Investor Relations > Press Releases

PVH Corp. Reports 2011 Fourth Quarter and Full Year Results and Raises 2012 Guidance

  • Fourth Quarter Revenue and EPS Exceed Guidance
  • Full Year Non-GAAP EPS Was $5.38; GAAP EPS Was $4.36
  • Tommy Hilfiger and Calvin Klein Businesses Continue to Drive Performance

NEW YORK--(BUSINESS WIRE)--Mar. 27, 2012-- PVH Corp. (NYSE: PVH) reported 2011 fourth quarter and full year results.

Non-GAAP Amounts:

The discussions of historical results 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 later in this release and identify and quantify all excluded items.

Overview of Fourth Quarter Results:

  • Earnings per share was $1.18 on a non-GAAP basis, which exceeded the Company’s guidance and the consensus estimate and represents an increase of 27% over the prior year’s fourth quarter non-GAAP earnings per share of $0.93.
  • GAAP earnings per share was $1.11, which exceeded the Company’s guidance and represents an increase of 54% as compared to the prior year’s fourth quarter GAAP earnings per share of $0.72.
  • Revenue increased 10% to $1.533 billion over the prior year’s fourth quarter. The revenue increase of $134.7 million is attributable to the net effect of (i) an increase of $111.2 million, or 16%, in the Company’s Tommy Hilfiger business; (ii) an increase of $29.5 million, or 12%, in the Company’s Calvin Klein business; and (iii) a decrease of $6.0 million, or 1%, in the Company’s Heritage Brands business.
  • Earnings before interest and taxes on a non-GAAP basis of $128.4 million was relatively flat to the prior year’s fourth quarter, as the Tommy Hilfiger and Calvin Klein revenue increases noted above were offset by a decrease in the Heritage Brands business due to a reduction in gross margin rates resulting from the impact of product cost increases.
  • GAAP earnings before interest and taxes improved to $108.9 million from $91.8 million in the prior year’s fourth quarter, primarily due to the impact of reduced integration and restructuring charges.

Fourth Quarter Business Review:

Calvin Klein

The Calvin Klein business continued its solid performance, posting a revenue increase of 12% over 2010 fourth quarter revenue to $278.5 million, with retail comparable store sales growth of 18%. Calvin Klein royalty revenue increased 16% as compared to the prior year’s fourth quarter, attributable to continued growth across most product categories and regions, with jeanswear, fragrance, footwear and accessories performing particularly well. Partially offsetting these increases was a decrease in the Company’s Calvin Klein wholesale sportswear business due to the timing of Fall shipments, as shipments were shifted into the third quarter from the fourth quarter to meet customer demand.

Earnings before interest and taxes for the Calvin Klein business was $70.2 million, which represents an increase of 6% over the prior year’s fourth quarter amount of $66.1 million due, in part, to the royalty and retail comparable store sales increases discussed above. Within the Company’s Calvin Klein apparel business, planned lower gross margin rates were the result of higher product costs, which were offset, in part, by increases in selling prices.

Tommy Hilfiger

The Tommy Hilfiger business continued its strong momentum, achieving a 16% increase in revenue over the 2010 fourth quarter revenue to $815.8 million, with retail comparable store sales growth of 15% in North America and 16% internationally. The European wholesale division also experienced low double-digit growth over the prior year’s fourth quarter. Foreign exchange rates had an immaterial year-over-year impact on revenue of the Tommy Hilfiger business.

On a non-GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business increased 25% to $70.3 million from $56.0 million in the prior year’s fourth quarter. Driving this increase were the revenue increases discussed above and an increase in operating margin, due principally to leveraging of expenses combined with operating expense synergies resulting from the Tommy Hilfiger integration in North America. These increases were partially offset by a decrease in gross margin rates due to higher product costs, which were mitigated, in part, by increased selling prices.

On a GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business increased 62% to $55.7 million, as compared to $34.3 million in the prior year’s fourth quarter. This increase was due principally to the net impact of the revenue and operating margin increases noted above. Also contributing to the increase was a net decrease in integration and restructuring charges.

Heritage Brands

Total revenue for the Heritage Brands business decreased 1% to $438.5 million from $444.5 million in the prior year’s fourth quarter. The dress furnishings business posted a 9% revenue increase, while retail comparable store sales increased 6%. These increases were more than offset by a 17% decrease in the wholesale sportswear business, driven particularly by underperformance in the Izod business. To mitigate the ongoing pressure in the wholesale sportswear business, the Company decided in 2011 to exit the Izod women’s and Timberland wholesale sportswear businesses in 2012.

Earnings before interest and taxes on a non-GAAP basis for the Heritage Brands business decreased to $10.6 million from $28.0 million in the prior year’s fourth quarter due to the revenue decrease in the wholesale sportswear business combined with lower gross margin rates. The decline in gross margin rates was driven by higher product costs combined with additional gross margin support provided to wholesale sportswear customers, particularly for the Izod business.

GAAP earnings before interest and taxes for the Heritage Brands business was $9.7 million as compared to the prior year’s fourth quarter of $21.4 million. This decrease was driven by the revenue and gross margin decreases noted above, partially offset by a net decrease in restructuring charges.

Fourth Quarter Consolidated Results:

On a non-GAAP basis, earnings before interest and taxes of $128.4 million was relatively flat to $129.4 million in the prior year’s fourth quarter, as increases of $14.3 million and $4.1 million in the Tommy Hilfiger and Calvin Klein businesses, respectively, were offset by a $17.3 million decrease in the Heritage Brands business.

On a GAAP basis, earnings before interest and taxes increased to $108.9 million as compared to $91.8 million in the prior year’s fourth quarter. The increase was principally due to a decrease in integration and restructuring charges.

Net interest expense decreased $6.1 million as compared to the prior year’s fourth quarter to $32.0 million, due principally to lower debt levels in the current quarter.

The effective tax rate was 10.6% on a non-GAAP basis as compared to 26.0% on a non-GAAP basis in the prior year’s fourth quarter. The effective tax rate was (5.7)% on a GAAP basis, as compared to 2.8% on a GAAP basis in the prior year’s fourth quarter. The 2011 fourth quarter GAAP tax rate benefited from revaluing certain deferred tax liabilities in connection with a fourth quarter decrease in the statutory tax rate in Japan. In addition, both the 2011 fourth quarter GAAP and non-GAAP tax rates were positively impacted principally by certain other discrete items.

Full Year 2011 Consolidated Results:

  • Earnings per share on a non-GAAP basis was $5.38 as compared to $4.26 for 2010.
  • GAAP earnings per share was $4.36 as compared to $0.80 for 2010.
  • Revenue was $5.891 billion, which represents an increase of 27%, or $1.254 billion, over the prior year’s amount of $4.637 billion. The Tommy Hilfiger business contributed $1.106 billion of this increase, $715.4 million of which was attributable to first quarter 2011 revenue, as the acquisition was not completed until the second quarter of 2010, and $390.1 million of which was attributable to second through fourth quarter growth over 2010. The remainder of the increase is attributable to increases of $131.8 million in the Calvin Klein business and $16.5 million in the Heritage Brands business.
  • On a non-GAAP basis, earnings before interest and taxes increased 23% to $674.2 million as compared to $548.3 million in 2010, due to the addition of first quarter earnings in the Tommy Hilfiger business and revenue growth in the Tommy Hilfiger and Calvin Klein businesses. These increases were partially offset by decreases in the Heritage Brands wholesale sportswear and retail businesses.
  • GAAP earnings before interest and taxes increased 175% to $559.7 million as compared to $203.4 million in 2010, due primarily to lower acquisition, integration and restructuring charges, combined with the addition of first quarter 2011 earnings in the Tommy Hilfiger business and the revenue increases in the Tommy Hilfiger and Calvin Klein businesses mentioned above. Partially offsetting these increases were decreases in the Heritage Brands wholesale sportswear and retail businesses, as noted above.
  • The effective tax rate was 28.2% on a non-GAAP basis for the full year 2011 as compared to 31.9% on a non-GAAP basis in the prior year. The non-GAAP tax rate for 2011 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 GAAP effective tax rate was 26.3% for the full year 2011 as compared to 29.7% in the prior year. The GAAP tax rate for 2011 benefited from the increase in international earnings discussed above, combined with the impact of revaluing certain deferred tax liabilities in connection with a fourth quarter decrease in the statutory tax rate in Japan.

Balance Sheet:

The Company ended the year with a net debt position of $1.683 billion, comprised of $1.916 billion of debt, net of $233.2 million of cash. During 2011, the Company made debt payments totaling approximately $450 million on its outstanding term loans, the majority of which were voluntary and ahead of schedule, for a total of approximately $700 million in debt payments since the closing of the Tommy Hilfiger acquisition on May 6, 2010. The Company currently plans to make debt payments of approximately $300 million during 2012.

Ending inventories increased 14% over 2010 due principally to increased product costs and the timing of receipts. The Company remains comfortable with the quality of its inventory.

2012 Guidance:

Please see the section entitled “Full Year and First Quarter Reconciliations of GAAP to Non-GAAP Amounts” at the end of this release for further detail and reconciliations of GAAP to non-GAAP amounts discussed in this section.

Full Year Guidance

Revenue in 2012 is currently projected to be relatively flat to up 2% as compared to the 2011 amount, including a negative impact of approximately 4%, of which approximately $150 million is attributable to projected differences in foreign currency translation (principally related to an expected weaker Euro to U.S. dollar exchange rate) and approximately $100 million is attributable to the 2012 exit from the Timberland and Izod women’s wholesale sportswear businesses. On a constant currency basis and excluding the impact of the exited businesses, 2012 revenue is projected to increase 4% to 6%.

Revenue for the Tommy Hilfiger business is expected to be relatively flat to up 2% as compared to 2011, including a negative impact of approximately 5% due to projected differences in foreign currency translation. Revenue for the Calvin Klein business is expected to grow 5% to 7% as compared to 2011. Calvin Klein royalty revenue is expected to be negatively impacted by projected differences in foreign currency translation, the upcoming reacquisition of the license for ck Calvin Klein apparel and accessories in Europe, challenging business conditions for our licensees in Europe and a reduction in licensee selling of Calvin Klein branded products in secondary channels. Revenue for the Heritage Brands business is expected to decrease 3% to 4% as compared to 2011, including a negative impact of approximately 6% due to the exit of businesses, as discussed above.

On a non-GAAP basis, earnings per share in 2012 is currently projected to be in the range of $6.10 to $6.20, or an increase of 13% to 15% over 2011. This estimate is negatively impacted by $0.20 to $0.25 per share due to projected differences in 2012 foreign currency translation. Pension expense is expected to increase by approximately $0.15 per share as compared to 2011, due in large part to a decrease in discount rates. Anticipated debt payments of approximately $300 million in 2012, combined with the effect of debt payments made during 2011, are expected to result in a decrease to net interest expense of approximately $0.12 per share as compared to 2011. The Company currently estimates that the 2012 effective tax rate will be 23.5% to 24.0%, which would generate an improvement on a non-GAAP basis of approximately $0.35 per share as compared to 2011. The lower effective tax rate in 2012 is due principally to growth in Tommy Hilfiger’s international business, which is generally taxed at lower rates. In addition, the 2012 effective tax rate is expected to be favorably impacted by the continuation of tax synergies resulting from the Tommy Hilfiger acquisition.

2012 earnings growth is expected to be heavily weighted toward the second half of the year. Earnings for the first half of 2012 are expected to be impacted by significantly higher year-over-year product costs, which began to impact the Company during the second half of 2011. Gross margins are expected to improve in the second half of 2012 as a result of year-over-year product cost declines.

First Quarter Guidance

First quarter revenue in 2012 is currently projected to increase 1% to 2% over the prior year’s first quarter amount of $1.369 billion, including a negative impact of approximately 2% attributable to approximately $30 million of projected differences in foreign currency translation (principally related to an expected weaker Euro to U.S. dollar exchange rate). Revenue for the Tommy Hilfiger business is expected to grow approximately 4% as compared to the first quarter of 2011, including a negative impact of approximately 4% due to projected differences in foreign currency translation. Revenue for the Calvin Klein business is expected to grow approximately 4% as compared to the first quarter of 2011. Calvin Klein royalty revenue is expected to be negatively impacted by projected differences in foreign currency translation, challenging business conditions for our licensees in Europe and a reduction in licensee selling in secondary channels. Revenue for the Heritage Brands business is expected to decrease 3% to 4% as compared to the first quarter of 2011.

On a non-GAAP basis, earnings per share is currently projected to be in the range of $1.23 to $1.25, as compared to $1.23 in the prior year’s first quarter. The first quarter of 2012 is expected to be the quarter most severely impacted by the significantly higher year-over-year product costs, as first quarter selling will include product both from the Fall 2011 season and for the Spring 2012 season. Product costs are expected to decline starting with product for the Fall 2012 season, which the Company will begin selling late in the second quarter of 2012. Also impacting earnings for the first quarter of 2012 is the negative effect from foreign currency translation, as the Euro to U.S. dollar exchange rates in the first quarter of 2012 are expected to be significantly weaker than actual rates experienced in the first quarter of 2011. The Company currently estimates that the first quarter 2012 effective tax rate will be 24.0% to 24.5%.

CEO Comments:

Commenting on these results, Emanuel Chirico, Chairman and Chief Executive Officer, noted, “During a year of tremendous volatility in the markets and significant product cost pressures impacting the industry, we are extremely pleased with our 2011 results, led by our global Calvin Klein and Tommy Hilfiger businesses. Our Calvin Klein and Tommy Hilfiger businesses continued to demonstrate their power and ability to drive double-digit growth both domestically and internationally, and today represent approximately three quarters of our business.”

Mr. Chirico added, “We have focused on the global growth of our Calvin Klein and Tommy Hilfiger businesses in 2011. We are excited about the continued execution of these growth strategies. Notably, we are looking forward to the potential opportunities presented by bringing the Tommy Hilfiger European men’s tailored apparel business in-house and developing the joint ventures we’ve established for Tommy Hilfiger in China and India. We also recently announced that we will be reacquiring the ck Calvin Klein apparel and accessories licenses in Europe, effective in 2013. We see an opportunity to leverage our well-developed European operating platform to accelerate the growth of this business, which we believe can reach approximately $500 million in sales in the next five to seven years.”

Mr. Chirico further commented, “Despite the uncertainty that has been impacting the overall market, we are optimistic that the strength of our brands, driven by Calvin Klein and Tommy Hilfiger, will continue to generate solid revenue and profitability growth in 2012. We believe that total revenues from our ongoing businesses in 2012 will grow 4% to 6% on a constant currency basis driven by 5% to 7% growth for both our Calvin Klein and Tommy Hilfiger businesses on a constant currency basis, as we will continue to focus on increasing the global presence of these brands through marketing investments and strategic expansions. We expect the revenues of our ongoing Heritage Brand businesses to increase 2% to 3% and are optimistic that more favorable product costs in the second half of 2012 will benefit these businesses and allow them to gradually return to their historical levels of profitability.”

Mr. Chirico concluded "We are focused on strengthening our balance sheet, as well as our financial returns, and plan to make additional debt repayments of approximately $300 million in 2012. We believe that the sound execution of our business strategies, investment in our world class brands and concentration on a strong balance sheet will continue to drive our long-term growth and pave the way for enhanced profitability and stockholder value in 2012 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 recorded during the first and second quarters associated with hedges against Euro to U.S. dollar exchange rates relating to the acquisition purchase price;
    • transaction, related restructuring and debt extinguishment costs of $121.0 million, of which $31.0 million was incurred in the fourth quarter; and
    • short-lived non-cash valuation amortization charges of $76.8 million recorded during the second and third quarters.
  • 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 dresswear and accessories business, principally consisting of non-cash charges.
  • A tax benefit of $7.9 million recorded in the third quarter of 2010 related to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions.
  • Pre-tax costs of $69.5 million 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 $18.6 million was incurred in the fourth quarter.
  • Pre-tax costs of $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 $8.1 million incurred in 2011 in connection with the Company’s negotiated early termination of its license to market sportswear under the Timberland brand and the Company’s 2012 exit from the Izod women’s wholesale sportswear business, of which $6.7 million was incurred in the second quarter, $0.5 million was incurred in the third quarter and $1.0 million was incurred in the fourth quarter.
  • A pre-tax expense of $20.7 million incurred in the third quarter of 2011 in connection with the Company’s reacquisition of the rights in India to the Tommy Hilfiger trademarks that had been subject to a perpetual license, 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.
  • A tax benefit of $5.4 million recorded in the fourth quarter of 2011 resulting from revaluing certain deferred tax liabilities in connection with a decrease in the statutory tax rate in Japan.
  • Pre-tax costs of approximately $30 million expected to be incurred in 2012 principally in connection with the integration of Tommy Hilfiger and the related restructuring, of which approximately $15 million is expected to be incurred in the first quarter.
  • 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 First 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 year end earnings release is scheduled for Wednesday, March 28, 2012 at 8:30 a.m. EDT. 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 #2344274. 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.

PVH CORP.

Consolidated GAAP Income Statements

(In thousands, except per share data)

           
  Quarter Ended     Year Ended
1/29/12 1/30/11 1/29/12 1/30/11
 
Net sales $ 1,407,818 $ 1,288,938 $ 5,410,028 $ 4,219,739
Royalty revenue 94,483 81,916 356,035 306,708
Advertising and other revenue 30,535   27,263   124,561   110,401
Total revenue $ 1,532,836   $ 1,398,117   $ 5,890,624   $ 4,636,848
 
Gross profit on net sales $ 649,192 $ 627,031 $ 2,575,293 $ 2,004,842
Gross profit on royalty, advertising and other
revenue 125,018   109,179   480,596   417,109
Total gross profit 774,210 736,210 3,055,889 2,421,951
 
Selling, general and administrative expenses 665,833 644,403 2,481,370 2,071,416
 
Debt modification and extinguishment costs 16,233 6,650
 
Other loss 140,490
 
Equity in income of unconsolidated affiliates 511     1,367    
 
Earnings before interest and taxes 108,888 91,807 559,653 203,395
 
Interest expense, net 32,030   38,097   128,088   126,822
 
Pre-tax income 76,858 53,710 431,565 76,573
 
Income tax (benefit) expense (4,388 ) 1,516   113,684   22,768
 
Net income $ 81,246   $ 52,194   $ 317,881   $ 53,805
 
Diluted net income per common share(1)   $ 1.11     $ 0.72       $ 4.36     $ 0.80
 
Quarter Ended Year Ended
1/29/12 1/30/11 1/29/12 1/30/11
 
Depreciation and amortization expense $ 33,242 $ 33,527 $ 132,010 $ 147,137

Please see following pages for information related to non-GAAP measures discussed in this release.

(1) Please see Note A in the Notes to Consolidated GAAP Income Statements for reconciliations of diluted net income per common share.

PVH CORP.

Non-GAAP Measures

(In thousands, except per share data)

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 expense and costs incurred in 2011 associated with (a) settling the unfavorable preexisting license agreement in connection with its buyout of the Tommy Hilfiger perpetual license in India; (b) the modification of its credit facility; and (c) the negotiated early termination of its license to market sportswear under the Timberland brand and the 2012 exit from its Izod women’s wholesale sportswear business; (iii) the costs incurred in 2010 in connection with the exit from its United Kingdom and Ireland Van Heusen dresswear and accessories business; (iv) the tax effects associated with these costs; (v) the tax benefit in 2011 resulting from revaluing certain deferred tax liabilities in connection with a decrease in the statutory tax rate in Japan; 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 are 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, the negotiated early termination of its Timberland license, the 2012 exit from the Izod women’s wholesale sportswear business and the exit from its United Kingdom and Ireland Van Heusen dresswear and accessories business 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.

           
  Quarter Ended     Year Ended
1/29/12 1/30/11 1/29/12 1/30/11
 
GAAP total revenue $ 1,532,836   $ 1,398,117   $ 5,890,624   $ 4,636,848
 
Non-GAAP Measures
Total gross profit(1) $ 776,263 $ 738,793 $ 3,063,516 $ 2,469,037
Selling, general and administrative expenses(2) 648,347 609,424 2,390,648 1,920,773
Earnings before interest and taxes(3) 128,427 129,369 674,235 548,264
Income tax expense(4) 10,254 23,735 153,930 134,398
Net income(5) 86,143 67,537 392,217 287,044
Diluted net income per common share(6) $ 1.18 $ 0.93 $ 5.38 $ 4.26
 
Depreciation and amortization expense(7)       $ 31,777       $ 130,840     $ 109,851
(1) Please see Table 3 for reconciliation of GAAP to non-GAAP gross profit.
(2) Please see Table 4 for reconciliation of GAAP to non-GAAP selling, general and administrative expenses (“SG&A”).
(3) Please see Table 2 for reconciliation of GAAP earnings before interest and taxes to non-GAAP earnings before interest and taxes.
(4) Please see Table 5 for reconciliation of GAAP income tax (benefit) expense to non-GAAP income tax expense and an explanation of the calculation of the tax effects associated with acquisition, integration, restructuring and debt modification and extinguishment costs.
(5) Please see Table 1 for reconciliation of GAAP net income to non-GAAP net income.
(6) Please see Note A in the Notes to Consolidated GAAP Income Statements for reconciliations of diluted net income per common share.
(7) Please see Table 6 for reconciliation of GAAP depreciation and amortization expense to non-GAAP depreciation and amortization expense.

PVH CORP.

Reconciliations of GAAP to Non-GAAP Amounts

(In thousands, except per share data)

 

Table 1 - Reconciliation of GAAP net income to non-GAAP net income

           
  Quarter Ended     Year Ended
1/29/12 1/30/11 1/29/12 1/30/11
Net income $ 81,246 $ 52,194 $ 317,881 $ 53,805
 
Diluted net income per common share(1) $ 1.11 $ 0.72 $ 4.36 $ 0.80
 
Items excluded:
 
Short-lived non-cash valuation amortization related to Tommy Hilfiger acquisition (gross margin) 44,503
 
Inventory liquidation costs associated with exit of certain Tommy Hilfiger product categories (gross margin) 2,053 2,583 7,627 2,583
 
SG&A expenses associated with buyout of Tommy Hilfiger perpetual license in India 20,709
 
SG&A expenses associated with Tommy Hilfiger acquisition, integration and related restructuring 16,520 28,427 61,895 144,091
 
SG&A expenses associated with negotiated termination of license to market Timberland sportswear and the 2012 exit from the Izod women’s wholesale sportswear business 966 8,118
 
SG&A expenses associated with the exit from the UK and Ireland Van Heusen business 6,552 6,552
 
Debt modification and extinguishment costs 16,233 6,650
 
Losses on hedges against Euro to U.S. dollar exchange rates relating to Tommy Hilfiger purchase price 140,490
 
Tax effect of the items above(2) (9,290 ) (22,219 ) (34,894 ) (103,696 )
 
Tax benefit resulting from revaluing certain deferred tax liabilities in connection with a decrease in the statutory tax rate in Japan (5,352 ) (5,352 )
 
Tax benefit related to the lapse of statute of limitations with respect to previously unrecognized tax positions       (7,934 )
 
Non-GAAP net income $ 86,143 $ 67,537 $ 392,217 $ 287,044
 
Non-GAAP diluted net income per common share(1)   $ 1.18     $ 0.93       $ 5.38     $ 4.26  
 
(1) Please see Note A in the Notes to the Consolidated GAAP Income Statements for reconciliations of diluted net income per common share.
(2) Please see Table 5 for an explanation of the calculation of the tax effects of the above items.

PVH CORP.

Reconciliations of GAAP to Non-GAAP Amounts (continued)

(In thousands)

 

Table 2 - Reconciliation of GAAP earnings before interest and taxes to non-GAAP earnings before interest and taxes

           
  Quarter Ended     Year Ended
1/29/12 1/30/11 1/29/12 1/30/11
 
Earnings before interest and taxes $ 108,888 $ 91,807 $ 559,653 $ 203,395
 
Items excluded:
 
Short-lived non-cash valuation amortization related to Tommy Hilfiger acquisition (gross margin) 44,503
 
Inventory liquidation costs associated with exit of certain Tommy Hilfiger product categories (gross margin) 2,053 2,583 7,627 2,583
 
SG&A expenses associated with buyout of Tommy Hilfiger perpetual license in India 20,709
 
SG&A expenses associated with Tommy Hilfiger acquisition, integration and related restructuring 16,520 28,427 61,895 144,091
 
SG&A expenses associated with negotiated termination of license to market Timberland sportswear and the 2012 exit from the Izod women’s wholesale sportswear business 966 8,118
 
SG&A expenses associated with the exit from the UK and Ireland Van Heusen business 6,552 6,552
 
Debt modification and extinguishment costs 16,233 6,650
 
Losses on hedges against Euro to U.S. dollar exchange rates relating to Tommy Hilfiger purchase price       140,490
 
Non-GAAP earnings before interest and taxes   $ 128,427     $ 129,369       $ 674,235     $ 548,264

Table 3 - Reconciliation of GAAP gross profit to non-GAAP gross profit

           
  Quarter Ended     Year Ended
1/29/12 1/30/11 1/29/12 1/30/11
 
Gross profit $ 774,210 $ 736,210 $ 3,055,889 $ 2,421,951
 
Items excluded:
 
Short-lived non-cash valuation amortization related to Tommy Hilfiger acquisition 44,503
 
Inventory liquidation costs associated with exit of certain Tommy Hilfiger product categories 2,053   2,583   7,627   2,583
 
Non-GAAP gross profit   $ 776,263     $ 738,793       $ 3,063,516     $ 2,469,037

PVH CORP.

Reconciliations of GAAP to Non-GAAP Amounts (continued)

(In thousands)

 

Table 4 - Reconciliation of GAAP SG&A to non-GAAP SG&A

           
Quarter Ended Year Ended
1/29/12 1/30/11 1/29/12 1/30/11
 
SG&A $ 665,833 $ 644,403 $ 2,481,370 $ 2,071,416
 
Items excluded:
 
SG&A expenses associated with buyout of Tommy Hilfiger perpetual license in India (20,709 )
 
SG&A expenses associated with Tommy Hilfiger acquisition, integration and related restructuring (16,520 ) (28,427 ) (61,895 ) (144,091 )
 
SG&A expenses associated with negotiated termination of license to market Timberland sportswear and the 2012 exit from the Izod women’s wholesale sportswear business (966 ) (8,118 )
 
SG&A expenses associated with the exit from the UK and Ireland Van Heusen business   (6,552 )   (6,552 )
 
Non-GAAP SG&A   $ 648,347     $ 609,424       $ 2,390,648     $ 1,920,773  

Table 5 - Reconciliation of GAAP income tax (benefit) expense to non-GAAP income tax expense

           
Quarter Ended Year Ended
1/29/12 1/30/11 1/29/12 1/30/11
 
Income tax (benefit) expense $ (4,388 ) $ 1,516 $ 113,684 $ 22,768
 
Items excluded:
 
Income tax effect of acquisition, integration, restructuring and debt modification and extinguishment costs (1) 9,290 22,219 34,894 103,696
 
Tax benefit resulting from revaluing certain deferred tax liabilities in connection with a decrease in the statutory tax rate in Japan 5,352 5,352
 
Tax benefit related to lapse of statute of limitations with respect to certain previously unrecognized tax positions       7,934
 
Non-GAAP income tax expense   $ 10,254     $ 23,735       $ 153,930     $ 134,398
 

 

(1) The estimated tax effects of the Company’s acquisition, integration, restructuring and debt modification and extinguishment costs 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 and debt extinguishment cost to determine if such cost is tax deductible, and if so, in what jurisdiction the deduction would occur. All of the Company’s acquisition, integration, restructuring, debt modification and debt extinguishment costs 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 amounts.

PVH CORP.

Reconciliations of GAAP to Non-GAAP Amounts (continued)

(In thousands)

 

Table 6 - Reconciliation of GAAP depreciation and amortization expense to non-GAAP depreciation and amortization expense

       
Quarter Ended   Year Ended
1/30/11 1/29/12 1/30/11
 
Depreciation and amortization expense $ 33,527 $ 132,010 $ 147,137
 
Items excluded:
 
Depreciation and amortization expense related to Tommy Hilfiger acquisition (1,750 ) (1,170 ) (37,286 )
 
Non-GAAP depreciation and amortization expense   $ 31,777       $ 130,840     $ 109,851  

PVH CORP.

Notes to Consolidated GAAP Income Statements

(In thousands, except per share data)

 

A. The Company computed its diluted net income per common share as follows:

       
Quarter Ended Quarter Ended
  1/29/12     1/30/11
GAAP     Non-GAAP GAAP     Non-GAAP
Results Adjustments Results Results Adjustments Results
 
Net income $ 81,246 $ (4,897 ) ((1 )) $ 86,143 $ 52,194 $ (15,343 ) ((2 )) $ 67,537
Weighted average common shares 67,478 67,478 66,682 66,682
Weighted average dilutive securities 1,601 1,601 1,574 1,574
Weighted average impact of assumed convertible preferred stock conversion 4,189   4,189   4,189   4,189
Total shares 73,268   73,268   72,445   72,445
 
Diluted net income per common share $ 1.11   $ 1.18   $ 0.72   $ 0.93
  Year Ended       Year Ended
  1/29/12     1/30/11
GAAP     Non-GAAP GAAP     Non-GAAP
Results Adjustments Results Results Adjustments Results
 
Net income $ 317,881 $ (74,336 ) (1) $ 392,217 $ 53,805 $ (233,239 ) (2) $ 287,044
Weighted average common shares 67,158 67,158 62,744 62,744
Weighted average dilutive securities 1,576 1,576 1,527 1,527
Weighted average impact of assumed convertible preferred stock conversion 4,189   4,189   3,107   3,107
Total shares 72,923   72,923   67,378   67,378
 
Diluted net income per common share $ 4.36   $ 5.38   $ 0.80   $ 4.26

(1) Represents the impact on net income in the quarter and year ended January 29, 2012 from the elimination of (i) the costs incurred in connection with the Company’s integration of Tommy Hilfiger and the related restructuring; (ii) the expense incurred associated with settling the unfavorable preexisting license agreement in connection with the Company’s buyout of the Tommy Hilfiger perpetual license in India; (iii) the costs incurred in connection with the Company’s modification of its credit facility; (iv) the costs incurred in connection with the Company’s negotiated early termination of its license to market sportswear under the Timberland brand and the 2012 exit from the Izod women’s wholesale sportswear business; (v) the tax effects associated with these costs; and (vi) the tax benefit resulting from revaluing certain deferred tax liabilities due to a decrease in the statutory tax rate in Japan. Please see Table 1 for a reconciliation of GAAP net income to non-GAAP net income.

(2) Represents the impact on net income in the quarter and year ended January 30, 2011 from the elimination of (i) the costs incurred in connection with the Company’s acquisition and integration of Tommy Hilfiger, including transaction, restructuring and debt extinguishment costs, short-lived non-cash valuation amortization charges and the effects of hedges against Euro to U.S. dollar exchange rates relating to the purchase price; (ii) the costs incurred in connection with the Company’s exit from its United Kingdom and Ireland Van Heusen dresswear 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. Please see Table 1 for a reconciliation of GAAP net income to non-GAAP net income.

PVH CORP.

Consolidated Balance Sheets

(In thousands)

 
January 29, January 30,
2012 2011
ASSETS
Current Assets:
Cash and Cash Equivalents $ 233,197 $ 498,718
Receivables 480,965 447,161
Inventories 809,009 710,868
Other Current Assets 216,064   178,542
Total Current Assets 1,739,235 1,835,289
Property, Plant and Equipment 458,891 404,577
Goodwill and Other Intangible Assets 4,380,853 4,421,516
Other Assets 173,382   122,968
$ 6,752,361   $ 6,784,350
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts Payable and Accrued Expenses $ 960,880 $ 926,387
Short-Term Borrowings 13,040 4,868
Current Portion of Long-Term Debt 69,951
Other Liabilities 1,160,116 1,046,549
Long-Term Debt 1,832,925 2,364,002
Stockholders’ Equity 2,715,449   2,442,544
$ 6,752,361   $ 6,784,350
PVH CORP.
Segment Data
(In thousands)
       

REVENUE BY SEGMENT

Quarter Ended Quarter Ended
  1/29/12     1/30/11
Heritage Brand Wholesale Dress Furnishings
Net sales $ 143,265 $ 131,556
Royalty revenue 1,524 1,525
Advertising and other revenue 855   1,149
Total 145,644 134,230
 
Heritage Brand Wholesale Sportswear
Net sales 118,379 142,624
Royalty revenue 2,362 2,924
Advertising and other revenue 398   420
Total 121,139 145,968
 
Heritage Brand Retail
Net sales 170,611 162,822
Royalty revenue 1,017 1,284
Advertising and other revenue 111   215
Total 171,739 164,321
             
Total Heritage Brands
Net sales 432,255 437,002
Royalty revenue 4,903 5,733
Advertising and other revenue 1,364   1,784
Total   438,522         444,519
 
Other (Calvin Klein Apparel)
Net sales 167,896   152,384
Total 167,896 152,384
 
Calvin Klein Licensing
Net sales 14,022 12,542
Royalty revenue 70,511 60,752
Advertising and other revenue 26,042   23,262
Total 110,575 96,556
             
Total Calvin Klein
Net sales 181,918 164,926
Royalty revenue 70,511 60,752
Advertising and other revenue 26,042   23,262
Total   278,471         248,940
 
Tommy Hilfiger North America
Net sales 362,151 335,204
Royalty revenue 4,192 3,576
Advertising and other revenue 1,723   876
Total 368,066 339,656
 
Tommy Hilfiger International
Net sales 431,494 351,806
Royalty revenue 14,877 11,855
Advertising and other revenue 1,406   1,341
Total 447,777 365,002
             
Total Tommy Hilfiger
Net sales 793,645 687,010
Royalty revenue 19,069 15,431
Advertising and other revenue 3,129   2,217
Total   815,843         704,658
 
Total Revenue
Net sales 1,407,818 1,288,938
Royalty revenue 94,483 81,916
Advertising and other revenue 30,535   27,263
Total $ 1,532,836   $ 1,398,117
PVH CORP.
Segment Data (continued)
(In thousands)
             

EARNINGS BEFORE INTEREST AND TAXES BY SEGMENT

 
Quarter Ended Quarter Ended
  1/29/12     1/30/11
Results Results
Under Non-GAAP Under Non-GAAP
GAAP Adjustments(1) Results GAAP(3) Adjustments(2) Results(3)
 
Heritage Brand Wholesale Dress Furnishings $ 17,615 $ 17,615 $ 10,747 $ (6,552) $ 17,299
 
Heritage Brand Wholesale Sportswear (8,702) $ (966) (7,736) 6,888 6,888
 
Heritage Brand Retail 769     769   3,791     3,791
                             
Total Heritage Brands   9,682     (966)     10,648         21,426     (6,552)     27,978
 
Other (Calvin Klein Apparel) 18,867 18,867 20,008 20,008
 
Calvin Klein Licensing 51,317     51,317   46,102     46,102
                             
Total Calvin Klein   70,184         70,184         66,110         66,110
 
Tommy Hilfiger North America 20,483 (11,141) 31,624 10,933 (16,621) 27,554
 
Tommy Hilfiger International 35,222   (3,471)   38,693   23,416   (5,076)   28,492
                             
Total Tommy Hilfiger   55,705     (14,612)     70,317         34,349     (21,697)     56,046
 
Corporate (26,683)   (3,961)   (22,722)   (30,078 ) (9,313)   (20,765)
 
Total earnings before interest and taxes $ 108,888   $ (19,539)   $ 128,427   $ 91,807   $ (37,562)   $ 129,369

(1) Adjustments for the quarter ended January 29, 2012 represent the elimination of the costs incurred in connection with the Company’s (i) integration of Tommy Hilfiger and the related restructuring; and (ii) negotiated early termination of its license to market sportswear under the Timberland brand and 2012 exit from the Izod women’s wholesale sportswear business.

(2) Adjustments for the quarter ended January 30, 2011 represent the elimination of the costs incurred in connection with the Company’s (i) integration of Tommy Hilfiger and the related restructuring; and (ii) exit from its United Kingdom and Ireland Van Heusen dresswear and accessories business.

(3) In 2011 the Company changed the way actuarial gains and losses from its defined benefit pension plans are allocated to its reportable segments. Actuarial gains and losses are now included as part of corporate expenses not allocated to any reportable segments. Prior year periods have been restated in order to present that information on a basis consistent with the current year.

PVH CORP.
Segment Data (continued)
(In thousands)
       
 

REVENUE BY SEGMENT

Year Ended Year Ended
  1/29/12     1/30/11
Heritage Brand Wholesale Dress Furnishings
Net sales $ 564,898 $ 523,901
Royalty revenue 6,158 5,815
Advertising and other revenue 2,169   2,689
Total 573,225 532,405
 
Heritage Brand Wholesale Sportswear
Net sales 537,284 568,447
Royalty revenue 10,008 10,731
Advertising and other revenue 1,687   1,764
Total 548,979 580,942
 
Heritage Brand Retail
Net sales 646,769 638,902
Royalty revenue 4,822 5,023
Advertising and other revenue 772   842
Total 652,363 644,767
             
Total Heritage Brands
Net sales 1,748,951 1,731,250
Royalty revenue 20,988 21,569
Advertising and other revenue 4,628   5,295
Total   1,774,567         1,758,114
 
Other (Calvin Klein Apparel)
Net sales 637,870   552,757
Total 637,870 552,757
 
Calvin Klein Licensing
Net sales 45,796 38,326
Royalty revenue 273,002 244,891
Advertising and other revenue 108,588   97,530
Total 427,386 380,747
             
Total Calvin Klein
Net sales 683,666 591,083
Royalty revenue 273,002 244,891
Advertising and other revenue 108,588   97,530
Total   1,065,256         933,504
 
Tommy Hilfiger North America
Net sales 1,273,829 889,630
Royalty revenue 16,850 11,558
Advertising and other revenue 7,016   3,257
Total 1,297,695 904,445
 
Tommy Hilfiger International
Net sales 1,703,582 1,007,776
Royalty revenue 45,195 28,690
Advertising and other revenue 4,329   4,319
Total 1,753,106 1,040,785
             
Total Tommy Hilfiger
Net sales 2,977,411 1,897,406
Royalty revenue 62,045 40,248
Advertising and other revenue 11,345   7,576
Total   3,050,801         1,945,230
 
Total Revenue
Net sales 5,410,028 4,219,739
Royalty revenue 356,035 306,708
Advertising and other revenue 124,561   110,401
Total $ 5,890,624   $ 4,636,848

PVH CORP.
Segment Data (continued)
(In thousands)

               

EARNINGS BEFORE INTEREST AND TAXES BY SEGMENT

 
Year Ended Year Ended
  1/29/12     1/30/11
Results Results
Under Non-GAAP Under Non-GAAP
GAAP(3) Adjustments(1) Results(3) GAAP(3) Adjustments(2) Results(3)
 
Heritage Brand Wholesale Dress Furnishings $ 78,577 $ 78,577 $ 66,624 $ (6,552 ) $ 73,176
 
Heritage Brand Wholesale Sportswear 11,398 $ (8,118) 19,516 57,921 57,921
 
Heritage Brand Retail 28,993     28,993   45,339     45,339
                             
Total Heritage Brands   118,968     (8,118)     127,086         169,884     (6,552)     176,436
 
Other (Calvin Klein Apparel) 88,822 88,822 73,093 73,093
 
Calvin Klein Licensing 189,178     189,178   174,699     174,699
                             
Total Calvin Klein   278,000         278,000         247,792         247,792
 
Tommy Hilfiger North America 81,450 (44,704) 126,154 37,554 (51,946) 89,500
 
Tommy Hilfiger International 200,697   (26,128)   226,825   51,653   (62,844)   114,497
                             
Total Tommy Hilfiger   282,147     (70,832)     352,979         89,207     (114,790)     203,997
 
Corporate (119,462)   (35,632)   (83,830)   (303,488)   (223,527)   (79,961)
 
Total earnings before interest and taxes $ 559,653   $ (114,582)   $ 674,235   $ 203,395   $ (344,869 ) $ 548,264

(1) Adjustments for the year ended January 29, 2012 represent the elimination of (i) the costs incurred in connection with the Company’s integration of Tommy Hilfiger and the related restructuring; (ii) the expense incurred associated with settling the unfavorable preexisting license agreement in connection with the Company’s buyout of the Tommy Hilfiger perpetual license in India; (iii) the costs incurred in connection with the Company’s modification of its credit facility; and (iv) the costs incurred in connection with the Company’s negotiated early termination of its license to market sportswear under the Timberland brand and its 2012 exit from the Izod women’s wholesale sportswear business.

(2) Adjustments for the year ended January 30, 2011 represent the elimination of the costs incurred in connection with the Company’s (i) acquisition and integration of Tommy Hilfiger, including transaction, restructuring and debt extinguishment costs, non-cash valuation amortization charges and the effects of hedges against Euro to U.S. dollar exchange rates relating to the purchase price; and (ii) exit from its United Kingdom and Ireland Van Heusen dresswear and accessories business.

(3) In 2011 the Company changed the way actuarial gains and losses from its defined benefit pension plans are allocated to its reportable segments. Actuarial gains and losses are now included as part of corporate expenses not allocated to any reportable segments. Prior year periods have been restated in order to present that information on a basis consistent with the current year.

PVH CORP.

Full Year and First Quarter Reconciliations of GAAP to Non-GAAP Amounts

The Company believes presenting its (1) 2012 estimated results excluding (i) the costs expected to be incurred principally in connection with its integration of Tommy Hilfiger and the related restructuring; and (ii) the estimated tax effects associated with these costs, and (2) first quarter 2011 results excluding (i) the costs incurred in connection with its integration of Tommy Hilfiger and the related restructuring; (ii) the costs incurred in connection with its modification of its credit facility; and (iii) the estimated tax effects associated with these costs, 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 these costs 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 integration, related restructuring or modification 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.

(Dollar amounts in millions, except per share data)

     

2012 Net Income Per Common Share Reconciliations

Full Year

2012

(Estimated)

First Quarter

2012

(Estimated)

 
GAAP net income per common share $5.80 - $5.90 $1.08 - $1.10
Estimated per common share impact of after tax integration and restructuring costs $0.30 $0.15
Net income per common share excluding impact of integration and restructuring costs $6.10 - $6.20 $1.23 - $1.25

The GAAP net income per common share amounts presented in the above table are being provided solely to comply with applicable SEC rules and are not, and should not be construed to be, guidance for the Company’s 2012 fiscal year. The Company’s net income per common share, as well as the amounts excluded in providing non-GAAP earnings guidance, would be expected to change as a result of acquisition, restructuring, divestment or similar transactions or activities or other one-time events. The Company has no current understanding or agreement regarding any such transaction or definitive plans regarding any such activity.

Reconciliation of Net Income Per Common Share Impact of Tax Rate Changes

  Full Year

2012

(Estimated)

 
2012 net income per common share increase due to change in tax rate on a GAAP basis (midpoint of estimate of 23.75% in 2012 vs. 26.3% in 2011) $0.20
Adjustment for difference in 2011 GAAP and non-GAAP tax rates $0.15
2012 net income per common share increase due to change in tax rate on a non-GAAP basis (midpoint of estimate of 23.75% in 2012 vs. 28.2% in 2011) $0.35

PVH CORP.

Full Year and First Quarter Reconciliations of GAAP to Non-GAAP Amounts (Continued)

 

Reconciliation of GAAP Diluted Net Income Per Common Share to Non-GAAP Diluted Net Income Per Common Share

First Quarter 2011
(Actual)
Results Under GAAP   Adjustments Non-GAAP Results
 
Net income $ 57.7 $ (31.9 ) (1) $ 89.6
Total weighted average shares 72.6     72.6
 
Diluted net income per common share $ 0.79     $ 1.23

(1) Represents the impact on net income in the quarter ended May 1, 2011 from the elimination of (i) the costs incurred in connection with the Company’s integration of Tommy Hilfiger and related restructuring; (ii) the costs incurred in connection with the Company’s modification of its credit facility; and (iii) the tax effects associated with these costs.

Source: PVH Corp.

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

 

News

Filter News by Brand and Year:

Calvin Klein Announced as Official Event Sponsor of Fashion Rocks® Special to Air Live from the Barclays Center on CBS September 9, 2014 / 7.29.14

Amateur Standout Cameron Wilson Joins Team IZOD in Multi-Year Partnership / 6.17.14

PVH Corp. Announces License Agreement with Vandale Industries for Warner’s and Olga / 6.10.14

PVH Corp. Annual Meeting of Stockholders June 19, 2014 / 6.10.14

PVH Corp. to Participate in the 34th Annual Piper Jaffray Consumer Conference on June 10, 2014 / 6.5.14

PVH Corp. Reports 2014 First Quarter Results / 6.4.14

PVH Corp. to Host Conference Call to Discuss First Quarter 2014 Earnings Results / 5.19.14

Calvin Klein, Inc. Announces Distribution and Retail Store License Agreement for Latin America with American Designer Fashion S.A. / 5.8.14

PVH Corp. Announces License Agreement with Leisure Brands (Pty) Ltd. for IZOD Brand / 5.6.14

SPEEDO USA’s New TriClops Pack Wins Red Dot Award 2014 / 5.6.14

PVH Corp. Announces License Agreement with TS Commerce Corporation for Van Heusen Brand / 5.5.14

PVH Corp. to Participate in the 3rd Annual Nomura Retail Conference April 28, 2014 / 4.23.14

PVH Corp. Announces Minority Investment in Karl Lagerfeld / 4.8.14

PVH Corp. Reports 2013 Fourth Quarter and Full Year Results and Announces 2014 Outlook / 3.25.14

Calvin Klein, Inc. Announces Tom Murry to Retire; Veteran Calvin Klein Executive Steve Shiffman to Be Elevated to Chief Executive Officer / 3.25.14

PVH Corp. Announces the Closing of Its Amended and Restated Senior Credit Facilities and Redemption of Its 7.375% Senior Notes Due 2020 / 3.24.14

Arvind Limited Joins Indian Joint Venture with PVH Corp. for Operation of Calvin Klein Businesses in India / 3.24.14

PVH Corp. to Host Conference Call to Discuss Fourth Quarter 2013 Earnings Results / 3.7.14

Warner's And Olga Help Women Say Goodbye To "Sleevage" With Launch Of No Side Effects And On Your Side Bras / 2.26.14

PVH Corp. Announces Intention to Amend Its Senior Credit Facilities and Call Its 7.375% Senior Notes Due 2020 and Reaffirms Guidance for Fourth Quarter and Full Year 2013 / 2.21.14

PVH Corp. Announces Appointment of Two New Directors to Its Board of Directors / 1.31.14

Tommy Hilfiger Announces Collaboration with Zooey Deschanel / 1.27.14

PVH Corp. to Reaffirm Earnings Per Share Guidance and Lower Revenue Guidance at the ICR Xchange Conference / 1.10.14

PVH CORP. Announces License Agreement with Axis Golf Pty. Limited for IZOD Brand / 1.6.14