PERRY ELLIS INTERNATIONAL, INC. REPORTS

FIRST QUARTER 2004 RESULTS

 

Company reports record quarterly revenues and net income. Reaffirms full fiscal year revenue and earnings guidance

 

Statement of Operations (First Quarter)/Balance Sheet Attached

 

For immediate release

 

MIAMI—May 21, 2003–Perry Ellis International, Inc. (Nasdaq: “PERY”) today reported record revenue and net income for its first quarter of fiscal year 2004.

 

Net income for the first quarter ended April 30, 2003 was approximately $5.6 million an 18.1% increase over the comparable prior year period.

 

Total revenue for the quarter ended April 30, 2003 increased 27.9% to approximately $108.3 million compared to approximately $84.7 million in the comparable quarter last year, representing the first time in the company’s history that total revenue for a fiscal quarter exceeded $100.0 million.

 

Net sales for the first quarter increased approximately $23.3 million, or 29.6%, to approximately $101.9 million from approximately $78.6 million in the comparable period last year, primarily as a result of the contribution of the Jantzen swimwear business acquisition completed in March 2002. Royalty income also rose to approximately $6.4 million, a 5.5% increase compared to royalty income of approximately $6.1 million for last year’s comparable first quarter period.

 

“We are very pleased with our performance in the first quarter”, said George Feldenkreis, Chairman and CEO of Perry Ellis International. “This performance was in line with our expectations and was accomplished in spite of the generally difficult retail environment and major geopolitical concerns. During the first quarter, Perry Ellis reached a new milestone for our company. For the first time in our history, quarterly net sales and revenues both exceeded $100 million. The benefits derived from strategies that we implemented over the past several years—including increased diversity of our distribution channels and expanded focus on our major brands drove these record sales. At the same time, our continued focus on the key financial and operational components of our business and expense control are clearly reflected in the continued improvement in our gross margins that we reported this quarter. We are looking forward to further revenue growth and net income improvement as this year progresses. We remain confident that we will achieve the full fiscal year 2004 revenue and earnings guidance we have previously released of approximately $2.60 per share, which includes the impact of the Salant acquisition that is scheduled to close on or about June 19^th.”

 

“Our performance for the first quarter underscores the continuing appeal of our family of brands and reinforces our belief that we have taken the right steps to maximize results,” said Oscar Feldenkreis, President and Chief Operating Officer, Perry Ellis International. “Moving forward, we are confident that our proven ability to provide the retailer with successful product lines at all levels of distribution, coupled with our recent entrée into the swim and women’s markets segments through our acquisition

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of the Jantzen business and our soon to be completed acquisition of Salant, positions us for continued growth and increased market prominence.”

 

Basic earnings per share increased to $0.87 per share, an increase of 16% over the comparable prior year period earnings of $0.75 per share. Fully diluted earnings per share increased to $0.80 per share, a 6.7% increase over last years comparable quarter earnings of $0.75 per fully diluted share, reflecting an almost 10% increase in the number of fully diluted shares outstanding from 6.4 million shares to 7.0 million shares

 

About Perry Ellis International

Perry Ellis International, Inc. (“PEI”) markets products in over 40 different categories under the Perry Ellis^®, Perry Ellis Portfolio^® and Perry Ellis America^® trademarks. Perry Ellis^® products are available in the United States and in more than 26 countries with worldwide retail sales of over $1.5 billion. Supreme International, Inc., a wholly owned subsidiary of PEI manufactures, markets and distributes other trademarks both domestically and internationally including: Munsingwear^®, John Henry^®, Manhattan^®, Cubavera^® and PING^® Collection, among others. PING^® is a registered trademark of Karsten Manufacturing Corporation. Jantzen, Inc., a wholly owned subsidiary of PEI, manufactures, markets and distributes the Jantzen^®, Diving Girl^® and Southpoint^® trademarks both domestically and internationally. Additional information on PEI is available at http://www.perryelliscorporate.com.

 

Safe Harbor Statement

Forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The actual results of PEI could differ materially from those expressed or indicated by forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, the effectiveness of Perry Ellis’ planned advertising, marketing and promotional campaigns, the ability of Perry Ellis to contain costs, Perry Ellis’ future capital needs, changes in fashion trends, risks relating to the retail industry, use of contract manufacturing and foreign sourcing, import restrictions, competition, seasonality, the level of consumer spending for apparel and other merchandise, exposure to foreign currency risk, possible disruption in commercial activities due to terrorist activity and armed conflict and other factors, including those set forth in Perry Ellis’ filings with the Securities and Exchange Commission. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those risks and uncertainties detailed in the Perry Ellis’ filings with the SEC. Any forward-looking statements speak only as of the day hereof and Perry Ellis disclaims any intent or obligation to update the same.

 

Perry Ellis filed a Registration Statement on Form S-4 (File No. 333-103848) with the SEC in connection with the proposed merger of its wholly owned subsidiary with Salant Corporation pursuant to a merger agreement dated February 3, 2003. The Registration Statement was declared effective by the SEC on May 19, 2003. Perry Ellis and Salant have mailed to their respective shareholders a Joint Proxy Statement-Prospectus, which is contained in the Registration Statement.

 

Investors and shareholders are urged to read the Registration Statement and the Joint Proxy Statement-Prospectus carefully. The Registration Statement and Joint Proxy Statement-Prospectus contain important information about each of Perry Ellis and Salant, the proposed merger, the persons

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who will be soliciting proxies related to the merger, their interest in the merger, and related matters and information. Investors and shareholders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov or at one of the SEC’s other public reference rooms in New York, NY or Chicago, Illinois.

 

Please call the SEC at 1-800-sec-0330 for further information with respect to the SEC’s public reference rooms. Free copies of these documents may be obtained by contacting Rosemary Trudeau, Perry Ellis’ Vice President-Finance at (305) 418-1294. Ms. Trudeau’s email address is rosemary.trudeau@PerryEllis.com.

 

Perry Ellis, Salant, and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the respective shareholder’s of Perry Ellis and Salant with respect to the transactions contemplated by the merger agreement. The Joint Proxy Statement-Prospectus contains important information about the persons soliciting the proxies relating to the merger and their interests in such transactions. Information regarding Perry Ellis’ officers and directors is included the Registration Statement. Information regarding Salant’s officers and directors is included in Salant’s Annual Report on Form 10-K for its fiscal year ended December 28, 2002. Free copies of these documents may also be obtained from the SEC’s website and also from each of the companies.

 

For More Information, contact:

Rosemary Trudeau

Vice President of Finance

Perry Ellis International

305-418-1294

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Perry Ellis International, Inc.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in 000’s, except per share information)

 

		Three Months Ended April 30, 2003			Three Months Ended April 30, 2002
Net sales		$	101,867		$	78,619
Royalty income			6,411			6,077
Total revenue			108,278			84,696
Cost of sales			71,545			57,932
Gross profit			36,733			26,764
SG&A expenses			21,609			14,510
Depreciation & amortization			1,112			660
Total operating expenses			22,721			15,170
Operating income			14,012			11,594
Interest expense			4,963			3,867
Income Before Minority Interest and Income Taxes			9,049			7,727
Minority Interest			47			32
Income tax provision			3,374			2,929
Net income		$	5,628		$	4,766
Earnings per share:
Basic			0.87			0.75
Diluted			0.80			0.75
Weighted average outstanding shares:
Basic			6,451,193			6,325,674
Diluted			7,029,014			6,391,139

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PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

		April 30, 2003			January 31, 2003
ASSETS
Current Assets:
Cash and cash equivalents		$	1,518,310		$	4,683,177
Accounts receivable, net			97,132,008			79,489,739
Inventories			45,588,454			51,306,474
Deferred income taxes			2,957,765			2,957,765
Prepaid income taxes			73,869			3,361,650
Other current assets			5,755,032			4,104,767
Total current assets			153,025,438			145,903,572
Property and equipment, net			31,079,085			31,048,876
Intangible assets, net			142,186,062			142,186,062
Other			12,163,614			12,098,835
TOTAL		$	338,454,199		$	331,237,345
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	9,057,672		$	12,820,168
Accrued expenses			5,286,676			5,058,748
Accrued interest payable			1,163,015			4,674,929
Unearned Revenues			1,592,348			1,994,554
Other current liabilities			974,689			1,457,422
Total current liabilities			18,074,400			26,005,821
Senior subordinated notes payable, net			99,332,637			99,180,580
Senior notes payable, net			61,282,101			60,729,796
Deferred income taxes			10,694,595			10,694,595
Senior credit facility			30,841,228			22,922,287
Real estate mortgage			11,600,000			11,600,000
Total long-term liabilities			213,750,561			205,127,258
Total liabilities			231,824,961			231,133,079
Minority Interest			748,957			702,480
Stockholders’ Equity:
Preferred stock $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding			—			—
Common stock $.01 par value; 30,000,000 shares authorized; 6,500,076 shares issued and outstanding as of April 30, 2003 and January 31, 2003			65,001			64,257
Additional paid-in-capital			27,887,923			27,198,094
Retained earnings			77,810,550			72,182,529
Accumulated other comprehensive loss			116,807			(43,094	)
Total stockholders’ equity			105,880,281			99,401,786
TOTAL		$	338,454,199		$	331,237,345