UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the Quarterly Period Ended October 31, 2007April 30, 2008

OR

Commission File Number: 0-21764

PERRY ELLIS INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in its Charter)

Registrant’s Telephone Number, Including Area Code: (305) 592-2830

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a non-accelerated filer.small reporting company. See definitiondefinitions of “accelerated filer,” “large accelerated filer” and large accelerated filer”“small reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer  ¨    Accelerated filer  x    Non-accelerated filer  ¨    Small reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares outstanding of the registrant’s common stock is 14,723,665(as15,700,394 (as of December 6, 2007)June 3, 2008).

PERRY ELLIS INTERNATIONAL, INC.

INDEX

PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(amounts in thousands, except share data)

See Notes to Unaudited Condensed Consolidated Financial Statements

PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(amounts in thousands, except per share data)

See Notes to Unaudited Condensed Consolidated Financial Statements

PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(amounts in thousands)

See Notes to Unaudited Condensed Consolidated Financial Statements

PERRY ELLIS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

The accompanying unaudited condensed consolidated financial statements of Perry Ellis International, Inc. and subsidiaries (“Perry Ellis” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the requirements of the Securities and Exchange Commission on Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and changes in cash flows required by GAAP.GAAP for annual financial statements. These condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2007.2008.

The information presented reflects all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the interim periods. Results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire fiscal year.

2 . RECENT ACCOUNTING PRONOUNCEMENTS

InEffective February 2006,1, 2008, the Financial Accounting Standards Board (“FASB”) issuedCompany adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 155, “Accounting for Certain Hybrid Financial Instruments -an amendment of FASB Statements No. 133 and 140,” which simplifies accounting for certain hybrid financial instruments by permitting fair value remeasurement for any hybrid instrument that contains an embedded derivative that otherwise would require bifurcation and eliminates a restriction on the passive derivative instruments that a qualifying special-purpose entity may hold. SFAS No. 155 is effective for all financial instruments acquired, issued or subject to a remeasurement (new basis) event occurring after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The adoption of SFAS No. 155 did not have an impact on the results of operations or the financial position of the Company.

In July 2006, the FASB issued Interpretation 48 (FIN 48), “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109”. The Company adopted the provisions of FIN 48, on February 1, 2007.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. The Company’s U.S. federal income tax returns for 2004 through 2007 are open tax years. Additionally, the Company’s U.S. federal income tax returns for 2000 through 2003 represent open tax years, but only to the extent of refund claims previously filed by the Company. The Company’s state tax filings are subject to varying statutes of limitations. The Company’s unrecognized state tax benefits are related to state tax returns open from 2003 through 2007, depending on each state’s particular statute of limitation. As of February 1, 2007, the Company is undergoing a U.S. federal income tax examination for the 2004 tax year. Additionally, various state, local, and foreign income tax returns are also under examination by taxing authorities.

The adoption of FIN 48 did not have a material effect on the consolidated financial position or results of operations. The Company has a $2.7 million liability recorded for unrecognized tax benefits as of February 1, 2007, which includes interest and penalties of $0.3 million. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expenses. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2.7 million, which includes interest and penalties of $0.3 million. For the three and the nine months ended October 31, 2007, the total amount of unrecognized tax benefits increased by $0.5 million and $1.1 million, respectively. The increase to the total amount of the unrecognized tax benefit for the three and the nine months ended October 31, 2007 includes interest and penalties of $0.1 million and $0.3 million, respectively.

It is reasonably possible that within the next twelve months the Company and the Internal Revenue Service will resolve some or all of the matters presently under U.S. federal income tax examination. The Company does not currently anticipate that such a resolution will significantly increase or decrease tax expense within the next twelve months.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” for financial assets and liabilities and SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment to FASB Statement No. 115”. SFAS 157, which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 definesclarifies that fair value asis an exit price, representing the priceamount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.participants. SFAS No. 157 will be effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years, except for nonfinancial159 permits an entity to measure certain financial assets and nonfinancialfinancial liabilities at fair value with changes in fair value recognized or disclosed onin earnings each period.

A description of the Company’s policies regarding fair value measurement is summarized below.

Fair Value Hierarchy—SFAS 157 requires disclosure about how fair value is determined for assets and liabilities and establishes a non-recurring basis,hierarchy for which SFAS No. 157 willthese assets and liabilities must be effectivegrouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy:

Determination of Fair Value—The Company generally uses quoted market prices (unadjusted) in active markets for fiscal years beginning after November 15, 2008identical assets or liabilities that the Company has the ability to determine fair value, and interim periods within those fiscal years. classifies such items in Level 1. Fair values determined by Level 2 inputs utilize inputs other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted market prices in active markets for similar assets or liabilities, and inputs other than quoted market prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest rates, currency rates, etc. Assets or liabilities valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.

The adoption of SFAS No. 157 is not expectedfollowing describes the valuation methodologies used by the Company to have a material impact on the results of operations or the financial positionmeasure fair value, including an indication of the Company.level in the fair value hierarchy in which each asset or liability is generally classified.

Marketable Securities—The Company uses quoted market prices in active markets to determine the fair value of marketable securities, which are classified in Level 1 of the fair value hierarchy.

In September 2006, the FASBFinancial Accounting Standards Board (“FASB”) issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R),” which requires a business entity to recognize the overfunded or underfunded status of a single-employer defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in comprehensive income in the year in which the changes occur. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. The adoption of the recognition and disclosure provisions of SFAS No. 158 did not have a material impact on the results of operations or the financial position of the Company. SFAS 158 also requires a business entity to measure plan assets and benefit obligations as of the date of its year-end statement of financial position effective for fiscal year endingsyears ending after December 15, 2008. In accordance with the provisions of SFAS No. 158, the Company will measure its plan assets and benefit obligations as of its January 31, 2009 fiscal year end. 

In December 2007, the FASB issued SFAS 141R, “Business Combinations,” which establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008. Accordingly, any business combinations the Company engages in will be recorded and disclosed following existing GAAP until February 1, 2009. The Company expects SFAS 141R will have an impact on its consolidated financial statements when effective, but the nature and magnitude of the specific effects will depend upon the nature, terms and size of the acquisitions it consummates after the effective date. The Company is still assessing the full impact this standard will have on its future consolidated financial statements.

In December 2007, the FASB issued SFAS No. 159,160, ““Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51.” This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This statement is effective for fiscal years beginning after December 15, 2008. The Fair Value Option for Financial Assets and Financial Liabilities,” which provides reporting entities an option to report selectedCompany has not completed its assessment of the impact, if any, this new pronouncement will have on its financial assets, including investment securities designated as available for sale, and financial liabilities, including most insurance contracts, at fair value.statements.

In March 2008, the FASB issued SFAS No. 159 establishes presentation161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 achieves these improvements by requiring disclosure requirements designedof the fair values of derivative instruments and their gains and losses in a tabular format. It also provides for more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk related. Finally, it requires cross- referencing within footnotes to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The standard also requires additional information to aidenable financial statement users’ understandingusers to locate important

information about derivative instruments. This statement is effective for interim periods beginning after December 15, 2008. The Company has not completed its assessment of a reporting entity’s choice to use fair valuethe impact, if any, this new pronouncement will have on its earnings and also requires entities to display onfinancial statements.

On February 4, 2008, the faceCompany completed the acquisition of the balance sheetC&C California and Laundry by Shelli Segal brands from Liz Claiborne, Inc. The acquisition was financed through existing cash and borrowings under the fair valueCompany’s existing senior credit facility. The results of those assets and liabilities for whichoperations of the reporting entity has chosen to measure at fair value. SFAS No. 159 is effectiveacquired brands have been included in the Company’s operations beginning as of the beginning of a reporting entity’s first fiscal year beginning after November 15, 2007. Because applicationdate of the standard is optional, any impactsacquisition.

Both brands are limitedideally positioned to those financialaddress the fastest growing segment within women’s apparel: contemporary. Both brands sell in luxury retail stores and high-end specialty boutiques. Together they expand the Company’s women’s contemporary business platform.

The aggregate purchase price was approximately $34.3, which represents the sum of (i) $33.1 million paid in cash, and (ii) acquisition costs of $1.2 million, of which $348,000 remains unpaid as of April 30, 2008.

The following table summarizes the estimated fair values of the assets acquired and liabilities to whichassumed after the preliminary valuation. Purchase accounting adjustments include preliminary fair value adjustments and the preliminary allocation of purchase price based on fair value as required under SFAS No. 159 would be applied, which has yet to be determined.141, “Business Combinations:”

3. STOCKHOLDERS’ EQUITY

The total allocation of the purchase price is as follows:

On November 21, 2006, the Company declared a 3-for-2 stock split effected in the form

Intangible assets consist of a stock dividend payable on December 29, 2006 to stockholders of record as of December 12, 2006. All references to prior years’ stock and earnings per share data in this report have been restated to give effectnon amortizing trademark intangibles.

Proforma financial information is not presented because it is deemed immaterial to the stock dividend.

4. INVENTORIES

Inventories are stated at the lower of cost (weighted moving average cost) or market. Cost principally consists of the purchase price (adjusted for lower of cost or market), customs, duties, freight, insurance and commissions to buying agents.

Inventories consisted of the following as of:

5. MARKETABLE SECURITIES

During fiscal 2007,Marketable securities consist of equity investments which are classified as available for sale. These investments are stated at fair value. Fair value is determined using quoted market prices in active markets for identical securities (Level 1 of the Company purchased 369,700 common shares in the open market of a current licensee for approximately $2.6 million. In May 2007, the Company purchased an additional 50,100 common shares in the open market of this licensee for $308,000. These shares were sold in June 2007, the proceeds were $320,000 and the gross realized gain on the sale was $12,000. The realized gain was reclassified from accumulated other comprehensive income to other income.

In July 2007, the Company purchased 50,000 common shares in the open market of an unrelated entity for $364,000.

fair value hierarchy under SFAS No. 157.) The following is a summary of the investments’ cost, unrealized gains (losses) and estimated fair value at:value:

The unrealized net (loss) gain of ($478,000) and $6,000 respectively,loss, net of taxes, of $1.1 million is included in accumulated other comprehensive income at October 31, 2007April 30, 2008 and January 31, 2007,2008, respectively.

The Company has assessed its investment in equity securities available for sale and concluded no events have occurred and no facts have been discovered with respect to such investments that would indicate an other than temporary impairment of the investments’ value.

6. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of:following:

For the three months ended October 31,April 30, 2008 and 2007, and 2006, depreciation and amortization expense relating to property and equipment amounted to $3.4$3.6 million and $2.8 million, respectively. For the nine months ended October 31, 2007 and 2006, depreciation and amortization expense relating to property and equipment amounted to $9.3 million and $7.9 million, respectively.

7. LETTER OF CREDIT FACILITIES

Borrowings and availability under letter of credit facilities consist of the following as of:

8. ADVERTISING AND RELATED COSTS

The Company’s accounting policy relating to advertising and related costs is to expense these costs in the period incurred. Advertising and related costs were approximately $7.0$6.5 million and $6.9$5.9 million for the three months ended October 31,April 30, 2008 and 2007, and 2006, respectively, and $17.0 million and $17.4 million for the nine months ended October 31, 2007 and 2006, respectively, and are included in selling, general and administrative expenses.

9. UNEARNED REVENUE

During the first quarter of fiscal 2008, the Company collected approximately $21 million in unearned royalty income and unearned advertising reimbursements on certain royalty licenses. These amounts will be recognized over the life of their respective licenses.

As of OctoberApril 30, 2008 and January 31, 2007,2008, the unearned royalty income short term portionsportion of approximately $1.7$1.4 million is included in unearned revenues, respectively. As of April 30, 2008 and January 31, 2008, the unearned advertising reimbursements short term portion of $1.3 million are included in unearned revenues and accrued expenses, and other liabilities, respectively. The long term portion of approximately $16.5$15.0 million and $15.7 million is included in unearned revenues and other liabilities.

10. NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted average shares of outstanding common stock. The calculation of diluted net income per share is similar to basic earnings per share except that the denominator includes potentially dilutive common stock. The potentially dilutive common stock included in the Company’s computation of diluted net income per share includes the effects of the stock options and unvested restricted shares as determined using the treasury stock method.

The following table sets forth the computation of basic and diluted net income per share:

11. COMPREHENSIVE INCOME

For the three months ended October 31,April 30, 2008 and 2007, and 2006, comprehensive income was $8.6comprised of the following: