MOV Movado Group Inc

~ Second Quarter Net Sales of $88.5 million ~

~ Second Quarter Loss Per Share of ($0.28), or ($0.07) Excluding Restructuring Plan and Other Items ~

~ Ends Second Quarter with Cash of $170 million ~

~ Announces Licensing Partnership with Calvin Klein ~

Movado Group, Inc. (NYSE: MOV) today announced second quarter and six-month results for the period ended July 31, 2020.

Efraim Grinberg, Chairman and Chief Executive Officer, stated, “We remain focused on ensuring the safety and health of our employees, customers and the communities where we operate. In a quarter that was significantly impacted globally by the COVID-19 pandemic, I am proud of our team’s ability to build on our multi-year investments in our digital center of excellence and adapt to support our ongoing mission to put consumers first, allowing them to connect with our great brands, designs and platforms wherever and whenever they choose to shop. These efforts allowed us to capture strong online demand where our Movado brand generated a 130% increase in our own and third party ecommerce sales. In North America, we reopened our outlet stores in June and were encouraged by the improved sequential performance in July, despite reduced stores hours. We are also seeing encouraging demand in our domestic department store channel. In China, we had a 16% increase in sales for the quarter with trends continuing to accelerate and we had positive top line growth in France and Germany, despite our customers being closed for nearly half of the quarter.”

Mr. Grinberg continued, “The aggressive actions we took at the height of the pandemic have positioned us well to continue to navigate the current environment. We have implemented initiatives that are expected to generate $90 million in cost savings in this fiscal year and have strengthened our financial health as evidenced by our cash balance of $170 million after repaying $37 million on our revolver at quarter end. As we look to the remainder of the year, we continue to expect improving sales trends in the second half relative to the first half with improved profitability and we will continue to be disciplined and agile in managing the business given the continued uncertainty. The actions we have taken, combined with our strong liquidity, enable us to leverage our powerful portfolio of brands which will be further strengthened by the exciting new licensing partnership announced today to design and develop Calvin Klein timepieces and jewelry. As a result, we have confidence that we will emerge from this extraordinary period a stronger company that is even better positioned to deliver long-term shareholder value.”

Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)

Second quarter fiscal 2021 results of operations included the following items:

• Operating expenses include a $0.7 million pre-tax charge, or $0.5 million after tax, representing $0.02 per diluted share, associated with the amortization of acquired intangible assets related to the acquisition of Olivia Burton;
• $0.3 million pre-tax charge, or $0.2 million after tax, representing $0.01 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT;
• $7.4 million pre-tax charge, or $5.0 million after tax, representing $0.22 per diluted share, related to corporate initiatives primarily in response to the COVID-19 pandemic; and
• Other non-operating income includes a $1.3 million pre-tax gain, or $0.8 million after tax, representing $0.04 per diluted share, associated with the sale of a non-operating asset in Switzerland.

Second quarter Fiscal 2020 results of operations included the following items:

• Operating expenses include a $0.7 million pre-tax charge, or $0.6 million after tax, representing $0.02 per diluted share, associated with the amortization of acquired intangible assets related to Olivia Burton;
• $1.1 million pre-tax charge, or $0.9 million after tax, representing $0.04 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT;
• $0.3 million pre-tax gain, or $0.2 million after tax, representing $0.01 per diluted share, associated with the change in estimate of the remaining accrual for the fiscal 2018 cost saving initiatives; and
• Other non-operating income includes a $13.6 million pre-tax benefit, or $10.4 million after tax, representing $0.44 per diluted share, associated with the remeasurement of the contingent consideration liability associated with the MVMT acquisition.

Second Quarter Fiscal 2021 (See attached table for GAAP and Non-GAAP measures)

• Net sales decreased 43.9% to $88.5 million compared to $157.8 million in the second quarter of fiscal 2020 primarily due to the impact of the COVID-19 pandemic. Net sales on a constant dollar basis also decreased 43.9%.
• Gross profit was $45.4 million, or 51.2% of sales, compared to $85.3 million, or 54.1% of sales, in the second quarter last year. The decrease in gross margin percentage was primarily the result of unfavorable changes in channel and product mix, decreased leverage on fixed costs due to decreased sales, and U.S. special tariff headwinds.
• Operating expenses were $54.3 million compared to $76.6 million in the prior year period. For the second quarter of fiscal 2021, adjusted operating expenses were $45.9 million, which excludes the operating expense charges mentioned above in the Non-GAAP Items section. For the second quarter of fiscal 2020, adjusted operating expenses were $75.1 million, which excludes the operating expense charges mentioned above in the Non-GAAP Items section. The decrease in adjusted operating expenses was primarily due to the Company’s initiative to minimize all non-essential operating expenses such as certain marketing, selling and payroll related expenses.
• Operating loss was $8.9 million compared to operating income of $8.8 million in the second quarter of fiscal 2020. Adjusted operating loss for the second quarter of fiscal 2021 was $0.6 million, which excludes the fiscal 2021 charges listed above in the Non-GAAP Items section, compared to adjusted operating income for the second quarter of fiscal 2020 of $10.3 million, which excludes the fiscal 2020 charges listed above in the Non-GAAP Items section.
• The Company recorded a tax benefit of $1.6 million compared to a tax provision of $4.7 million in the second quarter of fiscal 2020. The Company recorded an adjusted tax provision in the second quarter of fiscal 2021 of $0.6 million compared to an adjusted tax provision of $1.8 million for the second quarter of fiscal 2020.
• Net loss was $6.6 million, or $0.28 per diluted share, compared to net income of $17.5 million, or $0.75 per diluted share, in the second quarter of fiscal 2020 . Adjusted net loss for the fiscal 2021 period was $1.7 million, or $0.07 per diluted share, which excludes the second quarter fiscal 2021 net charges listed above in the Non-GAAP Items section after the associated tax effects. This compares to adjusted net income in the second quarter of fiscal 2020 of $8.3 million, or $0.36 per diluted share, which excludes the second quarter fiscal 2020 net charges listed above in the Non-GAAP Items section after the associated tax effects.

First Half Fiscal 2021 (See attached table for GAAP and Non-GAAP measures)

• Net sales were $158.2 million compared to $304.4 million in the first six months of fiscal 2020, a decrease of 48.0% primarily due to the COVID-19 pandemic. Net sales on a constant dollar basis decreased 47.8%.
• Gross profit was $77.2 million, or 48.8% of sales, compared to $164.2 million, or 54.0% of sales in the same period last year. Adjusted gross profit for the first six months of fiscal 2021, which excludes $3.5 million in corporate initiative charges related to the impact to the business of the COVID-19 pandemic, was $80.8 million, or 51.0% of net sales. Adjusted gross profit for the first six months of fiscal 2020, which excludes $0.1 million in adjustments associated with the amortization of acquisition accounting adjustments related to the MVMT acquisition, was $164.4 million, or 54.0% of net sales. The decrease in adjusted gross margin percentage was primarily the result of decreased leverage on fixed costs due to decreased sales, unfavorable changes in channel and product mix, unfavorable foreign currency exchange rates and U.S. special tariff headwinds.
• Operating expenses were $268.3 million as compared to $150.5 million in the first six months of last fiscal year. For the first six months of fiscal 2021, adjusted operating expenses were $99.0 million, which excludes $155.9 million in adjustments related to the impairment of goodwill and certain intangible assets, $11.1 million in corporate initiative charges related to the impact to the business from the COVID-19 pandemic, $1.4 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton and $1.0 million in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition. For the first six months of fiscal 2020, adjusted operating expenses were $146.9 million, which excludes $1.4 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton and $2.5 million in adjustments associated with the amortization of acquired intangible assets, accounting adjustments and deferred compensation related to the MVMT acquisition, partially offset by $0.3 million in adjustments associated with the change in estimate of the remaining accrual for the fiscal 2018 cost saving initiatives. The decrease in adjusted operating expenses was primarily due to the Company’s initiative to minimize all non-essential operating expenses such as certain marketing, selling and payroll related expenses.
• Operating loss was $191.1 million compared to operating income of $13.8 million in the first six months of fiscal 2020. Adjusted operating loss for the first six months of fiscal 2021 was $18.2 million, which excludes the fiscal 2021 charges listed in the immediately preceding bullet, compared to adjusted operating income of $17.4 million in the first six months of fiscal 2020 which excludes the fiscal 2020 net charges listed in the immediately preceding bullet.
• The Company recorded a tax benefit in the first six months of fiscal 2021 of $33.9 million as compared to a tax provision of $5.6 million in the first six months of last year. Based upon adjusted pre-tax income, the adjusted tax benefit was $4.3 million in the first half of fiscal 2021 compared to an adjusted tax provision of $3.1 million in the first half of fiscal 2020.
• Net loss was $156.6 million, or $6.75 per diluted share, compared to net income of $21.4 million, or $0.92 per diluted share, in the first six months of fiscal 2020. Adjusted net loss for the first half of fiscal 2021 was $14.7 million, or $0.63 per diluted shares, which excludes $131.1 million, net of $24.9 million of tax, in adjustments related to the impairment of goodwill and certain intangible assets, $10.0 million, net of $4.6 million of tax, in corporate initiative charges related to the impact to the business from the COVID-19 pandemic, $1.1 million, net of $0.3 million of tax, of expenses associated with the amortization of acquired intangible assets related to Olivia Burton and $0.6 million, net of $0.4 million of tax, in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition, and $0.8 million, net of $0.5 million of tax, associated with a gain on the sale of a non-operating asset in Switzerland. This compares to adjusted net income for the first half of fiscal 2020 of $13.9 million, or $0.60 per diluted share, which excludes $1.1 million, net of $0.3 million of tax, of expenses associated with the amortization of acquired intangible assets related to Olivia Burton; $2.0 million, net of $0.6 million of tax, of expenses related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation related to MVMT; $10.4 million, net of $3.3 million of tax, of gains associated with the remeasurement of the contingent consideration liability associated with the MVMT acquisition; and $0.2 million, net of $0.1 million of tax, of gains associated with the change in estimate of the remaining accrual for the fiscal 2018 cost saving initiatives.

Fiscal 2021 Outlook

Given the dynamic nature of the COVID-19 crisis and lack of visibility, the potential financial impact to the business cannot be reasonably estimated. The Company is not providing fiscal 2021 guidance.

Conference Call

The Company’s management will host a conference call and audio webcast to discuss its results today, August 27, 2020 at 9:00 a.m. Eastern Time. The conference call may be accessed by dialing (877) 407-0784. Additionally, a live webcast of the call can be accessed at www.movadogroup.com. The webcast will be archived on the Company’s website approximately one hour after the conclusion of the call. Additionally, a telephonic re-play of the call will be available at 12:00 p.m. ET on August 27, 2020 until 11:59 p.m. ET on September 10, 2020 and can be accessed by dialing (844) 512-2921 and entering replay pin number 13708469.

Movado Group, Inc. designs, sources, and distributes MOVADO®, MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, COACH®, TOMMY HILFIGER®, HUGO BOSS®, LACOSTE®, SCUDERIA FERRARI®, REBECCA MINKOFF® and URI MINKOFF® watches worldwide, and operates Movado company stores in the United States and Canada.

In this release, the Company presents certain financial measures that are not calculated according to generally accepted accounting principles in the United States (“GAAP”). Specifically, the Company is presenting adjusted gross profit, adjusted gross margin, adjusted operating expenses and adjusted operating income, which are gross profit, gross margin, operating expenses and operating income, respectively, under GAAP, adjusted to eliminate the amortization of acquisition accounting adjustments related to the Olivia Burton and MVMT acquisitions, corporate initiatives and the impairment of goodwill and certain intangible assets. The Company is also presenting adjusted tax provision, which is the tax provision under GAAP, adjusted to eliminate the impact of charges for the Olivia Burton and MVMT acquisitions, corporate initiatives, the impairment of goodwill and certain intangible assets and the gain on sale of a non-operating asset. The Company believes these adjusted measures are useful because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. The Company is also presenting adjusted net income, adjusted earnings per share and adjusted effective tax rate, which are net income, earnings per share and effective tax rate, respectively, under GAAP, adjusted to eliminate the after-tax impact of amortization of acquisition accounting adjustments related to the Olivia Burton and MVMT acquisitions, corporate initiatives, the impairment of goodwill and certain intangibles and the gain on sale of a non-operating asset. The Company believes that adjusted net income, adjusted earnings per share and adjusted effective tax rate are useful measures of performance because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. Additionally, the Company is presenting constant currency information to provide a framework to assess how its business performed excluding the effects of foreign currency exchange rate fluctuations in the current period. Comparisons of financial results on a constant dollar basis are calculated by translating each foreign currency at the same US dollar exchange rate as in effect for the prior-year period for both periods being compared. The Company believes this information is useful to investors to facilitate comparisons of operating results. These non-GAAP financial measures are designed to complement the GAAP financial information presented in this release. The non-GAAP financial measures presented should not be considered in isolation from or as a substitute for the comparable GAAP financial measures, and the methods of their calculation may differ substantially from similarly titled measures used by other companies.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company has tried, whenever possible, to identify these forward-looking statements using words such as “expects,” “anticipates,” “believes,” “targets,” “goals,” “projects,” “intends,” “plans,” “seeks,” “estimates,” “may,” “will,” “should” and variations of such words and similar expressions. Similarly, statements in this press release that describe the Company's business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the Company's actual results, performance or achievements and levels of future dividends to differ materially from those expressed in, or implied by, these statements. These risks and uncertainties may include, but are not limited to general economic and business conditions which may impact disposable income of consumers in the United States and the other significant markets (including Europe) where the Company’s products are sold, uncertainty regarding such economic and business conditions, trends in consumer debt levels and bad debt write-offs, general uncertainty related to possible terrorist attacks, natural disasters, pandemics, including the effect of the COVID-19 pandemic and other diseases on travel and traffic in our retail stores and the stores of our wholesale customers, supply disruptions and delivery delays from our Chinese and other suppliers as a result of the COVID-19 pandemic, adverse impact on the Company’s wholesale customers and customer traffic in the Company’s stores as a result of increased uncertainty and economic disruption caused by the COVID-19 pandemic, the stability of the European Union (including the impact of the United Kingdom’s process to exit from the European Union), the stability of the United Kingdom after its exit from the European Union, and defaults on or downgrades of sovereign debt and the impact of any of those events on consumer spending, changes in consumer preferences and popularity of particular designs, new product development and introduction, decrease in mall traffic and increase in e-commerce, the ability of the Company to successfully implement its business strategies, competitive products and pricing, the impact of “smart” watches and other wearable tech products on the traditional watch market, seasonality, availability of alternative sources of supply in the case of the loss of any significant supplier or any supplier’s inability to fulfill the Company’s orders, the loss of or curtailed sales to significant customers, the Company’s dependence on key employees and officers, the ability to successfully integrate the operations of acquired businesses without disruption to other business activities, the possible impairment of acquired intangible assets including goodwill if the carrying value of any reporting unit were to exceed its fair value, volatility in reported earnings resulting from changes in the estimated fair value of contingent acquisition consideration, the continuation of the company’s major warehouse and distribution centers, the continuation of licensing arrangements with third parties, losses possible from pending or future litigation, the ability to secure and protect trademarks, patents and other intellectual property rights, the ability to lease new stores on suitable terms in desired markets and to complete construction on a timely basis, the ability of the Company to successfully manage its expenses on a continuing basis, information systems failure or breaches of network security, the continued availability to the Company of financing and credit on favorable terms, business disruptions, and general risks associated with doing business outside the United States including, without limitation, import duties, tariffs (including retaliatory tariffs), quotas, political and economic stability, changes to existing laws or regulations, and success of hedging strategies with respect to currency exchange rate fluctuations, and the other factors discussed in the Company’s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. These statements reflect the Company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time. The Company assumes no duty to update its forward looking statements and this release shall not be construed to indicate the assumption by the Company of any duty to update its outlook in the future.

(Tables to follow)

  MOVADO GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)  

Three Months Ended

 

Six Months Ended

July 31,

 

July 31,

 

 

 

 

 

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

  Net sales

$

88,538

 

$

157,816

 

$

158,204

 

$

304,365

 

  Cost of sales

 

43,182

 

 

72,477

 

 

80,955

 

 

140,153

 

  Gross profit

 

45,356

 

 

85,339

 

 

77,249

 

 

164,212

 

  Operating expenses

 

54,272

 

 

76,563

 

 

112,409

 

 

150,462

 

Impairment of goodwill and intangible assets

 

-

 

 

-

 

 

155,919

 

 

-

 

Total operating expenses

 

54,272

 

 

76,563

 

 

268,328

 

 

150,462

 

  Operating (loss)/income

 

(8,916

)

 

8,776

 

 

(191,079

)

 

13,750

 

  Non-operating (expense)/income: Gain on sale of a non-operating asset

 

1,317

 

 

-

 

 

1,317

 

 

-

 

Change in contingent consideration

 

-

 

 

13,627

 

 

-

 

 

13,627

 

Interest expense

 

(590

)

 

(225

)

 

(861

)

 

(449

)

Interest income

 

8

 

 

24

 

 

23

 

 

45

 

  (Loss)/Income before income taxes

 

(8,181

)

 

22,202

 

 

(190,600

)

 

26,973

 

  (Benefit)/Provision for income taxes

 

(1,559

)

 

4,741

 

 

(33,889

)

 

5,588

 

  Net (loss)/income

 

(6,622

)

 

17,461

 

 

(156,711

)

 

21,385

 

  Less: Net loss attributable to noncontrolling interests

 

(7

)

 

(44

)

 

(103

)

 

(45

)

  Net (loss)/income attributable to Movado Group, Inc.

$

(6,615

)

$

17,505

 

$

(156,608

)

$

21,430

 

  Diluted Income Per Share Information Net (loss)/income attributable to Movado Group, Inc.

$

(0.28

)

$

0.75

 

$

(6.75

)

$

0.92

 

  Weighted diluted average shares outstanding

 

23,240

 

 

23,292

 

 

23,191

 

 

23,370

 

    MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In thousands, except for percentage data) (Unaudited)    

As Reported

 

 

Three Months Ended

 

 

July 31,

 

% Change

 

 

 

 

 

2020

 

2019

 

 

  Total net sales, as reported

$

88,538

$

157,816

-43.9

%

  Total net sales, constant dollar basis

$

88,461

$

157,816

-43.9

%

     

As Reported

Six Months Ended

July 31,

% Change

 

 

 

2020

 

2019

  Total net sales, as reported

$

158,204

$

304,365

-48.0

%

  Total net sales, constant dollar basis

$

158,813

$

304,365

-47.8

%

  MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In thousands, except per share data) (Unaudited)  

Net Sales

 

Gross Profit

 

Operating (Loss)/Income

 

Pre-tax (Loss)/Income

 

(Benefit)/Provision for Income Taxes

 

Net (Loss)/Income Attributable to Movado Group, Inc.

 

Diluted EPS

Three Months Ended July 31, 2020 As Reported (GAAP)

$

88,538

$

45,356

$

(8,916

)

$

(8,181

)

$

(1,559

)

$

(6,615

)

$

(0.28

)

Olivia Burton Costs (1)

 

-

 

-

 

671

 

 

671

 

 

139

 

 

532

 

$

0.02

 

MVMT Costs (2)

 

-

 

-

 

284

 

 

284

 

 

108

 

 

176

 

$

0.01

 

Gain On Sale of a Non-Operating Asset (3)

 

-

 

-

 

-

 

 

(1,317

)

 

(474

)

 

(843

)

$

(0.04

)

Corporate Initiatives (4)

 

-

 

-

 

7,368

 

 

7,368

 

 

2,353

 

 

5,015

 

$

0.22

 

Adjusted Results (Non-GAAP)

$

88,538

$

45,356

$

(593

)

$

(1,175

)

$

567

 

$

(1,735

)

$

(0.07

)

    Three Months Ended July 31, 2019 As Reported (GAAP)

$

157,816

$

85,339

$

8,776

 

$

22,202

 

$

4,741

 

$

17,505

 

$

0.75

 

Olivia Burton Costs (1)

 

-

 

-

 

690

 

 

690

 

 

131

 

 

559

 

 

0.02

 

MVMT Costs (2)

 

-

 

-

 

1,125

 

 

1,125

 

 

270

 

 

855

 

 

0.04

 

Change In Contingent Consideration (5)

 

-

 

-

 

-

 

 

(13,627

)

 

(3,270

)

 

(10,357

)

 

(0.44

)

Cost Savings Initiatives (6)

 

-

 

-

 

(320

)

 

(320

)

 

(77

)

 

(243

)

 

(0.01

)

Adjusted Results (Non-GAAP)

$

157,816

$

85,339

$

10,271

 

$

10,070

 

$

1,795

 

$

8,319

 

$

0.36

 

    Net Sales Gross Profit Operating(Loss)/Income Pre-tax(Loss)/Income (Benefit)/Provisionfor Income Taxes Net(Loss)/IncomeAttributable toMovado Group,Inc. Diluted EPS Six Months Ended July 31, 2020 As Reported (GAAP)

$

158,204

$

77,249

$

(191,079

)

$

(190,600

)

$

(33,889

)

$

(156,608

)

$

(6.75

)

Olivia Burton Costs (1)

 

-

 

-

 

1,356

 

 

1,356

 

 

258

 

 

1,098

 

$

0.05

 

MVMT Costs (2)

 

-

 

-

 

981

 

 

981

 

 

373

 

 

608

 

$

0.03

 

Goodwill and Intangible Asset Impairment (7)

 

-

 

-

 

155,919

 

 

155,919

 

 

24,867

 

 

131,052

 

$

5.65

 

Gain On Sale of a Non-Operating Asset (3)

 

-

 

-

 

-

 

 

(1,317

)

 

(474

)

 

(843

)

$

(0.04

)

Corporate Initiatives (4)

 

-

 

3,508

 

14,608

 

 

14,608

 

 

4,592

 

 

10,016

 

$

0.43

 

Adjusted Results (Non-GAAP)

$

158,204

$

80,757

$

(18,215

)

$

(19,053

)

$

(4,273

)

$

(14,677

)

$

(0.63

)

    Six Months Ended July 31, 2019 As Reported (GAAP)

$

304,365

$

164,212

$

13,750

 

$

26,973

 

$

5,588

 

$

21,430

 

$

0.92

 

Olivia Burton Costs (1)

 

-

 

-

 

1,402

 

 

1,402

 

 

266

 

 

1,136

 

 

0.05

 

MVMT Costs (2)

 

-

 

140

 

2,598

 

 

2,598

 

 

624

 

 

1,974

 

 

0.08

 

Change In Contingent Consideration (5)

 

-

 

-

 

-

 

 

(13,627

)

 

(3,270

)

 

(10,357

)

 

(0.44

)

Cost Savings Initiatives (6)

 

-

 

-

 

(320

)

 

(320

)

 

(77

)

 

(243

)

 

(0.01

)

Adjusted Results (Non-GAAP)

$

304,365

$

164,352

$

17,430

 

$

17,026

 

$

3,131

 

$

13,940

 

$

0.60

 

 

(1)

Related to the amortization of acquired intangible assets for Olivia Burton.

(2)

Related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation of MVMT, where applicable.

(3)

Related to a gain on sale of a non-operating asset in Switzerland.

(4)

Related to provision established associated with corporate initiatives, including restructuring plan.

(5)

Remeasurement of contingent consideration liability.

(6)

Change in estimate in Fiscal 2020 for severance and occupancy expenses.

(7)

Related to the impairment of goodwill for MVMT, Olivia Burton and City Time and impairment of certain of MVMT's intangible assets. MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)  

July 31,

 

January 31,

 

July 31,

2020

 

2020

 

2019

ASSETS     Cash and cash equivalents

$

170,195

$

185,872

$

134,890

Trade receivables, net

 

60,128

 

78,388

 

93,699

Inventories

 

173,374

 

171,406

 

200,953

Other current assets

 

29,856

 

28,888

 

32,113

Total current assets

 

433,553

 

464,554

 

461,655

  Property, plant and equipment, net

 

25,888

 

29,238

 

28,248

Operating lease right-of-use assets

 

82,169

 

89,523

 

91,119

Deferred and non-current income taxes

 

59,747

 

25,403

 

24,621

Goodwill

 

-

 

136,366

 

131,936

Other intangibles, net

 

18,071

 

42,359

 

43,995

Other non-current assets

 

60,261

 

59,865

 

59,057

Total assets

$

679,689

$

847,308

$

840,631

  LIABILITIES AND EQUITY     Accounts payable

$

29,929

$

35,488

$

50,281

Accrued liabilities

 

45,509

 

44,210

 

43,874

Accrued payroll and benefits

 

12,431

 

6,302

 

7,333

Current operating lease liabilities

 

14,766

 

15,083

 

14,609

Income taxes payable

 

6,774

 

8,217

 

10,800

Total current liabilities

 

109,409

 

109,300

 

126,897

  Loans payable to bank, non current

 

48,341

 

51,910

 

50,300

Deferred and non-current income taxes payable

 

20,743

 

25,419

 

26,593

Non-current operating lease liabilities

 

75,376

 

81,877

 

82,972

Other non-current liabilities

 

48,124

 

48,393

 

50,025

  Redeemable noncontrolling interest

 

3,037

 

3,165

 

3,540

  Shareholders' equity

 

373,671

 

526,537

 

500,304

  Noncontrolling interest

 

988

 

707

 

-

Total equity

 

374,659

 

527,244

 

500,304

  Total liabilities, redeemable noncontrolling interest and equity

$

679,689

$

847,308

$

840,631

  MOVADO GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)      

Six Months Ended

 

July 31,

 

 

 

 

 

 

2020

 

 

 

2019

 

Cash flows from operating activities:   Net (loss)/income  

$

(156,608

)

$

21,430

 

Impairment of goodwill and intangible assets  

 

155,919

 

 

-

 

Non-cash corporate initiatives  

 

6,608

 

 

-

 

Change in contingent consideration  

 

-

 

 

(13,627

)

Depreciation and amortization  

 

7,200

 

 

7,937

 

Other non-cash adjustments  

 

(33,833

)

 

2,289

 

Changes in working capital  

 

9,630

 

 

(50,401

)

Changes in non-current assets and liabilities  

 

(292

)

 

(222

)

Net cash used in operating activities  

 

(11,376

)

 

(32,594

)

    Cash flows from investing activities:   Capital expenditures  

 

(1,891

)

 

(6,948

)

Proceeds from sale of a non-operating asset  

 

1,317

 

 

-

 

Tradenames and other intangibles  

 

(51

)

 

(99

)

Net cash used in investing activities  

 

(625

)

 

(7,047

)

    Cash flows from financing activities:   Repayments of bank borrowings  

 

(36,772

)

 

-

 

Proceeds from bank borrowings  

 

30,879

 

 

-

 

Dividends paid  

 

-

 

 

(9,196

)

Stock repurchase  

 

-

 

 

(4,199

)

Stock awards and options exercised and other changes  

 

(474

)

 

(1,234

)

Debt issuance costs  

 

(300

)

 

-

 

Net cash used in financing activities  

 

(6,667

)

 

(14,629

)

    Effect of exchange rate changes on cash, cash equivalents, and restricted cash  

 

3,022

 

 

(751

)

Net change in cash, cash equivalents, and restricted cash  

 

(15,646

)

 

(55,021

)

Cash, cash equivalents, and restricted cash at beginning of period  

 

186,438

 

 

190,459

 

    Cash, cash equivalents, and restricted cash at end of period  

$

170,792

 

$

135,438

 

    Reconciliation of cash, cash equivalents, and restricted cash:   Cash and cash equivalents  

$

170,195

 

$

134,890

 

Restricted cash included in other non-current assets  

 

597

 

 

548

 

Cash, cash equivalents, and restricted cash  

$

170,792

 

$

135,438

 

   

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200827005233/en/

ICR, Inc. Rachel Schacter/Allison Malkin 203-682-8200