Perry Ellis International Inc. (PERY, Financial) filed Quarterly Report for the period ended 2009-08-01.
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 Cubavera Munsingwear Savane Original Penguin Grand Slam Natural Issue Pro Player the Havanera Co. Axis Tricots St. Raphael Gotcha Girl Star and MCD. The company enhances its roster of brands by licensing trademarks from third parties including Dockers for outerwear Nike and JAG for swimwear and PING and PGA TOUR for golf apparel. Perry Ellis International Inc. has a market cap of $194.7 million; its shares were traded at around $12.54 with a P/E ratio of 418 and P/S ratio of 0.2. Perry Ellis International Inc. had an annual average earning growth of 11.9% over the past 10 years. GuruFocus rated Perry Ellis International Inc. the business predictability rank of 3.5-star.
Depreciation and amortization. Depreciation and amortization for the three months ended August 1, 2009 was $3.4 million, a decrease of $0.3 million, or 8.1%, from $3.7 million for the three months ended July 31, 2008. Depreciation and amortization for the six months ended August 1, 2009, was $7.0 million, a decrease of $0.3 million, or 4.1%, from $7.3 million for the six months ended July 31, 2008. Depreciation and amortization decreased slightly as compared to the prior year, with the slight decrease attributed to the write off of the long lived assets in the amount of $1.6 million, during the fourth quarter of fiscal 2009.
Interest expense. Interest expense for the three months ended August 1, 2009, was $4.0 million, a decrease of $0.3 million, or 7.0%, from $4.3 million for the three months ended July 31, 2008. Interest expense for the six months ended August 1, 2009, was $8.6 million, a decrease of $0.2 million, or 2.3%, from $8.8 million for the six months ended July 31, 2008. The overall decrease in interest expense is primarily attributable to a lower average balance on our senior credit facility as compared to the prior year. We began the first fiscal quarter of 2010 with $54.4 million in borrowings on the senior credit facility and ended the second quarter with no outstanding borrowings as compared to $22.3 million as of July 31, 2008.
Net cash provided by operating activities was $78.5 million for the six months ended August 1, 2009, as compared to net cash provided by operating activities of $16.4 million for the six months ended July 31, 2008. The increase of $62.1 million in the level of cash provided by operating activities for the six months ended August 1, 2009, as compared to the six months ended July 31, 2008, is primarily attributable to a decrease in accounts receivable of $43.2 million due to lower sales and our collection efforts, a decrease in inventory of $37.1 million due to improved inventory planning and a decrease of prepaid taxes of $2.8 million; offset by the reduction of accounts payable, accrued expenses and other liabilities in the amount of $14.8 million and the decrease of unearned revenues and other liabilities of $4.0 million. For the six months ended July 31, 2008, cash provided by operating activities was primarily attributable to a decrease in accounts receivable of $22.9 million due to our collection efforts, and a decrease in inventory of $10.2 million due to improved inventory planning; offset by the reduction of accounts payable, accrued expenses and other liabilities in the amount of $19.2 million and the increase of prepaid taxes of $9.6 million.
Net cash used in investing activities was $1.6 million for the six months ended August 1, 2009, as compared to net cash used in investing activities of $38.7 million for the six months ended July 31, 2008. The net cash used during the first half of Fiscal 2010 primarily reflects the purchase of property and equipment in the amount of $1.6 million, as compared to net cash used during the first half of Fiscal 2009 for the purchase of property and equipment in the amount of $4.7 million and the acquisition of the C&C California and Laundry by Shelli Segal brands and inventory for $33.6 million. Additionally we entered into a capital lease for the acquisition of certain equipment in the amount of $0.9 million which was categorized as a non-cash financing activity. We anticipate capital expenditures during fiscal 2010 of $6 million to $7 million in technology and systems, retail stores, and other expenditures.
In October 2008, we amended our senior credit facility. In connection with the amendment, we paid approximately $338,000 in financing fees. These fees will be amortized over the term of our senior credit facility. The following is a description of the terms of our senior credit facility with Wachovia Bank, National Association, et al, as amended, and does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the senior credit facility: (i) the line is up to $125 million with the opportunity to increase this amount in $25 million increments up to $200 million; (ii) the inventory borrowing limit is $75 million; (iii) the sublimit for letters of credit is up to $40 million; (iv) the amount of letter of credit facilities allowed outside of the facility is $110 million and (v) the outstanding balance is due at the maturity date of February 1, 2012. At August 1, 2009, we did not have any borrowings under the senior credit facility.
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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 Cubavera Munsingwear Savane Original Penguin Grand Slam Natural Issue Pro Player the Havanera Co. Axis Tricots St. Raphael Gotcha Girl Star and MCD. The company enhances its roster of brands by licensing trademarks from third parties including Dockers for outerwear Nike and JAG for swimwear and PING and PGA TOUR for golf apparel. Perry Ellis International Inc. has a market cap of $194.7 million; its shares were traded at around $12.54 with a P/E ratio of 418 and P/S ratio of 0.2. Perry Ellis International Inc. had an annual average earning growth of 11.9% over the past 10 years. GuruFocus rated Perry Ellis International Inc. the business predictability rank of 3.5-star.
Highlight of Business Operations:
Net sales. Net sales for the three months ended August 1, 2009 were $153.0 million, a decrease of $34.4 million, or 18.4%, from $187.4 million for the three months ended July 31, 2008. This decrease was primarily driven by the weakness at the department store channel for swimwear product, affected by unusually cold weather, and for the Perry Ellis brand which accounted for $11 million. A reduction of $3 million resulted from the transition of the Perry Ellis dress shirts business to a licensed product and the exiting of Dockers Outwear and numerous specialty store programs. In addition, the door count reduction for the Perry Ellis Collection at the department store distribution channel, accounting for a $3.5 million reduction. The reduction due to the anticipated deceleration of PING golf business. Also, several of our previous customers, including Mervyns and Goodys, which accounted for sales of approximately $5.0 million during the second quarter of fiscal 2009, subsequently filed for bankruptcy and liquidated as a result. Further adding to the decrease was our planned reduction of $7.0 million in our private label and replenishment business. These decreases were partially offset by organic growth of several of our platforms golf lifestyle, Merona swim program, and our Hispanic brands.Depreciation and amortization. Depreciation and amortization for the three months ended August 1, 2009 was $3.4 million, a decrease of $0.3 million, or 8.1%, from $3.7 million for the three months ended July 31, 2008. Depreciation and amortization for the six months ended August 1, 2009, was $7.0 million, a decrease of $0.3 million, or 4.1%, from $7.3 million for the six months ended July 31, 2008. Depreciation and amortization decreased slightly as compared to the prior year, with the slight decrease attributed to the write off of the long lived assets in the amount of $1.6 million, during the fourth quarter of fiscal 2009.
Interest expense. Interest expense for the three months ended August 1, 2009, was $4.0 million, a decrease of $0.3 million, or 7.0%, from $4.3 million for the three months ended July 31, 2008. Interest expense for the six months ended August 1, 2009, was $8.6 million, a decrease of $0.2 million, or 2.3%, from $8.8 million for the six months ended July 31, 2008. The overall decrease in interest expense is primarily attributable to a lower average balance on our senior credit facility as compared to the prior year. We began the first fiscal quarter of 2010 with $54.4 million in borrowings on the senior credit facility and ended the second quarter with no outstanding borrowings as compared to $22.3 million as of July 31, 2008.
Net cash provided by operating activities was $78.5 million for the six months ended August 1, 2009, as compared to net cash provided by operating activities of $16.4 million for the six months ended July 31, 2008. The increase of $62.1 million in the level of cash provided by operating activities for the six months ended August 1, 2009, as compared to the six months ended July 31, 2008, is primarily attributable to a decrease in accounts receivable of $43.2 million due to lower sales and our collection efforts, a decrease in inventory of $37.1 million due to improved inventory planning and a decrease of prepaid taxes of $2.8 million; offset by the reduction of accounts payable, accrued expenses and other liabilities in the amount of $14.8 million and the decrease of unearned revenues and other liabilities of $4.0 million. For the six months ended July 31, 2008, cash provided by operating activities was primarily attributable to a decrease in accounts receivable of $22.9 million due to our collection efforts, and a decrease in inventory of $10.2 million due to improved inventory planning; offset by the reduction of accounts payable, accrued expenses and other liabilities in the amount of $19.2 million and the increase of prepaid taxes of $9.6 million.
Net cash used in investing activities was $1.6 million for the six months ended August 1, 2009, as compared to net cash used in investing activities of $38.7 million for the six months ended July 31, 2008. The net cash used during the first half of Fiscal 2010 primarily reflects the purchase of property and equipment in the amount of $1.6 million, as compared to net cash used during the first half of Fiscal 2009 for the purchase of property and equipment in the amount of $4.7 million and the acquisition of the C&C California and Laundry by Shelli Segal brands and inventory for $33.6 million. Additionally we entered into a capital lease for the acquisition of certain equipment in the amount of $0.9 million which was categorized as a non-cash financing activity. We anticipate capital expenditures during fiscal 2010 of $6 million to $7 million in technology and systems, retail stores, and other expenditures.
In October 2008, we amended our senior credit facility. In connection with the amendment, we paid approximately $338,000 in financing fees. These fees will be amortized over the term of our senior credit facility. The following is a description of the terms of our senior credit facility with Wachovia Bank, National Association, et al, as amended, and does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the senior credit facility: (i) the line is up to $125 million with the opportunity to increase this amount in $25 million increments up to $200 million; (ii) the inventory borrowing limit is $75 million; (iii) the sublimit for letters of credit is up to $40 million; (iv) the amount of letter of credit facilities allowed outside of the facility is $110 million and (v) the outstanding balance is due at the maturity date of February 1, 2012. At August 1, 2009, we did not have any borrowings under the senior credit facility.
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