Perry Ellis International Inc. (PERY, Financial) filed Quarterly Report for the period ended 2010-10-30.
Perry Ellis International Inc. has a market cap of $402.5 million; its shares were traded at around $28.52 with a P/E ratio of 15.2 and P/S ratio of 0.5. PERY is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Interest expense. Interest expense for the three months ended October 30, 2010 was $3.2 million, a decrease of $1.5 million, or 31.9%, from $4.7 million for the three months ended October 31, 2009. Interest expense for the nine months ended October 30, 2010 was $10.3 million, a decrease of $3.0 million, or 22.6%, from $13.3 million for the nine months ended October 31, 2009. The overall decrease in interest expense is primarily attributable to the lower average balance on our senior credit facility and senior subordinated notes payable as compared to the comparable prior year period.
We rely primarily upon cash flow from operations and borrowings under our senior credit facility, and to a lesser extent, on our letter of credit facilities to finance our operations, acquisitions and capital expenditures. We believe that as a result of our increased discipline in our working capital and cash flow management, our working capital requirements will increase slightly for the remainder of the year. As of October 30, 2010, our total working capital was $200.4 million as compared to $188.1 million as of January 30, 2010 and $195.5 million as of October 31, 2009. During the first quarter of fiscal 2010, an underutilized $30 million letter of credit facility was terminated. Traditionally, our letter of credit facilities were used for trade financing. We have shifted our inventory financing strategy from relying on letter of credit facilities to direct trade terms with our vendors, and as such, we did not need the excess capacity provided by this letter of credit facility. Additionally during the third quarter of fiscal 2011, a $3.6 million letter of credit facility was terminated in connection with the termination of our Canadian joint venture. We believe that our cash flows from operations and availability under our senior credit facility and remaining letter of credit facilities are sufficient to meet our working capital needs. We also believe that our real estate assets which have a net book value of $ 23.8 million at October 30, 2010, have a higher market value. These real estate assets may provide us with additional capital resources. Additional borrowings against these real estate assets, however would be subject to certain loan to value criteria established by lending institutions. Currently we have mortgage loans on these properties totaling $26.5 million.
Net cash provided by operating activities was $23.8 million for the nine months ended October 30, 2010, as compared to net cash provided by operating activities of $74.4 million for the nine months ended October 31, 2009. The decrease of $50.6 million in the level of cash provided by operating activities for the nine months ended October 30, 2010, as compared to the nine months ended October 31, 2009, is primarily attributable to an increase in inventory of $16.1 million as compared to a decrease of inventory of $42.8 million during the same period in fiscal 2010. In line with our expectations, we strategically purchased inventory to secure pricing and capacity which resulted in a 31% increase of inventory as compared to the third quarter of fiscal 2010. The increase was the result of our planning to accelerate receipt of goods in anticipation of possible price increases. Additionally there were increases in operating cash flows attributed to the decrease in accounts receivable of $21.9 million due to increased collection efforts and a decrease in prepaid income taxes of $6.3 million; offset by the reduction of accounts payable, accrued expenses and other liabilities in the amount of $10.4 million and the decrease of unearned revenues of $3.6 million. For
Net cash used in investing activities was $4.6 million for the nine months ended October 30, 2010, as compared to cash used in investing activities of $1.6 million for the nine months ended October 31, 2009. The net cash used during the first nine months of fiscal 2011 primarily reflects the purchase of property and equipment in the amount of $4.6 million, as compared to net cash used in the purchase of property and equipment in the amount of $2.3 million during the same period in fiscal 2010. Additionally, during fiscal 2010 we sold an intangible asset for a total sales price of $1.8 million, and we received proceeds in the amount of $0.7 million of which the balance was collected in the fourth quarter of fiscal 2011. We anticipate capital expenditures during fiscal 2011 of $6 million to $7 million in technology and systems, retail stores, and other expenditures.
Net cash used in financing activities for the nine months ended October 30, 2010, was $23.8 million, as compared to net cash used in financing activities for the nine months ended October 31, 2009 of $56.4 million. The net cash used during the first nine months of fiscal 2011 primarily reflects the repurchase of senior subordinated notes in the amount of $25.5 million, including redemption premiums and commissions of $0.5 million, the borrowings and payments on our senior credit facility of $403.4 million, the payment for the noncontrolling interest in our Canadian joint venture of $4.6 million and the payment of $11.3 million on our mortgages and capital leases, offset by proceeds from exercises of stock options of $2.4 million and a tax benefit from the exercise of stock options of $2.2 million and the proceeds from our new mortgage loan in the amount of $13.0 million. The net cash used during the first nine months of fiscal 2010 primarily reflects the net payments on our senior credit facility of $54.4 million, the payments of $0.7 million on our mortgages and capital leases, and the purchase of treasury stock of $1.8 million, offset by the proceeds received from the exercise of stock options of $0.3 million.
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Perry Ellis International Inc. has a market cap of $402.5 million; its shares were traded at around $28.52 with a P/E ratio of 15.2 and P/S ratio of 0.5. PERY is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Depreciation and amortization. Depreciation and amortization for the three months ended October 30, 2010 was $3.0 million, a decrease of $0.3 million, or 9.1%, from $3.3 million for the three months ended October 31, 2009. Depreciation and amortization for the nine months ended October 30, 2010, was $9.1 million, a decrease of $1.2 million, or 11.7%, from $10.3 million for the nine months ended October 31, 2009. The decrease in depreciation and amortization is attributed to the reduction in capital expenditures over the last two years and the closure of several retail locations.Interest expense. Interest expense for the three months ended October 30, 2010 was $3.2 million, a decrease of $1.5 million, or 31.9%, from $4.7 million for the three months ended October 31, 2009. Interest expense for the nine months ended October 30, 2010 was $10.3 million, a decrease of $3.0 million, or 22.6%, from $13.3 million for the nine months ended October 31, 2009. The overall decrease in interest expense is primarily attributable to the lower average balance on our senior credit facility and senior subordinated notes payable as compared to the comparable prior year period.
We rely primarily upon cash flow from operations and borrowings under our senior credit facility, and to a lesser extent, on our letter of credit facilities to finance our operations, acquisitions and capital expenditures. We believe that as a result of our increased discipline in our working capital and cash flow management, our working capital requirements will increase slightly for the remainder of the year. As of October 30, 2010, our total working capital was $200.4 million as compared to $188.1 million as of January 30, 2010 and $195.5 million as of October 31, 2009. During the first quarter of fiscal 2010, an underutilized $30 million letter of credit facility was terminated. Traditionally, our letter of credit facilities were used for trade financing. We have shifted our inventory financing strategy from relying on letter of credit facilities to direct trade terms with our vendors, and as such, we did not need the excess capacity provided by this letter of credit facility. Additionally during the third quarter of fiscal 2011, a $3.6 million letter of credit facility was terminated in connection with the termination of our Canadian joint venture. We believe that our cash flows from operations and availability under our senior credit facility and remaining letter of credit facilities are sufficient to meet our working capital needs. We also believe that our real estate assets which have a net book value of $ 23.8 million at October 30, 2010, have a higher market value. These real estate assets may provide us with additional capital resources. Additional borrowings against these real estate assets, however would be subject to certain loan to value criteria established by lending institutions. Currently we have mortgage loans on these properties totaling $26.5 million.
Net cash provided by operating activities was $23.8 million for the nine months ended October 30, 2010, as compared to net cash provided by operating activities of $74.4 million for the nine months ended October 31, 2009. The decrease of $50.6 million in the level of cash provided by operating activities for the nine months ended October 30, 2010, as compared to the nine months ended October 31, 2009, is primarily attributable to an increase in inventory of $16.1 million as compared to a decrease of inventory of $42.8 million during the same period in fiscal 2010. In line with our expectations, we strategically purchased inventory to secure pricing and capacity which resulted in a 31% increase of inventory as compared to the third quarter of fiscal 2010. The increase was the result of our planning to accelerate receipt of goods in anticipation of possible price increases. Additionally there were increases in operating cash flows attributed to the decrease in accounts receivable of $21.9 million due to increased collection efforts and a decrease in prepaid income taxes of $6.3 million; offset by the reduction of accounts payable, accrued expenses and other liabilities in the amount of $10.4 million and the decrease of unearned revenues of $3.6 million. For
Net cash used in investing activities was $4.6 million for the nine months ended October 30, 2010, as compared to cash used in investing activities of $1.6 million for the nine months ended October 31, 2009. The net cash used during the first nine months of fiscal 2011 primarily reflects the purchase of property and equipment in the amount of $4.6 million, as compared to net cash used in the purchase of property and equipment in the amount of $2.3 million during the same period in fiscal 2010. Additionally, during fiscal 2010 we sold an intangible asset for a total sales price of $1.8 million, and we received proceeds in the amount of $0.7 million of which the balance was collected in the fourth quarter of fiscal 2011. We anticipate capital expenditures during fiscal 2011 of $6 million to $7 million in technology and systems, retail stores, and other expenditures.
Net cash used in financing activities for the nine months ended October 30, 2010, was $23.8 million, as compared to net cash used in financing activities for the nine months ended October 31, 2009 of $56.4 million. The net cash used during the first nine months of fiscal 2011 primarily reflects the repurchase of senior subordinated notes in the amount of $25.5 million, including redemption premiums and commissions of $0.5 million, the borrowings and payments on our senior credit facility of $403.4 million, the payment for the noncontrolling interest in our Canadian joint venture of $4.6 million and the payment of $11.3 million on our mortgages and capital leases, offset by proceeds from exercises of stock options of $2.4 million and a tax benefit from the exercise of stock options of $2.2 million and the proceeds from our new mortgage loan in the amount of $13.0 million. The net cash used during the first nine months of fiscal 2010 primarily reflects the net payments on our senior credit facility of $54.4 million, the payments of $0.7 million on our mortgages and capital leases, and the purchase of treasury stock of $1.8 million, offset by the proceeds received from the exercise of stock options of $0.3 million.
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