House & Home
House and Home
House and Home
Wed, December 8, 2010
Cherokee Inc. Announces 3rd Quarter Fiscal 2011 Financial Results
VAN NUYS, Calif.--([ BUSINESS WIRE ])--Cherokee Inc. (NASDAQ:CHKE), a leading global brand management company, today reported total royalty revenues for the third quarter ended October 30, 2010 (the aThird Quartera) of $7.7 million, as compared to $8.0 million in the comparable period last year. Cherokeea™s operating expenses for the Third Quarter totaled $3.87 million, which was greater than the $3.33 million in the comparable period last year. Cherokeea™s net income for the Third Quarter decreased by a total of $0.5 million, to $2.3 million or $0.26 per diluted share, as compared to $2.8 million, or $0.31 per diluted share in the comparable period last year. The Company ended the quarter with cash and cash equivalents of $8.8 million, net receivables of $7.1 million and no debt.
Russell J. Riopelle, Chief Financial Officer, commented, aWe finished the quarter in another strong cash position and a debt-free balance sheet. During our Third Quarter we paid a $0.38 per share dividend in September, and announced our December dividend of $0.38 per share. We are encouraged that our Third Quarter U.S. royalties kept pace with last year, however, this was offset by less favorable exchange rates and retailersa™ reducing their prices, resulting in lower royalties from certain international accounts.a
About Cherokee Inc.
Cherokee Inc. is a global marketer and manager of a portfolio of LIFESTYLE BRANDS it owns and represents in multiple consumer product categories and sectors around the world. The Company has license agreements with premier retailers and manufacturers covering over 30 countries around the world including Target Stores (U.S.), Tesco (U.K., Ireland and certain Central European countries), Zellers (Canada), RT-Mart (Peoples Republic of China), Pick an Pay (South Africa), Falabella (Chile, Peru and Colombia), Arvind Mills (India and certain Middle Eastern countries), Shufersal LTD. (Israel), Comercial Mexicana (Mexico), Tiendas Soriana (Mexico), Eroski (Spain) and the TJX Companies (U.S., Canada and Europe).
Statements included within this news release that are not historical in nature constitute forward-looking statements for the purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995.When used, the words aanticipates,a abelieves,a aexpects,a amay,a ashoulda and similar expressions are intended to identify such forward-looking statements.Forward-looking statements included in this press release (including, without limitation, express or implied statements regarding potential future business development) involve known and unknown risk 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, international and regional economic conditions, the financial condition of the apparel industry and the retail industry, the overall level of consumer spending domestically and internationally, the effect of intense competition in the industry in which the Company operates, adverse changes in licensee or consumer acceptance of products bearing the Companya™s brands as a result of fashion trends or otherwise, the ability and/or commitment of the Companya™s licensees to design, manufacture and market Cherokee, Sideout and Carole Little branded products, the Companya™s dependence on a select group of licensees for most of the Companya™s revenues, the Companya™s dependence on its key management personnel and adverse determinations of claims, liabilities or litigations.A further list and description of these risk, uncertainties and other matters can be found in the Companya™s Annual Report on Form 10-K for Fiscal Year 2010, 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 Unaudited | |||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||
October 30, 2010 | October 31, 2009 | October 30, 2010 | October 31, 2009 | ||||||||||||||
| Royalty revenues | $ | 7,691,000 | $ | 8,041,000 | $ | 23,426,000 | $ | 25,014,000 | |||||||||
| Total selling, general and administrative expenses | 3,869,000 | 3,330,000 | 10,599,000 | 9,791,000 | |||||||||||||
| Operating income | 3,822,000 | 4,711,000 | 12,827,000 | 15,223,000 | |||||||||||||
| Other income (expenses) : | |||||||||||||||||
| Interest expense | -- | -- | -- | -- | |||||||||||||
| Investment and interest income | 3,000 | 6,000 | 10,000 | 19,000 | |||||||||||||
| Total other income (expenses), net | 3,000 | 6,000 | 10,000 | 19,000 | |||||||||||||
| Income before income taxes | 3,825,000 | 4,717,000 | 12,837,000 | 15,242,000 | |||||||||||||
| Income tax provision | 1,545,000 | 1,946,000 | 5,162,000 | 5,781,000 | |||||||||||||
| Net income | $ | 2,280,000 | $ | 2,771,000 | $ | 7,675,000 | $ | 9,461,000 | |||||||||
| Basic earnings per share | $ | 0.26 | $ | 0.31 | $ | 0.87 | $ | 1.07 | |||||||||
| Diluted earnings per share | $ | 0.26 | $ | 0.31 | $ | 0.87 | $ | 1.07 | |||||||||
| Weighted average shares outstanding | |||||||||||||||||
| Basic | 8,882,493 | 8,814,187 | 8,836,956 | 8,814,187 | |||||||||||||
| Diluted | 8,914,883 | 8,814,393 | 8,871,295 | 8,814,187 | |||||||||||||
| Effective Tax Rate | 40.4 | % | 41.3 | % | 40.2 | % | 37.9 | % | |||||||||
CHEROKEE INC. CONSOLIDATED BALANCE SHEETS Unaudited | |||||||
October 30, | January 30, | ||||||
2010 | 2010 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 8,820,000 | $ | 9,419,000 | |||
| Receivables | 7,113,000 | 6,939,000 | |||||
| Prepaid expenses and other current assets | 124,000 | 101,000 | |||||
| Income taxes receivable | 1,364,000 | 1,271,000 | |||||
| Deferred tax asset | 496,000 | 740,000 | |||||
| Total current assets | 17,917,000 | 18,470,000 | |||||
| Deferred tax asset | 726,000 | 630,000 | |||||
| Property and equipment, net | 167,000 | 185,000 | |||||
| Trademarks, net | 6,977,000 | 7,866,000 | |||||
| Other assets | 14,000 | 14,000 | |||||
| Total assets | $ | 25,801,000 | $ | 27,165,000 | |||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 1,197,000 | $ | 967,000 | |||
| Accrued compensation payable | 1,810,000 | 2,536,000 | |||||
| Income taxes payable | 789,000 | 1,260,000 | |||||
| Accrued dividends payable | 3,381,000 | 3,349,000 | |||||
| Total current liabilities | 7,177,000 | 8,112,000 | |||||
| Stockholders' Equity: | |||||||
| Preferred stock, $.02 par value, 1,000,000 shares authorized | |||||||
None issued and outstanding | - | - | |||||
| Common stock, $.02 par value, 20,000,000 shares authorized, | |||||||
8,896,154 and 8,814,187 shares issued and | |||||||
outstanding at October 30, 2010 and | |||||||
January 30, 2010, respectively | 177,000 | 176,000 | |||||
| Additional paid-in capital | 17,192,000 | 15,187,000 | |||||
| Retained earnings | 1,255,000 | 3,690,000 | |||||
| Stockholders' equity | 18,624,000 | 19,053,000 | |||||
| Total liabilities and stockholders' equity | $ | 25,801,000 | $ | 27,165,000 | |||
