty revenue from new and existing
licensees.
Interest income remained relatively constant during the period. In the
prior year period other expense of $736,458 represents a write-off of costs
associated with the Company's evaluation of its warehouse and distribution
facilities.
The provision for income taxes increased to 40.0% of earnings before
income taxes for the three month period ended August 31, 1995 as compared to
29.8% in the comparable prior year period. The prior year period rate was
unusually low due to tax relief provided by the State of Maine which reduced the
corporate tax rate and to the inclusion of a one time refund of taxes previously
paid.
Net earnings increased approximately 36% to $7.9 million in the three
months ended August 31, 1995 from $5.8 million in the comparable prior year
period as a result of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended August 31, 1995, the Company used cash in
its operating activities of $9.8 million. The cash used was principally
attributable to increases in accounts receivable and inventory of $16.2 and
$17.8 million, respectively, which were offset by net earnings of $11.7 million
plus increases in accounts payable, accrued expenses and income taxes payable
aggregating $8.9 million. The increase in inventory is primarily the result of
stocking more basic inventory to fill EDI orders resulting from increased demand
for the Anchor group of Nautica products and to fill increased orders for
shipments to be made in the future. Accounts receivable increases were primarily
due to increased sales and normal seasonality. During the six months ended
August 31, 1994 the Company used cash in its operating activities of $6.2
million. This was principally due to inventory and accounts receivable increases
of $13.5 and $9.7 million, respectively, which were financed principally from
net earnings, increases in accounts payable and decreases in short-term
investments.
During the six months ended August 31, 1995 the Company's principal
investing activities
<PAGE> 9
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related to the expansion of the Company's warehouse and distribution facilities
and the continued expansion of retail shops. The expected cost of the expansion
is approximately $15.0 million. The Company will utilize its existing cash and
lines of credit during construction and will consider financing alternatives for
the project following its completion. At August 31, 1995 there were no other
material commitments for capital expenditures.
The Company has $80.0 million in lines of credit with two commercial
banks available for short-term borrowings and letters of credit. These lines are
collateralized by wholesale inventory and accounts receivable. At August 31,
1995 letters of credit outstanding under the lines were $36.1 million and there
were no short-term borrowings outstanding.
INFLATION AND CURRENCY FLUCTUATIONS
The Company believes that inflation and the effect of fluctuations of
the Dollar against foreign currencies has not had a material effect on the cost
of imports or the Company's results of operations.
<PAGE> 10
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PART II
OTHER INFORMATION
All items are inapplicable expect:
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders of Nautica Enterprises, Inc. was
held on June 29, 1995.
(b) The directors named in the Proxy Statement constituting the entire
Board of Directors were elected to one year terms expiring in 1996, as
follows:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
Harvey Sanders 11,965,761 225,490
David Chu 11,965,761 225,490
George Greenberg 11,983,851 207,340
Robert B. Bank 12,010,976 180,215
Israel Rosenzweig 12,010,864 180,327
Charles Scherer 11,965,589 225,490
</TABLE>
(c) At the Annual Meeting, the stockholders voted upon a proposal to amend
the Company's Certificate of Incorporation to increase the authorized
shares of Common Stock from 20,000,000 shares to 50,000,000 as follows:
<TABLE>
<S> <C>
For the proposal 10,435,852
Against the proposal 1,694,504
Withheld 22,285
</TABLE>
The Notice of Annual Meeting of Stockholders and Proxy Statement for Nautica
Enterprises, Inc. dated June 1, 1995 was filed with the Securities and Exchange
Commission pursuant to Regulation of 14A of the Act and is incorporated herein
by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 3(i). Restated Certificate of Incorporation of Nautica
Enterprises, Inc.
Exhibit 27. Financial Data Schedule.
(b) Reports on Form 8-K. None
<PAGE> 11
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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.
NAUTICA ENTERPRISES, INC.
By: Harvey Sanders
--------------------------------------
Harvey Sanders
Chairman of the Board
and President
Date: October 12, 1995
-----------------------------------------
By: Neal S. Nackman
--------------------------------------
Neal S. Nackman
V.P. Finance and
Principal Financial Officer
Date: October 12, 1995
------------------------------------------
<PAGE> 12
EXHIBIT INDEX
-------------
Exhibit No. Distribution
- ----------- ------------
Ex-3(i) Restated Certificate of Incorporation of Nautica
Enterprises, Inc.
Ex-27 Financial Data Schedule
<PAGE> 1
Exhibit 3(i)
RESTATED CERTIFICATE OF INCORPORATION
OF
NAUTICA ENTERPRISES, INC.
The name under which the Corporation was originally incorporated was Pacific
Coast Knitting Mills, Inc.; the date of filing of the original Certificate of
Incorporation with the Secretary of State was May 17, 1971.
FIRST
NAME
The name of the Corporation is Nautica Enterprises, Inc.
SECOND
REGISTERED OFFICE AND REGISTERED AGENT
The address of its registered office in the State of Delaware is 32 Loockerman
Square, Suite L-100, in the City of Dover, County of Kent. The name of its
registered agent at such address is The Prentice-Hall Corporation Systems, Inc.
THIRD
DURATION
The Corporation is to have perpetual existence.
FOURTH
PURPOSES
The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
<PAGE> 2
FIFTH
CAPITAL STOCK
Section 1. (a) The Corporation is authorized to issue two classes of shares
to be designated, respectively, "common stock" and "preferred stock". The total
number of such shares which the Corporation shall have the authority to issue
shall be Fifty Two Million (52,000,000). The total number of shares of common
stock authorized to be issued shall be Fifty Million (50,000,000), $.10 par
value per share, and the total number of shares of preferred stock authorized to
be issued shall be Two Million (2,000,000), $.01 par value per share.
(b) The shares of preferred stock may be issued from time to time
in one or more series. The Board of Directors is hereby authorized to establish
from time to time by resolution or resolutions the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and limitations or restrictions thereof, including but not limited to the fixing
or alteration of the dividend rights, dividend rate or rates, conversion rights,
voting rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation preferences of
any wholly unissued series of shares of preferred stock, or any or all of them,
all to the fullest extent now or hereafter permitted by the General Corporation
Law of Delaware; and to increase or decrease the number of shares of any series
subsequent to the issue of shares of that series, but not below the number of
shares of such
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series then outstanding. In case the number of shares of any series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution originally fixing the number of
shares of such series. No vote of the holders of the common stock or preferred
stock shall, unless otherwise provided in the resolutions creating any
particular series of preferred stock be a prerequisite to the issuance of any
shares of any series of the preferred stock authorized by and complying with the
conditions of this Certificate of Incorporation. Section 2. No holder of any
shares of any class of capital stock of the Corporation shall have any
preferential or pre-emptive right to purchase, subscribe for, or otherwise
acquire any shares of any class of capital stock of the Corporation, now or
hereafter authorized, or any options or warrants to purchase any such shares of
capital stock or any securities exchangeable for or convertible into such shares
of capital stock which may at the time be issued, sold or offered for sale by
the Corporation.
SIXTH
ELECTION OF DIRECTORS
Election of directors need not be by written ballot unless the By-Laws of the
Corporation shall so provide.
SEVENTH
BOARD OF DIRECTORS
In furtherance and not in limitation of the powers conferred by statute, the
board of directors is expressly authorized:
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(1) To make, alter, amend or repeal the By-Laws of the
Corporation.
(2) To authorize and cause to be executed mortgages and liens
upon the real and personal property of the Corporation.
EIGHTH
COMPROMISE-SHAREHOLDERS
AND CREDITORS
Whenever a compromise or arrangement is proposed between this Corporation and
its creditors or any class of them and/or between this Corporation and its
shareholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or shareholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or a class of creditors, and/or of the shareholders or class of
shareholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
shareholders or class of shareholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization
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<PAGE> 5
of this Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the shareholders or class of
shareholders, of this Corporation, as the case may be, and also on this
Corporation.
NINTH
PLACE OF MEETING; CORPORATE BOOKS
Meetings of shareholders may be held within or without the State of Delaware, as
the By-Laws may provide. The books of the Corporation may be kept (subject to
any provisions contained in the General Corporation Law of the State of
Delaware) outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the By-Laws of the
Corporation.
TENTH
INDEMNIFICATION
(a) Each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative ("proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal representative, is or
was a director or officer of this Corporation or is or was serving at the
request of the Corporation as a director or officer of another corporation or of
a partnership, joint
5
<PAGE> 6
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director or officer or in any other capacity while
serving as a director or officer, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended, (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights that said law
permitted the Corporation to provide prior to such amendment) against all
expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such persons in connection therewith;
provided, however, that the Corporation shall indemnify any such person seeking
indemnity in connection with a proceeding (or part thereof) initiated by such
person only if such proceeding (or part thereof) was authorized by the board of
directors of the Corporation. Such right shall be a contract right and shall
include the right to be paid by the Corporation for expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that the payment of such expenses incurred by a director or officer in
his or her capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or
6
<PAGE> 7
officer, including without limitation, service to an employee benefit plan) in
advance of the final disposition of such proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be indemnified under
this Article TENTH or otherwise. The Corporation may, by action of the board of
directors, provide indemnification to employees and agents of the Corporation
with a lesser or the same scope and effect as the foregoing indemnification of
directors and officers.
(b) If a claim under Paragraph (a) of this Article TENTH is not paid in
full by the Corporation within ninety days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to receive the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking has been tendered to the Corporation) that the claimant has not met
the standards of conduct which make it permissible under the General Corporation
Law of the State of Delaware for the Corporation to indemnify the claimant for
the amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the
7
<PAGE> 8
failure of the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in said law, nor an actual determination by the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the claimant had not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant had not met the applicable standard of conduct.
(c) The rights conferred on any person by Paragraphs (a) and (b)
of this Article shall not be exclusive of any other right which such person may
have or hereafter acquire under any statute, provision of this Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
(d) The Corporation may maintain insurance, at its expense, to
protect itself and any such director or officer of the Corporation, or of
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the General Corporation Law of the State of Delaware.
8
<PAGE> 9
ELEVENTH
AMENDMENT OF CERTIFICATE
OF INCORPORATION
The Corporation reserves the right to amend, alter or repeal any provision
contained in this Certificate of Incorporation, and to add any provision to the
Certificate of Incorporation, to the extent and in the manner now or hereafter
provided by statute and all rights conferred upon the shareholders by this
Certificate of Incorporation are granted subject to this reservation.
TWELFTH
A director of this Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit. If the Delaware General
Corporation Law is amended after approval by the stockholders of this Article
TWELFTH to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended from time to time.
9
<PAGE> 10
Any appeal or modification of this Article TWELFTH shall not increase the
personal liability of any director of this Corporation for any act or
occurrence taking place prior to such repeal or modification, or otherwise
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification. The provisions of this
Article TWELFTH shall not be deemed to limit or preclude indemnification of a
director by the Corporation for any liability of a director which has not been
eliminated by the provisions of this Article TWELFTH.
THIRTEENTH
(a) Any action required or permitted to be taken by the holders of
Common Stock of the Corporation must be effected at a duly called annual or
special meeting of the stockholders of the Corporation and may not be effected
by any consent in writing.
(b) Whenever the vote of holders of shares of any class or series
other than Common Stock at a meeting thereof is required or permitted to be
taken for or in connection with any corporate action by any provision of the
General Corporation Law of the State of Delaware, the meeting and vote of such
stockholders may be dispensed with if such action is taken with the written
consent of such holders representing not less than a majority of the voting
power of all the capital stock of such class or series entitled to be voted
upon such action if a meeting were held; provided that in no case shall the
written consent by such holders having less than the minimum percentage of the
vote
10
<PAGE> 11
required by statute for such action, and provided that prompt notice is given
in writing to all such stockholders entitled to vote thereon of the taking of
corporate action without a meeting and by less than unanimous written consent.
This Restated Certificate of Incorporation was duly adopted by the
Board of Directors of the Corporation in accordance with the provisions of
Section 245 of the General Corporation Law of Delaware. It only restates and
integrates and does not further amend the provisions of the Corporation's
Certificate of Incorporation as heretofore amended or supplemented, and there
is no discrepancy between those provisions and the provisions of this Restated
Certificate of Incorporation.
11
<PAGE> 12
IN WITNESS WHEREOF, Nautica Enterprises, Inc. has caused this certificate to be
signed by its Chairman and attested to by its Assistant Secretary, this 12th
day of October, 1995.
NAUTICA ENTERPRISES, INC.
By:/s/ Harvey Sanders
-------------------------
Harvey Sanders
Chairman
Attest:
By: /s/ Donald W. Pennington
-------------------------
Assistant Secretary
12
<PAGE> 13
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that, on October 12, 1995, before me, a
Notary Public duly authorized by law to take acknowledgment of deeds,
personally came Harvey Sanders, Chairman of Nautica Enterprises, Inc., who duly
signed the foregoing instrument before me and acknowledged that such signing is
his act and deed, that such instrument as executed is the act and deed of said
corporation, and that the facts stated therein are true.
GIVEN under my hand on October 12,1995.
/s/
--------------------------
Notary Public
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
NAUTICA ENTERPRISES, INC., AND SUBSIDIARIES
FINANCIAL DATA SCHEDULE
(UNAUDITED)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF THE COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<CASH> 34,029,623
<SECURITIES> 0
<RECEIVABLES> 55,014,511
<ALLOWANCES> (1,414,044)
<INVENTORY> 66,710,568
<CURRENT-ASSETS> 160,643,269
<PP&E> 32,093,424
<DEPRECIATION> (9,608,210)
<TOTAL-ASSETS> 189,399,794
<CURRENT-LIABILITIES> 37,664,373
<BONDS> 200,000
<COMMON> 2,058,056
0
0
<OTHER-SE> 149,477,365
<TOTAL-LIABILITY-AND-EQUITY> 189,399,794
<SALES> 142,002,588
<TOTAL-REVENUES> 144,060,181
<CGS> 79,851,107
<TOTAL-COSTS> 79,851,107
<OTHER-EXPENSES> 44,702,968
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 19,506,106
<INCOME-TAX> 7,802,448
<INCOME-CONTINUING> 11,703,658
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,703,658
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.55
</TABLE>
