8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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): July 29, 2014

ICONIX BRAND GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-10593	11-2481903
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1450 Broadway, New York, New York	10018
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (212) 730-0030

Not Applicable

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Conditions.

On July 29, 2014, Iconix Brand Group, Inc., a Delaware corporation, (the “Registrant”) issued a press release announcing its financial results for the fiscal quarter and six months ended June 30, 2014. As noted in the press release, the Registrant has provided certain non–U.S. generally accepted accounting principles (“GAAP”) financial measures, the reasons it provided such measures and a reconciliation of the non–U.S. GAAP measures to U.S. GAAP measures. Readers should consider non–GAAP measures in addition to, and not as a substitute for, measures of financial performance prepared in accordance with U.S. GAAP. A copy of the Registrant’s press release is being furnished hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1 Press Release of Iconix Brand Group, Inc. dated July 29, 2014.

SIGNATURES

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

ICONIX BRAND GROUP, INC. (Registrant)
By:	/s/ Jeff Lupinacci
	Name:	Jeff Lupinacci
	Title:	Executive Vice President and Chief Financial Officer

Date: July 30, 2014

EX-99.1

Exhibit 99.1

ICONIX BRAND GROUP REPORTS RECORD REVENUE AND EARNINGS FOR THE SECOND QUARTER 2014

• Record Q2 revenue of $118.9 million and non-GAAP diluted EPS of $0.75

• Record Q2 EBITDA of $78.2 million and Q2 EBITDA margin of 66%

• Free cash flow of $60.0 million for Q2 and $118.0 million for six month period

• Raising 2014 revenue guidance to $455-$465 million and non-GAAP diluted EPS guidance to $2.60-$2.70

NEW YORK, New York—July 29, 2014 – Iconix Brand Group, Inc. (NASDAQ: ICON) (“Iconix” or the “Company”), today announced financial results for the second quarter ended June 30, 2014.

Q2 2014 Results for Iconix Brand Group, Inc.:

Total revenue for the second quarter of 2014 was approximately $118.9 million, a 3% increase as compared to approximately $115.1 million in the second quarter of 2013. EBITDA attributable to Iconix for the second quarter was approximately $78.2 million, an 8% increase as compared to $72.7 million in the prior year quarter. Free cash flow attributable to Iconix for the second quarter was approximately $60.0 million, as compared to the prior year quarter of approximately $60.8 million. On a non-GAAP basis, as described in the tables below, net income attributable to Iconix was $39.6 million, as compared to the prior year quarter of approximately $42.7 million. Non-GAAP diluted EPS for the second quarter of 2014 increased 4% to $0.75 compared to $0.72 in the prior year quarter. GAAP net income attributable to Iconix for the second quarter of 2014 was approximately $35.3 million, as compared to $38.7 million in the prior year quarter, and GAAP diluted EPS for the second quarter of 2014 was $0.60 compared to $0.66 in the prior year quarter.

Six months ended June 30, 2014:

Total revenue for the six months ended June 30, 2014 was approximately $235.1 million, a 7% increase as compared to approximately $220.2 million for the prior year period. EBITDA attributable to Iconix for the six month period was approximately $147.9 million, an 8% increase as compared to approximately $137.2 million in the prior year period. Free cash flow attributable to Iconix for the six month period was approximately $118.0 million, a 5% increase over the prior year period of approximately $112.7 million. On a non-GAAP basis, as defined in the tables below, net income attributable to Iconix for the six month period was approximately $78.9 million, compared to approximately $78.9 million in the prior year period, and non-GAAP diluted earnings per share was approximately $1.49 for the six month period, a 19% increase versus $1.25 for the prior year period. GAAP net income attributable to Iconix for the six month period of 2014 was approximately $95.1 million, a 30% increase as compared to $72.9 million in the prior year period and GAAP diluted EPS for the six month period of 2014 increased 41% to $1.63 compared to $1.16 in the prior year period.

EBITDA, free cash flow, non-GAAP net income and non-GAAP diluted EPS are all non-GAAP metrics and reconciliation tables for each are attached to this press release.

Neil Cole, Chairman and CEO of Iconix Brand Group, Inc. commented, “With record results in the second quarter, we continue to demonstrate the power of our business model with our diversified revenue stream and strong free cash flow. As we look to the future we believe we can continue to deliver significant growth and increased value for our Company and shareholders through our global expansion plans, worldwide Peanuts business and additional acquisitions of global iconic brands.

2014 Guidance for Iconix Brand Group, Inc.:

• Raising revenue guidance to $455-$465 million from $450-$460 million

• Raising non-GAAP diluted EPS guidance to $2.60-$2.70 from $2.55-$2.65

• Maintaining GAAP diluted EPS guidance of $2.50-$2.60

• Raising free cash flow guidance to $215-$222 million from $213-$220 million

This guidance relates to the Company’s existing portfolio of brands and does not include any additional acquisitions. In addition, this guidance does not assume any additional share repurchases or dilution from the Company’s convertible notes above the current stock price.

See reconciliation tables below for non-GAAP metrics. These non-GAAP metrics may be inconsistent with similar measures presented by other companies and should only be used in conjunction with our results reported according to U.S. GAAP. Any financial measure other than those prepared in accordance with U.S. GAAP should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.

About Iconix Brand Group, Inc.

Iconix Brand Group, Inc. owns, licenses and markets a growing portfolio of consumer brands including: CANDIE’S (R), BONGO (R), BADGLEY MISCHKA (R), JOE BOXER (R), RAMPAGE (R), MUDD (R), MOSSIMO (R), LONDON FOG (R), OCEAN PACIFIC (R), DANSKIN (R), ROCAWEAR (R), CANNON (R), ROYAL VELVET (R), FIELDCREST (R), CHARISMA (R), STARTER (R), WAVERLY (R), ZOO YORK (R), ED HARDY (R), SHARPER IMAGE (R), UMBRO (R), LEE COOPER (R), ECKO UNLTD. (R), and MARC ECKO (R). In addition, Iconix owns interests in the ARTFUL DODGER (R), MATERIAL GIRL (R), PEANUTS (R), TRUTH OR DARE (R), BILLIONAIRE BOYS CLUB (R), ICE CREAM (R), MODERN AMUSEMENT (R), and BUFFALO (R) brands. The Company licenses its brands to a network of leading retailers and manufacturers that touch every major segment of retail distribution from the luxury market to the mass market in both the U.S. and worldwide. Through its in-house business development, merchandising, advertising and public relations departments, Iconix manages its brands to drive greater consumer awareness and equity.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. The statements that are not historical facts contained in this press release are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors, all of which are difficult or impossible to predict and many of which are beyond the control of the Company, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, but are not limited to, uncertainty regarding the results of the Company’s acquisition of additional licenses, continued market acceptance of current products and the ability to successfully develop and market new products particularly in light of rapidly changing fashion trends, the impact of supply and manufacturing constraints or difficulties relating to the Company’s licensees’ dependence on foreign manufacturers and suppliers, uncertainties relating to customer plans and commitments, the ability of licensees to successfully market and sell branded products, competition, uncertainties relating to economic conditions in the markets in which the Company operates, the ability to hire and retain key personnel, the ability to obtain capital if required, the risks of litigation and regulatory proceedings, the risks of uncertainty of trademark protection, the uncertainty of marketing and licensing acquired trademarks and other risks detailed in the Company’s SEC filings. The words “believe”, “anticipate”, “estimate”, “expect”, “confident”, “continue”, “will”, “project”, “provide”, “guidance” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date the statement was made. All forward-looking statements are qualified by these cautionary statements and apply only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

# #

Contact Information:

Jaime Sheinheit

Investor Relations

Iconix Brand Group

212.730.0030

Unaudited Condensed Consolidated Income Statements

(in thousands, except earnings per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Licensing and other revenue	$	118,943		$	115,125		$	235,081		$	220,187
Selling, general and administrative expenses		44,293			43,611			92,495			82,437
Operating income		74,650			71,514			142,586			137,750
Interest and other expenses, net		20,765			13,102			3,427			26,969
Equity earnings on joint ventures		(5,675	)		(2,264	)		(8,797	)		(4,200	)
Other (income) expenses – net		15,090			10,838			(5,370	)		22,769
Income before income taxes		59,560			60,676			147,956			114,981
Provision for income taxes		20,778			18,661			46,332			33,692
Net income	$	38,782		$	42,015		$	101,624		$	81,289
Less: Net income attributable to non-controlling interest		3,463			3,299			6,537			8,384
Net income attributable to Iconix Brand Group, Inc.	$	35,319		$	38,716		$	95,087		$	72,905
Earnings per share:
Basic	$	0.73		$	0.69		$	1.94		$	1.21
Diluted	$	0.60		$	0.66		$	1.63		$	1.16
Weighted average number of common shares outstanding:
Basic		48,551			56,405			49,034			60,316
Diluted		58,595			58,994			58,237			62,853

Selected Balance Sheet Items:	(Unaudited)
(in thousands)	6/30/2014		12/31/2013
Total Assets	$	2,844,612	$	2,860,194
Total Liabilities	$	1,784,026	$	1,758,252
Total Stockholders’ Equity and Mezzanine Equity	$	1,060,586	$	1,101,942

The following tables detail unaudited reconciliations from non-GAAP amounts to U.S. GAAP and include reconciliations related to ASC Topic 470 as it relates to accounting for convertible debt and the incremental dilutive shares related to our convertible debt that are covered by our existing convertible note hedges.

Note: All items in the following reconciliation tables are attributable to Iconix Brand Group, Inc. and exclude results related to non-controlling interests.

(in thousands, except per share data)

	(Unaudited)						(Unaudited)
	Three months ended						Six months ended
Net income reconciliation	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Non-GAAP net income (1)	$	39,639		$	42,651		$	78,921		$	78,870
GAAP net income	$	35,319		$	38,716		$	95,087		$	72,905
Adjustments:
Non-cash interest related to ASC Topic 470		6,647			6,148			13,022			9,320
Non-cash gain related to investment in Iconix Latin America		—			—			(37,893	)		—
Taxes related to above item		(2,327	)		(2,213	)		8,705			(3,355	)
Net		4,320			3,935			(16,166	)		5,965
Non-GAAP net income	$	39,639		$	42,651		$	78,921		$	78,870

Non-GAAP weighted average diluted shares reconciliation

	Three months ended					Six months ended
	June 30, 2014			June 30, 2013		June 30, 2014 (3)			June 30, 2013
Non-GAAP weighted average diluted shares		52,851			58,994		52,997			62,853
GAAP weighted average diluted shares		58,595			58,994		58,237			62,853
Less: additional incremental dilutive shares covered by hedges for: (2)
2.50% Convertible Notes		(2,481	)		—		(2,265	)		—
1.50% Convertible Notes		(3,263	)		—		(2,975	)		—
Subtotal		(5,744	)		—		(5,240	)		—
Non-GAAP weighted average diluted shares		52,851			58,994		52,997			62,853

	(Unaudited)				(Unaudited)
	Three months ended				Six months ended
Diluted EPS reconciliation	June 30, 2014		June 30, 2013		June 30, 2014 (3)			June 30, 2013
Non-GAAP diluted EPS (1)	$	0.75	$	0.72	$	1.49		$	1.25
GAAP diluted EPS	$	0.60	$	0.66	$	1.63		$	1.16
Adjustments for non-cash interest related to ASC 470, net of tax	$	0.15	$	0.06	$	0.28		$	0.09
Non-cash gain related to investment in Iconix Latin America, net of tax		—		—	($	0.42	)		—
Non-GAAP diluted EPS	$	0.75	$	0.72	$	1.49		$	1.25

Forecasted Diluted EPS	Year Ending Dec. 31, 2014
	High			Low
Forecasted Non-GAAP diluted EPS (1)	$	2.70		$	2.60
Forecasted GAAP diluted EPS	$	2.60		$	2.50
Non-cash gain related to investment in Iconix Latin America, net of tax	($	0.42	)	($	0.42	)
Adjustments for non-cash interest related to ASC 470, net of tax, and incremental dilutive shares covered by hedges	$	0.52		$	0.52
Forecasted Non-GAAP Diluted EPS	$	2.70		$	2.60

(1) Non-GAAP net income and non-GAAP diluted EPS (along with non-GAAP weighted average diluted shares) are non-GAAP financial measures which represent net income excluding any non-cash interest related to ASC Topic 470 and non-cash non-recurring gains and charges, net of tax, and any incremental dilutive shares related to our convertible notes that are covered by their respective hedges. The Company believes these are useful financial measures in evaluating its financial condition because they are representative of only actual cash results.

(2) Based on the average closing stock price for the three month and six month periods ended June 30, 2014 there were potential dilutive shares related to our convertible notes for GAAP purposes; however, the Company will not be responsible for issuing a portion of these shares as they are covered by our convertible notes hedges.

(3) Non-GAAP diluted shares for the six month period ended June 30, 2014 include a correction to the first quarter 2014 Non-GAAP diluted share count by 1.2 million fewer shares related to the anti-dilutive impact of the Company’s convertible notes hedges.

EBITDA Reconciliation from Net Income

(in thousands)

	(Unaudited)				(Unaudited)
	Three months ended				Six months ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
EBITDA (4)	$	78,150	$	72,651	$	147,927	$	137,249
Reconciliation of EBITDA:
Net Income		35,319		38,716		95,087		72,905
Add: Income taxes		20,778		18,661		46,332		33,692
Add: Net interest expense and non-cash gain related to investment in Iconix Latin America		20,650		13,043		3,194		26,336
Add: Depreciation and amortization of certain intangibles		1,403		2,231		3,314		4,316
EBITDA	$	78,150	$	72,651	$	147,927	$	137,249

	(Unaudited)
EBITDA Reconciliation from Cash Flow from Operations	Six months ended
	June 30, 2014			June 30, 2013
EBITDA (4)	$	147,927		$	137,249
Reconciliation of EBITDA:
Net cash provided by operating activities		84,231			101,952
Add / (Less):
Cash interest expense, net		24,181			14,705
Cash taxes		18,421			25,280
Other		3,227			5,188
Net income attributable to non-controlling interest		(6,537	)		(8,384	)
Stock compensation expense		(8,247	)		(7,931	)
Provision for doubtful accounts		(1,945	)		(2,106	)
Net change in balance sheet items		34,596			8,545
EBITDA	$	147,927		$	137,249

(4) EBITDA, a non-GAAP financial measure, represents net income before income taxes, interest, other non-operating gains and losses, depreciation and amortization expenses. The Company believes EBITDA and EBITDA margin provide additional information for determining its ability to meet future debt service requirements, investing and capital expenditures, and is useful because it provides supplemental information to assist investors in evaluating the Company’s financial condition. EBITDA margin represents EBITDA divided by licensing and other revenue.

Free Cash Flow Reconciliation from Net Income

	(Unaudited)						(Unaudited)
	Three months ended						Six months ended
(in thousands)	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Free Cash Flow (5)	$	59,992		$	60,849		$	117,997		$	112,669
Reconciliation of Free Cash Flow:
Net Income		35,319			38,716			95,087			72,905
Add/(Less):
Depreciation and amortization of intangibles		1,403			2,231			3,314			4,316
Amortization of convertible note		7,350			6,923			14,428			10,537
Amortization of finance fees		1,309			895			2,711			1,727
Non-cash compensation expense		5,658			6,036			8,173			7,931
Provision for doubtful accounts		945			1,182			1,945			2,106
Non-cash income taxes		8,609			5,193			30,848			13,366
Non-cash gain related to investment in Iconix Latin America		—			—			(37,893	)		—
Other		(65	)		225			235			450
Subtotal		25,209			22,684			23,761			40,432
Less: Capital expenditures		(536	)		(551	)		(851	)		(668	)
Free Cash Flow	$	59,992		$	60,849		$	117,997		$	112,669

Free Cash Flow Reconciliation from Cash Flow from Operations	(Unaudited)
	Six months ended
	June 30, 2014			June 30, 2013
Free Cash Flow (5)	$	117,997		$	112,669
Reconciliation of Free Cash Flow:
Net cash provided by operating activities		84,231			101,952
Add / (Less):
Non-cash deferred tax items		2,937			4,954
Net income attributable to non-controlling interest		(6,537	)		(8,384	)
Gain on sale of securities					5,395
Capital expenditures		(851	)		(668	)
Other		3,621			875
Net change in balance sheet items		34,596			8,545
Free Cash Flow	$	117,997		$	112,669

Forecasted Free Cash Flow

	Year Ending
	Dec. 31, 2014
	High			Low
Free Cash Flow (5)	$	222,000		$	215,000
Reconciliation of Free Cash Flow:
Net income		154,000			148,000
Add:
Depreciation and amortization of intangibles		5,000			5,000
Amortization of convertible note		29,500			29,500
Amortization of finance fees		5,000			5,000
Non-cash compensation expense		18,500			18,000
Bad debt expense		4,000			3,500
Non-cash income taxes		45,000			45,000
Non-cash non-recurring gain		(38,000	)		(38,000	)
Other		1,000			1,000
subtotal		68,000			67,000
Less: Capital expenditures		(2,000	)		(2,000	)
Free Cash Flow	$	222,000		$	215,000

(5) Free Cash Flow, a non-GAAP financial measure, represents net income before depreciation, amortization, non-cash compensation expense, bad debt expense, net equity earnings from certain joint ventures, non-cash income taxes, non-cash interest related to convertible debt, non-cash non-recurring gains and charges, less capital expenditures. Free Cash Flow excludes any changes in Balance Sheet items, mandatory debt service requirements and other non-discretionary expenditures. Free Cash Flow should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. The Company believes Free Cash Flow is useful because it provides supplemental information to assist investors in evaluating the Company’s financial condition.