Cherokee Announces 37% EPS Increase for Fiscal Year Ended February 3, 2001.Business Editors VAN NUYS, Calif.--(BUSINESS WIRE)--April 2, 2001 -- Earnings per share increased 37% to $1.29 -- Net income grew 34% to $10.8 million -- Net revenues increased 14% to $28.3 million Cherokee Cherokee, Native American language Cherokee, language belonging to the Iroquoian branch of the Hokan-Siouan linguistic family. See Native American languages. Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CHKE) announced results for the fiscal year and fourth quarter ended February February: see month. 3, 2001. For the fiscal year ended February 3, 2001 ("Fiscal 2001"), Cherokee reported net income increased 33.6% to $10.8 million, up from $8.1 million a year ago. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the full year increased 37.2% to $1.29 from $0.94 during the fiscal year ended January January: see month. 29, 2000 ("Fiscal 2000"). Net revenues increased 14.4% to $28.3 million during Fiscal 2001 from $24.7 million during Fiscal 2000. For the fourth quarter ended February 3, 2001 ("Fourth Quarter"), net income increased 66.7% to $2.0 million, compared to net income of $1.2 million during the fourth quarter of Fiscal 2000. Diluted earnings per share increased 78.6% to $0.25 during the Fourth Quarter compared to $0.14 per share during the similar period the previous year. Net revenues during the Fourth Quarter were $6.0 million, a 5.3% year-over-year increase from the fourth quarter of last year. Results for the fourth quarter ended January 29, 2000 were negatively affected by a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge of $1.89 million for the forgiveness Forgiveness Angelica, Suor is forgiven by the Virgin Mary for ill-considered suicide. [Ital. Opera: Puccini, Suor Angelica, Westerman, 364] Bishop of Digne of a note receivable note receivable A debt due from borrowers and evidenced by a written promise of payment. Note receivable, an entry on the asset side of many corporate balance sheets, indicates the dollar amount of loans due to be repaid by borrowers. from an officer of the Company. Selling, general, and administrative expenses during Fiscal 2001 declined 10.9% to $8.3 million, or 29.5% of revenues, from $9.4 million, or 37.9% of revenues during Fiscal 2000. The year-over-year decline in selling, general, and administrative expenses reflects the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. one-time charge during Fiscal 2000, which was partially offset by higher compensation expenses during Fiscal 2001 as the Company invested in additional staff to support marketing efforts and to secure additional brands. "Our unique operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. , which eliminates inventory risk and insulates margins, enabled us to once again achieve revenue and profit growth, despite a challenging retail environment," commented Robert Margolis, Chief Executive Officer. "Our strategic alliances with world class retailers, both domestically and abroad, provided us with a powerful platform on which to grow." Worldwide retail sales of Cherokee branded products increased 33.6% to $1.87 billion and retail sales of Sideout branded products increased 27.1% to $98.5 million during Fiscal 2001. During the year, the Company signed new licensing agreements for the Cherokee brand with Paris-based Carrefour, the world's second largest retailer, and DongKwang International Co. Ltd covering Korea. In addition, the Company entered into a retail direct licensing agreement for the Sideout brand with Munich, Germany based Sport-Scheck GmBh. Mr. Margolis continued, "Fiscal 2001 was highlighted by a number of significant accomplishments. Operationally, our licensees broadened their Cherokee product offerings and gained momentum with our Sideout brand. From a strategic standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , we signed new licensing agreements to expand our global presence. We expect continued revenue and earnings growth during the year ending February 2, 2002 from our existing licensees and our agreement with Mossimo Inc (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : MGXO.OB). During fiscal 2003 and beyond, we are hopeful for additional growth from our newest licensee licensee n. a person given a license by government or under private agreement. (See: license, licensor) LICENSEE. One to whom a license has been given. 1 M. Q. & S. 699 n. , Carrefour. We are also pursuing additional brands to acquire or represent. We believe our business model is at the forefront of an industry shift wherein where·in adv. In what way; how: Wherein have we sinned? conj. 1. In which location; where: the country wherein those people live. 2. retailers are using their economies of scale to enjoy higher profit margins while delivering recognizable brands to consumers." "Our profitability and balance sheet continued to improve throughout the year," stated Carol Gratzke, Chief Financial Officer. "Our pre-tax margins expanded to 63.6% from 52.3% and we generated $14.5 million or $1.74 per share in operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. during the year. Moreover, we utilized $2.1 million of that cash flow to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. 249,000 shares and retire $10.1 million in debt. Looking forward, our objective is to continue managing our balance sheet while maximizing the value of our existing licenses." Cherokee Inc., based in Van Nuys, California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , is a marketer, licensor, and manager of brands it owns or represents. Proprietary brands include Sideout and Cherokee, which had worldwide retail sales exceeding $1.8 billion. Cherokee currently has licensing agreements worldwide in many product categories including men's, women's, and children's apparel, fashion accessories Fashion accessories are items apart from the garment itself, which complement the whole outfit. Fashion accessories include jewelry, gloves, handbags, hats, or scarves. , footwear Footwear consists of garments worn on the feet. It is worn for a variety of reasons, including protection against the environment, hygiene and adornment. Usually, socks and other hosiery are worn between the feet and the footwear, except for sandals and flip flops (thongs). , cosmetics cosmetics, preparations externally applied to change or enhance the beauty of skin, hair, nails, lips, and eyes. The use of body paint for ornamental and religious purposes has been common among primitive peoples from prehistoric times (see body-marking). , and luggage LUGGAGE. Such things as are carried by a traveller, generally for his personal accommodation; baggage. In England this word is generally used in the same sense that baggage is used in the United States. See Baggage. . Statements included within this news release that are not historical in nature constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. for the purposes of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provided by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. When used, the words "anticipates", "believes," "estimates," "expects", "objectives", "goals", "aims", "hopes", "may", "likely", "should" and similar expressions are intended to identify such forward-looking statements. In particular, the forward-looking statements in this news release include statements regarding the Company's goals for future growth in revenues and earnings, the prospects of existing and new licensees such as Carrefour, and the Company's pursuit of additional brands to acquire or represent. Forward-looking statements involve known and unknown risks and uncertainties that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties, include, but are not limited to, the effect of national and regional economic conditions, the financial condition of the apparel industry and the retail industry, the overall level of consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. , the effect of intense competition in the industry in which the Company operates, adverse changes in licensee or consumer acceptance of products bearing the Company's brands as a result of fashion trends or otherwise, the ability and/or commitment of the Company's licensees to design, manufacture and market Cherokee and Sideout branded products, the Company's dependence on a single licensee for most of the Company's revenues, the Company's dependence on its key management personnel and the effect of a breach or termination by the Company of the management agreement with the Company's CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . A further list and description of these risks, uncertainties and other matters can be found in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for Fiscal 2001, and in its periodic reports on Forms 10-Q and 8-K (if any). Undue reliance should not be placed on the forward-looking statements contained herein because some or all of them may turn out to be wrong. The Company disclaims any intent or obligation to update any of the forward-looking statements contained herein to reflect future events and developments.
CHEROKEE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Twelve months ended
February 3, January 29, February 3, January 29,
2001 2000 2001 2000
----------- ------------ ------------ -----------
Royalty revenues $6,006,000 $5,741,000 $28,281,000 24,714,000
Selling,
general and
administrative
expenses 2,115,000 3,714,000 8,351,000 9,376,000
----------- ------------ ------------ ----------
Operating income 3,891,000 2,027,000 19,930,000 15,338,000
Other income
(expenses) :
Interest expense (561,000) (655,000) (2,367,000) (2,817,000)
Investment and
Interest income 99,000 111,000 430,000 399,000
----------- ------------ ------------ ----------
Total other income
(expenses), net (462,000) (544,000) (1,937,000) (2,418,000)
Income before
income taxes 3,429,000 1,483,000 17,993,000 12,920,000
Income tax provision 1,401,000 281,000 7,227,000 4,859,000
----------- ------------ ------------ ----------
Net income $2,028,000 $1,202,000 $10,766,000 $8,061,000
=========== ============ ============ ==========
Basic earnings
per share $0.25 $0.14 $1.29 $0.94
----- ----- ----- -----
Diluted earnings
per share $0.25 $0.14 $1.29 $0.94
----- ----- ----- -----
Weighted average
shares outstanding
Basic 8,231,705 8,472,428 8,334,420 8,618,053
=========== ============ ============ ==========
Diluted 8,275,018 8,479,071 8,349,599 8,620,553
=========== ============ ============ ==========
CHEROKEE INC.
CONSOLIDATED BALANCE SHEETS
February 3, 2001 January 29, 2000
---------------- ---------------
Assets
Current assets:
Cash and cash equivalents $2,598,000 $2,253,000
Restricted cash 2,724,000 2,324,000
Receivables, net 5,893,000 4,841,000
Prepaid expenses and other
current assets 37,000 28,000
Deferred tax asset 713,000 1,579,000
-------------- --------------
Total current assets 11,965,000 11,025,000
Deferred tax asset 493,000 797,000
Securitization fees, net
of accumulated amortization
of $583,000 and $429,000,
respectively 606,000 812,000
Property and equipment, net of
accumulated depreciation of
$178,000 and $156,000, respectively 219,000 203,000
Trademarks, net of accumulated
amortization of $899,000 and
$503,000, respectively 6,115,000 4,666,000
Other assets 15,000 15,000
-------------- --------------
Total assets $19,413,000 $17,518,000
============== ==============
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $302,000 $600,000
Other accrued liabilities 3,176,000 2,286,000
Notes payable 10,500,000 10,125,000
-------------- --------------
Total current liabilities 13,978,000 13,011,000
Other liabilities 250,000 250,000
Notes payable - long term 20,255,000 28,389,000
-------------- --------------
Total liabilities 34,483,000 41,650,000
-------------- --------------
Stockholders' Deficit:
Common stock, $.02 par value,
20,000,000 shares authorized,
8,231,705 and 8,472,428
shares issued and outstanding at
October 28, 2000 and at
January 29, 2000, respectively 165,000 170,000
Note receivable from stockholder - (365,000)
Accumulated deficit (15,235,000) (23,937,000)
-------------- --------------
Stockholders' deficit (15,070,000) (24,132,000)
-------------- --------------
Total liabilities and
stockholders' deficit $19,413,000 $17,518,000
============== ==============
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