PVH Corp. Reports 2011 Third Quarter Results

• Third Quarter Revenue of $1.654 Billion and Non-GAAP EPS of $1.89 Exceed Guidance and Consensus Estimates; GAAP EPS of $1.54
• Results Driven by Continued Global Momentum in Tommy Hilfiger and Calvin Klein Businesses
• Full Year Non-GAAP EPS Guidance Raised to $5.23 to $5.25; High End of Previous Guidance Was $5.12
• GAAP EPS Guidance Revised to $4.05 to $4.07

NEW YORK--(BUSINESS WIRE)--Dec. 1, 2011-- PVH Corp. (NYSE: PVH) reported 2011 third quarter and year to date results.

Non-GAAP Amounts:

The discussions in this release that refer to non-GAAP amounts exclude the items which are described in this release under the heading “Non-GAAP Exclusions.” Reconciliations of GAAP to non-GAAP amounts are presented in Tables 1 through 6 and identify and quantify all excluded items.

Overview of Third Quarter Results:

• Earnings per share was $1.89 on a non-GAAP basis, which exceeded the Company’s guidance and the consensus estimate and represents an increase of 13% over the prior year’s third quarter non-GAAP earnings per share of $1.67.
• GAAP earnings per share was $1.54, and included a one-time unplanned pre-tax expense of $20.7 million incurred in connection with the Company’s buyout of the Tommy Hilfiger perpetual license in India, as compared to the Company’s guidance of at least $1.67. GAAP earnings per share in the prior year’s third quarter was $1.39.
• Revenue increased 9% to $1.654 billion over the prior year’s third quarter. The revenue increase is primarily attributable to the net effect of (i) an increase of $118.2 million, or 17%, in the Tommy Hilfiger business; (ii) an increase of $28.7 million, or 11%, in the Calvin Klein business; partially offset by (iii) a decline of $9.2 million, or 2%, in the Heritage Brands business.
• Earnings before interest and taxes on a non-GAAP basis increased 5% to $227.3 million, due to strong overall performance in the faster growing Tommy Hilfiger and Calvin Klein businesses, partially offset by lower gross margin rates primarily due to anticipated product cost increases.
• GAAP earnings before interest and taxes improved to $196.8 million from $178.3 million in the prior year’s third quarter, primarily due to revenue growth and the impact of reduced acquisition, integration and restructuring charges, partially offset by lower gross margin rates, which were anticipated.

Third Quarter Business Review:

Calvin Klein

Total revenue for the Calvin Klein business exceeded the Company’s guidance, increasing 11% over the prior year’s third quarter to $301.2 million. The increase reflected growth of 12% in retail comparable store sales and equally strong performance at wholesale. Calvin Klein royalty revenue increased 8% as compared to the prior year’s third quarter attributable to continued strong performance across most product categories and regions, with underwear, outerwear and women’s sportswear performing particularly well and outstanding growth coming from South America and Asia, offset, in part, by weakness in the domestic jeanswear business. Foreign exchange rates had an immaterial year-over-year impact on the revenue of the Calvin Klein business.

Earnings before interest and taxes for the Calvin Klein business was $85.7 million in the third quarter, which represents an increase of 13% over the prior year’s third quarter’s $75.6 million. This increase was due principally to the royalty and sales increases discussed above. Within the Company’s Calvin Klein apparel business, gross margin rates were down slightly, as higher product costs were partially mitigated by increases in selling prices.

Tommy Hilfiger

The Tommy Hilfiger business experienced a 17% increase in revenue to $826.6 million in the third quarter, far exceeding the top end of the Company’s previous guidance. The increase over the prior year’s third quarter reflects double digit growth in the European wholesale division, combined with retail comparable store sales growth of 15% in North America and 5% in Europe. In addition, year-over-year foreign exchange rate changes versus the U.S. dollar in the third quarter benefited revenue of the Tommy Hilfiger International business by approximately $25 million.

On a non-GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business increased 27% to $116.1 million in the current year’s third quarter, from $91.3 million in the prior year’s third quarter. This increase was driven by the revenue increases discussed above and operating expense synergies in North America, partially offset by lower gross margin rates. The lower gross margin rates resulted from higher product costs, which were somewhat mitigated by increases in selling prices. The increase in earnings before interest and taxes on a non-GAAP basis also included a benefit of approximately $5 million in the Tommy Hilfiger International business from year-over-year foreign exchange rate changes versus the U.S. dollar in the quarter.

On a GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business increased 46% in the third quarter to $90.5 million, as compared to $62.1 million in the prior year. This increase was due principally to the impact of the revenue increases, operating expense synergies in North America and the benefit from the foreign exchange rate changes noted above. Also contributing to the increase was a net decrease in acquisition, integration and restructuring charges. The expenses recorded in the current year’s third quarter related to the continuing integration of Tommy Hilfiger and the associated restructuring, together with the expenses related to the Company’s buyout of the Tommy Hilfiger perpetual license in India. These expenses were less than integration and restructuring costs incurred in the prior year’s third quarter. Partially offsetting these increases in earnings before interest and taxes were lower gross margin rates.

Heritage Brands

Total revenue for the Heritage Brands business decreased 2% to $526.3 million in the third quarter, as compared to $535.4 million in the prior year’s third quarter. The dress furnishings business posted a 4% increase in revenue that was more than offset by a 7% decrease in the sportswear division, driven particularly by underperformance in the Izod division and the soon-to-be discontinued Timberland division. The Heritage Brands retail business experienced flat comparable store sales during the quarter.

Earnings before interest and taxes for the Heritage Brands business was $45.3 million on a non-GAAP basis and $44.8 million on a GAAP basis, as compared to the prior year’s third quarter earnings before interest and taxes on both a GAAP and non-GAAP basis of $67.9 million. Driving the decrease in earnings within the Heritage Brands business was a decline in gross margin rates from the impact of higher product costs, relatively flat sportswear selling prices and the challenging competitive environment faced by the Company’s moderate businesses, further impacted by the revenue decrease discussed above. GAAP earnings before interest and taxes in the current year’s third quarter included approximately $0.5 million of costs incurred in connection with the Company’s negotiated early termination of its license to market sportswear under the Timberland brand, which will become effective in 2012.

Third Quarter Consolidated Results:

On a non-GAAP basis, earnings before interest and taxes in the third quarter increased to $227.3 million from $215.5 million in the third quarter of 2010. This increase of $11.8 million was primarily due to a $24.8 million increase in earnings before interest and taxes in the Tommy Hilfiger business, combined with a $10.1 million increase in earnings before interest and taxes in the Calvin Klein business, partially offset by a $22.5 million decrease in the earnings of the Heritage Brands business.

On a GAAP basis, earnings before interest and taxes increased to $196.8 million in the third quarter as compared to $178.3 million in the prior year’s third quarter. The increase was principally due to the net impact of the increases in earnings before interest and taxes in the Tommy Hilfiger and Calvin Klein businesses discussed above, partially offset by the decrease in earnings before interest and taxes in the Heritage Brands business discussed above, and a decrease in acquisition, integration and restructuring charges.

Net interest expense for the quarter decreased $9.7 million to $31.5 million, due principally to lower debt levels.

The effective tax rate was 29.4% on a non-GAAP basis for the third quarter, as compared to 31.3% on a non-GAAP basis in the prior year’s third quarter. The current year’s non-GAAP tax rate was positively impacted by a greater portion of the Company’s non-GAAP earnings being generated by the Company's international Tommy Hilfiger business, a significant portion of which is subject to favorable tax rates. The effective tax rate was 32.1% on a GAAP basis for the third quarter, as compared to 27.2% on a GAAP basis in the prior year’s third quarter. The prior year’s GAAP tax rate included a benefit resulting from the lapse of the statute of limitations with respect to certain previously unrecognized tax positions. The GAAP tax rates for both years were also impacted by certain non-deductible acquisition related costs.

Nine Months Consolidated Results:

• Earnings per share on a non-GAAP basis was $4.20 for the current year’s nine months, as compared to $3.34 for the prior year’s nine month period.
• GAAP earnings per share was $3.25, as compared to $0.02 for the prior year’s nine month period.
• Revenue was $4.358 billion, which represents an increase of $1.119 billion over the prior year’s amount of $3.239 billion. The Tommy Hilfiger business, which was acquired on May 6, 2010, contributed $994.4 million of this increase.
• Earnings before interest and taxes increased 30% to $545.8 million on a non-GAAP basis, due to the addition of first quarter earnings in the Tommy Hilfiger business and revenue growth across all businesses, partially offset by lower gross margin rates.
• GAAP earnings before interest and taxes increased 304% to $450.8 million, as compared to $111.6 million in the prior year’s nine months, due primarily to lower acquisition, integration and restructuring charges, combined with the addition of first quarter earnings in the Tommy Hilfiger business and the revenue increases mentioned above. Partially offsetting these increases were lower gross margin rates resulting from higher product costs during the first nine months of 2011.

Balance Sheet:

The Company ended the quarter with a net debt position of $1.944 billion, comprised of $2.104 billion of debt, net of $160.0 million of cash. During the first nine months of 2011, the Company made debt payments totaling approximately $285 million on its outstanding term loans, the majority of which were ahead of schedule, for a total of approximately $535 million in debt payments since the date of the Tommy Hilfiger acquisition. The Company currently plans to make additional debt payments of approximately $165 million during the remainder of 2011.

Ending inventories, while on plan, increased 21% to $830.1 million over the prior year’s third quarter, reflecting increased product costs, the Company’s planned fourth quarter sales increase and increased investment in core product inventory units, particularly in the dress furnishings division. The Company remains comfortable with the quality of its inventory and continues to believe that inventory balances will be more aligned with future sales projections by the end of fiscal 2011.

2011 Guidance:

Please see the section entitled “Full Year and Fourth Quarter Reconciliations of GAAP to Non-GAAP Amounts” at the end of this release for further detail on certain assumptions that are made in the following guidance.

Full Year Guidance

Revenue in 2011 is currently projected to be $5.825 billion to $5.845 billion, or an increase of approximately 26% as compared to 2010. This includes the full year effect of revenue of the Tommy Hilfiger business, which is currently estimated to be $2.990 billion to $3.000 billion, as compared to $1.945 billion for the nine month post-acquisition period in 2010. Revenue for the Calvin Klein business is expected to grow 13% to 14%, while revenue for the Heritage Brands business is expected to grow 1% to 2%.

On a non-GAAP basis, earnings per share in 2011 is currently projected to be in the range of $5.23 to $5.25, or an increase of 23% over the prior year. The 2011 non-GAAP earnings per share projection excludes a loss of approximately $1.18 per share comprised of the after-tax effect of approximately $115 million of pre-tax costs associated with the integration of Tommy Hilfiger and the related restructuring initiatives, the Company’s buyout of the Tommy Hilfiger perpetual license in India, the Company’s negotiated early termination of its license to market sportswear under the Timberland brand, which will become effective in 2012, and the amendment and restatement of the Company’s credit facility. On a non-GAAP basis, operating margin in 2011 is currently projected to be in a range of 11.4% to 11.5%.

On a GAAP basis, earnings per share in 2011 is currently projected to be in the range of $4.05 to $4.07, as compared to GAAP earnings per share of $0.80 in the prior year. On a GAAP basis, operating margin in 2011 is currently projected to be 9.4% to 9.5%.

The Company currently estimates that the 2011 effective tax rate will be 29.0% to 29.5% on a non-GAAP basis and 30.0% to 30.5% on a GAAP basis.

Fourth Quarter Guidance

Fourth quarter revenue in 2011 is currently projected to be $1.467 billion to $1.487 billion, or an increase of 5% to 6% over the prior year’s fourth quarter. Revenue for the Tommy Hilfiger business is expected to increase 7% to 9% over the prior year’s fourth quarter. Revenue for the Calvin Klein business is expected to increase 8% to 10%, while revenue for the Heritage Brands business is expected to remain relatively flat in the fourth quarter of 2011 as compared to the prior year’s fourth quarter.

For the fourth quarter of 2011, earnings per share is currently projected to be in the range of $1.03 to $1.05 on a non-GAAP basis, or an increase of 11% to 13% over the prior year’s fourth quarter. Marketing expense for the fourth quarter of 2011 has been increased and is expected to be approximately $5 million higher than last year. This increased spend for the fourth quarter is focused on the Tommy Hilfiger and Calvin Klein brands. The fourth quarter of 2011 non-GAAP earnings per share projection excludes a loss of approximately $0.23 per share comprised of the after-tax effect of approximately $20 million of pre-tax Tommy Hilfiger integration and related restructuring costs. On a GAAP basis, earnings per share for the fourth quarter is currently projected to be in the range of $0.80 to $0.82, as compared to GAAP earnings per share of $0.72 in the prior year’s fourth quarter. The Company currently estimates that the fourth quarter 2011 effective tax rate will be 13.0% to 17.0% on a non-GAAP basis and 11.0% to 16.0% on a GAAP basis.

CEO Comments:

Commenting on these results, Emanuel Chirico, Chairman and Chief Executive Officer, noted, “We are extremely pleased with our third quarter results, which were driven by our Tommy Hilfiger and Calvin Klein businesses. Despite the volatile market conditions, both of these brands continue to exhibit exceptional growth, both domestically and internationally. The Tommy Hilfiger and Calvin Klein businesses represent approximately three quarters of our overall revenues and their strong global performance has more than offset some of the challenges we have been facing with certain of our more moderate heritage businesses.”

Mr. Chirico continued, “In conjunction with our initiative to invest in broadening the reach of the Tommy Hilfiger brand internationally, we have recently invested in joint ventures for Tommy Hilfiger in India and China, as well as announced plans to bring the Tommy Hilfiger European men’s tailored apparel business in-house.”

Mr. Chirico concluded, “Given the current momentum of our business, including a strong Thanksgiving weekend, and despite the uncertain global economic and market conditions, we believe we are well-positioned for another solid holiday season. If these business trends continue, we believe there is potential for upside in our results as against our fourth quarter and full year guidance. We remain focused on expanding the global reach of our brands, led by Calvin Klein and Tommy Hilfiger, and plan to continue our investments in marketing during the fourth quarter. We believe that this disciplined investment in our brands, along with our continued execution of our business strategies and an improving balance sheet, will position us to deliver strong earnings results and drive shareholder value in the fourth quarter and beyond.”

Non-GAAP Exclusions:

The discussions in this release that refer to non-GAAP amounts exclude the following:

• Pre-tax costs of $338.3 million incurred in 2010 in connection with the acquisition and integration of Tommy Hilfiger, including the following:
  • a loss of $140.5 million associated with hedges against Euro to U.S. dollar exchange rates relating to the purchase price, of which $52.4 million was recorded in the first quarter and $88.1 million was recorded in the second quarter;
  • transaction, related restructuring and debt extinguishment costs of approximately $121.0 million, of which $51.6 million was incurred in the first quarter, $24.6 million was incurred in the second quarter, $13.7 million was incurred in the third quarter and $31.0 million was incurred in the fourth quarter; and
  • short-lived non-cash valuation amortization charges of approximately $76.8 million, of which $53.3 million was recorded in the second quarter and $23.5 million was recorded in the third quarter.

• Pre-tax costs of $6.6 million incurred in the fourth quarter of 2010 in connection with the Company’s exit from its United Kingdom and Ireland Van Heusen dress furnishings and accessories business, principally consisting of non-cash charges.

• A tax benefit of approximately $7.9 million in 2010 (recorded in the third quarter) related to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions.

• Pre-tax costs of approximately $71 million expected to be incurred in 2011 in connection with the integration of Tommy Hilfiger and the related restructuring, of which $30.5 million was incurred in the first quarter, $11.2 million was incurred in the second quarter, $9.3 million was incurred in the third quarter, and approximately $20 million is expected to be incurred in the fourth quarter.

• Pre-tax costs of approximately $16.2 million incurred in the first quarter of 2011 in connection with the amendment and restatement of the Company’s credit facility.

• Pre-tax costs of $7.2 million incurred in 2011 in connection with the Company’s negotiated early termination of its license to market sportswear under the Timberland brand, which will become effective in 2012, of which $6.7 million was incurred in the second quarter and $0.5 million was incurred in the third quarter.

• A pre-tax expense of $20.7 million incurred in the third quarter of 2011 in connection with the Company’s buyout of the Tommy Hilfiger perpetual license in India, as under accounting rules, the Company was required to record an expense due to settling the preexisting license agreement, which was unfavorable to the Company.

• Estimated tax effects associated with the above pre-tax costs, which are based on the Company’s assessment of deductibility. In making this assessment, the Company evaluated each item that it has recorded as an acquisition, integration, restructuring, debt modification or debt extinguishment cost to determine if such cost is tax deductible, and if so, in what jurisdiction the deduction would occur. All items above were identified as either primarily tax deductible in the United States, in which case the Company assumed a combined federal and state tax rate of 38.0%, or as non-deductible, in which case the Company assumed no tax benefit. The assumptions used were consistently applied for both GAAP and non-GAAP earnings amounts.

Please see Tables 1 through 6 and the section entitled “Full Year and Fourth Quarter Reconciliations of GAAP to Non-GAAP Amounts,” later in this release for reconciliations of GAAP to non-GAAP amounts.

The Company webcasts its conference calls to review its earnings releases. The Company’s conference call to review its third quarter earnings release is scheduled for Thursday, December 1, 2011 at 4:45 p.m. EST. Please log on either to the Company’s web site at www.pvh.com and go to the Press Releases page under the Investors tab or to www.companyboardroom.com to listen to the live webcast of the conference call. The webcast will be available for replay for one year after it is held, commencing approximately two hours after the live broadcast ends. Please log on to www.pvh.com or www.companyboardroom.com as described above to listen to the replay. In addition, an audio replay of the conference call is available for 48 hours starting approximately two hours after it is held. The replay of the conference call can be accessed by calling (domestic) 888-203-1112 and (international) 719-457-0820 and using passcode #4077509. The conference call and webcast consist of copyrighted material. They may not be re-recorded, reproduced, re-transmitted, rebroadcast or otherwise used without the Company’s express written permission. Your participation represents your consent to these terms and conditions, which are governed by New York law.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Forward-looking statements in this press release and made during the conference call / webcast, including, without limitation, statements relating to the Company’s future revenue and earnings, plans, strategies, objectives, expectations and intentions, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy, and some of which might not be anticipated, including, without limitation, the following: (i) the Company’s plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company; (ii) in connection with the acquisition of Tommy Hilfiger B.V. and certain affiliated companies, the Company borrowed significant amounts, may be considered to be highly leveraged, and will have to use a significant portion of its cash flows to service such indebtedness, as a result of which the Company might not have sufficient funds to operate its businesses in the manner it intends or has operated in the past; (iii) the levels of sales of the Company’s apparel, footwear and related products, both to its wholesale customers and in its retail stores, the levels of sales of the Company’s licensees at wholesale and retail, and the extent of discounts and promotional pricing in which the Company and its licensees and other business partners are required to engage, all of which can be affected by weather conditions, changes in the economy, fuel prices, reductions in travel, fashion trends, consolidations, repositionings and bankruptcies in the retail industries, repositionings of brands by the Company’s licensors and other factors; (iv) the Company’s plans and results of operations will be affected by the Company’s ability to manage its growth and inventory; (v) the Company’s operations and results could be affected by quota restrictions and the imposition of safeguard controls (which, among other things, could limit the Company’s ability to produce products in cost-effective countries that have the labor and technical expertise needed), the availability and cost of raw materials, the Company’s ability to adjust timely to changes in trade regulations and the migration and development of manufacturers (which can affect where the Company’s products can best be produced), changes in available factory and shipping capacity, wage and shipping cost escalation, and civil conflict, war or terrorist acts, the threat of any of the foregoing, or political and labor instability in any of the countries where the Company’s or its licensees’ or other business partners’ products are sold, produced or are planned to be sold or produced; (vi) disease epidemics and health related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas, as well as reduced consumer traffic and purchasing, as consumers limit or cease shopping in order to avoid exposure or becoming ill; (vii) acquisitions and issues arising with acquisitions and proposed transactions, including without limitation, the ability to integrate an acquired entity into the Company with no substantial adverse affect on the acquired entity’s or the Company’s existing operations, employee relationships, vendor relationships, customer relationships or financial performance; (viii) the failure of the Company’s licensees to market successfully licensed products or to preserve the value of the Company’s brands, or their misuse of the Company’s brands and (ix) other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission.

This press release includes, and the conference call / webcast will include, certain non-GAAP financial measures, as defined under SEC rules. A reconciliation of these measures is included in the financial information later in this release, as well as in the Company’s Current Report on Form 8-K furnished to the SEC in connection with this earnings release, which is available on the Company’s website at www.pvh.com and on the SEC’s website at www.sec.gov.

The Company does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimate regarding revenue or earnings, whether as a result of the receipt of new information, future events or otherwise.

The Company believes presenting its results excluding (i) the costs incurred in 2011 and 2010 in connection with its acquisition and integration of Tommy Hilfiger and the related restructuring; (ii) the one-time expenses incurred in 2011 in connection with its buyout of the Tommy Hilfiger perpetual license in India; (iii) the costs incurred in 2011 in connection with its modification of its credit facility; (iv) the costs incurred in 2011 in connection with the negotiated early termination of its license to market sportswear under the Timberland brand, which will become effective in 2012; (v) the tax effects associated with these costs; and (vi) the tax benefit in 2010 related to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions, which is on a non-GAAP basis for each year, provides useful additional information to investors. The Company believes that the exclusion of such amounts facilitates comparing current results against past and future results by eliminating amounts that it believes are not comparable between periods, thereby permitting management to evaluate performance and investors to make decisions based on the ongoing operations of the Company. The Company believes that investors often look at ongoing operations of an enterprise as a measure of assessing performance. The Company uses its results excluding these amounts to evaluate its operating performance and to discuss its business with investment institutions, the Company’s Board of Directors and others. The Company’s results excluding the costs associated with its acquisition and integration of Tommy Hilfiger and the related restructuring, its buyout of the Tommy Hilfiger perpetual license in India, the modification of its credit facility and the negotiated early termination of its Timberland license are also the basis for certain incentive compensation calculations.

The following table presents the Company’s GAAP revenue and the non-GAAP measures that are discussed in this release. Please see Tables 1 through 6 for reconciliations of the GAAP amounts to non-GAAP amounts.

The Company believes presenting its (1) 2011 estimated results excluding (i) the costs expected to be incurred in connection with its integration of Tommy Hilfiger and the related restructuring; (ii) the one-time expenses incurred in 2011 in connection with its buyout of the Tommy Hilfiger perpetual license in India; (iii) the costs incurred in connection with its modification of its credit facility; (iv) the costs incurred in connection with the negotiated early termination of its license to market sportswear under the Timberland brand, which will become effective in 2012; and (v) the estimated tax effects associated with these costs, and (2) 2010 results excluding (i) the costs incurred in connection with its acquisition and integration of Tommy Hilfiger; (ii) the costs incurred in connection with the exit from its United Kingdom and Ireland Van Heusen dress furnishings and accessories business; (iii) the tax effects associated with these costs; and (iv) a tax benefit related to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions, both of which are on a non-GAAP basis, provides useful additional information to investors. The Company believes that the exclusion of such amounts facilitates comparing current results against past and future results by eliminating amounts that it believes are not comparable between periods, thereby permitting management to evaluate performance and investors to make decisions based on the ongoing operations of the Company. The Company believes that investors often look at ongoing operations of an enterprise as a measure of assessing performance. The Company has provided the reconciliations set forth below to present its estimates on a GAAP basis and excluding these amounts. The Company uses its results excluding these amounts to evaluate its operating performance and to discuss its business with investment institutions, the Company’s Board of Directors and others. The Company’s earnings per share amounts excluding the costs associated with its acquisition and integration of Tommy Hilfiger and the related restructuring, its buyout of the Tommy Hilfiger perpetual license in India, the modification of its credit facility, the negotiated early termination of its Timberland license and the exit from its United Kingdom and Ireland Van Heusen dress furnishings and accessories business are also the basis for certain incentive compensation calculations. The estimated tax effects associated with the above costs are based on the Company’s assessment of deductibility. In making this assessment, the Company evaluated each item that it has recorded or expects to record as an acquisition, integration, restructuring, debt modification or debt extinguishment cost to determine if such cost is tax deductible, and if so, in what jurisdiction the deduction would occur. All items above were identified as either primarily tax deductible in the United States, in which case the Company assumed a combined federal and state tax rate of 38.0%, or as non-deductible, in which case the Company assumed no tax benefit. The assumptions used were consistently applied for both GAAP and non-GAAP earnings amounts.

Source: PVH Corp.

PVH Corp.
Dana Perlman, 212-381-3502
Treasurer, Senior Vice President, Business Development and Investor Relations
investorrelations@pvh.com