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Perry Ellis International Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: September 7, 2011 01:08PM

Perry Ellis International Inc. (PERY) filed Quarterly Report for the period ended 2011-07-30. Perry Ellis International Inc. has a market cap of $329.5 million; its shares were traded at around $20.16 with a P/E ratio of 8.4 and P/S ratio of 0.4.



Highlight of Business Operations:

Depreciation and amortization. Depreciation and amortization for the three months ended July 30, 2011, was $3.4 million, an increase of $0.4 million, or 13.3%, from $3.0 million for the three months ended July 31, 2010. Depreciation and amortization for the six months ended July 30, 2011 was $6.6 million, an increase of $0.5 million, or 8.2%, from $6.1 million for the six months ended July 31, 2010. The increase is attributed to our capital expenditures, primarily in the direct to consumer area.

Costs on early extinguishment of debt. During the first quarter of fiscal 2012, we retired our 8 7/8% senior subordinated notes payable in the amount of $104.3 million with the proceeds of our new 7 7/8% senior subordinated notes due 2019. In connection with this retirement, we paid an additional $1.5 million in fees and premiums. Also, we wrote-off approximately $853,000 in unamortized discount and bond fees associated with the 8 7/8% senior subordinated notes. Additionally, we wrote off the remaining premium that was associated with the termination of the swap that occurred during fiscal 2011 in the amount of $1.1 million. The 8 7/8% senior subordinated notes were scheduled to mature on September 15, 2013. During fiscal 2011, we retired $25.0 million of our 8 7/8% senior subordinated notes payable. In connection with this retirement, we paid an additional $453,000 in fees and premiums. Additionally we wrote-off approximately $277,000 in unamortized discount and bond fees associated with the retired portion of the 8 7/8% senior subordinated notes.

Interest expense. Interest expense for the three months ended July 30, 2011 was $3.8 million, an increase of $0.4 million, or 11.8%, from $3.4 million for the three months ended July 31, 2010. The overall increase in interest expense is primarily attributable to the higher balance in our 7 7/8% senior subordinated notes and higher average balance on our senior credit facility, primarily due to the financing of the acquisition of Rafaella. Interest expense for the six months ended July 30, 2011, was $8.4 million, an increase of $1.3 million, or 18.3%, from $7.1 million for the six months ended July 31, 2010. In addition to the factors described above, the 8 7/8% senior subordinated notes and the 7 7/8% senior subordinated notes were outstanding simultaneously for about one month during the six months ended July 30, 2011, causing us to have approximately $0.7 million in redundant interest expense.

The cash provided by operating activities for the six months ended July 30, 2011 is primarily attributable to an increase in inventory of $32.8 million and an increase in other current assets and prepaid income taxes of $1.8 million; offset by a decrease in accounts receivable of $19.7 million, an increase in net income of $7.7 million and a decrease in accounts payable and accrued expenses of $1.5 million. As a result of this increase in inventory and the inventory acquired through the Rafaella acquisition in January 2011, our inventory turnover ratio decreased to 3.4 as of July 30, 2011, as compared to 4.6 as of July 31, 2010. The cash provided by operating activities for the six months ended July 31, 2010 is primarily attributable to a decrease of $54.2 million in accounts receivable due to our collection efforts and a decrease of other current assets and prepaid taxes of $1.0 million; offset by the reduction of accounts payable, accrued expenses and other liabilities in the amount of $21.6 million, an increase in inventory of $2.7 million and the decrease of unearned revenues and other liabilities of $1.9 million.

Net cash provided by investing activities was $4.6 million for the six months ended July 30, 2011, as compared to cash used in investing activities of $1.4 million for the six months ended July 31, 2010. The net cash provided during the first six months of fiscal 2012 primarily reflects the redemption of restricted cash collateralizing letters of credit in the amount of $8.9 million acquired in the Rafaella acquisition and the proceeds from the sale of certain foreign intangibles in the amount of $2.9 million; offset by the purchase of property and equipment in the amount of $5.8 million. The net cash used during the first six months of fiscal 2011 primarily reflects the purchase of property and equipment in the amount of $1.4 million. We anticipate capital expenditures during fiscal 2012 of $11.0 million to $13.0 million in technology, systems, retail stores, and other expenditures.

Net cash used in financing activities for the six months ended July 30, 2011, was $3.4 million, as compared to $19.1 million for the six months ended July 31, 2010. The net cash used during the first six months of fiscal 2012 primarily reflects net proceeds from the issuance of our new 7 7/8% senior subordinated notes in the amount of $146.5 million and net proceeds from our stock offering in the amount of $52.9 million; offset by net payments on our senior credit facility of $97.3 million and the retirement of our 8 7/8% senior subordinated notes in the amount of $105.8 million, including redemption premiums and commissions of $1.5 million. The net cash used during the first six months of fiscal 2011 primarily reflects proceeds from our mortgage loan of $13.0 million, exercises of stock options of $2.4 million and a tax benefit from the exercise of stock options of $2.2 million; offset by the repurchase of our senior notes of $25.5 million and payments of $10.9 million on our mortgage loans.

Read the The complete Report



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