<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 December 2, 2000 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) 541-5757
----------------------------
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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 outstanding as of January 12, 2001
was 31,674,171.
<PAGE> 2
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
DECEMBER 2, 2000
(unaudited)
<TABLE>
<CAPTION>
INDEX
-------
Page No.
--------
<S> <C>
Part I - Financial Information:
Item 1. Financial Statements (unaudited):
Condensed Consolidated Balance Sheets
As at December 2, 2000 and March 4, 2000........................................................................2
Condensed Consolidated Statements of Earnings
For the Nine and Three Month Periods Ended
December 2, 2000 and November 27, 1999.........................................................................3
Condensed Consolidated Statements of Cash Flows
For the Nine Month Periods Ended
December 2, 2000 and November 27, 1999.........................................................................4
Notes to Condensed Consolidated Financial Statements............................................................5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...........................................................8
Item 3. Quantitative and Qualitative Disclosures About Market Risk.............................................11
Part II - Other Information.............................................................................................12
</TABLE>
<PAGE> 3
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
ASSETS (unaudited)
December 2, March 4,
2000 2000
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 47,228 $ 27,143
Short-term investments 5,400 33,991
Accounts receivable - net 91,749 88,784
Inventories 96,189 73,879
Prepaid expenses and other current assets 10,927 5,453
Deferred tax benefit 8,381 8,381
--------- ---------
Total current assets 259,874 237,631
Property, plant and equipment, net of
accumulated depreciation and amortization 85,246 81,674
Other assets 16,902 13,808
--------- ---------
$ 362,022 $ 333,113
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 44,896 $ 29,048
Accrued expenses and other current liabilities 35,283 30,559
Income taxes payable 12,890 9,793
--------- ---------
Total current liabilities 93,069 69,400
Stockholders' equity:
Preferred stock - par value $.01; authorized,
2,000,000 shares; no shares issued
Common stock - par value $.10; authorized, 100,000,000 shares; issued
43,172,000 shares at December 2, 2000 and 42,696,000 shares at
March 4, 2000 4,317 4,270
Additional paid-in capital 68,553 67,559
Retained earnings 355,066 322,045
--------- ---------
427,936 393,874
Less:
Common stock in treasury - at cost;
11,498,000 shares at December 2, 2000
and 8,964,000 shares at March 4, 2000 (158,983) (130,161)
--------- ---------
Total stockholders' equity 268,953 263,713
--------- ---------
$ 362,022 $ 333,113
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
-2-
<PAGE> 4
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
December 2, 2000 November 27, 1999 December 2, 2000 November 27, 1999
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Net Sales $ 469,090 $ 421,407 $ 178,489 $ 169,917
Cost of goods sold 274,708 242,156 104,163 96,884
------------------- ------------------- ------------------- -------------------
Gross profit 194,382 179,251 74,326 73,033
Selling, general and administrative
expenses 148,707 125,804 50,475 46,140
Net royalty income (6,256) (4,534) (2,559) (1,693)
------------------- ------------------- ------------------- -------------------
Operating profit 51,931 57,981 26,410 28,586
Other expense (13) - - -
Investment income, net 2,038 1,386 575 538
------------------- ------------------- ------------------- -------------------
Earnings before provision for income taxes 53,956 59,367 26,985 29,124
Provision for income taxes 20,935 23,272 10,470 11,417
------------------- ------------------- ------------------- -------------------
NET EARNINGS $ 33,021 $ 36,095 $ 16,515 $ 17,707
=================== =================== =================== ===================
Net earnings per share of common stock
Basic $ 1.03 $ 1.03 $ 0.52 $ 0.51
=================== =================== =================== ===================
Diluted $ 1.00 $ 0.98 $ 0.50 $ 0.48
=================== =================== =================== ===================
Weighted average number of
common shares outstanding
Basic 31,915,000 34,876,000 31,655,000 34,624,000
=================== =================== =================== ===================
Diluted 33,179,000 36,836,000 32,948,000 36,579,000
=================== =================== =================== ===================
Cash dividends per common share none none none none
=================== =================== =================== ===================
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE> 5
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION>
(unaudited)
Nine Months Nine Months
Ended Ended
December 2, 2000 November 27, 1999
------------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 33,021 $ 36,095
------------------- -----------------
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Deferred income taxes - (231)
Depreciation and amortization 16,866 13,229
Provision for bad debts 2,485 972
Changes in operating assets and liabilities
Accounts receivable (5,450) (18,811)
Inventories (22,310) 794
Prepaid expenses and other current assets (5,474) (744)
Other assets (3,839) (2,617)
Accounts payable - trade 15,848 (357)
Accrued expenses and other current liabilities 4,724 10,336
Income taxes payable 3,097 5,286
------------------- -----------------
Total adjustments 5,947 7,857
------------------- -----------------
Net cash provided by operating activities 38,968 43,952
------------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (19,693) (24,295)
Sale of short-term investments 28,591 21,071
------------------- -----------------
Net cash provided by (used in) investing activities 8,898 (3,224)
------------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt - (100)
Purchase of treasury stock (28,822) (29,460)
Proceeds from issuance of common stock 1,041 419
------------------- -----------------
Net cash used in financing activities (27,781) (29,141)
------------------- -----------------
Increase in cash and cash equivalents 20,085 11,587
Cash and cash equivalents at beginning of period 27,143 15,498
------------------- -----------------
Cash and cash equivalents at end of period $ 47,228 $ 27,085
=================== =================
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $ 17,982 $ 18,017
=================== =================
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE> 6
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 2, 2000
(unaudited)
(amounts in thousands)
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 nine-month period ended
December 2, 2000 are not necessarily indicative of the results
to be expected for the full year.
NOTE 3 - During the nine months ended December 2, 2000, the Company
changed its presentation of markdowns and promotional allowances
from a selling expense to a reduction of sales in an effort to
be consistent with industry-wide reporting practices. In
addition, the reserve for markdowns and promotional allowances
has been reclassified from accrued expenses to a reduction of
accounts receivable. Previously reported amounts have been
reclassified to conform with the current year's presentation.
This change in presentation has no impact on operating profit,
earnings before provision for income taxes or net earnings.
NOTE 4 - The Company utilized the last-in, first-out "LIFO" method
for certain wholesale inventories as at December 2, 2000 and
March 4, 2000 and for the nine and three month periods ended
December 2, 2000 and November 27, 1999. The "LIFO" inventory for
the nine month periods ended December 2, 2000 and November 27,
1999 are based upon end of year estimates. Inventories at
December 2, 2000 and March 4, 2000 consist primarily of finished
goods.
NOTE 5 - The Company has adopted Statement of Financial Accounting
Standards No. 130 ("SFAS No. 130), "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting
comprehensive income and its components in a financial
statement. Comprehensive income as defined includes all changes
in equity during a period from non-owner sources, as follows:
<TABLE>
<CAPTION>
Nine Nine Three Three
Months Months Months Months
Ended Ended Ended Ended
December 2, November 27, December 2, November 27,
2000 1999 2000 1999
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net earnings 33,021 $36,095 $16,515 $17,707
Changes in unrealized
gains and losses on
securities, net of
tax - (205) - (39)
------- ------------ ----------- ------------
Comprehensive income 33,021 $35,890 $16,515 $17,668
============ ============ =========== ============
</TABLE>
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<PAGE> 7
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
DECEMBER 2, 2000
(unaudited)
(amounts in thousands, except share data)
NOTE 6 - Short-term investments consist primarily of government and
agency bonds, tax exempt municipal bonds and corporate bonds.
These marketable securities are classified as trading and are
adjusted to market value at the end of each accounting period.
Unrealized market gains and losses are included in earnings.
Realized gains and losses on sales of investments are determined
on a specific identification basis, and are included in
earnings. For the nine months ended December 2, 2000 and
November 27, 1999, gross realized gains totaled $243 and $21 and
gross realized losses totaled $49 and $252, respectively. For
the three months ended December 2, 2000 and November 27, 1999,
gross realized gains totaled $206 and $0 and gross realized
losses totaled $0 and $13, respectively.
The unrealized net gains which were included in earnings were $4
as of December 2, 2000 and the unrealized net losses which were
included in earnings were $470 as of March 4, 2000.
NOTE 7 - Basic net earnings per share excludes dilution and is
computed by dividing income available to common shareholders by
the weighted-average common shares outstanding for the period.
Diluted net earnings per share reflects the weighted-average
common shares outstanding plus the potential dilutive effect of
options which are convertible into common shares. Options which
were excluded from the calculation of diluted earnings per share
because the exercise prices of the options were greater than the
average market price of the common shares and, therefore, would
be antidilutive, were 2,357,700 and 2,395,000 during the nine
months ended December 2, 2000 and November 27,1999,
respectively.
NOTE 8 - The Company has adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise
and Related Information," which established reporting and
disclosure standards for an enterprise's operating segments.
Operating segments are defined as components of an enterprise
for which separate financial information is available and
regularly reviewed by the Company's senior management.
The Company has the following two reportable segments: Wholesale
and Retail. The Wholesale segment designs, markets, sources and
distributes sportswear, activewear, outerwear, a jeans
collection, a tailored clothing collection, robes and sleepwear
for men and a jeans collection, and robes and sleepwear for
women to retail store customers. The Retail segment sells men's
apparel and other Nautica-branded products primarily through
Retail store locations directly to consumers.
- 6 -
<PAGE> 8
NAUTICA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
DECEMBER 2, 2000
(unaudited)
(amounts in thousands)
Segment profit is based on earnings before income taxes. The reportable
segments are distinct business units and are separately managed with
different distribution channels.
<TABLE>
<CAPTION>
All Corporate/
Wholesale Retail Other Eliminations Totals
--------- ------ ------- ------------ ---------
<S> <C> <C> <C> <C> <C>
FOR THE NINE MONTHS ENDED
DECEMBER 2, 2000
Net Sales $355,690 $113,400 $ - $ - $469,090
Earnings (loss) before
provisions for income
taxes 35,097 16,863 6,793 (4,797) 53,956
Segment Assets 220,957 56,148 9,014 75,903 362,022
Depreciation expense 13,468 1,295 223 1,135 16,121
FOR THE NINE MONTHS ENDED
NOVEMBER 27, 1999
Net Sales $323,426 $ 97,981 $ - $ - $421,407
Earnings (loss) before
provisions for income
taxes 46,953 14,164 4,534 (6,284) 59,367
Segment Assets 204,016 49,633 9,577 78,093 341,319
Depreciation expense 11,027 785 306 472 12,590
</TABLE>
<TABLE>
<CAPTION>
All Corporate/
Wholesale Retail Other Eliminations Totals
---------- ------ ------ ------------ -------
<S> <C> <C> <C> <C> <C>
FOR THE THREE MONTHS ENDED
DECEMBER 2, 2000
Net Sales $136,402 $42,087 $ - $ - $178,489
Earnings (loss) before
provisions for income
taxes 18,749 6,915 2,561 (1,240) 26,985
Segment Assets 220,957 56,148 9,014 75,903 362,022
Depreciation expense 4,443 473 62 375 5,353
FOR THE THREE MONTHS ENDED
NOVEMBER 27, 1999
Net Sales $134,241 $35,676 $ - $ - $169,917
Earnings (loss) before
provisions for income
taxes 23,947 6,038 1,693 (2,554) 29,124
Segment Assets 204,016 49,633 9,577 78,093 341,319
Depreciation expense 3,624 286 87 160 4,157
</TABLE>
In the Corporate/Eliminations column the segment assets primarily
consist of the Company's cash and investment portfolio and the
segment operating loss consists of corporate expenses offset by
investment income earned.
- 7 -
<PAGE> 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (unaudited)
RESULTS OF OPERATIONS
---------------------
During the nine months ended December 2, 2000, the Company changed its
presentation of markdowns and promotional allowances from a selling expense to a
reduction of sales in an effort to be consistent with industry-wide reporting
practices. In addition, the reserve for markdowns and promotional allowances has
been reclassified from accrued expenses to a reduction of accounts receivable.
Previously reported amounts have been reclassified to conform with the current
year's presentation. This change in presentation has no impact on operating
profit, earnings before provision for income taxes, or net earnings.
For the Nine Months Ended December 2, 2000:
Net sales increased 11.3% to $469.1 million in the nine months ended
December 2, 2000 from $421.4 million in the comparable prior year period. The
increase in sales is due primarily to increased unit volume rather than price
increases. The reported sales reflect a 10.0% increase in the Wholesale segment
to $355.7 million from $323.4 million and a 15.7% increase in the Retail segment
to $113.4 million from $98.0 million. The growth in the Wholesale segment was
driven by sales in new product lines and increases in core sportswear, men's
jeans and men's and ladies sleepwear sales offset by a decrease in NST sales.
The Company has discontinued distribution of NST product in the athletic
specialty chain channels. The Company still believes that the NST brand carries
high consumer recognition, and therefore, plans to re-evaluate its future
position in other channels of distribution. Excluding NST brand products for
the nine months of both the current and prior year periods, Wholesale segment
sales would have increased 13.3%. The overall Retail segment sales increase is
primarily a result of sales from new stores opened since the third quarter of
last year.
Gross profit for the period was 41.4% compared to 42.5% in the
comparable prior year period. The decrease is due to the impact of lower margins
on new product lines, and markdowns associated with an increase in promotional
activity at retail.
Total selling, general and administrative expenses ("SG&A") increased by
$22.9 million to $148.7 million in Fiscal 2001 from $125.8 million in Fiscal
2000. SG&A expenses as a percentage of net sales increased to 31.7% in Fiscal
2001 from 29.9% in Fiscal 2000. The increase is principally due to expenses
incurred to support the launch of new product lines.
Net royalty income increased by $1.8 million to $6.3 million from $4.5
million in the comparable prior year period. The increase is primarily due to
the strength in children's apparel, eyewear, women's swimwear, small leather
goods and the launch of a new men's fragrance, Latitude/Longitude. In addition,
part of the increase was a result of royalty payments received from audits
performed on prior year licensee reported sales.
Investment income increased by $.6 million to $2.0 million from $1.4
million in the comparable prior year period. The increase is due to higher rates
of return on investments.
The provision for income taxes decreased to 38.8% from 39.2% of earnings
before income taxes in the comparable prior year period. The decrease is due
primarily to a reduction in the effective state income tax rates.
Net earnings decreased 8.5% to $33.0 million from $36.1 million in the
comparable prior year period as a result of the factors discussed above.
- 8 -
<PAGE> 10
For the Three Months Ended December 2, 2000:
Net sales increased 5.0% to $178.5 million in the three months ended
December 2, 2000 from $169.9 million in the comparable prior year period. The
increase in sales is due primarily to increased unit volume rather than price
increases. The reported sales reflect a 1.6% increase in the Wholesale segment
to $136.4 million from $134.2 million and an 18.0% increase in the Retail
segment to $42.1 million from $35.7 million. The growth in the Wholesale segment
was driven by sales in new product lines and increases in men's and ladies
sleepwear sales offset by a decrease in NST sales. Excluding NST brand products
for the third quarter of both the current and prior year periods, Wholesale
segment sales would have increased 5.5%. The overall Retail segment sales
increase is a result of sales from new stores opened since the third quarter of
last year, and by higher comparable store sales.
Gross profit for the period was 41.6% compared to 43.0% in the
comparable prior year period. The decrease is due to the impact of lower margins
on new product lines, and markdowns associated with an increase in promotional
activity at retail.
Total SG&A expenses increased by $4.4 million to $50.5 million in Fiscal
2001 from $46.1 million in Fiscal 2000. SG&A expenses as a percentage of net
sales increased to 28.3% from 27.2% in Fiscal 2001. The increase is principally
due to expenses incurred to support the launch of new product lines.
Net royalty income increased by $.9 million to $2.6 million from $1.7
million in the comparable prior year period. The increase is primarily due to
royalty payments received from audits performed on prior year licensee reported
sales. In addition, there was strength in women's swimwear, small leather goods
and fragrance.
Investment income increased by $.1 million to $.6 million from $.5
million in the comparable prior year period. The increase is due to higher rates
of return on investments offset by lower average cash balances.
The provision for income taxes decreased to 38.8% from 39.2% of earnings
before income taxes in the comparable prior year period. The decrease is due
primarily to a reduction in the effective state income tax rates.
Net earnings decreased 6.7% to $16.5 million from $17.7 million in the
comparable prior year period as a result of the factors discussed above.
- 9 -
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
During the nine months ended December 2, 2000, the Company generated
cash from operating activities of $39.0 million principally from net earnings.
Increases in accounts receivable and inventory of $5.5 and $22.3 million,
respectively, resulted from increased sales, and were financed principally by
cash generated from net earnings, and increases in accounts payable and accrued
expenses. Accounts receivable was 14.5% lower than the same period in the prior
year due to timing of shipments, with a lower percentage occurring in the last
part of the quarter. Inventory was 38.6% higher than the same period in the
prior year due to increased sales and the timing of merchandise received. During
the nine months ended November 27, 1999, the Company generated cash from
operating activities of $44.0 million, principally from net earnings. The
increase in accounts receivable of $18.8 million resulted from increased sales,
and were financed principally by cash generated from net earnings and increases
in accrued expenses. Accounts receivable was 21.3% higher than the same period
in the prior year due to increased sales and the timing of shipments, with a
greater percentage occurring in the last part of the quarter. Inventory was
11.6% lower than the same period in the prior year due to reduced outlet
inventory and the receipt of production closer to the time of customer delivery.
During the nine months ended December 2, 2000, the Company's principal
investing activities related primarily to the purchase of property, plant and
equipment for the Nautica in-store shop program and the construction of a new
distribution facility. The Company expects to continue to incur capital
expenditures to expand the in-store shop program, and to open additional Retail
stores. The Company is currently evaluating various financing vehicles for the
new distribution facility. At December 2, 2000, there were no other material
commitments for capital expenditures.
During the nine months ended December 2, 2000, the Board of Directors
authorized the Company to purchase 4,000,000 shares of its common stock. During
such period, the Company purchased 2,533,000 shares of its outstanding common
stock at a cost of $28.8 million.
The Company has a total of $150.0 million in lines of credit with four
commercial banks available for short-term borrowings and letters of credit.
These lines are collateralized by imported inventory and accounts receivable. At
December 2, 2000 and March 4, 2000, letters of credit outstanding under the
lines were $59.1 million and $50.5 million, respectively, and there were no
short-term borrowings outstanding.
Historically, the Company has experienced its highest level of sales in
the second and third quarters and its lowest level in the first and fourth
quarters due to seasonal patterns. In the future, the timing of seasonal
shipments may vary by quarter. The Company anticipates that internally generated
funds from operations, existing cash balances, short-term investments and the
Company's existing credit lines will be sufficient to satisfy its cash
requirements.
INFLATION AND CURRENCY FLUCTUATIONS
-----------------------------------
The Company believes that inflation and the effect of fluctuations of
the dollar against foreign currencies have not had a material effect on the cost
of imports or the Company's results of operations.
- 10 -
<PAGE> 12
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
-----------------------------------------
Certain statements in this Form 10-Q and in future filings by the
Company with the Securities and Exchange Commission, in the Company's press
releases, and in oral statements made by or with the approval of authorized
personnel constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are based on current expectations and are indicated by words such as
"believes," "anticipates," "estimates," and similar words or phrases and involve
known and unknown risks, uncertainties and other factors, which may cause the
actual results or performance of the Company to be materially different from any
future results or performance expressed or implied by such forward-looking
statements. Such risks, uncertainties and factors include, but are not limited
to, the following: the overall level of consumer spending on apparel; dependence
on sales to a limited number of large department store customers; risks related
to extending credit to customers; actions of existing or new competitors and
changes in economic or political conditions in the markets where the Company
sells or sources its products; risks associated with consolidations,
restructurings and other ownership changes in the retail industry; changes in
trends in the market segments in which the Company competes; risks associated
with uncertainty relating to the Company's ability to launch, support and
implement new product lines; and, other risks and uncertainties in the Company's
Securities and Exchange Commission filings, press releases or oral statements.
Readers are urged not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company undertakes no
obligation to republish revised forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Disclosure about interest rate risk
The Company has no long-term debt, and finances capital needs through
available capital, future earnings and bank lines of credit. The Company's
exposure to market risk for changes in interest rates is primarily in its
investment portfolio. The Company, pursuant to investing guidelines, mitigates
exposure by limiting maturity, placing investments with high credit quality
issuers and limiting the amount of credit exposure to any one issuer. During the
nine months ended December 2, 2000, the Company earned investment income of $2.0
million. If interest rates had been 1% lower than they were during the year,
investment income would have been $.4 million lower. The market risks associated
with the investment portfolio exposure has not changed materially since March 4,
2000.
- 11 -
<PAGE> 13
PART II
OTHER INFORMATION
Items 1 through 9. - All items are inapplicable except:
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit No. Distribution
----------- --------------
3(a) Registrant's By-laws as currently in effect are incorporated
herein by reference to Registrant's Registration Statement on
Form S-1 (Registration No. 33-21998).
3(b) Registrant's Restated Certificate of Incorporation is
incorporated by reference from the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended August 31,
1995, as amended by a Certificate of Amendment incorporated by
reference from the Registrant's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1996.
10(iii)(a) Registrant's Executive Incentive Stock Option Plan is
incorporated by reference herein from the Registrant's
Registration Statements on Form S-8 (Registration Number
33-1488), as amended by the Company's Registration Statement
on Form S-8 (Registration Number 33-45823).
10(iii)(b) Registrant's 1989 Employee Incentive Stock Plan is
incorporated by reference herein from the Registrant's
Registration Statement on Form S-8 (Registration Number
33-36040).
10(iii)(c) Registrant's 1996 Stock Incentive Plan is incorporated by
reference herein from Registrant's Registration Statement on
Form S-8 (Registration Number 333-55711).
10(iii)(d) Registrant's 1994 Incentive Compensation Plan is incorporated
herein from the Registrant's Annual Report on Form 10-K for
the fiscal year ended February 28, 1997.
10(iii)(e) Registrant's Deferred Compensation Plan is incorporated herein
by reference from the Registrant's Annual Report on Form 10-K
for the fiscal year ended February 28, 1998.
10(iii)(f) Option Agreement and Royalty Agreement, each dated July 1,
1987, by and among the Registrant and David Chu are
incorporated herein by reference from the Registrant's
Registration Statement on Form S-1 (Registration No.
33-21998), and letter agreement dated May 1, 1998 between Mr.
Chu and the Registrant is incorporated herein by reference
from the Registrant's Annual Report on Form 10-K for the
fiscal year ended February 28, 1998.
- 12 -
<PAGE> 14
10(iii)(g) Employment Agreement, dated October 1, 1999, by and between
the Registrant and John Varvatos, and Split Dollar Agreement,
dated May 5, 2000, by and between the Registrant and John
Varvatos are incorporated herein by reference from the
Registrant's Annual Report on Form 10-K for the fiscal year
ended March 4, 2000.
27 Financial Data Schedule
(b) Reports on Form 8-K. None
- 13 -
<PAGE> 15
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: s/ Harvey Sanders
-------------------------------------
Harvey Sanders
Chairman of the Board
and President
Date: January 12, 2001
----------------
By: s/ Wayne A. Marino
-------------------------------------
Wayne A. Marino
Senior VP of Administration
and Chief Financial Officer
Date: January 12, 2001
----------------
By: s/ Lainie J. Goldstein
-------------------------------------
Lainie J. Goldstein
Corporate Vice President-
Financial Controller
Date: January 12, 2001
----------------
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