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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 11, 2006
GUESS?, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-11893 95-3679695
(Commission File Number) (IRS Employer Identification No.)
1444 S. Alameda Street Los Angeles, California 90021
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213) 765-3100
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On May 9, 2006, the shareholders of Guess?, Inc. (the "Company") approved an
amendment and restatement of the Guess?, Inc. 1996 Non-Employee Directors' Stock
Grant and Stock Option Plan to reflect the following principal amendments (i) to
extend the term for an additional ten years to May 9, 2016 and (ii) to increase
the number of shares of common stock of the Company that may be delivered
pursuant to all awards granted thereunder by 500,000 shares. Upon shareholder
approval, the plan was renamed the Guess?, Inc. 2006 Non-Employee Directors'
Stock Grant and Stock Option Plan. The purpose of the plan is to enable the
Company to attract and retain as non-employee directors individuals with
superior training, experience and ability and to provide additional incentive to
such non-employee directors by giving them an opportunity to participate in the
ownership of the Company.
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The Company issued a press release on May 11, 2006. The press release announced
its financial results for the quarter ended April 1, 2006. The press release is
attached hereto as Exhibit 99.1.
The information in this item is being furnished under Item 2.02 and shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities of
such section, nor shall such information be deemed incorporated by reference in
any filing under the Securities Act of 1933 or the Exchange Act, except as shall
be expressly set forth by specific reference in such a filing.
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
(c) APPOINTMENT OF CHIEF FINANCIAL OFFICER.
Effective May 9, 2006, Carlos Alberini, the Company's President and Chief
Operating Officer, was also appointed as the Company's Interim Chief Financial
Officer and Interim Principal Financial and Accounting Officer. Mr. Alberini
succeeds Frederick G. Silny, who relinquished his positions with the Company
effective May 9, 2006, as previously announced on February 8, 2006. The Company
is continuing its executive search for a permanent replacement.
Mr. Alberini, age 50, joined the Company in December 2000 as President and Chief
Operating Officer. Prior to joining the Company, Mr. Alberini served as Senior
Vice President and Chief Financial Officer of Footstar, Inc. from October 1996
to December 2000. Prior to his position at Footstar, Inc., from May 1995 to
October 1996 Mr. Alberini served as Vice President of Finance and Acting Chief
Financial Officer of the Melville Corporation, from 1987 to 1995 he served as
Corporate Controller and rose to Senior Vice President and Chief Financial
Officer and Treasurer of The Bon Ton Stores, and he spent ten years with Price
Waterhouse until leaving the firm as an audit manager in 1987. Mr. Alberini has
served as a director of the Company since December 11, 2000, and his present
term as a Class I director will expire at the 2009 annual meeting of
shareholders.
Mr. Alberini currently has an employment agreement with the Company that
provides for a month-to-month term. The agreement provides for an annual base
salary of $400,000, which may be increased based on annual reviews, and an
annual cash bonus of up to a maximum of 120% of base salary to be determined in
accordance with the Company's annual bonus plan. For 2005, he received a base
salary of $476,922 and a cash bonus of $310,000. Mr. Alberini is eligible to
participate in the Company's equity incentive plans, 401(k) plan and similar
benefits provided to senior executives. If Mr. Alberini's employment is
terminated by the Company at any time other than for his death, disability or
for cause (as such terms are defined in the agreement), the Company and Mr.
Alberini will enter into a consulting agreement for up to twelve months under
which Mr. Alberini will render consulting services for which the Company will
pay an annualized consulting fee equal to Mr. Alberini's base salary, as in
effect prior to the commencement of the consulting period. In addition, Mr.
Alberini will be entitled to receive continued vesting of any then outstanding
options over the term of the consulting period. The agreement also includes
certain non-competition, non-solicitation and confidentiality provisions.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) EXHIBITS.
The following exhibit is furnished herewith:
99.1 Press Release of Guess?, Inc. dated May 11, 2006 (financial results for
the quarter ended April 1, 2006)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Guess?,
Inc. has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Dated: May 11, 2006 GUESS?, INC.
By: /s/ Maurice Marciano
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Maurice Marciano
Co-Chairman of the Board,
Co-Chief Executive Officer and
Director
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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99.1 Press Release of Guess?, Inc. dated May 11, 2006 (financial
results for the quarter ended April 1, 2006)
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Exhibit 99.1
[LOGO OF GUESS?, INC.] NEWS RELEASE
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For Immediate Release
Contacts: Carlos Alberini Joseph Teklits
President & Chief Operating Officer ICR
(213) 765-3582 (203) 682-8258
GUESS?, INC. REPORTS STRONG FIRST QUARTER 2006 RESULTS
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Q1 EPS INCREASED 89% VERSUS Q1 LAST YEAR, $0.34 VERSUS $0.18
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EUROPE, WORLDWIDE LICENSING AND RETAIL MAIN DRIVERS OF EARNINGS GROWTH
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FIRST QUARTER HIGHLIGHTS
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- Net revenues increased 20.1% to $259.0 million
- Comp store sales up 13.9% for the quarter
- Earnings from operations up 71.6% to $26.0 million, with a 10.0%
operating margin compared to 7.0% last year
- Net earnings increased 88.6% to $15.4 million
Los Angeles, CA, May 11, 2006 - Guess?, Inc. (NYSE:GES) today reported strong
financial results for the first quarter ended April 1, 2006.
For the first quarter of 2006, the Company reported net earnings of $15.4
million, or diluted earnings of $0.34 per share, compared to net earnings of
$8.2 million, or diluted earnings of $0.18 per share, for the first quarter of
2005.
Paul Marciano, Co-Chairman and Co-CEO, commented, "Our performance in the period
exceeded our expectations and was driven by earnings growth in all of our
business segments. Our retail business' strong comp performance contributed to
significant profit growth in the period. This momentum accelerated in April with
a comp sales increase of 22.6%. Our European business delivered earnings growth
in excess of 30% for the quarter. Our licensing business also posted strong
earnings growth of over 30%, driven by the success of sales of accessories
worldwide, including incremental business in Europe. During the quarter, we
managed the business efficiently with solid margins and effective expense
control, which contributed to a significant operating margin expansion."
Paul Marciano continued, "We are pleased that our revenues and earnings continue
to become more diversified geographically as we execute our strategy to build
the Guess? brand in North America, Europe and around the world. We believe that
we are well positioned for profitable, consistent growth and we remain confident
about our future prospects."
Total net revenue for the first quarter of 2006 increased 20.1% to $259.0
million from $215.6 million in the first quarter of 2005. The Company's retail
stores in the U.S. and Canada generated revenues of $139.0 million in the 2006
first quarter, a 19.3% increase from $116.5 million reported in the same period
a year ago. Comparable store sales increased 13.9% during the first quarter of
2006 from the year-ago period. Net revenue from the Company's wholesale segment
was flat at $30.8 million in the first quarter of 2006 compared to the year-ago
period. Net revenue from the Company's European operations segment increased
32.7% to $75.2 million in the first quarter of 2006, compared to $56.6 million
in the prior-year period. Licensing segment net revenue increased 23.0% to $14.0
million in the 2006 first quarter from $11.4 million in the first quarter last
year.
The Company will hold a conference call at 4:30 pm (ET) on May 11, 2006 to
discuss the news announced in this press release. A live webcast of the
conference call will be accessible at www.guess.com via the "Investor's Info"
link from the "Guess?, Inc." section of the site. The webcast will be archived
on the website for 30 days.
Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection
of contemporary apparel, accessories and related consumer products. At April 29,
2006, the Company operated 316 retail stores in the United States and Canada.
The Company also distributes its products through better department and
specialty stores around the world. For more information about the Company,
please visit www.guess.com.
Except for historical information contained herein, certain matters discussed in
this press release, including statements concerning the Company's future growth
and prospects, are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are only expectations, and involve known and unknown
risks and uncertainties, which may cause actual results in future periods to
differ materially from what is currently anticipated. Factors which may cause
actual results in future periods to differ materially from current expectations
include, among other things, our ability to anticipate consumer preferences,
effectively operate our retail stores, effectively manage inventories,
successfully execute our strategies, including our supply chain and
international growth strategies, and general economic conditions and consumer
confidence. In addition to these factors, the economic and other factors
identified in the Company's most recent annual report on Form 10-K and other
filings with the Securities and Exchange Commission, including but not limited
to the risk factors discussed therein, could cause actual results to differ
materially from current expectations.
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GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
THREE MONTHS ENDED
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April 1, April 2,
2006 2005
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$ % $ %
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Net revenue
Product sales $ 244,943 94.6% $ 204,194 94.7%
Net royalties 14,035 5.4% 11,414 5.3%
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258,978 100.0% 215,608 100.0%
Cost of product sales 155,346 60.0% 133,385 61.9%
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Gross profit 103,632 40.0% 82,223 38.1%
Selling, general and administrative expenses 77,623 30.0% 67,069 31.1%
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Earnings from operations 26,009 10.0% 15,154 7.0%
Other (income) expense:
Interest expense 1,644 0.6% 1,754 0.8%
Interest income (1,210) (0.5)% (435) (0.2)%
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Earnings before income taxes 25,575 9.9% 13,835 6.4%
Income taxes 10,179 4.0% 5,672 2.6%
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Net earnings $ 15,396 5.9% $ 8,163 3.8%
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Net earnings per share:
Basic $ 0.34 $ 0.18
Diluted $ 0.34 $ 0.18
Weighted number of shares outstanding:
Basic 44,968 44,200
Diluted 45,717 44,644
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GUESS?, INC. AND SUBSIDIARIES
CONSOLIDATED SEGMENT DATA
(in thousands)
THREE MONTHS ENDED
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April 1, April 2,
2006 2005
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Net revenue:
Retail operations $ 138,958 $ 116,495
Wholesale operations 30,797 31,059
European operations 75,188 56,640
Licensing operations 14,035 11,414
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$ 258,978 $ 215,608
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Earnings (loss) from operations:
Retail operations $ 2,121 $ (3,408)
Wholesale operations 2,380 2,127
European operations 21,179 15,853
Licensing operations 12,285 9,144
Corporate overhead (11,956) (8,562)
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$ 26,009 $ 15,154
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GUESS?, INC. AND SUBSIDIARIES
SELECTED CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
APRIL 1, DECEMBER 31, APRIL 2,
2006 2005 2005
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ASSETS
Cash and cash equivalents $ 151,463 $ 171,549 $ 89,248
Receivables, net 123,245 81,762 123,007
Inventories, net 111,583 122,037 95,595
Other current assets 33,754 32,670 26,375
Property and equipment, net 148,088 144,007 117,659
Other assets 93,897 81,349 61,062
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Total Assets $ 662,030 $ 633,374 $ 512,946
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of notes $ 39,525 $ 35,051 $ 53,905
payable, long-term debt and
capital lease
Other current liabilities 169,505 182,175 140,058
Notes payable, long-term debt 50,509 53,199 53,865
and capital lease, excluding
current installments
Other liabilities 89,011 74,656 37,467
Stockholders' equity 313,480 288,293 227,651
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Total Liabilities and Stockholders' Equity $ 662,030 $ 633,374 $ 512,946
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GUESS?, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW DATA
(in thousands)
THREE MONTHS ENDED
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APRIL 1, APRIL 2,
2006 2005
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Net cash used in operating activities $ (17,079) $ (2,394)
Net cash used in investing activities (10,420) (27,145)
Net cash provided by financing activities 7,145 12,966
Effect of exchange rates on cash 268 (182)
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Net decrease in cash and cash equivalents (20,086) (16,755)
Cash and cash equivalents at the beginning of the year 171,549 106,003
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Cash and cash equivalents at the end of the period $ 151,463 $ 89,248
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SUPPLEMENTAL INFORMATION:
Depreciation and amortization $ 8,762 $ 8,427
Rent 20,016 16,767
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GUESS?, INC. AND SUBSIDIARIES
RETAIL STORE DATA
U.S. AND CANADA
THREE MONTHS ENDED
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APRIL 1, APRIL 2,
2006 2005
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Number of stores at the beginning of the year 315 287
Store openings 5 7
Store closures (7) (5)
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Number of stores at the end of the period 313 289
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Total store square footage at the end of the period 1,547,000 1,465,000
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