PERY Perry Ellis International Inc. (delisted)

Perry Ellis International, Inc. (NASDAQ:PERY): Reports third quarter earnings of $0.80 per fully diluted share, ahead of management�s plan. Strong gross profit margin and EBITDA margin improvement Annual Fiscal 2007 revenue view of $840 - $850 million, confirms previously announced proforma earnings range of $2.30 - $2.40 per fully diluted share Announces 3-for-2 stock split effected in the form of a stock dividend payable December 29,2006 Perry Ellis International, Inc. (NASDAQ:PERY) today reported results for the third quarter ended October 31, 2006 ("third quarter of fiscal 2007"), which included total revenues of $213.2 million, compared to $220.0 million, a 3.1% decline from the comparable period a year ago. The decline in total revenues during the quarter was anticipated as a part of management's fiscal 2007 plan and is primarily attributable to the final impacts of retailer consolidation and elimination of certain private label sportswear programs. Total revenues for the nine month period ended October 31, 2006 were $598.3 million, compared to $635.5 million, a 5.9% decline versus the comparable period last year. For the third quarter of fiscal 2007, net earnings were $8.2 million compared to $8.1 million for the comparable quarter last year and per share results were equal to last year at $0.80 per fully diluted share. Third quarter earnings were above last year�s levels as improved gross profit margin performance and lower interest costs offset the impact of lower total revenues. Additionally, the third quarter of fiscal 2007 results include expenses of $0.02 per share for the adoption of Statement of Financial Accounting Standards ("SFAS") 123R requiring the expensing of stock options. These costs are not reflected in prior year results. Overall third quarter results were ahead of management's previously announced plans, and included a 200 basis point improvement in gross profit margin and a 29 basis point improvement in EBITDA margin. For the nine months ended October 31, 2006, earnings were $1.14 per fully diluted share compared to earnings of $1.45 per fully diluted share for the comparable period last year. However, proforma earnings for nine months of fiscal 2007 were $1.33 per fully diluted share. Proforma results exclude the impact of $3.0 million in debt extinguishment costs ($0.19 per fully diluted share) incurred as a result of the March 2006 repayment of the Company's $57 million senior secured notes. The Company believes that proforma results provide a more meaningful comparison of financial performance. A table showing the reconciliation of actual to proforma earnings per share results is attached. Additionally, both proforma and reported earnings per share results for the nine months of fiscal 2007 include expenses of $0.06 per share related to the adoption of SFAS 123R, requiring the expensing of stock options. These costs are not reflected in prior year results. Looking forward for the balance of fiscal 2007, Perry Ellis indicated it anticipates annual revenue in the range of $840 - $850 million, and confirmed it�s previously announced proforma earnings view range of $2.30 - $2.40 per fully diluted share. In a separate release today Perry Ellis International also reported a 3-for-2 stock split effected in the form of a stock dividend payable on December 29, 2006 to stockholders of record as of December 12, 2006. All earnings per share references in this release do not include the impact of the stock dividend. George Feldenkreis, Chairman and Chief Executive Officer commented: �We are pleased with our strong gross profit margin improvement both during the third quarter and on a year to date basis. This is a consequence of our products continuing to perform exceptionally well at retail, as well as improved production planning and sourcing. We are also pleased to announce a 3-for-2 stock split which reflects the confidence we have in our future business growth.� Oscar Feldenkreis, Vice-Chairman, President and Chief Operating Officer stated: �Third quarter results reflect the end of the impact of retail consolidation and other factors that have impacted top line growth. We are well positioned for record sales and gross margins in our upcoming fourth quarter with our diversified growth platforms including swim, outerwear, Perry Ellis sportswear, international and direct retail. We expect these and other growth platforms to continue to show strong growth as we enter fiscal 2008.� About Perry Ellis International Perry Ellis International, Inc. is a leading designer, distributor and licensor of a broad line of high quality men's and women's apparel, accessories, and fragrances. The company's collection of dress and casual shirts, golf sportswear, sweaters, dress and casual pants and shorts, jeans wear, active wear and men's and women's swimwear is available through all major levels of retail distribution. The company, through its wholly owned subsidiaries, owns a portfolio of nationally and internationally recognized brands including Perry Ellis(R), Jantzen(R), Cubavera(R), Munsingwear(R), Savane(R), Original Penguin(R), Grand Slam(R), Natural Issue(R), Pro Player(R), the Havanera Co.(R), Axis(R), Tricots St. Raphael(R), Gotcha(R), Girl Star(R) and MCD(R). The company enhances its roster of brands by licensing trademarks from third parties including Dockers(R) for outerwear, Nike(R) and JAG(R) for swimwear, and PING(R) and PGA TOUR(R) for golf apparel. Additional information on the company is available at http://www.pery.com. Safe Harbor Statement We caution readers that the forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases such as "anticipate," "could," "may," "might," "potential," "predict," "should," "estimate," "expect," "project," "believe," "plan," "envision," "continue," "intend," "target," "contemplate," or "will" and similar words or phrases or comparable terminology. We have based such forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, many of which are beyond our control. These factors include: general economic conditions, a significant decrease in business from or loss of any of our major customers or programs, anticipated and unanticipated trends and conditions in our industry, including the impact of recent or future retail and wholesale consolidation, the effectiveness of our planned advertising, marketing and promotional campaigns, our ability to contain costs, disruptions in the supply chain, our future capital needs and our ability to obtain financing, our ability to integrate acquired businesses, trademarks, tradenames and licenses, our ability to predict consumer preferences and changes in fashion trends and consumer acceptance of both new designs and newly introduced products, the termination or non-renewal of any material license agreements to which we are a party, changes in the costs of raw materials, labor and advertising, our ability to carry out growth strategies including expansion in international and direct to consumer retail markets, the level of consumer spending for apparel and other merchandise, our ability to compete, exposure to foreign currency risk and interest rate risk, possible disruption in commercial activities due to terrorist activity and armed conflict, and other factors set forth in Perry Ellis International's filings with the Securities and Exchange Commission. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those risks and uncertainties detailed in Perry Ellis' filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise. PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (amounts in 000's, except per share information) INCOME STATEMENT DATA: Three Months Ended October 31, Nine Months Ended October 31, 2006� 2005� 2006� 2005� � Revenues Net sales $ 207,794� $ 214,665� $ 581,747� $ 619,357� Royalty income 5,445� 5,290� 16,512� 16,182� Total revenues 213,239� 219,955� 598,259� 635,539� Cost of sales 140,781� 149,595� 401,506� 438,414� Gross profit 72,458� 70,360� 196,753� 197,125� Operating expenses Selling, general and administrative expenses 51,746� 49,648� 151,514� 150,754� Depreciation and amortization 2,900� 2,436� 8,350� 6,899� Total operating expenses 54,646� 52,084� 159,864� 157,653� Operating income 17,812� 18,276� 36,889� 39,472� Costs on early extinguishment of debt -� -� 2,963� -� Interest expense 5,000� 5,621� 15,650� 16,402� � Income before minority interest and income taxes 12,812� 12,655� 18,276� 23,070� Minority interest 92� 59� 236� 427� Income tax provision 4,479� 4,503� 6,342� 8,063� Net income $ 8,241� $ 8,093� $ 11,698� $ 14,580� � Net income per share Basic $ 0.85� $ 0.85� $ 1.21� $ 1.53� Diluted $ 0.80� $ 0.80� $ 1.14� $ 1.45� � Weighted average number of shares outstanding Basic 9,692� 9,471� 9,645� 9,516� Diluted 10,360� 10,090� 10,218� 10,039� PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (amounts in 000's) � BALANCE SHEET DATA: � As of October 31, 2006 January 31, 2006 � Assets Current assets: Cash and cash equivalents $ 5,239� $ 9,412� Accounts receivable, net 140,774� 152,529� Inventories, net 126,386� 126,413� Other current assets 17,406� 16,239� Total current assets 289,805� 304,593� � Property and equipment, net 70,353� 66,592� Intangible assets, net 183,096� 183,090� Other assets 11,868� 15,739� � Total assets $ 555,122� $ 570,014� � Liabilities and stockholders' equity Current liabilities: Accounts payable $ 38,687� $ 51,763� Accrued expenses and other liabilities 20,883� 16,441� Accrued interest 2,278� 6,743� Unearned revenues 1,613� 1,096� Total current liabilities 63,461� 76,043� � � Long term liabilities: Senior subordinated notes payable 149,037� 148,914� Senior secured notes payable -� 56,923� Senior credit facility 65,126� 40,391� Real estate mortgage 26,731� 12,336� Deferred pension obligation 13,721� 13,721� Lease payable long term 283� 452� Total long term liabilities 254,898� 272,737� � Total liabilities 318,359� 348,780� � Minority interest 2,090� 1,854� � Stockholders' equity � Preferred stock -� -� Common stock 98� 96� Additional paid in capital 92,878� 90,084� Retained earnings 140,677� 128,979� Accumulated other comprehensive income 1,020� 221� Total stockholders' equity 234,673� 219,380� � Total liabilities and stockholders' equity $ 555,122� $ 570,014� � PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA (1) (UNAUDITED) (amounts in 000's) � Three Months Ended October 31, Nine Months Ended October 31, 2006� 2005� 2006� 2005� � � Net income as reported $ 8,241� $ 8,093� $ 11,698� $ 14,580� Plus: Depreciation and amortization 2,900� 2,436� 8,350� 6,899� Interest expense 5,000� 5,621� 15,650� 16,402� Costs on early extinguishment of debt -� -� 2,963� -� Minority interest 92� 59� 236� 427� Income tax provision 4,479� 4,503� 6,342� 8,063� EBITDA $ 20,712� $ 20,712� $ 45,239� $ 46,371� � � � Total revenues $ 213,239� $ 219,955� $ 598,259� $ 635,539� � EBITDA margin percentage of revenues 9.71% 9.42% 7.56% 7.30% � � (1) EBITDA consists of earnings before interest, costs on early extinguishment of debt, taxes, depreciation, amortization and minority interest. EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States of America, and does not represent cash flow from operations.��EBITDA is presented solely as a supplemental disclosure because management believes that it is a common measure of operating performance in the apparel industry. PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF DILUTED EARNINGS PER SHARE TO PROFORMA DILUTED EARNINGS PER SHARE (2) (UNAUDITED) � � Three Months Ended October 31, Nine Months Ended October 31, 2006� 2005� 2006� 2005� � Diluted earnings per share view $ 0.80� $ 0.80� $ 1.14� $ 1.45� Plus: Effect of debt extinguishment costs, net of tax effect $ -� $ -� $ 0.19� $ -� Proforma diluted earnings per share view $ 0.80� $ 0.80� $ 1.33� $ 1.45� � � (2) Proforma diluted earnings per share for the nine months ended October 31, 2006, consists of diluted earnings per share excluding the effect of approximately $3.0 million ($1.9 million, net of taxes) for debt extinguishment costs related to the call of our $57 million senior secured notes. Proforma diluted earnings per share is not a measurement of financial performance under generally accepted accounting principles. Accordingly, you should not regard this figure as an alternative to actual diluted earnings per share. Proforma diluted earnings per share is presented solely as a supplemental disclosure. � Additionally, proforma diluted earnings per share and diluted earnings per share for the three and nine months ended October 2006 include expenses of $0.02 and $0.06 per share, respectively related to the adoption of SFAS 123R, which requires the expensing of stock options. Such expense was not recognized in the prior period as SFAS 123R was implemented on February 1, 2006. Perry Ellis International, Inc. (NASDAQ:PERY): -- Reports third quarter earnings of $0.80 per fully diluted share, ahead of management's plan. Strong gross profit margin and EBITDA margin improvement -- Annual Fiscal 2007 revenue view of $840 - $850 million, confirms previously announced proforma earnings range of $2.30 - $2.40 per fully diluted share -- Announces 3-for-2 stock split effected in the form of a stock dividend payable December 29,2006 Perry Ellis International, Inc. (NASDAQ:PERY) today reported results for the third quarter ended October 31, 2006 ("third quarter of fiscal 2007"), which included total revenues of $213.2 million, compared to $220.0 million, a 3.1% decline from the comparable period a year ago. The decline in total revenues during the quarter was anticipated as a part of management's fiscal 2007 plan and is primarily attributable to the final impacts of retailer consolidation and elimination of certain private label sportswear programs. Total revenues for the nine month period ended October 31, 2006 were $598.3 million, compared to $635.5 million, a 5.9% decline versus the comparable period last year. For the third quarter of fiscal 2007, net earnings were $8.2 million compared to $8.1 million for the comparable quarter last year and per share results were equal to last year at $0.80 per fully diluted share. Third quarter earnings were above last year's levels as improved gross profit margin performance and lower interest costs offset the impact of lower total revenues. Additionally, the third quarter of fiscal 2007 results include expenses of $0.02 per share for the adoption of Statement of Financial Accounting Standards ("SFAS") 123R requiring the expensing of stock options. These costs are not reflected in prior year results. Overall third quarter results were ahead of management's previously announced plans, and included a 200 basis point improvement in gross profit margin and a 29 basis point improvement in EBITDA margin. For the nine months ended October 31, 2006, earnings were $1.14 per fully diluted share compared to earnings of $1.45 per fully diluted share for the comparable period last year. However, proforma earnings for nine months of fiscal 2007 were $1.33 per fully diluted share. Proforma results exclude the impact of $3.0 million in debt extinguishment costs ($0.19 per fully diluted share) incurred as a result of the March 2006 repayment of the Company's $57 million senior secured notes. The Company believes that proforma results provide a more meaningful comparison of financial performance. A table showing the reconciliation of actual to proforma earnings per share results is attached. Additionally, both proforma and reported earnings per share results for the nine months of fiscal 2007 include expenses of $0.06 per share related to the adoption of SFAS 123R, requiring the expensing of stock options. These costs are not reflected in prior year results. Looking forward for the balance of fiscal 2007, Perry Ellis indicated it anticipates annual revenue in the range of $840 - $850 million, and confirmed it's previously announced proforma earnings view range of $2.30 - $2.40 per fully diluted share. In a separate release today Perry Ellis International also reported a 3-for-2 stock split effected in the form of a stock dividend payable on December 29, 2006 to stockholders of record as of December 12, 2006. All earnings per share references in this release do not include the impact of the stock dividend. George Feldenkreis, Chairman and Chief Executive Officer commented: "We are pleased with our strong gross profit margin improvement both during the third quarter and on a year to date basis. This is a consequence of our products continuing to perform exceptionally well at retail, as well as improved production planning and sourcing. We are also pleased to announce a 3-for-2 stock split which reflects the confidence we have in our future business growth." Oscar Feldenkreis, Vice-Chairman, President and Chief Operating Officer stated: "Third quarter results reflect the end of the impact of retail consolidation and other factors that have impacted top line growth. We are well positioned for record sales and gross margins in our upcoming fourth quarter with our diversified growth platforms including swim, outerwear, Perry Ellis sportswear, international and direct retail. We expect these and other growth platforms to continue to show strong growth as we enter fiscal 2008." About Perry Ellis International Perry Ellis International, Inc. is a leading designer, distributor and licensor of a broad line of high quality men's and women's apparel, accessories, and fragrances. The company's collection of dress and casual shirts, golf sportswear, sweaters, dress and casual pants and shorts, jeans wear, active wear and men's and women's swimwear is available through all major levels of retail distribution. The company, through its wholly owned subsidiaries, owns a portfolio of nationally and internationally recognized brands including Perry Ellis(R), Jantzen(R), Cubavera(R), Munsingwear(R), Savane(R), Original Penguin(R), Grand Slam(R), Natural Issue(R), Pro Player(R), the Havanera Co.(R), Axis(R), Tricots St. Raphael(R), Gotcha(R), Girl Star(R) and MCD(R). The company enhances its roster of brands by licensing trademarks from third parties including Dockers(R) for outerwear, Nike(R) and JAG(R) for swimwear, and PING(R) and PGA TOUR(R) for golf apparel. Additional information on the company is available at http://www.pery.com. Safe Harbor Statement We caution readers that the forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases such as "anticipate," "could," "may," "might," "potential," "predict," "should," "estimate," "expect," "project," "believe," "plan," "envision," "continue," "intend," "target," "contemplate," or "will" and similar words or phrases or comparable terminology. We have based such forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, many of which are beyond our control. These factors include: general economic conditions, a significant decrease in business from or loss of any of our major customers or programs, anticipated and unanticipated trends and conditions in our industry, including the impact of recent or future retail and wholesale consolidation, the effectiveness of our planned advertising, marketing and promotional campaigns, our ability to contain costs, disruptions in the supply chain, our future capital needs and our ability to obtain financing, our ability to integrate acquired businesses, trademarks, tradenames and licenses, our ability to predict consumer preferences and changes in fashion trends and consumer acceptance of both new designs and newly introduced products, the termination or non-renewal of any material license agreements to which we are a party, changes in the costs of raw materials, labor and advertising, our ability to carry out growth strategies including expansion in international and direct to consumer retail markets, the level of consumer spending for apparel and other merchandise, our ability to compete, exposure to foreign currency risk and interest rate risk, possible disruption in commercial activities due to terrorist activity and armed conflict, and other factors set forth in Perry Ellis International's filings with the Securities and Exchange Commission. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those risks and uncertainties detailed in Perry Ellis' filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise. -0- *T PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (amounts in 000's, except per share information) INCOME STATEMENT DATA: Three Months Ended Nine Months Ended October 31, October 31, -------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Revenues Net sales $207,794 $214,665 $581,747 $619,357 Royalty income 5,445 5,290 16,512 16,182 --------- --------- --------- --------- Total revenues 213,239 219,955 598,259 635,539 Cost of sales 140,781 149,595 401,506 438,414 --------- --------- --------- --------- Gross profit 72,458 70,360 196,753 197,125 Operating expenses Selling, general and administrative expenses 51,746 49,648 151,514 150,754 Depreciation and amortization 2,900 2,436 8,350 6,899 --------- --------- --------- --------- Total operating expenses 54,646 52,084 159,864 157,653 --------- --------- --------- --------- Operating income 17,812 18,276 36,889 39,472 Costs on early extinguishment of debt - - 2,963 - Interest expense 5,000 5,621 15,650 16,402 --------- --------- --------- --------- Income before minority interest and income taxes 12,812 12,655 18,276 23,070 Minority interest 92 59 236 427 Income tax provision 4,479 4,503 6,342 8,063 --------- --------- --------- --------- Net income $8,241 $8,093 $11,698 $14,580 ========= ========= ========= ========= Net income per share Basic $0.85 $0.85 $1.21 $1.53 ========= ========= ========= ========= Diluted $0.80 $0.80 $1.14 $1.45 ========= ========= ========= ========= Weighted average number of shares outstanding Basic 9,692 9,471 9,645 9,516 Diluted 10,360 10,090 10,218 10,039 *T -0- *T PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (amounts in 000's) BALANCE SHEET DATA: As of --------------------------------- October 31, 2006 January 31, 2006 ---------------- ---------------- Assets Current assets: Cash and cash equivalents $5,239 $9,412 Accounts receivable, net 140,774 152,529 Inventories, net 126,386 126,413 Other current assets 17,406 16,239 ---------------- ---------------- Total current assets 289,805 304,593 ---------------- ---------------- Property and equipment, net 70,353 66,592 Intangible assets, net 183,096 183,090 Other assets 11,868 15,739 ---------------- ---------------- Total assets $555,122 $570,014 ================ ================ Liabilities and stockholders' equity Current liabilities: Accounts payable $38,687 $51,763 Accrued expenses and other liabilities 20,883 16,441 Accrued interest 2,278 6,743 Unearned revenues 1,613 1,096 ---------------- ---------------- Total current liabilities 63,461 76,043 ---------------- ---------------- Long term liabilities: Senior subordinated notes payable 149,037 148,914 Senior secured notes payable - 56,923 Senior credit facility 65,126 40,391 Real estate mortgage 26,731 12,336 Deferred pension obligation 13,721 13,721 Lease payable long term 283 452 ---------------- ---------------- Total long term liabilities 254,898 272,737 ---------------- ---------------- Total liabilities 318,359 348,780 ---------------- ---------------- Minority interest 2,090 1,854 ---------------- ---------------- Stockholders' equity Preferred stock - - Common stock 98 96 Additional paid in capital 92,878 90,084 Retained earnings 140,677 128,979 Accumulated other comprehensive income 1,020 221 ---------------- ---------------- Total stockholders' equity 234,673 219,380 ---------------- ---------------- Total liabilities and stockholders' equity $555,122 $570,014 ================ ================ *T -0- *T PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA (1) (UNAUDITED) (amounts in 000's) Three Months Ended Nine Months Ended October 31, October 31, -------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Net income as reported $8,241 $8,093 $11,698 $14,580 Plus: Depreciation and amortization 2,900 2,436 8,350 6,899 Interest expense 5,000 5,621 15,650 16,402 Costs on early extinguishment of debt - - 2,963 - Minority interest 92 59 236 427 Income tax provision 4,479 4,503 6,342 8,063 --------- --------- --------- --------- EBITDA $20,712 $20,712 $45,239 $46,371 ========= ========= ========= ========= Total revenues $213,239 $219,955 $598,259 $635,539 EBITDA margin percentage of revenues 9.71% 9.42% 7.56% 7.30% (1) EBITDA consists of earnings before interest, costs on early extinguishment of debt, taxes, depreciation, amortization and minority interest. EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States of America, and does not represent cash flow from operations. EBITDA is presented solely as a supplemental disclosure because management believes that it is a common measure of operating performance in the apparel industry. *T -0- *T PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF DILUTED EARNINGS PER SHARE TO PROFORMA DILUTED EARNINGS PER SHARE (2) (UNAUDITED) Three Months Ended Nine Months Ended October 31, October 31, ------------------- ----------------- 2006 2005 2006 2005 -------- -------- -------- -------- Diluted earnings per share view $0.80 $0.80 $1.14 $1.45 Plus: Effect of debt extinguishment costs, net of tax effect $- $- $0.19 $- -------- -------- -------- -------- Proforma diluted earnings per share view $0.80 $0.80 $1.33 $1.45 ======== ======== ======== ======== (2) Proforma diluted earnings per share for the nine months ended October 31, 2006, consists of diluted earnings per share excluding the effect of approximately $3.0 million ($1.9 million, net of taxes) for debt extinguishment costs related to the call of our $57 million senior secured notes. Proforma diluted earnings per share is not a measurement of financial performance under generally accepted accounting principles. Accordingly, you should not regard this figure as an alternative to actual diluted earnings per share. Proforma diluted earnings per share is presented solely as a supplemental disclosure. Additionally, proforma diluted earnings per share and diluted earnings per share for the three and nine months ended October 2006 include expenses of $0.02 and $0.06 per share, respectively related to the adoption of SFAS 123R, which requires the expensing of stock options. Such expense was not recognized in the prior period as SFAS 123R was implemented on February 1, 2006. *T