-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GccKom2VsudBVUjSArkYviUk5QYO5UVPOgVq4/tRLyJKGk+oYvxCRmNR0fF7iD4+ +BAg8TpwZi9Qgi7vZ3V4cg== 0000078239-07-000042.txt : 20070822 0000078239-07-000042.hdr.sgml : 20070822 20070822170550 ACCESSION NUMBER: 0000078239-07-000042 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070822 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070822 DATE AS OF CHANGE: 20070822 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHILLIPS VAN HEUSEN CORP /DE/ CENTRAL INDEX KEY: 0000078239 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 131166910 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07572 FILM NUMBER: 071073666 BUSINESS ADDRESS: STREET 1: 200 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2123813500 MAIL ADDRESS: STREET 1: 200 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 8-K 1 eightkaug222007.htm SECURITIES AND EXCHANGE COMMISSION


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934




Date of Report (Date of earliest event reported)

August 22, 2007



PHILLIPS-VAN HEUSEN CORPORATION
(Exact name of registrant as specified in its charter)


         Delaware

         001-07572

13-1166910

(State or other jurisdiction of incorporation)

          (Commission File Number)

(IRS Employer Identification No.)


        200 Madison Avenue, New York, New York

         10016

(Address of Principal Executive Offices)

          (Zip Code)


Registrant’s telephone number, including area code  (212)-381-3500


Not Applicable

(Former Name or Former Address, if Changed Since Last Report)







ITEM 2.02

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 22, 2007, Phillips-Van Heusen Corporation (the “Company”) issued a press release to report the Company’s 2007 second quarter earnings, which is set forth in the attached Exhibit 99.1.

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, regardless of any general incorporation language in such filing.

 

ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS

(d)  Exhibits.

Exhibit

Description

99.1

Press Release, dated August 22, 2007.


 




 

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PHILLIPS-VAN HEUSEN CORPORATION

 

By: /s/ Bruce Goldstein

Bruce Goldstein

Senior Vice President and Controller

 

Date: August 22, 2007





Exhibit Index


Exhibit

Description

99.1

Press Release, dated August 22, 2007.





EX-99.1 2 exh991eightkaug222007.htm DRAFT 2

Exhibit 99.1

PHILLIPS-VAN HEUSEN CORPORATION

200 MADISON AVENUE

NEW YORK, N.Y. 10016


FOR IMMEDIATE RELEASE:

August 22, 2007


Contact:  

Michael Shaffer

Executive Vice President and Chief Financial Officer

(212) 381-3523

www.pvh.com



PHILLIPS-VAN HEUSEN CORPORATION REPORTS

2007 SECOND QUARTER RESULTS


w

SECOND QUARTER EPS OF $0.68 EXCEEDS COMPANY GUIDANCE AND CONSENSUS ESTIMATE

w

SECOND QUARTER REVENUE INCREASES 20% OVER PRIOR YEAR

w

FULL YEAR REVENUE AND EPS GUIDANCE INCREASED



Second Quarter Results


New York, New York - Phillips-Van Heusen Corporation [NYSE:PVH] reported second quarter 2007 net income of $39.1 million, or $0.68 per share, which was $0.07 ahead of its previous earnings guidance.  This represents a 28% improvement over second quarter 2006 non-GAAP earnings per share of $0.53.  (Please refer to the “2006 non-GAAP Exclusions” section in this release.)  Second quarter 2006 GAAP net income was $29.0 million, or $0.33 per share.  


The second quarter earnings per share improvement was driven by a 20% revenue increase combined with a 130 basis point improvement in operating income margin as all of the Company’s businesses registered revenue and earnings increases.  Continued strong growth in royalty revenue resulted in Calvin Klein Licensing business operating income growth of 28%.  Operating income in the combined wholesale and retail businesses grew 30%, driven by a


1


20% increase in revenue along with a 50 basis point improvement in gross margin which was attributable to strong product sell-throughs.  Included in the second quarter of 2007 were $2.2 million of pre-tax costs, or $0.02 per share, associated with the start-up of the Company’s Timberland wholesale sportswear business and Calvin Klein better specialty retail stores.


Total revenue in the second quarter of 2007 was $552.4 million versus $458.9 million in the prior year.  Revenue increased 27% in the Company’s Calvin Klein licensing business, driven by continued strength in the fragrance business, due principally to the new men’s and women’s CKIN2U fragrance line that was successfully launched in the first quarter of 2007 and increased sales of both the men’s and women’s euphoria fragrance.  Also contributing to the Calvin Klein revenue increase was the success of the multiple new licensed product categories launched over the past few years and strong performances in jeans and underwear.  Revenue in the Company’s combined wholesale and retail businesses increased 20%, driven by the newly-acquired neckwear business, growth in the Company’s wholesale sportswear business principally related to the Calvin Klein and Van Heusen brands and the addition of sales associated with IZOD women’s sportswear.  In addition, the Company’s outlet retail business achieved comparable store sales growth of 7%, or 5% after adjusting for the shifted retail calendar.  


Year to Date Results


For the six months in 2007, net income was $92.1 million, or $1.60 per share, which represents a 27% improvement over non-GAAP earnings per share of $1.26 in 2006.  (Please refer to the “2006 non-GAAP Exclusions” section in this release.)  For the six months, GAAP net income was $77.7 million, or $1.27 per share in 2006.  


For the six months, total revenue increased 19% to $1,144.3 million in 2007 from $965.4 million for the same period in 2006.  


2



Balance Sheet


Receivables ended the quarter 42% above the prior year level, due principally to the revenue growth exhibited by the Company’s wholesale and licensing businesses combined with the calendar shift caused by the 53rd week in fiscal 2006, which resulted in a higher sales volume near the end of the second quarter of 2007 when compared to the prior year.  Inventories increased 26% to end the quarter on plan and in line with anticipated sales growth for the third quarter.  


The Company’s balance sheet at the end of the second quarter of 2007 includes receivables and inventories related to the Company’s new neckwear and IZOD women’s sportswear businesses.


CEO Comments


Commenting on these results, Emanuel Chirico, Chairman and Chief Executive Officer, noted, “We are extremely pleased with our second quarter results, as all of our businesses experienced revenue and earnings growth despite the recent challenges in the overall retail environment.  Our strategy of marketing nationally recognized brands across multiple channels of distribution continues to benefit our bottom line and helps to insulate us from a downturn in any one of our business segments.”


Mr. Chirico continued, “The strength of the Calvin Klein brand continues to fuel strong revenue and earnings increases and was the key driver in enabling us to exceed our previous guidance.  The global demand for the Calvin Klein brand continues to expand as we introduce new product categories and enter into new markets around the world.  Additionally, our heritage businesses continue to post revenue and earnings increases and our newly-acquired neckwear business continues to exceed expectations and represents a platform for growth when we layer on additional neckwear brands over time.”




3


Mr. Chirico concluded, “We feel strongly that our strategy will continue to serve us well as we look towards the balance of the year.  We remain focused on the growth opportunities at Calvin Klein and our new initiatives, including IZOD women’s sportswear, Timberland sportswear and Calvin Klein better specialty retail.  The investments we are making in people and infrastructure to support these new initiatives as well as our existing businesses put us in an excellent position to drive the long-term strength of our brands and to explore future growth opportunities that support our long-term growth targets.”


2007 Guidance


Annual Projections

The Company’s 2007 earnings per share estimate is being increased to a range of $3.15 to $3.17 from $3.06 to $3.10.  This represents an increase of 20% to 21% over 2006 non-GAAP earnings per share of $2.62.  The Company projects total revenue for the full year 2007 to be approximately $2.44 billion which represents an increase of 17% over 2006.


Quarterly Projections

Quarterly comparative revenue growth in 2007 is being impacted by the extra week of revenue (53rd week) in 2006.  The impact on the full year 2006 of the extra week of revenue is relatively immaterial at approximately $10 million.  However, the impact of the 53rd week in 2006 is causing the 13 weeks in each fiscal quarter of 2007 to be compared to 13 weeks which are not aligned when comparing 2007 to 2006.  The following table presents proforma adjustments to the Company’s 2006 revenue that would be required to both eliminate the effect of the 53rd week, and to adjust the 2006 revenue to align with the 2007 fiscal calendar:




4



 ($ in millions)

 
  
  

First Quarter

$15.0

Second Quarter

15.0

Third Quarter

30.0

Fourth Quarter

  (70.0)

Year

($10.0)


In addition to the revenue shift, profitability will also be impacted by a shift in advertising spending in the second half of the year.  Overall, advertising spending is expected to be slightly higher in 2007.  However, approximately $9 million will shift from the fourth quarter into the third quarter when compared to the prior year.


For the third quarter, earnings per share is projected to be in a range of $1.02 to $1.03, or an increase of 15% to 16% over the prior year.  Revenue for the third quarter is projected to be approximately $705 million, or an increase of 24% over the prior year.  (After adjusting for the 2007 retail calendar shift, revenue growth is projected to be 18%.)


For the fourth quarter, earnings per share is projected to be in a range of $0.53 to $0.54, or an increase of 13% to 15% over the prior year.  Revenue for the fourth quarter is estimated to be approximately $595 million, or an increase of 7% over the prior year.  (After adjusting for the 2007 retail calendar shift, revenue growth is projected to be 22%.)


Start-up Costs/Gain on Sale

For the full year 2007, the Company continues to expect to incur net costs of $8.0 million.  This is comprised of $11.3 million of start-up costs associated with the Company’s Timberland wholesale sportswear business and Calvin Klein better specialty retail stores, and a $3.3 million gain recorded in the first quarter of 2007 associated with the release of cash held in escrow in connection with the sale in the first quarter of 2006 of minority interests in certain entities.


5



The Company’s results through the second quarter of 2007 included $0.3 million of net start-up costs, which was $1.0 million less than the Company’s previous guidance due to the shift of such costs from the second quarter into the third quarter.  Of the remaining expected start-up costs of $7.7 million, the Company expects to incur $4.4 million in the third quarter and $3.3 million in the fourth quarter.


Cash Flow

Cash flow for 2007 is estimated to be between $85 million and $90 million, including approximately $100 million to $110 million of capital spending.  The higher level of capital spending, as compared with prior years, is to support the Company’s new business initiatives, as well as for infrastructure investments to support the growth of existing businesses.


2006 non-GAAP Exclusions


Non-GAAP earnings per share in 2006 excludes (a) a pre-tax gain of $32.0 million associated with the sale on January 31, 2006 by the Company of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia (of which $31.4 million was recorded in the first quarter and $0.7 million was recorded in the second quarter); (b) pre-tax costs of $10.5 million recorded in the first quarter resulting from the departure in February 2006 of Mark Weber, the Company’s former Chief Executive Officer; (c) pre-tax costs of $11.3 million associated with the closing in May 2006 of the Company’s apparel manufacturing facility in Ozark, Alabama (of which $9.4 million was recorded in the first quarter and $1.9 million was recorded in the second quarter); and (d) an inducement payment of $10.2 million and costs of $0.7 million recorded in the second quarter of 2006 associated with the secondary common stock offering completed in the second quarter of 2006.


Please see reconciliations of GAAP to non-GAAP earnings per share for 2006 in this release.



6


The Company webcasts its conference calls to review its earnings releases.  The Company’s conference call to review its second quarter earnings release is scheduled for Thursday, August 23, 2007 at 11:00 a.m. EST.  Please log on either to the Company’s web site at www.pvh.com and go to the News Releases page or to www.companyboardroom.com to listen to the live webcast of the conference call.  The webcast will be available for replay for one year after it is held, commencing approximately two hours after the live broadcast ends.  Please log on to www.pvh.com or www.companyboardroom.com as described above to listen to the replay.  In addition, an audio replay of the conference call is available for 48 hours starting one hour after it is held.  The replay of the conference call can be accessed by calling 1-888-203-1112 and using passcode #8410102.  The conference call and webcast consist of copyrighted material.  They may not be re-recorded, reproduced, re-transmitted, rebroadcast or otherwise used without the Company’s express written permission.  Your participation represents your consent to these terms and conditions, which are governed by New York law.





7




SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Forward-looking statements in this press release and made during the conference call / webcast, including, without limitation, statements relating to the Company’s future revenue, earnings and cash flows, 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 discreti on of the Company; (ii) the levels of sales of the Company’s apparel, footwear and related products, both to its wholesale customers and in its retail stores, the levels of sales of the Company’s licensees at wholesale and retail, and the extent of discounts and promotional pricing in which the Company and its licensees and other business partners are required to engage, all of which can be affected by weather conditions, changes in the economy, fuel prices, reductions in travel, fashion trends, consolidations, repositionings and bankruptcies in the retail industries, repositionings of brands by the Company’s licensors and other factors;  (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 continue to realize revenue growth from developing and growing Calvin Klein; (iv) the Company’s operations and results could be affected by quota restrictions and the impo sition of safeguard controls (which, among other things, could limit the Company’s ability to produce products in cost-effective countries that have the labor and technical expertise needed), the availability and cost of raw materials (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 propose d 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 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, earnings or cash flows, whether as a result of the receipt of new information, future events or otherwise.




8


PHILLIPS-VAN HEUSEN CORPORATION

Consolidated Income Statements

(In thousands, except per share data)


   

Quarter Ended

   

7/30/06

 

Quarter

 

Results

  
 

Ended

 

Under

 

Non-GAAP

 

8/5/07

 

GAAP

Adjustments(1)

   Results(1)

 






Net sales

$488,863


$407,120


$407,120

Royalty revenue

44,983


    38,712


38,712

Advertising and other revenue

    18,530


    13,096


    13,096

Total revenue

$552,376


$458,928


$458,928

 






Gross profit on net sales

$213,940


$175,339


$175,339

Gross profit on royalty, advertising and other revenue

    63,513


    51,808


    51,808

Total gross profit

277,453


227,147


227,147

 






Selling, general and administrative expenses

209,517


177,381

$  (1,897)

175,484

 






Gain on sale of investments

               

 

         675

       (675)

               

 






Earnings before interest and taxes

67,936


50,441

1,222

51,663

 






Interest expense, net

      3,943


      4,410

              

      4,410

 






Pre-tax income

63,993


46,031

1,222

47,253

 






Income tax expense

    24,893


    17,078

        454

    17,532

 




 


Net income

39,100


28,953

768

29,721

 






Inducement payment and offering costs

               


    10,948

  (10,948)

               

 






Net income available to common stockholders

$  39,100


$  18,005

$ 11,716

$  29,721

 






Diluted net income per common share(2)

$      0.68


$      0.33

 

$      0.53

  



  


(1)

Adjustments for the quarter ended July 30, 2006 consist of (a) a pre-tax adjustment of $0.7 million to the gain associated with the sale by the Company on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia; (b) pre-tax costs of $1.9 million associated with closing the Company’s apparel manufacturing facility in Ozark, Alabama in May 2006; and (c) an inducement payment and offering costs of $10.9 million. The inducement payment and offering costs related to the conversion of the remaining outstanding shares of the Company’s Series B convertible preferred stock by the holders of such stock into 11.6 million shares of common stock and the subsequent sale in a registered offering of 10.1 million shares of such stock by the holders in May 2006. The inducement payment and offering costs include (a) an inducement payment of $0.88 per share of common stock received upon conversion, or an aggregate of $10.2 million; and (b) certain costs, totaling $0.7 million, incurred by the Company in connection with the secondary common stock offering. The inducement payment was based on the net present value of the dividends that the Company would have been obligated to pay the holders of the Series B convertible preferred stock through the earliest date on which it was estimated that the Company would have had the right to convert the Series B convertible preferred stock, net of the net present value of the dividends payable on the shares of common stock into which the Series B convertible preferred stock was convertible over the same period.


(2)

Please see Note 2a to the Notes to Consolidated Income Statements for the calculations of diluted net income per common share.




9


PHILLIPS-VAN HEUSEN CORPORATION

Consolidated Income Statements

(In thousands, except per share data)


   

Six Months Ended

   

7/30/06

 

Six Months

 

Results

  
 

Ended

 

Under

 

Non-GAAP

 

8/5/07

 

GAAP

Adjustments(1)

   Results(1)

 






Net sales

$1,009,315


$861,308


$861,308

Royalty revenue

96,589


    78,347


78,347

Advertising and other revenue

       38,378


    25,711


    25,711

Total revenue

$1,144,282


$965,366


$965,366

 






Gross profit on net sales

$   435,059


$365,813


$365,813

Gross profit on royalty, advertising and other revenue

     134,967


  104,058


  104,058

Total gross profit

570,026


469,871


469,871

 






Selling, general and administrative expenses

416,546


  368,410

$(21,829)

346,581

 






Gain on sale of investments

         3,335

 

    32,043

  (32,043)

               

 






Earnings before interest and taxes

156,815


133,504

(10,214)

123,290

 






Interest expense, net

         8,417


      9,978

              

      9,978

 






Pre-tax income

148,398


123,526

(10,214)

113,312

 






Income tax expense

       56,292


    45,828

    (3,789)

    42,039

 






Net income

92,106


77,698

(6,425)

71,273

 






Preferred stock dividends on converted stock



3,230


3,230

 






Inducement payment and offering costs

                  


    10,948

  (10,948)

               

 






Net income available to common stockholders

$     92,106


$  63,520

$    4,523

$  68,043

 






Diluted net income per common share(2)

$         1.60


$      1.27

 

$      1.26

  



  


(1)

Adjustments for the six months ended July 30, 2006 consist of (a) a pre-tax gain of $32.0 million associated with the sale by the Company on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia; (b) pre-tax costs of $10.5 million resulting from the departure in February 2006 of Mark Weber, the Company’s former Chief Executive Officer; (c) pre-tax costs of $11.3 million associated with closing the Company’s apparel manufacturing facility in Ozark, Alabama in May 2006; and (d) an inducement payment and offering costs of $10.9 million. The inducement payment and offering costs related to the conversion of the remaining outstanding shares of the Company’s Series B convertible preferred stock by the holders of such stock into 11.6 million shares of common stock and the subsequent sa le in a registered offering of 10.1 million shares of such stock by the holders in May 2006. The inducement payment and offering costs include (a) an inducement payment of $0.88 per share of common stock received upon conversion, or an aggregate of $10.2 million; and (b) certain costs, totaling $0.7 million, incurred by the Company in connection with the secondary common stock offering.  The inducement payment was based on the net present value of the dividends that the Company would have been obligated to pay the holders of the Series B convertible preferred stock through the earliest date on which it was estimated that the Company would have had the right to convert the Series B convertible preferred stock, net of the net present value of the dividends payable on the shares of common stock into which the Series B convertible preferred stock was convertible over the same period.


(2)

Please see Note 2b to the Notes to Consolidated Income Statements for the calculations of diluted net income per common share.




10


Notes to Consolidated Income Statements:


1.

The Company believes presenting non-GAAP results for the quarter and six months ended July 30, 2006 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. Thus, the Company believes that the following items do not represent normal operating items and, as such, has provided reconciliations to present its ongoing results of operations excluding these items: (a) the gain realized in 2006 associated with the sale by the Company on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia; (b) costs resulting from the departure in February 2006 of Mark Weber, the Com pany’s former Chief Executive Officer; (c) costs associated with the May 2006 closing of the Company’s apparel manufacturing facility in Ozark, Alabama; and (d) the inducement payment and offering costs associated with the conversion of preferred shares and the sale in a registered offering of shares of common stock issued upon conversion that were paid and/or incurred in 2006.  The Company uses its results excluding these 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.


2a. The Company computed its quarterly diluted net income per common share as follows:

(In thousands, except per share data)


  

Quarter Ended

  

7/30/06

 

Quarter

 

Results

 

Non-

 

Ended

 

Under

 

GAAP

 

8/5/07

 

GAAP

Adjustments

Results

    


 

Net income

$39,100


$28,953

$       768(1)

$29,721

 






Less:






  Inducement payment and offering costs

             


  10,948

  (10,948)(2)

             

 






Net income available to common stockholders

$39,100


$18,005

$ 11,716

$29,721

 






Weighted average common shares outstanding

56,340


53,897


53,897

Weighted average impact of dilutive securities

1,503


1,135


1,135

Weighted average impact of converted






  preferred stock

             


             

      1,398(3)

    1,398

 






Total shares

  57,843


  55,032

      1,398

  56,430

 






Diluted net income per common share

$    0.68


$    0.33


$    0.53

    


 


(1)

Includes an adjustment to the gain associated with the sale by the Company on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia and costs associated with the closing in May 2006 of the Company’s apparel manufacturing facility in Ozark, Alabama.


(2)

Elimination of the inducement payment and offering costs associated with the conversion of preferred shares and the sale in a registered offering of shares of common stock issued upon conversion that were paid and/or incurred in May 2006.  The inducement payment and offering costs include (a) an inducement payment of $0.88 per share of common stock received upon conversion, or an aggregate of $10.2 million; and (b) certain costs, totaling $0.7 million, incurred by the Company in connection with the secondary common stock offering.


(3)

Additional shares which would have been included in the diluted net income per common share computation under the if-converted method if the inducement payment and offering costs had not been incurred.



11


2b. The Company computed its year to date diluted net income per common share as follows:

(In thousands, except per share data)




  

Six Months Ended

 

Six

 

7/30/06

 

Months

 

Results

 

Non-

 

Ended

 

Under

 

GAAP

 

8/5/07

 

GAAP

Adjustments

Results

    


 

Net income

$92,106


$77,698

$  (6,425)(1)

$71,273

 






Less:






  Preferred stock dividends on converted stock



3,230

(3,230)(2)


  Inducement payment and offering costs

             


  10,948

  (10,948)(3)

              

 






Net income available to common stockholders

$92,106


$63,520

$   7,753

$71,273

 






Weighted average common shares outstanding

56,134


48,666


48,666

Weighted average impact of dilutive securities

1,590


1,238


1,238

Weighted average impact of converted






  preferred stock

             


             

     6,482(4)

    6,482

 






Total shares

  57,724


  49,904

     6,482

  56,386

 






Diluted net income per common share

$    1.60


$    1.27


$    1.26

    


 


(1)

Includes (a) the gain associated with the sale by the Company on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia; (b) costs resulting from the departure in February 2006 of Mark Weber, the Company’s former Chief Executive Officer; and (c) costs associated with the closing in May 2006 of the Company’s apparel manufacturing facility in Ozark, Alabama.


(2)

Elimination of dividends on preferred stock which would not have been included in the diluted net income per common share computation under the if-converted method if the inducement payment and offering costs had not been incurred.  Eliminating such costs requires a recalculation when applying the if-converted method of calculating diluted net income per common share.


(3)

Elimination of the inducement payment and offering costs associated with the conversion of preferred shares and the sale in a registered offering of shares of common stock issued upon conversion that were paid and/or incurred in May 2006.  The inducement payment and offering costs include (a) an inducement payment of $0.88 per share of common stock received upon conversion, or an aggregate of $10.2 million; and (b) certain costs, totaling $0.7 million, incurred by the Company in connection with the secondary common stock offering.


(4)

Additional shares which would have been included in the diluted net income per common share computation under the if-converted method if the inducement payment and offering costs had not been incurred.





12


PHILLIPS-VAN HEUSEN CORPORATION

Consolidated Balance Sheets

(In thousands)


 

August 5,

July 30,

 

2007

2006

ASSETS

  

Current Assets:

  

Cash and Cash Equivalents

$   366,271

$   367,704

Receivables

153,284

107,673

Inventories

322,068

255,024

Other Current Assets

       36,948

       36,120

Total Current Assets

878,571

766,521

Property, Plant and Equipment

185,179

154,079

Goodwill and Other Intangible Assets

1,026,796

912,297

Other Assets

       29,951

       24,887

 

$2,120,497

$1,857,784

 



LIABILITIES AND STOCKHOLDERS’ EQUITY



Accounts Payable and Accrued Expenses

$   264,909

$   236,983

Other Liabilities

406,017

371,445

Long-Term Debt

399,545

399,531

Stockholders’ Equity

  1,050,026

     849,825

 

$2,120,497

$1,857,784





13


PHILLIPS-VAN HEUSEN CORPORATION

Business Data

(In thousands)


   

Quarter Ended

   

7/30/06

      
 

Quarter

 

Results

  
 

Ended

 

Under

 

Non-GAAP

 

8/5/07

 

GAAP

Adjustments

Results

Revenue – Wholesale and Retail






Net sales

$488,863


$407,120


$407,120

Royalty revenue

5,846


      6,059


      6,059

Advertising and other revenue

      1,604


      1,537


      1,537

Total

496,313


414,716


414,716

 






Revenue – Calvin Klein Licensing






Royalty revenue

39,137


32,653


32,653

Advertising and other revenue

    16,926


    11,559


    11,559

Total

56,063


44,212


44,212

 






Total Revenue






Net sales

488,863


407,120


407,120

Royalty revenue

44,983


    38,712


    38,712

Advertising and other revenue

    18,530


    13,096


    13,096

Total

$552,376


$458,928


$458,928

 






 



  



Operating earnings – Wholesale and Retail

$  52,862


$  40,721

$1,897(1)

$  42,618

 






Operating earnings – Calvin Klein Licensing

29,450


23,084

(675)(2)

22,409

 






Corporate expenses

    14,376


    13,364

            

   13,364

 






 






Earnings before interest and taxes

$  67,936


$  50,441

$1,222

$  51,663

 




  


(1)

Consists of costs associated with the closing in May 2006 of the Company’s apparel manufacturing facility in Ozark, Alabama.


(2)

Consists of an adjustment to the gain associated with the sale by the Company on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia.





14


PHILLIPS-VAN HEUSEN CORPORATION

Business Data

(In thousands)


   

Six Months Ended

   

7/30/06

      
 

Six Months

 

Results

  
 

Ended

 

Under

 

Non-GAAP

 

8/5/07

 

GAAP

Adjustments

Results

Revenue – Wholesale and Retail






Net sales

$1,009,315


$861,308


$861,308

Royalty revenue

12,218


    12,725


    12,725

Advertising and other revenue

         3,923


      3,338


      3,338

Total

1,025,456


877,371


877,371

 






Revenue – Calvin Klein Licensing






Royalty revenue

84,371


65,622


65,622

Advertising and other revenue

       34,455


    22,373


    22,373

Total

118,826


87,995


87,995

 






Total Revenue






Net sales

1,009,315


861,308


861,308

Royalty revenue

96,589


    78,347


    78,347

Advertising and other revenue

       38,378


    25,711


    25,711

Total

$1,144,282


$965,366


$965,366

 






 






Operating earnings – Wholesale and Retail

$   124,299


$  95,027

$ 11,294(2)

$106,321

 






Operating earnings – Calvin Klein Licensing

59,787(1)


73,045

(32,043)(3)

41,002

 






Corporate expenses

       27,271


    34,568

  (10,535)(4)

    24,033

 






 






Earnings before interest and taxes

$   156,815


$133,504

$(10,214)

$123,290

 




  


(1)

Includes a gain of $3,335 associated with the release of cash held in escrow in connection with the sale in the first quarter of 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia.


(2)

Consists of costs associated with the closing in May 2006 of the Company’s apparel manufacturing facility in Ozark, Alabama.


(3)

Consists of the gain associated with the sale by the Company on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia.


(4)

Consists of costs resulting from the departure in February 2006 of Mark Weber, the Company’s former Chief Executive Officer.



15


PHILLIPS-VAN HEUSEN CORPORATION

Reconciliation of GAAP to non-GAAP 2006 Full Year Diluted Net Income Per Share


Set forth below is the Company’s reconciliation of its 2006 full year GAAP diluted net income per share to diluted net income per share excluding the gain associated with the sale by the Company on January 31, 2006 of minority interests in certain entities, departure and restructuring costs and the May 2006 inducement and offering costs.  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.  Thus, the Company believes presenting its results excluding the items listed above for the 2006 full year provides useful information to investors because this allows investors to make decisions based on the ongoing operations of the enterprise.  The Company uses its results excluding the items listed above 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.  This reconciliation is presented to reconcile full year 2006 net income per share to the non-GAAP amount of $2.62.  This non-GAAP net income per share amount is being used as the basis of comparison to the Company’s projections for full year 2007 net income per share.


(In thousands, except per share data)


2006 Full Year

 

GAAP

   

Non-GAAP

  

Earnings

 

Adjustments

 

Earnings

      
 


 


 


Net income

$155,229

 


 

$155,229

 


 


 


Gain associated with the sale of minority interests in certain entities


 

$(32,043)

 

(32,043)

Departure costs associated with Mark Weber, the Company’s former CEO


 

10,535

 

10,535

Restructuring costs associated with manufacturing facility closing


 

   11,294

 

    11,294

Tax effect of adjustments

               

 

     3,789

 

     3,789

 


 


 


Net income as adjusted

155,229

 

(6,425)

 

148,804

 


 


 


Less:


 


 


     Inducement payment and offering costs

10,948

 

 (10,948)(1)

 


     Preferred stock dividends on converted stock

      3,230

 

    (3,230)(2)

 

               

 


 


 


Net income available to common stockholders for diluted net income


 


 


  per share

$141,051

 

$   7,753

 

$148,804

 


 


 


Shares outstanding:


 


 


     Weighted average common shares outstanding

52,110

 


 

52,110

     Weighted average impact of dilutive securities

1,373

 


 

1,373

     Weighted average impact of converted preferred stock

               

 

    3,241(3)

 

     3,241

Total shares outstanding for calculation

    53,483

 

    3,241

 

   56,724

 


 


 


Diluted net income per share

$      2.64

 


 

$     2.62

 


 


 



(1)

Elimination of the inducement payment and offering costs associated with the conversion of preferred shares and the sale in a registered offering of shares of common stock issued upon conversion that were paid and/or incurred in May 2006.  The inducement payment and offering costs include (a) an inducement payment of $0.88 per share of common stock received upon conversion, or an aggregate of $10.2 million, and (b) certain costs, totaling $0.7 million, incurred by the Company in connection with the secondary common stock offering.

(2)

Elimination of dividends on preferred stock which would not have been included in the diluted net income per share computation under the if-converted method if the inducement payment and offering costs had not been incurred. Eliminating such costs requires a recalculation when applying the if-converted method of calculating diluted net income per share.

(3)

Additional shares which would have been included in the diluted net income per share computation under the if-converted method if the inducement payment and offering costs had not been incurred.



16


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