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pursuant to rule 425 under the Securities Act of 1933, as amended, and deemed filed under Rule14a-12 under the Securities Exchange Act of 1934, amended.
Subject Company: Perry Ellis International, Inc. Commission File No. 333-103848 |
PERRY ELLIS INTERNATIONAL
June 2003
PERRY ELLIS INTERNATIONAL
June 2003
2
Investment Highlights
| • | Nationally and internationally recognized portfolio of 25 major brands |
| • | Strong retailer relationships |
| • | Strong licensing capabilities and relationships |
| • | Worldwide low-cost sourcing capabilities |
| • | Design expertise and advanced technology |
| • | Capacity for growth |
| • | Proven ability to integrate acquisitions |
| • | Experienced management team |
| Leading Branded Apparel Company | ||||
| • |
Portfolio of 25 owned and licensed brands |
Retail 5% | ||
| • |
Offer wide variety of men’s and women’s product categories |
Women’s Swim 13% | ||
| • |
Sell virtually all channels of apparel distribution – over 10,000 doors |
Licensing 4% | ||
| • |
Sell virtually all channels of apparel distribution – over 10,000 doors |
Men’s 78% | ||
4
Corporate History
[GRAPHIC]
| 1967 |
George Feldenkreis starts SUPREME INTERNATIONAL | |
| 1980 |
Company transforms business model, emphasizing fashion and multi-channel distribution. | |
| 1993 |
SUPREME INTERNATIONAL goes public (Nasdaq: SUPI); Develops acquisition strategy. | |
| 1996 |
Acquires MUNSINGWEAR | |
| 1999 |
Acquires PERRY ELLIS, MANHATTAN, and JOHN HENRY brands. Company changes name to PERRY ELLIS INTERNATIONAL, INC (Nasdaq: PERY) | |
| 2002 |
Acquires JANTZEN | |
| 2003 |
Acquires SALANT |
5
[GRAPHIC]
Revenue Growth
Fiscal Year Ending January 31
Millions of Dollars
CAGR 30%
Fiscal Year 2003 includes Jantzen Acquisition
Fiscal Year 2004 includes Salant acquisition for 6 months
Proforma 2004 includes Salant acquisition for full year
6
EPS Growth
Fiscal Year Ending January 31
Dollars Per Fully Diluted Share
CAGR 22%
[GRAPHIC]
Fiscal Year 2003 includes Jantzen Acquisition
Fiscal Year 2004 includes Salant acquisition for 6 months
Proforma 2004 includes Salant acquisition for full year
7
What Has Fueled Our Growth
Extensive, Low-Cost Sourcing Base
| • | Operations in 17 countries |
| • | 30 year relationship with vendors |
| • | Dependable and diversified manufacturing |
Balanced Distribution
| • | Mitigates channel sales volatility |
| • | Ability to provide multiple brands to retail partners |
Low-Cost Acquisition Strategy
| • | History of successful acquisition integration |
| • | Opportunistic buyer of under-developed brands |
| • | Perry Ellis infrastructure generates superior ROI |
| “3D” Business Strategy |
||
| Diverse Brands | ||
| Diverse Product Categories |
Diverse Distribution Channels | |
9
Business Strategy
| Objective: Develop and Enhance Brands by |
Strategy | |
| • Maintaining distinct distribution channels for each brand |
• Increase brand name recognition through aggressive marketing | |
| • Designing, sourcing and marketing high quality products |
• Increase market share in each retail channel | |
| • Reinforcing the image of the brands and continuously promoting them |
• Continue to diversify product line | |
| • Introducing fresh new product ideas |
• Adapt to changing marketplace | |
| • Expand licensing activities | ||
| • Pursue strategic acquisitions |
10
Diversified Brands
Perry Ellis / Salant Consolidated
Estimated 2004 Sales By Brand
Perry Ellis owns or licenses a portfolio of 25 major brands
| * | Licensed Brand |
| 32% |
Perry Ellis | |
| 15% |
Private Label | |
| 9% |
Natural Issue/Crossings | |
| 7% |
Jantzen | |
| 6% |
Axis | |
| 4% |
Munsingwear | |
| 4% |
Nike Swim * | |
| 4% |
All Others | |
| 3% |
Ping * | |
| 3% |
Ocean Pacific * | |
| 3% |
Tricot St Raphael | |
| 3% |
Havanera | |
| 2% |
John Henry | |
| 2% |
Grand Slam | |
| 2% |
Cubavera | |
| 1% |
Original Penguin |
11
“3D” Business Strategy
Diverse Product Categories
Men’s
| • | Activewear |
| • | Belts |
| • | Dress Shirts |
| • | Casual sportswear |
| • | Jeans Wear |
| • | Golf |
| • | Sweaters |
| • | Sports Apparel |
| • | Accessories |
Women’s
| • | Swimwear |
| • | Accessories |
12
Diverse Distribution Channels
Estimated Fiscal 2004
| Specialty |
Retail |
Clubs |
ASI |
Department Stores |
National Chains |
Mass |
Discount | |||||||
| 10% |
6% |
8% |
3% |
23% |
23% |
13% |
15% |
13
“3D” Brand Segmentation
[GRAPHIC]
14
Licensing: A Key Component of Our
Growth and Profitability
| Fiscal 2003 Results: |
|||
| • Royalty Income |
$ |
28.8 million | |
| • Advertising Expense Contribution |
$ |
5.5 million | |
| Total Licensing |
$ |
34.3 million |
15
Licensing: 138 License Agreements
| Brand |
Domestic |
International | ||
| Perry Ellis |
33 |
18 | ||
| Manhattan |
0 |
20 | ||
| John Henry |
6 |
8 | ||
| Grand Slam |
2 |
7 | ||
| Jantzen |
1 |
9 | ||
| Munsingwear |
3 |
5 | ||
| Ping |
2 |
5 | ||
| Cubavera |
2 |
2 | ||
| Natural Issue |
1 |
3 | ||
| Original Penguin |
1 |
2 | ||
| Havanera |
3 |
0 | ||
| Mondo Di Marco |
0 |
2 | ||
| Axis |
0 |
2 | ||
| Pro Player |
1 |
0 |
16
Global Sourcing
Fiscal 2003
| Asia |
Central & South America |
Middle East |
Other | |||||||||||
| 68% |
23 |
% |
6 |
% |
3% | |||||||||
| 19% |
China |
7 |
% |
Honduras |
4 |
% |
UAE |
|||||||
| 16% |
Korea |
4 |
% |
Guatemala |
3 |
% |
Oman |
|||||||
| 10% |
Indonesia |
4 |
% |
El Salvador |
||||||||||
| 7% |
Vietnam |
4 |
% |
Peru |
||||||||||
| 6% |
Philippines |
3 |
% |
Nicaragua |
||||||||||
| 3.5% |
India |
1 |
% |
Mexico |
||||||||||
| 3% |
Thailand |
|||||||||||||
| 1.4% |
Saipan |
|||||||||||||
| 1% |
Bangladesh |
|||||||||||||
| 1% |
Taiwan |
|||||||||||||
| • | Foreign offices in: Beijing, China; Guangzhou, China; Shanghai, China; Seoul, Korea; Taipei, Taiwan; and Ho Chi Minh, Vietnam. |
| • | Well positioned to take full advantage of 2005 elimination of all quota for WTO countries. |
17
Jantzen & Perry Ellis: A Great Combination
18
Jantzen: An American Icon
What did we buy?
| • | The number 1 selling brand of missy swimwear in the department store/national chain/specialty swim channels |
| • | Highly skilled design and technical development team |
| • | Our first entreé into the women’s market |
| • | Under utilized distribution facility in Seneca SC. |
| • | Fiscal 2003 results include ½ year of Jantzen |
19
Jantzen/The Sunwear Company:
Growth Strategy
| Short Term |
Long-Term | |
| • Focus on swim |
• Position Jantzen as the casual resort lifestyle brand for men and women | |
| • Nike–$100MM opportunity–Nike extended license to men’s |
• Sportswear | |
| • Tommy Hilfiger–premier designer brand–1st year of PEI ownership resulted in 50% growth |
• Jantzen Open Golf | |
| • Jantzen men’s–reintroduced for ‘03 |
• Sweaters | |
| • Women’s related beachwear |
• Active Wear | |
| • Accessories–Jantzen/Nike currently only $2MM –huge opportunity |
• Skin Care Products | |
| • Private label–market abandoned by VF in ‘98 |
• Build licensing business |
20
Salant Corporation & Perry Ellis:
Consolidating Control of the Perry Ellis Brand
21
Why Salant?
| • | Largest licensee of Perry Ellis brand |
| • | EPS accretive before any synergies |
| • | Acquire additional brands |
| • | Owned – Axis, Tricots St. Raphael |
| • | Licenses – Ocean Pacific, JNCO |
| • | Diversify customer concentration |
| • | Post merger no one customer >10% |
| • | Excellent management team |
| • | Will close June 19, 2003 |
22
Salant FY 2002 Sales by Brand
| Salant Sales by Brand
In Millions |
Perry Ellis at Salant
In Millions | |
| [PIE CHART] |
[PIE CHART] | |
| 2002 Revenue $252
2002 EBITDA $20 |
Total Revenue $169 million |
Perry Ellis International Financial Summary
Financial Summary
In Millions
¨ PEI Jantzen Salant
| Net Sales |
Royalty Income |
Total Revenue | ||||||||||||||||||||
| Consolidated |
||||||||||||||||||||||
| 2002 |
2003 |
2004 |
2004 |
2002 |
2003 |
2004 |
2004 |
2002 |
2003 |
2004 |
2004 | |||||||||||
| (est) |
Proforma |
(est) |
Proforma |
(est) |
Proforma | |||||||||||||||||
25
Financial Summary
In Millions
n PEI ¨ Jantzen ¨ Salant
| Net Income |
EPS |
EBITDA | ||
| Consolidated |
||||
| [BAR CHART] |
[BAR CHART] |
[BAR CHART] |
26
Perry Ellis International
First Quarter 2004 Results
($ in thousands, except per share data)
| 1st Quarter Ended |
|||||||||
| April 30, 2003 |
April 30, 2002 |
% Change |
|||||||
| Net Sales |
$ |
101.9 |
$ |
78.6 |
29.2 |
% | |||
| Royalty Income |
|
6.4 |
|
6.1 |
4.9 |
% | |||
| Total Revenue |
$ |
108.3 |
$ |
84.7 |
28.0 |
% | |||
| Gross Profit |
|
36.7 |
|
26.8 |
36.9 |
% | |||
| EBITDA |
|
15.1 |
|
12.3 |
22.8 |
% | |||
| Operating Income |
|
14.0 |
|
11.6 |
20.7 |
% | |||
| Net Income |
$ |
5.6 |
$ |
4.8 |
16.7 |
% | |||
| Earnings Per Share |
|||||||||
| Basic |
$ |
0.87 |
$ |
0.75 |
16.0 |
% | |||
| Diluted |
$ |
0.80 |
$ |
0.75 |
6.7 |
% | |||
| Fully Diluted Shares |
|
7.0 |
|
6.4 |
10.0 |
% | |||
| Outstanding (Millions) |
|||||||||
Source: Company Press Release dated May 21, 2003.
27
Salant
First Quarter 2004 Results
($ in thousands, except per share data)
| 1st Quarter Ended |
|||||||||
| March 30, 2003 |
March 30, 2002 |
% Change |
|||||||
| Net Sales |
$ |
67.2 |
$ |
60.3 |
11.5 |
% | |||
| Gross Profit |
|
19.5 |
|
16.1 |
21.3 |
% | |||
| EBITDA |
|
3.6 |
|
1.9 |
89.5 |
% | |||
| Operating Income |
|
3.1 |
|
0.4 |
675.0 |
% | |||
| Net Income |
$ |
2.2 |
$ |
0.4 |
450.0 |
% | |||
Source: Salant 10-Q 03/30/2003
28
Salant Acquisition
Transaction Highlights
| Adjusted Transaction Cost* |
||||
| In Millions |
||||
| Purchase Price |
$ |
91.0 |
| |
| Salant Cash |
$ |
(25.0 |
) | |
| Transaction Costs |
$ |
10.0 |
| |
| NPV Salant NOL |
$ |
(10.0 |
) | |
| Adjusted Price |
$ |
66.0 |
| |
| Adjusted Valuation Metrics* |
|||
| LTM Sales |
24 |
% | |
| LTM EBITDA |
3.3 |
times |
| * | Estimated as of 5/31/2003 |
29
Salant Acquisition Sources & Uses*
| Uses |
|||
| In Millions |
|||
| Purchase Price |
$ |
91.0 | |
| Fees |
$ |
5.5 | |
| Changes of Control Payout |
$ |
3.4 | |
| Retention Payouts |
$ |
1.2 | |
| Total Uses |
$ |
101.0 | |
| Sources |
|||
| In Millions |
|||
| Perry Ellis Stock |
$ |
39.0 | |
| Salant Cash |
$ |
25.0 | |
| Cash from Options (Net) |
$ |
2.0 | |
| Accrued Retention Bonus |
$ |
1.2 | |
| Revolver |
$ |
33.8 | |
| Total Sources |
$ |
101.0 | |
| * | Estimated as of 05/31/2003 |
30
Key Financial Leverage Statistics*
| Pre Merger |
Post Merger LTM | |||
| Debt/Equity |
1.6x |
1.4x | ||
| Interest Coverage |
2.2x |
3.0x | ||
| Funded Debt Leverage |
4.6x |
3.8x |
| * | Estimated as of 05/31/2003. |
31
Salant Acquisition
Effect on PEI Equity Ownership
| 14% |
Retail | |||||
| Pre Merger |
[PIE CHART] |
30% |
Institutional | |||
| 56% |
Officers & Directors | |||||
| 11% |
Retail | |||||
| 21% |
Salant Shareholders | |||||
| Pre Merger* |
[PIE CHART] |
23% |
Institutional | |||
| 45% |
Officers & Directors |
| * | Estimated as of 05/31/2003 assuming PEII Stock at closing of $19.00. |
32
Looking Forward
Organic Opportunities
| • | Product |
| • | Continue expansion of bottoms business (has increased to 21% of sales in the last 3 years |
| • | Expand the sweater business (3.2% of Fiscal 2003 sales – Tricots St. Raphael brand and Salant expertise along with Jantzen will add significantly to this effort) |
| • | Swim brand and swim products extension. Swim ‘04 season introduction of Nike Men’s swim. Add accessories to all brands. |
| • | Increased focus of brand development for the exploding Hispanic market – Cubavera, Havanera and Esquisito |
| • | Licensing |
| • | International |
| • | Jantzen |
| • | Perry Ellis Women’s |
33
Looking Forward
Hispanic Marketing Opportunities
| • | Hispanics will surpass African Americans as largest US minority by 2005 |
| • | Hispanic population expected to grow to 42 million by 2007* |
| • | Hispanics spend disproportionably more on apparel than average household* |
| • | PEI is a leader in Hispanic apparel market |
| • | Company has targeted Hispanic market for over 34 years |
| • | Current design staff comprised primarily of Hispanics |
*American Demographics 11/02
34
Looking Forward
Acquisitions
| • | Acquire low cost under-utilized/under-performing brands |
| • | Focus on products/categories that are difficult from a technical or logistical point of view |
| • | Integrate cost-effective, strategic acquisitions into Perry Ellis’s global infrastructure by focusing on our core competency: design/marketing/sourcing |
| • | Maximize brands acquired through heightened marketing efforts and increased focus on licensing opportunities |
35
Investment Highlights
| • | Nationally and internationally recognized portfolio of family brands |
| • | Strong retailer relationships |
| • | Strong licensing capability and relationships |
| • | Worldwide low-cost sourcing capabilities |
| • | Design expertise and enhanced technology |
| • | Capacity for growth |
| • | Proven ability to integrate acquisitions |
| • | Experienced management team |
36
Safe Harbor Statement
Forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The actual results of Perry Ellis could differ materially from those expressed or indicated by forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, the effectiveness of Perry Ellis’ planned advertising, marketing and promotional campaigns, the ability of Perry Ellis to contain costs, Perry Ellis’ future capital needs, changes in fashion trends, risks relating to the retail industry, use of contract manufacturing and foreign sourcing, import restrictions, competition, seasonality, the level of consumer spending for apparel and other merchandise, exposure to foreign currency risk, possible disruption in commercial activities due to terrorist activity and armed conflict and other factors, including those set forth in Perry Ellis’ filings with the Securities and Exchange Commission. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those risks and uncertainties detailed in the Perry Ellis’ filings with the SEC. Any forward-looking statements speak only as of the day hereof and Perry Ellis disclaims any intent or obligation to update the same.
Perry Ellis filed a Registration Statement on Form S-4 (File No. 333-103848) with the SEC in connection with the proposed merger of its wholly owned subsidiary with Salant Corporation pursuant to a merger agreement dated February 3, 2003. The Registration Statement was declared effective by the SEC on May 19, 2003. Perry Ellis and Salant have mailed to their respective shareholders a Joint Proxy Statement-Prospectus, which is contained in the Registration Statement.
Investors and shareholders are urged to read the Registration Statement and the Joint Proxy Statement-Prospectus carefully. The Registration Statement and Joint Proxy Statement-Prospectus contain important information about each of Perry Ellis and Salant, the proposed merger, the persons who will be soliciting proxies related to the merger, their interest in the merger, and related matters and information. Investors and shareholders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov or at one of the SEC’s other public reference rooms in New York, NY or Chicago, Illinois.
Please call the SEC at 1-800-sec-0330 for further information with respect to the SEC’s public reference rooms. Free copies of these documents may be obtained by contacting Rosemary Trudeau, Perry Ellis’ Vice President-Finance at (305) 418-1294. Ms. Trudeau’s email address is rosemary.trudeau@PerryEllis.com.
Perry Ellis, Salant, and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the respective shareholder’s of Perry Ellis and Salant with respect to the transactions contemplated by the merger agreement. The Joint Proxy Statement-Prospectus contains important information about the persons soliciting the proxies relating to the merger and their interests in such transactions. Information regarding Perry Ellis’ officers and directors is included the Registration Statement. Information regarding Salant’s officers and directors is included in Salant’s Annual Report on Form 10-K for its fiscal year ended December 28, 2002. Free copies of these documents may also be obtained from the SEC’s website and also from each of the companies.
For More Information, contact:
Rosemary Trudeau
Vice President of Finance
Perry Ellis International
305-418-1294
37
P E R R Y E L L I S I N T E R N A T I O N A L