Cherokee Announces Record Fourth Quarter and Full Year Results.Business Editors VAN NUYS, Calif.--(BUSINESS WIRE)--April 2, 2003 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) Highlights: - Fourth Quarter revenue up 12.3%; Full year revenue increases by 8.0% - Net Income up 9.3% for the Fourth Quarter and 8.0% for the year - Company further reduces long term debt by $10.5 million - Company acquires the trademarks of CL Fashion Inc. (Carole Little, CLII, Saint Tropez-West, Chorus chorus, in music chorus, in music, large group of singers performing in concert; a group singing liturgical music is a choir. The term chorus may also be used for a group singing or dancing together in a musical or in ballet. Line, All that Jazz, and Molly molly see mare hinny. Malloy Malloy is a surname of Irish origin. The name refers to:
license agreement with TJX Companies The TJX Companies, Incorporated (NYSE: TJX), is the largest international apparel and home fashions off-price department store chain, based in Framingham, Massachusetts, in the United States. for the Carole Little brand - Worldwide sales of Cherokee branded products by licensees exceeds $2.3 billion Cherokee Inc. (NASDAQ: CHKE), a licensor, marketer and brand manager of consumer brands today reported record revenue and earnings for the fourth quarter and full year, ended February February: see month. 1, 2003. Net revenues for the fourth quarter of fiscal 2003 rose 12.3% to $7.1 million, compared to revenues of $6.3 million in the fourth quarter of fiscal 2002. For the full year ended February 1, 2003, net revenues rose 8.0% to $33.1 million, compared to $30.7 million last year. Net income for the fourth quarter increased to $2.6 million or $0.30 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $2.3 million or $0.28 per diluted share, in last year's fourth quarter. Net income for the full year ended February 1, 2003 increased to $13.0 million or $1.54 per diluted share, compared to $12.1 million or $1.46 per diluted share last year. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. Margolis Margolis is a surname, and may refer to:
Selling, general and administrative expenses for the fourth quarter were $2.3 million or 32.1% of revenue, compared to $2.1 million or 33.1% of revenue for the same period last year. The quarterly improvement in selling, general and administrative expenses as a percent of revenue was due to an arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the panel's decision that the Company is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to recover its legal expenses incurred as a result of its arbitration with Mossimo Mossimo is a mid-range American apparel company, founded in 1986. Mossimo specializes in youth, teenage, and adult male clothing. It draws from street, urban and sport styles. . Selling, general and administrative expenses for the full year ended February 1, 2003 were $10.1 million or 30.6% of sales, compared to $9.1 million or 29.8% of revenue last year largely due to higher payroll and travel costs attributable to increased business activities overseas. "We believe the Company had another exceptional year as we expanded our business in the international marketplace, as well as continued to penetrate the domestic market," commented Howard Siegel, President. "We are excited about the retail direct licensing agreement with TJX Companies for the Carole Little brand, the Gilricho master license for the Chorus Line, All that Jazz and Molly Malloy brands and the recently announced agreement with Marshall Field's Marshall Field's was an iconic Chicago, Illinois, department store that grew to become a major chain before being acquired by Cincinnati-based Federated Department Stores on August 30, 2005. for the Sideout brand. Our goal is to remain active in seeking additional opportunities to leverage our unique business model." Commenting on the financial results, Kyle <noinclude></noinclude> ''This article or section is being rewritten at One derivation of the surname is from the Scottish Highland word caol, 'channel', or 'strait'. There are other possible derivations (see below). Wescoat, Chief Financial Officer stated, "We continued to improve our balance sheet during the year by paying down an additional $10.5 million in long term debt. We expect to have fully repaid our secured notes by early next year. Our stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. continued to grow, reaching $11.8 million by year-end. Our cash balance at year-end was $5.5 million. When operating effectively, a characteristic of our business model is powerful cash generation. We will continue to explore any strategic opportunities we believe will enhance shareholder value over the longer term." 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). , a marketer, licensor and manager of a variety of brands it owns or represents and is continuing its negotiations for domestic and international licensing contracts covering multiple categories of merchandise. Cherokee currently has licensing agreements in a number of categories, including family 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. , as well as 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). , home furnishings furnishings the extra type or quantity of hair on the head, tail, ears or legs, specified for a particular breed. For example, the feathers in setters, the beard in Bearded collies, the eyebrows in Schnauzers. and recreational products. 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", "expects", "may", "should", "could", "goals" 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 expectation that it will remain active in seeking opportunities to leverage its business model, the Company's goal of fully repaying the secured notes by early next year and the Company's goal of continuing to explore strategic alternatives such as other additional brands to acquire or represent. Forward-looking statements involve known and unknown risks and uncertainties that may cause the actual results, performance, achievements or share price of the Company to be materially different from any future results, performance, achievements or share price 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 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. 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, Sideout, Carole Little, CLII, Saint Tropez-West, Chorus Line, All that Jazz and Molly Malloy 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 adverse determinations of claims, liabilities or litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , including the dispute with Mossimo, and the effect of a breach or termination by the Company of the management agreement with the Company's CEO. 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 2003, 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 1, February 2, February 1, February 2,
----------- ----------- ------------ ------------
2003 2002 2003 2002
----------- ----------- ------------ ------------
Royalty revenues $7,063,000 $6,290,000 $33,143,000 $30,674,000
Selling, general and
administrative
expenses 2,269,000 2,083,000 10,152,000 9,133,000
----------- ----------- ------------ ------------
Operating income 4,794,000 4,207,000 22,991,000 21,541,000
Other income
(expense):
Interest expense (245,000) (377,000) (1,131,000) (1,754,000)
Investment and
interest income 130,000 43,000 245,000 292,000
----------- ----------- ------------ ------------
Total other expenses,
net (115,000) (334,000) (886,000) (1,462,000)
Income before income
taxes 4,679,000 3,873,000 22,105,000 20,079,000
Income tax provision 2,117,000 1,529,000 9,087,000 8,020,000
----------- ----------- ------------ ------------
Net income $2,562,000 $2,344,000 $13,018,000 $12,059,000
=========== =========== ============ ============
Basic earnings per
share $ 0.31 $ 0.29 $ 1.58 $ 1.47
----------- ----------- ------------ ------------
Diluted earnings per
share $ 0.30 $ 0.28 $ 1.54 $ 1.46
----------- ----------- ------------ ------------
Weighted average
shares outstanding
Basic 8,266,879 8,163,405 8,244,675 8,199,284
=========== =========== ============ ============
Diluted 8,444,168 8,262,978 8,456,708 8,243,554
=========== =========== ============ ============
CHEROKEE INC.
CONSOLIDATED BALANCE SHEET
February 1, February 2,
------------ ------------
2003 2002
------------ ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 2,852,000 $ 4,394,000
Restricted cash 2,637,000 2,645,000
Receivables 9,896,000 6,232,000
Prepaid expenses and other current assets 425,000 62,000
Deferred tax asset 964,000 886,000
------------ ------------
Total current assets 16,774,000 14,219,000
Deferred tax asset 1,832,000 2,100,000
Securitization fees, net of accumulated
amortization of $1,200,000 and $840,000,
respectively 195,000 401,000
Property and equipment, net of accumulated
depreciation of $311,000 and $265,000,
respectively 120,000 156,000
Trademarks, net of accumulated amortization
of $2,100,000 and $1,433,000, respectively 10,127,000 7,365,000
Other assets 15,000 15,000
------------ ------------
Total assets $29,063,000 $24,256,000
============ ============
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Accounts payable $ 203,000 $ 400,000
Income taxes payable - 22,000
Other accrued liabilities 4,452,000 3,584,000
Notes payable 10,500,000 10,500,000
------------ ------------
Total current liabilities 15,155,000 14,506,000
Notes payable - long term 2,141,000 11,510,000
------------ ------------
Total liabilities 17,296,000 26,016,000
------------ ------------
Stockholders' Equity (Deficit):
Common stock, $.02 par value, 20,000,000
shares authorized, 8,232,264 and 8,163,405
shares issued and outstanding at February
1, 2003 and at February 2, 2002,
respectively 165,000 164,000
Additional paid-in capital 1,760,000 1,252,000
Retained earnings/(deficit) 9,842,000 (3,176,000)
------------ ------------
Stockholders' equity (deficit) 11,767,000 (1,760,000)
------------ ------------
Total liabilities and stockholders' equity
(deficit) $29,063,000 $24,256,000
============ ============
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