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PVH Corp. Reports 2012 Fourth Quarter And Full Year Results

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

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

                 

PVH CORP.

Consolidated GAAP Income Statements

(In thousands, except per share data)

 
 
Quarter Ended Year Ended
2/3/13 1/29/12 (1) 2/3/13 1/29/12 (1)
 
Net sales $ 1,506,910 $ 1,407,818 $ 5,540,821 $ 5,410,028
Royalty revenue 98,102 94,483 370,019 356,035
Advertising and other revenue 31,188   30,535   132,159   124,561
Total revenue $ 1,636,200   $ 1,532,836   $ 6,042,999   $ 5,890,624
 
Gross profit on net sales $ 751,366 $ 649,192 $ 2,747,052 $ 2,575,293
Gross profit on royalty, advertising and other revenue 129,290   125,018   502,178   480,596
Total gross profit 880,656 774,210 3,249,230 3,055,889
 
Selling, general and administrative expenses 771,172 740,057 2,594,315 2,549,850
 
Debt modification costs 16,233
 
Equity in income of unconsolidated affiliates 404   511   5,447   1,367
 
Earnings before interest and taxes 109,888 34,664 660,362 491,173
 
Interest expense, net 31,367   32,030   117,250   128,088
 
Pre-tax income 78,521 2,634 543,112 363,085
 
Income tax expense (benefit) (2,227 ) (32,890 ) 109,272   87,388
 
Net income $ 80,748   $ 35,524   $ 433,840   $ 275,697
 
Diluted net income per common share (2) $ 1.09       $ 0.48   $ 5.87       $ 3.78
 
Quarter Ended Year Ended
2/3/13 1/29/12 2/3/13 1/29/12
 
Depreciation and amortization expense $ 37,812 $ 33,242 $ 140,356 $ 132,010
 

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

(1)

 

In the fourth quarter of 2012, the Company changed its method of accounting for its retirement plans to (i) calculate expected return on plan assets using the fair value of plan assets; and (ii) immediately recognize actuarial gains and losses in its operating results in the year in which they occur. Prior periods have been retrospectively adjusted to reflect the effect of these accounting changes.

(2)

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 B.V. and certain affiliated companies (collectively, “Tommy Hilfiger”) and the related restructuring; (ii) the costs incurred in 2012 in connection with its acquisition of Warnaco, which closed on February 13, 2013; (iii) the interest expense incurred in 2012 in connection with the issuance of $700 million of senior notes related to the Company’s acquisition of The Warnaco Group, Inc. (“Warnaco”); (iv) 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; (v) the costs incurred in 2011 in connection with the modification of its credit facility; (vi) the costs incurred in 2011 in connection with the negotiated early termination of its license to market sportswear under the Timberland brand and its exit from the Izod women’s wholesale sportswear business; (vii) the recognized actuarial losses on retirement plans in 2012 and 2011; (viii) the tax effects associated with these costs; (ix) the tax benefit in 2012 resulting from the recognition of previously unrecognized net operating loss assets and tax credits; and (x) the tax benefit in 2011 resulting from revaluing certain deferred tax liabilities due to a decrease in the statutory tax rate in Japan, which are on a non-GAAP basis for each year, provides useful additional information to investors. The Company excludes such amounts that it deems non-recurring or non-operational and believes that this (i) 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 and (ii) assists investors in evaluating the effectiveness of the Company’s operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance. 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 in (i) through (viii) of the first sentence are also the basis for certain incentive compensation calculations.

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

                     
Quarter Ended Year Ended
2/3/13 1/29/12 (1) 2/3/13 1/29/12 (1)
 
GAAP total revenue $ 1,636,200   $ 1,532,836   $ 6,042,999   $ 5,890,624
 
Non-GAAP Measures
Total gross profit (2) $ 776,263 $ 3,063,516
Selling, general and administrative expenses (3) $ 700,756 646,451 $ 2,503,069 2,383,008
Earnings before interest and taxes (4) 180,304 130,323 751,608 681,875
Interest expense (5) 27,711 113,594
Income tax expense (6) 34,059 10,982 151,654 156,864
Net income (7) 118,534 87,311 486,360 396,923
Diluted net income per common share (8) $ 1.60         $ 1.19   $ 6.58         $ 5.44
 

(1)

 

In the fourth quarter of 2012, the Company changed its method of accounting for its retirement plans to (i) calculate expected return on plan assets using the fair value of plan assets; and (ii) immediately recognize actuarial gains and losses in its operating results in the year in which they occur. Prior periods have been retrospectively adjusted to reflect the effect of these accounting changes.

(2)

Please see Table 3 for reconciliation of GAAP to non-GAAP gross profit.

(3)

Please see Table 4 for reconciliation of GAAP to non-GAAP selling, general and administrative expenses (“SG&A”).

(4)

Please see Table 2 for reconciliation of GAAP to non-GAAP earnings before interest and taxes.

(5)

Please see Table 5 for reconciliation of GAAP to non-GAAP interest expense.

(6)

Please see Table 6 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 and actuarial losses on retirement plans.

(7)

Please see Table 1 for reconciliation of GAAP to non-GAAP net income.

(8)

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 Year Ended
2/3/13 1/29/12 (1) 2/3/13 1/29/12 (1)
 
Net income $ 80,748 $ 35,524 $ 433,840 $ 275,697
 
Diluted net income per common share (2) $ 1.09 $ 0.48 $ 5.87 $ 3.78
 
Items excluded:
 
Inventory liquidation costs associated with exit of certain Tommy Hilfiger product categories (gross margin) 2,053 7,627
 
Actuarial losses on retirement plans 28,142 76,120 28,142 76,120
 
SG&A expenses associated with buyout of perpetual license for Tommy Hilfiger in India 20,709
 
SG&A expenses associated with Tommy Hilfiger integration and related restructuring 6,107 16,520 20,525 61,895
 
SG&A expenses associated with negotiated termination of license to market Timberland sportswear and exit from the Izod women’s wholesale sportswear business 966 8,118
 
SG&A expenses associated with acquisition of Warnaco 36,167 42,579
 
Debt modification costs 16,233
 
Interest expense associated with issuance of $700M of senior notes related to acquisition of Warnaco 3,656 3,656
 
Tax effect of the items above (3) (26,835 ) (38,520 ) (28,431 ) (64,124 )
 
Tax benefit resulting from recognition of previously unrecognized net operating loss assets and tax credits (9,451 ) (13,951 )
 
Tax benefit resulting from revaluing certain deferred tax liabilities in connection with a decrease in the statutory tax rate in Japan   (5,352 )   (5,352 )
 
Non-GAAP net income $ 118,534 $ 87,311 $ 486,360 $ 396,923
 
Non-GAAP diluted net income per common share (2) $ 1.60       $ 1.19   $ 6.58       $ 5.44  

 

(1)

 

In the fourth quarter of 2012, the Company changed its method of accounting for its retirement plans to (i) calculate expected return on plan assets using the fair value of plan assets; and (ii) immediately recognize actuarial gains and losses in its operating results in the year in which they occur. Prior periods have been retrospectively adjusted to reflect the effect of these accounting changes.

(2)

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

(3)

Please see Table 6 for an explanation of the calculation of the tax effects of the above items.

 
 

PVH CORP.

Reconciliations of GAAP to Non-GAAP Amounts (continued)

(In thousands)

 

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

                 
Quarter Ended Year Ended
2/3/13 1/29/12 (1) 2/3/13 1/29/12 (1)
 
Earnings before interest and taxes $ 109,888 $ 34,664 $ 660,362 $ 491,173
 
Items excluded:
 
Inventory liquidation costs associated with exit of certain Tommy Hilfiger product categories (gross margin) 2,053 7,627
 
Actuarial losses on retirement plans 28,142 76,120 28,142 76,120
 
SG&A expenses associated with buyout of perpetual license for Tommy Hilfiger in India 20,709
 
SG&A expenses associated with Tommy Hilfiger integration and related restructuring 6,107 16,520 20,525 61,895
 
SG&A expenses associated with negotiated termination of license to market Timberland sportswear and exit from the Izod women’s wholesale sportswear business 966 8,118
 
SG&A expenses associated with acquisition of Warnaco 36,167 42,579
 
Debt modification costs       16,233
 
Non-GAAP earnings before interest and taxes   $ 180,304       $ 130,323   $ 751,608       $ 681,875

 

(1)

 

In the fourth quarter of 2012, the Company changed its method of accounting for its retirement plans to (i) calculate expected return on plan assets using the fair value of plan assets; and (ii) immediately recognize actuarial gains and losses in its operating results in the year in which they occur. Prior periods have been retrospectively adjusted to reflect the effect of these accounting changes.

 
   

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

     

 

Quarter Ended

 

Year Ended

1/29/12 1/29/12
 
Gross profit $ 774,210 $ 3,055,889
 
Items excluded:
 
Inventory liquidation costs associated with exit of certain Tommy Hilfiger product categories 2,053   7,627
 
Non-GAAP gross profit $ 776,263   $ 3,063,516
 
 

PVH CORP.

Reconciliations of GAAP to Non-GAAP Amounts (continued)

(In thousands)

 

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

                 
Quarter Ended Year Ended
2/3/13 1/29/12 (1) 2/3/13 1/29/12 (1)
 
SG&A $ 771,172 $ 740,057 $ 2,594,315 $ 2,549,850
 
Items excluded:
 
Actuarial losses on retirement plans (28,142 ) (76,120 ) (28,142 ) (76,120 )
 
SG&A expenses associated with buyout of perpetual license for Tommy Hilfiger in India (20,709 )
 
SG&A expenses associated with Tommy Hilfiger integration and related restructuring (6,107 ) (16,520 ) (20,525 ) (61,895 )
 
SG&A expenses associated with negotiated termination of license to market Timberland sportswear and exit from the Izod women’s wholesale sportswear business (966 ) (8,118 )
 
SG&A expenses associated with acquisition of Warnaco (36,167 )   (42,579 )  
 
Non-GAAP SG&A $ 700,756     $ 646,451   $ 2,503,069   $ 2,383,008  

 

(1)

 

In the fourth quarter of 2012, the Company changed its method of accounting for its retirement plans to (i) calculate expected return on plan assets using the fair value of plan assets; and (ii) immediately recognize actuarial gains and losses in its operating results in the year in which they occur. Prior periods have been retrospectively adjusted to reflect the effect of these accounting changes.

 
 

Table 5 - Reconciliation of GAAP net interest expense to non-GAAP net interest expense

       
Quarter Ended Year Ended
2/3/13 2/3/13
 
Interest expense, net $ 31,367 $ 117,250
 
Items excluded:
 
Interest expense associated with issuance of $700M of senior notes related to acquisition of Warnaco (3,656 ) (3,656 )
 
Non-GAAP interest expense, net $ 27,711   $ 113,594  
 
 

PVH CORP.

Reconciliations of GAAP to Non-GAAP Amounts (continued)

(In thousands)

 

Table 6 - Reconciliation of GAAP income tax expense to non-GAAP income tax expense

               
Quarter Ended Year Ended
2/3/13 1/29/12 (1) 2/3/13 1/29/12 (1)
 
Income tax expense (benefit) $ (2,227 ) $ (32,890 ) $ 109,272 $ 87,388
 
Items excluded:
 
Income tax effect of acquisition, integration, restructuring and debt modification costs and actuarial losses on retirement plans (2) 26,835 38,520 28,431 64,124
 
Tax benefit resulting from recognition of previously unrecognized net operating loss assets and tax credits 9,451 13,951
 
Tax benefit resulting from revaluing certain deferred tax liabilities in connection with a decrease in the statutory tax rate in Japan   5,352     5,352
 
Non-GAAP income tax expense $ 34,059       $ 10,982   $ 151,654     $ 156,864

 

(1)

 

In the fourth quarter of 2012, the Company changed its method of accounting for its retirement plans to (i) calculate expected return on plan assets using the fair value of plan assets; and (ii) immediately recognize actuarial gains and losses in its operating results in the year in which they occur. Prior periods have been retrospectively adjusted to reflect the effect of these accounting changes.

(2)

The estimated tax effects of the Company’s acquisition, integration, restructuring and debt modification costs and actuarial losses on retirement plans 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 and actuarial loss on retirement plans to determine if such item 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 and actuarial losses on retirement plans 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
2/3/13 1/29/12 (1)
GAAP         Non-GAAP GAAP         Non-GAAP
Results Adjustments Results Results Adjustments Results
 
Net income $ 80,748 $ (37,786 ) (2) $ 118,534 $ 35,524 $ (51,787 ) (3) $ 87,311
 
Weighted average common shares 72,040 72,040 67,478 67,478
Weighted average dilutive securities 1,589 1,589 1,601 1,601
Weighted average impact of assumed convertible preferred stock conversion 684 684 4,189 4,189
Total shares 74,313 74,313 73,268 73,268
 
Diluted net income per common share $ 1.09 $ 1.60 $ 0.48 $ 1.19
         
Year Ended Year Ended
2/3/13 1/29/12 (1)
GAAP         Non-GAAP GAAP         Non-GAAP
Results Adjustments Results Results Adjustments Results
 
Net income $ 433,840 $ (52,520 ) (2) $ 486,360 $ 275,697 $ (121,226 ) (3) $ 396,923
 
Weighted average common shares 70,392 70,392 67,158 67,158
Weighted average dilutive securities 1,397 1,397 1,576 1,576
Weighted average impact of assumed convertible preferred stock conversion 2,087 2,087 4,189 4,189
Total shares 73,876 73,876 72,923 72,923
 
Diluted net income per common share $ 5.87 $ 6.58 $ 3.78 $ 5.44
 

(1)

 

In the fourth quarter of 2012, the Company changed its method of accounting for its retirement plans to (i) calculate expected return on plan assets using the fair value of plan assets; and (ii) immediately recognize actuarial gains and losses in its operating results in the year in which they occur. Prior periods have been retrospectively adjusted to reflect the effect of these accounting changes.

(2)

Represents the impact on net income in the quarter and year ended February 3, 2013 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 acquisition of Warnaco, which closed on February 13, 2013; (iii) the interest expense incurred in connection with the issuance of $700 million of senior notes related to the Company’s acquisition of Warnaco; (iv) the recognized actuarial loss on retirement plans; (v) the tax effects associated with these costs; and (vi) the tax benefit resulting from the recognition of previously unrecognized net operating loss assets and tax credits. Please see Table 1 for a reconciliation of GAAP net income to non-GAAP net income.

(3)

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

 
       

PVH CORP.

Consolidated Balance Sheets

(In thousands)

 
February 3, January 29,
2013 2012
ASSETS
Current Assets:
Cash and Cash Equivalents (1) $ 892,209 $ 233,197
Receivables 441,324 480,965
Inventories 878,415 809,009
Other Current Assets 225,058   216,064
Total Current Assets 2,437,006 1,739,235
Property, Plant and Equipment 561,335 458,891
Goodwill and Other Intangible Assets 4,539,892 4,380,853
Other Assets 243,316   173,382
$ 7,781,549   $ 6,752,361
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts Payable and Accrued Expenses $ 1,063,600 $ 960,880
Short-Term Borrowings 10,847 13,040
Current Portion of Long-Term Debt 88,000 69,951
Other Liabilities 1,154,891 1,160,116
Long-Term Debt (1) 2,211,642 1,832,925
Stockholders’ Equity 3,252,569   2,715,449
$ 7,781,549   $ 6,752,361
 

(1)

 

Cash and Cash Equivalents and Long-Term Debt as of February 3, 2013 include the impact of the issuance of $700 million of senior notes related to the acquisition of Warnaco.

 
         
PVH CORP.
Segment Data
(In thousands)

REVENUE BY SEGMENT

Quarter Ended Quarter Ended
2/3/13 1/29/12

Heritage Brand Wholesale Dress Furnishings

Net sales $ 142,906 $ 143,265
Royalty revenue 1,430 1,524
Advertising and other revenue 718   855
Total 145,054 145,644
 

Heritage Brand Wholesale Sportswear

Net sales 98,060 118,379
Royalty revenue 2,424 2,362
Advertising and other revenue 399   398
Total 100,883 121,139
 

Heritage Brand Retail

Net sales 180,494 170,611
Royalty revenue 1,054 1,017
Advertising and other revenue 241   111
Total 181,789 171,739
               

Total Heritage Brands

Net sales 421,460 432,255
Royalty revenue 4,908 4,903
Advertising and other revenue 1,358   1,364
Total 427,726 438,522
               

Other (Calvin Klein Apparel)

Net sales 211,050   167,896
Total 211,050 167,896
 

Calvin Klein Licensing

Net sales 5,644 14,022
Royalty revenue 73,762 70,511
Advertising and other revenue 26,913   26,042
Total 106,319 110,575
               

Total Calvin Klein

Net sales 216,694 181,918
Royalty revenue 73,762 70,511
Advertising and other revenue 26,913   26,042
Total 317,369 278,471
               

Tommy Hilfiger North America

Net sales 399,594 362,151
Royalty revenue 6,186 4,192
Advertising and other revenue 1,672   1,723
Total 407,452 368,066
 

Tommy Hilfiger International

Net sales 469,162 431,494
Royalty revenue 13,246 14,877
Advertising and other revenue 1,245   1,406
Total 483,653 447,777
               

Total Tommy Hilfiger

Net sales 868,756 793,645
Royalty revenue 19,432 19,069
Advertising and other revenue 2,917   3,129
Total 891,105 815,843
               

Total Revenue

Net sales 1,506,910 1,407,818
Royalty revenue 98,102 94,483
Advertising and other revenue 31,188   30,535
Total $ 1,636,200   $ 1,532,836
 
                         
PVH CORP.
Segment Data (continued)
(In thousands)
 

EARNINGS BEFORE INTEREST AND TAXES BY SEGMENT

 
Quarter Ended Quarter Ended
2/3/13

1/29/12 ((1))

Results Results
Under Non-GAAP Under Non-GAAP
GAAP Adjustments (2) Results GAAP Adjustments (3) Results
 
Heritage Brand Wholesale Dress Furnishings $ 20,585 $ 20,585 $ 17,571 $ 17,571
 
Heritage Brand Wholesale Sportswear 3,542 3,542 (8,720

)

 

$ (966 ) (7,754 )
 
Heritage Brand Retail 2,431       2,431   704       704  
                                     
Total Heritage Brands     26,558               26,558   9,555         (966 )     10,521  
 
Other (Calvin Klein Apparel) 27,412 27,412 18,836 18,836
 
Calvin Klein Licensing 46,378       46,378   51,299       51,299  
                                     
Total Calvin Klein     73,790               73,790   70,135               70,135  
 
Tommy Hilfiger North America 52,491 52,491 20,406 (11,141 ) 31,547
 
Tommy Hilfiger International 43,636   $ (5,643 ) 49,279   35,222     (3,471 ) 38,693  
                                     
Total Tommy Hilfiger     96,127         (5,643 )     101,770   55,628         (14,612 )     70,240  
 
Corporate (86,587 )   (64,773 ) (21,814 ) (100,654

)

 

  (80,081 )

(20,573

)

 
Total earnings before interest and taxes $ 109,888   $ (70,416 ) $ 180,304   $ 34,664   $ (95,659 ) $ 130,323  
 

(1)

 

In the fourth quarter of 2012, the Company changed its method of accounting for its retirement plans to (i) calculate expected return on plan assets using the fair value of plan assets; and (ii) immediately recognize actuarial gains and losses in its operating results in the year in which they occur. Prior periods have been retrospectively adjusted to reflect the effect of these accounting changes.

(2)

Adjustments for the quarter ended February 3, 2013 represent 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 acquisition of Warnaco, which closed on February 13, 2013; and (iii) the recognized actuarial loss on retirement plans.

(3)

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

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

REVENUE BY SEGMENT

Year Ended Year Ended
2/3/13 1/29/12

Heritage Brand Wholesale Dress Furnishings

Net sales $ 523,795 $ 564,898
Royalty revenue 5,576 6,158
Advertising and other revenue 2,875   2,169
Total 532,246 573,225
 

Heritage Brand Wholesale Sportswear

Net sales 467,986 537,284
Royalty revenue 9,901 10,008
Advertising and other revenue 1,997   1,687
Total 479,884 548,979
 

Heritage Brand Retail

Net sales 657,556 646,769
Royalty revenue 4,771 4,822
Advertising and other revenue 1,186   772
Total 663,513 652,363
             

Total Heritage Brands

Net sales 1,649,337 1,748,951
Royalty revenue 20,248 20,988
Advertising and other revenue 6,058   4,628
Total 1,675,643 1,774,567
             

Other (Calvin Klein Apparel)

Net sales 724,962   637,870
Total 724,962 637,870
 

Calvin Klein Licensing

Net sales 34,971 45,796
Royalty revenue 277,369 273,002
Advertising and other revenue 113,064   108,588
Total 425,404 427,386
             

Total Calvin Klein

Net sales 759,933 683,666
Royalty revenue 277,369 273,002
Advertising and other revenue 113,064   108,588
Total 1,150,366 1,065,256
             

Tommy Hilfiger North America

Net sales 1,399,323 1,273,829
Royalty revenue 22,364 16,850
Advertising and other revenue 8,073   7,016
Total 1,429,760 1,297,695
 

Tommy Hilfiger International

Net sales 1,732,228 1,703,582
Royalty revenue 50,038 45,195
Advertising and other revenue 4,964   4,329
Total 1,787,230 1,753,106
             

Total Tommy Hilfiger

Net sales 3,131,551 2,977,411
Royalty revenue 72,402 62,045
Advertising and other revenue 13,037   11,345
Total 3,216,990 3,050,801
             

Total Revenue

Net sales 5,540,821 5,410,028
Royalty revenue 370,019 356,035
Advertising and other revenue 132,159   124,561
Total $ 6,042,999   $ 5,890,624
 
                       
PVH CORP.
Segment Data (continued)
(In thousands)
 

EARNINGS BEFORE INTEREST AND TAXES BY SEGMENT

 
Year Ended Year Ended
2/3/13 1/29/12 (1)
Results Results
Under Non-GAAP Under Non-GAAP
GAAP Adjustments (2) Results GAAP Adjustments (3) Results
 
Heritage Brand Wholesale Dress Furnishings $ 66,204 $ 66,204 $ 78,400 $ 78,400
 
Heritage Brand Wholesale Sportswear 34,883 34,883 11,327 $ (8,118) 19,445
 
Heritage Brand Retail 13,498       13,498   28,731     28,731  
                                   
Total Heritage Brands     114,585             114,585   118,458       (8,118)     126,576  
 
Other (Calvin Klein Apparel) 89,921 89,921 88,700 88,700
 
Calvin Klein Licensing 194,747       194,747   189,105     189,105  
                                   
Total Calvin Klein     284,668             284,668   277,805             277,805  
 
Tommy Hilfiger North America 200,121 $ (379) 200,500 81,142 (44,704) 125,846
 
Tommy Hilfiger International 220,812     (15,441) 236,253   200,697   (26,128) 226,825  
                                   
Total Tommy Hilfiger     420,933       (15,820)     436,753   281,839       (70,832)     352,671  
 
Corporate (159,824)   (75,426) (84,398 ) (186,929 ) (111,752) (75,177 )
 
Total earnings before interest and taxes $ 660,362   $ (91,246) $ 751,608   $ 491,173   $ (190,702) $ 681,875  
 

(1)

 

In the fourth quarter of 2012, the Company changed its method of accounting for its retirement plans to (i) calculate expected return on plan assets using the fair value of plan assets; and (ii) immediately recognize actuarial gains and losses in its operating results in the year in which they occur. Prior periods have been retrospectively adjusted to reflect the effect of these accounting changes.

(2)

Adjustments for the year ended February 3, 2013 represent 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 acquisition of Warnaco, which closed on February 13, 2013; and (iii) the recognized actuarial loss on retirement plans.

(3)

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

 

PVH CORP. 2013 Full Year and First Quarter Reconciliations of GAAP to Non-GAAP Amounts

The Company is presenting its 2013 estimated results excluding (a) the costs expected to be incurred in connection with its acquisition and integration of Warnaco, including the related restructuring; (b) the actuarial loss expected to be incurred on retirement plans; and (c) the estimated tax effects associated with these costs, which is on a non-GAAP basis. The Company believes presenting these results on a non-GAAP basis provides useful additional information to investors. The Company excludes such amounts that it deems non-recurring or non-operational and believes that this (i) 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 and (ii) assists investors in evaluating the effectiveness of the Company’s operations and underlying business trends in a manner that is consistent with management’s evaluation of business 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 amounts referred to in clauses (a), (b) and (c), above, 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 or restructuring cost and actuarial loss on retirement plans 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)

 

2013 Net Income Per Common Share Reconciliations

Full Year 2013

(Estimated)

First Quarter

2013

(Estimated)

 
GAAP net income per common share $5.88 $0.88
Estimated per common share impact of after tax acquisition, integration and restructuring costs and actuarial loss on retirement plans $1.12 $0.45
Net income per common share excluding impact of acquisition, integration and restructuring costs and actuarial loss on retirement plans $7.00 $1.33
 

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 2013 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 or any market or other changes affecting the Company’s expected actuarial loss on retirement plans. Other than the Company’s acquisition of Warnaco, which closed on February 13, 2013, and the related restructuring, the Company has no current understanding or agreement regarding any such transaction or definitive plans regarding any such activity.

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