<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 May 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.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 95-2431048
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(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
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(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
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APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of Common Stock of the registrant outstanding as
of July 7, 1995 was 19,693,285.
<PAGE> 2
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
MAY 31, 1995
(Unaudited)
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
Part I - Financial Information:
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets
As at May 31, 1995 and February 28, 1995............................................. 2
Condensed Consolidated Statements of Earnings
For the Three Month Periods Ended
May 31, 1995 and 1994................................................................ 3
Condensed Consolidated Statements of Cash Flows
For the Three Month Periods Ended
May 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:
Item 6. Exhibits and Reports on form 8-K.............................................. 8
</TABLE>
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<PAGE> 3
NAUTICA ENTERPRISES, INC, AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
ASSETS
May 31, February 28,
1995 1995
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 48,072,078 $ 49,153,556
Accounts receivable - net 36,307,444 37,362,801
Inventories (Note 3) 63,778,217 48,876,065
Prepaid expenses and other current assets 4,799,683 5,389,979
Deferred tax benefit 2,511,279 2,511,279
------------ ------------
Total current assets 155,468,701 143,293,680
Property, plant and equipment, net of
accumulated depreciation and amortization 19,260,108 18,759,795
Other assets 6,392,946 6,302,031
------------ ------------
$181,121,755 $168,355,506
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 50,000 $ 50,000
Accounts payable - trade 21,832,219 12,534,381
Accrued expenses and other current liabilities 13,902,424 15,631,659
Income taxes payable 1,870,141 589,115
------------ ------------
Total current liabilities 37,654,784 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 20,478,405 shares
at May 31, 1995 and 20,416,110 shares at
February 28, 1995 2,047,841 2,041,611
Additional paid-in capital 53,246,549 53,079,214
Retained earnings 88,523,141 84,730,086
------------ ------------
143,817,531 139,850,911
Less:
Common stock in treasury - at cost;
785,035 shares at May 31, 1995
and February 28, 1995 550,560 550,560
------------ ------------
Total stockholders' equity 143,266,971 139,300,351
------------ ------------
$181,121,755 $168,355,506
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 4
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
------------------------------
1995 1994
------------------------------
<S> <C> <C>
Net Sales $61,448,458 $44,553,892
----------- -----------
Cost and expenses:
Cost of goods sold 34,735,357 25,276,169
Designing, selling, shipping, general
and administrative expenses 21,517,097 15,842,595
----------- -----------
56,252,454 41,118,764
----------- -----------
Operating Profit 5,196,004 3,435,128
----------- -----------
Other
Net royalty income 412,450 109,525
Interest income 711,766 346,684
----------- -----------
1,124,216 456,209
Earnings before provision for income taxes 6,320,220 3,891,337
Provision for income taxes 2,527,165 1,585,000
----------- -----------
NET EARNINGS $ 3,793,055 $ 2,306,337
=========== ===========
Earnings per share of common stock $ 0.18 $ 0.11
=========== ===========
Weighted average number of common and
common equivalent shares outstanding 20,850,364 20,708,127
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 5
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months End
May 31,
------------------------------
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,793,055 $ 2,306,337
Adjustments to reconcile net earnings to net cash provided by ------------ -----------
operating activities:
Depreciation and amortization 1,097,937 778,057
Increase (decrease) in cash flows as a result of changes
in asset and liability account balances:
Accounts receivable 1,055,357 8,925,395
Inventories (14,902,152) (3,988,216)
Prepaid expenses and other current assets 590,296 415,247
Other assets (190,969) (64,165)
Accounts payable 9,297,838 2,997,160
Accrued expenses and other current liabilities (1,729,235) (1,929,540)
Income taxes payable 1,281,026 (1,683,211)
------------ -----------
Total adjustments (3,499,902) 5,450,727
------------ -----------
Net cash provided by operating activities 293,153 7,757,064
------------ -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (1,498,196) (627,986)
Long-Term investment 0 (2,500,000)
------------ -----------
Net Cash used in investing activities (1,498,196) (3,127,986)
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt (50,000) (50,000)
Proceeds from issuance of common stock under
stock options 173,565 19,607
------------ -----------
Net cash used in financing activities 123,565 (30,393)
------------ -----------
Increase (decrease) in cash and cash equivalents (1,081,478) 4,598,685
Cash and cash equivalents at beginning of period 49,153,556 44,854,155
------------ -----------
Cash and cash equivalents at end of period $ 48,072,078 $49,452,840
============ ===========
Supplemental Information:
Cash paid during the period for:
Interest expense $ 17,334 $ 12,341
============ ===========
Income taxes $ 1,916,299 $ 3,170,031
============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 6
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 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 conjuncton 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 three month periods
ended May 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 wholesale inventories as at May 31, 1995 and
February 28, 1995 and for the three month periods ended May
31, 1995 and 1994. The "Lifo" inventory for the three month
periods ended May 31, 1995 and 1994 are based upon end of year
estimates. Inventories at May 31, 1995 and February 28, 1995
consist primarily of finished goods.
NOTE 4 - On April 18, 1995 the Board of Directors declared a
three-for-two split of the Company's common stock, to be
effected in the form of a stock dividend payable on July 6,
1995 to stockholders of record on May 5, 1995. All share and
per share data has been adjusted to reflect the stock split.
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<PAGE> 7
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MAY 31, 1995
(Unaudited)
RESULTS OF OPERATIONS
For the Three Months Ended May 31, 1995:
Consolidated net sales increased 37.9% to $61.4 million in the three
months ended May 31, 1995 as compared to $44.6 million in the comparable prior
year period. This increase is due primarly to increased sales of Nautica
products through its wholesale and retail operations. Nautica's wholesale sales
increased due to the expansion of Nautica's in-store shop program, sales to new
retail customers and to additional locations of existing customers, and the
continued growth of a basic stock replenishment program for the Anchor group of
Nautica products. The increase in Nautica's wholesale sales is due to increased
unit volume rather than price increases. Nautica retail sales increased as a
result of the full year effect of seven stores opened since June 1994 and to an
increase in comparable store sales.
Consolidated gross profit remained relatively constant in the three
months ended May 31, 1995 at 43.5% of net sales as compared to 43.3% in the
comparable prior year period.
Designing, selling, shipping and general and administrative expenses,
as a percentage of net sales, decreased to 35.0% in the three months ended May
31, 1995 as compared to 35.6% in the comparable prior year period due to
economies of scale achieved with sales growth.
Operating profit increased 51.3% to $5.2 million (8.5% of net sales) in
the three months ended May 31, 1995 as compared to $3.4 million (7.7% of net
sales) in the comparable prior year period as a result of the factors discussed
above.
Net royalty income increased approximately $303,000 in the three months
ended May 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 $365,000 in the three months
ended May 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.
The provision for income taxes remained relatively contant at 40.0% of
earnings before income taxes for the three month period ended May 31, 1995 as
compared to 40.7% in the comparable prior year period.
Net earnings increased 64.5% to $3.8 million in the three months ended
May 31, 1995 from $2.3 million in the comparable prior year period as a result
of the factors discussed above.
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<PAGE> 8
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended May 31, 1995 the Company generated cash
from its operating activities of $293,000. Net earnings of $3.8 million plus
increases in accounts payable and income taxes payable were offset by an
increase in inventories of $14.9 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 orders for
shipments to be made in the future. During the three months ended May 31, 1994
the Company generated cash from its operating activities of $7.8 million. Such
cash was principally from net earnings and decreases in accounts receivable
partially offset by an increase in inventories.
During the three months ended May 31, 1995 the Company's principal
investing activities related to the expansion of the Company's warehouse and
distribution facilities. 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 the project at its completion.
At May 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 May 31, 1995
letters of credit outstanding under the lines were $44.8 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.
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<PAGE> 9
PART II
OTHER INFORMATION
Item 6.
(a) Exhibit 27. Financial Data Schedule.
(b) Reports on form 8-K. None.
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<PAGE> 10
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: 07/11/95
---------------------
By: Sharon Burd
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Sharon Burd
Controller
and Principal Financial
Officer
Date: 07/11/95
---------------------
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<PAGE> 11
EXHIBIT INDEX
Exhibit 27. Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> MAY-31-1995
<CASH> 48,072,078
<SECURITIES> 0
<RECEIVABLES> 37,681,060
<ALLOWANCES> (1,373,616)
<INVENTORY> 63,778,217
<CURRENT-ASSETS> 155,468,701
<PP&E> 27,859,531
<DEPRECIATION> (8,599,423)
<TOTAL-ASSETS> 181,121,755
<CURRENT-LIABILITIES> 37,654,784
<BONDS> 200,000
<COMMON> 2,047,841
0
0
<OTHER-SE> 141,219,100
<TOTAL-LIABILITY-AND-EQUITY> 181,121,755
<SALES> 61,448,458
<TOTAL-REVENUES> 63,675,585
<CGS> 34,735,357
<TOTAL-COSTS> 22,470,653
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 141,603
<INTEREST-EXPENSE> 7,752
<INCOME-PRETAX> 6,320,220
<INCOME-TAX> 2,527,165
<INCOME-CONTINUING> 3,793,055
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,793,055
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
