Perry Ellis International, Inc. (“Perry Ellis”) (NASDAQ:PERY)
today announced that it has entered into a definitive agreement to
acquire substantially all of the assets of Rafaella Apparel Group,
Inc. (“Rafaella”), an entity controlled by affiliates of Cerberus
Capital Management, L.P., for an aggregate purchase price of $70
million plus warrants to purchase 106,564 shares of common stock,
subject to net working capital adjustments to the final closing
balances.
Rafaella is a leading designer, sourcer, marketer and
distributor of a full line of women’s better sportswear, and
recognized throughout the women’s apparel industry and by consumers
for its superior fitting pants. Distributed across the department
store channel, Rafaella recognized revenues of approximately $122
million and adjusted EBITDA of $12.4 million for the trailing
twelve month period ended September 30, 2010. A table showing the
reconciliation of adjusted EBITDA to net income is attached.
“With the addition of the Rafaella Apparel platform, Perry Ellis
will immediately become a more significant player in the women’s
apparel industry. We are extremely impressed with the management
team which brings extensive industry experience in design,
sourcing, and customer sales relationships. This acquisition will
provide additional diversification within our business model to
enable us to deliver more value to our stakeholders,” commented
George Feldenkreis, Chairman and Chief Executive Officer.
Perry Ellis will finance the transaction through its senior
credit facility and cash on hand. Subject to closing, the
acquisition is expected to add approximately $.40 to earnings per
share for next fiscal year. The Company expects to close the
transaction, subject to satisfaction of customary closing
conditions, on or before January 28, 2011.
“We are extremely pleased to welcome the Rafaella team to Perry
Ellis. We believe this addition to our core businesses will provide
excellent cross-selling opportunities across our portfolio of
brands and provides a larger foundation to support our current
women’s brands Laundry by Shelli Segal and C&C California,”
commented Oscar Feldenkreis, President and Chief Operating
Officer.
Christa Michalaros, Chief Executive Officer of Rafaella Apparel
Group, commented, “We are delighted to become part of the Perry
Ellis family of brands. The ability to leverage Perry Ellis’
operational expertise, financial strength, and proven success
developing full lifestyle brands, will enable us to continue
strengthening our position in the women’s apparel market. It also
will allow us to deliver enhanced opportunities for our business
partners, customers, and employees.”
Financo, Inc. is acting as lead financial advisor to Rafaella
Apparel Group, Inc. in connection with the acquisition.
The Company will host a conference call to discuss the
acquisition on Friday, January 7, 2011, at 11:00 AM EST, which will
be hosted by George Feldenkreis, Chairman and Chief Executive
Officer, Oscar Feldenkreis, President and Chief Operating Officer,
and Anita Britt, Chief Financial Officer. To access the broadcast
live, please visit the investor relations section of the Company’s
website at http://www.pery.com. A replay of the broadcast will be
available for 10 days following the call and can be accessed by
dialing 1-888-203-1112, passcode 9665504.
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®, Jantzen®, Laundry by
Shelli Segal®, C&C California®, Cubavera®, Centro®, Solero®,
Munsingwear®, Savane®, Original Penguin® by Munsingwear®, Grand
Slam®, Natural Issue®, Pro Player®, the Havanera Co.®, Axis®,
Tricots St. Raphael®, Gotcha®, Girl Star®, MCD® John Henry®, Mondo
di Marco®, Redsand®, Manhattan®, Axist® and Farah®. The Company
enhances its roster of brands by licensing trademarks from third
parties including Pierre Cardin® for men’s sportswear, Nike® and
Jag® for swimwear, and Callaway®, TOP-FLITE®, PGA TOUR® and
Champions Tour® 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, trade names 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.
RECONCILIATION OF NET INCOME TO EBITDA(1)
(UNAUDITED) (amounts in 000's)
Twelve Months Ended September 30, 2010
Net income $ 118 Plus: Depreciation and amortization 4,419 Interest
expense 10,264 Income tax provision 3,082 EBITDA
17,883 Gain on senior secured note purchases (5,493 )
EBITDA as adjusted $ 12,390 1 EBITDA
consists of earnings before interest, taxes, depreciation, and
amortization. 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. "EBITDA as
adjusted" consists of EBITDA adjusted for the gain on the
repurchase of senior secured notes. These are not indicative of
their ongoing operations and thus to get a more comparable result
with the operating performance of the apparel industry, they have
been removed from the calculation.
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