Phillips-Van Heusen Corporation Reports 2004 Third 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 -- Third 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 -- Earnings Exceed First Call Consensus Estimate by 18% -- Full Year EPS Guidance Increased Phillips-Van Heusen Corporation reported 2004 third quarter net income of $26.7 million, or $0.52 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 with the prior year's third quarter net income of $17.0 million, or $0.34 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 third quarter improved to $30.6 million, or $0.59 per diluted common share, which was $0.09 or 18% ahead of the Company's previous earnings guidance and the First Call consensus estimate, and was an improvement of 37% over last year. Excluding restructuring and other items, net income in the prior year's third quarter was $21.5 million, or $0.43 per diluted common share. For the nine months, net income in the current year was $41.3 million, or $0.79 per diluted common share, which compares with net income for the prior year's nine months of $23.9 million, or $0.30 per diluted common share. Excluding restructuring and other items, net income for the current year's nine months improved to $55.9 million, or $1.09 per diluted common share, which was an improvement of 28% over last year. Excluding restructuring and other items, net income for the prior year's nine months was $40.9 million, or $0.85 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 in the second quarter of 2003. (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 improvement in third quarter net income, excluding restructuring and other items, was due to earnings increases in both of the Company's business segments. 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 30% over the prior year due principally to the continued strong performance of the Company's wholesale apparel business and improvement in the Company's retail outlet business. The Calvin Klein Licensing segment recorded a 40% increase in operating earnings over the prior year due to growth exhibited by new and existing licensees. Total revenues in the third quarter increased 4% to $473.5 million from $453.6 million in the prior year. The prior year's third quarter includes revenues of $13.7 million from the wholesale footwear business and $6.3 million from the Calvin Klein wholesale collection apparel business. The Company exited these businesses by licensing them to third parties as of the end of fiscal 2003. Excluding these businesses, revenues increased 9% over the prior year. This increase was driven by the Calvin Klein licensing and Calvin Klein sportswear businesses, as well as the Company's other sportswear businesses. For the nine month period, total revenues were $1,227.6 million, an increase of 1% from the prior year amount of $1,212.5 million. The prior year's nine month period includes revenues of $49.0 million from the wholesale footwear business and $16.4 million from the Calvin Klein wholesale collection apparel business. Excluding these businesses exited as of the end of fiscal 2003, revenues increased 7% 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 third quarter results. Strong revenue and earnings growth exhibited by both of our business segments enabled our earnings to be well ahead of our previous earnings guidance. The earnings growth in our Apparel segment was driven by increased revenue and higher gross margins due to more full priced selling and the introduction of the higher margin Calvin Klein better men's sportswear line. In addition, the improvement in our existing retail business, and the closing of underperforming retail outlet stores, coupled with the limited rollout of Calvin Klein retail outlet stores in premium outlet malls An outlet mall (or outlet centre) is a type of shopping mall, in which manufacturers sell their products directly to the public through their own branded stores. Clothing, sporting goods, electrical products, cosmetics, and toys are among the types of items sold at outlet , enabled us to achieve earnings growth in our retail outlet business. Our Calvin Klein Licensing segment benefited from revenue increases from existing licensees, as well as the growth initiatives we have undertaken." Mr. Klatsky continued, "Our strategy of 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 has enabled us to once again achieve strong earnings growth. The launch of our Calvin Klein better men's sportswear line and 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) , continue to perform well and contributed to our revenue and earnings increases. We also remain excited about our four new dress shirt licensing agreements: 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 of this year, 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 principally begin shipping in the fourth quarter of this year." Mr. Klatsky concluded, "Given our third quarter results, we are raising our 2004 earnings per share guidance (excluding restructuring and other items) to $1.29 to $1.30, with fourth quarter earnings of $0.15 to $0.16 per share. Including restructuring and other items, we anticipate that GAAP earnings per share in 2004 will be $0.88 to $0.89, with fourth quarter GAAP earnings per share of $0.10 to $0.11. We are increasing our 2004 revenue guidance to a range of $1.650 billion to $1.660 billion, which represents an increase of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 5% - 6% 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). Looking beyond this year, we continue to be very comfortable in our ability to grow earnings at 15% to 20% per year while our revenues grow 5% to 6% per year. 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 Wednesday: see week. , November November: see month. 17, 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 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 one hour after it is held. The replay of the conference call can be accessed by calling 1-888-203-1112 and using passcode # 825516. 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
10/31/04
-----------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items (1) Items(1)
--------- --------------- -------------
Net sales $422,652 $422,652
Royalty and other revenues 50,804 50,804
----------- ---------------
Total revenues $473,456 $473,456
=========== ===============
Gross profit on net sales $159,108 $159,108
Gross profit on royalty and
other revenues 50,804 50,804
----------- ---------------
Total gross profit 209,912 209,912
Selling, general and
administrative expenses 160,408 $5,950 154,458
----------- ----------- -----------
Earnings before interest
and taxes 49,504 (5,950) 55,454
Interest expense, net 8,365 8,365
----------- ----------- -----------
Pre-tax income 41,139 (5,950) 47,089
Income tax expense 14,398 (2,082) 16,480
----------- ----------- -----------
Net income 26,741 (3,868) 30,609
Preferred stock dividends 5,280 5,280
----------- ----------- -----------
Net income available to
common stockholders $21,461 $(3,868) $25,329
=========== ============ ===========
Basic net income per
common share(3) $0.69 $0.82
=========== ===============
Diluted net income per
common share(3) $0.52 $0.59
=========== ===============
Quarter Ended
11/2/03
---------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items (2) Items(2)
------- ------------- --------------
Net sales $416,117 $6,267 $409,850
Royalty and
other revenues 37,480 37,480
------- ------------- --------------
Total revenues $453,597 $6,267 $447,330
========= ============== =========
Gross profit on
net sales $140,845 $(2,441) $143,286
Gross profit on
royalty and
other revenues 37,480 37,480
------- ------------- --------------
Total gross
profit 178,325 (2,441) 180,766
Selling, general
and administrative
expenses 142,655 3,589 139,066
------- ------------- --------------
Earnings before
interest and taxes 35,670 (6,030) 41,700
Interest expense, net 9,184 9,184
------- ------------- --------------
Pre-tax income 26,486 (6,030) 32,516
Income tax expense 9,452 (1,604) 11,056
------- ------------- --------------
Net income 17,034 (4,426) 21,460
Preferred stock
dividends 5,177 5,177
------- ------------- --------------
Net income
available to
common stockholders $11,857 $(4,426) $16,283
======= ============= ==============
Basic net income
per common
share(3) $0.39 $0.54
========= =============
Diluted net
income per common
share(3) $0.34 $0.43
========= =============
(1) Restructuring and other items for the quarter ended October
31, 2004 include the pre-tax costs associated with (a) licensing the
Bass brand for wholesale distribution of footwear 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.
(2) Restructuring and other items for the quarter ended November
2, 2003 include (a) the operating losses of certain Calvin Klein
businesses which the Company has closed or licensed, and associated
costs in connection therewith and (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.
(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)
Nine Months Ended
10/31/04
-----------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items (1) Items(1)
-----------------------------------------
Net sales $1,095,367 $1,095,367
Royalty and other revenues 132,251 132,251
----------- --------------
Total revenues $1,227,618 $1,227,618
=========== ==============
Gross profit on net sales $420,950 $420,950
Gross profit on royalty and
other revenues 132,251 132,251
----------- --------------
Total gross profit 553,201 553,201
Selling, general and
administrative expenses 454,883 $13,095 441,788
Gain on sale of investment
-----------------------------------------
Earnings before interest
and taxes 98,318 (13,095) 111,413
Interest expense, net 34,743 9,374 25,369
-----------------------------------------
Pre-tax income 63,575 (22,469) 86,044
Income tax expense 22,251 (7,864) 30,115
-----------------------------------------
Net income 41,324 (14,605) 55,929
Preferred stock dividends 15,841 15,841
-----------------------------------------
Net income available to
common stockholders $25,483 $(14,605) $40,088
=========================================
Basic net income per
common share(3) $0.82 $1.30
=========== ==============
Diluted net income per
common share(3) $0.79 $1.09
=========== ==============
Nine Months Ended
11/2/03
-----------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items(2) Items(2)
-----------------------------------
Net sales $1,104,863 $16,396 $1,088,467
Royalty and
other revenues 107,608 107,608
Total revenues $1,212,471 $16,396 $1,196,075
Gross profit on
net sales $386,233 $(3,388) $389,621
Gross profit on
royalty and
other revenues 107,608 107,608
Total gross profit 493,841 (3,388) 497,229
Selling, general
and administrative
expenses 432,817 24,967 407,850
Gain on sale of
investment 3,496 3,496
Earnings before
interest
and taxes 64,520 (24,859) 89,379
Interest
expense, net 27,410 27,410
Pre-tax income 37,110 (24,859) 61,969
Income tax
expense 13,252 (7,818) 21,070
Net income 23,858 (17,041) 40,899
Preferred stock
dividends 14,746 14,746
Net income
available to common
stockholders $9,112 $(17,041) $26,153
Basic net income
per common
share(3) $0.30 $0.87
=========== ===========
Diluted net
income per common
share(3) $0.30 $0.85
=========== ===========
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Income Statements
(In thousands, except per share data)
(1) Restructuring and other items for the nine months ended
October 31, 2004 include the following:
-- Pre-tax costs of $13.1 million associated with (a) licensing the
Bass brand for wholesale distribution of footwear 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.
(2) Restructuring and other items for the nine months ended
November 2, 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.
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 per
common share as follows: (In thousands, except per share data)
Quarter Ended Quarter Ended
10/31/04 11/2/03
--------------------- ---------------------
Results Results
Excluding Excluding
Results Restructuring Results Restructuring
Under and Other Under and Other
GAAP Items GAAP Items
--------------------- ---------------------
Net income $26,741 $30,609 $17,034 $21,460
Less: Preferred stock
dividends 5,280 5,280 5,177 5,177
--------------------- ---------------------
Net income available to
common stockholders for
basic
net income per common
share 21,461 25,329 11,857 16,283
Add back preferred stock
dividends 5,280 5,280 5,177 5,177
--------------------- ---------------------
Net income available to
common
stockholders for diluted
net income per
common share $26,741 $30,609 $17,034 $21,460
===================== =====================
Weighted average common
shares
outstanding for basic net
income per common share 31,066 31,066 30,398 30,398
Impact of dilutive stock
options 1,635 1,635 787 787
Impact of assumed preferred
stock conversion 18,910 18,910 18,541 18,541
--------------------- ---------------------
Total shares for diluted
net income
per common share 51,611 51,611 49,726 49,726
===================== =====================
Basic net income per
common share $0.69 $0.82 $0.39 $0.54
===================== =====================
Diluted net income per
common share $0.52 $0.59 $0.34 $0.43
===================== =====================
Nine Months Ended Nine Months Ended
10/31/04 11/2/03
--------------------- ---------------------
Results Results
Excluding Excluding
Results Restructuring Results Restructuring
Under and Other Under and Other
GAAP Items GAAP Items
--------------------- ---------------------
Net income $41,324 $55,929 $23,858 $40,899
Less: Preferred stock
dividends 15,841 15,841 14,746 14,746
--------------------- ---------------------
Net income available to
common stockholders for
basic
net income per common
share 25,483 40,088 9,112 26,153
Add back preferred stock
dividends 15,841 14,746
--------------------- ---------------------
Net income available to
common
stockholders for diluted
net
income per common share $25,483 $55,929 $9,112 $40,899
===================== =====================
Weighted average common
shares
outstanding for basic net
income
per common share 30,889 30,889 30,228 30,228
Impact of dilutive stock
options 1,418 1,418 521 521
Impact of assumed preferred
stock conversion 18,910 17,603
--------------------- ---------------------
Total shares for diluted
net income
per common share 32,307 51,217 30,749 48,352
===================== =====================
Basic net income per
common share $0.82 $1.30 $0.30 $0.87
===================== =====================
Diluted net income per
common share $0.79 $1.09 $0.30 $0.85
===================== =====================
The sum of the first three quarters diluted net income per common
share does not equal the year-to-date total due to applying the
if-converted method to the Company's convertible redeemable preferred
stock.
3. 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. You
should not construe EBITDA 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. Net income is reconciled to EBITDA as follows:
Quarter Ended
10/31/04
----------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
-------------------------------------
($000)
Net income $26,741 $(3,868) $30,609
Plus:
Income tax expense 14,398 (2,082) 16,480
Interest expense, net 8,365 8,365
Depreciation
and amortization 6,539 6,539
------------------------------------
EBITDA $56,043 $(5,950) $61,993
====================================
Quarter Ended
11/2/03
----------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
-------------------------------------
($000)
Net income $17,034 $(4,426) $21,460
Plus:
Income tax expense 9,452 (1,604) 11,056
Interest expense, net 9,184 9,184
Depreciation
and amortization 6,872 6,872
---------------------------------
EBITDA $42,542 $(6,030) $48,572
=================================
Nine Months Ended
10/31/04
----------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
----------------------------------------
($000)
Net income $41,324 $(14,605) $55,929
Plus:
Income tax expense 22,251 (7,864) 30,115
Interest expense, net 34,743 9,374 25,369
Depreciation and amortization 20,645 20,645
----------------------------------------
EBITDA $118,963 $(13,095) $132,058
========================================
Nine Months Ended
11/2/03
----------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
----------------------------------------
($000)
Net income $23,858 $(17,041) $40,899
Plus:
Income tax expense 13,252 (7,818) 21,070
Interest expense, net 27,410 27,410
Depreciation and amortization 20,543 20,543
----------------------------------------
EBITDA $ 85,063 $(24,859) $109,922
========================================
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Balance Sheets
(In thousands)
October 31, November 2,
2004 2003
-------------------------
ASSETS
Current Assets:
Cash and Cash Equivalents $94,303 $82,087
Receivables 160,213 184,021
Inventories 242,671 233,412
Other, including deferred taxes of $17,164
and $27,454 33,218 43,523
-------------------------
Total Current Assets 530,405 543,043
Property, Plant and Equipment 146,263 142,364
Goodwill and Other Intangible Assets 802,224 782,097
Other 30,378 25,126
-------------------------
$1,509,270 $1,492,630
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses $194,947 $189,460
Other Liabilities, including deferred taxes
of $199,905
and $198,378 327,145 330,396
Long-Term Debt 399,510 399,076
Series B Convertible Redeemable Preferred
Stock 264,746 264,746
Stockholders' Equity 322,922 308,952
-------------------------
$1,509,270 $1,492,630
=========================
PHILLIPS-VAN HEUSEN CORPORATION
Segment Data
(In thousands)
Quarter Ended
10/31/04
------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
------------------------------------
Revenues - Apparel and Related
Products
----------------------------
Net sales $420,117 $420,117
Royalty and other revenues 5,094 5,094
--------- ------------
Total 425,211 425,211
Revenues - Calvin Klein Licensing
---------------------------------
Net sales 2,535 2,535
Royalty and other revenues 45,710 45,710
--------- ------------
Total 48,245 48,245
Total Revenues
---------------------------------
Net sales 422,652 422,652
Royalty and other revenues 50,804 50,804
--------- ------------
Total $473,456 $473,456
========= ============
Operating earnings - Apparel
and Related Products $41,555 $(5,950) $47,505
Operating earnings -
Calvin Klein Licensing 15,261 15,261
Corporate expenses 7,312 7,312
------------------------------------
Earnings before
interest and taxes $49,504 $(5,950) $55,454
====================================
Quarter Ended
11/2/03
-------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
-------------------------------------
Revenues - Apparel and Related
Products
---------------------------------
Net sales $406,420 $406,420
Royalty and other revenues 3,368 3,368
--------- --------------
Total 409,788 409,788
Revenues - Calvin Klein Licensing
---------------------------------
Net sales 9,697 $6,267 3,430
Royalty and other revenues 34,112 34,112
-------------------------------------
Total 43,809 6,267 37,542
Total Revenues
---------------------------------
Net sales 416,117 6,267 409,850
Royalty and other revenues 37,480 37,480
-------------------------------------
Total $453,597 $6,267 $447,330
=====================================
Operating earnings - Apparel
and Related Products $36,681 $36,681
Operating earnings -
Calvin Klein Licensing 4,895 $(6,030) 10,925
Corporate expenses 5,906 5,906
-------------------------------------
Earnings before
interest and taxes $35,670 $(6,030) $41,700
PHILLIPS-VAN HEUSEN CORPORATION
Segment Data
(In thousands)
Nine Months Ended
10/31/04
---------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
-----------------------------------
Revenues - Apparel and
Related Products
------------
Net sales $1,086,981 $1,086,981
Royalty and other
revenues 13,907 13,907
----------- -------------
Total 1,100,888 1,100,888
Revenues - Calvin
Klein Licensing
------------
Net sales 8,386 8,386
Royalty and other
revenues 118,344 118,344
----------- -------------
Total 126,730 126,730
Total Revenues
------------
Net sales 1,095,367 1,095,367
Royalty and other
revenues 132,251 132,251
----------- -------------
Total $1,227,618 $1,227,618
=========== =============
Operating earnings -
Apparel and
Related Products $80,637 $(13,095) $93,732
Operating earnings -
Calvin Klein
Licensing 40,722 40,722
Corporate expenses(1) 23,041 23,041
---------------------------------
Earnings before
interest and taxes $98,318 $(13,095) $111,413
=================================
Nine Months Ended
11/2/03
--------------------------------------
Results
Excluding
Results Restructuring Restructuring
Under and Other and Other
GAAP Items Items
--------------------------------------
Revenues - Apparel and
Related Products
------------
Net sales $11,077,864 $1,077,864
Royalty and other
revenues 10,903 10,903
------------ -------------
Total 11,088,767 1,088,767
Revenues - Calvin
Klein Licensing
------------
Net sales 26,999 $16,396 10,603
Royalty and other
revenues 96,705 96,705
--------------------------------------
Total 123,704 16,396 107,308
Total Revenues
------------
Net sales 11,104,863 16,396 1,088,467
Royalty and other
revenues 107,608 107,608
--------------------------------------
Total $11,212,471 $16,396 $1,196,075
======================================
Operating earnings -
Apparel and
Related Products $74,870 $74,870
Operating earnings -
Calvin Klein
Licensing 6,010 $(28,355) 34,365
Corporate
expenses(1) 16,360 (3,496) 19,856
--------------------------------------
Earnings before
interest and taxes $64,520 $(24,859) $89,379
======================================
(1) Corporate expenses under GAAP for the nine months ended
November 2, 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 $0.88 - $0.89
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 and relocating the Company's
retail footwear operations 0.32
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
Effect of preferred stock conversion:
-------------------------------------------
2004 full year non-GAAP EPS estimate assumes
conversion of the Company's preferred stock.
2004 full year GAAP EPS estimate does not assume
conversion of the Company's preferred stock
because such assumption would be antidilutive to
the GAAP EPS computation (0.10)
------------------
Estimated diluted net income per common share
excluding the above items (non-GAAP) $1.29 - $1.30
===================
2004 Fourth
Quarter
--------------
Estimated diluted net income
per common share under GAAP $0.10 - $0.11
Will be classified as Operating Expenses:
--------------------------------------------------------
Add back estimated pre-tax costs of $3 million
associated
with (a) closing underperforming retail outlet stores
and
(b) exiting the wholesale footwear business and
relocating
the Company's retail footwear operations 0.05
--------------
Estimated diluted net income per common share
excluding the above items (non-GAAP) $0.15 - $0.16
==============
Note: 2004 fourth quarter non-GAAP and GAAP EPS estimates do not
assume conversion of the Company's preferred stock because such
assumption would be antidilutive to both the non-GAAP and GAAP EPS
computations.
PHILLIPS-VAN HEUSEN CORPORATION
Reconciliation of 2004 EBITDA Estimate
The Company's 2004 full year EBITDA estimate is $164.2-$168.2
million, excluding restructuring and other items relating to licensing
the Bass brand for wholesale distribution of footwear 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 $166.2 million which is the
midpoint 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 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 $50,500 $(16,500) $67,000
Plus:
Income tax expense 27,100 (8,900) 36,000
Interest expense, net 43,100 9,400 33,700
Depreciation and amortization 29,500 29,500
----------------------------------------
EBITDA $150,200 $(16,000) $166,200
========================================
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