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PVH Corp. Reports 2012 Third Quarter Results

  • Non-GAAP EPS of $2.34 Exceeded the Top End of the Company’s Guidance by $0.04; GAAP EPS Was $2.24
  • Tommy Hilfiger and Calvin Klein Businesses Continue to Drive Earnings Performance
  • Full Year Non-GAAP EPS Guidance Raised to a Range of $6.37 to $6.38, an Increase of 18% to 19% over the Prior Year’s Non-GAAP EPS

NEW YORK--(BUSINESS WIRE)--Nov. 27, 2012-- PVH Corp. [NYSE: PVH] reported 2012 third quarter and year to date results and updated its guidance for the full year.

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 Third Quarter Results:

  • Earnings per share was $2.34 on a non-GAAP basis, which exceeded the Company’s guidance and represents a 24% increase over the prior year period’s non-GAAP earnings per share of $1.89.
  • GAAP earnings per share was $2.24 and represents a 45% increase over the prior year period’s GAAP earnings per share of $1.54.
  • Revenue of $1.643 billion decreased 1% as compared to the prior year period due to a 5% negative impact attributable to the exit from the Izod women’s and Timberland wholesale sportswear businesses (worth approximately $50 million) and foreign currency translation (worth approximately $40 million). On a constant currency basis and excluding the impact of exited businesses, revenue increased 4%.
  • Operating margin on a non-GAAP basis increased 150 basis points due to a 260 basis point gross margin increase, driven by the higher-margin Calvin Klein and Tommy Hilfiger businesses growing faster, combined with higher average unit retail selling prices and decreased product costs across the Company’s businesses. GAAP operating margin increased 260 basis points.

Third Quarter Business Review:

Tommy Hilfiger

Revenue in the Tommy Hilfiger business increased 1% to $833.6 million from $826.6 million in the prior year’s third quarter, including a negative impact of approximately $40 million, or 5%, related to foreign currency translation. On a constant currency basis, Tommy Hilfiger revenue increased 6%. Within the Tommy Hilfiger North America business, revenue increased 8%, principally driven by retail comparable store sales growth of 9%. Revenue in the Tommy Hilfiger International business decreased 4%, due to a negative impact of 8% related to foreign currency translation. On a constant currency basis, revenue for the Tommy Hilfiger International business increased 4%, driven by European retail comparable store sales growth of 14%, partially offset by continued weakness in Japan, where the Company is currently in the process of strategically repositioning and investing in the brand.

On a non-GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business increased 16% to $135.1 million from $116.2 million in the prior year’s third quarter, due to the net revenue increase discussed above and a significant improvement in gross margin driven by an increase in average unit retail selling prices and a decrease in product costs. Partially offsetting this increase was the negative impact of approximately $10 million related to foreign currency translation.

On a GAAP basis, earnings before interest and taxes for the Tommy Hilfiger business increased 42% to $128.8 million, as compared to $90.6 million in the prior year’s third quarter. This increase was due principally to the net impact of the overall revenue and gross margin increases noted above, combined with the absence of expenses incurred in connection with the Company’s buyout of the perpetual license for Tommy Hilfiger in India and a decrease in integration and restructuring costs.

Calvin Klein

Revenue in the Calvin Klein business increased 6% to $319.6 million from $301.2 million in the prior year’s third quarter, driven primarily by a 9% increase in comparable store sales within the Company’s Calvin Klein outlet retail business and an 11% increase in the North American wholesale business. These increases were partially offset by Calvin Klein royalty revenue, which was relatively flat to the prior year period. Fragrance, women’s sportswear, dresses, footwear and handbags continued to experience strong growth globally during the quarter, but were offset by a decline in royalty revenue related to the upcoming reacquisition of the European bridge apparel and accessories business and continued weakness in jeans and women’s underwear in Europe and the United States.

Earnings before interest and taxes for the Calvin Klein business increased 7% to $92.4 million as compared to the prior year’s third quarter amount of $86.2 million, driven principally by the revenue increases discussed above, combined with an improvement in gross margin in the Company’s Calvin Klein apparel business and a shift in advertising expenses.

Heritage Brands

Total revenue for the Heritage Brands business decreased 7% to $489.5 million as compared to $526.3 million in the prior year’s third quarter due to a $50 million, or 10%, negative impact related to the exit from the Izod women’s and Timberland wholesale sportswear businesses. Excluding the impact of exited businesses, revenue for the Heritage Brands business increased 3%, principally attributable to strong growth in the Company’s ongoing wholesale sportswear businesses. Comparable store sales for the Heritage Brands retail business were relatively flat to the prior year.

Earnings before interest and taxes for the Heritage Brands business was $47.4 million, an increase of 3% as compared to the prior year’s third quarter of $46.1 million on a non-GAAP basis and an increase of 4% as compared to the prior year’s third quarter of $45.6 million on a GAAP basis. The increase in earnings before interest and taxes was due principally to strength in the wholesale dress furnishings and wholesale sportswear businesses, partially offset by continued weakness in the retail business, particularly Bass. The increase in earnings before interest and taxes on a GAAP basis was also attributable to the absence of $0.5 million of costs incurred in 2011 in connection with the Company’s termination of its license to market sportswear under the Timberland brand.

Third Quarter Consolidated Earnings:

On a non-GAAP basis, earnings before interest and taxes increased 10% to $250.4 million from $227.3 million in the prior year’s third quarter, including the negative impact of approximately $10 million related to foreign currency translation and a $3.3 million increase in corporate expenses due principally to an increase in pension expense resulting from a decrease in discount rates. Driving the overall increase in non-GAAP earnings before interest and taxes was (i) an increase of $18.9 million in the Tommy Hilfiger business, inclusive of approximately $10 million negative impact due to foreign currency translation; (ii) an increase of $6.3 million in the Calvin Klein business; and (iii) an increase of $1.3 million in the Heritage Brands business.

On a GAAP basis, earnings before interest and taxes increased 21% to $237.4 million as compared to $196.8 million in the prior year’s third quarter. The increase was due principally to the net effect of the changes discussed above, combined with the net effect of (i) the absence of $20.7 million of expenses incurred in connection with the Company’s buyout of the perpetual license for Tommy Hilfiger in India; (ii) a $2.7 million decrease in integration and restructuring costs associated with the Tommy Hilfiger acquisition; and (iii) $6.4 million of costs incurred in the current year’s third quarter related to the pending acquisition of The Warnaco Group, Inc.

Net interest expense decreased $3.3 million to $28.3 million as compared to the prior year’s third quarter, due principally to lower debt levels in the current quarter.

The effective tax rate was 21.9% on a non-GAAP basis as compared to 29.4% on a non-GAAP basis in the prior year’s third quarter. The effective tax rate was 20.9% on a GAAP basis, as compared to 32.1% on a GAAP basis in the prior year’s third quarter. Continuing to positively impact the Company’s 2012 tax rates is an increase in the proportion of earnings attributable to foreign jurisdictions that are subject to favorable tax rates, as well as the continuation of the tax synergies resulting from the Tommy Hilfiger acquisition. In addition, positively impacting the third quarter 2012 GAAP effective tax rate was a benefit resulting from previously unrecognized tax credits.

The non-GAAP effective tax rate in the third quarter was lower than the Company’s previous guidance due to the timing of certain discrete tax items, which benefited the Company’s third quarter non-GAAP earnings per share by approximately $0.03 and were originally planned to occur in the fourth quarter of the current year.

Nine Months Consolidated Results:

  • Earnings per share on a non-GAAP basis was $4.90 as compared to $4.20 for the prior year.
  • GAAP earnings per share was $4.70 as compared to $3.25 for the prior year.
  • Revenue increased 1% to $4.407 billion, including a negative impact of 4% attributable to foreign currency translation and the exited sportswear businesses. The overall increase in revenue was due to the net impact of:
    • A 4%, or $90.9 million, increase in the Tommy Hilfiger business, including a negative impact of approximately $100 million, or 4%, related to foreign currency translation. Within the Tommy Hilfiger North America business, revenue increased 10%, principally driven by retail comparable store sales growth of 11%. Revenue in the Tommy Hilfiger International business was relatively flat to the prior year period, including a negative impact of 7% related to foreign currency translation. On a constant currency basis, revenue for the Tommy Hilfiger International business increased 7%, driven by European retail comparable store sales growth of 12%, partially offset by continued weakness in Japan, where the Company is currently in the process of strategically repositioning and investing in the brand.
    • A 6%, or $46.2 million, increase in the Calvin Klein business, driven primarily by a 7% increase in comparable store sales within the Company’s Calvin Klein outlet retail business and an 8% increase in the North American wholesale business. Royalty revenue increased 1% as compared to the prior year, including a negative impact of 2% related to foreign currency translation.
    • A 7%, or $88.1 million, decrease in the Heritage Brands business, including the negative impact of 5% related to the exited sportswear businesses. The Company’s dress furnishings business experienced a 9% decrease due to a reduction in sales to a mid-tier department store retailer. Comparable store sales in the Heritage Brands retail business were relatively flat.
  • On a non-GAAP basis, earnings before interest and taxes increased $14.4 million to $560.2 million. This change resulted from:
    • A $52.5 million increase in the Tommy Hilfiger business due principally to the revenue increase mentioned above combined with an increase in gross margin due primarily to higher average unit retail selling prices globally. Partially offsetting this increase was the negative impact of approximately $15 million related to foreign currency translation.
    • A $3.2 million increase in the Calvin Klein business attributed to the revenue increase discussed above, partially offset by a planned decrease in gross margin resulting principally from the impact of higher product costs experienced in the first half of the year.
    • A $28.1 million decrease in the Heritage Brands business due principally to the revenue decrease mentioned above, combined with a planned decrease in gross margin rates resulting principally from the impact of higher product costs experienced in the first half of the year.
    • A $13.2 million decrease attributable to an increase in corporate expenses due principally to additional pension expense resulting from lower discount rates.
  • GAAP earnings before interest and taxes increased $88.6 million to $539.3 million. Earnings increased $98.5 million and $3.2 million in the Tommy Hilfiger and Calvin Klein businesses, respectively, while earnings in the Heritage Brands business decreased $21.0 million and corporate expenses decreased $7.8 million. These earnings changes were due to the above-mentioned items combined with lower integration, restructuring and debt modification costs, partially offset by the $6.4 million of costs incurred in the current year’s third quarter related to the acquisition of Warnaco.
  • On a non-GAAP basis, the effective tax rate was 23.9% as compared to 31.9% in the prior year period. The GAAP effective tax rate was 23.6% as compared to 33.3% for the prior year period. The Company’s 2012 tax rates were positively impacted by an increase in the proportion of earnings attributable to foreign jurisdictions that are subject to favorable tax rates, as well as the continuation of the tax synergies resulting from the Tommy Hilfiger acquisition. In addition, positively impacting the 2012 GAAP effective tax rate was a benefit resulting from previously unrecognized tax credits.

Balance Sheet:

The Company ended the quarter with a net debt position of $1.597 billion, comprised of $1.874 billion of debt, net of $276.6 million of cash. During the third quarter, the Company made payments totaling $77.7 million on its outstanding term loans, for total term loan payments of approximately $170 million during the first nine months of 2012 and approximately $870 million since the date of the Tommy Hilfiger acquisition, the majority of which were voluntary. The Company currently plans to make term loan payments of approximately $130 million during the remainder of 2012.

Ending inventories increased 2% to $855.4 million over the prior year’s third quarter. The Company continues to remain very comfortable with the quality of its inventory.

2012 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 and reconciliations of GAAP to non-GAAP amounts discussed in this section.

Warnaco Acquisition

The Company announced in the fourth quarter of 2012 that it had entered into a definitive agreement to acquire The Warnaco Group, Inc., with an expected closing date early in 2013. The following provides guidance for the Company’s full year and fourth quarter 2012, which does not give effect to the Warnaco acquisition and assumes the Company continues on a standalone basis.

Full Year Guidance

Revenue in 2012 is projected to increase approximately 2% as compared to $5.891 billion in 2011. On a constant currency basis and excluding the impact of the exited businesses, 2012 revenue is projected to increase approximately 6%. Foreign currency translation is expected to have a negative revenue impact of approximately $120 million, or 2%, while the exit from the Izod women’s and Timberland wholesale sportswear businesses is expected to reduce revenue by approximately $100 million, or 2%, for a total decrease in revenue of approximately 4% related to these items.

Revenue for the Tommy Hilfiger business is expected to increase approximately 4% as compared to $3.051 billion in 2011, including a negative foreign currency translation impact of approximately 4%. Revenue for the Calvin Klein business is expected to grow approximately 7% as compared to $1.065 billion in 2011. Calvin Klein royalty revenue is expected to be negatively impacted by foreign currency translation, the upcoming reacquisition of the ck Calvin Klein European apparel and accessories licenses and the ongoing challenging business for the jeans and underwear product categories in Europe and the United States. Revenue for the Heritage Brands business is expected to decrease approximately 5% as compared to $1.775 billion in 2011, attributable to a 6% negative impact related to the previously mentioned exited sportswear businesses.

On a non-GAAP basis, earnings per share in 2012 is currently projected to be in the range of $6.37 to $6.38, an increase of 18% to 19% over the 2011 amount of $5.38. The Company estimates that the 2012 effective tax rate will be approximately 23.5%.

Fourth Quarter Guidance

Fourth quarter revenue in 2012 is currently projected to increase 4% to 5% as compared to the prior year’s fourth quarter amount of $1.533 billion. On a constant currency basis and excluding the impact of the exited businesses, fourth quarter revenue in 2012 is projected to increase 7% to 8%. Foreign currency translation is expected to have a negative revenue impact of approximately $20 million, or 1%, while the exit from the Izod women’s and Timberland wholesale sportswear businesses is expected to reduce revenue by approximately $30 million, or 2%, for a total decrease in revenue of approximately 3% related to these items.

Revenue for the Tommy Hilfiger business is expected to increase approximately 5% as compared to the fourth quarter of 2011, which includes a negative impact of approximately 2% related to foreign currency translation. Revenue for the Calvin Klein business is expected to grow approximately 10% as compared to the fourth quarter of 2011. Revenue for the Heritage Brands business is expected to be relatively flat as compared to the fourth quarter of 2011, inclusive of a 7% negative impact related to the exited sportswear businesses.

On a non-GAAP basis, earnings per share for the fourth quarter is currently projected to be in the range of $1.48 to $1.49, including the negative impact Hurricane Sandy had on business in the first half of November. This represents an increase of 25% to 26% over $1.18 in the prior year’s fourth quarter. The Company does not expect that foreign currency translation will have a material impact on earnings in the fourth quarter as compared to the prior year. The Company currently estimates that the fourth quarter 2012 effective tax rate will be approximately 22.0%, which reflects the timing of certain discrete tax benefits moving out of the fourth quarter and into the third quarter, as previously mentioned.

CEO Comments:

Commenting on these results, Emanuel Chirico, Chairman and Chief Executive Officer, noted, “We are very pleased with our third quarter and year-to-date performance, which was primarily driven by the Tommy Hilfiger and Calvin Klein businesses continuing to exhibit strong global growth, allowing us to exceed our previous earnings guidance. The Heritage Brands business saw some modest improvement in the quarter, which we believe demonstrates that this business is on the path to return to its historic profitability levels. Taking into account the third quarter outperformance across our businesses, coupled with the impact of Hurricane Sandy, we have once again raised our full year earnings guidance, despite the uncertain global economic and market conditions.”

Mr. Chirico continued, “The worldwide consumer appeal for Calvin Klein and Tommy Hilfiger has allowed us to successfully expand our market share penetration and global reach of our designer lifestyle brands, despite the macroeconomic headwinds. We believe we can continue to grow our businesses profitably in the future by identifying and executing additional strategic opportunities for all of our brands, including the recently announced acquisition of Warnaco and formation of a joint venture in Brazil for the Tommy Hilfiger brand.”

Mr. Chirico concluded, “Both the PVH and Warnaco management teams are working diligently to consummate the Warnaco acquisition. We currently expect this transaction to close in early 2013. As we highlighted when we announced the acquisition, this is a unique opportunity to reunite the “House of Calvin Klein” to ensure a single global brand vision. This acquisition also allows us to align our strong operating platforms in North America and Europe with Warnaco’s operations in Asia and Latin America, which will give the combined company strong established operations in every major consumer market worldwide. This will pave the way for enhanced revenue and earnings growth, while also improving operating margins in the future. As we head into the important holiday selling season, we remain firm in our belief that the strength of our brands, the sound execution of our business strategies, continued investment in our world-class brands and our strong credit profile will continue to drive long-term growth and will position us to deliver strong earnings results in the fourth quarter of 2012 and beyond.”

Non-GAAP Exclusions:

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

  • 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 $15 million expected to be incurred in 2012 principally in connection with the integration of Tommy Hilfiger and the related restructuring, of which $3.3 million was incurred in the first quarter, $4.5 million was incurred in the second quarter, $6.6 million was incurred in the third quarter, and approximately $1 million is expected to be incurred in the fourth quarter.
  • Pre-tax costs of approximately $36 million expected to be incurred in 2012 in connection with the acquisition of Warnaco, of which $6.4 million was incurred in the third quarter and approximately $30 million is expected to be incurred in the fourth quarter.
  • A tax benefit of $4.5 million recorded in the third quarter of 2012 resulting from previously unrecognized tax credits.
  • 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 or debt 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.

Please see Tables 1 through 5 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 Wednesday, November 28, 2012 at 9:00 a.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 #7917574. 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, including, without limitation, statements relating to the Company’s proposed acquisition of The Warnaco Group, Inc. (“Warnaco”), 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) the Company’s proposed acquisition of Warnaco is subject to conditions, which may not be satisfied, in which event the transaction may not close; (iii) in connection with the acquisition of Tommy Hilfiger B.V. and certain affiliated companies, the Company borrowed significant amounts, and in connection with the proposed acquisition of Warnaco, the Company intends to borrow additional significant amounts, may now or thereafter be considered to be highly leveraged, and uses and will have to continue 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; (iv) 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; (v) the Company’s plans and results of operations will be affected by the Company’s ability to manage its growth and inventory, including the Company’s ability to realize benefits from Warnaco, if the acquisition is consummated; (vi) 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; (vii) 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 become ill or limit or cease shopping in order to avoid exposure; (viii) acquisitions and issues arising with acquisitions and proposed transactions, including, without limitation, the ability to integrate an acquired entity, such as Warnaco, 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; (ix) 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 (x) other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”).

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 Nine Months Ended
10/28/12 10/30/11 10/28/12 10/30/11
 
Net sales $ 1,501,442 $ 1,517,494 $ 4,033,911 $ 4,002,210
Royalty revenue 103,944 102,541 271,917 261,552
Advertising and other revenue 37,384 34,125 100,971 94,026
Total revenue $ 1,642,770 $ 1,654,160 $ 4,406,799 $ 4,357,788
 
Gross profit on net sales $ 727,756 $ 692,302 $ 1,995,686 $ 1,926,101
Gross profit on royalty, advertising and other revenue 141,328 136,666 372,888 355,578
Total gross profit 869,084 828,968 2,368,574 2,281,679
 
Selling, general and administrative expenses 634,854 632,982 1,834,288 1,815,537
 
Debt modification costs 16,233
 
Equity in income of unconsolidated affiliates 3,193 856   5,043 856
 
Earnings before interest and taxes 237,423 196,842 539,329 450,765
 
Interest expense, net 28,284 31,542   85,883 96,058
 
Pre-tax income 209,139 165,300 453,446 354,707
 
Income tax expense 43,730 53,061   107,221 118,072
 
Net income $ 165,409 $ 112,239   $ 346,225 $ 236,635
 
Diluted net income per common share(1) $ 2.24   $ 1.54 $ 4.70 $ 3.25
 
Quarter Ended Nine Months Ended
10/28/12 10/30/11 10/28/12 10/30/11
 
Depreciation and amortization expense $ 34,752 $ 32,321 $ 102,544 $ 98,768
 

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 2012 and 2011 in connection with its integration of Tommy Hilfiger and the related restructuring; (ii) the costs incurred in 2012 in connection with its pending acquisition of Warnaco, which is expected to close in early 2013; (iii) the expense incurred in 2011 associated with settling the unfavorable preexisting license agreement in connection with its buyout of the perpetual license for Tommy Hilfiger in India; (iv) the costs incurred in 2011 in connection with the modification of its credit facility; (v) the costs incurred in 2011 in connection with the negotiated early termination of its license to market sportswear under the Timberland brand; (vi) the tax effects associated with these costs; and (vii) the tax benefit in 2012 resulting from previously unrecognized tax credits, 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 described above in (i) through (vi) 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 5 for reconciliations of the GAAP amounts to non-GAAP amounts.

             
Quarter Ended Nine Months Ended
10/28/12 10/30/11 10/28/12 10/30/11
 
GAAP total revenue $ 1,642,770 $ 1,654,160 $ 4,406,799 $ 4,357,788
 
Non-GAAP Measures
Total gross profit(1) $ 832,389 $ 2,287,253
Selling, general and administrative expenses(2) $ 621,881 605,928 $ 1,813,458 1,742,301
Earnings before interest and taxes(3) 250,396 227,317 560,159 545,808
Income tax expense(4) 48,643 57,557 113,317 143,676
Net income(5) 173,469 138,218 360,959 306,074
Diluted net income per common share(6) $ 2.34 $ 1.89 $ 4.90 $ 4.20
 

(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 to non-GAAP earnings before interest and taxes.

(4)

Please see Table 5 for reconciliation of GAAP to non-GAAP income tax expense and an explanation of the calculation of the tax effects associated with acquisition, integration, restructuring and debt modification costs.

(5)

Please see Table 1 for reconciliation of GAAP 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.

 
 

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 Nine Months Ended
10/28/12 10/30/11 10/28/12 10/30/11
 
Net income $ 165,409 $ 112,239 $ 346,225 $ 236,635
 
Diluted net income per common share(1) $ 2.24 $ 1.54 $ 4.70 $ 3.25
 
Items excluded:
 
Inventory liquidation costs associated with exit of certain Tommy Hilfiger product categories (gross margin) 3,421 5,574
 
SG&A expenses associated with buyout of perpetual license for Tommy Hilfiger in India 20,709 20,709
 
SG&A expenses associated with Tommy Hilfiger integration and related restructuring 6,561 5,843 14,418 45,375
 
SG&A expenses associated with negotiated termination of license to market Timberland sportswear 502 7,152
 
SG&A expenses associated with pending acquisition of Warnaco 6,412 6,412
 
Debt modification costs 16,233
 
Tax effect of the items above(2) (413 ) (4,496 ) (1,596 ) (25,604 )
 
Tax benefit resulting from previously unrecognized tax credits (4,500 )   (4,500 )  
 
Non-GAAP net income $ 173,469 $ 138,218 $ 360,959 $ 306,074
 
Non-GAAP diluted net income per common share(1) $ 2.34     $ 1.89     $ 4.90     $ 4.20  
 

(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.

 
 

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

             
Quarter Ended Nine Months Ended
10/28/12 10/30/11 10/28/12 10/30/11
 
Earnings before interest and taxes $ 237,423 $ 196,842 $ 539,329 $ 450,765
 
Items excluded:
 
Inventory liquidation costs associated with exit of certain Tommy Hilfiger product categories (gross margin) 3,421 5,574
 
SG&A expenses associated with buyout of perpetual license for Tommy Hilfiger in India 20,709 20,709
 
SG&A expenses associated with Tommy Hilfiger integration and related restructuring 6,561 5,843 14,418 45,375
 
SG&A expenses associated with negotiated termination of license to market Timberland sportswear 502 7,152
 
SG&A expenses associated with pending acquisition of Warnaco 6,412 6,412
 
Debt modification costs       16,233
 
Non-GAAP earnings before interest and taxes $ 250,396   $ 227,317   $ 560,159   $ 545,808
   

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

   

 

Quarter Ended

 

Nine Months Ended

10/30/11 10/30/11
 
Gross profit $ 828,968 $ 2,281,679
 
Items excluded:
 
Inventory liquidation costs associated with exit of certain Tommy Hilfiger product categories 3,421 5,574
 
Non-GAAP gross profit $ 832,389 $ 2,287,253
 
 

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 Nine Months Ended
10/28/12 10/30/11 10/28/12 10/30/11
 
SG&A $ 634,854 $ 632,982 $ 1,834,288 $ 1,815,537
 
Items excluded:
 
SG&A expenses associated with buyout of perpetual license for Tommy Hilfiger in India (20,709 ) (20,709 )
 
SG&A expenses associated with Tommy Hilfiger integration and related restructuring (6,561 ) (5,843 ) (14,418 ) (45,375 )
 
SG&A expenses associated with negotiated termination of license to market Timberland sportswear (502 ) (7,152 )
 
SG&A expenses associated with pending acquisition of Warnaco (6,412 )   (6,412 )  
 
Non-GAAP SG&A $ 621,881   $ 605,928   $ 1,813,458   $ 1,742,301  
 
 

Table 5 - Reconciliation of GAAP income tax expense to non-GAAP income tax expense

                 
Quarter Ended Nine Months Ended
10/28/12 10/30/11 10/28/12 10/30/11
 
Income tax expense $ 43,730 $ 53,061 $ 107,221 $ 118,072
 
Items excluded:
 
Income tax effect of acquisition, integration, restructuring and debt modification costs (1) 413 4,496 1,596 25,604
 
Tax benefit resulting from previously unrecognized tax credits 4,500     4,500    
 
Non-GAAP income tax expense $ 48,643   $ 57,557   $ 113,317     $ 143,676
 

(1)

 

The estimated tax effects of the Company’s acquisition, integration, restructuring and debt modification 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 and debt modification 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 and debt modification 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.

 
       

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
10/28/12 10/30/11
GAAP         Non-GAAP GAAP         Non-GAAP
Results Adjustments Results Results Adjustments Results
 
Net income $ 165,409 $ (8,060 ) (1) $ 173,469 $ 112,239 $ (25,979 ) (2) $ 138,218
 
Weighted average common shares 70,586 70,586 67,225 67,225
Weighted average dilutive securities 1,304 1,304 1,549 1,549
Weighted average impact of assumed convertible preferred stock conversion 2,095 2,095 4,189 4,189
Total shares 73,985 73,985 72,963 72,963
 
Diluted net income per common share $ 2.24 $ 2.34 $ 1.54 $ 1.89
 
     
Nine Months Ended Nine Months Ended
10/28/12 10/30/11
GAAP         Non-GAAP GAAP         Non-GAAP
Results Adjustments Results Results Adjustments Results
 
Net income $ 346,225 $ (14,734 ) (1) $ 360,959 $ 236,635 $ (69,439 ) (2) $ 306,074
 
Weighted average common shares 69,843 69,843 67,051 67,051
Weighted average dilutive securities 1,332 1,332 1,568 1,568
Weighted average impact of assumed convertible preferred stock conversion 2,555 2,555 4,189 4,189
Total shares 73,730 73,730 72,808 72,808
 
Diluted net income per common share $ 4.70 $ 4.90 $ 3.25 $ 4.20
 

(1)

 

Represents the impact on net income in the period ended October 28, 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 costs incurred in connection with the Company’s pending acquisition of Warnaco, which is expected to close in early 2013; (iii) the tax effects associated with these costs; and (iv) the tax benefit resulting from previously unrecognized tax credits. 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 period ended October 30, 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; (iii) the costs incurred in connection with the Company’s negotiated early termination of its license to market sportswear under the Timberland brand; (iv) the expense incurred associated with settling the unfavorable preexisting license agreement in connection with its buyout of the perpetual license for Tommy Hilfiger in India; and (v) the tax effects associated with these costs. Please see Table 1 for a reconciliation of GAAP net income to non-GAAP net income.

 
       

PVH CORP.

Consolidated Balance Sheets

(In thousands)

 
October 28, October 30,
2012 2011
ASSETS
Current Assets:
Cash and Cash Equivalents $ 276,630 $ 159,981
Receivables 607,465 621,593
Inventories 855,359 841,928
Other Current Assets 172,665   168,988
Total Current Assets 1,912,119 1,792,490
Property, Plant and Equipment 519,863 436,286
Goodwill and Other Intangible Assets 4,383,520 4,519,889
Other Assets 170,469   173,514
$ 6,985,971   $ 6,922,179
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts Payable and Accrued Expenses $ 913,452 $ 921,531
Short-Term Borrowings 142,514 12,820
Current Portion of Long-Term Debt 84,000 61,111
Other Liabilities 1,151,785 1,121,379
Long-Term Debt 1,647,596 2,030,445
Stockholders’ Equity 3,046,624   2,774,893
$ 6,985,971   $ 6,922,179
 
       
PVH CORP.
Segment Data
(In thousands)
 

REVENUE BY SEGMENT

Quarter Ended Quarter Ended
10/28/12 10/30/11

Heritage Brand Wholesale Dress Furnishings

Net sales $ 155,436 $ 163,173
Royalty revenue 1,314 1,681
Advertising and other revenue 620 496
Total 157,370 165,350
 

Heritage Brand Wholesale Sportswear

Net sales 157,761 187,344
Royalty revenue 2,470 2,498
Advertising and other revenue 778 408
Total 161,009 190,250
 

Heritage Brand Retail

Net sales 169,407 169,269
Royalty revenue 1,285 1,268
Advertising and other revenue 438 143
Total 171,130 170,680
             

Total Heritage Brands

Net sales 482,604 519,786
Royalty revenue 5,069 5,447
Advertising and other revenue 1,836 1,047
Total     489,509     526,280
 

Other (Calvin Klein Apparel)

Net sales 196,746 174,632
Total 196,746 174,632
 

Calvin Klein Licensing

Net sales 12,104 16,339
Royalty revenue 78,888 80,052
Advertising and other revenue 31,909 30,216
Total 122,901 126,607
             

Total Calvin Klein

Net sales 208,850 190,971
Royalty revenue 78,888 80,052
Advertising and other revenue 31,909 30,216
Total     319,647     301,239
 

Tommy Hilfiger North America

Net sales 376,267 350,281
Royalty revenue 6,553 5,537
Advertising and other revenue 2,429 2,002
Total 385,249 357,820
 

Tommy Hilfiger International

Net sales 433,721 456,456
Royalty revenue 13,434 11,505
Advertising and other revenue 1,210 860
Total 448,365 468,821
             

Total Tommy Hilfiger

Net sales 809,988 806,737
Royalty revenue 19,987 17,042
Advertising and other revenue 3,639   2,862
Total     833,614     826,641
 

Total Revenue

Net sales 1,501,442 1,517,494
Royalty revenue 103,944 102,541
Advertising and other revenue 37,384   34,125
Total $ 1,642,770   $ 1,654,160
 
                       
PVH CORP.
Segment Data (continued)
(In thousands)
 

EARNINGS BEFORE INTEREST AND TAXES BY SEGMENT

 
Quarter Ended Quarter Ended
10/28/12   10/30/11
Results Results  
Under Non-GAAP Under Non-GAAP
GAAP Adjustments(1) Results GAAP(3) Adjustments(2) Results(3)
 
Heritage Brand Wholesale Dress Furnishings $ 27,162 $ 27,162 $ 26,026 $ 26,026
 
Heritage Brand Wholesale Sportswear 15,807 15,807 11,033 $ (502 ) 11,535
 
Heritage Brand Retail 4,409       4,409   8,535       8,535  
                                             
Total Heritage Brands     47,378               47,378         45,594       (502 )     46,096  
 
Other (Calvin Klein Apparel) 30,073 30,073 26,898 26,898
 
Calvin Klein Licensing 62,350       62,350   59,271       59,271  
                                             
Total Calvin Klein     92,423               92,423         86,169             86,169  
 
Tommy Hilfiger North America 66,174 66,174 41,752 (3,421 ) 45,173
 
Tommy Hilfiger International 62,583   $ (6,301 ) 68,884   48,820     (22,209 ) 71,029  
                                             
Total Tommy Hilfiger     128,757         (6,301 )     135,058         90,572       (25,630 )     116,202  
 
Corporate (31,135 )   (6,672 ) (24,463 ) (25,493 )   (4,343 ) (21,150 )
 
Total earnings before interest and taxes $ 237,423   $ (12,973 ) $ 250,396   $ 196,842   $ (30,475 ) $ 227,317  
 

(1)

 

Adjustments for the quarter ended October 28, 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) pending acquisition of Warnaco, which is expected to close in early 2013.

 

(2)

Adjustments for the quarter ended October 30, 2011 represent the elimination of the costs incurred in connection with the Company’s (i) integration of Tommy Hilfiger and the related restructuring; (ii) settlement of the unfavorable preexisting license agreement in connection with the Company’s buyout of the perpetual license for Tommy Hilfiger in India; and (iii) negotiated early termination of its license to market sportswear under the Timberland brand.

 

(3)

In the fourth quarter of 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 and are not allocated to any reportable segment. Prior 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

Nine Months Ended Nine Months Ended
10/28/12 10/30/11

Heritage Brand Wholesale Dress Furnishings

Net sales $ 380,889 $ 421,633
Royalty revenue 4,146 4,634
Advertising and other revenue 2,157 1,314
Total 387,192 427,581
 

Heritage Brand Wholesale Sportswear

Net sales 369,926 418,905
Royalty revenue 7,477 7,646
Advertising and other revenue 1,598 1,289
Total 379,001 427,840
 

Heritage Brand Retail

Net sales 477,062 476,158
Royalty revenue 3,717 3,805
Advertising and other revenue 945 661
Total 481,724 480,624
             

Total Heritage Brands

Net sales 1,227,877 1,316,696
Royalty revenue 15,340 16,085
Advertising and other revenue 4,700 3,264
Total     1,247,917     1,336,045
 

Other (Calvin Klein Apparel)

Net sales 513,912 469,974
Total 513,912 469,974
 

Calvin Klein Licensing

Net sales 29,327 31,774
Royalty revenue 203,607 202,491
Advertising and other revenue 86,151 82,546
Total 319,085 316,811
             

Total Calvin Klein

Net sales 543,239 501,748
Royalty revenue 203,607 202,491
Advertising and other revenue 86,151 82,546
Total     832,997     786,785
 

Tommy Hilfiger North America

Net sales 999,729 911,678
Royalty revenue 16,178 12,658
Advertising and other revenue 6,401 5,293
Total 1,022,308 929,629
 

Tommy Hilfiger International

Net sales 1,263,066 1,272,088
Royalty revenue 36,792 30,318
Advertising and other revenue 3,719 2,923
Total 1,303,577 1,305,329
             

Total Tommy Hilfiger

Net sales 2,262,795 2,183,766
Royalty revenue 52,970 42,976
Advertising and other revenue 10,120 8,216
Total     2,325,885     2,234,958
 

Total Revenue

Net sales 4,033,911 4,002,210
Royalty revenue 271,917 261,552
Advertising and other revenue 100,971 94,026
Total $ 4,406,799 $ 4,357,788
 
                         
PVH CORP.
Segment Data (continued)
(In thousands)
 

EARNINGS BEFORE INTEREST AND TAXES BY SEGMENT

 
Nine Months Ended Nine Months Ended
  10/28/12 10/30/11
Results Results
Under Non-GAAP Under Non-GAAP
GAAP Adjustments(1) Results GAAP(3) Adjustments(2) Results(3)
 
Heritage Brand Wholesale Dress Furnishings $ 45,718 $ 45,718 $ 60,961 $ 60,961
 
Heritage Brand Wholesale Sportswear 31,380 31,380 20,100 $ (7,152 ) 27,252
 
Heritage Brand Retail 11,223       11,223   28,224     28,224  
                                             
Total Heritage Brands     88,321               88,321         109,285       (7,152 )       116,437  
 
Other (Calvin Klein Apparel) 62,584 62,584 69,955 69,955
 
Calvin Klein Licensing 148,408       148,408   137,862     137,862  
                                             
Total Calvin Klein     210,992               210,992         207,817             207,817  
 
Tommy Hilfiger North America 147,801 $ (379 ) 148,180 60,967 (33,563 ) 94,530
 
Tommy Hilfiger International 177,176     (9,798 ) 186,974   165,475   (22,657 )   188,132  
                                             
Total Tommy Hilfiger     324,977         (10,177 )     335,154         226,442       (56,220 )       282,662  
 
Corporate (84,961 )   (10,653 ) (74,308 ) (92,779 ) (31,671 )   (61,108 )
 
Total earnings before interest and taxes $ 539,329   $ (20,830 ) $ 560,159   $ 450,765   $ (95,043 )   $ 545,808  
 

(1)

 

Adjustments for the period ended October 28, 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) pending acquisition of Warnaco, which is expected to close in early 2013.

 

(2)

Adjustments for the period ended October 30, 2011 represent the elimination of the costs incurred in connection with the Company’s (i) integration of Tommy Hilfiger and the related restructuring; (ii) settlement of the unfavorable preexisting license agreement in connection with the Company’s buyout of the perpetual license for Tommy Hilfiger in India; (iii) modification of its credit facility; and (iv) negotiated early termination of its license to market sportswear under the Timberland brand.

 

(3)

In the fourth quarter of 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 periods have been restated in order to present that information on a basis consistent with the current year.

 

PVH CORP.
Full Year and Fourth Quarter Reconciliations of GAAP to Non-GAAP Amounts

The Company is presenting its (1) 2012 estimated results excluding (a) the costs expected to be incurred in connection with its integration of Tommy Hilfiger and the related restructuring; (b) the costs expected to be incurred in connection with its pending acquisition of Warnaco, which is expected to close in early 2013; (c) the estimated tax effects associated with these costs; and (d) the tax benefit resulting from previously unrecognized tax credits, and (2) 2011 results excluding (a) the costs incurred in connection with its integration of Tommy Hilfiger and the related restructuring; (b) the costs incurred in connection with 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; (c) the expense associated with settling the unfavorable preexisting license agreement in connection with its buyout of the perpetual license for Tommy Hilfiger in India; (d) the costs incurred in connection with the modification of its credit facility; (e) the estimated tax effects associated with these costs; and (f) the tax benefit resulting from revaluing certain deferred tax liabilities in connection with a decrease in the statutory tax rate in Japan. Both the 2012 estimated results and 2011 results are on a non-GAAP basis. The Company believes presenting these results on a non-GAAP basis provides useful additional information to investors. The Company believes that the exclusion of the amounts identified 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 costs associated with the Company’s integration of Tommy Hilfiger and the related restructuring, the pending acquisition of Warnaco, the negotiated early termination of its Timberland license and the 2012 exit from the Izod women’s wholesale sportswear business, its buyout of the perpetual license for Tommy Hilfiger in India and the modification of its credit facility are also excluded from earnings per share calculations for purposes of incentive compensation awards. 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 or debt 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.

       

(Dollar amounts in millions, except per share data)

 

2012 Net Income Per Common Share Reconciliations

Full Year

2012

(Estimated)

Fourth Quarter

2012

(Estimated)

 
GAAP net income per common share $5.84 - $5.85 $1.15 - $1.16
Estimated per common share impact of after tax acquisition, integration and restructuring costs $0.53 $0.33
Net income per common share excluding impact of acquisition, integration and restructuring costs $6.37 - $6.38 $1.48 - $1.49
 

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, if any, that the Company engages in or suffers during the period. Other than the Company’s previously announced acquisition of Warnaco, the Company has no current understanding or agreement regarding any such transaction or definitive plans regarding any such activity.

       

PVH CORP.

Full Year and Fourth 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

 
Full Year 2011 Fourth Quarter 2011
(Actual) (Actual)
Results Under GAAP     Adjustments     Non-GAAP Results Results Under GAAP     Adjustments     Non-GAAP Results
 
Net income $ 317.9 $ (74.3 ) (1) $ 392.2 $ 81.2 $ (4.9 ) (2) $ 86.1
Total weighted average shares 72.9 72.9 73.3 73.3
 
Diluted net income per common share $ 4.36 $ 5.38 $ 1.11 $ 1.18
 

(1)

 

Represents the impact on net income in the 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 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 its Izod women’s wholesale sportswear business; (iii) the expense incurred associated with settling the unfavorable preexisting license agreement in connection with the Company’s buyout of the perpetual license for Tommy Hilfiger in India; (iv) the costs incurred in connection with the modification of the Company’s credit facility; (v) the estimated tax effects associated with these costs; and (vi) the tax benefit resulting from revaluing certain deferred tax liabilities in connection with a decrease in the statutory tax rate in Japan.

 

(2)

Represents the impact on net income in the quarter ended January 29, 2011 from the elimination of (i) the costs incurred in connection with the Company’s integration of Tommy Hilfiger and the related restructuring; (ii) 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 its Izod women’s wholesale sportswear business; (iii) the tax effects associated with these costs; and (iv) the tax benefit resulting from revaluing certain deferred tax liabilities in connection with a decrease in the statutory tax rate in Japan.

Source: PVH Corp.

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

 

News

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

Calvin Klein Collection Presented Francisco Costa’s Resort 2015 Collection / 6.5.14

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

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

Calvin Klein, Inc. Hosted Multi-Brand Event in Singapore to Celebrate the Company’s Expanding Presence in Asia / 4.12.14

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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

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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

Calvin Klein Underwear Launches Global Multimedia Campaign with Consumer Call to Action / 2.19.14

Calvin Klein Collection Presented Francisco Cista’s Fall 2014 Women’s Runway Show in New York / 2.13.14

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

Calvin Klein Collection Presented Italo Zucchelli’s Spring 2015 Men’s Runway Show in Milan / 1.22.14

CALVIN KLEIN COLLECTION PRESENTED ITALO ZUCCHELLI’S SPRING 2015 MEN’S RUNWAY SHOW IN MILAN / 1.22.14

CALVIN KLEIN COLLECTION PRESENTED ITALO ZUCCHELLI’S SPRING 2015 MEN’S RUNWAY SHOW IN MILAN / 1.22.14

Calvin Klein, Inc. Announces Spring 2014 Global Advertising Campaigns / 1.21.14

Calvin Klein Collection Presented Italo Zucchelli’s Fall 2014 Men’s Runway Show in Milan / 1.12.14

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

Tommy Hilfiger Celebrates London Collections: Men Fall 2014 / 1.6.14