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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): DECEMBER 12, 2005
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 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
BANK OF AMERICA LINE OF CREDIT AGREEMENT AND AMENDED AND RESTATED
PROMISSORY NOTE.
On December 12, 2005, Movado Group, Inc. (the "Company") executed a
line of credit letter agreement with Bank of America ("B of A") and an amended
and restated promissory note in the principal amount of up to $20,000,000
payable to B of A.
Pursuant to the line of credit letter agreement, B of A will
consider requests for short-term loans and documentary letters of credit for the
importation of merchandise inventory, the aggregate amount of which at any time
outstanding shall not exceed $20,000,000. The Company's obligations under the
agreement are guaranteed by its subsidiaries, Movado Retail Group, Inc. and
Movado LLC.
Pursuant to the amended and restated promissory note, the Company
promised to pay to B of A $20,000,000, or such lesser amount as may then be the
unpaid balance of all loans made by B of A to the Company thereunder, in
immediately available funds upon the maturity date of June 16, 2006. The Company
has the right to prepay all or part of any outstanding amounts under the
promissory note without penalty at any time prior to the maturity date. The
amended and restated promissory note bears interest at an annual rate equal to
either (i) a floating rate equal to the prime rate or (ii) such fixed rate as
may be agreed upon by the Company and B of A for an interest period which is
also then agreed upon. The amended and restated promissory note contains various
representations and warranties and events of default that are customary for
instruments of that type.
The line of credit letter agreement supersedes the line of credit
letter agreement from B of A to the Company dated June 19, 2005, as amended, and
the amended and restated promissory note supersedes the amended and restated
promissory note dated June 19, 2005.
JP MORGAN CHASE PROMISSORY NOTE.
On December 13, 2005, the Company executed a promissory note in the
principal amount of up to $37,000,000 payable to JPMorgan Chase Bank, N.A.
("Chase")
Pursuant to the promissory note, the Company promised to pay to
Chase $37,000,000, or such lesser amount as may then be the unpaid balance of
each loan made or letter of credit issued by Chase to the Company thereunder,
upon the maturity date of July 31, 2006; provided that during the period between
January 31, 2006 and the maturity date, the maximum principal amount of all
loans made by Chase to the Company, and outstanding under the promissory note,
shall not exceed $2,000,000. The Company has the right to prepay all or part of
any outstanding amounts under the promissory note without penalty at any time
prior to the maturity date. The promissory note bears interest at an annual rate
equal to either (i) a floating rate equal to the prime rate, (ii) a fixed rate
2
equal to an adjusted London Interbank Offered Rate plus 0.625% or (iii) a fixed
rate equal to a rate of interest offered by Chase from time to time on any
single commercial borrowing. The promissory note contains various events of
default that are customary for instruments of that type. In addition, it is an
event of default for any security interest or other encumbrance to be created or
imposed on the Company's property, other than as permitted in the lien covenant
of the Credit Agreement, dated as of December 15, 2005, among the Company, the
lenders signatory thereto and Chase, as administrative agent, a copy of which
will be filed by the Company as an exhibit to its next periodic report or
registration statement under the Securities Act. Interested parties should read
those agreements in their entirety.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
See the discussion under Item 1.01 above, which discussion is
incorporated by reference herein.
ITEM 8.01. OTHER EVENTS.
On December 15, 2005, the Company issued a press release which is
attached hereto as Exhibit 99.1 and is incorporated by reference into this item.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press release of Movado Group, Inc. dated
December 15, 2005.
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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: December 16, 2005
MOVADO GROUP, INC.
By: /s/ Timothy Michno
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Name: Timothy Michno
Title: General Counsel
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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99.1 Press release of Movado Group, Inc. dated December 15, 2005.
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
APPROVED BY: Rick Cote
Executive Vice President and
Chief Operating Officer
201-267-8000
CONTACT: Investor Relations
Suzanne Michalek
Director of Corporate Communications
201-267-8000
Financial Dynamics
Melissa Myron/Rachel Albert
212-850-5600
FOR IMMEDIATE RELEASE
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MOVADO GROUP, INC. BOARD APPROVES PLAN TO
REPATRIATE APPROXIMATELY $150 MILLION IN FOREIGN EARNINGS
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PARAMUS, NJ - DECEMBER 15, 2005 -- MOVADO GROUP, INC. (NYSE: MOV)
announced that it intends to repatriate approximately $150 million in
undistributed foreign earnings under the provisions of the American Jobs
Creation Act (AJCA) of 2004. The Company anticipates repatriating approximately
$150 million depending upon year-end cash balances and the exchange rate at the
time of repatriation. Assuming the Company repatriates $150 million, a one-time
charge will be recorded in the fourth quarter ending January 31, 2006 for the
related tax expense, which is currently estimated to be $8.0 million, or
approximately $0.31 per diluted share. The repatriation will consist of proceeds
from existing off-shore year-end cash and proceeds drawn from the Company's new
Swiss credit facility.
The repatriation provision of the AJCA requires that funds be
invested in qualified investments in the United States. The investments include:
advertising and marketing expenditures, infrastructure and capital investments,
including retail store expansion and renovation, headquarters expansion,
information technology replacements and upgrades, employee hiring and training,
and compensation and benefits for non-executive employees.
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.
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," "PROJECTS," "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 RETAIL INDUSTRY, IMPORT
RESTRICTIONS, COMPETITION, SEASONALITY 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.
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