EX-99.1 2 exh9913rdqtr2004.htm

EXHIBIT 99.1

PHILLIPS-VAN HEUSEN CORPORATION

200 MADISON AVENUE

NEW YORK, N.Y. 10016

FOR IMMEDIATE RELEASE:

November 16, 2004

Contact: Emanuel Chirico

Executive Vice President & Chief Financial Officer

(212) 381-3503

www.pvh.com

PHILLIPS-VAN HEUSEN CORPORATION REPORTS

2004 THIRD QUARTER RESULTS

  • Third Quarter EPS 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 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 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.

-1-

Restructuring and other items in the current year include the costs of (i) exiting the wholesale footwear business and relocating the Company's retail footwear operations, (ii) closing underperforming retail outlet stores, and (iii) debt extinguishment associated with the Company's debt refinancing in February 2004. Restructuring and other items in the prior year include (i) the operating losses of certain Calvin Klein businesses which the Company has closed or licensed, and associated costs in connection therewith, (ii) the costs of certain duplicative personnel and facilities incurred during the integration of various logistical 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 and Segment Data for a reconciliation of 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 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

-2-

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 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, 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 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, 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 Max Azria and MICHAEL Michael Kors which were launched in the second quarter of this year, as well as Chaps and SEAN JOHN, 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 5% - 6% over 2003. Revenue growth in

-3-

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, November 17, 2004 at 11:00 a.m. EST. 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 by New York law.

 

 

 

 

 

-4-

 

 

 

 

 

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Forward-looking statements in this press release and made during the conference call / webcast, including, without limitation, statements relating to the Company's future 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 restrictions (which, among other things, could limit the Company's ability to produce products in cost-effective countries that have the labor and technical expertise needed), the availability and cost of raw materials (particularly petroleum-based synthetic fabrics, 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 in the United States or any of the countries where the Company's products are or are planned to be produced; (v) disease epidemics and health related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas; (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 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.

-5-

 

PHILLIPS-VAN HEUSEN CORPORATION

Consolidated Income Statements

(In thousands, except per share data)
 

Quarter Ended

  

Quarter Ended
 

10/31/04

  

11/2/03
     

Results

      

Results
     

Excluding

      

Excluding
 

Results

Restructuring

Restructuring

  

Results

Restructuring

Restructuring
 

Under

and Other

and Other

  

Under

and Other

and Other
 

GAAP

Items (1)

Items(1)

  

GAAP

Items(2)

Items(2)
               

Net sales

$422,652

  

$422,652

  

$416,117

$ 6,267

$409,850

Royalty and other revenues

50,804

50,804

  

37,480

37,480

Total revenues

$473,456

  

$473,456

  

$453,597

$ 6,267

$447,330
               

Gross profit on net sales

$159,108

  

$159,108

  

$140,845

$ (2,441)

$143,286

Gross profit on royalty and

              

other revenues

50,804

50,804

  

37,480

37,480

Total gross profit

209,912

  

209,912

  

178,325

(2,441)

180,766
               

Selling, general and

             

administrative expenses

160,408

$ 5,950

154,458

  

142,655

3,589

139,066
               
               

Earnings before interest

              

and taxes

49,504

(5,950)

55,454

  

35,670

(6,030)

41,700
               

Interest expense, net

8,365

8,365

  

9,184

9,184
               

Pre-tax income

41,139

(5,950)

47,089

  

26,486

(6,030)

32,516
               

Income tax expense

14,398

(2,082)

16,480

  

9,452

(1,604)

11,056
               

Net income

26,741

(3,868)

30,609

  

17,034

(4,426)

21,460
               

Preferred stock dividends

5,280

5,280

  

5,177

5,177
               

Net income available to

              

common stockholders

$ 21,461

$ (3,868)

$ 25,329

  

$ 11,857

$ (4,426)

$ 16,283
               

Basic net income per

              

common share(3)

$ 0.69

  

$ 0.82

  

$ 0.39

  

$ 0.54
               

Diluted net income per

              

common share(3)

$ 0.52

  

$ 0.59

  

$ 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.

-6-

(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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-7-

 

PHILLIPS-VAN HEUSEN CORPORATION

Consolidated Income Statements

(In thousands, except per share data)
 

Nine Months Ended

  

Nine Months Ended
 

10/31/04

  

11/2/03
     

Results

      

Results
     

Excluding

      

Excluding
 

Results

Restructuring

Restructuring

  

Results

Restructuring

Restructuring
 

Under

and Other

and Other

  

Under

and Other

and Other
 

GAAP

Items (1)

Items(1)

  

GAAP

Items(2)

Items(2)
               

Net sales

$1,095,367

  

$1,095,367

  

$1,104,863

$ 16,396

$1,088,467

Royalty and other revenues

132,251

  

132,251

  

107,608

107,608

Total revenues

$1,227,618

  

$1,227,618

  

$1,212,471

$ 16,396

$1,196,075
               

Gross profit on net sales

$ 420,950

  

$ 420,950

  

$ 386,233

$ (3,388)

$ 389,621

Gross profit on royalty and

              

other revenues

132,251

  

132,251

  

107,608

107,608

Total gross profit

553,201

  

553,201

  

493,841

(3,388)

497,229
               

Selling, general and

             

administrative expenses

454,883

$ 13,095

441,788

  

432,817

24,967

407,850
               

Gain on sale of investment

 

3,496

3,496

               

Earnings before interest

              

and taxes

98,318

(13,095)

111,413

  

64,520

(24,859)

89,379
               

Interest expense, net

34,743

9,374

25,369

  

27,410

27,410
               

Pre-tax income

63,575

(22,469)

86,044

  

37,110

(24,859)

61,969
               

Income tax expense

22,251

(7,864)

30,115

  

13,252

(7,818)

21,070
 

           

Net income

41,324

(14,605)

55,929

  

23,858

(17,041)

40,899
               

Preferred stock dividends

15,841

15,841

  

14,746

14,746
               

Net income available to

              

common stockholders

$ 25,483

$(14,605)

$ 40,088

  

$ 9,112

$(17,041)

$ 26,153
               

Basic net income per

              

common share(3)

$ 0.82

  

$ 1.30

  

$ 0.30

  

$ 0.87
               

Diluted net income per

              

common share(3)

$ 0.79

  

$ 1.09

  

$ 0.30

  

$ 0.85
               

(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.

-8-
  • 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-9-

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
           

-10-

 
 

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.

 

 

-11-

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

  

Quarter Ended
 

10/31/04

  

11/2/03
     

Results

      

Results
     

Excluding

      

Excluding
 

Results

Restructuring

Restructuring

  

Results

Restructuring

Restructuring
 

Under

and Other

and Other

  

Under

and Other

and Other
 

GAAP

Items

Items

  

GAAP

Items

Items

($000)

              

Net income

$26,741

$(3,868)

$30,609

  

$17,034

$(4,426)

$21,460

Plus:

              

Income tax expense

14,398

(2,082)

16,480

  

9,452

(1,604)

11,056

Interest expense, net

8,365

  

8,365

  

9,184

  

9,184

Depreciation and amortization

6,539

6,539

  

6,872

6,872

EBITDA

$56,043

$(5,950)

$61,993

  

$42,542

$(6,030)

$48,572
               

 
 

Nine Months Ended

  

Nine Months Ended
 

10/31/04

  

11/2/03
     

Results

      

Results
     

Excluding

      

Excluding
 

Results

Restructuring

Restructuring

  

Results

Restructuring

Restructuring
 

Under

and Other

and Other

  

Under

and Other

and Other
 

GAAP

Items

Items

  

GAAP

Items

Items

($000)

              

Net income

$ 41,324

$(14,605)

$ 55,929

  

$23,858

$(17,041)

$ 40,899

Plus:

              

Income tax expense

22,251

(7,864)

30,115

  

13,252

(7,818)

21,070

Interest expense, net

34,743

9,374

25,369

  

27,410

  

27,410

Depreciation and amortization

20,645

20,645

  

20,543

20,543

EBITDA

$118,963

$(13,095)

$132,058

  

$85,063

$(24,859)

$109,922
               

 

 

 

 

-12-

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

 

 

 

 

 

 

 

 

 

 

-13-

 

PHILLIPS-VAN HEUSEN CORPORATION

Segment Data

(In thousands)
 

Quarter Ended

  

Quarter Ended
 

10/31/04

  

11/2/03
     

Results

      

Results
     

Excluding

      

Excluding
 

Results

Restructuring

Restructuring

  

Results

Restructuring

Restructuring
 

Under

and Other

and Other

  

Under

and Other

and Other
 

GAAP

Items

Items

  

GAAP

Items

Items
               

Revenues - Apparel and Related

Products

              

Net sales

$420,117

  

$420,117

  

$406,420

  

$406,420

Royalty and other revenues

5,094

  

5,094

  

3,368

  

3,368

Total

425,211

  

425,211

  

409,788

  

409,788
               

Revenues - Calvin Klein Licensing

              

Net sales

2,535

  

2,535

  

9,697

$ 6,267

3,430

Royalty and other revenues

45,710

  

45,710

  

34,112

34,112

Total

48,245

  

48,245

  

43,809

6,267

37,542
               

Total Revenues

              

Net sales

422,652

  

422,652

  

416,117

6,267

409,850

Royalty and other revenues

50,804

  

50,804

  

37,480

37,480

Total

$473,456

  

$473,456

  

$453,597

$ 6,267

$447,330
               
               

Operating earnings - Apparel

              

and Related Products

$ 41,555

$ (5,950)

$ 47,505

  

$ 36,681

  

$ 36,681
               

Operating earnings -

              

Calvin Klein Licensing

15,261

  

15,261

  

4,895

$ (6,030)

10,925
               

Corporate expenses

7,312

7,312

  

5,906

5,906
               

Earnings before

              

interest and taxes

$ 49,504

$ (5,950)

$ 55,454

  

$ 35,670

$ (6,030)

$ 41,700
               

 

 

-14-

 

PHILLIPS-VAN HEUSEN CORPORATION

Segment Data

(In thousands)
 

Nine Months Ended

  

Nine Months Ended
 

10/31/04

  

11/2/03
     

Results

      

Results
     

Excluding

      

Excluding
 

Results

Restructuring

Restructuring

  

Results

Restructuring

Restructuring
 

Under

and Other

and Other

  

Under

and Other

and Other
 

GAAP

Items

Items

  

GAAP

Items

Items
               

Revenues - Apparel and Related

Products

              

Net sales

$1,086,981

  

$1,086,981

  

$1,077,864

  

$1,077,864

Royalty and other revenues

13,907

  

13,907

  

10,903

  

10,903

Total

1,100,888

  

1,100,888

  

1,088,767

  

1,088,767
               

Revenues - Calvin Klein

Licensing

              

Net sales

8,386

  

8,386

  

26,999

$ 16,396

10,603

Royalty and other revenues

118,344

  

118,344

  

96,705

96,705

Total

126,730

  

126,730

  

123,704

16,396

107,308
               

Total Revenues

              

Net sales

1,095,367

  

1,095,367

  

1,104,863

16,396

1,088,467

Royalty and other revenues

132,251

  

132,251

  

107,608

107,608

Total

$1,227,618

  

$1,227,618

  

$1,212,471

$ 16,396

$1,196,075
               
               

Operating earnings - Apparel

              

and Related Products

$ 80,637

$(13,095)

$ 93,732

  

$ 74,870

  

$ 74,870
               

Operating earnings -

              

Calvin Klein Licensing

40,722

  

40,722

  

6,010

$(28,355)

34,365
               

Corporate expenses(1)

23,041

23,041

  

16,360

(3,496)

19,856
               

Earnings before

              

interest and taxes

$ 98,318

$(13,095)

$ 111,413

  

$ 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.

 

-15-

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.

-16-

 

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

 

 

 

 

 

-17-