Cherokee Inc. reported total royalty revenues for the third quarter ended Oct. 30 of $7.7 million, as compared to $8.0 million in the comparable period last year.
Cherokee's operating expenses for the third auarter totaled $3.87 million, which was greater than the $3.33 million in the comparable period last year. Net income decreased by a total of $0.5 million, to $2.3 million or 26 cents per diluted share, as compared to $2.8 million, or 31 cents per diluted share in the comparable period last year. The company ended the quarter with cash and cash equivalents of $8.8 million, net receivables of $7.1 million and no debt.
“We finished the quarter in another strong cash position and a debt-free balance sheet,” said Russell J. Riopelle, CFO. “During our third quarter we paid a 38 cent per share dividend in September, and announced our December dividend of 38 cents per share. We are encouraged that our third quarter U.S. royalties kept pace with last year, however, this was offset by less favorable exchange rates and retailers' reducing their prices, resulting in lower royalties from certain international accounts.”
The company has license agreements with premier retailers and manufacturers covering over 30 countries around the world including Target Stores (U.S.).
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CHEROKEE INC. CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited |
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| Three months ended | Nine months ended | ||||||||||||||||
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October 30, 2010 |
October 31, 2009 |
October 30, 2010 |
October 31, 2009 |
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| Royalty revenues | $ | 7,691,000 | $ | 8,041,000 | $ | 23,426,000 | $ | 25,014,000 | |||||||||
| Total selling, general and administrative expenses | 3,869,000 | 3,330,000 | 10,599,000 | 9,791,000 | |||||||||||||
| Operating income | 3,822,000 | 4,711,000 | 12,827,000 | 15,223,000 | |||||||||||||
| Other income (expenses) : | |||||||||||||||||
| Interest expense | — | — | — | — | |||||||||||||
| Investment and interest income | 3,000 | 6,000 | 10,000 | 19,000 | |||||||||||||
| Total other income (expenses), net | 3,000 | 6,000 | 10,000 | 19,000 | |||||||||||||
| Income before income taxes | 3,825,000 | 4,717,000 | 12,837,000 | 15,242,000 | |||||||||||||
| Income tax provision | 1,545,000 | 1,946,000 | 5,162,000 | 5,781,000 | |||||||||||||
| Net income | $ | 2,280,000 | $ | 2,771,000 | $ | 7,675,000 | $ | 9,461,000 | |||||||||
| Basic earnings per share | $ | 0.26 | $ | 0.31 | $ | 0.87 | $ | 1.07 | |||||||||
| Diluted earnings per share | $ | 0.26 | $ | 0.31 | $ | 0.87 | $ | 1.07 | |||||||||
| Weighted average shares outstanding | |||||||||||||||||
| Basic | 8,882,493 | 8,814,187 | 8,836,956 | 8,814,187 | |||||||||||||
| Diluted | 8,914,883 | 8,814,393 | 8,871,295 | 8,814,187 | |||||||||||||
| Effective Tax Rate | 40.4 | % | 41.3 | % | 40.2 | % | 37.9 | % | |||||||||
