Cherokee Inc.'s Board of Directors has approved the distribution of a special dividend to shareholders of $0.50 per share. The dividend will be payable on or about May 26, 2004 to shareholders of record on May 12, 2004.
The special dividend will be paid with the proceeds from the Los Angeles Superior Court arbitration award that awarded Cherokee all finder's fees that Mossimo Inc. had withheld under its March 28, 2000 finders agreement with Cherokee. The Company recently received $6.39 million from Mossimo in this matter.
These proceeds were paid to Cherokee as a result of a final arbitration award dated January 16, 2003, that awarded Cherokee all finder's fees that Mossimo had previously withheld, together with interest at the statutory rate and Cherokee's full attorneys' fees. This final arbitration award was previously confirmed by a Los Angeles Superior Court judgment dated June 17, 2003, which included the arbitration award amount plus interest at the statutory rate from January 16, 2003 to June 17, 2003. The Superior Court judgment also adjudged and decreed that Cherokee shall be entitled to receive from Mossimo 15% of all revenue received by Mossimo from Target Stores pursuant to Mossimo's March 28, 2000 licensing agreement with Target, and any extensions thereof.
“We are very pleased to receive these funds from the Mossimo litigation and to have the opportunity to share these proceeds with our shareholders,” said Robert Margolis, Chairman and CEO of Cherokee Inc. “We remain committed to enhancing shareholder value and will continue to return profits to our shareholders when conditions permit.”
While much of the Mossimo litigation is resolved, Cherokee is continuing to pursue the Court's award of full attorney's fees and expects to recover all or substantially all of these costs. To date, Cherokee has only received reimbursement of its legal fees incurred up to January 16, 2003, the date of the final arbitration award noted above. Since that time Cherokee has incurred in excess of $410,000 of additional legal fees that it is pursuing reimbursement from Mossimo on.
“We are pleased that Mossimo has paid us much of what we believe we are owed in this matter, and we look forward to receiving future payments from Mossimo pursuant to the Court judgments noted above, whereby Cherokee will continue to receive 15% of all future revenue received by Mossimo from Target,” said Russell J. Riopelle, Chief Financial Officer of Cherokee Inc.
