EX-99.1 2 eh2000540_ex9901.htm EXHIBIT 99.1

EXHIBIT 99.1


CONTACT:
  
ICR, Inc.
   
Rachel Schacter/Allison Malkin
   
203-682-8200

FINAL


MOVADO GROUP, INC. ANNOUNCES FOURTH QUARTER
AND FISCAL YEAR 2020 RESULTS

~ Fiscal Year 2020 Net Sales Increased 3.1% to $701.0 Million ~
~ Fiscal Year 2020 Operating Income of $43.0 Million; Adjusted Operating Income of $50.0 Million ~
~ Fiscal Year 2020 Earnings Per Share of $1.83; Fiscal Year 2020 Adjusted Earnings Per Share of $1.57, includes a 26.4% Effective Tax Rate ~
~ Discontinues Quarterly Dividend Pending Clarity on COVID-19 ~

Paramus, NJ – March 26, 2020 -- Movado Group, Inc. (NYSE: MOV) today announced fourth quarter and fiscal year 2020 results for the periods ended January 31, 2020.

Efraim Grinberg, Chairman and Chief Executive Officer, stated, “In a period of unprecedented times where COVID-19 has affected communities around the world, we’re focused on the health of our associates, customers and business partners. We have temporarily closed all of our stores and asked office workers around the world to work from home, with the exception of Asia which recently reopened. Due to the increasing uncertainty related to the potential impacts of COVID-19, we are not providing an annual outlook at this time.”

Mr Grinberg continued, “In the near term, we are reducing costs and allocating our resources to maximize financial flexibility and allow us to navigate through a difficult environment. We’re fortunate to have balance sheet strength with approximately $190 million in cash as of March 25, 2020 after giving effect to a recent draw down of $30 million on our credit facility. We have decided to discontinue our regular quarterly dividend with an expectation to resume the dividend when business conditions warrant it. We believe that our powerful portfolio of brands, and talented and passionate team that is focused on bringing to market innovative assortments will serve us well when conditions stabilize. Overall, we believe we are well positioned to navigate these challenging times.”

Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Fourth quarter fiscal 2020 results of operations included the following charges and benefits:

 •
Operating expenses include a $0.7 million pre-tax charge, or $0.6 million after tax, representing $0.03 per diluted share, associated with the amortization of acquired intangible assets related to the acquisition of Olivia Burton;

•
$1.0 million pre-tax charge, or $0.8 million after tax, representing $0.03 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT; and

•
Other non-operating income includes a favorable $1.7 million pre-tax benefit, or $1.3 million after tax, representing $0.06 per diluted share, associated with the remeasurement of the contingent consideration liability associated with the MVMT acquisition.

Fourth quarter fiscal 2019 results of operations included the following charges and benefits:

 •
a $2.4 million pre-tax charge, or $2.5 million after tax, representing $0.10 per diluted share, associated with the integration and acquisition of MVMT;

•
$0.7 million pre-tax charge, or $0.6 million after tax, representing $0.02 per diluted share, associated with the amortization of acquired intangible assets related to Olivia Burton;

•
a favorable $0.3 million pre-tax change in estimate, or $0.2 million after tax, representing $0.01 per diluted share, associated with the Company’s cost savings initiatives; and

•
a $4.4 million tax benefit, or $0.18 per diluted share, related to the Tax Cuts and Jobs Act (“2017 Tax Act”) as well as certain discrete foreign tax items.

Fourth Quarter Fiscal 2020 Results (See attached table for GAAP and non-GAAP measures)
•
Net sales decreased 4.2% to $191.0 million compared to $199.4 million in the fourth quarter of fiscal 2019. Net sales on a constant dollar basis decreased 3.8% compared to net sales in the fourth quarter of fiscal 2019.
•
Gross profit was $100.6 million, or 52.7% of net sales, compared to $110.6 million, or 55.5% of net sales in the same period last year. Adjusted gross profit for the fourth quarter of fiscal 2019, which excludes a $0.4 million adjustment associated with the amortization of acquisition accounting adjustments related to the MVMT acquisition, was $111.1 million, or 55.7% of net sales. The decrease in adjusted gross margin percentage was primarily the result of unfavorable foreign currency exchange rates, unfavorable changes in channel and product mix, tariff headwinds as well as decreased leverage on fixed costs due to decreased sales.
•
Operating expenses increased to $94.0 million in the fourth quarter of fiscal 2020 from $93.5 million in the fourth quarter last year. Adjusted operating expenses for the fourth quarter of fiscal 2020 were $92.3 million excluding $1.0 million of expenses related to the amortization of MVMT’s intangible assets and deferred compensation arrangements and $0.7 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton. Adjusted operating expenses for the fourth quarter of fiscal 2019 were $91.1 million, which excludes $2.0 million of expenses related to the integration and acquisition of MVMT and $0.7 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton, partially offset by a $0.3 million change in estimate associated with the Company’s cost savings initiatives. The increase in adjusted operating expenses was primarily due to higher marketing expenses including expenses related to MVMT for customer acquisition and brand awareness and an increase in payroll and rent related expenses associated with the opening of new company stores retail locations and operating expenses related to the Company’s new joint ventures in Spain and Australia, partially offset by a decrease in performance based compensation.
•
Operating income in the fourth quarter of fiscal 2020 was $6.6 million compared to operating income of $17.1 million in the prior year period. Adjusted operating income for the fourth quarter of fiscal 2020 was $8.3 million, which excludes $1.0 million of expenses related to the amortization of MVMT’s intangible assets and deferred compensation arrangements and $0.7 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton. Adjusted operating income for the fourth quarter of fiscal 2019 was $19.9 million, which excludes $2.4 million of expenses related to the integration and acquisition of MVMT and $0.7 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton, partially offset by a $0.3 million change in estimate associated with the Company’s cost savings initiatives.
•
The tax provision was $4.6 million in the fourth quarter of fiscal 2020 compared to a tax benefit of $0.5 million in the fourth quarter of fiscal 2019. Based on adjusted pre-tax income, the adjusted tax provision was $4.5 million or an adjusted tax rate of 56.0% as compared to an adjusted tax provision of $3.9 million or an adjusted tax rate of 19.9% in the fourth quarter of fiscal 2019. The increase in the adjusted effective tax rate is primarily due to a limitation on a portion of foreign tax credits as it relates to the GILTI tax as a result of the mix of jurisdictional earnings.
•
Net income was $3.5 million, or $0.15 per diluted share, compared to net income of $17.4 million, or $0.74, for the same period in the prior year. Adjusted net income in the fourth quarter of fiscal 2020 was $3.5 million, or $0.15 per diluted share, which excludes a $1.3 million benefit associated with the remeasurement of the contingent consideration liability associated with the MVMT acquisition, net of tax, partially offset by $0.8 million related to the MVMT acquisition, net of tax, and $0.6 million of amortization related to the acquisition of Olivia Burton, net of tax. This compares to adjusted net income in the fourth quarter of fiscal 2019 of $15.9 million, or $0.67 per diluted share, which excludes a $4.4 million benefit related to the 2017 Tax Act and certain discrete foreign tax items and a $0.2 million change in estimate related to the Company’s cost savings initiatives, net of tax, partially offset by $2.5 million related to the MVMT acquisition, net of tax, and $0.6 million of amortization related to the acquisition of Olivia Burton, net of tax.

2
Full Year Fiscal 2020 Results (See attached table for GAAP and Non-GAAP measures)
•
Net sales increased 3.1% to $701.0 million compared to net sales of $679.6 million in fiscal 2019. Net sales on a constant dollar basis increased 4.9% compared to net sales in fiscal 2019.
•
Gross profit was $374.9 million, or 53.5% of net sales, compared to gross profit of $369.4 million, or 54.4% of net sales, in the prior year. Adjusted gross profit for fiscal 2020 was $375.0 million, or 53.5% of net sales, excluding $0.1 million in amortization of acquisition accounting adjustments related to the MVMT acquisition. Adjusted gross profit for fiscal 2019 was $369.9 million, or 54.4% of net sales, excluding $0.6 million in amortization of acquisition accounting adjustments related to the MVMT acquisition. The decrease in the adjusted gross margin percentage from last year was primarily the result of unfavorable foreign currency exchange rates, unfavorable changes in channel and product mix and tariff headwinds, partially offset by increased leverage on fixed costs due to increased sales.
•
Operating expenses were $331.9 million in fiscal 2020 compared to operating expenses of $307.2 million in the prior year. For fiscal 2020, adjusted operating expenses were $325.0 million, which excludes $4.4 million in expenses related to the amortization of MVMT’s intangible assets and deferred compensation arrangements and $2.8 million of amortization related to the acquisition of Olivia Burton, partially offset by a $0.3 million change in estimate related to the Company’s cost savings initiatives. For fiscal 2019, adjusted operating expenses were $290.7 million, which excludes $13.8 million in expenses related to the integration and acquisition of MVMT and $2.9 million of amortization related to the acquisition of Olivia Burton, partially offset by a $0.3 million change in estimate related to the Company’s cost savings initiatives. The increase in adjusted operating expenses was primarily the result of higher marketing expenses including expenses related to MVMT since the date of the acquisition, operating expenses related to the Company’s new joint ventures in Spain and Australia, increased payroll and rent related expenses associated with the opening of new company stores retail locations, the acquisition of MVMT and the expansion of one of the Company’s distribution centers, partially offset by a decrease in performance based compensation.
•
Operating income for fiscal 2020 was $43.0 million as compared to operating income of $62.2 million for fiscal 2019. Adjusted operating income for fiscal 2020 was $50.0 million, which excludes $4.6 million in expenses related to the amortization of MVMT’s intangible assets and deferred compensation arrangements and certain accounting adjustments and $2.8 million of amortization related to the acquisition of Olivia Burton, partially offset by a $0.3 million change in estimate related to the Company’s cost savings initiatives. This compares to adjusted operating income for fiscal 2019 of $79.2 million, which excludes $14.4 million in expenses related to the integration and acquisition of MVMT and $2.9 million of amortization related to the acquisition of Olivia Burton, partially offset by a $0.3 million change in estimate related to the Company’s cost savings initiatives.
•
The tax provision was $15.1 million in fiscal 2020 compared to $0.2 million in fiscal 2019. Based upon adjusted pre-tax income, the adjusted effective tax rate for fiscal 2020 was 26.4% as compared to the adjusted effective tax rate of 19.9% in fiscal 2019.
•
Net income was $42.7 million, or $1.83 per diluted share, for fiscal 2020 compared to net income of $61.6 million, or $2.61 per diluted share, for the prior year. Adjusted net income in fiscal 2020 was $36.5 million or $1.57 per diluted share, which excludes $3.5 million in expenses related to the amortization of MVMT’s intangible assets and deferred compensation arrangements and certain accounting adjustments, net of tax, and $2.3 million of amortization related to the acquisition of Olivia Burton, net of tax, partially offset by a a gain of $11.7 million associated with the remeasurement of the contingent consideration liability associated with the MVMT acquisition, net of tax, and $0.2 million change in estimate related to the Company’s cost savings initiatives, net of tax. Adjusted net income in fiscal 2019 was $63.1 million or $2.67 per diluted share, which excludes the $12.0 million tax benefit related to the 2017 Tax Act and certain discrete foreign tax items, $11.4 million in expenses related to the integration and acquisition of MVMT, net of tax, and $2.4 million of amortization related to the acquisition of Olivia Burton, net of tax, partially offset by a $0.2 million change in estimate related to the Company’s cost savings initiatives, net of tax.

Fiscal 2021 Outlook and COVID-19 Update
Given the rapidly changing environment with COVID-19, the Company is refraining from providing fiscal 2021 guidance. The Company expects the COVID-19 pandemic to negatively impact its business, results of operations, and financial position; however, the related financial impact cannot be reasonably estimated at this time.

The Company is taking a number of proactive measures to increase its financial flexibility during this period of uncertainty, including strategic cost reductions across all functional areas and borrowing an additional $30 million on its revolving credit facility in March 2020. The Company’s strong balance sheet, with approximately $190 million of cash as of March 25, 2020, will help it navigate the current unprecedented situation. Additionally, the Company maintains strong, long-term relationships with its vendors, landlords and banking partners.

Quarterly Dividend and Share Repurchase Program
In light of the uncertainty caused by the COVID-19 pandemic, the Company’s Board of Directors discontinued the regular quarterly dividend until further notice. The Company remains committed to paying a dividend over the long-term and it would seek to resume a dividend when appropriate following stabilization in the environment.

During fiscal 2020 the Company repurchased approximately 131,000 shares under its share repurchase program. As of January 31, 2020, the Company had $36.4 million remaining under the $50.0 million share repurchase authorization. However, the Company’s Board of Directors has determined to suspend share repurchases until further notice.

3
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today, March 26th, at 9:00 a.m. Eastern Time. The conference call may be accessed by dialing (877) 407-0784.  Additionally, a live webcast of the call can be accessed at www.movadogroup.com. The webcast will be archived on the Company’s website approximately one hour after the conclusion of the call. Additionally, a telephonic re-play of the call will be available from 12:00 p.m. ET on March 26, 2020 until 11:59 p.m. ET on April 2, 2020 and can be accessed by dialing 844-512-2921 and entering replay pin number 13699996.

Movado Group, Inc. designs, sources, and distributes MOVADO®, MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, COACH®, TOMMY HILFIGER®, HUGO BOSS®, LACOSTE®, SCUDERIA FERRARI®, REBECCA MINKOFF® and URI MINKOFF® watches worldwide, and operates Movado company stores in the United States and Canada.

In this release, the Company presents certain financial measures that are not calculated according to generally accepted accounting principles in the United States (“GAAP”). Specifically, the Company is presenting adjusted gross profit, adjusted gross margin, adjusted operating expenses and adjusted operating income, which are gross profit, gross margin, operating expenses and operating income, respectively, under GAAP, adjusted to eliminate the expenses and amortization of acquisition accounting adjustments related to the Olivia Burton acquisition, integration and acquisition costs as well as the amortization of acquisition accounting adjustments related to MVMT and charges for the Company’s cost savings initiatives. The Company is also presenting adjusted tax provision, which is the tax provision under GAAP, adjusted to eliminate the impact of tax benefits related to the 2017 Tax Act as well as other tax benefit of foreign tax items, charges for the Olivia Burton and MVMT acquisitions, and the Company’s cost savings initiatives. The Company believes these adjusted measures are useful because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. The Company is also presenting adjusted net income, adjusted earnings per share and adjusted effective tax rate, which are net income, earnings per share and effective tax rate, respectively, under GAAP, adjusted to eliminate the after-tax impact of tax benefits related to the 2017 Tax Act as well as other tax benefit of foreign tax items, amortization of acquisition accounting adjustments and other charges related to the Olivia Burton and MVMT acquisitions, and the Company’s cost savings initiatives. The Company believes that adjusted net income, adjusted earnings per share and adjusted effective tax rate are useful measures of performance because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. Additionally, the Company is presenting constant currency information to provide a framework to assess how its business performed excluding the effects of foreign currency exchange rate fluctuations in the current period. Comparisons of financial results on a constant dollar basis are calculated by translating each foreign currency at the same U.S. dollar exchange rate as in effect for the prior-year period for both periods being compared. The Company believes this information is useful to investors to facilitate comparisons of operating results. These non-GAAP financial measures are designed to complement the GAAP financial information presented in this release. The non-GAAP financial measures presented should not be considered in isolation from or as a substitute for the comparable GAAP financial measures, and the methods of their calculation may differ substantially from similarly titled measures used by other companies.

4
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 variations of such words 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 general economic and business conditions which may impact disposable income of consumers in the United States and the other significant markets (including Europe) where the Company’s products are sold, uncertainty regarding such economic and business conditions, trends in consumer debt levels and bad debt write-offs, general uncertainty related to possible terrorist attacks, natural disasters, pandemics, including the effect of COVID-19 and other diseases on travel and traffic in our retail stores and wholesale business, the stability of the European Union (including the impact of the United Kingdom’s process to exit from the European Union), the stability of the United Kingdom after its exit from the European Union, and defaults on or downgrades of sovereign debt and the impact of any of those events on consumer spending, changes in consumer preferences and popularity of particular designs, new product development and introduction, decrease in mall traffic and increase in e-commerce, the ability of the Company to successfully implement its business strategies, competitive products and pricing, the impact of “smart” watches and other wearable tech products on the traditional watch market, seasonality, availability of alternative sources of supply in the case of the loss of any significant supplier or any supplier’s inability to fulfill the Company’s orders, the loss of or curtailed sales to significant customers, the Company’s dependence on key employees and officers, the ability to successfully integrate the operations of acquired businesses without disruption to other business activities, the possible impairment of acquired intangible assets including goodwill if the carrying value of any reporting unit were to exceed its fair value, volatility in reported earnings resulting from changes in the estimated fair value of contingent acquisition consideration, the continuation of the company’s major warehouse and distribution centers, the continuation of licensing arrangements with third parties, losses possible from pending or future litigation, the ability to secure and protect trademarks, patents and other intellectual property rights, the ability to lease new stores on suitable terms in desired markets and to complete construction on a timely basis, the ability of the Company to successfully manage its expenses on a continuing basis, information systems failure or breaches of network security, the continued availability to the Company of financing and credit on favorable terms, business disruptions, and general risks associated with doing business outside the United States including, without limitation, import duties, tariffs (including retaliatory tariffs), quotas, political and economic stability, changes to existing laws or regulations, and success of hedging strategies with respect to currency exchange rate fluctuations, 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. The Company assumes no duty to update its forward looking statements and this release shall not be construed to indicate the assumption by the Company of any duty to update its outlook in the future.

(Tables to follow)


5
MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

   
Three Months Ended
    
Twelve Months Ended
  
   
January 31,
    
January 31,
  
   
2020
    
2019
    
2020
    
2019
  
                         
Net sales
  
$
190,983
    
$
199,376
    
$
700,966
    
$
679,567
  
                                 
Cost of sales
    
90,375
      
88,740
      
326,077
      
310,209
  
                                 
Gross profit
    
100,608
      
110,636
      
374,889
      
369,358
  
                                 
Operating expenses
    
94,005
      
93,545
      
331,898
      
307,161
  
                                 
Operating income
    
6,603
      
17,091
      
42,991
      
62,197
  
                                 
Non-operating income/(expense):
                                
Change in contingent consideration
    
1,729
      
-
      
15,356
      
-
  
Interest expense
    
(241
)
    
(241
)
    
(930
)
    
(771
)
Interest income
    
23
      
49
      
86
      
307
  
                                 
Income before income taxes
    
8,114
      
16,899
      
57,503
      
61,733
  
                                 
Provision/(Benefit) for income taxes
    
4,581
      
(495
)
    
15,124
      
162
  
                                 
Net income
    
3,533
      
17,394
      
42,379
      
61,571
  
                                 
Less: Net income (loss) attributable to noncontrolling interests
    
29
      
(53
)
    
(320
)
    
(53
)
                                 
Net income attributable to Movado Group, Inc.
  
$
3,504
    
$
17,447
    
$
42,699
    
$
61,624
  
                                 
Diluted Income Per Share Information
                                
Net income attributable to Movado Group, Inc.
  
$
0.15
    
$
0.74
    
$
1.83
    
$
2.61
  
                                 
Weighted diluted average shares outstanding
    
23,272
      
23,532
      
23,297
      
23,600
  



6
MOVADO GROUP, INC.
GAAP AND NON-GAAP MEASURES
(In thousands, except for percentage data)
(Unaudited)

   
As Reported
        
   
Three Months Ended
        
   
January 31,
    
% Change
  
                   
   
2020
    
2019
        
                   
Total net sales, as reported
  
$
190,983
    
$
199,376
      
-4.2
%
Total net sales, constant dollar basis
  
$
191,703
    
$
199,376
      
-3.8
%
                         
                         
                         
   
As Reported
          
   
Twelve Months Ended
          
   
January 31,
    
% Change
  
                         
     
2020
      
2019
          
                         
Total net sales, as reported
  
$
700,966
    
$
679,567
      
3.1
%
Total net sales, constant dollar basis
  
$
713,095
    
$
679,567
      
4.9
%


7
MOVADO GROUP, INC.
GAAP AND NON-GAAP MEASURES
(In thousands, except per share data)
(Unaudited)

   
Net Sales
    
Gross Profit
    
Operating Income
    
Pre-tax Income
    
Provision/(Benefit) for Income Taxes
    
Net Income Attributable to Movado Group, Inc.
    
Diluted EPS
  
Three Months Ended January 31, 2020
                                          
As Reported (GAAP)
  
$
190,983
    
$
100,608
    
$
6,603
    
$
8,114
    
$
4,581
    
$
3,504
    
$
0.15
  
Olivia Burton Costs (1)
    
-
      
-
      
709
      
709
      
134
      
575
      
0.03
  
MVMT Costs (2)
    
-
      
-
      
1,028
      
1,028
      
247
      
781
      
0.03
  
Change In Contingent Consideration (3)
    
-
      
-
      
-
      
(1,729
)
    
(415
)
    
(1,314
)
    
(0.06
)
Adjusted Results (Non-GAAP)
  
$
190,983
    
$
100,608
    
$
8,340
    
$
8,122
    
$
4,547
    
$
3,546
    
$
0.15
  
                                                         
                                                         
Three Months Ended January 31, 2019
                                                        
As Reported (GAAP)
  
$
199,376
    
$
110,636
    
$
17,091
    
$
16,899
    
$
(495
)
  
$
17,447
    
$
0.74
  
Olivia Burton Costs (1)
    
-
      
-
      
716
      
716
      
136
      
580
      
0.02
  
Cost Savings Initiatives (4)
    
-
      
-
      
(281
)
    
(281
)
    
(61
)
    
(220
)
    
(0.01
)
MVMT Costs (5)
    
-
      
420
      
2,409
      
2,409
      
(46
)
    
2,455
      
0.10
  
Other Tax Items (6)
    
-
      
-
      
-
      
-
      
4,398
      
(4,398
)
    
(0.18
)
Adjusted Results (Non-GAAP)
  
$
199,376
    
$
111,056
    
$
19,935
    
$
19,743
    
$
3,932
    
$
15,864
    
$
0.67
  
                                                         
                                                         
                                                         
   
Net Sales
    
Gross Profit
    
Operating Income
    
Pre-tax Income
    
Provision/(Benefit) for Income Taxes
    
Net Income Attributable to Movado Group, Inc.
    
Diluted EPS
  
Twelve Months Ended January 31, 2020
                                                        
As Reported (GAAP)
  
$
700,966
    
$
374,889
    
$
42,991
    
$
57,503
    
$
15,124
    
$
42,699
    
$
1.83
  
Olivia Burton Costs (1)
    
-
      
-
      
2,787
      
2,787
      
529
      
2,258
      
0.10
  
MVMT Costs (2)
    
-
      
140
      
4,562
      
4,562
      
1,095
      
3,467
      
0.15
  
Change In Contingent Consideration (3)
    
-
      
-
      
-
      
(15,356
)
    
(3,685
)
    
(11,671
)
    
(0.50
)
Cost Savings Initiatives (4)
    
-
      
-
      
(320
)
    
(320
)
    
(77
)
    
(243
)
    
(0.01
)
Adjusted Results (Non-GAAP)
  
$
700,966
    
$
375,029
    
$
50,020
    
$
49,176
    
$
12,986
    
$
36,510
    
$
1.57
  
                                                         
                                                         
Twelve Months Ended January 31, 2019
                                                        
As Reported (GAAP)
  
$
679,567
    
$
369,358
    
$
62,197
    
$
61,733
    
$
162
    
$
61,624
    
$
2.61
  
Olivia Burton Costs (1)
    
-
      
-
      
2,908
      
2,908
      
552
      
2,356
    
$
0.10
  
Cost Savings Initiatives (4)
    
-
      
-
      
(281
)
    
(281
)
    
(61
)
    
(220
)
  
$
(0.01
)
MVMT Costs (5)
    
-
      
560
      
14,354
      
14,354
      
2,964
      
11,390
    
$
0.48
  
Other Tax Items (6)
    
-
      
-
      
-
      
-
      
12,031
      
(12,031
)
  
$
(0.51
)
Adjusted Results (Non-GAAP)
  
$
679,567
    
$
369,918
    
$
79,178
    
$
78,714
    
$
15,648
    
$
63,119
    
$
2.67
  

(1)
Related to the amortization of acquired intangible assets for Olivia Burton.
(2)
Related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation of MVMT.
(3)
Remeasurement of contingent consideration liability.
(4)
Change in estimate in Fiscal 2020 and Fiscal 2019 for severance and occupancy expenses.
(5)
Related to acquisition costs, amortization of acquired intangible assets and accounting adjustments of MVMT.
(6)
Related to the impact of the 2017 Tax Act as well as tax benefit of other foreign tax items.


8
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

    
January 31,
    
January 31,
  
   
2020
    
2019
  
ASSETS
            
             
             
Cash and cash equivalents
  
$
185,872
    
$
189,911
  
Trade receivables, net
    
78,388
      
84,026
  
Inventories
    
171,406
      
165,311
  
Other current assets
    
28,888
      
28,898
  
    Total current assets
    
464,554
      
468,146
  
                 
Property, plant and equipment, net
    
29,238
      
26,067
  
Operating lease right-of-use assets
    
89,523
      
-
  
Deferred and non-current income taxes
    
25,403
      
24,503
  
Goodwill
    
136,366
      
136,033
  
Other intangibles, net
    
42,359
      
48,183
  
Other non-current assets
    
59,865
      
56,769
  
    Total assets
  
$
847,308
    
$
759,701
  
                 
LIABILITIES AND EQUITY
                
                 
                 
Accounts payable
  
$
35,488
    
$
38,650
  
Accrued liabilities
    
44,210
      
44,429
  
Accrued payroll and benefits
    
6,302
      
18,773
  
Current operating lease liabilities
    
15,083
      
-
  
Income taxes payable
    
8,217
      
10,831
  
    Total current liabilities
    
109,300
      
112,683
  
                 
Loans payable to bank, non current
    
51,910
      
50,280
  
Deferred and non-current income taxes payable
    
25,419
      
29,242
  
Non-current operating lease liabilities
    
81,877
      
-
  
Other non-current liabilities
    
48,393
      
67,120
  
                 
Redeemable noncontrolling interest
    
3,165
      
3,721
  
                 
Shareholders' equity
    
526,537
      
496,655
  
                 
Noncontrolling interest
    
707
      
-
  
    Total equity
    
527,244
      
496,655
  
                 
    Total liabilities, redeemable noncontrolling interest and equity
  
$
847,308
    
$
759,701
  


9
MOVADO GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

   
Twelve Months Ended
  
   
January 31,
 
   
2020
    
2019
  
Cash flows from operating activities:
            
Net income
  
$
42,699
    
$
61,624
  
Change in contingent consideration
    
(15,356
)
    
-
  
Depreciation and amortization
    
16,381
      
14,165
  
Other non-cash adjustments
    
15,617
      
(7,818
)
Changes in working capital
    
(25,380
)
    
16,309
  
Changes in non-current assets and liabilities
    
(1,891
)
    
1,890
  
Net cash (used in)/provided by operating activities
    
32,070
      
86,170
  
                 
Cash flows from investing activities:
                
Capital expenditures
    
(12,713
)
    
(10,635
)
Acquisitions, net of cash acquired
    
(639
)
    
(97,882
)
Proceeds from assets held for sale
    
240
      
-
  
Trademarks and other intangibles
    
(255
)
    
(492
)
Net cash used in investing activities
    
(13,367
)
    
(109,009
)
                 
Cash flows from financing activities:
                
Proceeds from bank borrowings
    
-
      
50,296
  
Repayments of bank borrowings
    
-
      
(25,000
)
Dividends paid
    
(18,400
)
    
(18,469
)
Stock repurchase
    
(4,199
)
    
(7,418
)
Stock awards and options exercised and other changes
    
(1,266
)
    
4,968
  
Debt issuance costs
    
-
      
(689
)
Net cash (used in)/provided by financing activities
    
(23,865
)
    
3,688
  
                 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
    
1,141
      
(5,801
)
Net change in cash, cash equivalents, and restricted cash
    
(4,021
)
    
(24,952
)
Cash, cash equivalents, and restricted cash at beginning of period
    
190,459
      
215,411
  
                 
Cash, cash equivalents, and restricted cash at end of period
  
$
186,438
    
$
190,459
  
                 
Reconciliation of cash, cash equivalents, and restricted cash:
                
Cash and cash equivalents
  
$
185,872
    
$
189,911
  
Restricted cash included in other non-current assets
    
566
      
548
  
Cash, cash equivalents, and restricted cash
  
$
186,438
    
$
190,459
  



10