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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨☐

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

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 ~~15,496,000~~15,498,000 (as of ~~August 29,~~November 30, 2016).


							October 29,			January 30,
	July 30, 2016			January 30, 2016			2016			2016
ASSETS

Current Assets:
Cash and cash equivalents	$	27,882		$	31,902		$	29,824		$	31,902
Investments, at fair value								12,915			9,782
Accounts receivable, net		120,639			132,066			128,782			132,066
Inventories		134,414			182,750			112,266			182,750
Investments, at fair value		13,633			9,782
Prepaid income taxes		—			1,818			1,788			1,818
Prepaid expenses and other current assets		8,347			8,461			8,217			8,461

Total current assets		304,915			366,779			293,792			366,779


Property and equipment, net		63,796			63,908			63,682			63,908
Other intangible assets, net		187,485			187,919			187,268			187,919
Deferred income tax		392			442			441			442
Other assets		2,757			2,927			2,355			2,927

TOTAL	$	559,345		$	621,975		$	547,538		$	621,975

LIABILITIES AND EQUITY

Current Liabilities:
Accounts payable	$	55,740		$	103,684		$	43,786		$	103,684
Accrued expenses and other liabilities		22,879			26,497			25,577			26,497
Accrued interest payable		1,487			1,521			528			1,521
Income taxes payable		459			—
Unearned revenues		3,857			4,213			3,494			4,213
Deferred pension obligation		12,206			12,107			6,904			12,107

Total current liabilities		96,628			148,022			80,289			148,022


Senior subordinated notes payable, net		49,600			49,528			49,637			49,528
Senior credit facility		33,865			61,758			37,837			61,758
Real estate mortgages		20,873			21,318			20,668			21,318
Unearned revenues and other long-term liabilities		18,464			14,853			18,917			14,853
Deferred income taxes		36,007			35,015			36,235			35,015

Total long-term liabilities		158,809			182,472			163,294			182,472

Total liabilities		255,437			330,494			243,583			330,494


Commitment and contingencies

Equity:
Preferred stock $.01 par value; 5,000,000 shares authorized; no shares issued or outstanding		—			—			—			—
Common stock $.01 par value; 100,000,000 shares authorized; 15,609,579 shares issued and outstanding as of July 30, 2016 and 15,409,310 shares issued and outstanding as of January 30, 2016		156			154
Common stock $.01 par value; 100,000,000 shares authorized; 15,610,661 shares issued and outstanding as of October 29, 2016 and 15,409,310 shares issued and outstanding as of January 30, 2016								156			154
Additional paid-in-capital		146,868			144,025			148,186			144,025
Retained earnings		172,495			161,810			167,330			161,810
Accumulated other comprehensive loss		(15,611	)		(14,508	)		(9,566	)		(14,508	)

Total								306,106			291,481
Treasury stock at cost; 113,935 shares as of October 29, 2016 and no shares as of January 30, 2016								(2,151	)		—

Total equity		303,908			291,481			303,955			291,481

TOTAL	$	559,345		$	621,975		$	547,538		$	621,975


												Three Months Ended					Nine Months Ended
												October 29,			October 31,		October 29,		October 31,
	Three Months Ended						Six Months Ended					2016			2015		2016		2015
	July 30, 2016			August 1, 2015			July 30, 2016		August 1, 2015
Revenues:
Net sales	$	193,341		$	204,638		$	444,216	$	462,895		$	185,298		$	196,447	$	629,514	$	659,342
Royalty income		8,312			8,661			18,731		16,818			8,661			8,992		27,392		25,810

Total revenues		201,653			213,299			462,947		479,713			193,959			205,439		656,906		685,152
Cost of sales		127,822			137,357			294,032		313,671			122,856			132,144		416,888		445,815

Gross profit		73,831			75,942			168,915		166,042			71,103			73,295		240,018		239,337

Operating expenses:
Selling, general and administrative expenses		72,654			68,254			142,588		137,862			72,846			64,869		215,434		202,731
Depreciation and amortization		3,716			3,446			7,183		6,768			3,534			3,383		10,717		10,151

Total operating expenses		76,370			71,700			149,771		144,630			76,380			68,252		226,151		212,882
Loss on sale of long-lived assets		—			—			—		(697	)		—			—		—		(697	)

Operating (loss) income		(2,539	)		4,242			19,144		20,715			(5,277	)		5,043		13,867		25,758
Costs of early extinguishment of debt		—			5,121			—		5,121			—			—		—		5,121
Interest expense		1,889			1,943			3,914		5,570			1,738			1,853		5,652		7,423

Net (loss) income before income taxes		(4,428	)		(2,822	)		15,230		10,024			(7,015	)		3,190		8,215		13,214
Income tax (benefit) provision		(863	)		(1,541	)		4,545		1,894			(1,850	)		917		2,695		2,811

Net (loss) income	$	(3,565	)	$	(1,281	)	$	10,685	$	8,130		$	(5,165	)	$	2,273	$	5,520	$	10,403


Net (loss) income per share:
Basic	$	(0.24	)	$	(0.09	)	$	0.72	$	0.55		$	(0.34	)	$	0.15	$	0.37	$	0.70

Diluted	$	(0.24	)	$	(0.09	)	$	0.71	$	0.53		$	(0.34	)	$	0.15	$	0.36	$	0.68


Weighted average number of shares outstanding
Basic		14,953			15,048			14,882		14,849			14,991			15,148		14,920		14,948
Diluted		14,953			15,048			15,139		15,283			14,991			15,465		15,169		15,344


							Nine Months Ended
							October 29,			October 31,
	Six Months Ended						2016			2015
	July 30, 2016			August 1, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	10,685		$	8,130		$	5,520		$	10,403
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7,382			7,087			11,013			10,632
Provision for bad debts		478			279			680			435
Amortization of debt issue cost		205			266			309			369
Amortization of premiums and discounts		28			94			42			124
Amortization of unrealized (gain) loss on pension liability		310			270
Amortization of unrealized loss on pension liability								465			405
Pension settlement charge								8,300			—
Costs on early extinguishment of debt		—			1,158			—			1,158
Deferred income taxes		1,042			1,613			1,221			2,614
Share-based compensation		3,786			2,286			5,104			3,641
Loss on sale of long-lived assets		—			697
Loss (gain) on sale of long-lived assets								—			697
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable, net		10,087			13,199			506			6,507
Inventories		47,604			30,149			69,012			38,380
Prepaid income taxes		1,874			190			17			3,606
Prepaid expenses and other current assets		110			(759	)		402			(762	)
Other assets		37			107			121			111
Deferred pension obligation								(5,516	)		(416	)
Accounts payable and accrued expenses		(52,572	)		(41,175	)		(62,602	)		(54,759	)
Accrued interest payable		(34	)		(2,534	)		(993	)		(3,509	)
Income taxes payable		344			—
Unearned revenues and other liabilities		3,469			(666	)		3,640			(998	)
Deferred pension obligation		99			85

Net cash provided by operating activities		34,934			20,476			37,241			18,638


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(6,609	)		(7,345	)		(9,334	)		(9,837	)
Purchases of investments		(9,039	)		(2,641	)		(12,467	)		(8,230	)
Proceeds from investment maturities		5,205			11,860			9,341			17,845
Proceeds on sale of intangible assets		—			2,500			—			2,500
Proceeds from note receivable								250			250

Net cash (used in) provided by investing activities		(10,443	)		4,374			(12,210	)		2,528


CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from senior credit facility		179,380			255,065			250,012			330,644
Payments on senior credit facility		(207,273	)		(196,854	)		(273,933	)		(270,023	)
Payments on senior subordinated notes		—			(100,000	)		—			(100,000	)
Purchase of treasury stock								(2,151	)		—
Payments on real estate mortgages		(423	)		(410	)		(634	)		(615	)
Payments on capital leases		(129	)		(77	)		(196	)		(137	)
Deferred financing fees		—			(569	)		—			(574	)
Proceeds from exercise of stock options		5			1,339			5			1,408
Tax benefit from exercise of equity instruments		—			(201	)

Net cash used in financing activities		(28,440	)		(41,707	)		(26,897	)		(39,297	)


Effect of exchange rate changes on cash and cash equivalents		(71	)		575			(212	)		600


NET DECREASE IN CASH AND CASH EQUIVALENTS		(4,020	)		(16,282	)		(2,078	)		(17,531	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		31,902			43,547			31,902			43,547

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	27,882		$	27,265		$	29,824		$	26,016


					Nine Months Ended
					October 29,		October 31,
	Six Months Ended				2016		2015
	July 30, 2016		August 1, 2015
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	3,715	$	7,746	$	6,294	$	10,439

Income taxes	$	700	$	366	$	904	$	507


NON-CASH FINANCING AND INVESTING ACTIVITIES:
Accrued purchases of property and equipment	$	407	$	—	$	1,172	$	1,684

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 for annual financial statements. The 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 30, 2016, filed with the Securities and Exchange Commission on April 14, 2016.

The information presented reflects all adjustments, which are in the opinion of management 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.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers.” ASU No. 2014-09 clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP and International Financial Reporting Standards (“IFRS”) that removes inconsistencies and weaknesses in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, provides more useful information to users of financial statements through improved disclosure requirements and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. ASU No. 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Companies can choose to apply the ASU using either the full retrospective approach or a modified retrospective approach. The Company is currently evaluating both methods of adoption and the impact, if any, that the adoption of this ASU will have on the Company’s results of operations or the Company’s financial position.

In March 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30)”, which is simplifying the Presentation of Debt Issuance Costs. The standard 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. ASU 2015-03 is effective for interim periods beginning after December 15, 2015. The Company adopted the accounting standard in the first quarter of fiscal 2017. Prior to the adoption, debt issuance costs were classified as other assets. This presentation change was applied retrospectively to the condensed consolidated balance sheet and consequently, amounts related to debt issuance costs are presented as a direct deduction of the corresponding debt liability for all periods presented.

The effect on the condensed consolidating balance sheet as of January 30, 2016, as a result of this change in presentation, is a decrease of ($0.5) million in other assets, and a decrease of ($0.5) million in senior subordinated notes payable.

In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory”, which requires inventory measured using any method other than last-in, first out (“LIFO”) or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU 2015-11 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2016. Early application is permitted. The adoption of ASU No. 2015-11 is not expected to have a material impact on the Company’s results of operations or the Company’s financial position.

In February 2016, the FASB issued ASU No. 2016-02, ~~“Leases~~“Leases (Topic 842)”which requires an entity that is a lessee to recognize the assets and liabilities arising from leases on the balance sheet. This guidance also requires

disclosures about the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, using a modified retrospective approach, and early adoption is permitted. The Company is evaluating the effect that the adoption will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-07, “Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting,” which eliminates the requirement to retroactively adjust an investment that subsequently qualifies for equity method accounting (as a result of an increase in level of ownership interest or degree of influence) as if the equity method of accounting had been applied during all prior periods that the investment was held. The new standard requires that the investor add the cost of acquiring additional ownership interest in the investee to its current basis and prospectively adopt the equity method of accounting. Any unrealized gains or losses in an available-for-sale investment that subsequently qualifies as an equity method investment should be recognized in earnings at the date the investment qualifies as an equity method investment. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. This new guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which is part of the FASB’s Simplification Initiative. The updated guidance simplifies the accounting for share-based payment transactions. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”, which amends certain aspects of the FASB’s new revenue standard, ASU 2014-09, “Revenue from Contracts with Customers”,specifically the standard’s guidance on identifying performance obligations and the implementation guidance on licensing. The amendments clarify when promised goods or services are separately identifiable (i.e., distinct within the context of a contract), an important step in determining whether goods and services should be accounted for as separate performance obligations. In addition, the amendments allow entities to disregard goods or services that are immaterial in the context of a contract and provide an accounting policy election for accounting for certain shipping and handling activities. The amendments also clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property (IP), which will determine whether the entity recognizes revenue over time or at a point in time. The amendments revise the guidance to address how entities should apply the exception for sales- and usage-based royalties to licenses of IP, recognize revenue for licenses that are not separate performance obligations and evaluate different types of license restrictions (e.g., time-based, geography-based). The new guidance’s effective date and transition provisions are aligned with the requirements in the new revenue standard, which is not yet effective. The Company is currently evaluating the impact, if any, that the adoption of this ASU will have on the Company’s results of operations or the Company’s financial position.

In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” which amends certain aspects of the new revenue standard, ASU 2014-09,“Revenue from Contracts with Customers”. The amendments are intended to provide clarifying guidance in a few narrow areas such as collectability, contract modifications, completed contracts at transition, and non-cash considerations. The new guidance’s effective date and transition provisions are aligned with the requirements in the new revenue standard, which is not yet effective. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which provides guidance for the accounting for credit losses on instruments within its scope. The amendments guide on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. The amendments require a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. The amendments also require that credit losses

on available-for-sale debt securities be presented as an allowance. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. The amendments in this

update are effective for fiscal years beginning after December 15, 2019, including interim periods within those annual periods. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15,“Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force),” which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The amendments in this update are effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The Company is currently assessing the impact of the future adoption of this standard on its consolidated Statements of Cash Flows.

In October 2016, the FASB issued ASU No. 2016-16,“Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,” which is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This update removes the current exception in GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. The amendments in this update are effective for public entities for annual reporting periods beginning after December 15, 2017. Early adoption is permitted and should be in the first interim period if an entity issues interim financial statements. The Company is currently assessing the impact of the future adoption of this standard on its consolidated financial statements.


							October 29,			January 30,
	July 30, 2016			January 30, 2016			2016			2016
	(in thousands)						(in thousands)
Trade accounts	$	133,691		$	144,708		$	143,033		$	144,708
Royalties		4,442			5,892			5,220			5,892
Other receivables		1,011			1,769			812			1,769

Total		139,144			152,369			149,065			152,369
Less: allowances		(18,505	)		(20,303	)		(20,283	)		(20,303	)

Total	$	120,639		$	132,066		$	128,782		$	132,066

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


					October 29,		January 30,
					2016		2016
	July 30, 2016		January 30, 2016		(in thousands)
	(in thousands)
Finished goods	$	134,414	$	182,414	$	112,266	$	182,414
Raw materials and in process		—		336		—		336

Total	$	134,414	$	182,750	$	112,266	$	182,750

The Company’s investments include marketable securities and certificates of deposit at ~~July 30,~~October 29, 2016 and ~~included certificates of deposit at~~ January 30, 2016. Marketable securities are classified as available-for-sale and consist of corporate bonds with maturity dates less than two years. Certificates of deposit are classified as available-for-sale with ~~$10.4~~$9.7 million with maturity dates within one ~~year or less.~~year. Investments are stated at fair value. The estimated fair value of the marketable securities is based on quoted prices in an active market (Level 1 fair value measures).


												Gross		Gross			Estimated
			Gross		Gross			Estimated		Cost		Unrealized Gains		Unrealized Losses			Fair Value
	Cost		Unrealized Gains		Unrealized Losses			Fair Value		(in thousands)
	(in thousands)
Marketable securities	$	3,264	$	12	$	—		$	3,276	$	3,262	$	4	$	—		$	3,266
Certificates of deposit		10,361		—		(4	)		10,357		9,655		—		(6	)		9,649

Total investments	$	13,625	$	12	$	(4	)	$	13,633	$	12,917	$	4	$	(6	)	$	12,915


												Gross		Gross			Estimated
										Cost		Unrealized Gains		Unrealized Losses			Fair Value
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		(in thousands)
	(in thousands)
Certificates of deposit	$	9,791	$	—	$	(9	)	$	9,782	$	9,791	$	—	$	(9	)	$	9,782

Total investments	$	9,791	$	—	$	(9	)	$	9,782	$	9,791	$	—	$	(9	)	$	9,782


							October 29,			January 30,
							2016			2016
	July 30, 2016			January 30, 2016			(in thousands)
	(in thousands)
Furniture, fixtures and equipment	$	87,713		$	84,634		$	90,141		$	84,634
Buildings and building improvements		20,420			19,462			20,660			19,462
Vehicles		523			523			523			523
Leasehold improvements		48,078			46,882			48,329			46,882
Land		9,430			9,430			9,430			9,430

Total		166,164			160,931			169,083			160,931
Less: accumulated depreciation and amortization		(102,368	)		(97,023	)		(105,401	)		(97,023	)

Total	$	63,796		$	63,908		$	63,682		$	63,908

The above table of property and equipment includes assets held under capital leases as of:


	July 30,			January 30,			October 29,			January 30,
	2016			2016			2016			2016
	(in thousands)						(in thousands)
Furniture, fixtures and equipment	$	810		$	810		$	810		$	810
Less: accumulated depreciation and amortization		(317	)		(182	)		(384	)		(182	)

Total	$	493		$	628		$	426		$	628

For the three months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015, depreciation and amortization expense relating to property and equipment amounted to ~~$3.6~~$3.5 million and ~~$3.3~~$3.4 million, respectively. For the ~~six~~nine months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015, depreciation and amortization expense relating to property and equipment amounted to ~~$6.9~~$10.4 million and ~~$6.6~~$10.0 million, respectively. These amounts include amortization expense for leased property under capital leases.

Trademarks included in other intangible assets, net, are considered indefinite-lived intangible assets and totaled $184.1 ~~million~~ at ~~July 30,~~October 29, 2016 and January 30, 2016.

On March 19, 2015, the Company entered into an agreement to sell the intellectual property of its C&C California brand to a third party. The sales price was $2.5 million, which was collected during the first quarter of fiscal 2016. In connection with this transaction, the Company recorded a loss of ($0.7) million in the licensing segment.


							October 29,			January 30,
	July 30, 2016			January 30, 2016			2016			2016
	(in thousands)						(in thousands)
Customer lists	$	8,450		$	8,450		$	8,450		$	8,450
Less: accumulated amortization		(5,111	)		(4,677	)		(5,328	)		(4,677	)

Total	$	3,339		$	3,773		$	3,122		$	3,773

For the three months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015, amortization expense relating to customer lists amounted to ~~approximately $0.2~~$0.3 million for each of the periods. For the ~~six~~nine months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015, amortization expense relating to customer lists amounted to ~~$0.4~~$0.7 million for each of the periods. Other intangible assets are amortized over their estimated useful lives of 10 years. Assuming no impairment, the table sets forth the estimated amortization expense for future periods based on recorded amounts as of January 30, 2016:

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


							October 29,			January 30,
							2016			2016
	July 30, 2016			January 30, 2016			(in thousands)
	(in thousands)
Total letter of credit facilities	$	30,264		$	30,286		$	30,000		$	30,286
Outstanding letters of credit		(11,470	)		(11,395	)		(10,788	)		(11,395	)

Total credit available	$	18,794		$	18,891		$	19,212		$	18,891

During the third quarter of fiscal 2017, one letter of credit facility totaling $0.3 million, utilized by the Company’s United Kingdom subsidiary, expired and has not been renewed.

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 ~~$3.7~~$4.2 million and ~~$3.2~~$4.1 million for the three months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015, respectively, and ~~$8.0~~$12.2 million and ~~$7.0~~$11.1 million for the ~~six~~nine months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015, respectively, and are included in selling, general and administrative expenses.

Basic net (loss) income per share is computed by dividing net (loss) income by the weighted average shares of outstanding common stock. The calculation of diluted net ~~(loss)~~ 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 stock options, stock appreciation rights (“SARS”), and unvested restricted shares as determined using the treasury stock method.

The following table sets forth the computation of basic and diluted (loss) income per share:


											Three Months Ended					Nine Months Ended
	Three Months Ended						Six Months Ended				October 29,			October 31,		October 29,		October 31,
	July 30, 2016			August 1, 2015			July 30, 2016		August 1, 2015		2016			2015		2016		2015
	(in thousands, except per share data)										(in thousands, except per share data)
Numerator:
Net (loss) income	$	(3,565	)	$	(1,281	)	$	10,685	$	8,130	$	(5,165	)	$	2,273	$	5,520	$	10,403

Denominator:
Basic-weighted average shares		14,953			15,048			14,882		14,849		14,991			15,148		14,920		14,948
Dilutive effect: equity awards		—			—			257		434		—			317		249		396

Diluted-weighted average shares		14,953			15,048			15,139		15,283		14,991			15,465		15,169		15,344


Basic (loss) income per share	$	(0.24	)	$	(0.09	)	$	0.72	$	0.55	$	(0.34	)	$	0.15	$	0.37	$	0.70

Diluted (loss) income per share	$	(0.24	)	$	(0.09	)	$	0.71	$	0.53	$	(0.34	)	$	0.15	$	0.36	$	0.68


Antidilutive effect:⁽¹⁾		1,103			1,220			604		517		1,015			530		532		693


	Changes in Equity		Changes in Equity
	(in thousands)		(in thousands)
Equity at January 30, 2016	$	291,481	$	291,481

Comprehensive income		9,582		10,462
Share transactions under employee equity compensation plans		2,845		4,163
Purchase of treasury stock				(2,151	)

Equity at July 30, 2016	$	303,908
Equity at October 29, 2016			$	303,955


Equity at January 31, 2015	$	302,017	$	302,017

Comprehensive income		9,484		11,282
Share transactions under employee equity compensation plans		2,199		3,809

Equity at August 1, 2015	$	313,700
Equity at October 31, 2015			$	317,108

During the third quarter of fiscal 2017, the Board of Directors extended the stock repurchase program to authorize the Company to purchase, from time to time and as market and business conditions warranted, up to $70 million of the Company’s common stock for cash in the open market or in privately negotiated transactions through October 31, 2017. Although the Board of Directors allocated a maximum of $70 million to carry out the program, the Company is not obligated to purchase any specific number of outstanding shares and will reevaluate the program on an ongoing basis. Total purchases under the plan life-to-date amount to $60.8 million.

During the third quarter of fiscal 2017, the Company repurchased shares of its common stock at a cost of $2.2 million. There were no treasury shares outstanding as of January 30, 2016. During the second quarter of fiscal 2016, the Company retired 770,753 shares of treasury stock recorded at a cost of approximately $15.7 million. Accordingly, during the second quarter of fiscal 2016, the Company reduced common stock and additional paid in capital by $7,000 and $15.7 million, respectively.

Changes in accumulated other comprehensive loss by component, net of ~~tax:~~tax, are as follows:


	Unrealized			Foreign			Unrealized
	(Loss) Gain on			Currency Translation			(Loss) Gain on
	Pension Liability			Adjustments, Net			Investments			Total
	(in thousands)
Balance, January 31, 2015	$	(8,085	)	$	(4,774	)	$	7		$	(12,852	)
Other comprehensive loss (income) before reclassifications		—			482			(8	)		474
Amounts reclassified from accumulated other comprehensive loss		405			—			—			405

Balance, October 31, 2015	$	(7,680	)	$	(4,292	)	$	(1	)	$	(11,973	)

A summary of the impact on the condensed consolidated statements of operations line items is as follows:


	Three Months Ended					Three Months Ended
	July 30, 2016		August 1, 2015			October 29, 2016		October 31, 2015
	(in thousands)					(in thousands)
Amortization of defined benefit pension items
Actuarial gains	$	155	$	135	Selling, general and administrative expenses
Actuarial loss						$	8,455	$	135	Selling, general and administrative expenses
Tax provision		—		—	Income tax provision		—		—	Income tax provision

Total, net of tax	$	155	$	135		$	8,455	$	135


	Six Months Ended					Nine Months Ended
	July 30, 2016		August 1, 2015			October 29, 2016		October 31, 2015
	(in thousands)					(in thousands)
Amortization of defined benefit pension items
Actuarial gains	$	310	$	270	Selling, general and administrative expenses
Actuarial loss						$	8,765	$	405	Selling, general and administrative expenses
Tax provision		—		—	Income tax provision		—		—	Income tax provision

Total, net of tax	$	310	$	270		$	8,765	$	405

The Company has a risk management policy to manage foreign currency risk relating to inventory purchases by its subsidiaries that are denominated in foreign currencies. As such, the Company may employ hedging and derivative strategies to limit the effects of changes in foreign currency on its operating income and cash flows. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged. The Company achieves this by closely matching the notional amount, term and conditions of the derivative instrument with the underlying risk being hedged. The Company does not use derivative instruments for trading or speculative purposes.

For derivatives that will be accounted for as hedging instruments, the Company formally designates and documents at inception the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company will formally assess at least quarterly whether the financial instruments used in hedging are “highly effective” at offsetting changes in cash flows of the related underlying exposures. For purposes of assessing hedge effectiveness, the Company uses the forward method, and assesses effectiveness based on the changes in both spot and forward points of the hedging instrument. If and when a derivative is no longer expected to be “highly effective,” hedge accounting is discontinued and hedge ineffectiveness, if any, is included in current period earnings. As of October 29, 2016, there was no hedge ineffectiveness.

The Company’s United Kingdom subsidiary is exposed to foreign currency risk from inventory purchases. In order to mitigate the financial risk of settlement of inventory at various prices based on movement of the U.S.

dollar against the British pound, the Company entered into foreign currency forward exchange contracts (the “Hedging Instruments”) in October 2016. These are formally designated and “highly effective” as cash flow hedges. The Company will hedge approximately 45% of its U.S. dollar denominated purchases. All changes in the Hedging Instruments’ fair value associated with inventory purchases are recorded in equity as a component of accumulated other comprehensive income until the underlying hedged item is reclassified to earnings. The Company records the foreign currency forward exchange contracts at fair value in its Consolidated Balance Sheets. The cash flows from derivative instruments that are designated as cash flow hedges are classified in the same category as the cash flows from the underlying hedged items. In the event that hedge accounting is discontinued, cash flows subsequent to the date of discontinuance are classified within investing activities. The Company considers the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. The Company classifies derivative instrument cash flows from hedges of foreign currency risk on the settlement of inventory as operating activities.

The Company’s Hedging Instruments were classified within Level 2 of the fair value hierarchy. The following table summarizes the fair value and balance sheet classification of the Company’s Hedging Instruments.

At October 29, 2016, the notional amount outstanding of foreign exchange forward contracts is $5.7 million. Such contracts expire between October 2016 and March 2017. There were no outstanding Hedging Instruments at January 30, 2016.

At October 29, 2016, accumulated other comprehensive income included a $255 thousand net deferred gain for Hedging Instruments that are expected to be reclassed during the next 12 months. The net deferred gain will be reclassified from accumulated other comprehensive income to costs of goods sold when the inventory is sold.

No gains or losses relating to Hedging Instruments were reclassified to earnings during any of the fiscal periods presented.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company’s U.S. federal income tax returns for fiscal 2011 through fiscal 2016 are open tax years. The Company’s state tax filings are subject to varying statutes of limitations. The Company’s unrecognized state tax benefits are related to open tax years from fiscal 2005 through fiscal 2017, depending on each state’s particular statute of ~~limitation.~~limitations. As of ~~July 30,~~October 29, 2016, the fiscal 2011, 2012 and 2013 U.S. federal income tax returns are under examination, as well as various state, local, and foreign income tax returns, by various taxing authorities.

The Company has a $1.1 million liability recorded for unrecognized tax benefits as of January 30, 2016, which includes interest and penalties of $0.2 million. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. All of the unrecognized tax benefits, if recognized, would affect the Company’s effective tax rate. During the three months and ~~six~~nine months ended ~~July 30,~~October 29, 2016, the total amount of unrecognized tax benefits decreased by approximately $13,000 and increased by ~~approximately $37,000 and $87,000,~~$75,000, respectively. The change to the total amount of the unrecognized tax benefit for the three and ~~six~~nine months ended ~~July 30,~~October 29, 2016 included ~~an increase~~a decrease in interest and penalties of approximately ~~$15,000~~$11,000 and ~~$41,000,~~an increase of $30,000, respectively.

The Company does not currently anticipate a resolution within the next twelve months for any of the remaining unrecognized tax benefits as of ~~July 30,~~October 29, 2016. The statute of limitations related to the Company’s

fiscal 2011, 2012 and 2013 U.S. federal tax years has been extended as part of the examination and is not expected to lapse within the next twelve months. During the three months ended October 29, 2016, the Company received a Notice of Proposed Adjustment from the Internal Revenue Service which proposed adjustments to taxable income for fiscal 2011, 2012 and 2013 of $6.1 million, $5.3 million and $6.8 million respectively. The Company has not established uncertain tax position reserves related to this matter as the Company believes its positions are highly certain to be sustained upon appeal or, if necessary, through litigation.

At the end of fiscal 2016, the Company maintained a $46.2 million valuation allowance against its remaining domestic deferred tax asset; including, but not limited to, the federal net operating loss ~~carryforward~~carryforwards and the U.S. state net operating loss carryforwards, utilization of which isare not restricted by factors beyond the Company’s control. The establishment of valuation allowances and ~~development~~the developments of projected annual effective tax rates requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. An accumulation of recent pretax losses is considered strong negative evidence in that evaluation. Although the Company recognized pretax earnings through the ~~six~~nine months ended ~~July 30,~~October 29, 2016, by itself that does not represent sufficient positive evidence that its deferred tax asset will be realized to warrant removing the valuation allowances established against the U.S. deferred tax assets. Deferred tax assets without valuation allowances remain in certain foreign tax jurisdictions, where supported by the evidence.

During the first, second and ~~second~~third quarters of fiscal 2017, the Company granted an aggregate of 86,173, 14,914 and ~~14,914~~3,000 shares of restricted stock to certain key employees, which vest primarily over a three-year period, at an estimated value of $1.6 million, $0.3 million and ~~$0.3~~$0.06 million, respectively. This value is being recorded as compensation expense on a straight-line basis over the vesting period of the restricted stock.

Also, during the second quarter of fiscal 2017, the Company awarded to six directors an aggregate of 31,902 shares of restricted stock. The restricted stock awarded vests primarily over a one-year period, at an estimated value of $0.7 million. This value is being recorded as compensation expense on a straight-line basis over the vesting period of the restricted stock.

During the first quarter of fiscal 2017, the Company granted ~~performance based~~performance-based restricted stock to certain key employees. Such stock generally vests 100% in April 2019, provided that each employee is still an employee of the Company on such date, and that the Company has met certain performance criteria. A total of 184,004 shares of performance-based restricted stock were issued at an estimated value of $3.5 million.

During the first and second quarters of fiscal 2017, a total of 159,862 and 11,343 shares of restricted stock vested, of which 46,000 and 3,105 shares were withheld to cover the employees’ statutory income tax requirements. The estimated value of the withheld shares was $880,000 and $60,000, respectively.

The Company has four reportable segments: Men’s Sportswear and Swim, Women’s Sportswear, Direct-to-Consumer and Licensing. The Men’s Sportswear and Swim and Women’s Sportswear segments derive revenues from the design, import and distribution of apparel to department stores and other retail outlets, principally throughout the United States. The Direct-to-Consumer segment derives its revenues from the sale of the Company’s branded and licensed products through the Company’s retail stores and e-commerce platforms. The Licensing segment derives its revenues from royalties associated from the use of the Company’s brand names, principally Perry Ellis, Original Penguin, Laundry, Gotcha, Pro Player, Farah, Ben Hogan and John Henry.

The Company allocates certain corporate selling, general and administrative expenses based primarily on the revenues generated by the segments.


													Three Months Ended						Nine Months Ended
	Three Months Ended						Six Months Ended						October 29,			October 31,			October 29,			October 31,
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015			2016			2015			2016			2015
	(in thousands)												(in thousands)
Revenues:
Men’s Sportswear and Swim	$	145,148		$	150,488		$	343,073		$	348,941		$	135,717		$	141,512		$	478,790		$	490,453
Women’s Sportswear		24,136			29,882			56,625			68,705			28,676			33,421			85,301			102,126
Direct-to-Consumer		24,057			24,268			44,518			45,249			20,905			21,514			65,423			66,763
Licensing		8,312			8,661			18,731			16,818			8,661			8,992			27,392			25,810

Total revenues	$	201,653		$	213,299		$	462,947		$	479,713		$	193,959		$	205,439		$	656,906		$	685,152


Depreciation and amortization:
Men’s Sportswear and Swim	$	2,006		$	1,863		$	3,903		$	3,738		$	1,814		$	1,771		$	5,717		$	5,509
Women’s Sportswear		764			566			1,378			1,066			729			589			2,107			1,655
Direct-to-Consumer		889			971			1,785			1,875			932			976			2,717			2,851
Licensing		57			46			117			89			59			47			176			136

Total depreciation and amortization	$	3,716		$	3,446		$	7,183		$	6,768		$	3,534		$	3,383		$	10,717		$	10,151


Operating (loss) income:
Men’s Sportswear and Swim	$	(2,425	)	$	822		$	14,517		$	12,152
Men’s Sportswear and Swim⁽¹⁾													$	(7,683	)	$	2,392		$	6,834		$	14,544
Women’s Sportswear		(3,106	)		(1,051	)		(3,457	)		331			(1,289	)		(109	)		(4,746	)		222
Direct-to-Consumer		(2,933	)		(2,147	)		(6,305	)		(4,013	)		(3,370	)		(4,038	)		(9,675	)		(8,051	)
Licensing⁽¹⁾		5,925			6,618			14,389			12,245
Licensing⁽²⁾														7,065			6,798			21,454			19,043

Total operating (loss) income	$	(2,539	)	$	4,242		$	19,144		$	20,715		$	(5,277	)	$	5,043		$	13,867		$	25,758
Costs on early extinguishment of debt		—			5,121			—			5,121			—			—			—			5,121
Total interest expense		1,889			1,943			3,914			5,570			1,738			1,853			5,652			7,423

Total net (loss) income before income taxes	$	(4,428	)	$	(2,822	)	$	15,230		$	10,024		$	(7,015	)	$	3,190		$	8,215		$	13,214

The Company sponsors a qualified pension plan. The following table provides the components of net benefit cost for the plan during the three and ~~six~~nine months ofended fiscal 2017 and 2016:


													Three Months Ended						Nine Months Ended
													October 29,			October 31,			October 29,			October 31,
	Three Months Ended						Six Months Ended						2016			2015			2016			2015
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015			(in thousands)
	(in thousands)
Service cost	$	63		$	63		$	126		$	126		$	63		$	63		$	189		$	189
Interest cost		124			337			248			674			124			337			372			1,011
Expected return on plan assets		(87	)		(658	)		(174	)		(1,316	)		(87	)		(658	)		(261	)		(1,974	)
Amortization of net gain		155			135			310			270
Settlement														8,300			—			8,300			—
Amortization of net loss														155			135			465			405

Net periodic benefit cost	$	255		$	(123	)	$	510		$	(246	)	$	8,555		$	(123	)	$	9,065		$	(369	)

~~17.~~Settlement accounting, which accelerates recognition of a plan’s unrecognized net gain or loss, is triggered if the lump sums paid during a year exceed the sum of the plan’s service and interest cost. Since the lump sums paid or expected to be paid in Fiscal 2017 exceed that threshold, the Company recognized a settlement charge of $8.3 million in anticipation of the plan’s termination in fiscal 2017.

In March 2011, the Company issued $150 million 7⁷⁄₈% senior subordinated notes, due April 1, 2019. The proceeds of this offering were used to retire the $150 million 8⁷⁄₈% senior subordinated notes due September 15, 2013 and to repay a portion of the outstanding balance on the senior credit facility. The proceeds to the Company were $146.5 million yielding an effective interest rate of 8.0%.

On April 6, 2015, the Company elected to call for the partial redemption of $100 million of its $150 million 7⁷⁄₈% senior subordinated notes due 2019 and a notice of redemption was sent to all registered holders of the senior subordinated notes. The redemption terms provided for the payment of a redemption premium of 103.938% of the principal amount redeemed. On May 6, 2015, the Company completed the redemption of the $100 million of its senior subordinated notes. The Company incurred debt extinguishment costs of approximately $5.1 million in connection with the redemption, including the redemption premium as well as the write-off of note issuance costs. At ~~July 30,~~October 29, 2016, the balance of the 7⁷⁄₈% senior subordinated notes totaled $49.6 million, net of debt issuance cost in the amount of $0.4 million. At January 30, 2016, the balance of the 7⁷⁄₈% senior subordinated notes totaled $49.5 million, net of debt issuance cost in the amount of $0.5 million.

Certain Covenants.The indenture governing the senior subordinated notes contains certain covenants which restrict the Company’s ability and the ability of its subsidiaries to, among other things, incur additional indebtedness in certain circumstances, pay dividends or make other distributions on, redeem or repurchase capital stock, make investments or other restricted payments, create liens on assets to secure debt, engage in transactions with affiliates, and effect a consolidation or merger. The Company is not aware of any non-compliance with any of its covenants in this indenture. The Company could be materially harmed if it violates any covenants because the indenture’s trustee could declare the outstanding notes, together with accrued interest, to be immediately due and payable, which the Company may not be able to satisfy. In addition, a violation could also constitute a cross-default under the senior credit facility, the letter of credit facilities and the real estate mortgages resulting in all of the Company’s debt obligations becoming immediately due and payable, which the Company may not be able to satisfy.

On April 22, 2015, the Company amended and restated its existing senior credit facility (the “Credit Facility”), with Wells Fargo Bank, National Association, as agent for the lenders, and Bank of America, N.A., as syndication agent. The Credit Facility provides a revolving credit facility of up to an aggregate amount of $200 million. The Credit Facility has been extended through April 30, ~~2020.~~2020 (“Maturity Date”). In connection with this amendment and restatement, the Company paid fees in the amount of $0.6 million. These fees will be amortized over the term of the credit facility as interest expense. At ~~July 30,~~October 29, 2016, ~~the~~The Company had outstanding borrowings of ~~$33.9~~$37.8 million under the Credit Facility. At January 30, 2016, the Company had outstanding borrowings of $61.8 million, under the Credit Facility.

Certain Covenants. The Credit Facility contains certain financial and other covenants, which, among other things, require the Company to maintain a minimum fixed charge coverage ratio if availability falls below certain thresholds. The Company is not aware of any non-compliance with any of its covenants in this Credit Facility. These covenants may restrict ~~the Company’s~~its ability and the ability of its subsidiaries to, among other things, incur additional indebtedness and liens in certain circumstances, redeem or repurchase capital stock, make certain investments or sell assets. The Company may pay cash dividends subject to certain restrictions set forth in the covenants including, but not limited to, meeting a minimum excess availability threshold and no occurrence of a default. The Company could be materially harmed if it violates any covenants, as the lenders under the Credit Facility could declare all amounts outstanding, together with accrued interest, to be immediately due and payable. If the Company is unable to repay those amounts, the lenders could proceed against its assets and the assets of its subsidiaries that are borrowers or guarantors. In addition, a covenant violation that is not cured or waived by the lenders could also constitute a cross-default under certain of ~~the Company’s~~its other outstanding indebtedness, such as the indenture relating to its 7⁷⁄₈% senior subordinated notes due April 1, 2019, its letter of credit facilities, or its real estate mortgage loans. A cross-default could result in all of the Company’s debt obligations becoming immediately due and payable, which it may not be able to satisfy. Additionally, the Credit Facility includes a subjective acceleration clause if a “material adverse change” in the Company’s business occurs. The Company believes that the likelihood of the lender exercising this right is remote.

Borrowing ~~Base~~Base.. Borrowings under the Credit Facility are limited to a borrowing base calculation, which generally restricts the outstanding balance to the sum of (a) 87.5% of eligible receivables plus (b) 87.5% of eligible foreign accounts up to $1.5 million plus (c) the lesser of (i) the inventory loan limit, which equals 80% of the maximum credit under the Credit Facility at the time, (ii) a maximum of 70.0% of eligible finished goods inventory with an inventory limit not to exceed $125 million, or 90.0% of the net recovery percentage (as defined in the Credit Facility) of eligible inventory.

Interest. Interest on the outstanding principal balance drawn under the Credit Facility accrues at the prime rate and at the rate quoted by the agent for Eurodollar loans. The margin adjusts quarterly, in a range of 0.50% to 1.00% for prime rate loans and 1.50% to 2.00% for Eurodollar loans, based on the previous quarterly average of excess availability plus excess cash on the last day of the previous quarter.

Security. As security for the indebtedness under the Credit Facility, the Company granted to the lenders a first priority security interest (subject to liens permitted under the Credit Facility to be senior thereto) in substantially all of its existing and future assets, including, without limitation, accounts receivable, inventory, deposit accounts, general intangibles, equipment and capital stock or membership interests, as the case may be, of certain subsidiaries, and real estate but excluding its non-U.S. subsidiaries and all of its trademark portfolio.

Accounts receivable, accounts payable, accrued interest payable and accrued expenses. The carrying amounts reported in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments.

Investments. (classified within Level 1 of the valuation hierarchy)—The carrying amounts of the available-for-sale investments are measured at fair value on a recurring basis in the consolidated balance sheets.

Real estate mortgages. (classified within Level 2 of the valuation hierarchy)—The carrying amounts of the real estate mortgages were approximately ~~$21.7~~$21.4 million and $22.0 million at ~~July 30,~~October 29, 2016 and January 30, 2016, respectively. The carrying values of the real estate mortgages at ~~July 30,~~October 29, 2016 and January 30, 2016, approximate their fair values since the interest rates approximate ~~market.~~market rates.

Senior credit facility. The carrying amount of the senior credit facility approximates fair value due to the frequent resets of its floating interest rate.

Senior subordinated notes payable. (classified within Level 1 of the valuation hierarchy)— - The carrying amounts of the 7⁷⁄₈% senior subordinated notes payable were approximately $49.6 million and $49.5 million at ~~July 30,~~October 29, 2016 and January 30, ~~2016.~~2016, respectively. The fair value of the 7⁷⁄₈% senior subordinated notes payable was approximately ~~$49.5 million~~$50.3 and $49.0 million as of ~~July 30,~~October 29, 2016 and January 30, 2016, respectively, based on quoted market prices.

See footnote 13 to the consolidated financial statements for disclosure of the fair value and line item caption of derivative instruments recorded in the consolidated balance sheets.

These estimated fair value amounts have been determined using available market information and appropriate valuation methods.

On April 20, 2016, the Company entered into an employment agreement with George Feldenkreis, the Company’s Executive Chairman. The term of the employment agreement shall continue until Mr. Feldenkreis’ death or termination of the employment agreement by the Company or Mr. Feldenkreis. He will be paid a base salary of not less than $750,000 per year during the term of employment and, among other things, a lump sum payment of $1.0 million upon the termination of his employment in most circumstances. Additionally, he is entitled to participate in the Company’s incentive compensation plans. In connection with the terms of ~~his~~this new employment agreement, the Company accelerated the expense recognition related to ~~his~~Mr. Feldenkreis’ outstanding cash incentive and stock based compensation awards. The impact of the acceleration was a $4.2 million charge during the second quarter of fiscal 2017 to selling, general and administrative expenses.

On April 20, 2016, the Company entered into an employment agreement with Oscar Feldenkreis, the Company’s Vice Chairman of the Board of Directors, Chief Executive Officer and President. The term of the employment agreement ends on February 2, 2019. Pursuant to the employment agreement, he will be paid a base salary of not less than $1,350,000 per year during the term of his employment with the Company. Additionally, he is entitled to participate in the Company’s incentive compensation plans.

The Company and several of its subsidiaries (the “Guarantors”) have fully and unconditionally guaranteed the senior subordinated notes payable on a joint and several basis. These guarantees are subject to release in limited circumstances (only upon the occurrence of certain customary conditions). The following are condensed consolidating financial statements, which present, in separate columns: Perry Ellis International, Inc., (Parent Only), the Guarantors on a combined, or where appropriate, consolidated basis, and the Non-Guarantors on a combined, or where appropriate, consolidated basis. Additional columns present eliminating adjustments and consolidated totals as of ~~July 30,~~October 29, 2016 and January 30, 2016 and for the three and ~~six~~nine months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015. The combined Guarantors are 100% owned subsidiaries of Perry Ellis International, Inc., and have fully and unconditionally guaranteed the senior subordinated notes payable on a joint and several basis.


	Parent Only		Guarantors		Non- Guarantors		Eliminations			Consolidated		Parent Only		Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS

Current Assets:
Cash and cash equivalents	$	—	$	3,949	$	23,933	$	—		$	27,882	$	—	$	4,239	$	25,585	$	—		$	29,824
Investment, at fair value													—		—		12,915		—			12,915
Accounts receivable, net		—		94,942		25,697		—			120,639		—		104,580		24,202		—			128,782
Intercompany receivable, net		80,417		—		—		(80,417	)		—		82,241		—		—		(82,241	)		—
Inventories		—		113,649		20,765		—			134,414		—		96,480		15,786		—			112,266
Investment, at fair value		—		—		13,633		—			13,633
Prepaid income taxes													1,643		—		—		145			1,788
Prepaid expenses and other current assets		—		7,525		822		—			8,347		—		7,219		998		—			8,217

Total current assets		80,417		220,065		84,850		(80,417	)		304,915		83,884		212,518		79,486		(82,096	)		293,792


Property and equipment, net		—		61,312		2,484		—			63,796		—		61,425		2,257		—			63,682
Other intangible assets, net		—		155,153		32,332		—			187,485		—		154,936		32,332		—			187,268
Deferred income taxes		—		—		392		—			392		—		—		441		—			441
Investment in subsidiaries		275,401		—		—		(275,401	)		—		270,236		—		—		(270,236	)		—
Other assets		—		1,962		795		—			2,757		—		1,879		476		—			2,355

TOTAL	$	355,818	$	438,492	$	120,853	$	(355,818	)	$	559,345	$	354,120	$	430,758	$	114,992	$	(352,332	)	$	547,538


LIABILITIES AND EQUITY

Current Liabilities:
Accounts payable	$	—	$	46,167	$	9,573	$	—		$	55,740	$	—	$	39,330	$	4,456	$	—		$	43,786
Accrued expenses and other liabilities		—		17,972		4,907		—			22,879		—		20,804		4,773		—			25,577
Accrued interest payable		1,487		—		—		—			1,487		528		—		—		—			528
Income taxes payable		823		624		708		(1,696	)		459		—		623		928		(1,551	)		—
Unearned revenues		—		3,068		789		—			3,857		—		2,835		659		—			3,494
Deferred pension obligation		—		12,136		70		—			12,206		—		6,863		41		—			6,904
Intercompany payable, net		—		72,291		17,298		(89,589	)		—		—		75,929		17,826		(93,755	)		—

Total current liabilities		2,310		152,258		33,345		(91,285	)		96,628		528		146,384		28,683		(95,306	)		80,289


Senior subordinated notes payable, net		49,600		—		—		—			49,600		49,637		—		—		—			49,637
Senior credit facility		—		33,865		—		—			33,865		—		37,837		—		—			37,837
Real estate mortgages		—		20,873		—		—			20,873		—		20,668		—		—			20,668
Unearned revenues and other long-term liabilities		—		18,247		217		—			18,464		—		18,728		189		—			18,917
Deferred income taxes		—		34,311		—		1,696			36,007		—		34,539		—		1,696			36,235

Total long-term liabilities		49,600		107,296		217		1,696			158,809		49,637		111,772		189		1,696			163,294


Total liabilities		51,910		259,554		33,562		(89,589	)		255,437		50,165		258,156		28,872		(93,610	)		243,583


Total equity		303,908		178,938		87,291		(266,229	)		303,908		303,955		172,602		86,120		(258,722	)		303,955

TOTAL	$	355,818	$	438,492	$	120,853	$	(355,818	)	$	559,345	$	354,120	$	430,758	$	114,992	$	(352,332	)	$	547,538


	Parent Only		Guarantors		Non- Guarantors		Eliminations			Consolidated		Parent Only		Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS

Current Assets:
Cash and cash equivalents	$	—	$	775	$	31,127	$	—		$	31,902	$	—	$	775	$	31,127	$	—		$	31,902
Investment, at fair value													—		—		9,782		—			9,782
Accounts receivable, net		—		106,018		26,048		—			132,066		—		106,018		26,048		—			132,066
Intercompany receivable, net		74,091		—		—		(74,091	)		—		74,091		—		—		(74,091	)		—
Inventories		—		155,703		27,047		—			182,750		—		155,703		27,047		—			182,750
Investment, at fair value		—		—		9,782		—			9,782
Prepaid income taxes		1,017		—		—		801			1,818		1,017		—		—		801			1,818
Prepaid expenses and other current assets		—		7,426		1,035		—			8,461		—		7,426		1,035		—			8,461

Total current assets		75,108		269,922		95,039		(73,290	)		366,779		75,108		269,922		95,039		(73,290	)		366,779

Property and equipment, net		—		61,260		2,648		—			63,908		—		61,260		2,648		—			63,908
Other intangible assets, net		—		155,587		32,332		—			187,919		—		155,587		32,332		—			187,919
Investment in subsidiaries		267,422		—		—		(267,422	)		—		267,422		—		—		(267,422	)		—
Deferred income taxes		—		—		442		—			442		—		—		442		—			442
Other assets		—		2,150		777		—			2,927		—		2,150		777		—			2,927


TOTAL	$	342,530	$	488,919	$	131,238	$	(340,712	)	$	621,975	$	342,530	$	488,919	$	131,238	$	(340,712	)	$	621,975


LIABILITIES AND EQUITY

Current Liabilities:
Accounts payable	$	—	$	89,961	$	13,723	$	—		$	103,684	$	—	$	89,961	$	13,723	$	—		$	103,684
Accrued expenses and other liabilities		—		21,524		4,973		—			26,497		—		21,524		4,973		—			26,497
Accrued interest payable		1,521		—		—		—			1,521		1,521		—		—		—			1,521
Income taxes payable		—		623		272		(895	)		—		—		623		272		(895	)		—
Unearned revenues		—		2,952		1,261		—			4,213		—		2,952		1,261		—			4,213
Deferred pension obligation		—		12,025		82		—			12,107		—		12,025		82		—			12,107
Intercompany payable, net		—		60,384		21,449		(81,833	)		—		—		60,384		21,449		(81,833	)		—

Total current liabilities		1,521		187,469		41,760		(82,728	)		148,022		1,521		187,469		41,760		(82,728	)		148,022


Senior subordinated notes payable, net		49,528		—		—		—			49,528		49,528		—		—		—			49,528
Senior credit facility		—		61,758		—		—			61,758		—		61,758		—		—			61,758
Real estate mortgages		—		21,318		—		—			21,318		—		21,318		—		—			21,318
Unearned revenues and other long-term liabilities		—		14,608		245		—			14,853		—		14,608		245		—			14,853
Deferred income taxes		—		33,319		—		1,696			35,015		—		33,319		—		1,696			35,015

Total long-term liabilities		49,528		131,003		245		1,696			182,472		49,528		131,003		245		1,696			182,472


Total liabilities		51,049		318,472		42,005		(81,032	)		330,494		51,049		318,472		42,005		(81,032	)		330,494


Total equity		291,481		170,447		89,233		(259,680	)		291,481		291,481		170,447		89,233		(259,680	)		291,481


TOTAL	$	342,530	$	488,919	$	131,238	$	(340,712	)	$	621,975	$	342,530	$	488,919	$	131,238	$	(340,712	)	$	621,975

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE ~~(LOSS )~~ INCOME (LOSS) (UNAUDITED)

~~CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS ) INCOME (UNAUDITED)~~


																						Non-
																Parent Only			Guarantors			Guarantors			Eliminations			Consolidated
	Parent Only			Guarantors			Non- Guarantors			Eliminations			Consolidated
Revenues:
Net sales	$	—		$	179,921		$	24,717		$	—		$	204,638		$	—		$	162,185		$	23,113		$	—		$	185,298
Royalty income		—			5,286			3,375			—			8,661			—			5,230			3,431			—			8,661

Total revenues		—			185,207			28,092			—			213,299			—			167,415			26,544			—			193,959
Cost of sales		—			121,408			15,949			—			137,357			—			107,489			15,367			—			122,856

Gross profit		—			63,799			12,143			—			75,942			—			59,926			11,177			—			71,103
Operating expenses:
Selling, general and administrative expenses		—			57,275			10,979			—			68,254			—			63,475			9,371			—			72,846
Depreciation and amortization		—			3,138			308			—			3,446			—			3,220			314			—			3,534

Total operating expenses		—			60,413			11,287			—			71,700			—			66,695			9,685			—			76,380

Operating income		—			3,386			856			—			4,242
Costs on early extinguishment of debt		—			5,121			—			—			5,121
Interest expense		—			1,939			4			—			1,943
Operating (loss) income																	—			(6,769	)		1,492			—			(5,277	)

Interest expense (income)																	—			1,756			(18	)		—			1,738

Net (loss) income before income taxes		—			(3,674	)		852			—			(2,822	)		—			(8,525	)		1,510			—			(7,015	)
Income tax (benefit) provision		—			(2,517	)		976			—			(1,541	)		—			(2,189	)		339			—			(1,850	)

Equity in earnings of subsidiaries, net		(1,281	)		—			—			1,281			—			(5,165	)		—			—			5,165			—

Net loss		(1,281	)		(1,157	)		(124	)		1,281			(1,281	)
Net (loss) income																	(5,165	)		(6,336	)		1,171			5,165			(5,165	)

Other comprehensive income		288			135			153			(288	)		288
Other comprehensive income (loss)																	6,045			8,142			(2,097	)		(6,045	)		6,045

Comprehensive (loss) income	$	(993	)	$	(1,022	)	$	29		$	993		$	(993	)
Comprehensive income (loss)																$	880		$	1,806		$	(926	)	$	(880	)	$	880


															Parent Only		Guarantors		Non- Guarantors			Eliminations			Consolidated
	Parent Only			Guarantors		Non- Guarantors			Eliminations			Consolidated
Revenues:
Net sales	$	—		$	394,142	$	50,074		$	—		$	444,216		$	—	$	556,327	$	73,187		$	—		$	629,514
Royalty income		—			12,275		6,456			—			18,731			—		17,505		9,887			—			27,392

Total revenues		—			406,417		56,530			—			462,947			—		573,832		83,074			—			656,906
Cost of sales		—			260,705		33,327			—			294,032			—		368,194		48,694			—			416,888

Gross profit		—			145,712		23,203			—			168,915			—		205,638		34,380			—			240,018
Operating expenses:
Selling, general and administrative expenses		—			123,794		18,794			—			142,588			—		187,269		28,165			—			215,434
Depreciation and amortization		—			6,467		716			—			7,183			—		9,687		1,030			—			10,717

Total operating expenses		—			130,261		19,510			—			149,771			—		196,956		29,195			—			226,151

Operating income		—			15,451		3,693			—			19,144			—		8,682		5,185			—			13,867
Interest expense		—			3,935		(21	)		—			3,914
Interest expense (income)																—		5,691		(39	)		—			5,652

Net income before income taxes		—			11,516		3,714			—			15,230			—		2,991		5,224			—			8,215
Income tax provision		—			3,025		1,520			—			4,545			—		836		1,859			—			2,695

Equity in earnings of subsidiaries, net		10,685			—		—			(10,685	)		—			5,520		—		—			(5,520	)		—

Net income		10,685			8,491		2,194			(10,685	)		10,685			5,520		2,155		3,365			(5,520	)		5,520

Other comprehensive (loss) income		(1,103	)		310		(1,413	)		1,103			(1,103	)
Other comprehensive income (loss)																4,942		8,452		(3,510	)		(4,942	)		4,942

Comprehensive income	$	9,582		$	8,801	$	781		$	(9,582	)	$	9,582
Comprehensive income (loss)															$	10,462	$	10,607	$	(145	)	$	(10,462	)	$	10,462


														Parent Only		Guarantors			Non- Guarantors		Eliminations			Consolidated
	Parent Only		Guarantors			Non- Guarantors		Eliminations			Consolidated
Revenues:
Net sales	$	—	$	412,200		$	50,695	$	—		$	462,895		$	—	$	586,515		$	72,827	$	—		$	659,342
Royalty income		—		10,198			6,620		—			16,818			—		15,693			10,117		—			25,810

Total revenues		—		422,398			57,315		—			479,713			—		602,208			82,944		—			685,152
Cost of sales		—		281,659			32,012		—			313,671			—		399,813			46,002		—			445,815

Gross profit		—		140,739			25,303		—			166,042			—		202,395			36,942		—			239,337
Operating expenses:
Selling, general and administrative expenses		—		117,120			20,742		—			137,862			—		172,690			30,041		—			202,731
Depreciation and amortization		—		6,162			606		—			6,768			—		9,258			893		—			10,151

Total operating expenses		—		123,282			21,348		—			144,630			—		181,948			30,934		—			212,882

Loss on sale of long-lived assets		—		(697	)		—		—			(697	)		—		(697	)		—		—			(697	)

Operating income		—		16,760			3,955		—			20,715			—		19,750			6,008		—			25,758
Costs on early extinguishment of debt		—		5,121			—		—			5,121
Costs of early extinguishment of debt															—		5,121			—		—			5,121
Interest expense		—		5,506			64		—			5,570			—		7,363			60		—			7,423

Net income before income taxes		—		6,133			3,891		—			10,024			—		7,266			5,948		—			13,214
Income tax provision		—		564			1,330		—			1,894			—		908			1,903		—			2,811

Equity in earnings of subsidiaries, net		8,130		—			—		(8,130	)		—			10,403		—			—		(10,403	)		—

Net income		8,130		5,569			2,561		(8,130	)		8,130			10,403		6,358			4,045		(10,403	)		10,403

Other comprehensive income		1,354		270			1,084		(1,354	)		1,354			879		405			474		(879	)		879

Comprehensive income	$	9,484	$	5,839		$	3,645	$	(9,484	)	$	9,484		$	11,282	$	6,763		$	4,519	$	(11,282	)	$	11,282


	Parent Only			Guarantors			Non- Guarantors			Eliminations			Consolidated			Parent Only			Guarantors			Non- Guarantors			Eliminations			Consolidated
NET CASH PROVIDED BY OPERATING ACTIVITIES:	$	4,543		$	28,295		$	4,802		$	(2,706	)	$	34,934		$	1,155		$	32,968		$	5,824		$	(2,706	)	$	37,241


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		—			(5,854	)		(755	)		—			(6,609	)		—			(8,292	)		(1,042	)		—			(9,334	)
Purchase of investments		—			—			(9,039	)		—			(9,039	)		—			—			(12,467	)		—			(12,467	)
Proceeds from investments maturities		—			—			5,205			—			5,205
Proceeds from investment maturities																	—			—			9,341			—			9,341
Proceeds from note receivable																	—			—			250			—			250
Intercompany transactions		(4,477	)		—			—			4,477			—			1,203			—			—			(1,203	)		—

Net cash used in investing activities		(4,477	)		(5,854	)		(4,589	)		4,477			(10,443	)
Net cash provided by (used in) investing activities																	1,203			(8,292	)		(3,918	)		(1,203	)		(12,210	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from senior credit facility		—			179,380			—			—			179,380			—			250,012			—			—			250,012
Payments on senior credit facility		—			(207,273	)		—			—			(207,273	)		—			(273,933	)		—			—			(273,933	)
Payments on real estate mortgages		—			(423	)		—			—			(423	)		—			(634	)		—			—			(634	)
Payments on capital leases		—			(129	)		—			—			(129	)		—			(196	)		—			—			(196	)
Dividends paid to stockholder		—			—			(2,706	)		2,706			—			—			—			(2,706	)		2,706			—
Purchase of treasury stock																	(2,151	)		—			—			—			(2,151	)
Proceeds from exercise of stock options		5			—			—			—			5			5			—			—			—			5
Intercompany transactions		—			9,178			(4,630	)		(4,548	)		—			—			3,539			(4,530	)		991			—

Net cash provided by (used in) financing activities		5			(19,267	)		(7,336	)		(1,842	)		(28,440	)
Net cash used in financing activities																	(2,146	)		(21,212	)		(7,236	)		3,697			(26,897	)
Effect of exchange rate changes on cash and cash equivalents		(71	)		—			(71	)		71			(71	)		(212	)		—			(212	)		212			(212	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			3,174			(7,194	)		—			(4,020	)		—			3,464			(5,542	)		—			(2,078	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		—			775			31,127			—			31,902			—			775			31,127			—			31,902

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	—		$	3,949		$	23,933		$	—		$	27,882		$	—		$	4,239		$	25,585		$	—		$	29,824


	Parent Only			Guarantors			Non- Guarantors			Eliminations			Consolidated			Parent Only			Guarantors			Non- Guarantors			Eliminations			Consolidated
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:	$	(1,789	)	$	19,293		$	2,972		$	—		$	20,476
NET CASH PROVIDED BY OPERATING ACTIVITIES:																$	382		$	15,691		$	2,565		$	—		$	18,638


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		—			(6,734	)		(611	)		—			(7,345	)		—			(8,913	)		(924	)		—			(9,837	)
Purchase of investments		—			—			(2,641	)		—			(2,641	)		—			—			(8,230	)		—			(8,230	)
Proceeds from investment maturities		—			—			11,860			—			11,860			—			—			17,845			—			17,845
Proceeds on sale of intangible assets		—			2,500			—			—			2,500			—			2,500			—			—			2,500
Proceeds from note receivable																	—			—			250			—			250
Intercompany transactions		100,076			—			—			(100,076	)		—			97,610			—			—			(97,610	)		—

Net cash provided by (used in) investing activities		100,076			(4,234	)		8,608			(100,076	)		4,374			97,610			(6,413	)		8,941			(97,610	)		2,528


CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on senior subordinated notes		(100,000	)		—			—			—			(100,000	)		(100,000	)		—			—			—			(100,000	)
Borrowings from senior credit facility		—			255,065			—			—			255,065			—			330,644			—			—			330,644
Payments on senior credit facility		—			(196,854	)		—			—			(196,854	)		—			(270,023	)		—			—			(270,023	)
Payments on real estate mortgages		—			(410	)		—			—			(410	)		—			(615	)		—			—			(615	)
Payments on capital leases		—			(77	)		—			—			(77	)		—			(137	)		—			—			(137	)
Deferred financing fees		—			(569	)		—			—			(569	)		—			(574	)		—			—			(574	)
Proceeds from exercise of stock options		1,339			—			—			—			1,339			1,408			—			—			—			1,408
Tax benefit from exercise of equity instruments		(201	)		—			—			—			(201	)
Intercompany transactions		—			(97,968	)		(2,683	)		100,651			—			—			(96,096	)		(2,114	)		98,210			—

Net cash used in financing activities		(98,862	)		(40,813	)		(2,683	)		100,651			(41,707	)		(98,592	)		(36,801	)		(2,114	)		98,210			(39,297	)
Effect of exchange rate changes on cash and cash equivalents		575			—			575			(575	)		575			600			—			600			(600	)		600

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		—			(25,754	)		9,472			—			(16,282	)		—			(27,523	)		9,992			—			(17,531	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		—			30,055			13,492			—			43,547			—			30,055			13,492			—			43,547

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	—		$	4,301		$	22,964		$	—		$	27,265		$	—		$	2,532		$	23,484		$	—		$	26,016

In November 2016, the Company paid off its then existing real estate mortgage loan and refinanced its main administrative office, warehouse and distribution facility in Miami with a $21.7 million mortgage loan. The loan is due on November 22, 2026. The interest rate is 3.715% per annum. Monthly payments of principal and interest approximate $112,000, based on a 25-year amortization with the outstanding principal due at maturity.

In November 2016, the Company refinanced its Tampa facility with a $13.2 million mortgage loan. The loan is due on November 22, 2026. The interest rate is 3.715% per annum. Monthly payments of principal and interest approximate $68,000, based on a 25-year amortization with the outstanding principal due at maturity.

Additionally, the Company may use some of the excess funds generated from the mortgage loans described above to pay down the senior credit facility and repurchase certain of its outstanding senior subordinated notes.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, all references to “Perry Ellis,” the “Company,” “we,” “us” or “our” include Perry Ellis International, Inc. and its subsidiaries. This management’s discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended January 30, 2016, filed with the Securities and Exchange Commission on April 14, 2016.

We caution readers that this report includes “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations rather than historical facts and they are indicated by words or phrases such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “could,” “envision,” “estimate,” “expect,” “guidance,” “indicate,” “intend,” “may,” “might,” “plan,” “possibly,” “potential,” “predict,” “probably,” “pro-forma,” “project,” “seek,” “should,” “target,” or “will” or the negative thereof or other variations thereon and similar words or phrases or comparable terminology. Such forward-looking statements include, but are not limited to, statements regarding Perry Ellis’ strategic operating review, growth initiatives and internal operating improvements intended to drive revenues and enhance profitability, the implementation of Perry Ellis’ profitability improvement plan and Perry Ellis’ plans to exit underperforming, low growth brands and businesses. We have based such forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the factors that could affect our financial performance, cause actual results to differ from our estimates, or underlie such forward-looking statements, are as set forth below and in various places in this report. These factors include, but are not limited to:

You are cautioned that all forward-looking statements involve risks and uncertainties detailed in our filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which are valid only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise.

Included in the footnotes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended January 30, 2016 is a summary of all significant accounting policies used in the preparation of our consolidated financial statements. We follow the accounting methods and practices as required by accounting principles generally accepted in the United States of America (“GAAP”). In particular, our critical accounting policies and areas in which we use judgment are in the areas of revenue recognition, the estimated collectability of accounts receivable, the recoverability of obsolete or overstocked inventory, the impairment of long-lived assets that are our trademarks, the recoverability of deferred tax assets and the measurement of retirement related benefits. We believe that there have been no significant changes to our critical accounting policies during the three and ~~six~~nine months ended ~~July 30,~~October 29, 2016 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended January 30, 2016.

The following table sets forth, for the periods indicated, selected financial data expressed by segments and includes a reconciliation of EBITDA to operating income by segment, the most directly comparable GAAP financial measure:


													Three Months Ended						Nine Months Ended
	Three Months Ended						Six Months Ended						October 29,			October 31,			October 29,			October 31,
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015			2016			2015			2016			2015
	(in thousands)												(in thousands)
Revenues by segment:
Men’s Sportswear and Swim	$	145,148		$	150,488		$	343,073		$	348,941		$	135,717		$	141,512		$	478,790		$	490,453
Women’s Sportswear		24,136			29,882			56,625			68,705			28,676			33,421			85,301			102,126
Direct-to-Consumer		24,057			24,268			44,518			45,249			20,905			21,514			65,423			66,763
Licensing		8,312			8,661			18,731			16,818			8,661			8,992			27,392			25,810

Total revenues	$	201,653		$	213,299		$	462,947		$	479,713		$	193,959		$	205,439		$	656,906		$	685,152


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 2, 2014			October 29, 2016			October 31, 2015			October 29, 2016			October 31, 2015
	(in thousands)												(in thousands)
Reconciliation of operating income to EBITDA
Reconciliation of operating (loss) income to EBITDA
Operating (loss) income by segment:
Men’s Sportswear and Swim	$	(2,425	)	$	822		$	14,517		$	12,152		$	(7,683	)	$	2,392		$	6,834		$	14,544
Women’s Sportswear		(3,106	)		(1,051	)		(3,457	)		331			(1,289	)		(109	)		(4,746	)		222
Direct-to-Consumer		(2,933	)		(2,147	)		(6,305	)		(4,013	)		(3,370	)		(4,038	)		(9,675	)		(8,051	)
Licensing		5,925			6,618			14,389			12,245			7,065			6,798			21,454			19,043

Total operating (loss) income	$	(2,539	)	$	4,242		$	19,144		$	20,715		$	(5,277	)	$	5,043		$	13,867		$	25,758

Add:
Depreciation and amortization
Men’s Sportswear and Swim	$	2,006		$	1,863		$	3,903		$	3,738		$	1,814		$	1,771		$	5,717		$	5,509
Women’s Sportswear		764			566			1,378			1,066			729			589			2,107			1,655
Direct-to-Consumer		889			971			1,785			1,875			932			976			2,717			2,851
Licensing		57			46			117			89			59			47			176			136

Total depreciation and amortization	$	3,716		$	3,446		$	7,183		$	6,768		$	3,534		$	3,383		$	10,717		$	10,151

EBITDA by segment:
Men’s Sportswear and Swim	$	(419	)	$	2,685		$	18,420		$	15,890		$	(5,869	)	$	4,163		$	12,551		$	20,053
Women’s Sportswear		(2,342	)		(485	)		(2,079	)		1,397			(560	)		480			(2,639	)		1,877
Direct-to-Consumer		(2,044	)		(1,176	)		(4,520	)		(2,138	)		(2,438	)		(3,062	)		(6,958	)		(5,200	)
Licensing		5,982			6,664			14,506			12,334			7,124			6,845			21,630			19,179

Total EBITDA	$	1,177		$	7,688		$	26,327		$	27,483		$	(1,743	)	$	8,426		$	24,584		$	35,909


EBITDA margin by segment
Men’s Sportswear and Swim		(0.3	%)		1.8	%		5.4	%		4.6	%		(4.3	%)		2.9	%		2.6	%		4.1	%
Women’s Sportswear		(9.7	%)		(1.6	%)		(3.7	%)		2.0	%		(2.0	%)		1.4	%		(3.1	%)		1.8	%
Direct-to-Consumer		(8.5	%)		(4.8	%)		(10.2	%)		(4.7	%)		(11.7	%)		(14.2	%)		(10.6	%)		(7.8	%)
Licensing		72.0	%		76.9	%		77.4	%		73.3	%		82.3	%		76.1	%		79.0	%		74.3	%
Total EBITDA margin		0.6	%		3.6	%		5.7	%		5.7	%		(0.9	%)		4.1	%		3.7	%		5.2	%

EBITDA consists of earnings before interest, depreciation and amortization, costs on early extinguishment of debt and income taxes. EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States of America, and does not represent cash flow from operations. The most directly comparable GAAP financial measure, presented above, is operating income. EBITDA and EBITDA margin are presented solely as a supplemental disclosure because management believes that they are a common measure of operating performance in the apparel industry.

The following is a discussion of the results of operations for the three and ~~six~~nine month periods ended ~~July 30,~~October 29, 2016 of the fiscal year ending January 28, 2017 (“fiscal 2017”) compared with the three and ~~six~~nine month periods ended ~~August 1,~~October 31, 2015 of the fiscal year ended January 30, 2016 (“fiscal 2016”).

Results of ~~Operations—~~Operations - three and ~~six~~nine months ended ~~July 30,~~October 29, 2016 compared to the three and ~~six~~nine months ended ~~August 1,~~October 31, 2015.

Net ~~sales.~~sales. Men’s Sportswear and Swim net sales for the three months ended ~~July 30,~~October 29, 2016 were ~~$145.1~~$135.7 million, a decrease of ~~$5.4~~$5.8 million, or ~~3.6%~~4.1%, from ~~$150.5~~$141.5 million for the three months ended ~~August 1,~~October 31, 2015. The net sales decrease was attributed primarily to business exits ~~coupled with a $2.7 million~~and the negative impact ~~from~~of foreign currency ~~conversions which was~~translation, partially offset by ~~a 3.5% increase~~increases in ~~the core~~ Perry Ellis, ~~Original Penguin~~Golf lifestyle apparel and ~~golf apparel businesses.~~Nike swim business.

Men’s Sportswear and Swim net sales for the ~~six~~nine months ended ~~July 30,~~October 29, 2016 were ~~$343.1~~$478.8 million, a decrease of ~~$5.8~~$11.7 million, or ~~1.7%~~2.4%, from ~~$348.9~~$490.5 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The net sales decrease was attributed primarily to exited brands coupled with the negative impact in our special markets programs and foreign currency conversions, partially offset by increases in our core Perry Ellis and Original Penguin collections, ~~and golf~~as well as our Golf lifestyle apparel and Nike swim business.

Women’s Sportswear net sales for the three months ended ~~July 30,~~October 29, 2016 were ~~$24.1~~$28.7 million, a decrease of ~~$5.8~~$4.7 million, or ~~19.4%~~14.1%, from ~~$29.9~~$33.4 million for the three months ended ~~August 1,~~October 31, 2015. The net sales decrease was attributed primarily to softer replenishment business across the ~~sale~~women’s market driven in part by the impact of ~~C&C California in the prior year as well as the planned decrease in special markets programs.~~Hurricane Matthew for some of our east coast retail partners.

Women’s Sportswear net sales for the ~~six~~nine months ended ~~July 30,~~October 29, 2016 were ~~$56.6~~$85.3 million, a decrease of ~~$12.1~~$16.8 million, or ~~17.6%~~16.5%, from ~~$68.7~~$102.1 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The net sales decrease was primarily due to the sale of C&C California in the prior year, ~~and our~~ planned ~~decrease~~decreases in special markets programs and softer replenishment business across the women’s market consistent with the reductions cited above.

Direct-to-Consumer net sales for the three months ended ~~July 30,~~October 29, 2016 were ~~$24.1~~$20.9 million, a decrease of ~~$0.2~~$0.6 million, or ~~0.8%~~2.8%, from ~~$24.3~~$21.5 million for the three months ended ~~August 1,~~October 31, 2015. The ~~slight~~ decrease was driven by ~~three store closings~~five stores closing during ~~the first half of~~ fiscal 2017, partially offset by a comparable sales increase of ~~1.2%~~1%. We have experienced a significant ~~negative impact on~~decline in traffic and comparable same store sales for our retail ~~store~~ locations that cater to higher level of tourist activity. These doors represent close to 45% of our total store count.

Direct-to-Consumer net sales for the ~~six~~nine months ended ~~July 30,~~October 29, 2016 were ~~$44.5~~$65.4 million, a decrease of ~~$0.7~~$1.4 million, or ~~1.5%~~2.1%, from ~~$45.2~~$66.8 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The decrease was driven by relatively flat comparable same store sales, coupled with ~~three~~five net fewer stores as ~~compared to the prior period.~~discussed above.

Royalty income. Royalty income for the three months ended ~~July 30,~~October 29, 2016 was ~~$8.3~~$8.7 million, a decrease of ~~$0.4~~$0.3 million, or ~~4.6%~~3.3%, from ~~$8.7~~$9.0 million for the three months ended ~~August 1,~~October 31, 2015. The decrease in royalty income was attributed to the transition of two of our licensed partners ~~one~~ to ~~in-house ownership and one to a~~ new ~~partnership.~~partnerships.

Royalty income for the ~~six~~nine months ended ~~July 30,~~October 29, 2016 was ~~$18.7~~$27.4 million, an increase of ~~$1.9~~$1.6 million, or ~~11.3%~~6.2%, from ~~$16.8~~$25.8 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. Royalty income increases were attributed to increases in our Perry Ellis and Original Penguin brands as well as the new licenses signed during this and last year, and from our continuing initiatives to upgrade our licensing partners, partially offset by the transition discussed above.

Gross profit.Gross profit was ~~$73.8~~$71.1 million for the three months ended ~~July 30,~~October 29, 2016, a decrease of ~~$2.1~~$2.2 million, or ~~2.8%~~3.0%, from ~~$75.9~~$73.3 million for the three months ended ~~August 1,~~October 31, 2015. This decrease is attributed to the sales decrease from our brand exits, foreign currency translations and ~~special markets program~~softer replenishment business across the women’s market described above.

Gross profit was ~~$168.9~~$240.0 million for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, an increase of ~~$2.9~~$0.7 million, or ~~1.7%~~0.3%, from ~~$166.0~~$239.3 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. This increase is attributed to the sales mix composition, our increase in royalty income, ~~described above~~ and the factors described within the gross profit margin section ~~below.~~below; partially offset by sales decrease from our brand exits, softer special market programs and softer replenishment business across the women’s market described above.

Gross profit margin. As a percentage of total revenue, gross profit margins were ~~36.6%~~36.7% for the three months ended ~~July 30,~~October 29, 2016, as compared to ~~35.6%~~35.7% for the three months ended ~~August 1,~~October 31, 2015 which represents an expansion of 100 basis points. The expansion was driven by ~~stronger product margins~~solid performance across our core brands in our ~~men’s collection, golf apparel, Nike and~~wholesale business, as well as stronger metrics in our direct-to-consumer ~~businesses.~~business.

For the ~~six~~nine months ended ~~July 30,~~October 29, 2016, gross profit margins were 36.5% as a percentage of total revenue as compared to ~~34.6%~~34.9% for the ~~six~~nine months ended ~~August 1,~~October 31, 2015, an ~~expansion~~increase of ~~190~~160 basis points. The increase is attributed to stronger product margins and reduced markdowns in our men’s collection, ~~golf~~Golf apparel and Nike businesses as well as an increase in royalty income and reduced cost realized through consolidation in our foreign buying offices and freight services.

Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended ~~July 30,~~October 29, 2016 were ~~$72.7~~$72.8 million, an increase of ~~$4.4~~$7.9 million, or ~~6.4%~~12.2%, from ~~$68.3~~$64.9 million for the three months ended ~~August 1,~~October 31, 2015. The increase was attributed primarily to expenses of $8.3 million associated with the termination of our defined pension plan offset by savings from the streamlining and consolidations of our operations.

Selling, general and administrative expenses for the nine months ended October 29, 2016 were $215.4 million, an increase of $12.7 million, or 6.3%, from $202.7 million for the nine months ended October 31, 2015. The increase is attributed to expenses associated with the termination of our defined pension plan, as described above, slightly higher incentive compensation accruals, severance costs ~~related to our restructuring activities, as well as~~and the ~~required~~ acceleration of executive compensation costs, ~~relating to~~partially offset by reduced costs resulting from our continued focus on the ~~new contract for our executive chairman. These compensation costs will be distributed in future periods as they are earned.~~core infrastructure. See footnote 2021 to the unaudited condensed consolidated financial statements for further information regarding the acceleration of ~~compensation.~~

Selling, general and administrative expenses for the six months ended July 30, 2016 were $142.6 million, an increase of $4.7 million, or 3.4%, from $137.9 million for the six months ended August 1, 2015. The increase is attributed to slightly higher incentiveexecutive compensation ~~accruals, severance costs and the acceleration of compensation costs as discussed above, partially offset by reduced costs resulting from our continued focus on the core infrastructure.~~costs.

EBITDA. Men’s Sportswear and Swim EBITDA margin for the three months ended ~~July 30,~~October 29, 2016, decreased ~~210~~720 basis points to ~~(0.3%~~(4.3%), from ~~1.8%~~2.9% for the three months ended ~~August 1,~~October 31, 2015. ~~Direct costs associated with the segment remained relatively flat from the previous quarter. Because of this, the~~The EBITDA margin was unfavorably impacted by a decrease in net sales ~~described above had an unfavorable impact on~~and a settlement charge related to the ~~EBITDA margin.~~ termination of our defined benefit plan in the amount of $8.3 million.

Men’s Sportswear and Swim EBITDA margin for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, ~~increased 80~~decreased 150 basis points to ~~5.4%~~2.6%, from ~~4.6%~~4.1% for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The EBITDA margin was ~~favorably~~unfavorably impacted by a settlement charge related to the termination of our defined benefit plan in the amount of $8.3 million, partially offset by the increase in gross profit and margins in our men’s collection, ~~golf~~Golf lifestyle apparel and Nike businesses. ~~Because of this increase, we were able to realize a favorable leverage in selling, general and administrative expenses, more specifically on payroll and advertising expenses.~~

Women’s Sportswear EBITDA margin for the three months ended ~~July 30,~~October 29, 2016 decreased ~~810~~340 basis points to ~~(9.7%~~(2.0%) from ~~(1.6%)~~1.4% for the three months ended ~~August 1,~~October 31, 2015. Women’s Sportswear EBITDA margin for the ~~six~~nine months ended ~~July 30,~~October 29, 2016 decreased ~~570~~490 basis points to ~~(3.7%~~(3.1%) from ~~2.0%~~1.8% for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The EBITDA margin was unfavorably impacted by the exit of C&C California, ~~and~~ planned decreases in special markets programs asand softer replenishment business across the women’s market. As a result of these factors we were not able to realize favorable leverage in selling, general and administrative expenses.

Direct-to-Consumer EBITDA margin for the three months ended ~~July 30,~~October 29, 2016, ~~decreased 370~~increased 250 basis points to ~~(8.5%~~(11.7%), from ~~(4.8%~~(14.2%) for the three months ended ~~August 1,~~October 31, 2015. This increase was attributed to expansion in gross margin and tighter overhead spending. Because of these factors, we were able to realize favorable leverage.

Direct-to-Consumer EBITDA margin for the ~~six~~nine months ended ~~July 30,~~October 29, 2016 decreased ~~550~~280 basis points to ~~(10.2%~~(10.6%), from ~~(4.7%~~(7.8%) for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The ~~decrease~~EBITDA margin was ~~attributable to~~unfavorably impacted by the closing of a net of ~~three~~five stores, as described above. Additionally, selling, general and administrative expenses were unfavorably impacted by increases in rent as we renewed some of our leases at higher rates.

Licensing EBITDA margin for the three months ended ~~July 30,~~October 29, 2016, ~~decreased 490~~increased 620 basis points to ~~72.0%~~82.3%, from ~~76.9%~~76.1% for the three months ended ~~August 1,~~October 31, 2015. ~~Direct~~The increase is primarily due to a decrease in the direct costs associated with the licensing ~~segment remained relatively flat from the previous quarter. Because of this, the decrease in royalty income described above had an unfavorable impact on the EBITDA margin.~~ segment.

Licensing EBITDA margin for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, increased ~~410~~470 basis points to ~~77.4%~~79.0%, from ~~73.3%~~74.3% for the ~~six~~nine months ended ~~August 1, 2015~~.October 31, 2015. The EBITDA margin was favorably impacted by the increase in royalty income, as described ~~above.~~above, and a decrease in the direct costs associated with the licensing segment. Also, as described below, during the ~~three~~nine months ended ~~May 2,~~October 31, 2015, we had a loss on the sale of the C&C California brand tradename, which was the primary reason for the lower EBITDA margin in the first quarter of fiscal 2016.

Depreciation and amortization. Depreciation and amortization for the three months ended ~~July 30,~~October 29, 2016, was ~~$3.7~~$3.5 million, an increase of ~~$0.3~~$0.1 million, or ~~8.8%~~2.9%, from $3.4 million for the three months ended ~~August 1,~~October 31, 2015.

Depreciation and amortization for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, was ~~$7.2~~$10.7 million, an increase of ~~$0.4~~$0.5 million, or ~~5.9%~~4.9%, from ~~$6.8~~$10.2 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The increase is attributed to depreciation related to our increased capital expenditures, primarily in the direct-to-consumer segment, and leasehold improvements made during fiscal 2017 and 2016.

Loss on sale of long-lived ~~assets~~assets.. During the first quarter of fiscal 2016, we entered into an agreement to sell the intellectual property of our C&C California brand to a third party. As a result of this transaction, we recorded a loss of ($0.7) million in the licensing segment.

Cost on early extinguishment of ~~debt.~~debt. On April 6, 2015, we called for partial redemption of $100 million of our $150 million outstanding 7⁷/ ⁄₈% Senior Subordinated Notes. The redemption terms provided for the payment of a redemption premium of 103.938% of the principal amount redeemed. On May 6, 2015, we completed the redemption of $100 million of our senior subordinated notes. We incurred debt extinguishment costs of approximately $5.1 million in connection with the redemption premium and the write-off of note issuance costs.

Interest expense. Interest expense for the three months ended ~~July 30,~~October 29, 2016, ~~and~~was $1.7 million, a decrease of $0.2 million, or 10.5%, from $1.9 million for the three months ended ~~August 1, 2015 was $1.9 million. Interest remained flat.~~October 31, 2015. Interest expense for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, was ~~$3.9~~$5.7 million, a decrease of $1.7 million, or ~~30.4%~~23.0%, from ~~$5.6~~$7.4 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The decrease was primarily attributable to a decrease in interest resulting from the partial redemption of $100 million of our senior subordinated notes during the second quarter of fiscal ~~2016. This decrease was partially offset by~~2016 as well as a ~~higher~~lower average amount borrowed on our credit facility as compared to the prior year period. ~~The increase in the credit facility was due to its use for the redemption of the notes as discussed above.~~

Income ~~taxes.~~taxes. The income tax benefit for the three months ended ~~July 30,~~October 29, 2016, was ~~$0.9~~$1.9 million, a decrease of ~~$0.6~~$2.8 million, as compared to ~~$1.5~~an expense of $0.9 million for the three months ended ~~August 1,~~October 31, 2015. For the three months ended ~~July 30,~~October 29, 2016, our effective tax rate was ~~19.5%~~26.4% as compared to ~~54.7%~~28.8% for the three months ended ~~August 1,~~October 31, 2015. The income tax provision for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, was ~~$4.5~~$2.7 million, ~~an increase~~a decrease of ~~$2.6~~$0.1 million, as compared to ~~$1.9~~$2.8 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. For the ~~six~~nine months ended ~~July 30,~~October 29, 2016, our effective tax rate was ~~29.8%~~32.8% as compared to ~~18.9%~~21.3% for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The overall change in the effective tax rate is attributed to the current year impact of the valuation allowance on domestic taxes and a change in the ratio of income between domestic and foreign operations, of which the domestic operations are taxed at higher statutory tax rates.

Net (loss) income.Net ~~loss~~(loss) income for the three months ended ~~July 30,~~October 29, 2016, was ~~$3.6~~($5.2) million, ~~an increase~~a decrease of ~~$2.3~~$7.5 million, ~~or 176.9%,~~ as compared to ~~a loss of $1.3~~$2.3 million for the three months ended ~~August 1,~~October 31, 2015. Net income for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, was ~~$10.7~~$5.5 million, ~~an increase~~a decrease of ~~$2.6~~$4.9 million, or ~~32.1%~~47.1%, as compared to ~~$8.1~~$10.4 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The changes in operating results were due to the items described above.

We rely principally on cash flow from operations and borrowings under our senior credit facility to finance our operations, pension funding requirements, acquisitions, and capital expenditures. We believe that our working capital requirements will increase for next year as we continue to expand internationally. As of ~~July 30,~~October 29, 2016, our total working capital was ~~$208.3~~$213.5 million as compared to $218.8 million at January 30, 2016 and ~~$215.3~~$221.5 million as of ~~August 1,~~October 31, 2015. We believe that our cash flows from operations and availability under our senior credit facility and remaining letter of credit ~~facilities~~facility are sufficient to meet our working capital needs and capital expenditure needs over the next year.

We consider the undistributed earnings of our foreign subsidiaries as of ~~July 30,~~October 29, 2016, to be indefinitely reinvested and, accordingly, no United States income taxes have been provided thereon. As of ~~July 30,~~October 29, 2016, the amount of cash associated with indefinitely reinvested foreign earnings was approximately ~~$23.9~~$25.6 million. We have not, nor do we anticipate the need to, repatriate these funds to the United States to satisfy our domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements.

Net cash provided by operating activities was ~~$34.9~~$37.2 million for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, as compared to cash provided by operating activities of ~~$20.5~~$18.6 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015.

The cash provided by operating activities for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, is primarily attributable to ~~a decrease in accounts receivable of $10.1 million,~~ decreased inventory of $47.6 million due to improved inventory management, an increase in unearned revenues and other liabilities of $3.5 million, as well as a decrease in prepaid income taxes of $1.9 million. This was partially offset by a decrease in accounts payable and accrued expenses of $52.6 million.

The cash provided by operating activities for the six months ended August 1, 2015, is primarily attributable to a decrease in accounts receivable of $13.2 million due to the timing of shipments as compared to the prior year, as well as decreased inventory of $30.1$69.0 million due to improved inventory management. This was partially offset by a decrease in accounts payable and accrued expenses of ~~$41.2~~$62.6 million, as well as a reduction in deferred pension obligation of $5.5 million due to our funding of our pension in anticipation of its termination and a reduction in accrued interest of $1.0 million. For the nine months ended October 29, 2016, our inventory turnover ratio increased to 3.8, as we continued to improve our inventory management, from 3.7 for the comparable period in fiscal 2016.

The cash provided by operating activities for the nine months ended October 31, 2015, is primarily attributable to a decrease in accounts receivable of $6.5 million, decreased inventory of $38.4 million due to improved inventory management, as well as a reduction in prepaid taxes of 3.6 million. This was partially offset by a decrease in accounts payable and accrued expenses of $54.8 million as well as decreased accrued interest payable of ~~$2.5~~$3.5 million. For the six months ended August 1, 2015, our inventory turnover ratio increased to 3.7 as compared to 3.3 for the comparable period in fiscal 2015. Inventory levels declined as noted above resulting from tighter inventory management.

Net cash used in investing activities was ~~$10.4~~$12.2 million for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, as compared to cash provided by investing activities of ~~$4.4~~$2.5 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The net cash used in investing activities during the first ~~six~~nine months of fiscal 2017 primarily reflects the purchase of investments of ~~$9.0~~$12.5 million and the purchase of property and equipment of ~~$6.6~~$9.3 million primarily for leasehold improvements and store fixtures; partially offset by ~~the~~ proceeds from the maturities of investments of $9.3 million. We anticipate capital expenditures during the remainder of fiscal 2017 of $3.0 million to $4.0 million in ~~the amount of $5.2 million.~~new leasehold improvements, technology, systems, retail stores, and other expenditures.

Net cash provided by investing activities was ~~$4.4~~$2.5 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015, as compared to cash used in investing activities of ~~$16.1~~$19.8 million for the ~~six~~nine months ended ~~August 2,~~November 1, 2014. The net cash provided by investing activities during the first ~~six~~nine months of fiscal 2016 primarily reflects the proceeds from the maturities of investments in the amount of ~~$11.9~~$17.8 million, ~~and~~the proceeds on the sale of the C&C California brand in the amount of $2.5 million and the proceeds from notes receivable associated with the sale of the Australian, Fiji and New Zealand Jantzen trademark rights in the amount of $0.3 million; partially offset by the purchase of investments of ~~$2.6~~$8.2 million and the purchase of property and equipment of ~~$7.3~~$9.8 million primarily for leasehold improvements and store fixtures.

Net cash used in financing activities was ~~$28.4~~$26.9 million for the ~~six~~nine months ended ~~July 30,~~October 29, 2016, as compared to ~~cash used in financing activities of $41.7~~$39.3 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015. The net cash used during the first ~~six~~nine months of fiscal 2017 primarily reflects net payments on our senior credit facility of ~~$27.9~~$23.9 million, purchases of treasury stock of $2.2 million, payments of ~~$0.4~~$0.6 million on our mortgage loans and payments on capital leases of ~~$0.1 million.~~$0.2 million; partially offset by the proceeds from exercises of stock options of 5,000.

Net cash used in financing activities was ~~$41.7~~$39.3 million for the ~~six~~nine months ended ~~August 1,~~October 31, 2015, as compared to ~~cash used in financing activities of $8.7~~$10.9 million for the ~~six~~nine months ended ~~August 2,~~November 1, 2014. The net cash used during the first ~~six~~nine months of fiscal 2016 primarily reflects payments for the partial redemption on our senior subordinated notes of $100 million, payments of ~~$0.4~~$0.6 million on our mortgage loans, payments of deferred financing fees on the senior credit facility of $0.6 million and payments on capital leases of ~~$0.07~~$0.1 million; partially offset by net borrowings on our senior credit facility of ~~$58.2~~$60.6 million and the proceeds from ~~the~~ exercises of stock options of ~~$1.3 million and a tax benefit from exercise of equity instruments of $0.2~~$1.4 million. We financed the redemption of the subordinated notes through our senior credit facility.

Our Board of Directors has authorized us to purchase, from time to time and as market and business conditions warrant, up to $70 million of our common stock for cash in the open market or in privately negotiated transactions through October 31, ~~2016.~~2017. Although our Board of Directors allocated a maximum of $70 million to carry out the program, we are not obligated to purchase any specific number of outstanding shares and will reevaluate the program on an ongoing basis.

~~There have been no open market purchases through the second quarter of fiscal 2017.~~ Total purchases under the plan ~~to date~~life-to-date amount to approximately ~~$58.6~~$60.8 million.

During the third quarter of fiscal 2017, we repurchased shares of common stock at a cost of $2.2 million. There were no treasury shares outstanding as of January 30, 2016. During the second quarter of fiscal 2016, we retired 770,753 shares of treasury stock recorded at a cost of approximately $15.7 million. Accordingly, during the second quarter of fiscal 2016, we reduced common stock and additional paid in capital by $7,000 and $15.7 million, respectively.

In March 2011, we issued $150 million 7⁷/ ⁄₈% senior subordinated notes, due April 1, 2019. The proceeds of this offering were used to retire the $150 million 8⁷/ ⁄₈% senior subordinated notes due September 15, 2013 and to repay a portion of the outstanding balance on the senior credit facility. The proceeds to us were $146.5 million yielding an effective interest rate of 8.0%.

On April 6, 2015, we elected to call for the partial redemption of $100 million of our $150 million 7⁷/ ⁄₈% senior subordinated notes due 2019 and a notice of redemption was sent to all registered holders of the senior subordinated notes. The redemption terms provided for the payment of a redemption premium of 103.938% of the principal amount redeemed. On May 6, 2015, we completed the redemption of the $100 million of our senior subordinated notes. We incurred debt extinguishment costs of approximately $5.1 million in connection with the redemption, including the redemption premium as well as the write-off of note issuance costs. At ~~July 30,~~October 29, 2016, the balance of the 7⁷/ ⁄₈% senior subordinated notes totaled $49.6 million, net of debt issuance costs in the amount of $0.4 million. At January 30, 2016, the balance of the 7⁷/ ⁄₈% senior subordinated notes totaled $49.5 million, net of debt issuance costs in the amount of $0.5 million.

Certain Covenants.The indenture governing the senior subordinated notes contains certain covenants which restrict our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness in certain circumstances, pay dividends or make other distributions on, redeem or repurchase capital stock, make investments or other restricted payments, create liens on assets to secure debt, engage in transactions with affiliates, and effect a consolidation or merger. We are not aware of any non-compliance with any of our covenants in this indenture. We could be materially harmed if we violate any covenants because the indenture’s trustee could declare the outstanding notes, together with accrued interest, to be immediately due and payable, which we may not be able to satisfy. In addition, a violation could also constitute a cross-default under the senior credit facility, the letter of credit facilities and the real estate mortgages resulting in all of our debt obligations becoming immediately due and payable, which we may not be able to satisfy.

On April 22, 2015, we amended and restated our existing senior credit facility (the “Credit Facility”), with Wells Fargo Bank, National Association, as agent for the lenders, and Bank of America, N.A., as syndication agent. The Credit Facility provides a revolving credit facility of up to an aggregate amount of $200 million. The Credit Facility has been extended through April 30, 2020. In connection with this amendment and restatement, we paid fees in the amount of $0.6 million. These fees will be amortized over the term of the credit facility as interest expense. At ~~July 30,~~October 29, 2016 we had outstanding borrowings of ~~$33.9~~$37.8 million, under the Credit Facility. At January 30, 2016, we had outstanding borrowings of $61.8 million, under the Credit Facility.

Certain Covenants. The Credit Facility contains certain financial and other covenants, which, among other things, require us to maintain a minimum fixed charge coverage ratio if availability falls below certain thresholds. We are not aware of any non-compliance with any of our covenants in this Credit Facility. These covenants may restrict our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness and liens in certain circumstances, redeem or repurchase capital stock, make certain investments or sell assets. We may pay cash dividends subject to certain restrictions set forth in the covenants including, but not limited to, meeting a minimum excess availability threshold and no occurrence of a default. We could be materially harmed if we violate any covenants, as the lenders under the Credit Facility could declare all amounts outstanding, together with accrued interest, to be immediately due and payable. If we are unable to repay those amounts, the lenders could proceed against our assets and the assets of our subsidiaries that are borrowers or guarantors. In addition, a covenant violation that is not cured or waived by the lenders could also constitute a cross-default under certain of our other outstanding indebtedness, such as the indenture relating to our 7⁷/ ⁄₈% senior subordinated notes due April 1, 2019, our letter of credit facilities, or our real estate mortgage loans. A cross-default could result in all of our debt obligations becoming immediately due and payable, which we may not be able to satisfy. Additionally, our Credit Facility includes a subjective acceleration clause if a “material adverse change” in our business occurs. We believe that the likelihood of the lender exercising this right is remote.

Borrowing Base. Borrowings under the Credit Facility are limited to a borrowing base calculation, which generally restricts the outstanding balance to the sum of (a) 87.5% of eligible receivables plus (b) 87.5% of eligible foreign accounts up to $1.5 million plus (c) the lesser of (i) the inventory loan limit, which equals 80% of the maximum credit under the Credit Facility at the time, (ii) a maximum of 70.0% of eligible finished goods inventory with an inventory limit not to exceed $125 million, or 90.0% of the net recovery percentage (as defined in the Credit Facility) of eligible inventory.

Security. As security for the indebtedness under the Credit Facility, we granted to the lenders a first priority security interest (subject to liens permitted under the Credit Facility to be senior thereto) in substantially all of our existing and future assets, including, without limitation, accounts receivable, inventory, deposit accounts, general intangibles, equipment and capital stock or membership interests, as the case may be, of certain subsidiaries, and real estate, but excluding our non-U.S. subsidiaries and all of our trademark portfolio.

As of ~~July 30,~~October 29, 2016, we maintained one U.S. dollar letter of credit facility totaling $30.0 ~~million and one letter of credit facility totaling $0.3 million utilized by our United Kingdom subsidiary.~~million. Each documentary letter of credit is secured primarily by the consignment of merchandise in transit under that letter of credit and certain subordinated liens on our assets.

During the ~~first~~third quarter of fiscal 2017, one letter of credit facility totaling, $0.3 million utilized by our United Kingdom subsidiary, expired and has not been renewed.

During fiscal 2016, a $15 million line of credit expired and was not ~~renewed. During fiscal 2016,~~renewed and we decreased the letter of credit sublimit in our Senior Credit Facility to $30.0 million.

At ~~July 30,~~October 29, 2016 and January 30, 2016, there was ~~$18.8~~$19.2 million and $18.9 million, respectively, available under the existing letter of credit ~~facilities.~~facility.

In July 2010, we paid off our then existing real estate mortgage loan and refinanced our main administrative office, warehouse and distribution facility in Miami with a $13.0 million mortgage loan. The loan is due on August 1, 2020. In July 2013, we amended the mortgage loan agreement to modify the interest rate. The interest rate was reduced to 3.9% per annum and the terms were restated to reflect new monthly payments of principal and interest of $69,000, based on a 25-year amortization with the outstanding principal due at maturity. At ~~July 30,~~October 29, 2016, the balance of the real estate mortgage loan totaled ~~$10.9~~$10.8 million, net of discount, of which ~~$399,000~~$403,000 is due within one year.

In November 2016, we paid off our existing real estate mortgage loan and refinanced our main administrative office, warehouse and distribution facility in Miami with a $21.7 million mortgage loan. The loan is due on November 22, 2026. The interest rate is 3.715% per annum. Monthly payments of principal and interest approximate $112,000, based on a 25-year amortization with the outstanding principal due at maturity.

In June 2006, we entered into a mortgage loan for $15 million secured by our Tampa facility. The loan is due on January 23, 2019. In January 2014, we amended the mortgage loan to modify the interest rate. The interest rate was reduced to 3.25% per annum and the terms were restated to reflect new monthly payments of principal and interest of approximately $68,000, based on a 20-year amortization with the outstanding principal due at maturity. At ~~July 30,~~October 29, 2016, the balance of the real estate mortgage loan totaled ~~$10.9~~$10.7 million, net of discount, of which approximately ~~$468,000~~$472,000 is due within one year.

In November 2016, we refinanced our Tampa facility with a $13.2 million mortgage loan. The loan is due on November 22, 2026. The interest rate is 3.715% per annum. Monthly payments of principal and interest approximate $68,000, based on a 25-year amortization with the outstanding principal due at maturity.

Additionally, we may use some of the excess funds generated from the new mortgage loans described above to pay down our senior credit facility and repurchase certain of our outstanding senior subordinated notes.

The real estate mortgage loans contain certain covenants. We are not aware of any non-compliance with any of the covenants. If we violate any covenants, the lender under the real estate mortgage loan could declare all amounts outstanding thereunder to be immediately due and payable, which we may not be able to satisfy. A covenant violation could constitute a cross-default under our senior credit facility, ~~the~~our letter of credit facilities and the indenture relating to our senior subordinated notes resulting in all of our debt obligations becoming immediately due and payable, which we may not be able to satisfy.

We are not a party to any “off-balance sheet arrangements,” as defined by applicable GAAP and SEC rules.

We do not believe that inflation or foreign currency fluctuations significantly affected our results of operations for the three and ~~six~~nine months ended ~~July 30,~~October 29, 2016.

The market risk inherent in our financial statements represents the potential changes in the fair value, earnings or cash flows arising from changes in interest rates. We manage this exposure through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Our policy allows the use of derivative financial instruments for identifiable market risk exposure, including interest ~~rate.~~rate and foreign currency.

Our United Kingdom subsidiary is exposed to foreign currency risk from inventory purchases. In order to mitigate the financial risk of settlement of inventory at various prices based on movement of the U.S. dollar against the British pound, in October 2016, we entered into foreign currency forward exchange contracts (the “Hedging Instruments”). These contracts are formally designated and “highly effective” as cash flow hedges.

All changes in the Hedging Instruments’ fair value associated with inventory purchases are recorded in equity as a component of accumulated other comprehensive income until the underlying hedged item is reclassified to earnings. We ~~currently do not have~~record the Hedging Instruments at fair value in our Consolidated Balance Sheet. The cash flows from such hedges are presented in the same category in our Consolidated Statement of Cash Flows as the items being hedged.

At October 29, 2016, the notional amount outstanding of Hedging Instruments is $5.7 million. Such contracts expire between October 2016 and March 2017. There were no outstanding Hedging Instruments at January 30, 2016.

No gains or losses relating to foreign exchange forward contracts were reclassified to earnings during any ~~derivative financial instruments for identifiable market risk.~~of the fiscal periods presented.

We are exposed to market risks for the pricing of cotton and other fibers, which may impact fabric prices. Fabric is a portion of the overall product cost, which includes various components. We manage our fabric prices by using a combination of different strategies including the utilization of sophisticated logistics and supply chain management systems, which allow us to maintain maximum flexibility in our global sourcing of products. This provides us with the ability to re-direct our sourcing of products to the most cost-effective jurisdictions. In addition, we may modify our product offerings to our customers based on the availability of new fibers, yield enhancement techniques and other technological advances that allow us to utilize more cost effective fibers. Finally, we also have the ability to adjust our price points of such products, to the extent market conditions allow. These factors, along with our foreign-based sourcing offices, allow us to procure product from lower cost countries or capitalize on certain tariff-free arrangements, which help mitigate any commodity price increases that may occur. We have not historically managed, and do not currently intend to manage, commodity price exposures by using derivative instruments.

~~Our~~We have a risk management policy to manage foreign currency risk relating to inventory purchases by our subsidiaries which are denominated in foreign currencies. As such, we may employ hedging and derivative strategies to limit the effects of changes in foreign currency on our operating income and cash flows. However, we consider our current exposure to foreign exchange risk isas not ~~significant and accordingly, we have not entered into any transactions to hedge against those risks.~~significant.

We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) of the Securities Exchange Act. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~July 30,~~October 29, 2016 in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

~~There were~~During the last fiscal quarter, we upgraded our accounting system to Oracle E-Business Suite 12.1.3. The upgrade was fully integrated into our current system of internal controls.

Other than the changes noted above there have been no other changes in our internal ~~control~~controls over financial reporting that occurred during ~~the~~our last fiscal quarter ~~ended July 30, 2016~~ that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Florida		59-1162998
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

3000 N.W. 107 Avenue Miami, Florida		33172
(Address of Principal Executive Offices)		(Zip Code)


	PAGE
PART I: FINANCIAL INFORMATION

Item 1:

Condensed Consolidated Balance Sheets (Unaudited) as of ~~July 30,~~October 29, 2016 and January 30, 2016		1

Condensed Consolidated Statements of Operations (Unaudited) for the three and ~~six~~nine months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015		2

Condensed Consolidated Statements of Comprehensive ~~(Loss)~~ Income (Unaudited) for the three and ~~six~~nine months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015		3

Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~six~~nine months ended ~~July 30,~~October 29, 2016 and ~~August 1,~~October 31, 2015		4

Notes to Unaudited Condensed Consolidated Financial Statements		6

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations		2628

Item 3:

Quantitative and Qualitative Disclosures About Market Risk		3537

Item 4:

Controls and Procedures		3538

PART II: OTHER INFORMATION		39

Item 6:2:

~~Exhibits~~Unregistered Sales of Equity Securities and Use of Proceeds		3639

Item 6:

Exhibits		40


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾		Maximum Approximate Dollar Value that May Yet Be Purchased under the Plans or Programs

July 31, 2016 to August 27, 2016		87,600	$	18.83		87,600	$	9,716,088
August 28, 2016 to October 1, 2016		26,335	$	19.03		26,335	$	9,215,045

Total shares repurchased during Fiscal 2017		113,935	$	18.88		113,935	$	9,215,045


Exhibit Number	Exhibit Description	Where Filed

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)	Filed herewith.

31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)	Filed herewith.

32.1	Certification of Principal Executive Officer pursuant to Section 1350	Filed herewith.

32.2	Certification of Principal Financial Officer pursuant to Section 1350	Filed herewith.

101.INS	XBRL Instance Document	Filed herewith.

101.SCH	XBRL Taxonomy Extension Schema	Filed herewith.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase	Filed herewith.

101.DEF	XBRL Taxonomy Extension Definition Linkbase	Filed herewith.

101.LAB	XBRL Taxonomy Extension Label Linkbase	Filed herewith.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase	Filed herewith.


	Unrealized (Loss) Gain on Pension Liability			Foreign Currency Translation Adjustments, Net			Unrealized Gain (Loss) on Investments			Total
	(in thousands)
Balance, January 30, 2016	$	(7,368	)	$	(7,131	)	$	(9	)	$	(14,508	)
Other comprehensive (loss) income before reclassifications		—			(1,430	)		17			(1,413	)
Amounts reclassified from accumulated other comprehensive income		310			—			—			310

Balance, July 30, 2016	$	(7,058	)	$	(8,561	)	$	8		$	(15,611	)


	Unrealized (Loss) Gain on Pension Liability			Foreign Currency Translation Adjustments, Net			Unrealized (Loss) Gain on Investments			Total
	(in thousands)
Balance, January 31, 2015	$	(8,085	)	$	(4,774	)	$	7		$	(12,852	)
Other comprehensive income (loss) before reclassifications		—			1,091			(7	)		1,084
Amounts reclassified from accumulated other comprehensive income		270			—			—			270

Balance, August 1, 2015	$	(7,815	)	$	(3,683	)	$	—		$	(11,498	)


		October 29,		January 30,
Derivatives Designated As Hedging Instruments	Balance sheet location	2016		2016
		(in thousands)

Foreign currency forward exchange contract (inventory purchases)	Other Current Assets	$	255	$	—

Total		$	255	$	—


	(in thousands)

2017	$	868
2018	$	835
2019	$	793
2020	$	734
2021	$	543

Perry Ellis International, Inc.

~~September 2,~~
December 6, 2016

/S/ ANITA BRITT

Anita Britt, Chief Financial Officer

(Principal Financial Officer and Duly Authorized Officer)