Quarterly Report (10-q)

Date : 11/21/2017 @ 2:26PM
Source : Edgar (US Regulatory)
Stock : Movado Grp. Inc. (MOV)
Quote : 38.9  -0.35 (-0.89%) @ 3:59PM
Movado share price Chart

Quarterly Report (10-q)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended October 31, 2017

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: 1-16497

 

MOVADO GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

New York

 

13-2595932

(State or Other Jurisdiction

of Incorporation or Organization)

 

(IRS Employer

Identification No.)

 

 

 

650 From Road, Ste. 375

Paramus, New Jersey

 

07652-3556

(Address of Principal Executive Offices)

 

(Zip Code)

(201) 267-8000

(Registrant’s telephone number, including area code)

 

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 that past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,’’ “accelerated filer,’’ “smaller reporting company,’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer          

Accelerated filer                  

Non-accelerated filer (Do not check if a smaller reporting company)  

Smaller reporting company

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  

The number of shares outstanding of the registrant’s Common Stock and Class A Common Stock as of November 14, 2017 were 16,298,173 and 6,641,950, respectively.

 

 

 


MOVADO GROUP, INC.

Index to Quarterly Report on Form 10-Q

October 31, 2017

 

 

 

 

 

Page

Part I

 

Financial Information (Unaudited)

 

3

 

 

 

Item 1.

 

 

Consolidated Balance Sheets at October 31, 2017, January 31, 2017 and October 31, 2016

 

3

 

 

 

 

 

Consolidated Statements of Operations for the three and nine months ended October 31, 2017 and October 31, 2016

 

4

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the three and nine months ended October 31, 2017 and October 31, 2016

 

5

 

 

 

 

 

Consolidated Statements of Cash Flows for the nine months ended October 31, 2017 and October 31, 2016

 

6

 

 

 

 

 

Notes to Consolidated Financial Statements

 

7

 

 

 

Item 2.

 

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

 

 

 

Item 3.

 

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

Item 4.

 

 

Controls and Procedures

 

34

 

Part II

 

 

Other Information

 

35

 

 

 

Item 1.

 

 

Legal Proceedings

 

35

 

 

 

Item 1A.

 

 

Risk Factors

 

35

 

 

 

Item 2.

 

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

 

 

 

Item 6.

 

 

Exhibits

 

37

 

Signature

 

38

 

 

 

 

 


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

 

MOVADO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

October 31,

 

 

January 31,

 

 

October 31,

 

 

2017

 

 

2017

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

155,484

 

 

$

256,279

 

 

$

199,758

 

Trade receivables, net

 

132,941

 

 

 

66,847

 

 

 

130,076

 

Inventories

 

169,866

 

 

 

153,167

 

 

 

169,402

 

Other current assets

 

26,361

 

 

 

28,487

 

 

 

28,096

 

Total current assets

 

484,652

 

 

 

504,780

 

 

 

527,332

 

Property, plant and equipment, net

 

24,637

 

 

 

34,173

 

 

 

34,867

 

Deferred and non-current income taxes

 

23,610

 

 

 

24,837

 

 

 

20,614

 

Goodwill

 

56,316

 

 

 

 

 

 

 

Other intangibles, net

 

22,568

 

 

 

1,633

 

 

 

1,730

 

Other non-current assets

 

47,783

 

 

 

42,379

 

 

 

39,935

 

Total assets

$

659,566

 

 

$

607,802

 

 

$

624,478

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Loans payable to bank, current

$

5,000

 

 

$

5,000

 

 

$

3,000

 

Accounts payable

 

28,014

 

 

 

27,192

 

 

 

22,443

 

Accrued liabilities

 

62,666

 

 

 

35,061

 

 

 

52,895

 

Income taxes payable

 

5,192

 

 

 

4,149

 

 

 

5,601

 

Total current liabilities

 

100,872

 

 

 

71,402

 

 

 

83,939

 

Loans payable to bank

 

25,000

 

 

 

25,000

 

 

 

35,000

 

Deferred and non-current income taxes payable

 

7,501

 

 

 

3,322

 

 

 

3,145

 

Other non-current liabilities

 

38,752

 

 

 

34,085

 

 

 

32,297

 

Total liabilities

 

172,125

 

 

 

133,809

 

 

 

154,381

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock, $0.01 par value, 5,000,000 shares authorized; no shares

   issued

 

 

 

 

 

 

 

 

Common Stock, $0.01 par value, 100,000,000 shares authorized;

   27,324,319, 27,176,656 and 27,138,206 shares issued and outstanding,

   respectively

 

273

 

 

 

272

 

 

 

271

 

Class A Common Stock, $0.01 par value, 30,000,000 shares authorized;

   6,641,950, 6,644,105 and 6,644,105 shares issued and outstanding,

   respectively

 

66

 

 

 

66

 

 

 

66

 

Capital in excess of par value

 

189,332

 

 

 

185,354

 

 

 

182,834

 

Retained earnings

 

425,649

 

 

 

415,919

 

 

 

413,666

 

Accumulated other comprehensive income

 

80,388

 

 

 

76,780

 

 

 

77,057

 

Treasury Stock, 11,026,671, 10,869,321 and 10,849,321 shares,

   respectively, at cost

 

(208,267

)

 

 

(204,398

)

 

 

(203,797

)

Total Movado Group, Inc. shareholders' equity

 

487,441

 

 

 

473,993

 

 

 

470,097

 

Noncontrolling interests

 

 

 

 

 

 

 

 

Total equity

 

487,441

 

 

 

473,993

 

 

 

470,097

 

Total liabilities and equity

$

659,566

 

 

$

607,802

 

 

$

624,478

 

 

See Notes to Consolidated Financial Statements

 

3


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended October 31,

 

 

Nine Months Ended October 31,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net sales

$

190,693

 

 

$

179,818

 

 

$

418,739

 

 

$

421,967

 

Cost of sales

 

86,623

 

 

 

81,268

 

 

 

199,406

 

 

 

191,837

 

Gross profit

 

104,070

 

 

 

98,550

 

 

 

219,333

 

 

 

230,130

 

Selling, general, and administrative

 

78,885

 

 

 

67,479

 

 

 

189,479

 

 

 

183,590

 

Operating income

 

25,185

 

 

 

31,071

 

 

 

29,854

 

 

 

46,540

 

Other expense (Note 3)

 

 

 

 

(1,282

)

 

 

 

 

 

(1,282

)

Interest expense

 

(445

)

 

 

(333

)

 

 

(1,191

)

 

 

(1,039

)

Interest income

 

110

 

 

 

45

 

 

 

361

 

 

 

138

 

Income before income taxes

 

24,850

 

 

 

29,501

 

 

 

29,024

 

 

 

44,357

 

Provision for income taxes (Note 10)

 

7,490

 

 

 

9,286

 

 

 

10,341

 

 

 

14,450

 

Net income

 

17,360

 

 

 

20,215

 

 

 

18,683

 

 

 

29,907

 

Less: Net income attributed to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

78

 

Net income attributed to Movado Group, Inc.

$

17,360

 

 

$

20,215

 

 

$

18,683

 

 

$

29,829

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted basic average shares outstanding

 

23,079

 

 

 

23,055

 

 

 

23,080

 

 

 

23,074

 

Net income per share attributed to Movado Group, Inc.

$

0.75

 

 

$

0.88

 

 

$

0.81

 

 

$

1.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted diluted average shares outstanding

 

23,273

 

 

 

23,230

 

 

 

23,261

 

 

 

23,259

 

Net income per share attributed to Movado Group, Inc.

$

0.75

 

 

$

0.87

 

 

$

0.80

 

 

$

1.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

$

0.13

 

 

$

0.13

 

 

$

0.39

 

 

$

0.39

 

 

See Notes to Consolidated Financial Statements

 

 

4


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

Three Months Ended October 31,

 

 

Nine Months Ended October 31,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Comprehensive income, net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

$

17,360

 

 

$

20,215

 

 

$

18,683

 

 

$

29,907

 

Net unrealized (loss) / gain on investments, net of tax (benefit) of

   $(6), $4, $(6) and $1, respectively

 

(13

)

 

 

6

 

 

 

(12

)

 

 

8

 

Net change in effective portion of hedging contracts, net of tax

   (benefit) of $88, $(9), $9 and $5, respectively

 

448

 

 

 

(43

)

 

 

37

 

 

 

31

 

Foreign currency translation adjustments

 

(5,525

)

 

 

(6,319

)

 

 

3,583

 

 

 

8,489

 

Comprehensive income including noncontrolling interests

 

12,270

 

 

 

13,859

 

 

 

22,291

 

 

 

38,435

 

Less: Comprehensive income attributed to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

54

 

Total comprehensive income attributed to Movado Group, Inc.

$

12,270

 

 

$

13,859

 

 

$

22,291

 

 

$

38,381

 

 

See Notes to Consolidated Financial Statements

 

 

5


 

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended October 31,

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income including noncontrolling interests

$

18,683

 

 

$

29,907

 

Adjustments to reconcile net income to net cash (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

9,842

 

 

 

8,520

 

Transactional (gains) / losses

 

(859

)

 

 

2,663

 

Write-down of inventories

 

1,930

 

 

 

1,967

 

Deferred income taxes

 

719

 

 

 

230

 

Stock-based compensation

 

3,644

 

 

 

5,663

 

Impairment of long-term investment

 

 

 

 

1,282

 

Cost savings initiative

 

13,437

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Trade receivables

 

(62,175

)

 

 

(60,386

)

Inventories

 

(14,562

)

 

 

(7,657

)

Other current assets

 

1,647

 

 

 

1,540

 

Accounts payable

 

334

 

 

 

(5,140

)

Accrued liabilities

 

18,296

 

 

 

12,892

 

Income taxes payable

 

373

 

 

 

(917

)

Other non-current assets

 

(5,399

)

 

 

(5,123

)

Other non-current liabilities

 

4,664

 

 

 

3,718

 

Net cash (used in) operating activities

 

(9,426

)

 

 

(10,841

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(3,575

)

 

 

(3,847

)

Short-term investment

 

 

 

 

(151

)

Restricted cash deposits

 

1,018

 

 

 

(1,156

)

Trademarks and other intangibles

 

(500

)

 

 

(296

)

Acquisition, net of cash acquired

 

(78,991

)

 

 

 

Net cash (used in) investing activities

 

(82,048

)

 

 

(5,450

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from bank borrowings

 

 

 

 

3,000

 

Repayments of bank borrowings

 

 

 

 

(5,000

)

Stock options exercised and other changes

 

(626

)

 

 

(1,256

)

Dividends paid

 

(8,953

)

 

 

(8,951

)

Purchase of incremental ownership of U.K. joint venture

 

 

 

 

(1,320

)

Stock repurchase

 

(3,004

)

 

 

(3,263

)

Net cash (used in) financing activities

 

(12,583

)

 

 

(16,790

)

Effect of exchange rate changes on cash and cash equivalents

 

3,262

 

 

 

4,651

 

Net (decrease) in cash and cash equivalents

 

(100,795

)

 

 

(28,430

)

Cash and cash equivalents at beginning of period

 

256,279

 

 

 

228,188

 

Cash and cash equivalents at end of period

$

155,484

 

 

$

199,758

 

 

See Notes to Consolidated Financial Statements

 

 

6


 

MOVADO GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

BASIS OF PRESENTATION

The accompanying interim unaudited consolidated financial statements have been prepared by Movado Group, Inc. (the “Company”), in a manner consistent with that used in the preparation of the annual audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2017 (the “2017 Annual Report on Form 10-K”). The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the financial position and results of operations for the periods presented. The consolidated balance sheet data at January 31, 2017 is derived from the audited annual financial statements, which are included in the Company’s 2017 Annual Report on Form 10-K and should be read in connection with these interim unaudited financial statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year.

 

 

NOTE 1 – RECLASSIFICATIONS

Certain reclassifications were made to prior years’ financial statement amounts and related note disclosures to conform to fiscal 2018 presentation. As a result of the adoption of ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” excess tax benefits and deficiencies related to share­based compensation are reported as operating activities in the statement of cash flows.

 

 

NOTE 2 - CHANGES TO CRITICAL ACCOUNTING POLICIES

As a result of the acquisition of JLB Brands Ltd., the owner of the Olivia Burton brand, in the second quarter of fiscal 2018, the Company has made the following additions to its critical accounting policies related to intangible assets and goodwill (see Note 17 – Acquisitions).

Intangibles

In accordance with applicable guidance, the Company estimates and records the fair value of purchased intangible assets at the time of its acquisition, which in the acquisition of the Olivia Burton brand primarily consist of a trade name and customer relationships. The fair values of these intangible assets are estimated based on independent third-party appraisals. Finite-lived intangible assets are amortized over their respective estimated useful lives and are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Estimates of fair value for finite-lived intangible assets are primarily determined using discounted cash flows, with consideration of market comparisons and recent transactions. This approach uses significant estimates and assumptions, including projected future cash flows, discount rates and growth rates.

Goodwill

At the time of acquisition, in accordance with applicable guidance, the Company records all acquired net assets at their estimated fair values. These estimated fair values are based on management’s assessments and independent third-party appraisals. The excess of the purchase consideration over the aggregate estimated fair values of the acquired net assets is recorded as goodwill.

Goodwill is not amortized but will be assessed for impairment at least annually. Under applicable guidance, the Company generally performs its annual goodwill impairment analysis using a qualitative approach to determine whether it is more likely than not that the fair value of goodwill is less than its carrying value. If, based on the results of the qualitative assessment, it is concluded that it is more likely than not that the fair value of goodwill is less than its carrying value, a quantitative test is performed. The Company early adopted ASU 2017-04 “Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment” (see Note 14 – Accounting Changes and Recent Accounting Pronouncements) on a prospective basis during the second quarter of fiscal 2018 in light of goodwill in the period, associated with the acquisition of the Olivia Burton brand.

7


 

T he quantitative impairment test is performed to measure the amount of impairment loss, if any. The quantitative impairment test identif ies the existence o f potential impairment by comparing the fair value of each reporting unit with its carrying value, including goodwill. I f a reporting unit’s carrying amount exceeds its fair value, the Company will record an impairment charge , as an operating expense item, based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit.

Determination of the fair value of a reporting unit and the fair value of individual assets and liabilities of a reporting unit is based on management's assessment, including the consideration of independent third-party appraisals when necessary. Furthermore, this determination is subjective in nature and involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. Estimates of fair value are primarily determined using discounted cash flows, market comparisons, and recent transactions. These approaches use significant estimates and assumptions, including projected future cash flows, discount rates, growth rates, and determination of appropriate market comparisons.

 

 

NOTE 3 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value into three broad levels as follows:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities.

 

Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

 

Level 3 – Unobservable inputs based on the Company’s assumptions.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands) as of October 31, 2017 and 2016 and January 31, 2017:

 

 

  

 

  

Fair Value at October 31, 2017

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

291

 

 

$

 

 

$

 

 

$

291

 

Short-term investment

 

Other current assets

 

 

156

 

 

 

 

 

 

 

 

 

156

 

SERP assets - employer

 

Other non-current assets

 

 

1,538

 

 

 

 

 

 

 

 

 

1,538

 

SERP assets - employee

 

Other non-current assets

 

 

35,532

 

 

 

 

 

 

 

 

 

35,532

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

67

 

 

 

 

 

 

67

 

Total

 

$

37,517

 

 

$

67

 

 

$

 

 

$

37,584

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

35,532

 

 

$

 

 

$

 

 

$

35,532

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

685

 

 

 

 

 

 

685

 

Total

 

$

35,532

 

 

$

685

 

 

$

 

 

$

36,217

 

 

 

  

 

  

Fair Value at January 31, 2017

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

309

 

 

$

 

 

$

 

 

$

309

 

Short-term investment

 

Other current assets

 

 

154

 

 

 

 

 

 

 

 

 

154

 

SERP assets - employer

 

Other non-current assets

 

 

1,091

 

 

 

 

 

 

 

 

 

1,091

 

SERP assets - employee

 

Other non-current assets

 

 

30,831

 

 

 

 

 

 

 

 

 

30,831

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

145

 

 

 

 

 

 

145

 

Total

 

$

32,385

 

 

$

145

 

 

$

 

 

$

32,530

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

30,831

 

 

$

 

 

$

 

 

$

30,831

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

211

 

 

 

 

 

 

211

 

Total

 

$

30,831

 

 

$

211

 

 

$

 

 

$

31,042

 

8


 

 

 

  

 

  

Fair Value at October 31, 2016

 

 

  

Balance Sheet Location

  

Level 1

 

  

Level 2

 

  

Level 3

 

  

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities

 

Other current assets

 

$

280

 

 

$

 

 

$

 

 

$

280

 

Short-term investment

 

Other current assets

 

 

150

 

 

 

 

 

 

 

 

 

150

 

SERP assets - employer

 

Other non-current assets

 

 

1,464

 

 

 

 

 

 

 

 

 

1,464

 

SERP assets - employee

 

Other non-current assets

 

 

28,495

 

 

 

 

 

 

 

 

 

28,495

 

Hedge derivatives

 

Other current assets

 

 

 

 

 

141

 

 

 

 

 

 

141

 

Total

 

$

30,389

 

 

$

141

 

 

$

 

 

$

30,530

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERP liabilities - employee

 

Other non-current liabilities

 

$

28,495

 

 

$

 

 

$

 

 

$

28,495

 

Hedge derivatives

 

Accrued liabilities

 

 

 

 

 

391

 

 

 

 

 

 

391

 

Total

 

$

28,495

 

 

$

391

 

 

$

 

 

$

28,886

 

 

The fair values of the Company’s available-for-sale securities are based on quoted prices. The fair value of the short-term investment, which is a guaranteed investment certificate, is based on its purchase price plus one half of a percent calculated annually. The assets related to the Company’s defined contribution supplemental executive retirement plan (“SERP”) consist of both employer (employee unvested) and employee assets which are invested in investment funds with fair values calculated based on quoted market prices. The SERP liability represents the Company’s liability to the employees in the plan for their vested balances. The hedge derivatives are entered into by the Company principally to reduce its exposure to Swiss franc and Euro exchange rate risks. Fair values of the Company’s hedge derivatives are calculated based on quoted foreign exchange rates and quoted interest rates. The carrying amount of debt approximated fair value as of October 31, 2017.

 

During the three months ended October 31, 2016, the Company determined that an investment in a privately held company experienced an other than temporary impairment and recorded a charge of $1.3 million, in other expenses in the Company’s Consolidated Statements of Operations, to reduce the carrying value to zero in the United States location of the Wholesale segment.

 

 

9


 

NOTE 4 – EQUITY

The components of equity for the nine months ended October 31, 2017 and 2016 are as follows (in thousands):

 

 

 

Movado Group, Inc. Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Common

Stock   (1)

 

 

Class   A

Common

Stock   (2)

 

 

Capital   in

Excess   of

Par   Value

 

 

Retained

Earnings

 

 

Treasury

Stock

 

 

Accumulated

Other

Comprehensive

Income

 

 

Noncontrolling

Interests

 

 

Total

 

Balance, January 31, 2017

 

$

272

 

 

$

66

 

 

$

185,354

 

 

$

415,919

 

 

$

(204,398

)

 

$

76,780

 

 

$

 

 

$

473,993

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,683

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,953

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,953

)

Stock repurchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,004

)

 

 

 

 

 

 

 

 

 

 

(3,004

)

Stock options exercised

 

 

1

 

 

 

 

 

 

 

238

 

 

 

 

 

 

 

(865

)

 

 

 

 

 

 

 

 

 

 

(626

)

Supplemental executive

   retirement plan

 

 

 

 

 

 

 

 

 

 

96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

96

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

3,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,644

 

Net unrealized loss on

   investments, net of tax benefit

   of $6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

 

(12

)

Net change in effective

   portion of hedging contracts,

   net of tax of $9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37

 

 

 

 

 

 

 

37

 

Foreign currency translation

   adjustment (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,583

 

 

 

 

 

 

 

3,583

 

Balance, October 31, 2017

 

$

273

 

 

$

66

 

 

$

189,332

 

 

$

425,649

 

 

$

(208,267

)

 

$

80,388

 

 

$

 

 

$

487,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

Stock   (1)

 

 

Class   A

Common

Stock   (2)

 

 

Capital   in

Excess   of

Par   Value

 

 

Retained

Earnings

 

 

Treasury

Stock

 

 

Accumulated

Other

Comprehensive

Income

 

 

Noncontrolling

Interests

 

 

Total

 

Balance, January 31, 2016

 

$

270

 

 

$

66

 

 

$

178,118

 

 

$

392,788

 

 

$

(199,195

)

 

$

68,505

 

 

$

595

 

 

$

441,147

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,829

 

 

 

 

 

 

 

 

 

 

 

78

 

 

 

29,907

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,951

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,951

)

Stock repurchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,263

)

 

 

 

 

 

 

 

 

 

 

(3,263

)

Stock options exercised, net of

   tax of $167

 

 

1

 

 

 

 

 

 

 

(86

)

 

 

 

 

 

 

(1,339