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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ

    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended April 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-18183
 G-III APPAREL GROUP, LTD.
  Delaware
    
    41-1590959(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 512 Seventh Avenue, New York, New York
    
    10018(Address of Principal Executive Offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year,
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ




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TABLE OF CONTENTS
 Page No.Part I FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets 

April 30, 2010, April 30, 2009 and January 31, 2010
    
    
    3Condensed Consolidated Statements of Operations 
For the Three Months Ended April 30, 2010 and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows 
For the Three Months Ended April 30, 2010 and 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    8Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    13Item 4. Controls and Procedures
    
    
    13Part II OTHER INFORMATIONItem 1A. Risk Factors
    
    
    14Item 6. Exhibits
    
    
    15Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 April 30,
    
    
    April 30,
    
    
    January 31,2010
    
    
    2009
    
    
    2010(Unaudited)
    
    
    (Unaudited)(In thousands, except share and per share amounts)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    17,869
    
    
    $
    2,262
    
    
    $
    46,813Accounts receivable, net of allowance for doubtful accounts
and sales discounts of $28,184, $17,452 and $29,092,
respectively
    
    
    82,887
    
    
    
    52,307
    
    
    
    73,456Inventories
    
    
    100,006
    
    
    
    89,354
    
    
    
    119,877Prepaid income taxes
    
    
    
    
    
    
    5,188
    
    
    
    Deferred income taxes
    
    
    15,315
    
    
    
    11,565
    
    
    
    15,315Prepaid expenses and other current assets
    
    
    14,561
    
    
    
    14,280
    
    
    
    10,694Total current assets
    
    
    230,638
    
    
    
    174,956
    
    
    
    266,155PROPERTY AND EQUIPMENT, NET
    
    
    11,585
    
    
    
    9,755
    
    
    
    7,539DEFERRED INCOME TAXES
    
    
    10,672
    
    
    
    11,640
    
    
    
    10,672OTHER ASSETS
    
    
    1,893
    
    
    
    1,783
    
    
    
    1,723INTANGIBLES, NET
    
    
    19,482
    
    
    
    20,940
    
    
    
    19,826GOODWILL
    
    
    26,100
    
    
    
    25,494
    
    
    
    26,100$
    300,370
    
    
    $
    244,568
    
    
    $
    332,015LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESNotes payable
    
    $
    
    
    
    $
    31,080
    
    
    $
    Income taxes payable
    
    
    602
    
    
    
    
    
    
    
    10,874Accounts payable
    
    
    37,502
    
    
    
    28,966
    
    
    
    50,337Accrued expenses
    
    
    17,189
    
    
    
    14,916
    
    
    
    29,333Contingent purchase price payable
    
    
    
    
    
    
    4,935
    
    
    
    Deferred income taxes
    
    
    1,529
    
    
    
    1,578
    
    
    
    1,529Total current liabilities
    
    
    56,822
    
    
    
    81,475
    
    
    
    92,073DEFERRED INCOME TAXES
    
    
    6,495
    
    
    
    6,648
    
    
    
    6,495OTHER NON-CURRENT LIABILITIES
    
    
    1,877
    
    
    
    620
    
    
    
    1,237TOTAL LIABILITIES
    
    
    65,194
    
    
    
    88,743
    
    
    
    99,805STOCKHOLDERS EQUITYPreferred stock; 1,000,000 shares authorized; No shares
issued and outstandingCommon stock  $.01 par value; 40,000,000 shares authorized;
19,466,439, 17,063,002 and 19,192,704 shares issued
    
    
    195
    
    
    
    171
    
    
    
    192Additional paid-in capital
    
    
    142,104
    
    
    
    99,901
    
    
    
    137,764Accumulated other comprehensive loss
    
    
    (41
    )
    
    
    
    
    
    
    (36
    )Retained earnings
    
    
    93,888
    
    
    
    56,723
    
    
    
    95,260Common stock held in treasury  367,225 shares at cost
    
    
    (970
    )
    
    
    (970
    )
    
    
    (970
    )235,176
    
    
    
    155,825
    
    
    
    232,210$
    300,370
    
    
    $
    244,568
    
    
    $
    332,015
 The accompanying notes are an integral part of these statements.
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G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended April 30,2010
    
    
    2009(Unaudited)(In thousands, except per share amounts)Net sales
    
    $
    154,278
    
    
    $
    107,563Cost of goods sold
    
    
    105,241
    
    
    
    76,348Gross profit
    
    
    49,037
    
    
    
    31,215Selling, general and administrative expenses
    
    
    49,682
    
    
    
    40,883Depreciation and amortization
    
    
    1,280
    
    
    
    1,404Operating loss
    
    
    (1,925
    )
    
    
    (11,072
    )Interest and financing charges, net
    
    
    362
    
    
    
    685Loss before income taxes
    
    
    (2,287
    )
    
    
    (11,757
    )Income tax benefit
    
    
    (915
    )
    
    
    (4,938
    )Net loss
    
    $
    (1,372
    )
    
    $
    (6,819
    )NET LOSS PER COMMON SHARE:Basic and Diluted:Net loss per common share
    
    $
    (0.07
    )
    
    $
    (0.41
    )Weighted average number of shares outstanding
    
    
    18,903
    
    
    
    16,696
 The accompanying notes are an integral part of these statements.
  4




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G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended April 30,2010
    
    
    2009(Unaudited)(In thousands)Cash flows from operating activitiesNet loss
    
    $
    (1,372
    )
    
    $
    (6,819
    )Adjustments to reconcile net loss to net cash used
in operating activities:Depreciation and amortization
    
    
    1,280
    
    
    
    1,404Stock based compensation
    
    
    661
    
    
    
    415Deferred financing charges
    
    
    104
    
    
    
    140Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (9,431
    )
    
    
    17,389Inventories
    
    
    19,871
    
    
    
    27,258Income taxes, net
    
    
    (10,272
    )
    
    
    (10,410
    )Prepaid expenses and other current assets
    
    
    (3,867
    )
    
    
    (3,961
    )Other assets, net
    
    
    (274
    )
    
    
    (64
    )Accounts payable, accrued expenses and other liabilities
    
    
    (24,339
    )
    
    
    (26,800
    )Net cash used in operating activities
    
    
    (27,639
    )
    
    
    (1,448
    )Cash flows from investing activitiesCapital expenditures
    
    
    (4,982
    )
    
    
    (830
    )Net cash used in investing activities
    
    
    (4,982
    )
    
    
    (830
    )Cash flows from financing activitiesProceeds from notes payable, net
    
    
    
    
    
    
    2,032Proceeds from exercise of stock options
    
    
    1,113
    
    
    
    Tax benefit from exercise/vesting of equity awards
    
    
    2,569
    
    
    
    Net cash provided by financing activities
    
    
    3,682
    
    
    
    2,032Effect of exchange rate changes
    
    
    (5
    )
    
    
    Net decrease in cash and cash equivalents
    
    
    (28,944
    )
    
    
    (246
    )Cash and cash equivalents at beginning of period
    
    
    46,813
    
    
    
    2,508Cash and cash equivalents at end of period
    
    $
    17,869
    
    
    $
    2,262Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    258
    
    
    $
    751Income taxes
    
    
    6,788
    
    
    
    5,446
 The accompanying notes are an integral part of these statements.
  5




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G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Basis of Presentation
    Note 2  Inventories
  April 30,
    
    
    April 30,
    
    
    January 31,2010
    
    
    2009
    
    
    2010(In thousands)Finished goods
    
    $
    93,531
    
    
    $
    85,273
    
    
    $
    116,627Raw materials and work-in-process
    
    
    6,475
    
    
    
    4,081
    
    
    
    3,250$
    100,006
    
    
    $
    89,354
    
    
    $
    119,877
 Note 3  Net Loss per Common Share
  Note 4  Notes Payable
    6




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Note 4  Notes Payable (continued)
  Note 5  Segments
  Three Months Ended April 30,2010
    
    
    2009Wholesale
    
    
    
    
    
    
    
    
    
    
    WholesaleWholesale
    
    
    Non-
    
    
    
    
    
    
    Wholesale
    
    
    Non-Licensed
    
    
    Licensed
    
    
    Retail
    
    
    Licensed
    
    
    Licensed
    
    
    RetailNet sales (1)
    
    $
    92,432
    
    
    $
    40,265
    
    
    $
    30,006
    
    
    $
    59,997
    
    
    $
    28,779
    
    
    $
    27,157Cost of goods sold (1)
    
    
    68,271
    
    
    
    28,587
    
    
    
    16,808
    
    
    
    45,229
    
    
    
    22,836
    
    
    
    16,653Gross profit
    
    
    24,161
    
    
    
    11,678
    
    
    
    13,198
    
    
    
    14,768
    
    
    
    5,943
    
    
    
    10,504Selling, general and administrative
    
    
    26,666
    
    
    
    9,078
    
    
    
    13,938
    
    
    
    19,246
    
    
    
    7,406
    
    
    
    14,231Depreciation and amortization
    
    
    154
    
    
    
    815
    
    
    
    311
    
    
    
    209
    
    
    
    919
    
    
    
    276Operating profit (loss)
    
    $
    (2,659
    )
    
    $
    1,785
    
    
    $
    (1,051
    )
    
    $
    (4,687
    )
    
    $
    (2,382
    )
    
    $
    (4,003
    )
 (1)
    
    Net sales and cost of goods sold for the wholesale licensed apparel and wholesale
non-licensed apparel segments include an aggregate of $8.4 million of intersegment sales to the
Companys retail operations for each of the three months ended April 30, 2010 and 2009.   7




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
   Overview
      8




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
    
    Improve the merchandise mix of outerwear at our stores, with increased emphasis
on leather outerwear and a stronger assortment of private label product;
 
    
    Emphasize presentation of product in our stores and training of our sales
associates;
 
    
    Incorporate an improved mix of private label and branded accessories; and
 
    
    Reduce overhead costs at the distribution center for our retail operations by
reducing our leased space by one-half at that distribution center.
        9




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Results of Operations
 Three months ended April 30, 2010 compared to three months ended April 30, 2009
    10




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Liquidity and Capital Resources
    Financing Agreement
    11




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Cash from Operating Activities
   Cash from Investing Activities
  Cash from Financing Activities
  Financing Needs
  Critical Accounting Policies
   12




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4. Controls and Procedures.
    13




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PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors.
   14




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Item 6. Exhibits.
 10.1
    
    
    Amendment No. 4 (as revised), dated May 13, 2010, to Amended and Restated
Financing Agreement, by and among G-III Leather Fashions, Inc., J. Percy for Marvin
Richards, Ltd., CK Outerwear, LLC, A. Marc &Co., Inc., Andrew & Suzanne Company
Inc. AM Retail Group, Inc. and the Lenders that are parties thereto and JPMorgan
Chase Bank, N.A., as Agent.31.1
    
    
    Certification by Morris Goldfarb, Chief Executive Officer of G-III
Apparel Group, Ltd., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, in
connection with G-III Apparel Group, Ltd.s Quarterly Report on Form 10-Q for the
fiscal quarter ended April 30, 2010.31.2
    
    
    Certification by Neal S. Nackman, Chief Financial Officer of G-III
Apparel Group, Ltd., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, in
connection with G-III Apparel Group, Ltd.s Quarterly Report on Form 10-Q for the
fiscal quarter ended April 30, 2010.32.1
    
    
    Certification by Morris Goldfarb, Chief Executive Officer of G-III
Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel
Group, Ltd.s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30,
2010.32.2
    
    
    Certification by Neal S. Nackman, Chief Financial Officer of G-III
Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel
Group, Ltd.s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30,
2010.
 
  15




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SIGNATURES
  G-III APPAREL GROUP, LTD.
(Registrant)Date:      June 7, 2010
    By:
    /s/ Morris GoldfarbMorris GoldfarbChief Executive OfficerDate:      June 7, 2010
    By:
    /s/ Neal S. NackmanNeal S. NackmanChief Financial Officer  16