Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
May. 31, 2015 | Jul. 10, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | JOE'S JEANS INC. | |
Entity Central Index Key | 844,143 | |
Document Type | 10-Q | |
Document Period End Date | May 31, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --11-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 69,968,208 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | May. 31, 2015 | Nov. 30, 2014 |
Current assets | ||
Cash and cash equivalents | $ 828 | $ 1,054 |
Accounts receivable, net | 1,408 | 2,588 |
Factored accounts receivable, net | 20,129 | 30,421 |
Inventories, net | 48,579 | 61,319 |
Deferred income taxes, net | 1,509 | 6,065 |
Prepaid expenses and other current assets | 2,081 | 1,672 |
Total current assets | 74,534 | 103,119 |
Property and equipment, net | 4,580 | 5,040 |
Goodwill | 12,230 | 12,230 |
Intangible assets | 79,606 | 80,773 |
Deferred financing costs | 1,400 | 1,611 |
Other assets | 1,102 | 1,176 |
Total assets | 173,452 | 203,949 |
Current liabilities | ||
Accounts payable and accrued expenses | 16,064 | 23,331 |
Buy-out payable | 3,277 | 3,277 |
Line of credit | 20,820 | 31,338 |
Short-term debt | 59,123 | 59,003 |
Total current liabilities | 99,284 | 116,949 |
Convertible notes | 26,078 | 24,733 |
Deferred income taxes, net | 27,690 | 17,765 |
Deferred rent | 3,001 | 2,862 |
Other liabilities | 643 | 643 |
Total liabilities | $ 156,696 | $ 162,952 |
Commitments and contingencies | ||
Stockholders' equity | ||
Common stock, $0.10 par value: 100,000 shares authorized, 70,668 shares issued and 69,834 outstanding (2015) and 69,822 shares issued and 69,298 outstanding (2014) | $ 7,069 | $ 6,984 |
Additional paid-in capital | 111,745 | 111,010 |
Accumulated deficit | (98,623) | (73,679) |
Treasury stock, 834 shares (2015) and 524 shares (2014) | (3,435) | (3,318) |
Total stockholders' equity | 16,756 | 40,997 |
Total liabilities and stockholders' equity | $ 173,452 | $ 203,949 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | May. 31, 2015 | Nov. 30, 2014 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 70,668 | 69,822 |
Common stock, shares outstanding | 69,834 | 69,298 |
Treasury stock, shares | 834 | 524 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2015 | May. 31, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) | ||||
Net sales | $ 47,229 | $ 48,167 | $ 90,246 | $ 95,511 |
Cost of goods sold | 27,835 | 25,594 | 52,753 | 51,453 |
Gross profit | 19,394 | 22,573 | 37,493 | 44,058 |
Operating expenses: | ||||
Selling, general and administrative | 17,781 | 18,125 | 38,102 | 37,077 |
Depreciation and amortization | 996 | 1,160 | 2,008 | 2,387 |
Total operating expenses | 18,777 | 19,285 | 40,110 | 39,464 |
Operating income (loss) | 617 | 3,288 | (2,617) | 4,594 |
Interest expense | 3,944 | 3,355 | 7,828 | 6,676 |
Other expenses/ (income) | (4,818) | (2,268) | ||
Income (loss) before provision for taxes | (3,327) | 4,751 | (10,445) | 186 |
Income tax expense | 22 | 2,412 | 14,499 | 25 |
Net income (loss) and comprehensive income (loss) | $ (3,349) | $ 2,339 | $ (24,944) | $ 161 |
Earnings (loss) per common share - basic (in dollars per share) | $ (0.05) | $ 0.03 | $ (0.36) | $ 0 |
Earnings (loss) per common share - diluted (in dollars per share) | $ (0.05) | $ 0.01 | $ (0.36) | $ 0 |
Weighted average shares outstanding | ||||
Basic (in shares) | 69,355 | 68,148 | 69,139 | 68,045 |
Diluted (in shares) | 69,355 | 87,096 | 69,139 | 87,212 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net cash (used in) provided by operating activities | $ 10,841 | $ (4,039) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (381) | (290) |
Purchase of Hudson Clothing, Inc., net of cash acquired | (418) | |
Net cash used in investing activities | (381) | (708) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
(Repayment of) proceeds from line of credit | (10,518) | 6,068 |
Repayment of term loan | (15) | |
Payment of promissory tax note | (1,235) | |
Purchase of restricted stock | (117) | (227) |
Payment of taxes on restricted stock units | (51) | (205) |
Net cash provided by (used in) financing activities | (10,686) | 4,386 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (226) | (361) |
CASH AND CASH EQUIVALENTS, at beginning of period | 1,054 | 785 |
CASH AND CASH EQUIVALENTS, at end of period | $ 828 | $ 424 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total |
Balance at Nov. 30, 2013 | $ 6,890 | $ 107,933 | $ (45,963) | $ (3,091) | $ 65,769 |
Balance (in shares) at Nov. 30, 2013 | 68,878 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) and comprehensive income (loss) (unaudited) | 161 | 161 | |||
Embedded conversion feature net of taxes | 2,058 | 2,058 | |||
Stock repurchase | (227) | (227) | |||
Stock-based compensation, net of withholding taxes | 382 | 382 | |||
Issuance of restricted stock | $ 64 | (64) | |||
Issuance of restricted stock (in shares) | 641 | ||||
Balance at May. 31, 2014 | $ 6,954 | 110,309 | (45,802) | (3,318) | 68,143 |
Balance (in shares) at May. 31, 2014 | 69,519 | ||||
Balance at Nov. 30, 2014 | $ 6,984 | 111,010 | (73,679) | (3,318) | $ 40,997 |
Balance (in shares) at Nov. 30, 2014 | 69,822 | 69,822 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) and comprehensive income (loss) (unaudited) | (24,944) | $ (24,944) | |||
Stock repurchase | (117) | (117) | |||
Stock-based compensation, net of withholding taxes | 820 | 820 | |||
Issuance of restricted stock | $ 85 | (85) | |||
Issuance of restricted stock (in shares) | 846 | ||||
Balance at May. 31, 2015 | $ 7,069 | $ 111,745 | $ (98,623) | $ (3,435) | $ 16,756 |
Balance (in shares) at May. 31, 2015 | 70,668 | 70,668 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
May. 31, 2015 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 1 - BASIS OF PRESENTATION Our principal business activity involves the design, development and worldwide marketing of apparel products, which include denim jeans, related casual wear and accessories that bear the brand Joe’s ® and Hudson ® . Our primary current operating subsidiaries are Joe’s Jeans Subsidiary, Inc., or Joe’s Jeans Subsidiary and Hudson Clothing, LLC, or Hudson. In addition, we have other subsidiaries, including Joe’s Jeans Retail Subsidiary, Inc., Innovo West Sales, Inc., Hudson Clothing Holdings, Inc. and HC Acquisition Holding, Inc. All significant inter-company transactions have been eliminated. We completed the acquisition of Hudson on September 30, 2013 and the information presented includes the results of operations of Hudson from the date of acquisition. Our reportable business segments are Wholesale and Retail. We manage, evaluate and aggregate our operating segments for segment reporting purposes primarily on the basis of business activity and operation. Our Wholesale segment is comprised of sales of Joe’s ® and Hudson ® products to retailers, specialty stores and international distributors, includes revenue from licensing agreements and records expenses from sales, trade shows, distribution, product samples and customer service departments. Our Retail segment is comprised of sales to consumers through full price retail stores, outlet stores and through our online retail sites at www.joesjeans.com and www.hudsonjeans.com . We opened our first full price retail store in October 2008 in Chicago, Illinois and we currently operate 12 full price retail stores and 20 outlet stores in outlet centers, malls and street locations around the country for our Joe’s ® brand. Our Corporate and other is comprised of expenses from corporate operations, which include the executive, finance, legal, human resources, design and production departments and general advertising expenses associated with our brands. Our unaudited condensed consolidated financial statements, which include the accounts of our wholly-owned subsidiaries, for the three and six months ended May 31, 2015 and 2014 and the related footnote information have been prepared on a basis consistent with our audited consolidated financial statements as of November 30, 2014 contained in our Annual Report on Form 10-K for the fiscal year ended November 30, 2014, or the Annual Report. Our fiscal year end is November 30. Each fiscal year, as presented, is 52 weeks. Going Concern Prior to the acquisition of Hudson in fiscal 2013, our primary sources of liquidity were: (i) cash from sales of products; (ii) sales from accounts receivable factoring facilities and advances against inventory; and (iii) utilizing existing cash balances. In fiscal 2013, we incurred substantial indebtedness to finance the acquisition of Hudson, including approximately $32,445,000 in the aggregate principal amount of convertible notes, a $60,000,000 term loan credit agreement, and a $50,000,000 revolving credit agreement. On November 6, 2014, we received an initial notice of default and event of default and demand for payment of default interest under the term loan credit facility for violating certain financial and maintenance covenants. As of May 31, 2015, we were not in compliance with the covenants under the term loan credit agreement. Under the term loan credit agreement, an event of default occurred because the minimum EBITDA for the twelve fiscal months ending (i) September 30, 2014 of $22,136,300, (ii) October 31, 2014 of $22,991,900, and (iii) November 30, 2014 of $23,417,800 have not been met. In addition, as of May 31, 2015, the (i) financial plan and forecast for 2015 had not been timely delivered;(ii) minimum fixed charge coverage ratios at our respective quarter end measurement dates of 1.09x, 1.15x and 1.20x had not been met; and (iii) the maximum leverage ratios at our respective quarter end measurement dates of 3.21x, 3.00x and 2.75x had not been met. As a result of the events of default under the term loan credit agreement, this also triggered a default and an event of default under the terms of the revolving credit agreement. Both lenders have reserved their respective rights to exercise any and all remedies available to them under their respective agreements and have demanded payment of interest under those agreements at the default rate of interest. In addition, as a result of the events of default under the term loan credit agreement and the revolving credit agreement, we also became in default of our subordinated convertible notes issued to the former equity owners of Hudson. Under the terms of the revolving credit and term loan credit agreements, we are prohibited from making any payments under the subordinated convertible notes, but we are accruing interest on the convertible notes at the default rate. We are also prohibited from making earn-out payments to our creative director, Mr. Dahan under his buy-out agreement. On February 10, 2015, we received second notices of default and events of default for failure to comply with certain financial and other covenants and a demand for continued payment of default interest under the term loan credit agreement and revolving credit agreement from both Garrison Loan Agency Service LLC, or Garrison, and CIT Commercial Services, Inc., a unit of CIT Group, or CIT. In connection with the terms of the revolving and term loan credit agreements, certain restrictions were placed on our ability to incur indebtedness; create liens; consolidate, merge, liquidate or dissolve; sell, lease or otherwise transfer any assets; substantially change the nature of the business; make investments or acquisitions; pay dividends; enter into transactions with affiliates; amend material documents, prepay indebtedness and make capital expenditures. In addition, all of our assets, including trademarks, secure our obligations under the revolving and term loan credit agreements. Our failure to cure the defaults could result in an acceleration of the debt by either or both lenders, which would have a material adverse effect on our liquidity, financial condition and results of operations, and could cause us to become bankrupt or insolvent. Since all of our assets are subject to liquidation by the creditors, liquidation could result in no assets being left for the stockholders after the creditors receive their required payment. On June 26, 2015, we entered into forbearance agreements and amendments to the revolving and term loan credit agreements with Garrison and CIT. Under the terms of the forbearance, the lenders have agreed to forbear from exercising certain of their respective rights and remedies with respect to each existing default (generally defined as existing and certain future anticipated or possible events of default) for a period of time. See “Note 14 — Subsequent Events” for a further discussion of the forbearance agreements. While management is evaluating all options to cure the defaults, including refinancing, extending the indebtedness and exploring all other alternatives for other sources of capital for ongoing cash needs, including a sale of assets or the company or a recapitalization, there can be no assurance that we will be able to secure a resolution or refinance or extend the indebtedness and, accordingly, our liquidity and ability to operate could be adversely affected. We have engaged Carl Marks Advisory Group to assist us as we explore all strategic and financing alternatives to resolve the defaults and events of default, including the engagement of a chief restructuring advisor to assist us with our day-to-day operational needs. We are currently in discussions with our creditors under both the term loan credit agreement and revolving credit agreement regarding a resolution to the defaults, and our ability to continue as a going concern is dependent upon us resolving the outstanding indebtedness. As of May 31, 2015, our cash balance was $828,000, our term loan had a balance of $59,123,000 and our cash availability with CIT was approximately $11,500,000. This amount with CIT fluctuates on a daily basis based upon invoicing and collection related activity by CIT on our behalf. As of May 31, 2015, our revolving credit facility had an outstanding balance of $20,820,000. As a result of the aforementioned defaults and events of default, Moss Adams LLP, our independent auditor, has expressed substantial doubt about our ability to continue as a going concern in their audit report dated February 13, 2015. The accompanying consolidated financial statements for the year ended November 30, 2014 and three and six months ended May 31, 2015 were prepared under the assumption that we will continue to operate as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. As discussed in the previous paragraphs, we face various uncertainties that raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments that may result from the outcome of these uncertainties. |
ADOPTION OF ACCOUNTING PRINCIPL
ADOPTION OF ACCOUNTING PRINCIPLES | 6 Months Ended |
May. 31, 2015 | |
ADOPTION OF ACCOUNTING PRINCIPLES | |
ADOPTION OF ACCOUNTING PRINCIPLES | NOTE 2 — ADOPTION OF ACCOUNTING PRINCIPLES In May 2014, the Financial Accounting Standards Board, or FASB, issued a comprehensive new revenue recognition standard which will supersede previous existing revenue recognition guidance. The standard creates a five-step model for revenue recognition that requires companies to exercise judgment when considering contract terms and relevant facts and circumstances. The five-step model includes (1) identifying the contract, (2) identifying the separate performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations and (5) recognizing revenue when each performance obligation has been satisfied. The standard also requires expanded disclosures surrounding revenue recognition. The standard is effective for fiscal periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective adoption. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. In August 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014-15 to communicate amendments to FASB Accounting Standards Codification Subtopic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, or ASC amendments. The ASC amendments establish new requirements for management to evaluate a company’s ability to continue as a going concern and to provide certain related disclosures. The ASC amendments are effective for the annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted, but we have not yet adopted such guidance. In May 2015, FASB issued ASU 2015-08, Business Combinations (Topic 805): Pushdown Accounting - Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115 , or ASU 2015-08. The amendments in ASU 2015-08 amend various SEC paragraphs included in the FASB’s Accounting Standards Codification to reflect the issuance of Staff Accounting Bulletin No. 115, or SAB 115. SAB 115 rescinds portions of the interpretive guidance included in the SEC’s Staff Accounting Bulletins series and brings existing guidance into conformity with ASU No. 2014-17, Business Combinations (Topic 805): Pushdown Accounting , which provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. We have adopted the amendments in ASU 2015-08, effective May 8, 2015, as the amendments in the update are effective upon issuance. The adoption did not have an impact on our Condensed Financial Statements. In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , or ASU 2015-03. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public entities, ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is to be applied on a retrospective basis and represents a change in accounting principle. We believe the adoption of ASU 2015-03 will not have a material effect on our consolidated financial statements. |
FACTORED ACCOUNTS AND RECEIVABL
FACTORED ACCOUNTS AND RECEIVABLES | 6 Months Ended |
May. 31, 2015 | |
Factored Accounts and Receivables | |
FACTORED ACCOUNTS AND RECEIVABLES | NOTE 3 — FACTORED ACCOUNTS AND RECEIVABLES Factored accounts and receivables consist of the following (in thousands): May 31, 2015 November 30, 2014 Non-recourse receivables assigned to factor $ $ Client recourse receivables Total receivables assigned to factor Allowance for customer credits ) ) Due from factor $ $ Non-factored accounts receivable $ $ Allowance for customer credits ) ) Allowance for doubtful accounts ) ) Accounts receivable, net of allowance $ $ Of the total amount of receivables sold by us as of May 31, 2015 and November 30, 2014, we hold the risk of payment of $1,192,000 and $7,878,000, respectively, in the event of non-payment by the customers. CIT Commercial Services Amended and Restated Factoring Agreement On September 30, 2013, we entered into an amended and restated factoring agreement, or the Amended and Restated Factoring Agreement, with CIT, which replaced all prior agreements relating to factoring and inventory security. The Amended and Restated Factoring Agreement provides that we sell and assign to CIT certain of our accounts receivable, including accounts arising from or related to sales of inventory and the rendition of services. We will pay a factoring rate of 0.50 percent for accounts for which CIT bears the credit risk, subject to discretionary surcharges, and 0.35 percent for accounts for which we bear the credit risk, but in no event less than $3.50 per invoice. The Amended and Restated Factoring Agreement may be terminated by CIT upon 60 days’ written notice or immediately upon the occurrence of an event of default as defined in the agreement. The accounts receivable agreement may be terminated by us upon 60 days’ written notice prior to September 30, 2018 or annually with 60 days’ written notice prior to September 30th of each year thereafter. The Amended and Restated Factoring Agreement remains effective until it is terminated. In November 2014, we received an initial notice of default and event of default and demand for payment of default interest from Garrison, as term loan agent, under the term loan facility entered into on September 30, 2013. As a result of the event of default under the term loan facility, this also triggered a default and an event of default under the terms of the revolving credit facility with CIT entered into on September 30, 2013. As a result of such default and event of default, both of CIT and Garrison have reserved their respective rights to exercise any and all remedies available to them under their respective agreements and have demanded payment of interest under those agreements at the default rate of interest. On February 10, 2015, we received additional notices of default and events of default for failure to comply with certain financial and other covenants and a demand for continued payment of default interest from both Garrison and CIT. As of May 31, 2015, our cash balance was $828,000 and our borrowing base cash availability with CIT was approximately $11,500,000. This amount with CIT fluctuates on a daily basis based upon invoicing and collection related activity by CIT for the receivables sold. See also “Note 13 — Debt” for a further discussion of our debt arrangements with CIT and other lenders and “Note 14 — Subsequent Events” for a discussion of a forbearance agreement with CIT. |
INVENTORIES, NET
INVENTORIES, NET | 6 Months Ended |
May. 31, 2015 | |
INVENTORIES, NET | |
INVENTORIES, NET | NOTE 4 — INVENTORIES, NET Inventories are valued at the lower of cost or market with cost determined by the first-in, first-out method. Inventories consisted of the following (in thousands): May 31, 2015 November 30, 2014 Finished goods $ $ Finished goods consigned to others Work in progress Raw materials Less allowance for obsolescence and slow moving items ) ) $ $ |
LONG-LIVED AND INTANGIBLE ASSET
LONG-LIVED AND INTANGIBLE ASSETS AND GOODWILL | 6 Months Ended |
May. 31, 2015 | |
LONG-LIVED AND INTANGIBLE ASSETS AND GOODWILL | |
LONG-LIVED AND INTANGIBLE ASSETS AND GOODWILL | NOTE 5 — LONG-LIVED AND INTANGIBLE ASSETS AND GOODWILL Valuation of Long-lived and Intangible Assets and Goodwill We assess the impairment of identifiable intangibles, long-lived assets and goodwill annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important that could trigger an impairment review other than on an annual basis include the following: · A significant underperformance relative to expected historical or projected future operating results; · A significant change in the manner of the use of the acquired asset or the strategy for the overall business; or · A significant negative industry or economic trend. When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the aforementioned factors and the carrying value exceeds the estimated undiscounted cash flows expected to be generated by the asset, impairment is measured based on a projected discounted cash flow method using a discount rate determined by management. These cash flows are calculated by netting future estimated sales against associated merchandise costs and other related expenses such as payroll, occupancy and marketing. An asset is considered to be impaired if we determine that the carrying value may not be recoverable based upon our assessment of the asset’s ability to continue to generate income from operations and positive cash flow in future periods or if significant changes our strategic business objectives and utilization of the assets occurred. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the estimated fair value, which is determined based on discounted future cash flows. The impairment loss calculations require management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in future cash flows. Future expected cash flows for store assets are based on management’s estimates of future cash flows over the remaining lease period or expected life, if shorter. We consider historical trends, expected future business trends and other factors when estimating each store’s future cash flow. We also consider factors such as: the local environment for each store location, including mall traffic and competition; our ability to successfully implement strategic initiatives; and the ability to control variable costs such as cost of sales and payroll, and in some cases, renegotiate lease costs. In the third and fourth quarter of fiscal 2014, we recorded store impairment charge of $840,000 related to six of our retail stores. Based on the operating performance of these stores, we believed that we could not recover the carrying value of property and equipment located at these stores. Business acquisitions are accounted for under the purchase method by assigning the purchase price to tangible and intangible assets acquired and liabilities assumed. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Purchased intangible assets with finite lives are amortized over their estimated useful lives. Goodwill and intangible assets with indefinite lives are not amortized but are tested at least annually for impairment or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In fiscal 2007, we acquired through merger JD Holdings, which included all of the goodwill and intangible assets goodwill related to the Joe’s ® , Joe’s Jeans™ and JD ® logo and marks. On September 30, 2013, we acquired Hudson, which included all of the goodwill and intangible assets related to the Hudson ® logos and marks. We have assigned an indefinite life to the remaining intangible assets relating to the trademarks acquired, and therefore, no amortization expenses are expected to be recognized. However, we will test the assets for impairment annually in accordance with our critical accounting policies. We evaluate goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable using a two-step process. The first step is to determine the fair value of each reporting unit and compare this value to its carrying value. If the fair value exceeds the carrying value, no further work is required and no impairment loss would be recognized. The second step is performed if the carrying value exceeds the fair value of the assets. The implied fair value of the reporting unit’s goodwill must be determined and compared to the carrying value of the goodwill. We review our other indefinite-lived intangible assets for impairment on an annual basis, or when circumstances indicate their carrying value may not be recoverable. We calculate the value of the indefinite-lived intangible assets using a discounted cash flow method, based on the relief from royalty concept. Our annual impairment testing date is September 30 of each year or when circumstances indicate their carrying value may not be recoverable. Based on our under-performance in the fourth quarter of fiscal 2014, we determined that it was appropriate to perform an impairment testing as of November 30, 2014. Based on our testing we determined that the goodwill allocated to our Hudson wholesale reporting unit was impaired by $23,585,000, and there was no impairment of our other indefinite-lived intangible assets. As of February 28, 2015, we also determined that a triggering event had occurred due to the decline in our market capitalization and tested our goodwill and other indefinite-lived assets for impairment and determined that there was no impairment. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
May. 31, 2015 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 6 — RELATED PARTY TRANSACTIONS Joe Dahan Since the acquisition of the Joe’s® brand as a result of a merger in October 2007 through February 18, 2013, Mr. Dahan was entitled to a certain percentage of our gross profit in any applicable fiscal year until October 2017. At the time of the acquisition, pursuant to ASC 805 — Business Combinations, we assessed this original contingent consideration arrangement as compensatory and expensed such amounts over the term of the earn out period at the defined percentage amounts. On February 18, 2013, we entered into a new agreement with Mr. Dahan that fixed the overall amount to be paid by us for the remaining months of year six through year 10 in the original merger agreement at $9,168,000 through weekly installment payments beginning on February 22, 2013 until November 27, 2015. In the first quarter of fiscal 2013, we recorded a charge of $8,732,000 as contingent consideration buy-out expense in connection with this agreement. This amount represented the net present value of the total fixed amount that Mr. Dahan would receive. The entire amount was expensed during the first quarter of fiscal 2013 as the amount payable represented a present obligation due to Mr. Dahan. On September 30, 2013, in connection with entry into new credit facilities relating to the acquisition of Hudson, Mr. Dahan, CIT, Garrison and all of our loan parties entered into an earn out subordination agreement, which provides, among other things, that any payment, whether in cash, in kind, securities or any other property, in connection with the our obligations to Mr. Dahan is expressly junior and subordinated in right of payment to all amounts due and owing upon any indebtedness outstanding under the revolving credit facility and the term loan facility. We are permitted to make certain amounts of weekly installment payments of our obligations in the absence of an insolvency proceeding or any event of default under the revolving credit agreement or the term loan credit agreement. As a result of our default under the revolving credit agreement or the term loan credit agreement, we are currently prohibited from making any payments to Mr. Dahan. See “Note 10 — Commitments and Contingencies - Contingent Consideration Payments, Buy Out Agreement and Earnout Subordination Agreement” for a further discussion on these agreements with Mr. Dahan. Ambre Dahan In January 2013, we entered in to a consulting arrangement with Ambre Dahan, the spouse of Mr. Dahan, for design director services that paid her $175,000 per annum on a bi-weekly basis. For the three months ended May 31, 2015 and 2014, we paid Ms. Dahan $0 and $40,000, and for the six months ended May 31, 2015 and 2014, we paid Ms. Dahan $0 and $87,000, respectively, under this arrangement. This arrangement was terminated effective as of November 17, 2014. Albert Dahan In October 2011, we entered into an agreement with Ever Blue LLC, or Ever Blue, an entity for which Albert Dahan is the sole member, for the sale of children’s products. Ever Blue has an exclusive right to produce, distribute and sell children’s products bearing the Joe’s® brand on a worldwide basis, subject to certain limitations on the channels of distribution. In exchange for the license, Ever Blue pays to us a royalty on net sales with certain guaranteed minimum sales for each term. In connection with this agreement, we provided initial funding to Ever Blue for inventory purchases, which such amount has been repaid in full. For the three months ended May 31, 2015 and 2014, we recognized $32,000 and $60,000, respectively, in royalty income under the license agreement. For the six months ended May 31, 2015 and 2014, we recognized $45,000 and $308,000, respectively, in royalty income under the license agreement. Peter Kim We have entered into several agreements, including a stock purchase agreement, a convertible note, a registration rights agreement, an employment agreement and a non-competition agreement with Peter Kim, Chief Executive Officer of our Hudson subsidiary, in connection with the acquisition of Hudson. See “Note 12 — Acquisition of Hudson” and “Note 13 — Debt” for a further discussion of those agreements. Employment Agreements with Officers and Directors We have entered into employment agreements with Marc Crossman, our former President and Chief Executive Officer, Joe Dahan, our Creative Director and Peter Kim, our Chief Executive Office of our Hudson subsidiary. Mr. Dahan is also a member of our Board of Directors. Marc Crossman On May 30, 2008, we entered into an employment agreement with Mr. Crossman to serve as our President and Chief Executive Officer. The employment agreement was effective as of December 1, 2007, the commencement of our 2008 fiscal year, had an initial term of two years and automatically renewed for additional two year periods on December 1, 2009, December 1, 2011 and December 1, 2013, respectively. The employment agreement continues to automatically renew for additional two year periods if neither we nor Mr. Crossman provides 180 days’ advanced notice of non-renewal prior to the end of the term or upon the occurrence of a change in control. Under the employment agreement, Mr. Crossman is entitled to an annual salary of $429,300, an annual discretionary bonus targeted at 50 percent of his base salary based upon the achievement of financial and other performance criteria that the Compensation and Stock Option Committee of the Board of Directors, or Compensation Committee, may deem appropriate in its sole and absolute discretion, an annual grant of equity compensation pursuant to our stock incentive plans, life and disability insurance policies paid on his behalf and other discretionary benefits that the Compensation Committee may deem appropriate in its sole and absolute discretion. The employment agreement provides for severance payment of up to two years if terminated under certain circumstances. On January 19, 2015, our Board of Directors accepted the resignation of Mr. Crossman. The Board and Mr. Crossman also agreed that Mr. Crossman would become a consultant for a period of twelve (12) months pursuant to a consulting agreement. In exchange for a release of all claims related to Mr. Crossman’s employment and the provision of consulting services by Mr. Crossman, we have agreed to pay Mr. Crossman the following: (i) payment of $35,775 per month for a period of twelve (12) months; (ii) acceleration of the unvested equity awards previously granted to Mr. Crossman; (iii) granted him restricted common stock in the amount of 600,000 shares that vest 1/12 th on a monthly basis over the twelve (12) month period; and (iv) agreed to reimburse him for health and dental COBRA payments for a period of twelve (12) months or until he is eligible for coverage under a successor employer’s group health plan. Joe Dahan On October 25, 2007, we entered into an employment agreement for Mr. Dahan to serve as Creative Director for the Joe’s brand. The initial term of employment was for five years, or until October 25, 2012, and then automatically renewed for successive one year periods unless terminated earlier in accordance with the agreement. Under the employment agreement, Mr. Dahan is entitled to an annual salary of $300,000 and other discretionary benefits that the Compensation Committee may deem appropriate in its sole and absolute discretion. The employment agreement provides for severance payment of up to one year if terminated under certain circumstances. Peter Kim On September 30, 2013, we entered into an employment agreement with Mr. Kim to serve as Chief Executive Officer of our Hudson subsidiary for a term of three years. Under the employment agreement, Mr. Kim is entitled to a base salary of $500,000 per year and is also eligible to receive an annual discretionary bonus targeted at 50 percent of his base salary, based on the satisfaction of criteria and performance standards as established in advance and agreed to by Mr. Kim and the Compensation Committee. Mr. Kim is also entitled to other discretionary benefits that the Compensation Committee may deem appropriate in its sole and absolute discretion. The employment agreement provides for severance payment of up to one year if terminated under certain circumstances. Hamish Sandhu On July 2, 2015, we entered into an employment agreement with Mr. Sandhu to serve as our Chief Financial Officer for a term of one year with automatic renewal for successive one year periods unless terminated earlier in accordance with the agreement or advanced notice of non-renewal 90 days before the expiration of the current term. Under the employment agreement, Mr. Sandhu is entitled to a an annual salary of $325,000 and other cash and non-cash compensation, including an annual discretionary cash and equity bonus of not less than 10 percent of his base salary based upon the achievement of financial and other performance criteria as set forth in the employment agreement, premiums for health insurance paid on his behalf and for his family and life and disability insurance policies paid on his behalf. The employment agreement provides for severance payment of up to one year if terminated under certain circumstances. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
May. 31, 2015 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 7 — EARNINGS PER SHARE Earnings per share are computed using weighted average common shares and dilutive common equivalent shares outstanding. Potentially dilutive shares consist of outstanding options, shares issuable upon the assumed conversion of convertible notes, restricted stock and unvested restricted stock units, or RSUs. A reconciliation of the numerator and denominator of basic earnings per share and diluted earnings per share is as follows: Three months ended Six months ended (in thousands, except per share data) (in thousands, except per share data) May 31, 2015 May 31, 2014 May 31, 2015 May 31, 2014 Basic earnings (loss) per share computation: Numerator: Net earnings (loss) and comprehensive earnings (loss) $ ) $ $ ) $ Denominator: Weighted average common shares outstanding Earnings (loss) per common share - basic Net earnings (loss) and comprehensive earnings (loss) $ ) $ $ ) $ Diluted earnings (loss) per share computation: Numerator: Net earnings (loss) and comprehensive earnings (loss) $ ) $ $ ) $ Convertible notes interest expense, net of taxes — — Other Income - Gain from change in fair value of conversion derivative, net of taxes — ) — ) Numerator for dilutive earnings (loss) per share $ ) $ $ ) $ Denominator: Weighted average common shares outstanding Effect of dilutive securities: Convertible note shares — — Restricted shares, RSU’s and options — — Dilutive potential common shares Earnings (loss) per common share - diluted Net earnings (loss) and comprehensive earnings (loss) $ ) $ $ ) $ For the three months ended May 31, 2015, and 2014, currently exercisable options, convertible notes, unvested restricted shares and unvested RSUs in the aggregate of 20,599,927 and 21,510,929, respectively, have been excluded from the calculation of the diluted loss per share as their effect would have been anti-dilutive. For the six months ended May 31, 2015, and 2014, currently exercisable options, convertible notes, unvested restricted shares and unvested RSUs in the aggregate of 20,599,927 and 21,510,929, respectively, have been excluded from the calculation of the diluted loss per share as their effect would have been anti-dilutive. Shares Reserved for Future Issuance As of May 31, 2015, shares reserved for future issuance include: (i) 563,000 shares of common stock issuable upon the exercise of stock options granted under the incentive plans; (ii) 667,169 shares of common stock issuable upon the vesting of RSUs; (iii) an aggregate of 2,557,438 shares of common stock available for future issuance under the Amended and Restated 2004 Stock Incentive Plan; and (iv) 18,969,425 shares of common stock issuable pursuant to the convertible notes. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
May. 31, 2015 | |
INCOME TAXES | |
INCOME TAXES | NOTE 8 — INCOME TAXES We utilize the liability method of accounting for income taxes in accordance with FASB Accounting Standards Codification, or ASC, 740. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statements and tax bases of assets and liabilities using enacted tax rates. For interim periods, the income tax provision is calculated using an estimated annual effective tax rate based upon projected annual income, permanent items, discrete items and statutory rates in states in which we operate. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Quarterly, management reassesses the need for a valuation allowance. Realization of deferred income tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies and reversals of existing taxable temporary differences. In determining the need for a valuation allowance, we reviewed all available evidence pursuant to the requirements of FASB ASC 740. Pursuant to ASC 740, we excluded the deferred income tax liabilities associated with identified indefinite long lived intangible assets as a source of income. For the first quarter of fiscal 2015, based upon our assessment of all available evidence, we have concluded that it is more likely than not that the net deferred tax assets, as of November 30, 2014, with the exception of certain deferred taxes associated with separate filing states for Hudson, will not be realized. For the first quarter of fiscal 2015, the valuation allowance associated with deferred taxes as of November 30, 2014, increased by $14,481,000. Based on our prior assessment for fiscal 2014, 2013, and 2012, we had determined that the deferred tax assets were more likely than not to be realized with the exception of a valuation allowance of $640,000, $342,000 and $0, respectively, that was recorded against a state net operating loss deferred tax asset. We considered all available evidence, both positive and negative, in our assessment of the valuation allowance needed as of February 28, 2015. Due to a review of operating performance for the quarter and a change in business strategy, which included the disposal of certain assets that have a fair value in excess of tax basis, we increased our valuation allowance by $14,481,000 as of February 28, 2015. In calculating the amount of deferred tax assets subject to a valuation allowance, we have excluded the deferred tax liabilities associated with our trademarks from that amount. These intangible assets have an indefinite life and therefore, we cannot expect that the associated deferred tax liabilities will reverse over the same periods as our other net deferred tax assets. For the second quarter of fiscal 2015, based on our reassessment of the realizability of deferred taxes, we have determined that due to the operating performance for the quarter, a valuation allowance continues to be necessary for the deferred tax assets as of November 30, 2014, with the exception of certain deferred taxes associated with separate filing states for Hudson, We are subject to U.S. federal income tax as well as income tax in multiple state jurisdictions. To the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carryforward amount. We are no longer subject to U.S. federal and state income tax examinations by tax authorities for years prior to 2011 and 2010, respectively. We are currently not undergoing any examinations. We had net operating loss carryforwards of $25,067,000 at the end of fiscal 2014 for federal tax purposes that will expire from fiscal 2019 through 2034. We also had $19,874,000 of net operating loss carryforwards available for California, which begin to expire from fiscal 2015 through fiscal 2034. Certain limitations may be placed on net operating loss carryforwards as a result of “changes in control” as defined in Section 382 of the Internal Revenue Code. In the event a change in control occurs, it will have the effect of limiting the annual usage of the carryforwards in future years. Additional changes in control in future periods could result in further limitations of our ability to offset taxable income. Management believes that certain changes in control have occurred which resulted in limitations on our net operating loss carryforwards. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
May. 31, 2015 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 9 — STOCKHOLDERS’ EQUITY Stock Incentive Plans On June 3, 2004, we adopted the 2004 Stock Incentive Plan, or the 2004 Incentive Plan, and in October 2011, we adopted an Amended and Restated 2004 Stock Incentive Plan, or the Restated Plan, to update it with respect to certain provisions and changes in the tax code since its original adoption. Under the Restated Plan, the number of shares authorized for issuance is 6,825,000 shares of common stock. After the adoption of the Restated Plan in October 2011, we no longer grant awards pursuant to the 2004 Incentive Plan; however, it remains in effect for awards outstanding as of the adoption of the Restated Plan. Under the Restated Plan, grants may be made to employees, officers, directors and consultants under a variety of awards based upon underlying equity, including, but not limited to, stock options, restricted common stock, restricted stock units or performance shares. The Restated Plan limits the number of shares that can be awarded to any employee in one year to 1,250,000. The exercise price for incentive options may not be less than the fair market value of our common stock on the date of grant and the exercise period may not exceed ten years. Vesting periods, terms and types of awards are determined by the Board of Directors and/or our Compensation Committee. The Restated Plan includes a provision for the acceleration of vesting of all awards upon a change of control as well as a provision that allows forfeited or unexercised awards that have expired to be available again for future issuance. Since fiscal 2008, we have issued both restricted common stock and RSUs to our officers, directors and employees pursuant to our various plans. The RSUs represent the right to receive one share of common stock for each unit on the vesting date provided that the employee continues to be employed by us. On the vesting date of the RSUs, we expect to issue the shares of common stock to each participant upon vesting and expect to withhold an equivalent number of shares at fair market value on the vesting date to fulfill tax withholding obligations. Any RSUs withheld or forfeited will be shares available for issuance in accordance with the terms of the Restated Plan. The shares of common stock issued upon exercise of a previously granted stock option or a grant of RSUs are considered new issuances from shares reserved for issuance in connection with the adoption of the various plans. We require that the option holder provide a written notice of exercise in accordance with the option agreement and plan to the stock plan administrator and full payment for the shares be made prior to issuance. All issuances are made under the terms and conditions set forth in the applicable plan. As of May 31, 2015, 2,557,438 shares remained available for issuance under the Restated Plan. For all stock compensation awards that contain graded vesting with time-based service conditions, we have elected to apply a straight-line recognition method to account for all of these awards. For existing grants that were not fully vested at November 30, 2014, there was a total of $871,000 and $587,000 of stock based compensation expense recognized during the six months ended May 31, 2015 and 2014, respectively. The following summarizes option grants, restricted common stock and RSUs issued to members of the Board of Directors for the fiscal years 2002 through the second quarter of fiscal 2015 (in actual amounts) for service as a member: May 31, 2015 Granted as of: Number of options Exercise price 2002 $ 2002 $ 2003 $ 2004 $ 2005 $ 2006 $ Number of restricted shares isssued 2007 2008 2009 2010 2011 — 2012 2013 — 2014 2015 — Exercise prices for all options outstanding as of May 31, 2015 were as follows: Options Outstanding and Exercisable Exercise Price Number of shares Weighted-Average Remaining Contractual Life $ $ $ The following table summarizes stock option activity by plan for the six months ended May 31, 2015 and 2014 (in actual amounts): Total Number of Shares 2004 Incentive Plan Amended and Restated 2004 Incentive Plan Outstanding at November 30, 2014 — Granted — Exercised — — — Forfeited / Expired ) — ) Outstanding and exercisable at May 31, 2015 Outstanding at November 30, 2013 — Granted — — — Exercised — — — Forfeited / Expired — — — Outstanding and exercisable at May 31, 2014 — Stock option activity in the aggregate for the periods indicated are as follows (in actual amounts): Options Weighted average exercise price Weighted average remaining contractual Life (Years) Aggregate Intrinsic Value Outstanding at November 30, 2014 $ Granted Exercised — — Expired — — Forfeited ) — — Outstanding and exercisable at May 31, 2015 $ $ $ — Weighted average per option fair value of options granted during the year N/A Options Weighted average exercise price Weighted average remaining contractual Life (Years) Aggregate Intrinsic Value Outstanding at November 30, 2013 $ Granted — — Exercised — — Expired — — Forfeited — — — — Outstanding and exercisable at May 31, 2014 $ $ — Weighted average per option fair value of options granted during the year N/A As of May 31, 2015, there was $631,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2004 Incentive Plan and the Restated Plan. That unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.5 years. A summary of the status of restricted common stock and RSUs as of November 30, 2014 and November 30, 2013, and changes during the six months ended May 31, 2015 and 2014, are presented below (in actual amounts): Weighted-Average Grant-Date Fair Value Restricted Shares Restricted Stock Units Total Shares Restricted Shares Restricted Stock Units Outstanding at November 30, 2014 $ $ Granted — — Issued ) ) ) Cancelled — ) ) — Forfeited — ) ) — Outstanding at May 31, 2015 $ $ Outstanding at November 30, 2013 $ $ Granted Issued ) ) ) Cancelled — ) ) — Forfeited — ) ) — Outstanding at May 31, 2014 $ $ In the three months ended May 31, 2015, we did not grant any shares of RSUs, options or restricted stock. In the six months ended May 31, 2015, we did not grant any shares of RSUs and granted 40,000 options to purchase shares of our common stock and 600,000 shares of restricted stock. In the three months ended May 31, 2015, we (i) issued 150,000 shares of restricted stock and common stock to holders of RSUs, respectively, in connection with the granting of restricted stock or vesting of RSUs or restricted stock. We did not withhold, cancel or forfeit any RSUs or retire into treasury any shares of restricted stock. In the six months ended May 31, 2015, we (i) issued 1,238,675 shares of restricted stock and common stock to holders of RSUs, respectively, in connection with the granting of restricted stock or vesting of restricted stock or RSUs, (ii) withheld, canceled or forfeited 120,310 RSUs, and (iii) retired into treasury 309,842 shares of restricted stock. In the three months ended May 31, 2014, we did not grant any shares of RSUs, options or restricted stock. In the six months ended May 31, 2014, we granted 362,242 shares of RSUs and 288,121 shares of restricted stock. In the three months ended May 31, 2014, we (i) issued 58,914 shares of restricted stock and common stock to holders of RSUs, respectively, in connection with the granting of restricted stock or vesting of restricted stock or RSUs, (ii) withheld, canceled or forfeited 13,837 RSUs. We did not retire into treasury any shares of restricted stock. In the six months ended May 31, 2014, we (i) issued 803,010 shares of restricted stock and common stock to holders of RSUs, respectively, in connection with the granting of restricted stock or vesting of restricted stock or RSUs, (ii) withheld, canceled or forfeited 198,603 RSUs, and (iii) retired into treasury 194,901 shares of restricted stock. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
May. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 — COMMITMENTS AND CONTINGENCIES Contingent Consideration Payments, Buy-Out Agreement and Earnout Subordination Agreement As part of the consideration paid in connection with the merger with JD Holdings in October of 2007 and without regard to continued employment, until February 12, 2013, Mr. Dahan was entitled to a certain percentage of the gross profit earned by us in any applicable fiscal year until October 2017. On February 18, 2013, we entered into an agreement with Mr. Dahan that provided certainty of payments to him by removing the contingencies related to the contingent consideration payments to be made to Mr. Dahan as an earn out under the original merger agreement. This agreement fixed the overall amount to be paid by us for the remaining months of year six through year 10 in the original merger agreement. The payments are now made over an accelerated time period until November 2015 instead of October 2017. Under the agreement, beginning on February 22, 2013 until November 27, 2015, Mr. Dahan is entitled to receive the total aggregate fixed amount of $9,168,000 through weekly installment payments. In the first quarter of fiscal 2013, we recorded a charge of $8,732,000 as contingent consideration buy-out expense in connection with this agreement. This amount represented the net present value of the total fixed amount that Mr. Dahan would receive. The entire amount was expensed during the first quarter of fiscal 2013 as the amount payable represented a present obligation due to Mr. Dahan. Mr. Dahan is not required to perform any services or remain employed to receive the fixed amount. Mr. Dahan also agreed to an additional restrictive covenant relating to non-competition and non-solicitation until November 30, 2016 that added to the original restrictive covenant in the merger agreement. As a result of our default under the revolving credit agreement or the term loan credit agreement, we are currently prohibited from making any payments to Mr. Dahan. Operating Leases We lease retail store locations and our corporate offices and warehouse under operating lease agreements expiring on various dates through 2024 or 3 to 10 years from the rent commencement date. Some of these leases require us to make periodic payments for property taxes, utilities and common area operating expenses. Certain retail store leases provide for rents based upon the minimum annual rental amount and a percentage of annual sales volume, generally ranging from 6 percent to 8 percent, when specific sales volumes are exceeded. Some leases include lease incentives, rent abatements and fixed rent escalations, which are amortized and recorded over the initial lease term on a straight-line basis. As of May 31, 2015, the future minimum rental payments under non-cancelable operating leases with lease terms in excess of one year were as follows (in thousands): Future Lease Obligations are as follows (in thousands): 2015 Remainder of the year $ 2016 2017 2018 2019 Thereafter $ Convertible Notes, Promissory Tax Notes, Revolving Credit Facility and Term Loan Credit Facility See “Note 13 — Debt” for a further discussion on the commitments related to the acquisition of Hudson which included the issuance of the convertible notes, the tax notes, the revolving credit facility and the term loan credit facility. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
May. 31, 2015 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 11 — SEGMENT INFORMATION The following table contains summarized financial information concerning our reportable segments: Three months ended Six months ended ( dollar values in thousands ) May 31, 2015 May 31, 2014 May 31, 2015 May 31, 2014 Net sales: Wholesale $ $ $ $ Retail $ $ $ $ Gross profit: Wholesale $ $ $ $ Retail $ $ $ $ Operating (loss) income: Wholesale $ $ $ $ Retail ) ) Corporate and other ) ) ) ) $ $ $ ) $ Six months ended May 31, 2015 May 31, 2014 Capital expenditures: Wholesale $ $ Retail — — Corporate and other — $ $ May 31, 2015 November 30, 2014 Total assets: Wholesale $ $ Retail Corporate and other $ $ |
ACQUISITION OF HUDSON
ACQUISITION OF HUDSON | 6 Months Ended |
May. 31, 2015 | |
ACQUISITION OF HUDSON | |
ACQUISITION OF HUDSON | NOTE 12 - ACQUISITION OF HUDSON On July 15, 2013, we announced the execution of a stock purchase agreement with Hudson, Fireman Capital CPF Hudson Co-Invest LP, or Fireman, Peter Kim, Paul Cardenas, Tony Chu, and certain option holders of Hudson named therein, pursuant to which we agreed to acquire all of the outstanding equity interests in Hudson. On September 30, 2013, we completed the acquisition of Hudson and purchased all of the outstanding equity interests for an aggregate purchase price of approximately $94,102,000, consisting of $65,416,000 in cash, approximately $27,451,000 in convertible notes, net of discount, and $1,235,000 in aggregate principal amount of promissory notes bearing no interest, that was paid on April 1, 2014, to certain former option holders of Hudson. In addition, in connection with the acquisition, we, along with all of our subsidiaries entered into: (i) a revolving credit agreement with CIT as administrative agent, collateral agent, documentation agent and syndication agent, CIT Finance LLC, as sole lead arranger and sole bookrunner, and the lenders party thereto, and (ii) a term loan credit agreement with Garrison, as administrative agent, collateral agent, lead arranger, documentation agent and syndication agent, and the lenders party thereto. In addition, we entered into an amended and restated factoring agreement with CIT that amends and restates our existing factoring agreement. See “Note 13 — Debt” for a description of our debt arrangements. The acquisition has been accounted for as a purchase under United States generally accepted accounting principles. Accordingly, we have, with the assistance from independent valuation specialists, allocated the purchase price to the assets and liabilities of Hudson in our financial statements as of the completion of the acquisition at their respective fair values as of September 30, 2013. During the measurement period of one year, we recognized additional liabilities of $2,003,000 based upon the information obtained from facts and circumstances that existed as of the acquisition date. Goodwill was increased by the same amount to reflect these adjustments. The assets acquired in this acquisition consisted of tangible and intangible assets acquired and liabilities assumed. The differences between the fair value of the consideration paid and the estimated fair value of the assets and liabilities has been recorded as goodwill. The significant factors that resulted in recognition of goodwill were: (a) the purchase price was based upon cash flow and return on capital projections assuming integrations with our company and (b) the calculation of the fair value of tangible and intangible assets acquired that qualified for recognition. We have determined that the useful life of the acquired trade name asset is indefinite, and therefore, no amortization expense will initially need to be recognized. The useful life of the acquired customer relationships and design assets are finite and will be amortized over their useful lives. However, we will test the assets for impairment annually and/or if events or changes in circumstances indicate that the assets might be impaired. Additionally, a deferred tax liability has been established in the allocation of the purchase price with respect to the identified indefinite long lived intangible assets acquired. Under the purchase method of accounting, the total consideration as shown in the table below (in thousands) is allocated to the assets based on their estimated fair values as of the date of the completion of the acquisition. The consideration is allocated as follows: Assets and liabilities assumed: Cash and cash equivalents $ Accounts receivable Due from factor Inventories Prepaid expenses and other assets Property and equipment Other assets Accounts payable and accrued expenses ) Other current liabilities ) Due to factor ) Deferred income taxes, net ) Intangible assets acquired: Trade names Customer relationships Design Net assets acquired Goodwill created by the acquisition Total consideration transferred $ Total Purchase Price Cash $ Promissory notes Convertible notes (Face value $32,445 less discount) Total Purchase Price $ |
DEBT
DEBT | 6 Months Ended |
May. 31, 2015 | |
DEBT | |
DEBT | NOTE 13 - DEBT The five-year payment schedule of our term debt and convertible notes is as follows (in thousands): Payments due by period (in thousands) Total 2015 2016 2017 2018 2019 Thereafter Short term debt $ $ $ — $ — $ — $ — $ — Convertible notes — — — — — $ $ $ — $ — $ — $ $ — Convertible Notes The convertible notes were issued with different interest rates and conversion features for Hudson’s management stockholders and Fireman, respectively. Interest on the convertible notes is paid in a combination of cash and additional paid in kind notes, or PIK notes. Convertible notes in an aggregate principal amount of approximately $22,885,000 (face amount) were issued to Hudson’s management stockholders, are structurally and contractually subordinated to our senior debt and mature on March 31, 2019. All of the notes are expressly junior and subordinated in right of payment to all amounts due and owing upon any indebtedness outstanding under the revolving credit facility and the term loan facility (as discussed below). The management notes accrue interest quarterly on the outstanding principal amount (i) from September 30, 2013 until the earlier to occur of the date of conversion of the notes or November 30, 2014 at a rate of 10 percent per annum, which is payable 7.68 percent in cash and 2.32 percent in PIK Notes, (ii) from December 1, 2014 until the earlier to occur of the date of conversion of the notes or September 30, 2016 at a rate of 10 percent per annum payable in cash, and (iii) from October 1, 2016 until the earlier to occur of the date of conversion of the notes or the date such principal amount is paid in full at a rate of 10.928 percent per annum payable in cash. Payment of interest at the cash pay rate under clause (ii) or (iii), as applicable, for any payment date will be subject to satisfaction of certain financial conditions for us. As of December 1, 2014, we did not meet such financial conditions, and therefore, the interest continues to accrue quarterly at a rate of 10 percent per annum, which is payable 7.68 percent in cash and 2.32 percent in PIK notes. In addition, because we are prohibited from making any payments under the subordinated convertible notes, as of January 1, 2015, we began to accrue an additional two percent interest under the default rate in cash. The management notes become convertible by each of the holders beginning on September 30, 2015 until maturity on March 31, 2019 into shares of our common stock, cash, or a combination of cash and common stock, with the settlement choice at our election. The approximately $9,560,000 (face amount) in aggregate principal amount of convertible notes issued to Fireman are structurally and contractually subordinated to our senior debt and mature on March 31, 2019. The Fireman note accrues interest quarterly on the outstanding principal amount (i) from September 30, 2013 until the earlier to occur of the date of conversion of the notes or November 30, 2014 at a rate of 6.5 percent per annum, which is payable 3 percent in cash and 3.5 percent in PIK Notes, (ii) from December 1, 2014 until the earlier to occur of the date of conversion of the notes or September 30, 2016 at a rate of 6.5 percent per annum payable in cash, and (iii) from October 1, 2016 until the earlier to occur of the date of conversion of the notes or the date such principal amount is paid in full at a rate of 7 percent per annum payable in cash. Payment of interest at the cash pay rate under clause (ii) or (iii), as applicable, for any payment date will be subject to satisfaction of certain financial conditions for us. As of December 1, 2014, we did not meet such financial conditions, and therefore, the interest continues to accrue quarterly at a rate of 6.5 percent per annum, which is payable 3 percent in cash and 3.5 percent in PIK notes. In addition, because we are prohibited from making any payments under the subordinated convertible notes, as of January 1, 2015, we began to accrue an additional two and a half percent interest under the default rate in cash. The Fireman note becomes convertible by the holder on October 14, 2014 until maturity on March 31, 2019 into shares of common stock, cash, or a combination of cash and common stock, with the settlement choice at our election. Each of the notes is convertible, in whole but not in part, at a conversion price of $1.78 per share, subject to certain adjustments, into approximately 18,200,000 shares of our common stock. The Fireman note may be converted at its sole election and the management notes may be converted at either a majority of the holders’ election or individually, depending on the holder. If the we elect to pay cash with respect to a conversion of the notes, the amount of cash to be paid per share will be equal to (a) the number of shares of common stock issuable upon such conversion multiplied by (b) the average of the closing prices for the common stock over the 20 trading day period immediately preceding the notice of conversion. We will have the right to prepay all or any portion of the principal amount of the notes at any time by paying 103 percent of the principal amount of the portion of any management note subject to prepayment or 100 percent of the principal amount of the portion of the Fireman note subject to prepayment. The holders of the convertible notes also have demand and piggyback registration rights associated with their notes in a separate agreement pursuant to which they have the right to require us to prepare and file a registration statement on Form S-1 or S-3 or any similar form or successor to such forms under the Securities Act, or any other appropriate form under the Securities Act or the Exchange Act, for the resale of all or part of their shares that may be issued under the convertible notes. Embedded Conversion Derivative FASB Accounting Standards Codification (ASC) Topic 470 (ASC 470), Accounting for Convertible Debt Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement) requires the issuer of convertible debt that may be settled in shares or cash upon conversion at their option, such as our convertible notes, to account for their liability and equity components separately by bifurcating the embedded conversion derivative, or the derivative, from the host debt instrument. Although ASC 470 has no impact on our actual past or future cash flows, it requires us to record non-cash interest expense as the debt discount is amortized. As a result of the issuance of convertible notes in September 2013, the total potential shares of common stock that could be issued exceeded the amount of shares we were eligible to issue under NASDAQ rules as of that date. Therefore, we were required to value the derivative and recognize the fair value as a long-term liability. The fair value of this derivative at the time of issuance of the convertible notes was $5,496,000 and was recorded as the original debt discount for the purposes of accounting for the debt component of the convertible notes. This debt discount on the Fireman and management notes are being amortized as interest expense using an effective interest rate of 8.32 percent and 4.31 percent, respectively, over the remaining 5.5 year term of the convertible notes. On May 8, 2014, we obtained stockholder approval for our ability to issue the common stock underlying the convertible notes in compliance with NASDAQ rules. The derivative liability has been reassessed and it was determined that it should be reclassified to stockholders’ equity as of May 8, 2014. We determined the fair value of the derivative using a binomial lattice model at that date. The key assumptions for determining the fair value at May 8, 2014 included the remaining time to maturity of approximately four years and ten months, volatility of 60 percent, and the risk-free interest rate of 1.63 percent. The fair value of the embedded conversion derivative was $5,700,000 and $3,430,000 at November 30, 2013 and May 8, 2014, respectively. The decrease in the fair value of the embedded conversion derivative from November 30, 2013 to May 8, 2014 resulted in a gain of $2,270,000, which has been recorded as other income. The primary reason for the decrease in fair value was due to the change in our stock price as compared to the conversion price. The following table (in thousands) is a summary of the recorded value of the convertible note as of May 31, 2015. The value of the convertible note reflects the present value of the contractual cash flows from the convertible notes and resulted in an original issue discount of $10,490,000 including the additional original discount attributed to the embedded conversion derivative of $5,496,000, that were recorded on September 30, 2013, the issuance date. Balance May 31, 2015 Convertible notes - Face value $ Less: Original issue discount ) Less: Debt discount related to the embedded derivative liability ) Convertible notes recorded value on issue date Add: PIK notes issued Accretion of debt discounts Convertible notes value The following table (in thousands) is a summary of our total interest expense as follows: Three months ended Six months ended May 31, 2015 May 31, 2014 May 31, 2015 May 31, 2014 Contractual coupon interest $ $ $ $ Amortization of discount and deferred financing costs Total interest expense $ $ $ $ Promissory Notes In connection with the acquisition of Hudson, we issued approximately $1,235,000 in aggregate principal amount of promissory notes bearing no interest that were paid on April 1, 2014 to certain option holders of Hudson. Revolving Credit Agreement The revolving credit agreement with CIT provides us with a revolving credit facility up to $50,000,000 comprised of a revolving A-1 commitment of up to $1,000,000 and a revolving A commitment of up to $50,000,000 minus the revolving A-1 commitment. Our actual maximum credit availability under the revolving facility varies from time to time and is determined by calculating a borrowing base, which is based on the value of the eligible accounts receivable and eligible inventory minus reserves imposed by CIT. The revolving facility also provides for swingline loans, up to $5,000,000 sublimit, and letters of credit, up to $1,000,000 sublimit. Proceeds from advances under the revolving facility may be used for working capital needs and general corporate purposes and were initially used to pay a portion of the consideration for the acquisition of Hudson and fees and expenses associated with the acquisition of Hudson. As of May 31, 2015, $20,820,000 was outstanding under our revolving credit facility and cash availability of approximately $11,500,000. All unpaid loans under the revolving facility mature on September 30, 2018. We have the right at any time and from time to time to terminate the commitments under the revolving facility by paying in full or prepay any borrowings, in whole or in part, without terminating or reducing the commitment. If we terminate the revolving facility in full prior to the second anniversary of the date, we are required to pay a prepayment fee of 1 percent or 0.5 percent of the commitments terminated depending on when we make the prepayment. The revolving facility is guaranteed by us and all of our subsidiaries, and secured by liens on substantially all assets owned by us, including a first- priority lien on certain property, including principally trade accounts, inventory, certain related assets and proceeds of the foregoing, subject to permitted liens and exceptions, and a second-priority lien on all other assets, including intellectual property owned by us, which secures the term loan facility on a first-priority basis. Advances under the revolving facility are in the form of either base rate loans or LIBOR rate loans. The interest rate for base rate loans under the revolving A commitment fluctuates and is equal to (x) the Alternate Base Rate, which is the greatest of (a) the JPMorgan Chase Bank prime rate; (b) the Federal funds rate plus 0.50 percent; and (c) the 90-Day LIBO Rate, which is the rate per annum equal to the 90 day LIBOR published in the New York City edition of the Wall Street Journal under “Money Rates,” plus 1 percent, in each case, plus (y) 1.5 percent. The interest rate for LIBOR rate loans under the revolving A commitment is equal to the 90-Day LIBO Rate per annum plus 2.5 percent. The interest rate for base rate loans and LIBOR rate loans under the revolving A-1 commitment is equal to (i) Alternate Base Rate plus 2.5 percent and (ii) the 90-Day LIBO Rate plus 3.5 percent, respectively. Interest on the revolving facility is payable on the first day of each calendar month and the maturity date. In addition, because we are in default under the revolving credit facility, we are paying an additional one percent interest under the default rate. Our average interest rate, including the default rate, is approximately 3.5 percent. Among other fees, we pay a commitment fee of 0.25 percent per annum (due quarterly) on the average daily amount of the unused revolving commitment under the revolving facility. We also pay fees with respect to any letters of credit. The revolving facility contains usual and customary negative covenants for transactions of this type, including, but not limited to: restrictions on our ability and our subsidiaries’ ability, to create or incur indebtedness; create liens; consolidate, merge, liquidate or dissolve; sell, lease or otherwise transfer any of its assets; substantially change the nature of its business; make investments or acquisitions; pay dividends; enter into transactions with affiliates; and amend material documents, prepay certain indebtedness and make capital expenditures. The negative covenants are subject to certain exceptions as specified in the revolving credit agreement. In addition, the revolving credit agreement requires us to: (a) maintain (i) at all times availability under the revolving facility of not less than $5,000,000 and (ii) at all times the sum of availability under the revolving facility plus up to $2,500,000 of unrestricted cash of not less than $7,500,000; and (b) maintain a minimum fixed charge coverage ratio calculated for each four fiscal quarter period at levels set forth in the revolving facility. As of May 31, 2015, we were not in compliance with certain covenants under the revolving credit agreement as a result of an event of default under the term loan credit agreement. As of November 30, 2014, we were out of compliance with the minimum fixed charge coverage ratio of 1.09x and had failed to timely deliver the financial plan and forecast for 2015. As of February 28, 2015, the (i) fixed charge coverage ratio of 1.15x and (ii) leverage ratio of 3.00x were also not met. As of May 31, 2015, the (i) fixed charge coverage ratio of 1.20x and (ii) leverage ratio of 2.75x were not met. See “Note 14- Subsequent Events” for a discussion of forbearance agreements and amendments to the revolving credit and term loan credit agreements entered into with CIT and Garrison. Term Loan Credit Agreement The term loan credit agreement entered into with Garrison provided for term loans of up to $60,000,000 and was fully funded to us as of September 30, 2013. The term loan proceeds were used to finance a portion of the consideration for the acquisition of Hudson, to pay fees and expenses associated with the acquisition and for working capital needs and other general corporate purposes. The term loan matures on September 30, 2018. We are allowed to prepay the term loan at any time, in whole or in part, subject to the payment of a prepayment fee if we prepay prior to September 30, 2016. The prepayment fee is 3 percent if we prepay prior to September 30, 2014 and reduces by 1 percent per year until September 30, 2016. In addition, we are required to make prepayments out of extraordinary receipts, certain percentage of the excess cash flow and certain net proceeds of certain asset sales or equity issuances, in each case (other than a prepayment in connection with excess cash flow), subject to the payment of the prepayment fee as set forth above. The term loan facility is guaranteed by us and all of our subsidiaries and is secured by liens on substantially all assets owned by us, including a first-priority lien on intellectual property owned by us and a second-priority lien on the revolving credit priority collateral. The interest rate for the term loan fluctuates and is equal to the rate per annum equal to the British Banker Association Interest Settlement Rate for deposits in Dollars with a term of three months, as appears on the Bloomberg BBAM Screen, plus 10.75 percent. Interest is payable on the first day of each calendar month and the maturity date. In addition, because we are in default under the term loan agreement, we are paying an additional two percent interest under the default rate. Our average interest rate, including the default rate, is approximately 14 percent. The term loan credit agreement contains usual and customary negative covenants for transactions of this type, including, but not limited to, restrictions on our ability and our subsidiaries’ ability to create or incur indebtedness; create liens; consolidate, merge, liquidate or dissolve; sell, lease or otherwise transfer any of its assets; substantially change the nature of its business; make investments or acquisitions; pay dividends; enter into transactions with affiliates; amend material documents, prepay certain indebtedness and make capital expenditures. The negative covenants are subject to certain exceptions as specified in the term loan credit agreement. In addition, the term loan credit agreement also requires us to maintain: (a) (i) at all times, availability under the revolving credit facility of not less than $5,000,000 and (ii) at all times as tested on each date that a borrowing certificate is delivered, the sum of availability under the revolving credit facility plus up to $2,500,000 of unrestricted cash of not less than $7,500,000; (b) a minimum fixed charge coverage ratio; (c) a minimum EBITDA; and (d) a leverage ratio not more than the maximum leverage coverage ratio as set forth in the term loan credit agreement. As of May 31, 2015, we were not compliance with certain covenants under the term loan credit agreement. Under the term loan credit agreement, an event of default has occurred. The minimum EBITDA for the twelve fiscal months ending (i) September 30, 2014 of $22,136,300, (ii) October 31, 2014 of $22,991,900 and (iii) November 30, 2014 of $23,417,800 were not met. In addition, as of November 30, 2014, we were out of compliance with the (i) minimum fixed charge coverage ratio of 1.09x; and (ii) the maximum leverage ratio of 3.21x. As of February 28, 2015, the (i) fixed charge coverage ratio of 1.15x; and (ii) leverage ratio of 3.00x were also not met. As of May 31, 2015, the (i) fixed charge coverage ratio of 1.20x; and (ii) leverage ratio of 2.75x were not met. As a result of being out of compliance with these covenants, the term loan debt has been classified as current on the balance sheet. See “Note 14- Subsequent Events” for a discussion of forbearance agreements and amendments to the revolving credit and term loan credit agreements entered into with CIT and Garrison. Amended and Restated Factoring Agreement See “Note 3 — Factored Accounts and Receivables” for a discussion of our Amended and Restated Factoring Agreement. |
Subsequent Events
Subsequent Events | 6 Months Ended |
May. 31, 2015 | |
SUBSEQUENT EVENTS | |
Subsequent Events | NOTE 14 — SUBSEQUENT EVENTS On June 26, 2015, we entered into a Forbearance and Amendment No. 3 to Revolving Credit Agreement, or the CIT Forbearance Agreement, with CIT. The CIT Forbearance Agreement requires CIT and the lenders to forbear from exercising certain of their respective rights and remedies with respect to each existing default (generally defined as existing and certain future anticipated or possible events of default) under the revolving credit agreement during the forbearance period and further amends the revolving credit agreement. Concurrent with the CIT Forbearance Agreement, we entered into a substantially similar forbearance agreement with Garrison, or the Garrison Forbearance Agreement, that also amended the term loan credit agreement. The CIT Forbearance Agreement and Garrison Forbearance Agreement are collectively referred to as the Forbearance Agreements. Both of the Forbearance Agreements provide that each of the lenders will forbear from exercising certain of their respective rights and remedies during the forbearance period with respect to existing defaults. The Forbearance Period ends upon the earliest to occur of a Forbearance Default or October 15, 2015, or the Forbearance Termination Date. The Forbearance Period is automatically extended until November 15, 2015 if at the Forbearance Termination Date no Forbearance Default has occurred and all of the milestones with respect to a sale/recapitalization process have been met, except for shareholder approval, or the Extended Forbearance Termination Date. To induce the lenders to enter into the Garrison Forbearance Agreement, we have agreed to pay a forbearance fee of 1.35% of the greater of the outstanding balance of the obligations under the term loan credit agreement on (i) June 26, 2015 or (ii) the Forbearance Fee Payment Date (i.e., earliest of consummation of a sale/recapitalization transaction, acceleration of Obligations, and payment in full of Obligations). CIT is entitled to a forbearance fee of $450,000 on the Forbearance Fee Payment Date. If the Forbearance Period is automatically extended, we have agreed to pay Garrison an additional 0.25% fee and CIT an additional $125,000 fee (which, in each case, may be pro-rated for the period from October 15, 2015 until November 15, 2015, if the entire period is not needed). As noted above, the Forbearance Agreements also provide for amendments to the revolving credit agreement and term loan credit agreement. Each Forbearance Agreement amended the definition of “Availability” under the respective revolving credit agreement and term loan credit agreement to reduce the minimum availability requirement to $4,500,000 from $7,500,000. In addition, the CIT Forbearance Agreement modified the definition of “Eligible Accounts” to permit as eligible accounts, until the Forbearance Termination Date (as it may be extended), trade accounts owing from Nordstrom’s and its affiliates not exceeding 55% of aggregate eligible accounts. After the Forbearance Termination Date (as it may be extended), the 55% applicable to Nordstrom and its affiliates will revert to 45%. As a result of the Forbearance Agreements, while existing defaults remain under the revolving credit agreement and term loan credit agreement, Garrison and CIT and the respective lenders must forbear from the exercise of certain rights and remedies, such as the acceleration of the obligations during the Forbearance Period. The respective Forbearance Agreements contain covenants applicable during the Forbearance Period including, among others, covenants requiring compliance with a budget and provision, on a weekly basis, of reports of actual results as compared to the budget, and continuation of the engagement of Carl Marks to provide investment banking services, including execution of the sales/recapitalization process in accordance with specified milestones and restructuring advice. The sales/recapitalization process refers to the sale of substantially all of the assets or the obtaining of financing sufficient to satisfy all obligations under the respective credit agreements. The milestones relate to certain deadlines to achieve various steps in connection with a proposed merger/acquisition transaction. On July 6, 2015, our board of directors approved and adopted Amended and Restated Bylaws, or the Amended and Restated Bylaws, which amend and restate the provisions of our existing bylaws in their entirety. The Amended and Restated Bylaws provide, among other things, that: (i) to bring any business before an annual meeting, a stockholder must give our Secretary written notice no later than the close of business on the 90th day and no earlier than the opening of business on the 120th day before the anniversary of the preceding annual stockholder’s meeting; provided, however, that if the annual meeting is set more than 30 days earlier or more than 60 days later than such anniversary date, notice by the stockholder must be received no earlier than the opening of business on the 120th day before the meeting and no later than the later of the close of business on the 90th day before the meeting or the close of business on the 10th day following public disclosure of the date of the annual meeting. Notwithstanding the previous sentence, for purposes of determining whether a stockholder’s notice shall have been received in a timely manner for the annual meeting of stockholders in 2015, to be timely, a stockholder’s notice must have been received not later than the close of business on August 15, 2015, nor earlier than the opening of business on July 15, 2015. Any stockholder proposal will be deemed to have satisfied the advance notice requirements if the stockholder has notified us of their intention to present a proposal at an annual meeting in compliance with Rule 14a-8 of the Securities Exchange Act of 1934, as amended, and such stockholder’s proposal has been included in our proxy statement; (ii) any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of the stockholders and may not be effected by written consent in lieu of meeting; (iii) we will, to the fullest extent permitted by law, indemnify our current and former directors and officers against all liability incurred in connection with any threatened, pending or completed proceeding; provided, however, that an eligible director or officer will be indemnified by us in connection with a proceeding initiated by such person only if the proceeding was authorized by the board; and (iv) the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for certain actions brought on behalf of or against us, unless we consent in writing to an alternative forum. |
FACTORED ACCOUNTS AND RECEIVA21
FACTORED ACCOUNTS AND RECEIVABLES (Tables) | 6 Months Ended |
May. 31, 2015 | |
Factored Accounts and Receivables | |
Schedule of factored accounts and receivables | Factored accounts and receivables consist of the following (in thousands): May 31, 2015 November 30, 2014 Non-recourse receivables assigned to factor $ $ Client recourse receivables Total receivables assigned to factor Allowance for customer credits ) ) Due from factor $ $ Non-factored accounts receivable $ $ Allowance for customer credits ) ) Allowance for doubtful accounts ) ) Accounts receivable, net of allowance $ $ |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 6 Months Ended |
May. 31, 2015 | |
INVENTORIES, NET | |
Schedule of inventories | Inventories are valued at the lower of cost or market with cost determined by the first-in, first-out method. Inventories consisted of the following (in thousands): May 31, 2015 November 30, 2014 Finished goods $ $ Finished goods consigned to others Work in progress Raw materials Less allowance for obsolescence and slow moving items ) ) $ $ |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
May. 31, 2015 | |
EARNINGS PER SHARE | |
Schedule of reconciliation of numerator and denominator of basic and diluted earnings per share | Three months ended Six months ended (in thousands, except per share data) (in thousands, except per share data) May 31, 2015 May 31, 2014 May 31, 2015 May 31, 2014 Basic earnings (loss) per share computation: Numerator: Net earnings (loss) and comprehensive earnings (loss) $ ) $ $ ) $ Denominator: Weighted average common shares outstanding Earnings (loss) per common share - basic Net earnings (loss) and comprehensive earnings (loss) $ ) $ $ ) $ Diluted earnings (loss) per share computation: Numerator: Net earnings (loss) and comprehensive earnings (loss) $ ) $ $ ) $ Convertible notes interest expense, net of taxes — — Other Income - Gain from change in fair value of conversion derivative, net of taxes — ) — ) Numerator for dilutive earnings (loss) per share $ ) $ $ ) $ Denominator: Weighted average common shares outstanding Effect of dilutive securities: Convertible note shares — — Restricted shares, RSU’s and options — — Dilutive potential common shares Earnings (loss) per common share - diluted Net earnings (loss) and comprehensive earnings (loss) $ ) $ $ ) $ |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
May. 31, 2015 | |
STOCKHOLDERS' EQUITY | |
Schedule of option grants, restricted common stock and RSUs issued to members of the Board of Directors for service as a member | The following summarizes option grants, restricted common stock and RSUs issued to members of the Board of Directors for the fiscal years 2002 through the second quarter of fiscal 2015 (in actual amounts) for service as a member: May 31, 2015 Granted as of: Number of options Exercise price 2002 $ 2002 $ 2003 $ 2004 $ 2005 $ 2006 $ Number of restricted shares isssued 2007 2008 2009 2010 2011 — 2012 2013 — 2014 2015 — |
Schedule of exercise prices for all options outstanding and exercisable | Options Outstanding and Exercisable Exercise Price Number of shares Weighted-Average Remaining Contractual Life $ $ $ |
Summary of stock option activity by plan | The following table summarizes stock option activity by plan for the six months ended May 31, 2015 and 2014 (in actual amounts): Total Number of Shares 2004 Incentive Plan Amended and Restated 2004 Incentive Plan Outstanding at November 30, 2014 — Granted — Exercised — — — Forfeited / Expired ) — ) Outstanding and exercisable at May 31, 2015 Outstanding at November 30, 2013 — Granted — — — Exercised — — — Forfeited / Expired — — — Outstanding and exercisable at May 31, 2014 — |
Schedule of stock option activity in the aggregate for the periods | Stock option activity in the aggregate for the periods indicated are as follows (in actual amounts): Options Weighted average exercise price Weighted average remaining contractual Life (Years) Aggregate Intrinsic Value Outstanding at November 30, 2014 $ Granted Exercised — — Expired — — Forfeited ) — — Outstanding and exercisable at May 31, 2015 $ $ $ — Weighted average per option fair value of options granted during the year N/A Options Weighted average exercise price Weighted average remaining contractual Life (Years) Aggregate Intrinsic Value Outstanding at November 30, 2013 $ Granted — — Exercised — — Expired — — Forfeited — — — — Outstanding and exercisable at May 31, 2014 $ $ — Weighted average per option fair value of options granted during the year N/A |
Summary of the status of restricted common stock and RSUs and changes | A summary of the status of restricted common stock and RSUs as of November 30, 2014 and November 30, 2013, and changes during the six months ended May 31, 2015 and 2014, are presented below (in actual amounts): Weighted-Average Grant-Date Fair Value Restricted Shares Restricted Stock Units Total Shares Restricted Shares Restricted Stock Units Outstanding at November 30, 2014 $ $ Granted — — Issued ) ) ) Cancelled — ) ) — Forfeited — ) ) — Outstanding at May 31, 2015 $ $ Outstanding at November 30, 2013 $ $ Granted Issued ) ) ) Cancelled — ) ) — Forfeited — ) ) — Outstanding at May 31, 2014 $ $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
May. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum rental payments under non-cancelable retail operating leases with lease terms in excess of one year | As of May 31, 2015, the future minimum rental payments under non-cancelable operating leases with lease terms in excess of one year were as follows (in thousands): 2015 Remainder of the year $ 2016 2017 2018 2019 Thereafter $ |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
May. 31, 2015 | |
SEGMENT INFORMATION | |
Summary of financial information concerning reportable segments | Three months ended Six months ended ( dollar values in thousands ) May 31, 2015 May 31, 2014 May 31, 2015 May 31, 2014 Net sales: Wholesale $ $ $ $ Retail $ $ $ $ Gross profit: Wholesale $ $ $ $ Retail $ $ $ $ Operating (loss) income: Wholesale $ $ $ $ Retail ) ) Corporate and other ) ) ) ) $ $ $ ) $ Six months ended May 31, 2015 May 31, 2014 Capital expenditures: Wholesale $ $ Retail — — Corporate and other — $ $ May 31, 2015 November 30, 2014 Total assets: Wholesale $ $ Retail Corporate and other $ $ |
ACQUISITION OF HUDSON (Tables)
ACQUISITION OF HUDSON (Tables) | 6 Months Ended |
May. 31, 2015 | |
ACQUISITION OF HUDSON | |
Schedule of total consideration allocated to the assets based on their estimated fair values as of the date of the completion of the acquisition | Under the purchase method of accounting, the total consideration as shown in the table below (in thousands) is allocated to the assets based on their estimated fair values as of the date of the completion of the acquisition. The consideration is allocated as follows: Assets and liabilities assumed: Cash and cash equivalents $ Accounts receivable Due from factor Inventories Prepaid expenses and other assets Property and equipment Other assets Accounts payable and accrued expenses ) Other current liabilities ) Due to factor ) Deferred income taxes, net ) Intangible assets acquired: Trade names Customer relationships Design Net assets acquired Goodwill created by the acquisition Total consideration transferred $ Total Purchase Price Cash $ Promissory notes Convertible notes (Face value $32,445 less discount) Total Purchase Price $ |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
May. 31, 2015 | |
DEBT | |
Schedule of five year payment of debt for the promissory notes, long term debt and convertible notes | The five-year payment schedule of our term debt and convertible notes is as follows (in thousands): Payments due by period (in thousands) Total 2015 2016 2017 2018 2019 Thereafter Short term debt $ $ $ — $ — $ — $ — $ — Convertible notes — — — — — $ $ $ — $ — $ — $ $ — |
Summary of the recorded value of the convertible note | Balance May 31, 2015 Convertible notes - Face value $ Less: Original issue discount ) Less: Debt discount related to the embedded derivative liability ) Convertible notes recorded value on issue date Add: PIK notes issued Accretion of debt discounts Convertible notes value |
Schedule of interest expense | The following table (in thousands) is a summary of our total interest expense as follows: Three months ended Six months ended May 31, 2015 May 31, 2014 May 31, 2015 May 31, 2014 Contractual coupon interest $ $ $ $ Amortization of discount and deferred financing costs Total interest expense $ $ $ $ |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) | Nov. 30, 2014USD ($) | Oct. 31, 2014USD ($) | Sep. 30, 2014USD ($) | May. 31, 2015USD ($)item | Nov. 30, 2014USD ($) | Oct. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Feb. 28, 2015USD ($) | May. 31, 2014USD ($) | Nov. 30, 2013USD ($) | Sep. 30, 2013USD ($) |
Number of primary business segments | item | 2 | ||||||||||
Number of full price retail stores | item | 12 | ||||||||||
Number of outlet stores | item | 20 | ||||||||||
Length of fiscal year | 364 days | ||||||||||
Cash and cash equivalents | $ 1,054,000 | $ 828,000 | $ 1,054,000 | $ 424,000 | $ 785,000 | ||||||
Line of credit | 31,338,000 | 20,820,000 | 31,338,000 | ||||||||
Term Debt | 59,003,000 | 59,123,000 | 59,003,000 | ||||||||
Hudson Clothing Holdings, Inc. | |||||||||||
Debt Instrument, Face Amount | $ 32,445,000 | ||||||||||
Term Loans | Hudson Clothing Holdings, Inc. | |||||||||||
Debt Instrument, Face Amount | 32,445,000 | ||||||||||
EBITDA | $ 23,417,800 | $ 22,991,900 | $ 22,136,300 | $ 23,417,800 | $ 22,991,900 | $ 22,136,300 | |||||
Fixed charge coverage ratio | 1.15 | ||||||||||
Leverage ratio | 3 | ||||||||||
Buyer Notes | |||||||||||
Debt Instrument, Face Amount | $ 32,445,000 | ||||||||||
Buyer Notes | Hudson Clothing Holdings, Inc. | |||||||||||
Debt Instrument, Face Amount | 60,000,000 | ||||||||||
Revolving Facility | |||||||||||
Fixed charge coverage ratio | 1.15 | ||||||||||
Leverage ratio | 3 | ||||||||||
Available borrowing under facility | $ 11,500,000 | ||||||||||
Revolving Facility | Hudson Clothing Holdings, Inc. | |||||||||||
Debt Instrument, Face Amount | $ 50,000,000 | ||||||||||
CIT | |||||||||||
Cash and cash equivalents | $ 11,500,000 | ||||||||||
CIT | Revolving Facility | |||||||||||
Available borrowing under facility | $ 11,500,000 |
FACTORED ACCOUNTS AND RECEIVA30
FACTORED ACCOUNTS AND RECEIVABLES (Detail) - USD ($) | Sep. 30, 2013 | Sep. 30, 2013 | May. 31, 2015 | Feb. 28, 2015 | Nov. 30, 2014 | May. 31, 2014 | Nov. 30, 2013 |
Accounts receivable, inventory advances and due from factor | |||||||
Non-recourse receivables assigned to factor | $ 24,831,000 | $ 30,811,000 | |||||
Client recourse receivables | 1,192,000 | 7,878,000 | |||||
Total receivables assigned to factor | 26,023,000 | 38,689,000 | |||||
Allowance for customer credits | (5,894,000) | (8,268,000) | |||||
Due from factor | 20,129,000 | 30,421,000 | |||||
Non-factored accounts receivable | 3,507,000 | 4,264,000 | |||||
Allowance for customer credits | (465,000) | (929,000) | |||||
Allowance for doubtful accounts | (1,634,000) | (747,000) | |||||
Accounts receivable, net of allowances | 1,408,000 | 2,588,000 | |||||
Risk of payment in the event of non-payment by the customers | 1,192,000 | 7,878,000 | |||||
Cash and cash equivalents | 828,000 | $ 1,054,000 | $ 424,000 | $ 785,000 | |||
Revolving Facility | |||||||
Accounts receivable, inventory advances and due from factor | |||||||
Available borrowing under facility | 11,500,000 | ||||||
CIT | |||||||
Accounts receivable, inventory advances and due from factor | |||||||
Required notice period for termination of the agreement by factor | 60 days | ||||||
Required written notice period for termination of the agreement prior to September 30, 2018 | 60 days | ||||||
Cash and cash equivalents | $ 11,500,000 | ||||||
CIT | Amended And Restated Factoring Agreement [Member] | |||||||
Accounts receivable, inventory advances and due from factor | |||||||
Required notice period for termination of the agreement by factor | 60 days | ||||||
Factoring rate of accounts for which the factor bore the credit risk, over a specified amount of invoices factored (as a percent) | 0.50% | ||||||
Factoring rate of accounts for which the entity bore the credit risk (as a percent) | 0.35% | ||||||
Minimum factoring rate payable per invoice | $ 3.50 | ||||||
CIT | Revolving Facility | |||||||
Accounts receivable, inventory advances and due from factor | |||||||
Available borrowing under facility | $ 11,500,000 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Thousands | May. 31, 2015 | Nov. 30, 2014 |
INVENTORIES, NET | ||
Finished goods | $ 31,276 | $ 40,064 |
Finished goods consigned to others | 1,055 | 1,089 |
Work in progress | 2,316 | 4,424 |
Raw materials | 17,446 | 19,408 |
Inventories, gross | 52,093 | 64,985 |
Less allowance for obsolescence and slow moving items | (3,514) | (3,666) |
Inventories, net | $ 48,579 | $ 61,319 |
LONG-LIVED AND INTANGIBLE ASS32
LONG-LIVED AND INTANGIBLE ASSETS AND GOODWILL (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Nov. 30, 2014USD ($)item | May. 31, 2015USD ($) | Nov. 30, 2014USD ($)item | |
LONG-LIVED AND INTANGIBLE ASSETS AND GOODWILL | |||
Store impairment charges | $ 840,000 | ||
Number of full price retail stores on which impairment charge was recorded | item | 6 | 6 | |
Impairment of goodwill or indefinite lived intangible assets | $ 0 | $ 23,585,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Detail) - USD ($) | Jul. 02, 2015 | Jan. 19, 2015 | Sep. 30, 2013 | Feb. 18, 2013 | Dec. 03, 2012 | Dec. 03, 2010 | Dec. 01, 2008 | Dec. 01, 2007 | Oct. 25, 2007 | Jan. 31, 2013 | May. 31, 2015 | May. 31, 2014 | Feb. 28, 2013 | May. 31, 2015 | May. 31, 2014 | Nov. 30, 2014 |
Related party transactions | ||||||||||||||||
Number of restricted shares issued | 40,000 | |||||||||||||||
Maximum | Modified merger agreement | ||||||||||||||||
Related party transactions | ||||||||||||||||
Term under the original merger agreement for which overall payment has been fixed and reduced | 10 years | |||||||||||||||
Minimum | Modified merger agreement | ||||||||||||||||
Related party transactions | ||||||||||||||||
Term under the original merger agreement for which overall payment has been fixed and reduced | 6 years | |||||||||||||||
Joe Dahan | ||||||||||||||||
Related party transactions | ||||||||||||||||
Initial term of employment | 5 years | |||||||||||||||
Period for automatic renewal of the term of the employment | 1 year | |||||||||||||||
Annual salary | $ 300,000 | |||||||||||||||
Joe Dahan | Modified merger agreement | ||||||||||||||||
Related party transactions | ||||||||||||||||
Contingent consideration expense | $ 8,732,000 | |||||||||||||||
Aggregate fixed amount payable through weekly installments | $ 9,168,000 | |||||||||||||||
Joe Dahan | Maximum | ||||||||||||||||
Related party transactions | ||||||||||||||||
Period for severance payment | 1 year | |||||||||||||||
Albert Dahan | ||||||||||||||||
Related party transactions | ||||||||||||||||
Royalty income recognized | $ 32,000 | $ 45,000 | $ 308,000 | $ 60,000 | ||||||||||||
Ambre Dahan | ||||||||||||||||
Related party transactions | ||||||||||||||||
Amount paid per annum on a bi-weekly basis under the consulting arrangement | $ 175,000 | |||||||||||||||
Amount paid under the consulting arrangement | $ 0 | $ 40,000 | ||||||||||||||
Marc Crossman | ||||||||||||||||
Related party transactions | ||||||||||||||||
Initial term of employment | 2 years | |||||||||||||||
Period for automatic renewal of the term of the employment | 2 years | 2 years | 2 years | |||||||||||||
Advance notice period required for non-renewal of employment agreement prior to the end of the term or upon occurrence of a change in control | 180 days | |||||||||||||||
Annual salary | $ 429,300 | |||||||||||||||
Annual discretionary bonus as a percentage of base salary | 50.00% | |||||||||||||||
Agreement term | 12 months | |||||||||||||||
Monthly payment | $ 35,775 | |||||||||||||||
Number of restricted shares issued | 600,000 | |||||||||||||||
Peter Kim | ||||||||||||||||
Related party transactions | ||||||||||||||||
Initial term of employment | 3 years | |||||||||||||||
Annual salary | $ 500,000 | |||||||||||||||
Annual discretionary bonus as a percentage of base salary | 50.00% | |||||||||||||||
Peter Kim | Maximum | ||||||||||||||||
Related party transactions | ||||||||||||||||
Period for severance payment | 1 year | |||||||||||||||
Hamish Sandhu | Subsequent event | ||||||||||||||||
Related party transactions | ||||||||||||||||
Initial term of employment | 1 year | |||||||||||||||
Period for automatic renewal of the term of the employment | 1 year | |||||||||||||||
Advance notice period required for non-renewal of employment agreement prior to the end of the term or upon occurrence of a change in control | 90 days | |||||||||||||||
Annual salary | $ 325,000 | |||||||||||||||
Hamish Sandhu | Maximum | Subsequent event | ||||||||||||||||
Related party transactions | ||||||||||||||||
Annual discretionary bonus as a percentage of base salary | 10.00% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2015 | May. 31, 2014 | |
Numerator: | ||||
Net income (loss) and comprehensive income (loss) (unaudited) | $ (3,349) | $ 2,339 | $ (24,944) | $ 161 |
Convertible notes interest expense, net of taxes | 557 | 1,960 | ||
Numerator for dilutive earnings (loss) per share | $ (3,349) | $ 525 | $ (24,944) | $ 156 |
Denominator: | ||||
Weighted average common shares outstanding | 69,355,000 | 68,148,000 | 69,139,000 | 68,045,000 |
Earnings (loss) per common share - basic | ||||
Net loss and comprehensive loss (in dollars per share) | $ (0.05) | $ 0.03 | $ (0.36) | $ 0 |
Numerator: | ||||
Net income (loss) and comprehensive income (loss) (unaudited) | $ (3,349) | $ 2,339 | $ (24,944) | $ 161 |
Convertible notes interest expense, net of taxes | 557 | 1,960 | ||
Other Income - Gain from change in fair value of conversion derivative, net of taxes | (2,371) | (1,965) | ||
Numerator for dilutive earnings (loss) per share | $ (3,349) | $ 525 | $ (24,944) | $ 156 |
Denominator: | ||||
Weighted average common shares outstanding | 69,355,000 | 68,148,000 | 69,139,000 | 68,045,000 |
Effect of dilutive securities: | ||||
Convertible notes shares | 18,430,000 | 18,369,000 | ||
Restricted shares, RSU's, convertible securities and options (in shares) | 518,000 | 798,000 | ||
Dilutive potential common shares | 69,355,000 | 87,096,000 | 69,139,000 | 87,212,000 |
loss per common share - dilutive | ||||
Net loss and comprehensive loss (in dollars per share) | $ (0.05) | $ 0.01 | $ (0.36) | $ 0 |
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 20,599,927 | 21,510,929 | 20,599,927 | 21,510,929 |
Shares Reserved For Future Issuance | ||||
Stock options granted under the incentive plans reserved for future issuance (in shares) | 563,000 | 563,000 | ||
Shares of common stock issuable upon the vesting of RSUs | 667,169 | 667,169 | ||
Shares of common stock available for future issuance under the Amended and Restated 2004 Stock Incentive Plan | 2,557,438 | 2,557,438 | ||
Shares of common stock issuable pursuant to the convertible notes | 18,969,425 | 18,969,425 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | |||
May. 31, 2015 | Nov. 30, 2014 | Nov. 30, 2013 | Nov. 30, 2012 | |
Net operating losses | ||||
Increase in valuation allowance | $ 14,481,000 | |||
Valuation allowance | $ 640,000 | $ 342,000 | $ 0 | |
Federal tax | ||||
Net operating losses | ||||
Net operating loss carryforwards | $ 25,067,000 | |||
California | ||||
Net operating losses | ||||
Net operating loss carryforwards | $ 19,874,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Oct. 31, 2011 | May. 31, 2015 | May. 31, 2015 | May. 31, 2014 | |
Stock Incentive Plans | ||||
Stock based compensation expense recognized | $ 871,000 | $ 587,000 | ||
Granted as of: | ||||
Granted (in shares) | 40,000 | |||
Granted (in dollars per share) | $ 0.38 | |||
Number of restricted shares issued | 40,000 | |||
Options | 2002 | ||||
Granted as of: | ||||
Granted (in shares) | 40,000 | |||
Granted (in dollars per share) | $ 1 | |||
Options | 2002 | ||||
Granted as of: | ||||
Granted (in shares) | 31,496 | |||
Granted (in dollars per share) | $ 1.27 | |||
Options | 2003 | ||||
Granted as of: | ||||
Granted (in shares) | 30,768 | |||
Granted (in dollars per share) | $ 1.30 | |||
Options | 2004 | ||||
Granted as of: | ||||
Granted (in shares) | 320,000 | |||
Granted (in dollars per share) | $ 1.58 | |||
Options | 2005 | ||||
Granted as of: | ||||
Granted (in shares) | 300,000 | |||
Granted (in dollars per share) | $ 5.91 | |||
Options | 2006 | ||||
Granted as of: | ||||
Granted (in shares) | 450,000 | |||
Granted (in dollars per share) | $ 1.02 | |||
Restricted stock and RSUs | ||||
Granted as of: | ||||
Number of restricted shares issued | 600,000 | 650,363 | ||
Restricted stock and RSUs | 2007 | ||||
Granted as of: | ||||
Number of restricted shares issued | 320,000 | |||
Restricted stock and RSUs | 2008 | ||||
Granted as of: | ||||
Number of restricted shares issued | 473,455 | |||
Restricted stock and RSUs | 2009 | ||||
Granted as of: | ||||
Number of restricted shares issued | 371,436 | |||
Restricted stock and RSUs | 2010 | ||||
Granted as of: | ||||
Number of restricted shares issued | 131,828 | |||
Restricted stock and RSUs | 2012 | ||||
Granted as of: | ||||
Number of restricted shares issued | 617,449 | |||
Restricted stock and RSUs | 2014 | ||||
Granted as of: | ||||
Number of restricted shares issued | 219,678 | |||
RSUs | ||||
Granted as of: | ||||
Number of restricted shares issued | 0 | 0 | 362,242 | |
Amended and restated 2004 Stock Incentive Plan | ||||
Stock Incentive Plans | ||||
Number of shares available for issuance | 2,557,438 | 2,557,438 | ||
Number of shares of common stock authorized for issuance | 6,825,000 | |||
Maximum number of shares that can be awarded to any employee in one year | 1,250,000 | |||
Exercise period | 10 years | |||
Granted as of: | ||||
Granted (in shares) | 40,000 | |||
Amended and restated 2004 Stock Incentive Plan | RSUs | ||||
Stock Incentive Plans | ||||
Right to receive a specified number of shares of common stock for each unit on vesting date | 1 | 1 | ||
2004 Stock Incentive Plan | ||||
Granted as of: | ||||
Granted (in shares) | 0 |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - $ / shares | 3 Months Ended | 6 Months Ended | |||
May. 31, 2015 | May. 31, 2015 | Nov. 30, 2014 | May. 31, 2014 | Nov. 30, 2013 | |
Options Outstanding and Exercisable | |||||
Exercise Price (in dollars per share) | $ 4.91 | $ 4.91 | $ 5.03 | $ 4.03 | $ 4.03 |
Number of shares | 563,333 | 563,333 | |||
Weighted-Average Remaining Contractual Life | 4 months 24 days | ||||
Stock option activity | |||||
Outstanding at the beginning of the period (in shares) | 550,000 | ||||
Granted (in shares) | 40,000 | ||||
Forfeited / Expired (in shares) | (26,667) | ||||
Outstanding at the end of the period (in shares) | 563,333 | 563,333 | |||
2004 Stock Incentive Plan | |||||
Stock option activity | |||||
Outstanding at the beginning of the period (in shares) | 550,000 | ||||
Granted (in shares) | 0 | ||||
Outstanding at the end of the period (in shares) | 550,000 | 550,000 | |||
Amended and restated 2004 Stock Incentive Plan | |||||
Stock option activity | |||||
Granted (in shares) | 40,000 | ||||
Forfeited / Expired (in shares) | (26,667) | ||||
Outstanding at the end of the period (in shares) | 13,333 | 13,333 | |||
$ 0.38 | |||||
Options Outstanding and Exercisable | |||||
Exercise Price (in dollars per share) | $ 0.38 | $ 0.38 | |||
Number of shares | 13,333 | 13,333 | |||
Weighted-Average Remaining Contractual Life | 9 years 7 months 6 days | ||||
$ 1.02 | |||||
Options Outstanding and Exercisable | |||||
Exercise Price (in dollars per share) | $ 1.02 | $ 1.02 | |||
Number of shares | 100,000 | 100,000 | |||
Weighted-Average Remaining Contractual Life | 9 months 18 days | ||||
$ 5.91 | |||||
Options Outstanding and Exercisable | |||||
Exercise Price (in dollars per share) | $ 5.91 | $ 5.91 | |||
Number of shares | 450,000 | 450,000 | |||
Weighted-Average Remaining Contractual Life |
STOCKHOLDERS' EQUITY (Details 3
STOCKHOLDERS' EQUITY (Details 3) - Equity Award [Domain] - USD ($) | 3 Months Ended | 6 Months Ended | |
May. 31, 2015 | May. 31, 2015 | May. 31, 2014 | |
Stock option activity | |||
Outstanding at the beginning of the period (in shares) | 550,000 | 775,000 | |
Granted (in shares) | 40,000 | ||
Forfeited (in shares) | (26,667) | ||
Outstanding at the end of the period (in shares) | 563,333 | 563,333 | 775,000 |
Weighted average exercise price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 5.03 | $ 4.03 | |
Granted (in dollars per share) | 0.38 | ||
Forfeited (in dollars per share) | 0.38 | ||
Outstanding at the end of the period (in dollars per share) | $ 4.91 | $ 4.91 | $ 4.03 |
Weighted average remaining contractual Life | |||
Outstanding and exercisable at the end of the period | 4 months 24 days | 10 months 24 days | |
Unrecognized compensation cost | |||
Unrecognized compensation cost related to nonvested share-based compensation arrangements | $ 631,000 | $ 631,000 | |
Weighted-average period for recognition of unrecognized compensation cost | 1 year 6 months |
STOCKHOLDERS' EQUITY (Details 4
STOCKHOLDERS' EQUITY (Details 4) - $ / shares | 3 Months Ended | 6 Months Ended | |
May. 31, 2015 | May. 31, 2015 | May. 31, 2014 | |
Total Shares | |||
Granted (in shares) | 40,000 | ||
Restricted stock and RSUs | |||
Total Shares | |||
Outstanding at the beginning of the period (in shares) | 1,826,154 | 2,616,128 | |
Granted (in shares) | 600,000 | 650,363 | |
Issued (in shares) | (1,238,675) | (803,010) | |
Cancelled (in shares) | (119,485) | 187,888 | |
Forfeited (in shares) | (825) | (10,715) | |
Outstanding at the end of the period (in shares) | 1,067,169 | 1,067,169 | 2,264,878 |
Restricted shares | |||
Total Shares | |||
Outstanding at the beginning of the period (in shares) | 792,303 | 954,798 | |
Granted (in shares) | 600,000 | 288,121 | |
Issued (in shares) | (992,303) | (450,616) | |
Outstanding at the end of the period (in shares) | 400,000 | 400,000 | 792,303 |
Shares withdrawn, cancelled or forfeited in period | 309,842 | ||
Weighted-Average Grant-Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 1.08 | $ 0.90 | |
Granted (in dollars per share) | 0.37 | 1.49 | |
Issued (in dollars per share) | 0.94 | 0.95 | |
Outstanding at the end of the period (in dollars per share) | $ 0.37 | $ 0.37 | $ 1.08 |
RSUs | |||
Total Shares | |||
Outstanding at the beginning of the period (in shares) | 1,033,851 | 1,661,330 | |
Granted (in shares) | 0 | 0 | 362,242 |
Issued (in shares) | (246,372) | (352,394) | |
Cancelled (in shares) | (119,485) | 187,888 | |
Forfeited (in shares) | (825) | (10,715) | |
Outstanding at the end of the period (in shares) | 667,169 | 667,169 | 1,472,575 |
Shares withdrawn, cancelled or forfeited in period | 120,310 | ||
Weighted-Average Grant-Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 1 | $ 0.93 | |
Granted (in dollars per share) | 1.49 | ||
Issued (in dollars per share) | 1.09 | 1.06 | |
Cancelled (in dollars per share) | 0.97 | 0.98 | |
Forfeited (in dollars per share) | 0.70 | 0.70 | |
Outstanding at the end of the period (in dollars per share) | $ 0.98 | $ 0.98 | $ 1.04 |
COMMITMENTS AND CONTINGENCIES40
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Feb. 18, 2013 | May. 31, 2015 | May. 31, 2014 | Feb. 28, 2013 | May. 31, 2015 | May. 31, 2014 |
Contingent Consideration Payments, Buy-Out Agreement and Earnout Subordination Agreement | ||||||
Gross profit | $ 19,394,000 | $ 22,573,000 | $ 37,493,000 | $ 44,058,000 | ||
Minimum | ||||||
Contingent Consideration Payments, Buy-Out Agreement and Earnout Subordination Agreement | ||||||
Operating lease agreements expiring term | 3 years | |||||
Percentage of annual sales volume | 6.00% | |||||
Minimum | Modified merger agreement | ||||||
Contingent Consideration Payments, Buy-Out Agreement and Earnout Subordination Agreement | ||||||
Term under the original merger agreement for which overall payment has been fixed and reduced | 6 years | |||||
Maximum | ||||||
Contingent Consideration Payments, Buy-Out Agreement and Earnout Subordination Agreement | ||||||
Operating lease agreements expiring term | 10 years | |||||
Percentage of annual sales volume | 8.00% | |||||
Maximum | Modified merger agreement | ||||||
Contingent Consideration Payments, Buy-Out Agreement and Earnout Subordination Agreement | ||||||
Term under the original merger agreement for which overall payment has been fixed and reduced | 10 years | |||||
Joe Dahan | Modified merger agreement | ||||||
Contingent Consideration Payments, Buy-Out Agreement and Earnout Subordination Agreement | ||||||
Aggregate fixed amount payable through weekly installments | $ 9,168,000 | |||||
Contingent consideration expense | $ 8,732,000 |
COMMITMENTS AND CONTINGENCIES41
COMMITMENTS AND CONTINGENCIES (Details 2) $ in Thousands | May. 31, 2015USD ($) |
Future Lease Obligations | |
2,015 | $ 3,949 |
2,016 | 7,818 |
2,017 | 7,799 |
2,018 | 7,628 |
2,019 | 5,689 |
Thereafter | 11,139 |
Future minimum rental payments | $ 44,022 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
May. 31, 2015 | May. 31, 2014 | May. 31, 2015 | May. 31, 2014 | Nov. 30, 2014 | |
Segment information | |||||
Net sales | $ 47,229 | $ 48,167 | $ 90,246 | $ 95,511 | |
Gross profit | 19,394 | 22,573 | 37,493 | 44,058 | |
Operating income (loss) | 617 | 3,288 | (2,617) | 4,594 | |
Capital expenditures | 381 | 290 | |||
Total assets | 173,452 | 173,452 | $ 203,949 | ||
Wholesale | |||||
Segment information | |||||
Net sales | 39,984 | 40,401 | 75,445 | 80,016 | |
Gross profit | 14,307 | 17,218 | 27,582 | 33,978 | |
Operating income (loss) | 8,394 | 11,560 | 16,186 | 21,931 | |
Capital expenditures | 381 | 118 | |||
Total assets | 69,482 | 69,482 | 98,420 | ||
Retail | |||||
Segment information | |||||
Net sales | 7,245 | 7,766 | 14,801 | 15,495 | |
Gross profit | 5,087 | 5,355 | 9,911 | 10,080 | |
Operating income (loss) | 99 | 103 | (508) | (885) | |
Total assets | 10,435 | 10,435 | 12,040 | ||
Corporate and other | |||||
Segment information | |||||
Operating income (loss) | (7,876) | $ (8,375) | (18,295) | (16,452) | |
Capital expenditures | $ 172 | ||||
Total assets | $ 93,535 | $ 93,535 | $ 93,489 |
ACQUISITION OF HUDSON (Details)
ACQUISITION OF HUDSON (Details) - USD ($) | Sep. 30, 2013 | May. 31, 2015 | Nov. 30, 2014 | Nov. 30, 2013 |
Acquisition of Hudson | ||||
Additional liabilities assets recognized | $ 2,003,000 | |||
Assets and liabilities assumed: | ||||
Goodwill created by the acquisition | 12,230,000 | $ 12,230,000 | ||
Buyer Notes | ||||
Acquisition of Hudson | ||||
Aggregate principal amount of notes issued | 32,445,000 | |||
Total Purchase Price | ||||
Convertible notes face value | 32,445,000 | |||
Hudson Clothing Holdings, Inc. | ||||
Acquisition of Hudson | ||||
Aggregate principal amount of notes issued | $ 32,445,000 | |||
Amortization expense | $ 0 | |||
Assets and liabilities assumed: | ||||
Cash and cash equivalents | 198,000 | |||
Accounts receivable | 1,263,000 | |||
Due from factor | 13,806,000 | |||
Inventories | 22,230,000 | |||
Prepaid expenses and other assets | 2,183,000 | |||
Property and equipment | 726,000 | |||
Other assets | 239,000 | |||
Accounts payable and accrued expenses | (9,566,000) | |||
Other current liabilities | (3,132,000) | |||
Due to factor | (7,411,000) | |||
Deferred income taxes, net | (17,913,000) | |||
Net assets acquired | 62,123,000 | |||
Goodwill created by the acquisition | 31,979,000 | |||
Total consideration transferred | 94,102,000 | |||
Total Purchase Price | ||||
Cash | 65,416,000 | |||
Promissory notes | 1,235,000 | |||
Period of Measurement | 1 year | |||
Convertible notes | 27,451,000 | |||
Total Purchase Price | 94,102,000 | |||
Convertible notes face value | 32,445,000 | |||
Hudson Clothing Holdings, Inc. | Promissory Tax Notes | ||||
Acquisition of Hudson | ||||
Aggregate principal amount of notes issued | 1,235,000 | |||
Total Purchase Price | ||||
Convertible notes face value | 1,235,000 | |||
Hudson Clothing Holdings, Inc. | Buyer Notes | ||||
Acquisition of Hudson | ||||
Aggregate principal amount of notes issued | $ 60,000,000 | |||
Total Purchase Price | ||||
Convertible notes face value | 60,000,000 | |||
Hudson Clothing Holdings, Inc. | Management notes | ||||
Acquisition of Hudson | ||||
Aggregate principal amount of notes issued | $ 22,885,000 | |||
Total Purchase Price | ||||
Convertible notes face value | $ 22,885,000 | |||
Hudson Clothing Holdings, Inc. | Fireman Note | ||||
Acquisition of Hudson | ||||
Aggregate principal amount of notes issued | 9,560,000 | |||
Total Purchase Price | ||||
Convertible notes face value | 9,560,000 | |||
Hudson Clothing Holdings, Inc. | Revolving Facility | ||||
Acquisition of Hudson | ||||
Aggregate principal amount of notes issued | 50,000,000 | |||
Total Purchase Price | ||||
Convertible notes face value | 50,000,000 | |||
Hudson Clothing Holdings, Inc. | Term Loans | ||||
Acquisition of Hudson | ||||
Aggregate principal amount of notes issued | 32,445,000 | |||
Total Purchase Price | ||||
Convertible notes face value | $ 32,445,000 | |||
Hudson Clothing Holdings, Inc. | Term Loans | Maximum | ||||
Acquisition of Hudson | ||||
Aggregate principal amount of notes issued | 60,000,000 | |||
Total Purchase Price | ||||
Convertible notes face value | 60,000,000 | |||
Hudson Clothing Holdings, Inc. | Trade names | ||||
Assets and liabilities assumed: | ||||
Intangible assets acquired | 44,400,000 | |||
Hudson Clothing Holdings, Inc. | Customer relationships | ||||
Assets and liabilities assumed: | ||||
Intangible assets acquired | 2,700,000 | |||
Hudson Clothing Holdings, Inc. | Designs | ||||
Assets and liabilities assumed: | ||||
Intangible assets acquired | $ 12,400,000 |
DEBT (Details)
DEBT (Details) | Nov. 30, 2014USD ($) | Oct. 31, 2014USD ($) | Sep. 30, 2014 | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($)item$ / sharesshares | Sep. 30, 2013USD ($)$ / sharesshares | May. 31, 2015USD ($) | May. 31, 2014USD ($) | May. 31, 2015USD ($) | May. 31, 2014USD ($) | Nov. 30, 2014USD ($) | Oct. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Feb. 28, 2015USD ($) | May. 08, 2014USD ($) | Nov. 30, 2013USD ($) |
Key assumptions for determining the fair value | ||||||||||||||||
Change in fair value of embedded conversion derivative | $ 2,371,000 | $ 1,965,000 | ||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Debt at the end of the period | $ 24,733,000 | $ 26,078,000 | $ 26,078,000 | $ 24,733,000 | ||||||||||||
Components of interest expense | ||||||||||||||||
Contractual coupon interest | 6,599,000 | 5,543,000 | ||||||||||||||
Amortization of discount and deferred financing | 1,229,000 | 1,133,000 | ||||||||||||||
Total interest expense | 3,944,000 | 3,355,000 | 7,828,000 | $ 6,676,000 | ||||||||||||
Borrowing availability on each date that a borrowing certificate is delivered | 7,500,000 | |||||||||||||||
Five year payment schedule of debt for the promissory notes, long term debt and convertible notes | ||||||||||||||||
2,015 | 59,123,000 | 59,123,000 | ||||||||||||||
2,019 | 33,766,000 | 33,766,000 | ||||||||||||||
Total | 92,889,000 | 92,889,000 | ||||||||||||||
Buyer Notes | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount of notes issued | $ 32,445,000 | 32,445,000 | ||||||||||||||
Fair value of derivative | $ 5,496,000 | $ 5,496,000 | $ 3,430,000 | $ 5,700,000 | ||||||||||||
Life of convertible notes | 5 years 6 months | |||||||||||||||
Key assumptions for determining the fair value | ||||||||||||||||
Remaining time to maturity | 4 years 10 months | |||||||||||||||
Volatility (as a percent) | 60.00% | |||||||||||||||
Risk-free interest rate (as a percent) | 1.63% | |||||||||||||||
Fair value of derivative | $ 5,496,000 | 5,496,000 | 3,430,000 | 5,700,000 | ||||||||||||
Aggregate original issue discount | 10,490,000 | 10,490,000 | ||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Convertible notes - Face value | $ 32,445,000 | 32,445,000 | ||||||||||||||
Less: Original issue discount | (4,994,000) | (4,994,000) | ||||||||||||||
Convertible notes recorded value on issue date | 21,955,000 | 21,955,000 | ||||||||||||||
Accumulated accretion of debt discounts | 2,802,000 | |||||||||||||||
Add: PIK notes issued | 1,321,000 | |||||||||||||||
Convertible notes value | 26,078,000 | 26,078,000 | ||||||||||||||
Plus: Embedded derivative liability - fair market value | 5,496,000 | 5,496,000 | $ 3,430,000 | 5,700,000 | ||||||||||||
Components of interest expense | ||||||||||||||||
Contractual coupon interest | 3,332,000 | 2,791,000 | ||||||||||||||
Amortization of discount and deferred financing | 612,000 | 564,000 | ||||||||||||||
Total interest expense | 3,944,000 | $ 3,355,000 | ||||||||||||||
Five year payment schedule of debt for the promissory notes, long term debt and convertible notes | ||||||||||||||||
2,019 | 33,766,000 | 33,766,000 | ||||||||||||||
Total | 33,766,000 | 33,766,000 | ||||||||||||||
Buyer Notes | Embedded Conversion Derivative | ||||||||||||||||
Key assumptions for determining the fair value | ||||||||||||||||
Change in fair value of embedded conversion derivative | (2,270,000) | |||||||||||||||
Aggregate original issue discount | $ 5,496,000 | $ 5,496,000 | ||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Less: Original issue discount | (5,496,000) | (5,496,000) | ||||||||||||||
Revolving Facility | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Borrowing outstanding under facility | 20,820,000 | 20,820,000 | ||||||||||||||
Available borrowing under facility | $ 11,500,000 | $ 11,500,000 | ||||||||||||||
Average interest rate, including default rate | 3.50% | 3.50% | ||||||||||||||
Fixed charge coverage ratio | 1.15 | 1.15 | ||||||||||||||
Leverage ratio | 3 | 3 | ||||||||||||||
Revolving Facility | Minimum | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Fixed charge coverage ratio | 1.09 | 1.09 | ||||||||||||||
Term Loans | ||||||||||||||||
Five year payment schedule of debt for the promissory notes, long term debt and convertible notes | ||||||||||||||||
2,015 | $ 59,123,000 | $ 59,123,000 | ||||||||||||||
Total | 59,123,000 | 59,123,000 | ||||||||||||||
CIT | Management notes | From October 1, 2016 | ||||||||||||||||
Debt | ||||||||||||||||
Interest rate payable in cash (as a percent) | 10.928% | 10.928% | ||||||||||||||
CIT | Revolving Facility | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Available borrowing under facility | $ 11,500,000 | |||||||||||||||
Hudson Clothing Holdings, Inc. | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount of notes issued | $ 32,445,000 | $ 32,445,000 | ||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Convertible notes - Face value | 32,445,000 | 32,445,000 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Promissory Tax Notes | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount of notes issued | 1,235,000 | 1,235,000 | ||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Convertible notes - Face value | $ 1,235,000 | $ 1,235,000 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Buyer Notes | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount of notes issued | 60,000,000 | |||||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 1.78 | $ 1.78 | ||||||||||||||
Number of shares issuable upon conversion of the debt | shares | 18,200,000 | 18,200,000 | ||||||||||||||
Trading days immediately preceding the notice of conversion used for calculation of average of the closing prices for the common stock | item | 20 | |||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Convertible notes - Face value | 60,000,000 | |||||||||||||||
Hudson Clothing Holdings, Inc. | Management notes | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount of notes issued | 22,885,000 | 22,885,000 | ||||||||||||||
Redemption price as a percentage of principal amount | 103.00% | |||||||||||||||
Effective interest rate (as a percent) | 4.31% | 4.31% | ||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Convertible notes - Face value | $ 22,885,000 | $ 22,885,000 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Management notes | From September 30, 2013 | ||||||||||||||||
Debt | ||||||||||||||||
Annual rate on outstanding principal amount (as a percent) | 10.00% | 10.00% | 10.00% | 10.00% | ||||||||||||
Interest rate payable in cash (as a percent) | 7.68% | 7.68% | 7.68% | 7.68% | ||||||||||||
PIK Interest (as a percent) | 2.32% | 2.32% | 2.32% | 2.32% | ||||||||||||
Additional interest (as a percent) | 2.00% | |||||||||||||||
Hudson Clothing Holdings, Inc. | Management notes | From December 1, 2014 | ||||||||||||||||
Debt | ||||||||||||||||
Interest rate payable in cash (as a percent) | 10.00% | 10.00% | ||||||||||||||
Hudson Clothing Holdings, Inc. | Fireman Note | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount of notes issued | $ 9,560,000 | $ 9,560,000 | ||||||||||||||
Redemption price as a percentage of principal amount | 100.00% | |||||||||||||||
Effective interest rate (as a percent) | 8.32% | 8.32% | ||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Convertible notes - Face value | $ 9,560,000 | $ 9,560,000 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Fireman Note | From September 30, 2013 | ||||||||||||||||
Debt | ||||||||||||||||
Annual rate on outstanding principal amount (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | ||||||||||||
Interest rate payable in cash (as a percent) | 3.00% | 3.00% | 3.00% | 3.00% | ||||||||||||
PIK Interest (as a percent) | 3.50% | 3.50% | 3.50% | 3.50% | ||||||||||||
Additional interest (as a percent) | 2.50% | |||||||||||||||
Hudson Clothing Holdings, Inc. | Fireman Note | From December 1, 2014 | ||||||||||||||||
Debt | ||||||||||||||||
Interest rate payable in cash (as a percent) | 6.50% | 6.50% | ||||||||||||||
Hudson Clothing Holdings, Inc. | Fireman Note | From October 1, 2016 | ||||||||||||||||
Debt | ||||||||||||||||
Interest rate payable in cash (as a percent) | 7.00% | 7.00% | ||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving Facility | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount of notes issued | 50,000,000 | |||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Convertible notes - Face value | 50,000,000 | |||||||||||||||
Components of interest expense | ||||||||||||||||
Maximum borrowing capacity | $ 50,000,000 | $ 50,000,000 | ||||||||||||||
Commitment fee (as a percent) | 0.25% | |||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving Facility | Minimum | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Prepayment fee (as a percent) | 0.50% | |||||||||||||||
Borrowing availability | $ 5,000,000 | |||||||||||||||
Borrowing availability on each date that a borrowing certificate is delivered | $ 7,500,000 | |||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving Facility | Maximum | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Prepayment fee (as a percent) | 1.00% | |||||||||||||||
Restricted cash that can be included in Excess Availability | $ 2,500,000 | |||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving A-1 Commitment | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Maximum borrowing capacity | $ 1,000,000 | 1,000,000 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving A-1 Commitment | Alternate Base Rate | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Variable rate basis | Alternate Base Rate | |||||||||||||||
Margin on variable rate basis (as a percent) | 2.50% | |||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving A-1 Commitment | 90-Day LIBO Rate | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Variable rate basis | LIBO Rate | |||||||||||||||
Margin on variable rate basis (as a percent) | 3.50% | |||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving A Commitment | Alternate Base Rate | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Margin on variable rate basis (as a percent) | 1.50% | |||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving A Commitment | Federal funds rate | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Variable rate basis | Federal funds rate | |||||||||||||||
Margin on variable rate basis (as a percent) | 0.50% | |||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving A Commitment | 90-Day LIBO Rate | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Variable rate basis | 90-Day LIBO Rate | |||||||||||||||
Hudson Clothing Holdings, Inc. | Revolving A Commitment | LIBOR rate loans | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Variable rate basis | 90-Day LIBO Rate | |||||||||||||||
Margin on variable rate basis (as a percent) | 2.50% | |||||||||||||||
Hudson Clothing Holdings, Inc. | Swingline loans | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Maximum borrowing capacity | $ 5,000,000 | 5,000,000 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Letters of credit | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Maximum borrowing capacity | $ 1,000,000 | $ 1,000,000 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Term Loans | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount of notes issued | 32,445,000 | |||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Convertible notes - Face value | $ 32,445,000 | |||||||||||||||
Components of interest expense | ||||||||||||||||
Average interest rate, including default rate | 14.00% | 14.00% | ||||||||||||||
Prepayment fee, if prepaid prior to September 30, 2014 (as a percent) | 3.00% | |||||||||||||||
Reduction in prepayment fee per year until September 30, 2016 (as a percent) | 1.00% | |||||||||||||||
EBITDA | $ 23,417,800 | $ 22,991,900 | $ 22,136,300 | $ 23,417,800 | $ 22,991,900 | $ 22,136,300 | ||||||||||
Fixed charge coverage ratio | 1.15 | 1.15 | ||||||||||||||
Leverage ratio | 3 | 3 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Term Loans | Minimum | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Restricted cash that can be included in Excess Availability | $ 5,000,000 | |||||||||||||||
Borrowing availability on each date that a borrowing certificate is delivered | 7,500,000 | |||||||||||||||
Fixed charge coverage ratio | 1.09 | 1.09 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Term Loans | Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount of notes issued | 60,000,000 | $ 60,000,000 | ||||||||||||||
Recorded value of the convertible note | ||||||||||||||||
Convertible notes - Face value | $ 60,000,000 | $ 60,000,000 | ||||||||||||||
Components of interest expense | ||||||||||||||||
Fixed charge coverage ratio | 3.21 | 3.21 | ||||||||||||||
Hudson Clothing Holdings, Inc. | Term Loans | British Banker Association Interest Settlement Rate | ||||||||||||||||
Components of interest expense | ||||||||||||||||
Variable rate basis | British Banker Association Interest Settlement Rate for deposits in Dollars with a term of three months | |||||||||||||||
Margin on variable rate basis (as a percent) | 10.75% |
Subsequent Events (Details)
Subsequent Events (Details) - Debt Instrument, Name [Domain] - Debt Instrument Interest Period [Domain] - Range [Domain] | Jul. 06, 2015 | Jun. 26, 2015USD ($) | May. 31, 2015USD ($)$ / sharesshares |
Subsequent Events | |||
Debt Instrument Covenant Borrowing Availability Requirement on Each Date Borrowing Certificate Delivered | $ 7,500,000 | ||
Trade Accounts Eligibility allowed after Termination Date | 0.45 | ||
Number of restricted shares issued | shares | 40,000 | ||
Granted (in dollars per share) | $ / shares | $ 0.38 | ||
Subsequent event | |||
Subsequent Events | |||
Debt Instrument Covenant Borrowing Availability Requirement on Each Date Borrowing Certificate Delivered | $ 4,500,000 | ||
Written Notice Term Requirement Post Previous Annual Meeting Business Anniversary Date | 90 days | ||
Written Notice Term Requirement Prior To Previous Annual Meeting Business Anniversary Date | 120 days | ||
Written Notice Term Requirement Prior to Annual Meeting Business Date | 120 days | ||
Written Notice Term Requirement Post Annual Meeting Business Date | 90 days | ||
Written Notice Term Requirement After Annual Meeting Date Disclosed. | 10 days | ||
Subsequent event | Garrison | |||
Subsequent Events | |||
Forbearance Fee (as a percent) | 1.35 | ||
Additional Forbearance Fee (as a percent) | 0.25 | ||
Subsequent event | CIT | |||
Subsequent Events | |||
Forbearance Fee | $ 450,000 | ||
Additional Forbearance Fee | $ 125,000 | ||
Trade Accounts Eligibility allowed under Nordstrom | 0.55 |
Uncategorized Items - joez-2015
Label | Element | Value |
Stock Incentive2004 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber | 775,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber | 775,000 |