-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q9nR/PYf6PvhyYqe+sr6iwOctN8D/AUK8ZYlkJ3VRZs0DzPY48X/gs2Z/+tEmPrD tsHQJvwiqVK+YNW2Op4VuQ== 0000950123-96-002685.txt : 19960525 0000950123-96-002685.hdr.sgml : 19960525 ACCESSION NUMBER: 0000950123-96-002685 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960524 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAUTICA ENTERPRISES INC CENTRAL INDEX KEY: 0000093736 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 952431048 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-06708 FILM NUMBER: 96572142 BUSINESS ADDRESS: STREET 1: 40 WEST 57TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125415990 MAIL ADDRESS: STREET 1: 40 W 57TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: STATE O MAINE INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC COAST KNITTING MILLS INC DATE OF NAME CHANGE: 19751124 10-K 1 NAUTICA ENTERPRISES, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 1O-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended February 29, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission file number 0-6708 NAUTICA ENTERPRISES, INC. (Exact Name of Registrant as Specified in Its Charter) DELAWARE 95-2431048 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 40 WEST 57TH STREET, NEW YORK, NEW YORK 10019 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (212) 541-5757 ------------------------------ Securities registered pursuant to Section 12(g) of the Act: Title of Class Common Stock par value $.10 per share Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] On May 20, 1996, the aggregate market value of the voting stock held by non-affiliates of the registrant, using the average bid and asked prices of the registrant's stock on such date, was $793,311,688. DOCUMENTS INCORPORATED BY REFERENCE Identification of Document Part into which Incorporated Proxy Statement for Annual Meeting of Stockholders to be held July 1, 1996. Part III -- Items 10, 11, 12 and 13 2 PART I ITEM 1. BUSINESS Nautica Enterprises, Inc., a Delaware corporation (the "Company") designs, sources and markets men's apparel through two wholly owned subsidiaries, Nautica International, Inc. ("Nautica") and State-O-Maine, Inc. ("State-O-Maine"). Nautica offers a lifestyle collection of men's sportswear, outerwear and activewear with a distinctive active outdoor image. The collection, sold under the Nautica brand, features innovative designs, classic styling, bold primary colors and quality fabrics. State-O-Maine offers: Nautica brand robes and loungewear; sportswear and swimwear under the Bayou Sport label; apparel designed and sourced for private label programs; and, robes and loungewear under the Charles Goodnight label. Nautica's in-store shop program is a primary component of the Company's growth strategy. Through this program, Nautica and a department store customer create a specific area within the store dedicated to the exclusive merchandising and sale of the Nautica collection. Each of these shops (referred to herein as a "Nautica Shop") is outfitted with signature Nautica fixtures and presents the Nautica collection in a visually attractive environment consistent with the Nautica image. In addition to Nautica's wholesale business, the Company operates 38 Nautica factory outlet stores and two flagship stores in New York City and Newport Beach, California through its wholly owned subsidiary Nautica Retail USA, Inc. ("Nautica Retail"). The factory outlet stores provide an additional sales channel for Nautica products and allow for organized distribution of excess and out-of-season merchandise. The Company, through its wholly owned subsidiary Nautica Apparel, Inc., strategically extends the Nautica product lines and broadens the international distribution of the Nautica apparel collection through license agreements. The Nautica name is currently licensed for a range of products consistent with Nautica's design concepts and image. PRODUCTS Nautica Nautica offers a lifestyle collection of men's sportswear, outerwear and activewear with a distinctive active outdoor image. The collection, sold under the Nautica brand, features innovative designs, classic styling, bold primary colors and quality fabrics. The Nautica name and trademarks are prominently displayed on Nautica products to promote brand awareness and maintain consumer loyalty. Although Nautica products are targeted to the 25-54 year old age group, the Company believes that its products appeal to both younger and older consumers who identify with the Nautica lifestyle and image. The Nautica collection is offered in three principal groups: Anchor, Crew and Fashion. Products in each of these groups are designed by Nautica's in-house staff and include sportswear, outerwear and activewear. Sportswear includes sweaters, cardigans, woven shirts, knit shirts, rugbys, pants and shorts. Outerwear includes parkas, anoraks, bomber jackets and foul weather gear. Activewear includes fleece and french terry tops, french terry pants and shorts, tee shirts and swimwear. The Anchor group serves as the foundation for the Nautica collection and consists of basic items, including cotton twill shirts, cotton pique knit shirts, cotton twill pants, lightweight jackets and swimwear. These seasonless products feature Nautica's signature color schemes and styles and are available to retail customers throughout the year. The Company maintains inventory of Anchor products in order to continuously 1 3 replenish the stock of its retail customers. Since 1992, retail customers have been able to re-order Anchor products through electronic data interchange (EDI). The Crew and Fashion groups are usually presented in ten deliveries during Nautica's four merchandising seasons. Crew is typically the first collection delivery of the Spring, Transitional, Fall and Holiday seasons. The Crew collections reinterpret Anchor basics by introducing seasonal colors and offer additional items and styles. Fashion deliveries consist of three to five small groups within each merchandising season. The Fashion collections are based on seasonal themes developed by Nautica's design and merchandising staffs. These themes, which have included "Great Lakes Adventure" and "Windward Sailing" reinforce the Nautica image. The Fashion group is distinguished by its distinctive use of color, novelty prints and fabrics and unique design elements. The Anchor, Crew and Fashion groups are developed to be merchandised together as a cohesive Nautica collection. In 1996, Nautica introduced its "Nautica Competition" brand of performance apparel. The Nautica Competition collection features innovative products engineered for both serious athletes and fitness-oriented consumers. Nautica has designed a separate in-store shop configuration for Nautica Competition using high tech materials accented with aluminum and glass and athletic inspired photographs. The Company also licenses the Nautica name and trademarks for a range of products consistent with Nautica's design concepts and image, including men's cologne and skin care products, watches, eyewear and footwear. See "Licensing." State-O-Maine State-O-Maine offers: Nautica brand robes and loungewear; sportswear and swimwear under the Bayou Sport label; apparel designed and sourced for private label programs; and, robes and loungewear under the Charles Goodnight label. The Nautica brand men's furnishings targets the same consumer base as the Nautica collection, but is typically sold and displayed in the men's furnishings department of leading department and specialty stores. For its other lines, State-O-Maine employs more competitive pricing and broader distribution strategies than those of Nautica. In 1989, State-O-Maine commenced the development, sale and distribution of distinctive men's robes and loungewear bearing the Nautica label. This line features quality fabrics, classic styling and design concepts inspired by the Nautica collections. In 1992, State-O-Maine introduced a spirited line of men's apparel under the Bayou Sport label. The Bayou Sport line of woven and knit shirts and swimwear features vibrant prints and bold colors and patterns, and is offered at competitive price points. State-O-Maine continues to actively develop its private label business for department store customers such as Belk and Dillard's and for national chain store operators such as J.C. Penney, Target and Sears, Roebuck and Co. Products designed and sourced for private label programs include sportswear, swimwear, robes and loungewear. The Company uses its design and sourcing expertise to offer quality products at competitive prices. In 1995, State-O-Maine introduced robes and loungewear under the Charles Goodnight label. This license agreement enables State-O-Maine to enhance the sale and distribution of its core robe and loungewear products. 2 4 MARKETING Nautica's in-store shop program is a primary component of the Company's growth strategy. Through this program, Nautica and a department store customer create a specific area within the store dedicated to the exclusive merchandising and sale of the Nautica collection. These Nautica Shops, strategically located in the men's collections departments of leading department stores, provide a distinctive selling environment tailored to Nautica's specifications and generally include cherry and ash wood flooring, custom designed ash fixtures, brass hardware and nautical props. As a result of their configuration, Nautica Shops stock a greater volume of Nautica inventory per square foot than would typically be carried in a standard department store setting. They also allow for enhanced customer service and monitoring of sales performance. Accordingly, management believes that the Nautica Shops achieve sales productivity significantly exceeding that of sales of Nautica products in a standard department store setting. Nautica plans to continue to install and expand Nautica Shops in department stores which currently sell the Nautica collection and to install Nautica Shops in additional retail locations. The continued development of the Nautica Shop program is dependent on general apparel industry conditions, continued participation by retail customers and continued demand by consumers for the Nautica collection. In 1996, the Company expanded the Nautica Shop program to include shops featuring the Nautica Competition brand of performance apparel. The shops feature high tech materials accented with aluminum and glass and athletic inspired photographs. In order to maximize the effectiveness of the Nautica Shop program, Nautica established a merchandise coordinator program in 1990. Each of Nautica's merchandise coordinators services a group of retail customers within a common geographic region. They communicate with and visit each of their customers on a regular basis to ensure proper visual display of Nautica merchandise, analyze inventory requirements, and provide selling and merchandising support to the sales staff. Merchandise coordinators also train certain department store employees with regard to Nautica's product features, sales methods and shop management. They also provide sales information to the Company's retail analysts who monitor retail customer performance and develop plans to assist these retail customers with future purchases of Nautica products. Management believes that the performance of Nautica Shops is enhanced by the close interaction of its merchandise coordinators with its retail customers. Nautica concentrates its marketing efforts on national and regional print advertising. The advertising captures the Nautica image in environments that reflect the Nautica lifestyle collection. The Nautica advertising campaign is featured throughout the year in national magazines including Atlantic Monthly, Conde Nast Traveler, Details, Esquire, GQ, George, L'Uomo Vogue, Men's Health, Men's Journal, The New Yorker, The New York Times Magazine, Outside, Sports Illustrated, Vanity Fair, Wired and W-The Men's Portfolio; and in regional magazines. In addition, Nautica participates with its retail customers in a cooperative advertising program. The print advertising is supplemented by a series of special events and sponsorships. Nautica was the official clothing sponsor for the U.S. Sailing Team. The Company is the official apparel sponsor of the Northville (L.I.) Classic and the Transamerica Senior Golf Championship, two events on the Senior PGA tour. Nautica products are also sold through 38 Company-owned factory outlet stores located throughout the United States and two Company-owned retail stores located in New York City and Newport Beach, California. See "Retail." Nautica sells its products primarily to leading department and specialty stores. Its principal customers include Dillard's, May Company Department Stores (including Kaufmann's, Foley's, Filene's, Lord & Taylor and Famous Barr), Dayton's-Hudson-Field's, Federated Department Stores (including Macy's, 3 5 Bloomingdale's, Lazarus/Rich's) and Nordstrom. Nautica maintains showrooms in New York City and Dallas, Texas. State-O-Maine sells its products primarily to department stores including Dillard's and May Company Department Stores, Dayton's-Hudson-Field's, and Federated Department Stores. In addition, State-O-Maine sells its products to national chain store operators such as J.C. Penney Co., Inc. and Sears, Roebuck and Co. State-O-Maine's Bayou Sport line and its private label program employ more competitive pricing and broader distribution strategies than the Nautica brand. State-O-Maine products are generally sold in individual product categories through mainfloor classification departments. Its products are marketed by its regional sales managers and sales representatives through its showrooms in New York City and Dallas, Texas. In fiscal 1996, Dillard's, May Company Department Stores and Federated Department Stores each accounted for approximately 15%, 18% and 14%, respectively, of the Company's total gross sales. No other customer of the Company accounted for 10% or more of the Company's sales during that period. PRODUCT DESIGN AND SOURCING The Company manages the development of its apparel from initial product concept through color and pattern design, fabric identification and testing and garment manufacturing. Products are designed by the in-house staffs of Nautica and State-O-Maine. The design teams work in conjunction with the sales and production teams to determine the apparel styles for a particular season based upon an evaluation of current style trends, prior year's sales and consultations with retail customers. In conjunction with agents located in foreign countries, Nautica and State-O-Maine arrange fabric sourcing and garment production to ensure that final products satisfy detailed specifications and quality standards. The Company contracts for the manufacture of its products and does not own or operate any manufacturing facilities. The Company's manufacturers are located primarily in Hong Kong, the People's Republic of China, the Philippines, Malaysia, Singapore, Saipan, Thailand, India and Turkey. The Company's agents, based in Hong Kong, Taiwan, Turkey and India monitor production to ensure compliance with design specifications, quality standards and timely delivery of finished garments. They are assisted by Company employees based in New York who regularly visit with the manufacturers to monitor production. To date, the Company has not experienced significant difficulty in obtaining manufacturing services. Management believes that many alternate manufacturing sources exist. However, the inability of current sources to satisfy the Company's manufacturing requirements, the loss of certain manufacturers, the loss of an agent of the Company or a delay in locating manufacturing capacity following termination of a manufacturing relationship, could have a material adverse effect on the Company's business and operating results. While the Company has long standing relationships with many of its manufacturers and believes its relations to be good, it does not have long-term commitments with manufacturers. The Company sources for many of its manufacturers a broad range of natural and synthetic fabrics primarily from foreign textile mills and converters. The Company separately negotiates with fabric suppliers for the sale of required fabric which is then purchased by its manufacturers in accordance with the Company's specifications. To date, the Company has not experienced significant difficulty in sourcing fabrics for its manufacturers. Management believes that many alternate sources of supplies exist. However, the inability of current sources to satisfy the Company's fabric requirements, the loss of certain fabric vendors, or a delay in manufacturers obtaining fabric from certain vendors, could have a material adverse effect on the Company's business and operating results. The Company does not have any long-term commitments with fabric suppliers. The Company contracts to purchase its goods in United States dollars and has not experienced material difficulties as a result of foreign political, economic or social instability. However, the Company's business remains subject to the usual risks associated with foreign suppliers. 4 6 LICENSING The Company strategically extends the Nautica product line and broadens the international distribution of the Nautica apparel collection through license agreements. These license agreements allow the Company to enter new businesses and countries with minimal capital commitments and to benefit from the experience of the licensee with the licensed product or the local market. The Nautica name and related trademarks are licensed through the Company's wholly owned subsidiary, Nautica Apparel, Inc. ("Nautica Licensing"). Net royalty income to the Company was approximately $942,000, $1,285,000 and $2,248,000 in fiscal 1994, fiscal 1995 and fiscal 1996, respectively. Nautica Licensing currently licenses products for wholesale distribution in the following product categories: men's cologne and skin care products, neckwear, tailored clothing, rainwear, boys' apparel, women's sportswear, footwear, luggage, watches, caps, men's hosiery, eyewear, belts and small leather goods, umbrellas and a Lincoln-Mercury Villager minivan. Internationally, Nautica apparel is licensed for sale in Australia, Brazil, Canada, the Caribbean, Chile, Colombia, Greece, Hong Kong, Japan, Korea, Mexico, New Zealand, Panama, Peru, Taiwan, Thailand and Venezuela. In addition to wholesale distribution of Nautica apparel, international licensees operate a total of approximately 58 Nautica retail stores in certain of these markets. As a provision of the agreement by which the Company acquired the Nautica brand in 1984, David Chu, Executive Vice President of the Company and President of Nautica Licensing and Nautica, is entitled to receive 50% of the net royalty income from licensing the Nautica name and trademarks. The Company is entitled to receive the remaining 50% of such net royalty income. RETAIL Factory Outlet Stores The Company operates 38 Nautica factory outlet stores generally located in manufacturers' outlet centers throughout the United States. The Company's retail operations are conducted through its wholly owned subsidiary, Nautica Retail USA, Inc. ("Nautica Retail"). These factory outlet stores have enabled the Company to increase sales in certain geographic markets where Nautica products were not previously available and to consumers who favor value-oriented retailers. They also provide opportunities for Nautica to sell excess and out-of-season merchandise, thereby reducing the need to sell such merchandise to discounters at excessively low prices. Nautica factory outlet stores are geographically positioned to minimize potential conflict with the Company's retail customers. Flagship Stores The Company operates two Nautica flagship stores, one in New York City and one in Newport Beach, California. With their signature Nautica cherry and ash wood flooring, ash fixtures, brass hardware and nautical props, these stores are designed to convey the complete Nautica image. The stores carry a wide range of Nautica brand products, including Nautica furnishings, watches and footwear. These stores serve as a showcase for Nautica's retail customers and build brand recognition among consumers. SEASONALITY Historically, the Company has experienced its highest level of sales in the third quarter and its lowest level in the first quarter. This pattern has resulted primarily from the timing of shipments to retail customers for Spring and Fall seasons. In the future, the timing of seasonal shipments may vary by quarter. 5 7 TRADEMARKS Nautica and its related trademarks (the "Nautica Marks"), including the Nautica Spinnaker, are registered trademarks of Nautica Apparel, Inc. in the United States for apparel and other products, including cologne, eyewear, watches, small leather goods, umbrellas, luggage and jewelry. Applications to register the Nautica Marks in other product categories have been filed by the Company in the United States. In addition, the Company has registered or is in the process of registering the Nautica Marks in over 70 countries throughout the world for apparel and in other complementary product categories. State-O-Maine and Bayou Sport are registered trademarks of State-O-Maine in the United States for certain apparel items. The Company regards its trademarks and other proprietary rights as valuable assets. COMPETITION The apparel industry is highly competitive. The Company encounters substantial competition from brands such as Polo/Ralph Lauren, Tommy Hilfiger and Claiborne, as well as from certain non-designer lines. In addition, department stores, including some of the Company's major retail customers, have increased in recent years the amount of goods manufactured specifically for them and sold under their own labels. Some of the Company's competitors are significantly larger and more diversified than the Company and have substantially greater resources available for marketing their products. The Company believes that its ability to compete effectively depends upon the continuing appeal of Nautica apparel and the Company's other products to its retail customers and consumers as well as the Company's ability to continue to offer high quality apparel at appropriate price points. EMPLOYEES At February 29, 1996, the Company had approximately 1,000 employees. Approximately 230 employees are located at the Company's Rockland, Maine facilities; approximately 180 of such employees are members of the Amalgamated Clothing and Textile Workers Union, AFL-CIO, CLC. The Company considers its relations with its employees to be good. ITEM 2. PROPERTIES The Company operates three warehouse and distribution facilities in Rockland, Maine. A 165,000 square foot facility, owned by the Company, is used for receiving, shipping and warehousing the Nautica apparel and private label lines. The Company expects to complete an expansion of the facility in 1996, which will add approximately 165,000 square feet of usable area. A 100,000 square foot facility, also owned by the Company, is used primarily for receiving, shipping and warehousing the Nautica furnishings, Bayou Sport and Nautica Retail inventories. A leased facility of approximately 33,000 square feet is used for warehousing a range of the Company's products. All merchandise is shipped directly from the Company's manufacturers to its facilities in Rockland, Maine where it is processed and shipped to customers. The Company has administrative and sales offices at 40 West 57th Street, New York, New York, where it occupies under lease approximately 32,000 square feet. It also leases a design studio of approximately 22,000 square feet located at 11 West 19th Street, New York, New York. The Company or its 6 8 subsidiaries also lease sales offices in Dallas, Texas, two retails stores and 38 Nautica factory outlet stores located throughout the United States. The factory outlet stores each average approximately 3,200 square feet. All of the Company's facilities are deemed by it to be adequate for the purposes utilized. ITEM 3. LEGAL PROCEEDINGS None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS No matters were submitted to a vote of security-holders during the fourth quarter of fiscal 1996. 7 9 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is publicly quoted on the National Market System of the National Association of Securities Dealers Automated Quotation System ("NASDAQ") under the trading symbol "NAUT." The following table sets forth for the periods indicated the high and low reported sales prices per share for the common stock as quoted by the NASDAQ National Market System. All prices have been adjusted to reflect a two-for-one stock split to be effected in the form of a stock dividend payable on May 28, 1996.
High Low ---- --- Fiscal 1995 First Quarter ended May 31, 1994 $ 9.25 $ 7.25 Second Quarter ended August 31, 1994 9.25 6.50 Third Quarter ended November 30, 1994 10.84 8.75 Fourth Quarter ended February 28, 1995 10.75 9.00 Fiscal 1996 First Quarter ended May 31, 1995 11.17 8.17 Second Quarter ended August 31, 1995 17.00 9.92 Third Quarter ended November 30, 1995 19.13 15.63 Fourth Quarter ended February 29, 1996 22.75 16.25 Fiscal 1997 First Quarter (through May 20, 1996) 24.38 22.25 ----- -----
As of May 20, 1996, there were approximately 365 holders of record of the Company's common stock. The policy of the Company is to retain earnings to provide funds for the operation and expansion of its business and, accordingly, the Company has paid no cash dividends on its Common Stock. Any payment of future cash dividends and the amounts thereof will be dependent upon the Company's earnings, financial requirements, and other factors deemed relevant by the Company's Board of Directors. 8 10 Item 6. Selected Financial Data
Year ended ---------------------------------------------------------------------------- February 29, February 28, February 28, February 28, February 29, 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Selected consolidated statements of earnings data Net sales $302,541,175 $247,630,892 $192,939,093 $150,962,006 $121,153,102 ============ ============ ============ ============ ============ Net earnings $ 31,986,310 $ 23,971,307 $ 16,803,991 $ 10,488,204 $ 7,488,669 ============ ============ ============ ============ ============ Net earnings per share of common stock Primary $ .75 $ .57 $ .45 $ .30 $ .22 === === === === === Fully diluted $ .75 $ .57 $ .45 $ .30 $ .22 === === === === === Cash dividends per share of common stock None None None None None February 29, February 28, February 28, February 28, February 29, 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Selected consolidated balance sheets data Total assets $209,339,849 $168,355,506 $137,040,445 $ 79,301,967 $ 60,357,985 Long-term debt, excluding current portion 200,000 250,000 300,000 350,000 417,338 Working capital 133,912,229 114,488,525 95,673,926 45,389,377 35,229,937 Stockholders' equity 173,138,288 139,300,351 114,143,790 59,013,183 48,297,673
All share data has been adjusted to reflect stock splits. 9 11 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Fiscal year ended February 29, 1996 compared to February 28, 1995: Consolidated net sales increased 22.2% to $302.5 million in the fiscal year ended February 29, 1996 compared to $247.6 million in the prior fiscal year. This increase is primarily a result of increased sales of Nautica products through its wholesale and retail operations. Nautica's wholesale sales increased due to the expansion of Nautica's in-store shop program, sales to new retail customers and to additional locations of existing customers. The increase in Nautica's wholesale sales is due primarily to increased unit volume rather than price increases. Nautica retail sales increased as a result of opening nine additional Nautica factory outlet stores during the current year, the full year effect of eight stores opened in the prior year and to an increase in comparable store sales. Consolidated gross profit during the fiscal year ended February 29, 1996 increased to 45.3% of net sales, as compared to 44.3% of net sales in the prior fiscal year. The net increase resulted primarily from a shift to the higher margin Nautica wholesale products and to an increase in retail operations. Selling, general and administrative expenses as a percentage of net sales decreased to 29.4% during the fiscal year ended February 29, 1996 as compared to 30.0% in the prior fiscal year. The net decrease, as a percentage of sales, resulted from economies of scale achieved with sales growth. Furthermore, selling, general and administrative expenses in 1995 include other expenses of $881,000 (.4% of net sales) which primarily related to costs associated with the Company's evaluation of its warehouse and distribution facilities location. Net royalty income increased by $963,000 to $2,248,000 in the fiscal year ended February 29, 1996 as compared to $1,285,000 in the prior fiscal year. The increase is a result of increased royalty revenue from new and existing licensees. The interest income increase of approximately $553,000 is due to higher average cash balances during the year and to an increase in the rate of return on investments The provision for income taxes increased to 39.6% as compared to 37.9% in the prior year. The prior year's rate was unusually low due to certain state tax relief provided to the Company which reduced the corporate tax rate and the inclusion of a one time refund of taxes previously paid. Net earnings increased 33.4% to $32.0 million in the fiscal year ended February 29, 1996 from $24.0 million in the prior fiscal year as a result of the factors discussed above. Fiscal year ended February 28, 1995 compared to February 28, 1994: Consolidated net sales increased 28.4% to $247.6 million in the fiscal year ended February 28, 1995 compared to $192.9 million in the prior fiscal year. This increase is primarily a result of increased sales of Nautica products through its wholesale and retail operations. Nautica's wholesale sales increased due to the expansion of Nautica's in-store shop program, sales to new retail customers and to additional locations of existing customers. The increase in Nautica's wholesale sales is primarily due to increased unit volume rather than price increases. Nautica retail sales increased as a result of opening eight additional Nautica factory outlet stores during the current year, the full year effect of four stores opened in the prior year and to an increase in comparable store sales. 10 12 Consolidated gross profit during the fiscal year ended February 28, 1995 increased to 44.3% of net sales, as compared to 43.5% of net sales in the prior fiscal year. The net increase resulted primarily from a shift in sales mix to higher margin products. Selling, general and administrative expenses as a percentage of net sales increased to 30.0% during the fiscal year ended February 28, 1995 as compared to 29.6% in the prior fiscal year. The net increase resulted from additional expenses incurred due to the expiration of a license agreement in the Company's State-O-Maine, Inc. subsidiary in the current year and other expenses of $881,000 which relates primarily to costs associated with the Company's evaluation of its warehouse and distribution facilities resulting in the decision to remain in Maine. Net royalty income increased by $343,000 to $1,285,000 in the fiscal year ended February 28, 1995 as compared to $942,000 in the prior fiscal year. This net increase resulted from increased royalty revenue associated with increased sales by licensees partially offset by increased expenses associated with a bankruptcy filing by one licensee. Investments of the cash balances from operations and the Company's public offering resulted in net interest income of $1,968,000 during the fiscal year ended February 28, 1995. The effective tax rate decreased to 37.9% for the fiscal year ended February 28, 1995 as compared to 41.2% in the prior fiscal year. The decrease is primarily due to certain state tax relief provided to the Company of approximately $1,429,000 and to tax exempt interest income. Net earnings increased 42.7% to $24.0 million in the fiscal year ended February 28, 1995 from $16.8 million in the prior fiscal year as a result of the factors discussed above. LIQUIDITY AND CAPITAL RESOURCES During the years ended February 29, 1996 and February 28, 1995 the Company generated cash from operating activities of $29.6 million and $13.8 million, respectively. Such cash was principally from net earnings and increases in accounts payable and accrued expenses offset by inventory increases in 1996 and 1995 of $5.4 and $18.6 million, respectively, and increases in accounts receivable of $9.2 and $2.5 million, respectively. The increases in inventory and accounts receivable in 1996 are primarily attributable to the increased sales volume. The increase in inventory in 1995 is primarily the result of stocking more basic inventory to fill EDI orders resulting from increased demand for the Anchor group of Nautica products and to fill orders for shipments to be made in the future. During the year ended February 29, 1996 the Company's principal investing activities related to the expansion of the Company's warehouse and distribution facilities and the continued expansion of in-store shops. The expected cost of the expansion is approximately $14.0 million. The Company will utilize its existing cash during construction and is considering financing alternatives for the project following its completion. During the year ended February 28, 1995 the Company's principal investing activities related to the continued expansion of Nautica's in-store shop program. The Company expects to continue to incur capital expenditures to promote the expansion of the Nautica in-store shop program. The Company has $80.0 million in lines of credit with two commercial banks available for short-term borrowings and letters of credit. These lines are collateralized by wholesale inventory and accounts receivable. At February 29, 1996 letters of credit outstanding under the lines were $32.5 million and there were no short-term borrowings outstanding. 11 13 Historically, the Company has experienced its highest level of sales in the third quarter and its lowest level in the first quarter. This pattern has resulted primarily from the timing of shipments to retail customers for Spring and Fall seasons. In the future, the timing of seasonal shipments may vary by quarter. The Company anticipates that internally generated funds from operations, existing cash balances and the Company's existing credit lines will be sufficient to satisfy its cash requirements. CURRENTY FLUCTUATIONS AND INFLATION The Company purchases its products from manufacturers located primarily in the Far East. These purchases are denominated in United States dollars. The Company believes that, to date, the effect of fluctuations of the dollar against foreign currencies has not had a material effect on the cost of imports or the Company's results of operations. However, there can be no assurance that purchase prices for the Company's products will not be affected by future fluctuations in the exchange rate between the United States dollar and the local currencies of these manufacturers. Due to the number of currencies involved, the Company cannot quantify the potential effect of such future fluctuations on future income. The Company does not engage in hedging activities with respect to such exchange rate risk. The Company believes that inflation has not had a material effect on the cost of imports or the Company's results of operations. NEW ACCOUNTING STANDARD In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation." This statement will be effective in the fiscal year 1997 and the Company believes the effect of the adoption of the new standard will have no impact on the Company's consolidated results of operations or financial position. The Company intends to continue to measure the compensation costs under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and present footnote disclosure of net income and earnings per share in accordance with SFAS No. 123. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements required by Part II, Item 8 are included in Part IV, Item 14. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE 12 14 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required is incorporated by reference from the Proxy Statement prepared with respect to the Annual Meeting of Stockholders to be held on July 1, 1996. In addition, for the fiscal year ended February 29, 1996, each of the following filed one late report under Section 16(a) of the Securities and Exchange Act of 1934, reflecting one transaction: Messrs. Robert B. Bank, George Greenberg, Israel Rosenzweig and Charles Scherer, Directors of the Company; Mr. Harvey Sanders, President and a Director of the Company; Mr. David Chu, Executive Vice President and a Director of the Company; and, Mr. John Wetzler, President of Nautica Retail USA, Inc., a wholly owned subsidiary of the Company. ITEM 11. EXECUTIVE COMPENSATION The information required is incorporated by reference from the Proxy Statement prepared with respect to the Annual Meeting of Stockholders to be held on July 1, 1996. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required is incorporated by reference from the Proxy Statement prepared with respect to the Annual Meeting of Stockholders to be held on July 1, 1996. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required is incorporated by reference from the Proxy Statement prepared with respect to the Annual Meeting of Stockholders to be held on July 1, 1996 and by reference to Footnotes G, H and K of the Financial Statement included in this report and referred to at Part IV, Item 14. 13 15 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 1. Financial Statements The following Consolidated Financial Statements of Nautica Enterprises, Inc. and Subsidiaries required by Part II, Item 8, are included in Part IV of this report:
Page ---- Report of Independent Certified Public Accountants F-3 Consolidated Balance Sheets at February 29, 1996 and February 28, 1995 F-4 Consolidated Statements of Earnings for each of the three years in the period ended February 29, 1996 F-6 Consolidated Statement of Stockholders' Equity for each of the three years in the period ended February 29, 1996 F-7 Consolidated Statements of Cash Flows for each of the three years in the period ended February 29, 1996 F-8 Notes to Consolidated Financial Statements F-10 (a) 2. Financial Statement Schedules Included in Part IV of this report: Schedules for each of the three years in the period ended February 29, 1996: II - Valuation and Qualifying Accounts F-24
3. Exhibits 3(a) Registrant's By-laws as currently in effect are incorporated herein by reference to Registrant's Registration Statement on Form S-1 (Registration No. 33-21998). 3(b) Registrant's Certificate of Incorporation is incorporated by reference to the Registration Statement on Form S-3 (Registration No. 33-71926), as amended by a Certificate of Amendment dated June 29, 1995. 10(iii)(a) Registrant's Executive Incentive Stock Option Plan is incorporated by reference herein from the Registrant's Registration Statements on Form S-8 (Registration Number 33-1488), as amended by the Company's Registration Statement on Form S-8 (Registration Number 33-45823). F-1 16 10(iii)(b) Registrant's 1989 Employee Incentive Stock Plan is incorporated by reference herein from the Registrant's Registration Statement on Form S-8 (Registration Number 33-36040). 10(iii)(c) Registrant's 1994 Incentive Compensation Plan is incorporated by reference herein from the Registrant's Annual Report on Form 10-K for year ended February 28, 1995. 21 Subsidiaries of Registrant. 23.1 Consent of Independent Certified Public Accountants. 27 Financial Data Schedule. (b) Reports on Form 8-K. None F-2 17 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors and Stockholders NAUTICA ENTERPRISES, INC. We have audited the accompanying consolidated balance sheets of Nautica Enterprises, Inc. and Subsidiaries as of February 29, 1996 and February 28, 1995, and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended February 29, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Nautica Enterprises, Inc. and Subsidiaries as of February 29, 1996 and February 28, 1995, and the consolidated results of their operations and their consolidated cash flows for each of the three years in the period ended February 29, 1996, in conformity with generally accepted accounting principles. We have also audited the schedule listed in the accompanying index at Item 14(a)2. for each of the three years in the period ended February 29, 1996. In our opinion, this schedule presents fairly, in all material respects, the information required to be set forth therein. GRANT THORNTON LLP New York, New York April 15, 1996 (except for Note G, as to which the date is April 29, 1996) F-3 18 Nautica Enterprises, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS
FEBRUARY 29, February 28, ASSETS 1996 1995 ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 61,047,522 $ 49,153,556 Accounts receivable - net of allowances of $1,064,000 in 1996 and $1,211,000 in 1995 45,704,169 37,362,801 Inventories 54,235,489 48,876,065 Prepaid expenses and other current assets 5,290,473 5,389,979 Deferred tax benefit 3,636,137 2,511,279 ------------ ------------ Total current assets 169,913,790 143,293,680 PROPERTY, PLANT AND EQUIPMENT - AT COST, less accumulated depreciation and amortization 30,712,102 18,759,795 OTHER ASSETS Excess of cost over net assets acquired, net of accumulated amortization 1,557,814 1,607,534 Other 7,156,143 4,694,497 ------------ ------------ 8,713,957 6,302,031 ------------ ------------ $209,339,849 $168,355,506 ============ ============
The accompanying notes are an integral part of these statements. F-4 19 Nautica Enterprises, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (CONTINUED)
FEBRUARY 29, February 28, LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995 ------------ ------------ CURRENT LIABILITIES Current maturities of long-term debt $ 50,000 $ 50,000 Accounts payable - trade 15,440,362 12,534,381 Accrued expenses and other current liabilities 19,140,265 15,631,659 Income taxes payable 1,370,934 589,115 ------------ ------------ Total current liabilities 36,001,561 28,805,155 LONG-TERM DEBT - NET 200,000 250,000 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock - par value $.01, authorized 2,000,000 shares, no shares issued Common stock - par value $.10, authorized 50,000,000 shares; issued, 41,354,806 shares at 1996 and 20,416,110 shares at 1995 4,135,480 2,041,611 Additional paid-in capital 52,836,972 53,079,214 Retained earnings 116,716,396 84,730,086 ------------ ------------ 173,688,848 139,850,911 Less Common stock in treasury at cost;1,570,070 shares at 1996 and 785,035 shares at 1995 550,560 550,560 ------------ ------------ 173,138,288 139,300,351 ------------ ------------ $209,339,849 $168,355,506 ============ ============
The accompanying notes are an integral part of these statements. F-5 20 Nautica Enterprises, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS
YEAR ENDED Year ended February 28, FEBRUARY 29, ----------------------------- 1996 1995 1994 ------------ ------------ ------------ Net sales $302,541,175 $247,630,892 $192,939,093 Cost of goods sold 165,462,039 137,967,107 108,977,721 ------------ ------------ ------------ Gross profit 137,079,136 109,663,785 83,961,372 Selling, general and administrative expenses 88,913,958 74,317,693 57,127,782 Net royalty (income) (2,247,961) (1,285,325) (941,964) ------------ ------------ ------------ Operating profit 50,413,139 36,631,417 27,775,554 ------------ ------------ ------------ Other income Interest income, net 2,521,135 1,968,204 85 Life insurance proceeds 825,556 ------------ ------------ ------------ 2,521,135 1,968,204 825,641 ------------ ------------ ------------ Earnings before provision for income taxes 52,934,274 38,599,621 28,601,195 Provision for income taxes 20,947,964 14,628,314 11,797,204 ------------ ------------ ------------ NET EARNINGS $ 31,986,310 $ 23,971,307 $ 16,803,991 ============ ============ ============ Earnings per share of common stock $ .75 $ .57 $ .45 ============ ============ ============ Weighted average number of common and common equivalent shares outstanding 42,716,880 41,711,574 37,258,692 ============ ============ ============
The accompanying notes are an integral part of these statements. F-6 21 Nautica Enterprises, Inc. and Subsidiaries CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Years ended February 29, 1996, February 28, 1995 and 1994
COMMON STOCK ADDITIONAL TREASURY STOCK ----------------------- PAID-IN RETAINED -------------------- SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT ---------- ---------- ----------- ------------ --------- -------- Balance at February 28, 1993 7,440,486 $ 744,049 $14,864,906 $ 43,954,788 348,905 $550,560 Net earnings 16,803,991 Common stock issued on exercise of stock options 484,339 48,434 1,740,177 Income tax benefit from stock options 3,955,967 Stock split 3,954,097 395,410 (395,410) 174,452 Common stock issued in public offering, net 1,592,585 159,258 32,422,780 ---------- ---------- ----------- ------------ --------- -------- Balance at February 28, 1994 13,471,507 1,347,151 52,588,420 60,758,779 523,357 550,560 Net earnings 23,971,307 Common stock issued on exercise of stock options 139,233 13,923 509,688 Stock split 6,805,370 680,537 (680,537) 261,678 Income tax benefit from stock options 661,643 ---------- ---------- ----------- ------------ --------- -------- Balance at February 28, 1995 20,416,110 2,041,611 53,079,214 84,730,086 785,035 550,560 Net earnings 31,986,310 Common stock issued on exercise of stock options 261,293 26,129 887,098 Stock split 20,677,403 2,067,740 (2,067,740) 785,035 Income tax benefit from stock options 938,400 ---------- ---------- ----------- ------------ --------- -------- BALANCE AT FEBRUARY 29, 1996 41,354,806 $4,135,480 $52,836,972 $116,716,396 1,570,070 $550,560 ========== ========== =========== ============ ========= ========
The accompanying notes are an integral part of this statement. F-7 22 Nautica Enterprises, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED Year ended February 28, FEBRUARY 29, ----------------------------- 1996 1995 1994 ------------- ------------- ------------ Cash flows from operating activities Net earnings $ 31,986,310 $ 23,971,307 $ 16,803,991 Adjustments to reconcile net earnings to net cash provided by operating activities Deferred income taxes - net (1,124,858) (594,810) (302,419) Depreciation and amortization 4,345,843 3,110,160 2,995,244 Provision for accounts receivable allowances and discounts 828,899 1,772,796 792,801 Loss on disposal and abandonment of fixed assets 881,443 163,784 Changes in operating assets and liabilities Accounts receivable (9,170,267) (2,494,196) (7,424,542) Inventories (5,359,424) (18,589,445) (1,542,519) Prepaid expenses and other current assets 99,506 (818,043) (462,558) Other assets (176,002) (342,765) (256,702) Accounts payable - trade 2,905,981 4,108,604 199,791 Accrued expenses and other current liabilities 3,508,606 4,485,838 4,396,340 Income taxes payable 1,720,219 (1,724,299) 6,125,122 ------------- ------------- ------------ Net cash provided by operating activities 29,564,813 13,766,590 21,488,333 ------------- ------------- ------------ Cash flows from investing activities Purchase of property, plant and equipment (15,906,571) (7,242,911) (7,445,689) Payments to register trademark (127,503) (197,889) (252,695) Long-term investments (2,500,000) (2,500,000) ------------- ------------- ------------ Net cash used in investing activities (18,534,074) (9,940,800) (7,698,384) ------------- ------------- ------------
F-8 23 Nautica Enterprises, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEAR ENDED Year ended February 28, FEBRUARY 29, ------------------------- 1996 1995 1994 ----------- ----------- ---------- Cash flows from financing activities Net decrease in notes payable - bank $(4,090,000) Principal payments on long-term debt $ (50,000) $ (50,000) (67,415) Proceeds from issuance of common stock, net 913,227 523,611 34,370,649 ----------- ----------- ----------- Net cash provided by financing activities 863,227 473,611 30,213,234 ----------- ----------- ----------- INCREASE IN CASH AND CASH EQUIVALENTS 11,893,966 4,299,401 44,003,183 Cash and cash equivalents at beginning of year 49,153,556 44,854,155 850,972 ----------- ----------- ----------- Cash and cash equivalents at end of year $61,047,522 $49,153,556 $44,854,155 =========== =========== =========== Supplemental disclosures of cash flow information: Cash paid during the year for Interest $ 46,436 $ 42,166 $ 282,391 Income taxes 21,301,164 16,791,336 5,969,914
The accompanying notes are an integral part of these statements. F-9 24 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS February 29, 1996, February 28, 1995 and 1994 NOTE A - SUMMARY OF ACCOUNTING POLICIES Nautica Enterprises, Inc. (the "Company") and Subsidiaries are primarily engaged in the design, manufacture and sale of men's apparel. The principal market for the Company's products is the United States. In preparing financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows: 1. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. 2. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with original maturities of three months or less to be cash equivalents. Cash equivalents consist principally of money market funds, demand notes and short-term tax-exempt notes and bonds. The market value of the cash equivalents approximates cost. 3. Revenue Recognition Revenue within wholesale operations is recognized at the time merchandise is shipped to customers. Retail store revenues are recognized at the time of sale. F-10 25 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE A (CONTINUED) 4. Inventories Inventories are stated at the lower of cost or market. Cost is determined by the last-in, first-out ("LIFO") method for wholesale inventories and by the first-in, first-out ("FIFO") method for retail inventories. 5. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Buildings and improvements are depreciated using the straight-line method over their estimated useful lives of 20 to 39 years. Machinery, equipment and fixtures are depreciated using the straight-line method over their estimated useful lives of three to ten years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. 6. Other Assets The excess of cost over net assets acquired is being amortized on a straight-line basis over a forty-year period. Accumulated amortization at February 29, 1996 and February 28, 1995 was $414,150 and $364,430, respectively. Included in other assets are long-term investments of $5,000,000 and $2,500,000 at February 29, 1996 and February 28, 1995, respectively. The investments are carried at cost which approximates market value. 7. Income Taxes The Company and its wholly-owned subsidiaries file a consolidated Federal income tax return. Deferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax law. F-11 26 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE A (CONTINUED) 8. Earnings Per Share Earnings per share are based on the weighted average number of shares of common stock outstanding during the year giving retroactive effect to the stock splits as described in Note G. Stock options are included in the calculation, when they are dilutive. 9. Reclassifications Certain amounts in prior years have been reclassified to conform with classifications used in 1996. NOTE B - INVENTORIES Inventories valued using the LIFO method comprised 81% and 85% of consolidated inventories before LIFO adjustment at February 29, 1996 and February 28, 1995, respectively. The FIFO earnings are presented in order to provide a basis for comparison to the operating results of those companies within the industry which do not use the LIFO method. Had the Company utilized the FIFO method of accounting for inventory, inventories would have been higher by $3,439,625, $3,268,309 and $4,101,208 at February 29, 1996, February 28, 1995 and February 28, 1994, respectively. Earnings before provision for income taxes would have been higher by $171,316 at February 29, 1996, lower by $832,899 at February 28, 1995 and higher by $509,151 at February 28, 1994. Net earnings would have been higher by $103,474 ($.003 per share) at February 29, 1996, lower by $517,230 ($.01 per share) at February 28, 1995 and higher by $299,381 ($.01 per share) at February 28, 1994. During the year ended February 28, 1995, reductions in certain LIFO pools had the effect of increasing earnings before income taxes by approximately $1,700,000 and net earnings by $1,056,000 ($.03 per share). F-12 27 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE B (CONTINUED) Inventories consist of the following:
1996 1995 ----------- ----------- Raw materials $ 1,499,239 $ 760,940 Finished goods 56,175,875 51,383,434 ----------- ----------- 57,675,114 52,144,374 Less amount to reduce carrying value to LIFO basis 3,439,625 3,268,309 ----------- ----------- $54,235,489 $48,876,065 =========== ===========
NOTE C - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are summarized as follows:
1996 1995 ----------- ----------- Land $ 312,512 $ 302,512 Building and improvements 5,090,108 5,038,556 Machinery, equipment and fixtures 22,139,014 15,294,599 Leasehold improvements 5,421,427 5,194,152 Construction in progress 8,759,794 533,131 ----------- ----------- 41,722,855 26,362,950 Accumulated depreciation and amortization 11,010,753 7,603,155 ----------- ----------- $30,712,102 $18,759,795 =========== ===========
F-13 28 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE D - SHORT-TERM BORROWINGS As of February 29, 1996, the Company had $80,000,000 in lines of credit, with two commercial banks, available for short-term borrowings and letters of credit collateralized by wholesale inventory and accounts receivable. At February 29, 1996, letters of credit outstanding under the lines were $32,455,742 and there were no short-term borrowings outstanding. Interest is payable at the prime rate. NOTE E - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following:
1996 1995 ----------- ----------- Payroll and other employee compensation $ 5,060,940 $ 3,774,201 Royalties 746,064 702,428 Advertising and promotion 9,288,502 7,815,054 Accrued rent 955,300 788,494 Other 3,089,459 2,551,482 ----------- ----------- $19,140,265 $15,631,659 =========== ===========
NOTE F - LONG-TERM DEBT The following is a summary of the long-term debt:
1996 1995 -------- -------- Industrial revenue bond $250,000 $300,000 Less current maturities 50,000 50,000 -------- -------- $200,000 $250,000 ======== ========
The industrial revenue bond is payable in annual installments of $50,000 through 2001, collateralized by land, building, and machinery (plant). The bond bears interest at a defined percentage of the prime rate (7.27% at February 29, 1996). F-14 29 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE G - STOCKHOLDERS' EQUITY On April 29, 1996, the Board of Directors declared a two-for-one stock split of the Company's common stock to be effected in the form of a stock dividend payable on May 28, 1996 to stockholders of record on May 13, 1996. On April 18, 1995 and October 21, 1993, the Board of Directors declared a three-for-two stock split of the Company's common stock effected in the form of a stock dividend. Amounts equal to par value of the shares of common stock to be issued were transferred from additional paid-in capital to the common stock account. All prior year stock options and per share disclosures have been restated to reflect the stock split. On December 23, 1993, the Company and certain selling stockholders sold an aggregate of 6,168,600 shares of common stock of the Company (including a portion of the underwriters' overallotment option). The Company did not receive any of the proceeds of the 1,390,844 shares sold by the selling stockholders. The net proceeds of the offering to the Company were approximately $32,600,000 after deducting underwriting commissions and direct offering costs. The offering costs were borne entirely by the Company. The Certificate of Incorporation, as amended, authorizes the Board of Directors to issue Preferred Stock, from time to time, in one or more series, with such voting powers, designations, preferences, and relative, participating, optional, conversion or other special rights, and such qualifications, limitations and restrictions, as the Board of Directors may, in their sole discretion, determine. NOTE H - COMMITMENTS AND CONTINGENCIES 1. Leases The Company leases real property and equipment, under operating leases expiring at various dates through 2009. Rent expense amounted to approximately $4,654,000 in 1996, $3,991,000 in 1995 and $3,110,000 in 1994. At February 29, 1996, minimum rental commitments under noncancellable leases are as follows: 1997 $ 3,465,000 1998 3,284,000 1999 2,870,000 2000 2,786,000 2001 2,523,000 Thereafter 12,572,000 ----------- Total minimum payments required $27,500,000 ===========
F-15 30 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE H (CONTINUED) 2. Stock Purchase Agreement and Life Insurance Proceeds The Company is a party to an agreement with the president and current Chairman of the Board of the Company and the president of Nautica Apparel, Inc. and Nautica International, Inc. ("Nautica"), and was a party to a similar agreement with the former chairman of the board (now deceased) of the Company (the principal stockholders), which provides, upon the death of any of the aforementioned stockholders, and at the request of their respective estates, that the Company will purchase a part of the common shares of the deceased stockholder. The Company has obtained policies of life insurance on the lives of the stockholders for the purpose of utilizing the proceeds from such insurance for the purchase of the shares of the Company's common stock. The agreement provides for the Company to purchase the deceased stockholder's shares of common stock at a defined market value on the date of death. The Company's obligation to purchase the common shares of the deceased stockholder is limited to the life insurance proceeds received by the Company on the death of such stockholder. The agreement also provides, as soon after the death of the stockholder as is practicable and upon the request of the estate of the deceased stockholder, for the filing of a registration statement with the Securities and Exchange Commission for an offering of the shares of common stock, if any, not purchased by the Company. Due to the death of the former chairman of the board of the Company in August 1993, the Company realized nontaxable income from life insurance proceeds in the amount of $825,556 ($.02 per share). The repurchase obligation relating to shares owned by the former chairman of the board of the Company expired. 3. Executive Compensation In the event of a change in control of the Company as defined in the agreement, certain senior management has the right to receive a lump-sum payment upon termination of employment other than for cause or permanent disability or resignation for good reason within three years. Such payments are to be equal to the excess of (i) the product of 2.90 multiplied by the "base amount" as determined within the meaning of Section 280G of the Internal Revenue Code over (ii) the value on the date of the Change of Control Event of non-cash benefits as defined in the agreement. At February 29, 1996, the maximum amount payable, applicable to four individuals, would be approximately $10,400,000. F-16 31 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE H (CONTINUED) 4. Other The Company is subject to claims and suits in the ordinary course of business. Management believes that the ultimate resolution of all such proceedings will not have a material adverse effect on the Company. 5. Concentrations In the normal course of business, the Company extends credit, on open account, to its retail store customers, after a credit analysis based on financial and other criteria. May Department Stores Company, Dillard Department Stores, Inc., and Federated Department Stores, Inc. accounted for approximately 18%, 15% and 14%, respectively, of sales in 1996, 17%, 17% and 8%, respectively, of sales in 1995 and approximately 14%, 13% and 6%, respectively, of sales in 1994. In recent years, a number of corporate groups, which include certain of the Company's department store customers, including Federated Department Stores, Inc., have been involved in highly leveraged financial transactions and certain of these customers have filed for protection under Chapter 11 of the Federal Bankruptcy Code. The Company does not believe that this concentration of sales and credit risks represents a material risk of loss with respect to its financial position as of February 29, 1996. NOTE I - INTEREST INCOME, NET Interest income, net is comprised of the following:
1996 1995 1994 ---------- ---------- --------- Interest income $2,557,973 $1,997,378 $ 267,529 Interest expense (36,838) (29,174) (267,444) ---------- ---------- --------- $2,521,135 $1,968,204 $ 85 ========== ========== =========
F-17 32 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE J - INCOME TAXES Significant components of the Company's deferred taxes at February 29, 1996 and February 28, 1995 are as follows:
1996 1995 ---------- ---------- Deferred tax assets Deferred compensation $ 179,284 $ 178,023 Allowance for doubtful accounts and sales discounts 423,814 423,185 Capitalized inventory costs 1,140,855 1,080,646 Nondeductible accruals 1,849,947 768,599 Depreciation 42,237 60,826 ---------- ---------- $3,636,137 $2,511,279 ========== ==========
The provision for income taxes is comprised of the following:
1996 1995 1994 ------------ ------------ ------------ Current Federal $ 17,603,176 $ 13,191,300 $ 8,987,079 State and local 4,469,646 2,031,824 3,112,544 Deferred (1,124,858) (594,810) (302,419) ------------ ------------ ------------ $ 20,947,964 $ 14,628,314 $ 11,797,204 ============ ============ ============
The following is a reconciliation of the normal expected statutory Federal income tax rate to the effective rate reported in the financial statements:
1996 1995 1994 --------- --------- --------- PERCENT Percent Percent OF INCOME of income of income --------- --------- --------- Computed "expected" provision for Federal income taxes 35.0% 35.0% 35.0% State taxes - net of Federal income tax benefit 5.5 4.1 7.1 Other (.9) (1.2) (.9) ---- ---- ---- Actual provision for income taxes 39.6% 37.9% 41.2% ==== ==== ====
F-18 33 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE J (CONTINUED) State income taxes in 1995 decreased due to certain tax relief provided to the Company and the inclusion of a one-time refund of taxes previously paid of $1,429,000. NOTE K - TRANSACTIONS WITH RELATED PARTIES Nautica has the exclusive right to use, exploit and license others to so use and exploit the Nautica name and trademarks. The President of Nautica Apparel, Inc. and Nautica International, Inc. (the "President") receives 50% of the net royalties received by the Company with respect to the use of the Nautica name and trademarks. The President earned royalties of approximately $2,248,000, $1,285,000 and $942,000 in 1996, 1995 and 1994, respectively. At February 29, 1996 and February 28, 1995, the amount due to the President included in accrued expenses and other current liabilities was approximately $743,000 and $627,000, respectively. The President has the right of first refusal to purchase the Company's right and interests in the name "Nautica" in the event the Company abandons, sells or disposes its interest in the name. NOTE L - MULTIEMPLOYER PENSION PLAN The Company contributed approximately $562,000 in 1996, $350,000 in 1995 and $230,000 in 1994 to a multiemployer pension and insurance plan for employees covered under a collective bargaining agreement. The plan is not administered by the Company and contributions are determined in accordance with provisions of negotiated labor contracts. The Multiemployer Pension Plan Amendments Act of 1980 (the "Act") significantly increased the pension responsibilities of participating employers. Under the provisions of the Act, if the plan terminates or the Company withdraws, the Company could be subject to a "withdrawal liability." As of February 29, 1996, the Company's share of unfunded vested benefits, if any, was not available from the plan's administrators. F-19 34 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE M - PROFIT-SHARING RETIREMENT AND SAVINGS PLAN The Company has a contributory retirement savings plan (Section 401(k) of the Internal Revenue Code) for all full-time employees. Under the provisions of the plan, eligible employees are permitted to contribute up to 15% of their salary subject to specified limits. The plan provides for discretionary employer matching contributions not to exceed the lesser of 100% of the employee's contribution or 6% of the employee's compensation. The amount of Company contributions to the plan charged to expense during the years ended February 29, 1996, February 28, 1995 and February 28, 1994 were approximately $173,000, $148,000, and $109,000, respectively. NOTE N - STOCK OPTION PLANS AND OPTION AGREEMENT On June 28, 1984, the Company adopted an Executive Incentive Stock Option Plan (the "1984 Plan"). The 1984 Plan provides that the Board of Directors may grant options to officers and key employees of the Company and its subsidiaries to purchase up to 3,206,250 shares of the Company's common stock. The 1984 Plan expires in 2001, and options shall not be granted after that date. Under the 1984 Plan, each optionee must remain in the continuous employment of the Company for at least one year from the date of grant before he can exercise any part of the options. The exercise price covered by each option is 100% of the fair market value of the common stock at the time of granting the option. In the event, at the time the option is granted, the employee shall own (either in his own name or by attribution) shares constituting in excess of 10 percent of the outstanding shares of the Company, then the exercise price shall be 110% of the fair market value at the time of granting the option. The options are exercisable on a cumulative basis at the annual rate of 20% of the total number of shares covered by the option for a period not exceeding ten years. On June 29, 1989, the Company adopted the Nautica Enterprises, Inc. 1989 Employee Incentive Stock Plan (the "1989 Plan"). The 1989 Plan authorizes the Compensation Committee (consisting of at least two disinterested directors) to grant to eligible participants stock options, restricted stock and/or stock bonus awards and expires in 1999. The option price per share of a stock option shall be not less than the fair market value of the stock on the date of the grant. The 1989 Plan provides for the reservation and availability of 8,437,500 shares of common stock of the Company, subject to adjustment for future stock splits, stock dividends, reorganizations and similar events. The 1989 Plan's eligibility criteria encompass executives and other key employees of the Company and its subsidiaries. F-20 35 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE N (CONTINUED) On January 4, 1996, the Board of Directors adopted the Nautica Enterprises, Inc. Stock Incentive Plan (the "1996 Plan"), subject to approval by the Company's stockholders at the 1996 Annual Meeting of Stockholders. The 1996 Plan authorizes the Compensation Committee to administer the plan and to grant to eligible participants of the Company and its affiliates, stock options, stock appreciation rights, restricted stock, deferred stock, bonus stock, cash bonuses, loans and tax offset payments. It also provides for annual "formula" option grants to nonemployee directors. The 1996 Plan provides for the reservation and availability of 6,000,000 shares of common stock of the Company subject to adjustment for future stock splits, stock dividends, reorganizations and similar events. The table below summarizes the activity in the plans, as adjusted for the stock splits referred to in Note G:
OPTION Option Option 1996 PRICE 1995 price 1994 price ---- ----- ---- ----- ---- ----- Outstanding at beginning of year 2,876,810 $ .78 - 9.92 2,806,034 $ .15 - 6.23 2,759,814 $ .15 - 3.39 Granted 834,000 10.38 522,000 7.17 - 9.92 621,000 3.50 - 6.23 Cancelled (41,400) 2.84 - 10.38 (33,524) 1.49 - 3.50 Exercised (522,756) .78 - 7.46 (417,700) .15 - 3.50 (574,780) .15 - 1.49 --------- ------- ------- Outstanding at end of year 3,146,654 .78 - 10.38 2,876,810 .78 - 9.92 2,806,034 .15 - 6.23 ========= ======= ======= Became exercisable during the year 595,126 610,428 486,792 Exercisable at end of year 1,054,684 982,314 789,586
F-21 36 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and 1994 NOTE N (CONTINUED) On July 1, 1987, the Company entered into an Option Agreement (the "Agreement") with the president of Nautica. The Agreement granted the president the option to purchase up to an aggregate of 2,262,086 shares of the Company's common stock at a purchase price of $.87 per share. The Agreement expires July 1, 1997; provided, however, in the event that the President of Nautica is employed by the Company on July 1, 1997, the options shall expire 60 days after the earlier of (i) July 1, 2007, or (ii) 10 months following the date that the President of Nautica ceases to be employed by the Company. During the year ended February 28, 1994, the president of Nautica exercised 1,580,124 options. At February 29, 1996, 681,962 options exercisable at $.87 per share remain outstanding. For financial reporting purposes, the tax benefit resulting from compensation expense allowable for income tax purposes in excess of the expense recorded in the financial statements, amounting to $938,000, $662,000 and $3,956,000 during the years ended February 29, 1996, and February 28, 1995 and 1994, respectively, has been credited to additional paid-in capital. In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation." This statement will be effective in the next fiscal year and the Company believes the effect of the adoption of the new standard will have no impact on the Company's consolidated results of operations or financial position. The Company intends to continue to measure compensation costs under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and present footnote disclosure of net income and earnings per share in accordance with SFAS No. 123. NOTE O - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
May 31 August 31 November 30 February 29 ------ --------- ----------- ----------- ----------------(in thousands, except per share data)---------------- 1996 Net sales $61,448 $80,554 $90,819 $69,720 Gross profit 26,713 35,438 41,227 33,700 Net income 3,793 7,911 11,906 8,377 Earnings per share $ .09 $ .19 $ .28 $ .20 Weighted average shares 41,700 42,398 42,656 42,732
F-22 37 Nautica Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) February 29, 1996, February 28, 1995 and February 28, 1994 NOTE O (CONTINUED)
May 31 August 31 November 30 February 28 ------ --------- ----------- ----------- ----------------(in thousands, except per share data)---------------- 1995 Net sales $44,554 $63,286 $86,978 $52,814 Gross profit 19,278 27,499 37,434 25,453 Net income 2,306 5,826 9,501 6,337 Earnings per share $ .06 $ .14 $ .23 $ .15 Weighted average shares 41,416 41,556 41,676 41,730
During the fourth quarter of the fiscal year ended February 28, 1995, the Company recorded inventory-related adjustments which increased earnings before income taxes by approximately $1,700,000. F-23 38 Nautica Enterprises, Inc. and Subsidiaries SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Additions ------------------------------ (1) (2) Charged to Balance at Charged to other Balance at beginning costs and accounts - Deductions - end of Description of year expenses describe describe (a) period ----------- ------- -------- -------- ------------ ------ YEAR ENDED FEBRUARY 29, 1996 RESERVES DEDUCTED FROM ASSETS TO WHICH THEY APPLY ALLOWANCE FOR BAD DEBTS $1,210,511 $ 345,343 $ 491,797 $1,064,057 ========== ========== ========== ========== ALLOWANCE FOR SALES DISCOUNTS $ -- $ 483,556 $ 483,556 $ -- ========== ========== ========== ========== Year ended February 28, 1995 Reserves deducted from assets to which they apply Allowance for bad debts $1,205,000 $1,538,618 $1,533,107 $1,210,511 ========== ========== ========== ========== Allowance for sales discounts $ -- $ 234,178 $ 234,178 $ -- ========== ========== ========== ========== Year ended February 28, 1994 Reserves deducted from assets to which they apply Allowance for bad debts $1,050,000 $ 525,495 $ 370,495 $1,205,000 ========== ========== ========== ========== Allowance for sales discounts $ -- $ 267,306 $ 267,306 $ -- ========== ========== ========== ==========
(a) Accounts written off as uncollectible. F-24 39 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NAUTICA ENTERPRISES, INC. (Registrant) By: /s/ Harvey Sanders ------------------------------------ Harvey Sanders Chairman (May 24, 1996) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name Title Date /s/ Harvey Sanders Chairman, President, May 24, 1996 ----------------------------------- Chief Executive Officer Harvey Sanders (Principal Executive Officer) and Director /s/ Donald Pennington Chief Administrative Officer May 24, 1996 ----------------------------------- (Principal Financial Officer) Donald Pennington Neal Nackman /s/ Neal S. Nackman Vice President Finance May 24, 1996 ------------------------------------ (Principal Accounting Officer) Neal S. Nackman /s/ David Chu Director May 24, 1996 ----------------------------------- David Chu /s/ Ronald G. Weiner Director May 24, 1996 ----------------------------------- Ronald G. Weiner /s/ Israel Rosenzweig Director May 24, 1996 ----------------------------------- Israel Rosenzweig
40 EXHIBIT INDEX Exhibit No. Description ---------- ----------- 3(a) Registrant's By-laws as currently in effect are incorporated herein by reference to Registrant's Registration Statement on Form S-1 (Registration No. 33-21998). 3(b) Registrant's Certificate of Incorporation is incorporated by reference to the Registration Statement on Form S-3 (Registration No. 33-71926), as amended by a Certificate of Amendment dated June 29, 1995. 10(iii)(a) Registrant's Executive Incentive Stock Option Plan is incorporated by reference herein from the Registrant's Registration Statements on Form S-8 (Registration Number 33-1488), as amended by the Company's Registration Statement on Form S-8 (Registration Number 33-45823). 10(iii)(b) Registrant's 1989 Employee Incentive Stock Plan is incorporated by reference herein from the Registrant's Registration Statement on Form S-8 (Registration Number 33-36040). 10(iii)(c) Registrant's 1994 Incentive Compensation Plan is incorporated by reference herein from the Registrant's Annual Report on Form 10-K for year ended February 28, 1995. 21 Subsidiaries of Registrant. 23.1 Consent of Independent Certified Public Accountants. 27 Financial Data Schedule. EX-3.B 2 CERTIFICATE OF AMENDMENT 1 Exhibit 3(b) CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF NAUTICA ENTERPRISES, INC. Nautica Enterprises, Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of the Corporation, in the manner prescribed by Section 141 of the General Corporation Law of Delaware, duly adopted resolutions proposing and declaring advisable the following amendment to the Certificate of Incorporation: RESOLVED, that the text of Article Fifth, Section 1(a) of the Corporation's Certificate of Incorporation be amended to read in its entirety as follows: "Section 1. (a) The corporation is authorized to issue two classes of shares to be designated, respectively, "common stock" and "preferred stock". The total number of such shares which the corporation shall have the authority to issue shall be Fifty Two Million (52,000,000). The total number of shares of common stock authorized to be issued shall be Fifty Million (50,000,000), $.10 par value per share, and the total number of shares of preferred stock authorized to be issued shall be Two Million (2,000,000), $.01 par value per share." SECOND: That said amendment was duly adopted by the stockholders of the Corporation in accordance with the 2 provisions of Section 242 of the General Corporation Law of Delaware. IN WITNESS WHEREOF, NAUTICA ENTERPRISES, INC. has caused this certificate to be signed by its President and attested to its Assistant Secretary, this 29th day of June, 1995. NAUTICA ENTERPRISES, INC. By: /s/ Harvey Sanders ------------------------------ Harvey Sanders President Attest: By: /s/ Sharon Burd ---------------------------------- Sharon Burd Assistant Secretary 3 STATE OF NEW YORK ) )ss.: COUNTY OF NASSAU ) BE IT REMEMBERED that, on June 29, 1995, before me, a Notary Public duly authorized by law to take acknowledgment of deeds, personally came Harvey Sanders, President of Nautica Enterprises, Inc., who duly signed the foregoing instrument before me and acknowledged that such signing is his act and deed, and that such instrument as executed is the act and deed of said corporation, and that the facts stated therein are true. GIVEN under my hand on June 29, 1995. /s/ -------------------------- Notary Public EX-21 3 SUBSIDIARIES OF REGISTRANT 1 EXHIBIT 21
Parent Corporation Subsidiary and Place of Incorporation - ------------------ ------------------------------------- Nautica Enterprises, Inc. State-O-Maine, Inc. (Delaware) Nautica Enterprises, Inc. Nautica International, Inc. (Delaware) Nautica Enterprises, Inc. Nautica Apparel, Inc. (Delaware) Nautica Enterprises, Inc. Nautica Retail USA, Inc. (Delaware)
EX-23.1 4 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated April 15, 1996 (except for Note G, as to which the date is April 29, 1996), accompanying the consolidated financial statements and schedule included in the Annual Report of Nautica Enterprises Inc. (formerly State-O-Maine, Inc.) on Form 10-K for the year ended February 29, 1996. We hereby consent to the incorporation by reference of said report in the Registration Statements of Nautica Enterprises Inc. (formerly State-O-Maine, Inc.) on Form S-8 (Registration Nos. 33-1488; 33-45823 and 33-36040). GRANT THORNTON LLP New York, New York May 22, 1996 EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF THE COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR FEB-29-1996 MAR-01-1995 FEB-29-1996 61,047,522 0 46,768,169 (1,064,000) 54,235,489 169,913,790 41,722,855 (11,010,753) 209,339,849 36,001,561 200,000 0 0 4,135,480 169,002,808 209,339,849 302,541,175 307,347,109 165,462,039 165,462,039 0 828,899 0 52,934,274 20,947,964 31,986,310 0 0 0 31,986,310 0.75 0.75
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