Perry Ellis International, Inc. (NASDAQ:PERY): Record Level Fourth
Quarter Revenues - Increase 8.3% Fourth Quarter Earnings per Fully
Diluted Share - Increase 26% Fiscal 2007 EBITDA Margin Improvement
to 8.5% of Revenues Confirms Fiscal 2008 Guidance, a 14-16%
Increase in Earnings per Fully Diluted Share Perry Ellis
International, Inc. (NASDAQ:PERY) today reported results for the
fourth quarter (�fourth quarter of fiscal 2007�) and fiscal year
ended January 31, 2007 (�fiscal 2007�). Fourth quarter of fiscal
2007 total revenues grew to a record level of $231.6 million, an
8.3% increase compared to $213.9 million reported in the fourth
quarter of the fiscal year ended January 31, 2006 (�fourth quarter
of fiscal 2006�). Fourth quarter of fiscal 2007 revenue increases
were balanced across a number of the company�s business units
including Perry Ellis, swimwear/action sports, direct retail and
international. Fourth quarter of fiscal 2007 EBITDA grew to $25.7
million, a $4.8 million or 23% increase over the same period last
year. A table showing the reconciliation of EBITDA to net income is
attached. Net income was $10.7 million, a 32% increase compared to
$8.1 million reported in the fourth quarter of fiscal 2006, and
fourth quarter of fiscal 2007 earnings per share were $0.68 per
fully diluted share, a 26% increase from $0.54 per fully diluted
share reported in the fourth quarter of fiscal 2006. Overall fourth
quarter of fiscal 2007 results were in line with management�s
expectations and included a 356 basis point improvement in gross
profit margin and a 131 basis point improvement in EBITDA margin to
11.1% of revenues compared to fourth quarter of fiscal 2006. Gross
profit and EBITDA margin improvements were driven by increased
revenues in higher margin businesses such as swimwear, direct
retail, Perry Ellis and international, as well as the strong retail
sell through performance of the company�s men�s wholesale
divisions. George Feldenkreis, chairman and chief executive
officer, commented, "We are very proud of our numerous fourth
quarter accomplishments, with record revenues, EBITDA, earnings and
the purchase and successful re-licensing of Perry Ellis fragrance
operations. During the quarter, we also declared and paid a 3-for-2
stock dividend - a strong indication of our confidence in our
future growth potential. During fiscal 2007 we have exhibited
significant gross profit margin expansion as a result of improved
production planning, sourcing and, most importantly, our products�
continued exceptional performance at retail. This led to strong
cash flow generation which enabled us to reduce overall debt levels
by over $21 million and lower our overall cost of capital with the
retirement of high cost $57 million senior secured notes. We are
excited about our position in the market today and look forward to
strong results in fiscal 2008." Fiscal 2007 total revenues were
$829.8 million, a 2.3% decline compared to $849.4 million reported
in the year ended January 31, 2006 (�fiscal 2006�), reflecting the
impact of retail consolidation and elimination of certain private
label sportswear programs during the first half of the year. Fiscal
2007 EBITDA grew to a record $70.9 million, a $3.6 million or 5.4%
increase over fiscal 2006 levels, and EBITDA margins improved 63
basis points to 8.5% of revenues. Fiscal 2007 earnings were $22.4
million or $1.45 per fully diluted share compared to $22.7 million
or $1.51 per fully diluted share in fiscal 2006. On a proforma
basis, which the company believes provides a more meaningful
comparison of financial performance, fiscal 2007 earnings were
$1.58 per fully diluted share compared to $1.51 per fully diluted
share last year, a 4.6% increase. Proforma results exclude the
impact of $3.0 million in debt extinguishment costs ($0.13 per
fully diluted share) incurred as a result of the March 2006
repayment of the company's $57 million senior secured notes. A
table showing the reconciliation of actual to proforma results is
attached. Additionally, both proforma and reported results include
expenses of approximately $0.05 per share related to the adoption
of SFAS 123R, requiring the expensing of stock-related
compensation. These costs are not reflected in fiscal 2006 results.
Oscar Feldenkreis, president and chief operating officer, remarked,
"More than ever, this year was a testament to the power of our
brands. The sell throughs of Perry Ellis, the best performing
neo-traditional men�s collection at department stores, helped us
increase door penetration and floor space; our golf performance
products for Grand Slam, PING and PGA TOUR are doing extremely well
across all distribution channels; Original Penguin continues its
wholesale expansion with concepts such as Black Label; Cubavera is
increasingly reaching new demographics beyond Hispanics; and our
re-launched Jantzen and recently-added JAG brand are performing
extraordinarily well in the department store channel during the
current swim season.� Oscar Feldenkreis concluded: "We believe the
feedback from the MAGIC show in February and our results in fiscal
2007, especially our fourth quarter, put us on track for a record
year in fiscal 2008. We expect strong growth coming from our Perry
Ellis brand, golf and Hispanic lifestyles, swimwear/action sports,
international and direct retail operations. We remain poised to
continue leveraging the sourcing and planning platforms we have
built to deliver efficiencies across all of our businesses. For
fiscal 2008, we anticipate revenue growth in the 8-10% range to
$900 - $910 million and earnings to increase in the range of 14% -
16% for $1.81 - $1.84 per fully diluted share.� 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 EndedJanuary 31, Year EndedJanuary 31,
2007� 2006� 2007� 2006� � Revenues Net sales $ 225,869� $ 208,147�
$ 807,616� $ 827,504� Royalty income 5,714� 5,728� 22,226� 21,910�
Total revenues 231,583� 213,875� 829,842� 849,414� Cost of sales
152,540� 148,486� 554,046� 586,900� Gross profit 79,043� 65,389�
275,796� 262,514� Operating expenses Selling, general and
administrative expenses 53,369� 44,482� 204,883� 195,236�
Depreciation and amortization 3,258� 2,658� 11,608� 9,557� Total
operating expenses 56,627� 47,140� 216,491� 204,793� Operating
income 22,416� 18,249� 59,305� 57,721� Costs on early
extinguishment of debt -� -� 2,963� -� Interest expense 5,464�
5,528� 21,114� 21,930� � Income before minority interest and income
taxes 16,952� 12,721� 35,228� 35,791� Minority interest 272� 43�
508� 470� Income tax provision 5,969� 4,576� 12,311� 12,639� Net
income $ 10,711� $ 8,102� $ 22,409� $ 22,682� � Net income per
share Basic $ 0.73� $ 0.56� $ 1.55� $ 1.59� Diluted $ 0.68� $ 0.54�
$ 1.45� $ 1.51� � Weighted average number of shares outstanding(a)
Basic 14,610� 14,379� 14,504� 14,301� Diluted 15,824� 15,021�
15,455� 15,050� � (a) On November 21, 2006, the Company announced 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 press
release have been restated to include the impact of the stock
dividend. PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES SELECTED
FINANCIAL DATA (UNAUDITED) (amounts in 000's) � BALANCE SHEET DATA:
As of January 31, 2007 January 31, 2006 � Assets Current assets:
Cash and cash equivalents $ 4,514� $ 9,412� Accounts receivable,
net 157,420� 152,529� Inventories, net 139,690� 126,413� Other
current assets 12,972� 16,239� Total current assets 314,596�
304,593� � Property and equipment, net 71,989� 66,592� Intangible
assets, net 192,656� 183,090� Other assets 13,965� 15,739� � Total
assets $ 593,206� $ 570,014� � Liabilities and stockholders' equity
Current liabilities: Accounts payable $ 44,295� $ 51,763� Accrued
expenses and other liabilities 31,605� 16,441� Accrued interest
5,822� 6,743� Unearned revenues 2,883� 1,096� Total current
liabilities 84,605� 76,043� � � Long term liabilities: Senior
subordinated notes payable 149,079� 148,914� Senior secured notes
payable -� 56,923� Senior credit facility 61,347� 40,391� Real
estate mortgage 26,604� 12,336� Deferred pension obligation 13,721�
13,721� Other liabilities 8,854� 452� Total long term liabilities
259,605� 272,737� � Total liabilities 344,210� 348,780� � Minority
interest 2,362� 1,854� � Stockholders' equity � Preferred stock -�
-� Common stock 146� 144� Additional paid in capital 94,252�
90,036� Retained earnings 151,388� 128,979� Accumulated other
comprehensive income 848� 221� Total stockholders' equity 246,634�
219,380� � Total liabilities and stockholders' equity $ 593,206� $
570,014� � PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME AND�GROSS�PROFIT TO EBITDA(1)
(UNAUDITED) (amounts in 000's) � Three Months EndedJanuary 31, Year
EndedJanuary 31, 2007� 2006� 2007� 2006� � � Net income as reported
$ 10,711� $ 8,102� $ 22,409� $ 22,682� Plus: Depreciation and
amortization 3,258� 2,658� 11,608� 9,557� Interest expense 5,464�
5,528� 21,114� 21,930� Costs on early extinguishment of debt -� -�
2,963� -� Minority interest 272� 43� 508� 470� Income tax provision
5,969� 4,576� 12,311� 12,639� EBITDA $ 25,674� $ 20,907� $ 70,913�
$ 67,278� � � Gross profit $ 79,043� $ 65,389� $ 275,796� $
262,514� Less: Selling, general and administrative expenses
(53,369) (44,482) (204,883) (195,236) EBITDA $ 25,674� $ 20,907� $
70,913� $ 67,278� � � Total revenues $ 231,583� $ 213,875� $
829,842� $ 849,414� � EBITDA margin percentage of revenues 11.1%
9.8% 8.5% 7.9% � (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 EndedJanuary 31, Year EndedJanuary
31, 2006� 2005� 2006� 2005� � Diluted earnings per share view $
0.68� $ 0.54� $ 1.45� $ 1.51� Plus: Effect of debt extinguishment
costs, net of tax effect $ -� $ -� $ 0.13� $ -� Proforma diluted
earnings per share view $ 0.68� $ 0.54� $ 1.58� $ 1.51� � (2)
Proforma diluted earnings per share for the year ended January 31,
2007, 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 accounting principles
generally accepted in the United States of America. 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, because management
believes it is useful to compare the Company's current results to
the prior year results without the one-time charge incurred during
Fiscal 2007. � Additionally, proforma diluted earnings per share
and diluted earnings per share for the three and twelve months
ended January 31, 2007 include expenses of $0.01 and $0.05 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.
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