##### Table of Contents



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, 2009
 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
    
    (I.R.S. Employerincorporation or organization)
    
    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)
    
    
    3Condensed
Consolidated Balance Sheets 
April 30, 2009, April 30, 2008 and January 31, 2009
    
    
    3Condensed Consolidated Statements of Operations 
For the Three Months Ended April 30, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows 
For the Three Months Ended April 30, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    9Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    13Item 4. Controls and Procedures
    
    
    13Part II OTHER INFORMATIONItem 1A. Risk Factors
    
    
    14Item 6. Exhibits
    
    
    14Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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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 31,2009
    
    
    2008
    
    
    2009(Unaudited)
    
    
    (Unaudited)(In thousands, except share and per share amounts)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    2,262
    
    
    $
    2,566
    
    
    $
    2,508Accounts receivable, net of allowance for doubtful accounts
and sales discounts of $17,452, $19,193 and $20,989,
respectively
    
    
    52,307
    
    
    
    49,460
    
    
    
    69,695Inventories
    
    
    89,354
    
    
    
    57,642
    
    
    
    116,612Prepaid income taxes
    
    
    5,188
    
    
    
    5,460
    
    
    
    Deferred income taxes
    
    
    11,565
    
    
    
    15,616
    
    
    
    11,565Prepaid expenses and other current assets
    
    
    14,280
    
    
    
    13,993
    
    
    
    10,319Total current assets
    
    
    174,956
    
    
    
    144,737
    
    
    
    210,699PROPERTY AND EQUIPMENT, NET
    
    
    9,755
    
    
    
    7,425
    
    
    
    9,863DEFERRED INCOME TAXES
    
    
    11,640
    
    
    
    3,941
    
    
    
    11,640OTHER ASSETS
    
    
    1,783
    
    
    
    2,143
    
    
    
    1,858INTANGIBLES, NET
    
    
    20,940
    
    
    
    27,228
    
    
    
    21,406GOODWILL
    
    
    25,494
    
    
    
    51,109
    
    
    
    25,494$
    244,568
    
    
    $
    236,583
    
    
    $
    280,960LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESNotes payable
    
    $
    31,080
    
    
    $
    26,177
    
    
    $
    29,048Income taxes payable
    
    
    
    
    
    
    
    
    
    
    5,222Accounts payable
    
    
    28,966
    
    
    
    17,989
    
    
    
    51,463Accrued expenses
    
    
    14,916
    
    
    
    14,686
    
    
    
    19,299Contingent purchase price payable
    
    
    4,935
    
    
    
    1,440
    
    
    
    4,935Deferred income taxes
    
    
    1,578
    
    
    
    1,298
    
    
    
    1,578Total current liabilities
    
    
    81,475
    
    
    
    61,590
    
    
    
    111,545DEFERRED INCOME TAXES
    
    
    6,648
    
    
    
    7,086
    
    
    
    6,648OTHER NON-CURRENT LIABILITIES
    
    
    620
    
    
    
    473
    
    
    
    538TOTAL LIABILITIES
    
    
    88,743
    
    
    
    69,149
    
    
    
    118,731STOCKHOLDERS EQUITYPreferred stock; 1,000,000 shares authorized; No shares
issued and outstandingCommon stock  $.01 par value; 40,000,000 shares authorized;
17,063,002, 16,873,502 and 17,063,002 shares issued
    
    
    171
    
    
    
    169
    
    
    
    171Additional paid-in capital
    
    
    99,901
    
    
    
    97,552
    
    
    
    99,486Retained earnings
    
    
    56,723
    
    
    
    70,683
    
    
    
    63,542156,795
    
    
    
    168,404
    
    
    
    163,199Common stock held in treasury  367,225 shares at cost
    
    
    (970
    )
    
    
    (970
    )
    
    
    (970
    )155,825
    
    
    
    167,434
    
    
    
    162,229$
    244,568
    
    
    $
    236,583
    
    
    $
    280,960
 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 30,2009
    
    
    2008(Unaudited)(In thousands, except per share amounts)Net sales
    
    $
    115,933
    
    
    $
    75,396Cost of goods sold
    
    
    84,718
    
    
    
    57,859Gross profit
    
    
    31,215
    
    
    
    17,537Selling, general and administrative expenses
    
    
    40,883
    
    
    
    27,165Depreciation and amortization
    
    
    1,404
    
    
    
    1,580Operating loss
    
    
    (11,072
    )
    
    
    (11,208
    )Interest and financing charges, net
    
    
    685
    
    
    
    566Loss before income taxes
    
    
    (11,757
    )
    
    
    (11,774
    )Income tax benefit
    
    
    (4,938
    )
    
    
    (4,886
    )Net loss
    
    $
    (6,819
    )
    
    $
    (6,888
    )NET LOSS PER COMMON SHARE:Basic and Diluted:Net loss per common share
    
    $
    (0.41
    )
    
    $
    (0.42
    )Weighted average number of shares outstanding
    
    
    16,696
    
    
    
    16,482
 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 CASH FLOWS
 Three Months Ended April 30,2009
    
    
    2008(Unaudited)(In thousands)Cash flows from operating activitiesNet loss
    
    $
    (6,819
    )
    
    $
    (6,888
    )Adjustments to reconcile net loss to net cash used
in operating activities, net of assets and
liabilities acquired:Depreciation and amortization
    
    
    1,404
    
    
    
    1,570Stock based compensation
    
    
    415
    
    
    
    217Deferred financing charges
    
    
    140
    
    
    
    174Changes in operating assets and liabilities:Accounts receivable, net
    
    
    17,389
    
    
    
    22,858Inventories
    
    
    27,258
    
    
    
    9,597Income taxes, net
    
    
    (10,410
    )
    
    
    (9,808
    )Prepaid expenses and other current assets
    
    
    (3,961
    )
    
    
    (5,199
    )Other assets, net
    
    
    (64
    )
    
    
    (230
    )Accounts payable, accrued expenses and
other liabilities
    
    
    (26,800
    )
    
    
    (14,300
    )Net cash used in operating activities
    
    
    (1,448
    )
    
    
    (2,009
    )Cash flows from investing activitiesCapital expenditures
    
    
    (830
    )
    
    
    (697
    )Acquisition of Andrew Marc, net of cash acquired
    
    
    
    
    
    
    (42,963
    )Contingent purchase price paid
    
    
    
    
    
    
    (3,454
    )Net cash used in investing activities
    
    
    (830
    )
    
    
    (47,114
    )Cash flows from financing activitiesProceeds from notes payable, net
    
    
    2,032
    
    
    
    26,177Repayment of term loan
    
    
    
    
    
    
    (13,060
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    67Tax benefit from exercise of stock options
    
    
    
    
    
    
    164Net cash provided by financing activities
    
    
    2,032
    
    
    
    13,348Net decrease in cash and cash equivalents
    
    
    (246
    )
    
    
    (35,775
    )Cash and cash equivalents at beginning of period
    
    
    2,508
    
    
    
    38,341Cash and cash equivalents at end of period
    
    $
    2,262
    
    
    $
    2,566Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    751
    
    
    $
    466Income taxes
    
    
    5,446
    
    
    
    4,714Detail of Andrew Marc acquisition:Acquired intangibles
    
    
    
    
    
    $
    36,483Fair value of other assets acquired, net
    
    
    
    
    
    
    20,867Fair value of total assets acquired
    
    
    
    
    
    
    57,350Liabilities assumed
    
    
    
    
    
    
    (14,310
    )Cash paid for acquisition
    
    
    
    
    
    
    43,040Cash acquired
    
    
    
    
    
    
    77Net cash paid for acquisition
    
    
    
    
    
    $
    42,963
 The accompanying notes are an integral part of these statements.
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G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  General Discussion
    Note 2  Inventories
  April 30,
    
    
    April 30,
    
    
    January 31,2009
    
    
    2008
    
    
    2009(In thousands)Finished goods
    
    $
    85,273
    
    
    $
    53,410
    
    
    $
    113,824Raw materials and work-in-process
    
    
    4,081
    
    
    
    4,232
    
    
    
    2,788$
    89,354
    
    
    $
    57,642
    
    
    $
    116,612
 Note 3  Contingent Purchase Price Payable
  Note 4  Net loss per Common Share
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Note 5  Notes Payable
    Note 6  Segments
  Three Months Ended April 30,2009
    
    
    2008Non-
    
    
    
    
    
    
    
    
    
    
    Non-Licensed
    
    
    Licensed
    
    
    Retail
    
    
    Licensed
    
    
    LicensedNet sales(1)
    
    $
    59,997
    
    
    $
    28,779
    
    
    $
    27,157
    
    
    $
    41,714
    
    
    $
    33,682Cost of goods sold
    
    
    45,229
    
    
    
    22,836
    
    
    
    16,653
    
    
    
    32,936
    
    
    
    24,923Gross profit
    
    
    14,768
    
    
    
    5,943
    
    
    
    10,504
    
    
    
    8,778
    
    
    
    8,759Selling, general and
administrative
    
    
    19,246
    
    
    
    7,406
    
    
    
    14,231
    
    
    
    15,110
    
    
    
    12,055Depreciation and amortization
    
    
    209
    
    
    
    919
    
    
    
    276
    
    
    
    640
    
    
    
    940Operating loss
    
    $
    (4,687
    )
    
    $
    (2,382
    )
    
    $
    (4,003
    )
    
    $
    (6,972
    )
    
    $
    (4,236
    )
 (1)
    
    Net sales for the licensed and non-licensed wholesale segments include an aggregate of $8.4
million of intersegment revenues from retail operations for the three months ended April 30, 2009.
Intersegment revenues for the previous period were not significant.   7




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Note 7  Recent Accounting Pronouncements
   8




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
   Overview
       9




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
    
    Improve the merchandise mix of outerwear at our stores;
 
    
    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.
        10




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Results of Operations
 Three months ended April 30, 2009 compared to three months ended April 30, 2008
      11




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Liquidity and Capital Resources
    Financing Agreement
    Cash from Operating Activities
    12




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Cash from Investing Activities
  Cash from Financing Activities
  Financing Needs
  Critical Accounting Policies
  
 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.
  
 Item 6. Exhibits.
 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, 2009.31.2
    
    
    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, 2009.32.1
    
    
    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,
2009.32.2
    
    
    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,
2009.
 
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SIGNATURES
  G-III APPAREL GROUP, LTD.(Registrant)Date: June 9, 2009
    
    By:
    
    /s/ Morris Goldfarb

Morris GoldfarbChief Executive OfficerDate: June 9, 2009
    
    By:
    
    /s/ Neal S. Nackman

Neal S. NackmanChief Financial Officer
  15




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EXHIBIT INDEX
 Exhibit No
    
    Description31.1
    
    
    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, 2009.31.2
    
    
    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, 2009.32.1
    
    
    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,
2009.32.2
    
    
    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,
2009.
 
  16