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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): September 7, 2006
MOVADO GROUP, INC.
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(Exact name of registrant as specified in charter)
NEW YORK
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(State or other jurisdiction of incorporation)
1-16497 13-2595932
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(Commission File Number) (IRS Employer Identification Number)
650 FROM ROAD
PARAMUS, NEW JERSEY 07652
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 267-8000
NOT APPLICABLE
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On September 7, 2006, Movado Group, Inc. issued a press release announcing its
results for the second quarter ended July 31, 2006. The press release is
attached hereto as Exhibit 99.1 and is incorporated by reference into this
item. The information in this Current Report is being furnished and shall not
be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act
of 1934 or otherwise subject to the liabilities of that Section. The
information in this Current Report shall not be incorporated by reference into
any registration statement or other document pursuant to the Securities Act of
1933, except as shall be expressly set forth by specific reference in any such
filing.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
EXHIBIT NO. DESCRIPTION
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99.1 Press Release Announcing Second Quarter Results,
dated September 7, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report on Form 8-K to be signed on
its behalf by the undersigned, hereunto duly authorized.
Dated: September 7, 2006
MOVADO GROUP, INC.
By: /s/ Timothy F. Michno
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Name: Timothy F. Michno
Title: General Counsel
EXHIBIT 99.1
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[GRAPHIC OMITTED] Movado
[LOGO - MOVADO GROUP INC.] Ebel
Concord
ESQ SWISS
Coach Watches
Tommy Hilfiger Watches
Hugo Boss Watches
Juicy Couture Watches
CONTACT: Investor Relations
Suzanne Michalek
Vice President, Corporate Communications
201-267-8000
Financial Dynamics
Melissa Myron/Rachel Albert
212-850-5600
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FOR IMMEDIATE RELEASE
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MOVADO GROUP, INC. ANNOUNCES SECOND QUARTER RESULTS
~ GROSS MARGIN EXPANDS TO 62% ~
~ OPERATING PROFIT INCREASES 14.6% FROM LY~
PARAMUS, NJ - SEPTEMBER 7, 2006 -- MOVADO GROUP, INC. (NYSE: MOV),
today announced second quarter results for the period ended July 31, 2006.
SECOND QUARTER FISCAL 2007
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o Net sales increased 9.8% to $126.6 million from $115.3 million last year.
o Comparable store sales increased 9.3% at the Company's Movado boutiques
versus a 2.3% increase in the year-ago period.
o Gross margin improved 130 basis points to 62.0% compared to 60.7% last
year.
o Operating profit increased 14.6% to $14.1 million, or 11.1% of sales,
versus $12.3 million, or 10.7% of sales in the year-ago period.
o Net interest expense was $0.3 million versus $0.9 million last year:
o Interest expense for the quarter was the same as the year-ago period,
$0.9 million, with average borrowings in the quarter of $99.3 million
at an average borrowing rate of 3.7%.
o Interest income for the quarter was $0.6 million due to short term
investments of cash-on-hand resulting from the repatriation of foreign
earnings under the American Jobs Creation Act.
o Income tax expense of $2.4 million reflects a 17.5% tax rate in the second
quarter compared to income tax expense of $2.9 million, or a 25.0% tax
rate, recorded last year. The favorable tax rate benefited second quarter
diluted earnings per share by $0.04 and reflects the continued utilization
of a Swiss net operating loss carryforward (NOL) acquired with the Ebel
brand in fiscal 2005. The Company anticipates maintaining the 17.5% tax
rate for the balance of fiscal 2007.
o Net income increased to $11.3 million, or $0.43 per diluted share,
compared to net income of $8.6 million, or $0.33 per diluted share, in the
prior year period.
FIRST HALF FISCAL 2007
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o Net sales increased 10.5% to $224.3 million from $203.1 million last year.
o Comparable store sales increased 7.0% at the Company's Movado boutiques
versus a 2.7% comparable store sales gain in the year-ago period.
o Gross margin was 61.6% compared to 60.5% last year.
o Operating profit was $17.5 million versus $14.4 million in the year-ago
period.
o Net interest expense was $0.4 million versus $1.7 million last year:
o Interest expense for the first half of fiscal 2007 was $1.9 million
compared to $1.8 million in the year-ago period. Average borrowings
for the year-to-date period were $102.8 million at an average
borrowing rate of 3.6%.
o Interest income for the first half of fiscal 2007 was $1.5 million due
to short term investments of cash-on-hand resulting from the
repatriation of foreign earnings under the American Jobs Creation Act.
o Net income was $14.2 million, or $0.54 per diluted share, compared to net
income of $9.5 million, or $0.37 per diluted share, in the prior year
period.
Efraim Grinberg, President and Chief Executive Officer, commented, "We
are very pleased with our performance for the first half of this year. Our
strong results reflect the continued customer appeal of our diverse portfolio
of brands, including the growing prominence of Ebel around the world, the
introduction of our new Hugo Boss watch collection, and the very successful
launch and delivery of Series 800, a bold new sport collection from Movado.
Looking ahead to the fall season, we are excited about the multitude of
powerful marketing programs we have in place to support each of our brands."
Rick Cote, Executive Vice President and Chief Operating Officer,
stated, "Improving our financial returns - namely operating margin - remains a
top priority for our company. We are encouraged by the continued momentum we
experienced in the second quarter with solid expansion achieved in both our
gross margin and operating margin results."
Movado Group continues to project fiscal 2007 diluted earnings per
share to range between $1.53 and $1.58. This guidance includes an approximate
$0.08 per diluted share expense associated with the adoption of FASB 123R and
the shift in the composition of the Company's equity-based compensation plan
from options toward restricted stock.
The Company's management will host a conference call today, September
7, 2006 at 10:00 a.m. Eastern Time to discuss its second quarter financial
results. A live broadcast of the call will be available on the Company's
website: www.movadogroup.com. This call will be archived online within one hour
of the completion of the conference call.
Movado Group, Inc. designs, manufactures, and distributes Movado, Ebel,
Concord, ESQ, Coach, Tommy Hilfiger and HUGO BOSS watches worldwide, and
operates Movado boutiques and company stores in the United States. The Company
plans to launch Juicy Couture watches in the fall of 2006 and LACOSTE watches
in the spring of 2007.
THIS PRESS RELEASE CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THE COMPANY
HAS TRIED, WHENEVER POSSIBLE, TO IDENTIFY THESE FORWARD-LOOKING STATEMENTS
USING WORDS SUCH AS "EXPECTS," "ANTICIPATES," "BELIEVES," "TARGETS," "GOALS,"
"PROJECTS," "INTENDS," "PLANS," "SEEKS," "ESTIMATES," "MAY," "WILL," "SHOULD"
AND SIMILAR EXPRESSIONS. SIMILARLY, STATEMENTS IN THIS PRESS RELEASE THAT
DESCRIBE THE COMPANY'S BUSINESS STRATEGY, OUTLOOK, OBJECTIVES, PLANS,
INTENTIONS OR GOALS ARE ALSO FORWARD-LOOKING STATEMENTS. ACCORDINGLY, SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS AND LEVELS OF FUTURE DIVIDENDS TO DIFFER MATERIALLY FROM THOSE
EXPRESSED IN, OR IMPLIED BY, THESE STATEMENTS. THESE RISKS AND UNCERTAINTIES
MAY INCLUDE, BUT ARE NOT LIMITED TO: THE COMPANY'S ABILITY TO SUCCESSFULLY
INTRODUCE AND SELL NEW PRODUCTS, THE COMPANY'S ABILITY TO SUCCESSFULLY
INTEGRATE THE OPERATIONS OF NEWLY ACQUIRED AND/OR LICENSED BRANDS WITHOUT
DISRUPTION TO ITS OTHER BUSINESS ACTIVITIES, CHANGES IN CONSUMER DEMAND FOR THE
COMPANY'S PRODUCTS, RISKS RELATING TO THE FASHION AND RETAIL INDUSTRY, IMPORT
RESTRICTIONS, COMPETITION, SEASONALITY, COMMODITY PRICE AND EXCHANGE RATE
FLUCTUATIONS, CHANGES IN LOCAL OR GLOBAL ECONOMIC CONDITIONS, AND THE OTHER
FACTORS DISCUSSED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K AND OTHER FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE STATEMENTS REFLECT THE
COMPANY'S CURRENT BELIEFS AND ARE BASED UPON INFORMATION CURRENTLY AVAILABLE TO
IT. BE ADVISED THAT DEVELOPMENTS SUBSEQUENT TO THIS PRESS RELEASE ARE LIKELY TO
CAUSE THESE STATEMENTS TO BECOME OUTDATED WITH THE PASSAGE OF TIME.
(Tables to follow)
MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
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THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31,
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2006 2005 2006 2005
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Net sales $ 126,588 $ 115,326 $ 224,332 $ 203,082
Cost of sales 48,076 45,340 86,230 80,258
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Gross profit 78,512 69,986 138,102 122,824
Selling, general and administrative expenses 64,438 57,701 120,594 108,400
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Operating profit 14,074 12,285 17,508 14,424
Interest expense (919) (926) (1,862) (1,804)
Interest income 616 42 1,507 111
Minority interest (15) -- 64 --
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Income before income taxes 13,756 11,401 17,217 12,731
Income tax 2,407 2,850 3,013 3,183
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Net income $ 11,349 $ 8,551 $ 14,204 $ 9,548
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Net income per diluted share $ 0.43 $ 0.33 $ 0.54 $ 0.37
Shares used in per share computation 26,584 26,126 26,506 26,074
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MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
JULY 31, JANUARY 31, JULY 31,
2006 2006 2005
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ASSETS
Cash and cash equivalents $ 78,126 $123,625 $ 50,323
Trade receivables, net 128,416 109,852 108,775
Inventories 215,461 198,582 203,047
Other 34,712 26,596 33,392
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Total current assets 456,715 458,655 395,537
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Property, plant and equipment, net 51,931 52,168 52,687
Other assets 40,464 39,069 38,519
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$549,110 $549,892 $486,743
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LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable to banks $ 0 $ 0 $ 37,500
Current portion of long-term debt 5,000 5,000 --
Accounts payable 40,266 35,529 35,283
Accrued liabilities 31,990 43,065 41,129
Deferred and current taxes payable 2,550 8,227 4,756
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Total current liabilities 79,806 91,821 118,668
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Long-term debt 91,978 104,955 45,000
Deferred and non-current income taxes 13,278 11,947 9,031
Other liabilities 20,112 19,491 17,363
Minority interest 245 -- --
Shareholders' equity 343,691 321,678 296,681
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$549,110 $549,892 $486,743
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