Perry Ellis International Reports Third Quarter Fiscal 2013 Results

  Perry Ellis International Reports Third Quarter Fiscal 2013 Results

  *Total revenue of $236.2 million in line with Company guidance
  *GAAP diluted EPS of $0.21
  *Adjusted diluted EPS of $0.25
  *Golf, women’s contemporary, and direct to consumer businesses continue
    strong profitable momentum
  *Inventory decreased 21% compared to last year to $157 million
  *Company maintains full fiscal 2013 adjusted diluted EPS guidance in a
    range of $1.75 - $1.80

Business Wire

MIAMI -- November 15, 2012

Perry Ellis International (NASDAQ:PERY) today reported results for the third
quarter ended October 27, 2012 (“third quarter of fiscal 2013”).

Third Quarter Results from Operations

In the third quarter of fiscal 2013, total revenues were $236.2 million
compared to $248.4 million in the quarter ended October 29, 2011 (“third
quarter of fiscal 2012”) and in-line with Company guidance of an expected
mid-single digit decrease. The Company noted that continued growth within
golf, direct to consumer and women’s contemporary was offset by planned
decreases in its Perry Ellis and Rafaella collection businesses.

Oscar Feldenkreis, President and Chief Operating Officer, commented, “The
third quarter was highlighted by continued positive momentum in our Golf and
direct to consumer platforms, substantial progress on our initiatives to
improve our Perry Ellis and Rafaella collection businesses and the disciplined
management of expenses and continued strong cash flow. We are very pleased
with the growth we are driving across our golf platforms through all channels
of distribution. Across our direct to consumer business we are generating
consistent sales and margin increases fueled by our unique products and
focused merchandising planning by door. We are well on our way with our
repositioning efforts in our Perry Ellis and Rafaella collection businesses,
and expect an improved consumer response to our holiday collections in the
fourth quarter and an even greater positive impact in spring 2013.”

Gross margin for the third quarter of fiscal 2013 was 32.1% as compared to
33.2% for the comparable period last year. The decline was attributable to
higher promotional levels in the collection businesses coupled with the lower
margins on the Callaway transitioned businesses. On the positive side, gross
margin expansion was realized in the golf business, as well as in the direct
to consumer business.

Selling, general and administrative (“SG&A”) expenses for the third quarter of
fiscal 2013 decreased $2.4 million to $64.0 million compared to $66.4 million
in the third quarter of fiscal 2012. The Company remains disciplined in this
area as it executes its streamlining and consolidating initiatives.

As reported under generally accepted accounting principles (“GAAP”), net
income for the third quarter of fiscal 2013 was $3.2 million, or earnings per
fully diluted share of $0.21, compared to net income of $6.5 million, or $0.40
per fully diluted share in the third quarter of fiscal 2012.

After considering the costs of the exit of underperforming brands, and the
streamlining and consolidation of facilities and other strategic initiatives,
earnings per fully diluted share, as adjusted, for the third quarter of fiscal
2013 was $0.25 compared to earnings per fully diluted share, as adjusted, of
$0.40 in the third quarter of fiscal 2012. (See attached reconciliation “Table
1”)

Adjusted EBITDA for the third quarter totaled $12.5 million or 5.3% of
revenue. (See attached reconciliation “Table 2”)

Nine Months Operations Review

For the nine months ended October 27, 2012 total revenues were $711.2 million
compared to $751.1 million for the nine months ended October 29, 2011. The
revenue reduction during the first nine months of the fiscal year, as compared
to last year, was primarily attributable to softness in the Company’s
collection businesses.

Adjusted EBITDA for the first nine months of fiscal 2013 totaled $42.9 million
or 6.0% of revenue. (See attached reconciliation “Table 2”)

Net income for the first nine months of fiscal 2013 was $10.4 million, or
$0.68 per fully diluted share, compared to $23.7 million, or $1.47 per fully
diluted share in the first nine months of fiscal 2012. (See attached
reconciliation “Table 1”)

After considering the costs associated with the exit of underperforming brands
and businesses, the voluntary retirement program, the streamlining and
consolidating of operations and strategic initiatives, earnings per fully
diluted share, as adjusted, for the first nine months of fiscal 2013 was $0.95
compared to earnings per fully diluted share, as adjusted, of $1.55 in the
first nine months of fiscal 2012. For the nine months of fiscal 2012, earnings
per fully diluted share, as adjusted, excludes costs related to the impact of
early extinguishment of debt and duplicate interest expense. (See attached
reconciliation “Table 1”)

Balance Sheet Update

George Feldenkreis, Chairman and CEO of Perry Ellis International commented,
“We are extremely pleased with the continued strengthening of our balance
sheet. Inventory reduction continues to tighten ahead of sales. We believe
that we have the balance sheet to fund our growth in our core businesses as
well as provide ample capacity and liquidity under a wide range of economic
conditions.”

The Company ended the third quarter of fiscal 2013 with $51.7 million in cash
and cash equivalents and full availability under its senior credit facility.
Inventories at quarter end totaled $157.5 million, a reduction of $40.8
million or 21% compared to $200.3 million as of October 29, 2011. As a result
of the disciplined management of inventory, the Company ended the period with
a net debt to total capitalization of approximately 25% as compared to 32% for
the comparable prior year period.

Fiscal 2013 Guidance

The Company remains comfortable with revenue guidance ranging from $990
million to $1 billion, as well as fully diluted earnings per share as adjusted
in a range of $1.75 to $1.80.

About Perry Ellis International

Perry Ellis International, Inc. is a leading designer, distributor and
licensor of a broad line of high quality men's and women's apparel,
accessories and fragrances, as well as select children’s apparel. The
Company's collection of dress and casual shirts, golf sportswear, sweaters,
dress pants, casual pants and shorts, jeans wear, active wear, dresses and
men's and women's swimwear is available through all major levels of retail
distribution. The Company, through its wholly owned subsidiaries, owns a
portfolio of nationally and internationally recognized brands, including:
Perry Ellis®, Jantzen®, Laundry by Shelli Segal®, C&C California®, Rafaella®,
Cubavera®, Ben Hogan®, Centro®, Solero®, Munsingwear®, Savane®, Original
Penguin® by Munsingwear®, Grand Slam®, Natural Issue®, Pro Player®, the
Havanera Co.®, Axis®, Gotcha®, Girl Star®, MCD®, John Henry®, Mondo di Marco®,
Redsand®, Manhattan®, Axist®, Farah®, Anchor Blue® and Miller’s Outpost®. The
Company enhances its roster of brands by licensing trademarks from third
parties, including: Nike® and Jag® for swimwear, and Callaway®, PGA TOUR® and
Champions Tour® for golf apparel. Additional information on the Company is
available at http://www.pery.com.

Safe Harbor Statement

We caution readers that the 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.
Forward-looking statements are based on current expectations rather than
historical facts and they are indicated by words or phrases such as
"anticipate," "believe," "budget," "contemplate," "continue," "could,"
"estimate," "expect," "guidance," "indicate," "intend," "may," "might,"
"plan," "possibly," "potential," "predict," "probably," "proforma," "project,"
"seek," "should," "target," or "will" and similar words or phrases or
comparable terminology. We have based such forward-looking statements on our
current expectations, assumptions, estimates and projections. While we believe
these expectations, assumptions, estimates and projections are reasonable,
such forward-looking statements are only predictions and involve known and
unknown risks and uncertainties, and other factors that may cause actual
results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements, many of which are beyond our control. These
factors include: general economic conditions, a significant decrease in
business from or loss of any of our major customers or programs, anticipated
and unanticipated trends and conditions in our industry, including the impact
of recent or future retail and wholesale consolidation, recent and future
economic conditions, including turmoil in the financial and credit markets,
the effectiveness of our planned advertising, marketing and promotional
campaigns, our ability to contain costs, disruptions in the supply chain, our
future capital needs and our ability to obtain financing, our ability to
protect our trademarks, our ability to integrate acquired businesses,
trademarks, trade names and licenses, our ability to predict consumer
preferences and changes in fashion trends and consumer acceptance of both new
designs and newly introduced products, the termination or non-renewal of any
material license agreements to which we are a party, changes in the costs of
raw materials, labor and advertising, our ability to carry out growth
strategies including expansion in international and direct to consumer retail
markets, the level of consumer spending for apparel and other merchandise, our
ability to compete, exposure to foreign currency risk and interest rate risk,
possible disruption in commercial activities due to terrorist activity and
armed conflict, and other factors set forth in Perry Ellis International's
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 Perry Ellis' filings with the SEC.
You are cautioned not to place undue reliance on these forward-looking
statements, which are valid only as of the date they were made. We undertake
no obligation to update or revise any forward-looking statements to reflect
new information or the occurrence of unanticipated events or otherwise.

                                                           
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(amounts in 000's, except per share information)
INCOME
STATEMENT DATA:
                    Three Months Ended              Nine Months Ended
                    October 27,     October 29,     October 27,     October
                    2012            2011            2012            29, 2011
                                                                    
Revenues
Net sales           $  229,330      $  242,116      $  691,436      $  733,487
Royalty income        6,918          6,304          19,772         17,657
Total revenues         236,248         248,420         711,208         751,144
Cost of sales         160,453        165,970        478,348        499,456
Gross profit           75,795          82,450          232,860         251,688
Operating
expenses
Selling,
general and            63,984          66,356          196,434         193,101
administrative
expenses
Depreciation
and                   3,424          3,369          10,314         9,982
amortization
Total operating       67,408         69,725         206,748        203,083
expenses
Operating              8,387           12,725          26,112          48,605
income
Costs on early
extinguishment         -               -               -               1,306
of debt
Interest              3,689          3,868          11,011         12,303
expense
                                                                    
Net income
before income          4,698           8,857           15,101          34,996
taxes
Income tax            1,518          2,348          4,687          11,262
provision
Net income          $  3,180        $  6,509        $  10,414       $  23,734
                                                                    
Net income, per
share
Basic               $  0.22         $  0.42         $  0.71         $  1.58
Diluted             $  0.21         $  0.40         $  0.68         $  1.47
                                                                    
Weighted
average number
of shares
outstanding
Basic                  14,662          15,317          14,669          15,009
Diluted                15,295          16,391          15,275          16,131

                                                           
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(amounts in 000's)
                                      
BALANCE SHEET DATA:
                                                              
                                         As of
                                         October 27, 2012     January 28, 2012
                                                              
Assets
Current assets:
Cash and cash equivalents                $     51,659         $     24,116
Accounts receivable, net                       154,947              145,563
Inventories                                    157,473              198,264
Other current assets                          28,789              33,733
Total current assets                          392,868             401,676
                                                              
Property and equipment, net                    54,337               56,496
Intangible assets, net                         248,517              242,634
Goodwill                                       13,794               13,794
Other assets                                  9,296               9,595
                                                              
Total assets                             $     718,812        $     724,195
                                                              
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                         $     89,418         $     80,253
Accrued expenses and other                     21,058               23,142
liabilities
Accrued interest payable                       1,018                4,186
Unearned revenues                             4,363               4,179
Total current liabilities                     115,857             111,760
                                                              
                                                              
Long term liabilities:
Senior subordinated notes payable,             150,000              150,000
net
Senior credit facility                         -                    21,679
Real estate mortgages                          24,415               25,114
Deferred pension obligation                    15,618               17,326
Unearned revenues and other                   34,170              31,821
long-term liabilities
Total long-term liabilities                   224,203             245,940
                                                              
Total liabilities                             340,060             357,700
                                                              
Equity                                                       
Total equity                                  378,752             366,495
                                                              
Total liabilities and equity             $     718,812        $     724,195

                                                            
PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
Table 1
Reconciliation of the three and nine months ended October 27, 2012 and October
29, 2011 net income and earnings per share to adjusted net income and adjusted
earnings per share.
(UNAUDITED)
(amounts in 000's, except per share information)

                         Three Months Ended            Nine Months Ended
                         October        October        October        October
                         27, 2012       29, 2011       27, 2012       29, 2011
Net income               $ 3,180        $ 6,509        $ 10,414       $ 23,734
Plus:
Costs on exited          400            -              2,245          -
brands
Costs of
streamlining and
consolidation of         936            -              2,397          -
operations, and
other strategic
initiatives
Costs of voluntary       -              -              2,420          -
retirement
Costs on early
extinguishment of        -              -              -              1,306
debt
Duplicate interest
from March 8 to          -              -              -              745
April 6, 2011
Less:
Gain on asset            (410)          -              (410)
sales
Tax benefit              (358)          -              (2,545)        (718)
Net income, as           $ 3,748        $ 6,509        $ 14,521       $ 25,067
adjusted
                                                                      
                                                                      
                         Three Months Ended            Nine Months Ended
                         October        October        October        October
                         27, 2012       29, 2011       27, 2012       29, 2011
Net income per           $ 0.21         $ 0.40         $ 0.68         $ 1.47
share, diluted
Net per share
costs on exited          0.02           -              0.09           -
brands
Net per share
costs of
streamlining and
consolidation of         0.04           -              0.10           -
operations, and
other strategic
initiatives
Net per share
costs of voluntary       -              -              0.10           -
retirement
Net per share
costs on early           -              -              -              0.05
extinguishment of
debt
Net per share
duplicate interest       -              -              -              0.03
from March 8 to
April 6, 2011
Net per share gain       (0.02)         -              (0.02)         -
on asset sales
Adjusted net
income per share,        $ 0.25         $ 0.40         $ 0.95         $ 1.55
diluted
                                                                      
                                                                      
"Adjusted net income per share, diluted" consists of "net income per share,
diluted" adjusted for the impact of the costs on exited brands, costs of
streamlining and consolidation of operations, and other strategic initiatives,
costs of voluntary retirement, early extinguishment of debt, duplicate
interest from March 8, 2011 to April 6, 2011, the time during which the
retired debt and the new debt were simultaneously outstanding, and gain on
asset sales. These costs and gain are not indicative of our core operations
and thus to get a more comparable result with the operating performance of the
apparel industry, they have been removed, net of taxes, from the calculation.

PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES
Table 2
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA(1)
(UNAUDITED)
(amounts in 000's)
                                                           
                   Three Months Ended              Nine Months Ended
                   October 27,     October 29,     October 27,      October 29,
                   2012            2011            2012             2011
                                                                    
                                                                    
Net income         $ 3,180         $ 6,509         $ 10,414         $ 23,734
Plus:
Depreciation
and                  3,424           3,369           10,314           9,982
amortization
Interest             3,689           3,868           11,011           12,303
expense
Costs on early
extinguishment       -               -               -                1,306
of debt
Income tax          1,518         2,348         4,687          11,262   
provision
EBITDA               11,811          16,094          36,426           58,587
                                                                    
Costs on             400             -               2,245            -
exited brands
Costs of
streamlining
and
consolidation        715             -               2,176            -
of operations,
and other
strategic
initiatives
Costs of
voluntary            -               -               2,420            -
retirement
Gain on asset        (410    )       -               (410     )       -
sales
                                                                 
EBITDA, as         $ 12,516       $ 16,094       $ 42,857        $ 58,587   
adjusted
                                                                    
                                                                    
                                                                    
                                                                    
Gross profit       $ 75,795        $ 82,450        $ 232,860        $ 251,688
Less:
Selling,
general and          (63,984 )       (66,356 )       (196,434 )       (193,101 )
administrative
expenses
Plus:
Costs on             400             -               2,245            -
exited brands
Costs of
streamlining
and
consolidation        715             -               2,176            -
of operations,
and other
strategic
initiatives
Costs of
voluntary            -               -               2,420            -
retirement
Gain on asset        (410    )       -               (410     )       -
sales
                                                                 
EBITDA, as          12,516        16,094        42,857         58,587   
adjusted
                                                                    
                                                                    
Total revenues     $ 236,248       $ 248,420       $ 711,208        $ 751,144
                                                                    
EBITDA margin
percentage of        5.3     %       6.5     %       6.0      %       7.8      %
revenues
                                                                    
                                                                    
           Adjusted EBITDA consists of (loss) earnings before interest, taxes,
           depreciation, amortization, costs on early extinguishment of debt,
           costs on exited brands, costs of streamlining and consolidation of
           operations, and other strategic initiatives, as well as, costs
           associated with voluntary retirements and the gain on sale of assets.
           Adjusted EBITDA is not a measurement of financial performance under
           accounting principles generally accepted in the United States of
(1)        America, and does not represent cash flow from operations. Adjusted
           EBITDA is presented solely as a supplemental disclosure because
           management believes that it is a common measure of operating
           performance in the apparel industry. In addition, we present Adjusted
           EBITDA because we believe it assists investors and analysts in
           comparing our performance across periods on a consistent basis by
           excluding items that we do not believe are indicators of our core
           operating performance.

Contact:

Perry Ellis International, Inc.
Anita Britt, 305-873-1210
 
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