Phillips-Van Heusen Corporation Reports 2004 Second Quarter Results.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Phillips-Van Heusen Corporation --Second Quarter EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Ahead of Guidance and First Call Consensus Estimate --Full Year Revenue and EPS Guidance Increased Phillips-Van Heusen Corporation reported 2004 second quarter net income of $13.0 million, or $0.24 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share which compares to the prior year's second quarter net income of $9.0 million, or $0.13 per diluted common share. Excluding restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other items, net income in the current year's second quarter improved to $14.2 million, or $0.28 per diluted common share, which was $0.03 or 12% ahead of the Company's previous earnings guidance and the First Call consensus estimate. Excluding restructuring and other items, net income in the prior year's second quarter was $11.6 million, or $0.21 per diluted common share. For the six months, net income in the current year was $14.6 million, or $0.13 per diluted common share which compares to net income for the prior year's six months of $6.8 million, which after deducting preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends, resulted in a net loss of $0.09 per diluted common share. Excluding restructuring and other items, net income for the current year's six months improved to $25.3 million, or $0.46 per diluted common share. Excluding restructuring and other items, net income for the prior year's six months was $19.4 million, or $0.32 per diluted common share. Restructuring and other items in the current year include the costs of (i) exiting the wholesale footwear Footwear consists of garments worn on the feet. It is worn for a variety of reasons, including protection against the environment, hygiene and adornment. Usually, socks and other hosiery are worn between the feet and the footwear, except for sandals and flip flops (thongs). business and relocating the Company's retail footwear operations, (ii) closing underperforming retail outlet retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → stores and (iii) debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. associated with the Company's debt refinancing Refinancing An extension and/or increase in amount of existing debt. in February February: see month. 2004. Restructuring and other items in the prior year include (i) the operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of certain Calvin Klein Noun 1. Calvin Klein - United States fashion designer noted for understated fashions (born in 1942) Calvin Richard Klein, Klein businesses which the Company has closed or licensed, and associated costs in connection therewith there·with adv. 1. With that, this, or it. 2. In addition to that. 3. Archaic Immediately thereafter. Adv. 1. , (ii) the costs of certain duplicative du·pli·cate adj. 1. Identically copied from an original. 2. Existing or growing in two corresponding parts; double. 3. personnel and facilities incurred during the integration of various logistical lo·gis·tic also lo·gis·ti·cal adj. 1. Of or relating to symbolic logic. 2. Of or relating to logistics. [Medieval Latin logisticus, of calculation and back office functions in connection with the Calvin Klein acquisition and (iii) the gain resulting from the Company's sale of its minority interest in Gant Company AB. (Please see Consolidated Income Statements consolidated income statement An income statement that combines the income statements of two or more organizations. As with other consolidated statements, a consolidated income statement eliminates any funds owed to or due from firms within the same group. and Segment Data for a reconciliation of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). amounts to non-GAAP financial measures.) The 22% improvement in second quarter net income, excluding restructuring and other items, was due to earnings increases in both of the Company's operating segments, as well as lower overall interest expense. Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the Apparel and Related Products segment increased 11% over the prior year due principally to the continued strong performance of the Company's wholesale dress shirt and sportswear businesses. The Calvin Klein Licensing segment recorded an 11% increase in operating earnings over the prior year as the Company's growth initiatives for that brand continue to be realized. Total revenues in the second quarter decreased 1% to $375.9 million from $379.4 million in the prior year. The prior year's second quarter includes revenues of $14.7 million from the wholesale footwear business and $4.4 million from the Calvin Klein wholesale collection apparel business. These businesses were exited as of the end of fiscal 2003. Excluding the businesses exited, revenues increased 4% over the prior year. For the six month period, total revenues were $754.2 million, a decrease of 1% from the prior year amount of $758.9 million. The prior year's six month period includes revenues of $35.3 million from the wholesale footwear business and $10.1 million from the Calvin Klein wholesale collection apparel business. Excluding these businesses exited at the end of fiscal 2003, revenues increased 6% over the prior year. Commenting on these results, Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. J. Klatsky, Chairman and Chief Executive Officer, noted, "We are extremely pleased with our second quarter results. The continued strong revenue and earnings growth exhibited by our wholesale apparel and Calvin Klein licensing businesses more than offset an earnings decline in our factory outlet outlet /out·let/ (-let) a means or route of exit or egress. pelvic outlet the inferior opening of the pelvis. business, reinforcing re·in·force also re-en·force or re·en·force tr.v. re·in·forced, re·in·forc·ing, re·in·forc·es 1. To give more force or effectiveness to; strengthen: The news reinforced her hopes. our decision to contract this business, and enabled our earnings to be well ahead of our previous guidance. All of our businesses experienced significant gross margin improvement due to lower Spring clearance CLEARANCE, com. law. The name of a certificate given by the collector of a port, in which is stated the master or commander (naming him) of a ship or vessel named and described, bound for a port, named, and having on board goods described, has entered and cleared his ship or vessel inventory levels and more full priced selling. In addition, we ended the quarter with a $62 million improvement in our net debt position over the prior year as our strategic initiatives, which include exiting the wholesale footwear business and the closing of underperforming outlet stores An outlet store or factory outlet is a retail store in which manufacturers sell their stock directly to the public through their own branded stores. The stores can be can be brick and mortar or online. , helped contribute to a 13% decrease in receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and a 16% decrease in inventories compared with the prior year." Mr. Klatsky continued, "We remain focused on maximizing max·i·mize tr.v. max·i·mized, max·i·miz·ing, max·i·miz·es 1. To increase or make as great as possible: the growth opportunities for Calvin Klein and our existing wholesale dress shirt and sportswear businesses. The initial launch of our Calvin Klein better men's sportswear line is just underway and second half bookings are exceeding our expectations. The Calvin Klein better women's sportswear line, licensed to a joint venture formed by Kellwood and GAV GAV Gateway Anti-Virus (Sonicwall) GAV Gross Asset Value GAV Great American Volleyball GAV Giubbotto Assetto Variabile (Italian: life jacket) GAv Gatha-Avestan (linguistics) , continues to perform well and is also well ahead of initial sales estimates. In addition, we continue to be excited about our four new dress shirt licensing arrangements: BCBG BCBG Bon Chic Bon Genre Max Azria Max Azria is a Jewish American fashion designer who founded the popular midscale women clothing line BCBG in 1989. Originally from Tunisia, Max Azria moved to the United States to enter the fashion world. and MICHAEL Michael Kors  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . which were launched in the second quarter, as well as Chaps and SEAN JOHN Sean John is a clothing line founded by hip-hop mogul Sean Combs A.K.A Diddy,in 1998. The name is taken from Combs' first and middle given names. People representing the brand include Combs himself, rappers T.I. , which will begin shipping in late 2004." Mr. Klatsky concluded, "Given our second quarter results, we are raising our 2004 earnings per share guidance (excluding restructuring and other items) to a range of $1.18 to $1.21, with third and fourth quarter earnings in the range of $0.49 to $0.51 and $0.15 to $0.16 per share, respectively. Including restructuring and other items, we anticipate that GAAP earnings per share in 2004 will be in the range of $0.71 to $0.74, with third and fourth quarter GAAP earnings in the range of $0.43 to $0.45 and $0.07 to $0.08 per share, respectively. We are increasing our 2004 revenue guidance to a range of $1.630 billion to $1.640 billion, which represents an increase of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 4.0% - 4.5% over 2003. Revenue growth in 2004 is being driven by Calvin Klein and our wholesale apparel businesses, partially offset by the exiting of the wholesale footwear business and the retail store closing program." (Please see reconciliation of GAAP to non-GAAP earnings per share estimates.) The Company webcasts its conference calls to review its earnings releases. The Company's conference call to review its second quarter earnings release is scheduled for Thursday Thursday: see week. , August 19, 2004 at 11:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . Please log on either to our web site at www.pvh.com and go to the News Release page or to CCBN's website at www.companyboardroom.com to listen to the live webcast of the conference call. The webcast will be available for replay for 30 days 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 one hour after it is held. The replay of the conference call can be accessed by calling 1-888-203-1112 and using passcode #727797. The conference call and webcast consist of copyrighted material. They may not be re-recorded, reproduced, retransmitted, rebroadcast or otherwise used without the Company's express written permission. Your participation represents your consent to these terms and conditions, which are governed gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. by New York law. SAFE HARBOR Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and OF 1995: Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. in this press release and made during the conference call / webcast, including, without limitation, statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's future revenues 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) the levels of sales of the Company's apparel and related products, both to its wholesale customers and in its retail stores, and 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 are required to engage, all of which can be affected by weather conditions, changes in the economy, fuel prices, reductions in travel, fashion trends and other factors; (iii) 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 revenue growth from developing and growing Calvin Klein; (iv) the Company's operations and results could be affected by quota quota In international trade, a government-imposed limit on the quantity of goods and services that may be exported or imported over a specified period of time. Quotas are more effective than tariffs in restricting trade, since they limit the availability of goods rather restrictions (which, among other things, could limit the Company's ability to produce products in cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. countries that have the labor and technical expertise needed), the availability and cost of raw materials (particularly petroleum-based synthetic fabrics Synthetic fabrics are textiles made from synthetic fibres. They are used primarily to make clothing. , which are currently in high demand), 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), and civil conflict, war or terrorist acts, the threat of any of the foregoing or political and labor instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or any of the countries where the Company's products are or are planned to be produced; (v) disease epidemics This article is a list of major epidemics. Worldwide Pandemics
The basic economic problem which arises from people having unlimited wants while there are and always will be limited resources. Because of scarcity, various economic decisions must be made to allocate resources efficiently. of raw materials and scrutiny Scrutiny (Fr. scrutin, Late Lat. scrutinium, from scrutari, to search or examine thoroughly) is a careful examination or inquiry (as though there was a mistake). or embargoing of goods produced in infected in·fect tr.v. in·fect·ed, in·fect·ing, in·fects 1. To contaminate with a pathogenic microorganism or agent. 2. To communicate a pathogen or disease to. 3. To invade and produce infection in. areas; (vi) 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; (vii) 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 (viii) 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 Reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed with the SEC in connection with its earnings releases. The Company does not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimate regarding revenues or earnings, whether as a result of the receipt of new information, future events or otherwise.
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Income Statements
(In thousands, except per share data)
Quarter Ended
8/1/04
------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items (1) Items(1)
---------- ------------- -------------
Net sales $ 336,137 $ 336,137
Royalty and other revenues 39,787 39,787
-------- --------
Total revenues $ 375,924 $ 375,924
======== ========
Gross profit on net sales $ 133,216 $ 133,216
Gross profit on royalty and
other revenues 39,787 39,787
-------- --------
Total gross profit 173,003 173,003
Selling, general and
administrative expenses 144,483 $ 1,874 142,609
Gain on sale of investment
---------- ------------- -------------
Earnings before interest
and taxes 28,520 (1,874) 30,394
Interest expense, net 8,535 8,535
-------- ------------- --------
Pre-tax income 19,985 (1,874) 21,859
Income tax expense 6,995 (656) 7,651
-------- ------- --------
Net income 12,990 (1,218) 14,208
Preferred stock dividends 5,280 5,280
-------- ------------- --------
Net income available to
common stockholders $ 7,710 $ (1,218) $ 8,928
======== ======= ========
Basic net income per
common share(3) $ 0.25 $ 0.29
======== ========
Diluted net income per
common share(3) $ 0.24 $ 0.28
======== ========
Quarter Ended
8/3/03
---------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items(2) Items(2)
------- ------------- -------------
Net sales $ 345,346 $ 4,402 $ 340,944
Royalty and other revenues 34,032 34,032
-------- --------- --------
Total revenues $ 379,378 $ 4,402 $ 374,976
======== ======= ========
Gross profit on net sales $ 124,051 $ (885) $ 124,936
Gross profit on royalty and
other revenues 34,032 34,032
-------- --------- --------
Total gross profit 158,083 (885) 158,968
Selling, general and
administrative expenses 138,031 6,314 131,717
Gain on sale of investment 3,496 3,496
-------- ------- -------------
Earnings before interest
and taxes 23,548 (3,703) 27,251
Interest expense, net 9,662 9,662
-------- --------- --------
Pre-tax income 13,886 (3,703) 17,589
Income tax expense 4,909 (1,071) 5,980
-------- ------- --------
Net income 8,977 (2,632) 11,609
Preferred stock dividends 5,076 5,076
-------- --------- --------
Net income available to
common stockholders $ 3,901 $ (2,632) $ 6,533
======== ======= ========
Basic net income per
common share(3) $ 0.13 $ 0.22
======== ========
Diluted net income per
common share(3) $ 0.13 $ 0.21
======== ========
(1) Restructuring and other items for the quarter ended August 1, 2004 include the pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta costs associated with (a) licensing the Bass brand for wholesale distribution to Brown Shoe Company Brown Shoe Company NYSE: BWS is a footwear company that owns a variety of popular footwear brands in the United States and Canada. Origins The company was created in St. and exiting the wholesale footwear business and relocating the Company's retail footwear operations and (b) closing underperforming retail outlet stores. (2) Restructuring and other items for the quarter ended August 3, 2003 include (a) the operating losses of certain Calvin Klein businesses which the Company has closed or licensed, and associated costs in connection therewith; (b) the costs of certain duplicative personnel and facilities incurred during the integration of various logistical and back office functions in connection with the acquisition of Calvin Klein and (c) the gain on the sale of the Company's minority interest in Gant Company AB. (3) Please see the Notes to Consolidated Income Statements for a reconciliation of basic and diluted net income per common share.
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Income Statements
(In thousands, except per share data)
Six Months Ended
8/1/04
-------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items (2) Items(2)
--------- ------------- -------------
Net sales(1) $672,715 $672,715
Royalty and other revenues 81,447 81,447
--------- -------------
Total revenues(1) $754,162 $754,162
========= =============
Gross profit on net sales(1) $261,842 $261,842
Gross profit on royalty and
other revenues 81,447 81,447
--------- -------------
Total gross profit(1) 343,289 343,289
Selling, general and
administrative expenses 294,475 $7,145 287,330
Gain on sale of investment
--------- ------------- -------------
Earnings before interest
and taxes 48,814 (7,145) 55,959
Interest expense, net 26,378 9,374 17,004
--------- ------------- -------------
Pre-tax income 22,436 (16,519) 38,955
Income tax expense 7,853 (5,782) 13,635
--------- ------------- -------------
Net income 14,583 (10,737) 25,320
Preferred stock dividends 10,561 10,561
--------- ------------- -------------
Net income (loss) available to
common stockholders $4,022 $(10,737) $14,759
========= ============= =============
Basic net income (loss) per
common share(4) $0.13 $0.48
========= =============
Diluted net income (loss) per
common share(4) $0.13 $0.46
========= =============
Six Months Ended
8/3/03
------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items(3) Items(3)
-------- ------------- -------------
Net sales(1) $688,746 $10,129 $678,617
Royalty and other revenues 70,128 70,128
---------- --------- -------------
Total revenues(1) $758,874 $10,129 $748,745
========== ========= =============
Gross profit on net sales(1) $245,388 $(947) $246,335
Gross profit on royalty and
other revenues 70,128 70,128
---------- --------- -------------
Total gross profit(1) 315,516 (947) 316,463
Selling, general and
administrative expenses 290,162 21,378 268,784
Gain on sale of investment 3,496 3,496
---------- --------- -------------
Earnings before interest
and taxes 28,850 (18,829) 47,679
Interest expense, net 18,226 18,226
---------- --------- -------------
Pre-tax income 10,624 (18,829) 29,453
Income tax expense 3,800 (6,214) 10,014
---------- --------- -------------
Net income 6,824 (12,615) 19,439
Preferred stock dividends 9,569 9,569
---------- --------- -------------
Net income (loss) available to
common stockholders $(2,745) $(12,615) $9,870
========== ========= =============
Basic net income (loss) per
common share(4) $(0.09) $0.33
========== =============
Diluted net income (loss) per
common share(4) $(0.09) $0.32
========== =============
(1) In the second quarter of 2004, the Company reclassified its recording of cooperative cooperative Organization owned by and operated for the benefit of those using its services. Cooperatives have been successful in such fields as the processing and marketing of farm products and the purchasing of other kinds of equipment and raw materials, and in the advertising costs from selling, general and administrative expenses to be a reduction of net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight . As a result, the sum of the Company's previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). totals for net sales, total revenues, gross profit and selling, general and administrative expenses in the first quarter of 2004 and 2003, when added to each year's second quarter, does not equal the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. totals. The reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. had no effect on net income. (2) Restructuring and other items for the six months ended August 1, 2004 include the following: --Pre-tax costs of $7.1 million associated with (a) licensing the Bass brand for wholesale distribution to Brown Shoe Company and exiting the wholesale footwear business and relocating the Company's retail footwear operations and (b) closing underperforming retail outlet stores. --Pre-tax debt extinguishment costs of $9.4 million associated with the Company's debt refinancing in February, 2004. (3) Restructuring and other items for the six months ended August 3, 2003 include (a) the operating losses of certain Calvin Klein businesses which the Company has closed or licensed, and associated costs in connection therewith; (b) the costs of certain duplicative personnel and facilities incurred during the integration of various logistical and back office functions in connection with the acquisition of Calvin Klein and (c) the gain on the sale of the Company's minority interest in Gant Company AB. (4) Please see the Notes to Consolidated Income Statements for a reconciliation of basic and diluted net income (loss) per common share. Notes to Consolidated Income Statements: 1. The Company believes presenting its results excluding restructuring and other items provides useful information to investors because many investors make decisions based on the ongoing operations of an enterprise. The Company believes that investors often look at ongoing operations as a measure of assessing performance and as a basis for comparing past results against future results. The Company uses its results excluding restructuring and other items to discuss its business with investment institutions, the Company's Board of Directors and others. Such results are also the basis for certain incentive compensation calculations. 2. The Company computed its basic and diluted net income (loss) per common share as follows: (In thousands, except per share data)
Quarter Ended Quarter Ended
8/1/04 8/3/03
---------------------- ---------------------
Results Results
Excluding Excluding
Results Restructuring Results Restructuring
Under and Other Under and Other
GAAP Items GAAP Items
-------- ------------- ------- -------------
Net income $12,990 $14,208 $8,977 $11,609
Less: Preferred stock
dividends 5,280 5,280 5,076 5,076
-------- ------------- ------- -------------
Net income available
to common stockholders
for basic and diluted
net income per
common share $7,710 $8,928 $3,901 $6,533
======== ============= ======= =============
Weighted average
common shares
outstanding for basic
net income per
common share 30,885 30,885 30,359 30,359
Impact of dilutive
stock options 1,269 1,269 529 529
-------- ------------- ------- -------------
Total shares for
diluted net income
per common share 32,154 32,154 30,888 30,888
======== ============= ======= =============
Basic net income per
common share $0.25 $0.29 $0.13 $0.22
======== ============= ======= =============
Diluted net income per
common share $0.24 $0.28 $0.13 $0.21
======== ============= ======= =============
Six Months Ended Six Months Ended
8/1/04 8/3/03
--------------------- ---------------------
Results Results
Excluding Excluding
Results Restructuring Results Restructuring
Under and Other Under and Other
GAAP Items GAAP Items
------- ------------- ------- -------------
Net income $14,583 $25,320 $6,824 $19,439
Less: Preferred stock
dividends 10,561 10,561 9,569 9,569
------- ------------- ------- -------------
Net income (loss)
available to
common stockholders for
basic and diluted net
income (loss)
per common share $4,022 $14,759 $(2,745) $9,870
======= ============= ======== ============
Weighted average common
shares outstanding for
basic net income (loss)
per common share 30,800 30,800 30,144 30,144
Impact of dilutive stock
options 1,309 1,309 387
-------- ------------ -------- ------------
Total shares for diluted
net income (loss) per
common share 32,109 32,109 30,144 30,531
======= ============= ======== ============
Basic net income (loss)
per common share $0.13 $0.48 $(0.09) $0.33
======= ============= ======== ============
Diluted net income (loss)
per common share $0.13 $0.46 $(0.09) $0.32
======= ============= ======== ============
3. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become is a "non-GAAP financial measure" which represents net income before net interest expense, income taxes, depreciation and amortization. EBITDA is provided because the Company believes it is an important measure of liquidity. The Company uses EBITDA in connection with certain covenants relating to the Company's outstanding debt. You should not construe construe v. to determine the meaning of the words of a written document, statute or legal decision, based upon rules of legal interpretation as well as normal meanings. EBITDA as an alternative to net income as an indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of the Company's operating performance, or as an alternative to cash flows from operating activities as a measure of the Company's liquidity, as determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . The Company may calculate EBITDA differently than other companies. Net income is reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to EBITDA as follows:
Quarter Ended
8/1/04
------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
-------- ------------- -------------
($000)
Net income $12,990 $(1,218) $14,208
Plus:
Income tax expense 6,995 (656) 7,651
Interest expense, net 8,535 8,535
Depreciation and amortization 7,050 7,050
-------- ------------- -------------
EBITDA $35,570 $(1,874) $37,444
======== ============= =============
Quarter Ended
8/3/03
--------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
--------- ------------- -------------
($000)
Net income $8,977 $(2,632) $11,609
Plus:
Income tax expense 4,909 (1,071) 5,980
Interest expense, net 9,662 9,662
Depreciation and amortization 6,895 6,895
--------- ------------ --------------
EBITDA $30,443 $(3,703) $34,146
========= ============ ==============
Six Months Ended
8/1/04
------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
-------- ------------- -------------
($000)
Net income $14,583 $(10,737) $25,320
Plus:
Income tax expense 7,853 (5,782) 13,635
Interest expense, net 26,378 9,374 17,004
Depreciation and amortization 14,106 14,106
-------- ------------- -------------
EBITDA $62,920 $(7,145) $70,065
======== ============= =============
Six Months Ended
8/3/03
-------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
--------- ------------- -------------
($000)
Net income $6,824 $(12,615) $19,439
Plus:
Income tax expense 3,800 (6,214) 10,014
Interest expense, net 18,226 18,226
Depreciation and amortization 13,671 13,671
---------- ----------- ------------
EBITDA $42,521 $(18,829) $61,350
========== =========== ============
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Balance Sheets
(In thousands)
August 1, August 3,
2004 2003
---------- ----------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 143,703 $ 81,344
Receivables 109,416 126,383
Inventories 217,379 258,809
Other, including deferred taxes of $17,164
and $29,404 32,464 46,519
---------- ----------
Total Current Assets 502,962 513,055
Property, Plant and Equipment 141,137 140,310
Goodwill and Other Intangible Assets 799,250 546,519
Other, including deferred taxes of $39,906 at
August 3, 2003 27,034 64,365
---------- ----------
$1,470,383 $1,264,249
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses $ 189,656 $ 178,609
Other Liabilities, including deferred taxes of
$185,702 at August 1, 2004 314,259 129,045
Long-Term Debt 399,507 399,055
Series B Convertible Redeemable Preferred Stock 264,746 259,569
Stockholders' Equity 302,215 297,971
---------- ----------
$1,470,383 $1,264,249
========== ==========
PHILLIPS-VAN HEUSEN CORPORATION
Segment Data
(In thousands)
Quarter Ended
8/1/04
-------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
--------- ------------- -------------
Revenues - Apparel and Related
Products
------------------------------
Net sales $333,207 $333,207
Royalty and other revenues 5,205 5,205
--------- -------------
Total 338,412 338,412
Revenues - Calvin Klein
Licensing
-----------------------
Net sales 2,930 2,930
Royalty and other revenues 34,582 34,582
--------- -------------
Total 37,512 37,512
Total Revenues
--------------
Net sales 336,137 336,137
Royalty and other revenues 39,787 39,787
--------- -------------
Total $375,924 $375,924
========= =============
Operating earnings - Apparel
and Related Products $23,815 $(1,874) $25,689
Operating earnings -
Calvin Klein Licensing 12,215 12,215
Corporate expenses(1) 7,510 7,510
--------- ------------- -------------
Earnings before
interest and taxes $28,520 $(1,874) $30,394
========= ============= =============
Quarter Ended
8/3/03
-------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
--------- ------------- -------------
Revenues - Apparel and Related
Products
------------------------------
Net sales $337,022 $337,022
Royalty and other revenues 3,770 3,770
--------- -------------
Total 340,792 340,792
Revenues - Calvin Klein
Licensing
-----------------------
Net sales 8,324 $4,402 3,922
Royalty and other revenues 30,262 30,262
--------- ------------ -------------
Total 38,586 4,402 34,184
Total Revenues
--------------
Net sales 345,346 4,402 340,944
Royalty and other revenues 34,032 34,032
--------- ------------ -------------
Total $379,378 $4,402 $374,976
========= ============ =============
Operating earnings - Apparel
and Related Products $23,164 $23,164
Operating earnings -
Calvin Klein Licensing 3,823 $(7,199) 11,022
Corporate expenses(1) 3,439 (3,496) 6,935
--------- ------------ -------------
Earnings before
interest and taxes $23,548 $(3,703) $27,251
========= ============ =============
(1) Corporate expenses under GAAP for the quarter ended August 3, 2003 are net of the $3,496 pre-tax Gant gain.
PHILLIPS-VAN HEUSEN CORPORATION
Segment Data
(In thousands)
Six Months Ended
8/1/04
-------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
--------- ------------- -------------
Revenues - Apparel and Related
Products
------------------------------
Net sales(1) $666,864 $666,864
Royalty and other revenues 8,813 8,813
--------- -------------
Total(1) 675,677 675,677
Revenues - Calvin Klein
Licensing
-----------------------
Net sales(1) 5,851 5,851
Royalty and other revenues 72,634 72,634
--------- -------------
Total(1) 78,485 78,485
Total Revenues
--------------
Net sales 672,715 672,715
Royalty and other revenues 81,447 81,447
--------- -------------
Total $754,162 $754,162
========= =============
Operating earnings - Apparel
and Related Products $39,082 $(7,145) $46,227
Operating earnings -
Calvin Klein Licensing 25,461 25,461
Corporate expenses(2) 15,729 15,729
--------- ------------- -------------
Earnings before
interest and taxes $48,814 $(7,145) $55,959
========= ============= =============
Six Months Ended
8/3/03
-------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
--------- ------------- -------------
Revenues - Apparel and Related
Products
------------------------------
Net sales(1) $671,444 $671,444
Royalty and other revenues 7,535 7,535
---------- -----------
Total(1) 678,979 678,979
Revenues - Calvin Klein
Licensing
-----------------------
Net sales(1) 17,302 $10,129 7,173
Royalty and other revenues 62,593 62,593
---------- ------------ -----------
Total(1) 79,895 10,129 69,766
Total Revenues
--------------
Net sales 688,746 10,129 678,617
Royalty and other revenues 70,128 70,128
---------- ------------ -----------
Total $758,874 $10,129 $748,745
========== ============ ===========
Operating earnings - Apparel
and Related Products $38,189 $38,189
Operating earnings -
Calvin Klein Licensing 1,115 $(22,325) 23,440
Corporate expenses(2) 10,454 (3,496) 13,950
---------- ------------ -----------
Earnings before
interest and taxes $28,850 $(18,829) $47,679
========== ============ ===========
(1) In the second quarter of 2004, the Company reclassified its recording of cooperative advertising costs from selling, general and administrative expenses to be a reduction of net sales. As a result, the sum of the Company's previously disclosed totals for net sales, total revenues, gross profit and selling, general and administrative expenses in the first quarter of 2004 and 2003, when added to each year's second quarter, does not equal the year-to-date totals. The reclassification had no effect on net income. (2) Corporate expenses under GAAP for the six months ended August 3, 2003 are net of the $3,496 pre-tax Gant gain. PHILLIPS-VAN HEUSEN CORPORATION Reconciliation of GAAP to non-GAAP 2004 Earnings Per Share Estimates
2004 Full Year
--------------
Estimated diluted net income
per common share under GAAP $0.71 - $0.74
Will be classified as Operating Expenses:
-----------------------------------------
Add back estimated pre-tax costs of $16 million
associated with (a) closing underperforming retail
outlet stores and (b) exiting the wholesale
footwear business 0.28
Will be classified as Interest Expense:
---------------------------------------
Add back $9.4 million (pre-tax) of debt
extinguishment costs associated with the
refinancing of the Company's 9 1/2% senior
subordinated notes 0.19
--------------
Estimated diluted net income per common share
excluding the above items (non-GAAP) $1.18 - $1.21
==============
2004 Third
Quarter
--------------
Estimated diluted net income
per common share under GAAP $0.43 - $0.45
Will be classified as Operating Expenses:
-----------------------------------------
Add back estimated pre-tax costs of $5 million
associated with (a) closing underperforming
retail outlet stores and (b) exiting the
wholesale footwear business 0.06
--------------
Estimated diluted net income per common share
excluding the above items (non-GAAP) $0.49 - $0.51
==============
2004 Fourth
Quarter
--------------
Estimated diluted net income
per common share under GAAP $0.07 - $0.08
Will be classified as Operating Expenses:
-----------------------------------------
Add back estimated pre-tax costs of $4 million
associated with (a) closing underperforming retail
outlet stores and (b) exiting the wholesale footwear
business 0.08
--------------
Estimated diluted net income per common share
excluding the above items (non-GAAP) $0.15 - $0.16
==============
PHILLIPS-VAN HEUSEN CORPORATION Reconciliation of 2004 EBITDA Estimate The Company's 2004 full year EBITDA estimate is $155.6-$159.6 million, excluding restructuring and other items relating to licensing the Bass brand for wholesale distribution to Brown Shoe Company, exiting the wholesale footwear business and relocating the Company's retail footwear operations, closing underperforming retail outlet stores and debt extinguishment costs associated with its recent bond refinancing. EBITDA is a "non-GAAP financial measure" which represents net income before net interest expense, income taxes, depreciation and amortization. EBITDA is provided because the Company believes it is an important measure of liquidity. The Company uses EBITDA in connection with certain covenants relating to the Company's outstanding debt. EBITDA should not be construed as an alternative to net income as an indicator of the Company's operating performance, or as an alternative to cash flows from operating activities as a measure of the Company's liquidity, as determined in accordance with generally accepted accounting principles. The Company may calculate EBITDA differently than other companies. Set forth below is the Company's reconciliation of net income to EBITDA of $157.6 million which is the midpoint mid·point n. 1. Mathematics The point of a line segment or curvilinear arc that divides it into two parts of the same length. 2. A position midway between two extremes. of the range provided. It is not possible to provide a reconciliation for the entire range without unreasonable effort due to the number of elements which comprise To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise EBITDA, including net income, income taxes, net interest expense and depreciation and amortization, each of which is subject to a range of estimates.
Estimated
Results
Estimated Estimated Excluding
Results Restructuring Restructuring
(In $000's) Under and Other and Other
GAAP Items Items
--------- ------------- -------------
Net income $44,700 $(16,500) $61,200
Plus:
Income tax expense 24,100 (8,900) 33,000
Interest expense, net 43,200 9,400 33,800
Depreciation and amortization 29,600 29,600
--------- ------------- -------------
EBITDA $141,600 $(16,000) $157,600
========= ============= =============
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