- Third quarter revenue increased 4%
compared to the prior year period.
- Third quarter EPS on a GAAP basis was
$1.56 compared to guidance of $2.30 to $2.35. Results included a
$77 million noncash loss related to the deconsolidation of a
Mexican subsidiary, which was not previously included in guidance,
as regulatory approval was not received until the fourth
quarter.
- Third quarter EPS on a non-GAAP basis
was $2.60, which exceeded guidance of $2.35 to $2.40 and included a
$0.46 per share negative impact compared to the prior year period
related to foreign currency exchange rates.
- Full year 2016 EPS guidance on a GAAP
basis is projected to be in a range of $6.51 to $6.56, which
includes the $77 million noncash loss related to the
deconsolidation of a Mexican subsidiary. Previous guidance of $7.50
to $7.60 did not include such loss.
- Full year 2016 EPS guidance on a
non-GAAP basis was raised to a range of $6.70 to $6.75, which
includes a negative impact of approximately $1.65 per share related
to foreign currency exchange rates. Previous guidance was $6.55 to
$6.65, which included a $1.60 per share negative impact related to
foreign currency exchange rates.
PVH Corp. (NYSE:PVH) reported 2016 third quarter results.
Non-GAAP Amounts:
Amounts stated to be on a non-GAAP basis exclude the items that
are described below under the heading “Non-GAAP Exclusions.”
Amounts stated on a constant currency basis are also deemed to be
on a non-GAAP basis. Reconciliations of amounts on a GAAP basis to
amounts on a non-GAAP basis are presented later in this release and
identify and quantify all excluded items.
CEO Comments:
Commenting on these results, Emanuel Chirico, Chairman and Chief
Executive Officer, noted, “We are very pleased with our strong
performance in the third quarter, which exceeded our guidance on a
non-GAAP basis despite the volatile macroeconomic environment. We
continue to over deliver against our 2016 plan, driven in large
part by strong momentum across our Calvin Klein and Tommy Hilfiger
International businesses. While our North America wholesale
businesses have performed well throughout the year, we have not
experienced any significant improvement in traffic and consumer
spending trends across our Tommy Hilfiger and Calvin Klein U.S.
outlet stores located in international tourist locations.”
Mr. Chirico continued, “Although we are increasing our non-GAAP
earnings guidance for the year, we continue to take a prudent
approach to planning the holiday season in light of the
macroeconomic and geopolitical volatility around the world, as well
as the strengthening dollar in the wake of the U.S. Presidential
election.”
Mr. Chirico concluded, “We believe that through the power of our
designer lifestyle brands, Calvin Klein and Tommy Hilfiger, we can
successfully navigate this uncertain environment. We expect our
proven business model and talented associates will continue to
drive the execution of our strategic initiatives in an
ever-changing environment while delivering stockholder value.”
Third Quarter Business Review:
Calvin Klein
Revenue in the Calvin Klein business for the quarter increased
9% to $891 million (increased 10% on a constant currency basis)
compared to the prior year period. Calvin Klein International
revenue increased 16% to $389 million (increased 17% on a constant
currency basis) compared to the prior year period, including a 7%
increase in comparable store sales. Europe and China continued to
demonstrate the strongest performance. Calvin Klein North America
revenue increased 5% to $502 million (increased 6% on a constant
currency basis) compared to the prior year period primarily driven
by continued healthy growth in the wholesale business. North
America retail revenue was flat compared to the prior year period,
as square footage expansion in Company-operated stores was offset
by a 5% comparable store sales decline driven by continued weakness
in traffic and consumer spending trends in Calvin Klein’s U.S.
stores located in international tourist locations.
Earnings before interest and taxes on a GAAP basis for the
quarter decreased to $69 million, compared to $142 million in the
prior year period. The decrease was principally due to the noncash
loss of $77 million recorded in the third quarter of 2016 in
anticipation of the deconsolidation of the Company’s subsidiary
that principally operated and managed its Calvin Klein business in
Mexico, which is expected to occur at 11:59 p.m. EST on November
30, 2016 in connection with the closing of the joint venture
transaction in Mexico (the “Mexico deconsolidation”). Partially
offsetting this decrease was the absence of $7 million of costs
incurred in the prior year period in connection with the Company’s
integration of Warnaco and the related restructuring. Earnings
before interest and taxes on a non-GAAP basis discussed below
excludes these amounts.
Earnings before interest and taxes on a non-GAAP basis for the
quarter decreased to $146 million, inclusive of a $16 million
negative impact due to foreign currency exchange rates, compared to
$148 million in the prior year period. Earnings on a non-GAAP basis
increased excluding the negative impact of foreign currency
exchange rates, despite a $10 million planned increase in expenses
related to marketing and investments associated with the recent
Calvin Klein creative team leadership change. The increase was
driven by the revenue increase noted above, as well as gross margin
improvement, particularly in Europe and in the North America
wholesale business.
Tommy Hilfiger
Revenue in the Tommy Hilfiger business for the quarter increased
4% to $927 million (increased 6% on a constant currency basis)
compared to the prior year period. Tommy Hilfiger International
revenue increased 16% to $525 million (increased 18% on a constant
currency basis) compared to the prior year period. This increase
was driven by continued strong growth in Europe, including a 10%
increase in comparable store sales, and the Company’s April 2016
acquisition of the 55% interest in its joint venture for Tommy
Hilfiger in China (“TH China”) that it did not already own (the “TH
China acquisition”). Tommy Hilfiger North America revenue decreased
7% to $402 million (also decreased 7% on a constant currency basis)
compared to the prior year period. The North America revenue
decrease was principally due to an 11% comparable store sales
decline, driven by continued weakness in traffic and consumer
spending trends in Tommy Hilfiger’s U.S. stores located in
international tourist locations, and the winding down of the
Company’s directly operated womenswear wholesale business in the
U.S. and Canada in connection with licensing this business to G-III
Apparel Group, Ltd. (the “G-III license”).
Earnings before interest and taxes on a GAAP basis for the
quarter decreased to $116 million compared to $126 million in the
prior year period. Included in earnings for the current year period
were (i) costs of $19 million incurred in connection with the TH
China acquisition, primarily consisting of noncash amortization of
short-lived assets, and the G-III license and (ii) a gain of $18
million recorded in connection with a payment made to the Company
to exit a retail flagship store in Europe. Earnings before interest
and taxes on a non-GAAP basis discussed below excludes these
amounts.
Earnings before interest and taxes on a non-GAAP basis for the
quarter decreased to $117 million, inclusive of a $24 million
negative impact due to foreign currency exchange rates, compared to
$126 million on a GAAP basis in the prior year period (there were
no non-GAAP exclusions in the prior year period). Excluding the
negative impact of foreign currency exchange rates, earnings on a
non-GAAP basis increased due to the Tommy Hilfiger International
revenue increase noted above and gross margin improvement in
Europe, partially offset by the Tommy Hilfiger North America
revenue decline noted above.
Heritage Brands
Revenue in the Heritage Brands business for the quarter
decreased 8% to $426 million compared to the prior year period,
principally resulting from the rationalization initiatives
implemented in 2015 that continued to impact the business in 2016,
consisting of the exit from the Izod retail business and the
discontinuation of several licensed product lines in the dress
furnishings business. Partially offsetting these decreases was a 6%
increase in comparable store sales in the Van Heusen business.
Earnings before interest and taxes on a GAAP basis for the
quarter increased to $44 million compared to $26 million in the
prior year period principally due to the absence of $17 million of
costs incurred in the prior year period in connection with (i) the
Warnaco integration and restructuring, (ii) the operation of and
exit from the Izod retail business and (iii) the discontinuation of
several licensed product lines in the dress furnishings business.
These costs were excluded from earnings before interest and taxes
on a non-GAAP basis in the prior year period. Current quarter
earnings before interest and taxes on a GAAP basis of $44 million
(there were no non-GAAP exclusions in the current year period)
increased slightly compared to $43 million on a non-GAAP basis in
the prior year period, as gross margin improvement in the ongoing
businesses more than offset the overall revenue decline noted
above.
Third Quarter Consolidated Earnings:
Earnings before interest and taxes on a GAAP basis for the
quarter decreased to $198 million compared to the prior year period
of $254 million, principally driven by an increase of $43 million
of net costs, consisting of (i) the noncash loss recorded in
anticipation of the Mexico deconsolidation, (ii) the gain recorded
in connection with a payment made to the Company to exit a Tommy
Hilfiger retail flagship store in Europe, (iii) the costs incurred
in connection with the TH China acquisition, primarily consisting
of noncash amortization of short-lived assets, (iv) the costs
incurred in connection with the G-III license and (v) the reduction
in costs incurred in connection with the Warnaco integration and
restructuring and the Heritage Brands rationalization initiatives
compared to the prior year period. Earnings before interest and
taxes on a non-GAAP basis discussed below excludes the net cost
increase.
Earnings before interest and taxes on a non-GAAP basis for the
quarter was $276 million, inclusive of a $41 million negative
impact due to foreign currency exchange rates, compared to $288
million in the prior year period.
The effective tax rate on a GAAP basis for the quarter increased
to 25.3% compared to 1.9% in the prior year period. The increase
was principally attributable to a reduction in discrete tax
benefits recognized in the current year period as compared to the
prior year period, as well as an unfavorable impact in the current
year period due to the tax expense recorded on the assets held for
sale in anticipation of the Mexico deconsolidation. Excluding these
items, the effective tax rate on a non-GAAP basis for the quarter
decreased to 14.9% compared to 15.3% in the prior year period,
principally attributable to a favorable shift in the mix of
earnings between tax jurisdictions.
Net interest expense increased to $29 million from $27 million
in the prior year period primarily due to the negative impacts of
the interest rate swap that commenced in February 2016 to convert a
portion of the Company’s variable rate debt under its term loans to
fixed rate debt and the issuance of €350 million of senior notes in
June 2016, partially offset by the positive impacts from debt
repayments made during 2015 and 2016 and the amendment of the
Company’s credit facility in the second quarter of 2016.
Inventory levels decreased 6% compared to the prior year’s third
quarter. Included in inventory was an increase related to the TH
China acquisition, which was offset by a decrease resulting from
the reclassification of the Company’s Mexico subsidiary’s assets as
held for sale in anticipation of the Mexico deconsolidation.
Nine Months Consolidated Results:
Earnings per share was $5.52 on a GAAP basis for the first nine
months of 2016 compared to $5.26 in the prior year period. Earnings
per share was $5.57 on a non-GAAP basis for the first nine months
of 2016 compared to $5.53 in the prior year period. Earnings per
share on both a GAAP and non-GAAP basis for the first nine months
of 2016 included a $1.42 negative impact related to foreign
currency exchange rates.
Revenue for the first nine months of 2016 increased 3% to $6.10
billion (increased 4% on a constant currency basis) compared to the
prior year period.
The revenue change was due to:
- An 11% increase (13% increase on a
constant currency basis) in the Calvin Klein business compared to
the prior year period, driven by significant growth in Europe,
China and the North America wholesale business. International
retail comparable store sales increased 7%. North America retail
comparable store sales decreased 4%, driven by the continued
weakness in traffic and consumer spending trends in Calvin Klein’s
U.S. stores located in international tourist locations.
- A 5% increase (6% increase on a
constant currency basis) in the Tommy Hilfiger business compared to
the prior year period, driven principally by strong growth across
Europe, including a 9% increase in comparable store sales, and the
TH China acquisition, which was completed in April 2016. In the
Tommy Hilfiger North America business, wholesale growth was more
than offset by a 9% decline in comparable store sales compared to
the prior year period, driven by continued weakness in traffic and
consumer spending trends in Tommy Hilfiger’s U.S. stores located in
international tourist locations.
- An 11% decrease in the Heritage Brands
business compared to the prior year period, driven principally by
the rationalization initiatives in the business, partially offset
by a 9% increase in comparable store sales in the Van Heusen
business.
Earnings before interest and taxes on a GAAP basis for the first
nine months of 2016 increased to $635 million compared to the prior
year period of $585 million due in large part to a net gain of $64
million, consisting of (i) the noncash gain of $153 million
recorded in 2016 to write-up the Company’s equity investment in TH
China to fair value in connection with the TH China acquisition,
(ii) the gain of $18 million recorded in 2016 in connection with a
payment made to the Company to exit a Tommy Hilfiger retail
flagship store in Europe, (iii) a $64 million reduction in costs
incurred in connection with the Warnaco integration and
restructuring and the Heritage Brands rationalization initiatives
compared to the prior year period, (iv) the noncash loss of $77
million recorded in the third quarter of 2016 in anticipation of
the Mexico deconsolidation, (v) $68 million of costs incurred in
2016 in connection with the TH China acquisition, primarily
consisting of noncash valuation adjustments and amortization of
short-lived assets, (vi) $16 million of costs incurred in
connection with the amendment of the Company’s credit facility and
(vii) $10 million of costs incurred in connection with the G-III
license and the restructuring associated with the new global
creative strategy for Calvin Klein. Earnings before interest and
taxes on a non-GAAP basis discussed below excludes these
amounts.
Earnings before interest and taxes on a non-GAAP basis for the
first nine months of 2016 was $647 million, inclusive of a $124
million negative impact due to foreign currency exchange rates,
compared to $659 million in the prior year period. Excluding the
negative impact of foreign currency exchange rates, the strong
growth on a non-GAAP basis was primarily driven by earnings
increases in the Calvin Klein business and in the Tommy Hilfiger
International business. Partially offsetting these increases were
earnings declines in Tommy Hilfiger North America, principally due
to continued weak performance in Tommy Hilfiger’s U.S. stores
located in international tourist locations, and in the Heritage
Brands business due to the overall revenue decline and a
deleveraging of expenses resulting from the rationalization
initiatives in the business.
Stock Repurchase Program:
During the first nine months of 2016, the Company repurchased
approximately 2.3 million shares of its common stock for $226
million (approximately 3.6 million shares for $352 million since
inception) under the $500 million three-year stock repurchase
program authorized by the Board of Directors in June 2015. Stock
repurchases under this program may be made from time to time over
the period through open market purchases, accelerated share
repurchase programs, privately negotiated transactions or other
methods, as the Company deems appropriate. Purchases are made based
on a variety of factors, such as price, corporate requirements and
overall market conditions, applicable legal requirements and
limitations, restrictions under the Company’s debt arrangements,
trading restrictions under the Company’s insider trading policy and
other relevant factors. The stock repurchase program may be
modified, including to increase or decrease the repurchase
limitation or extend, suspend, or terminate the program, at any
time, without prior notice.
2016 Guidance:
The Company currently expects its full year 2016 earnings per
share results will be negatively impacted compared to 2015 by
approximately $1.65 per share attributable to foreign currency
exchange rates due to the stronger U.S. dollar against other
currencies in which the Company transacts significant levels of
business. Approximately 80% of the negative impact is expected to
be on a transactional basis and approximately 20% is expected to be
due to currency translation. The negative impact on a transactional
basis is primarily due to our international businesses purchasing
inventory in U.S. dollars, as the increased local currency value of
inventory results in higher cost of goods in local currency when
the goods are sold. The negative translation impact is related to
the earnings generated in foreign markets, which will translate
into fewer U.S. dollars.
Please see the section entitled “Full Year and Quarterly
Reconciliations of GAAP to Non-GAAP Amounts” at the end of this
release for further detail and reconciliations of GAAP to non-GAAP
amounts discussed in this section.
Full Year Guidance
The Company currently projects that 2016 earnings per share on a
GAAP basis will be in a range of $6.51 to $6.56 compared to $6.89
in the prior year. The Company currently projects that 2016
earnings per share on a non-GAAP basis will be in a range of $6.70
to $6.75 compared to $7.05 in the prior year. Both projections
include approximately $1.65 per share negative impact related to
foreign currency exchange rates, as described above.
Revenue in 2016 is currently projected to increase approximately
2% (increase approximately 3% on a constant currency basis) as
compared to 2015. It is currently projected that revenue for the
Calvin Klein business will increase approximately 6% (increase
approximately 8% on a constant currency basis). Revenue for the
Tommy Hilfiger business is currently projected to increase
approximately 4% (increase approximately 5% on a constant currency
basis). Revenue for the Heritage Brands business is currently
projected to decrease approximately 9% principally due to the
rationalization initiatives implemented in 2015 that continued to
impact the business in 2016, consisting of the exit from the Izod
retail business and the discontinuation of several licensed product
lines in the dress furnishings business.
Net interest expense in 2016 is expected to be approximately
$117 million compared to $113 million in 2015 primarily due to the
negative impacts of the interest rate swap that commenced in
February 2016 to convert a portion of the Company’s variable rate
debt under its term loans to fixed rate debt and the issuance of
€350 million of senior notes in June 2016, partially offset by the
positive impacts from debt repayments made during 2015 and expected
to be made in 2016 and the amendment of the Company’s credit
facility in the second quarter of 2016. The Company currently
estimates that the 2016 effective tax rate will be in a range of
18% to 18.5% on a GAAP basis and 19% to 19.5% on a non-GAAP
basis.
The Company’s 2016 earnings per share estimate on a non-GAAP
basis excludes $27 million of expected pre-tax net costs,
consisting of (i) the $77 million noncash loss recorded in the
third quarter of 2016 in anticipation of the Mexico
deconsolidation, (ii) $22 million of costs incurred in connection
with the Warnaco integration and restructuring, the discontinuation
of several licensed product lines in the Heritage Brands dress
furnishings business, the G-III license and the restructuring
associated with the new global creative strategy for Calvin Klein,
(iii) $16 million of costs incurred in connection with the
amendment of the Company’s credit facility in the second quarter of
2016, (iv) the $70 million net gain related to TH China, including
the noncash gain recorded to write-up the Company’s equity
investment in TH China to fair value, partially offset by
acquisition costs expected to be incurred, and (v) the $18 million
gain recorded in connection with a payment made to the Company
during the third quarter of 2016 to exit a Tommy Hilfiger retail
flagship store in Europe. Also excluded from the Company’s estimate
of 2016 earnings per share on a non-GAAP basis are discrete tax
benefits of $14 million recorded related to the resolution of
uncertain tax positions, tax expense of $16 million recorded in the
third quarter of 2016 on the assets held for sale in anticipation
of the Mexico deconsolidation and the estimated tax effects of the
above pre-tax items.
Fourth Quarter Guidance
The Company currently expects its fourth quarter 2016 earnings
per share results will be negatively impacted compared to the
fourth quarter of 2015 by $0.23 per share related to foreign
currency exchange rates due to the stronger U.S. dollar against
other currencies in which the Company transacts significant levels
of business.
The Company currently expects that the fourth quarter of 2016
will include an expense increase of $25 million over the prior year
period related to marketing and investments associated with the
recent Calvin Klein creative team leadership change, including a
shift of $5 million of expenses into the fourth quarter that were
previously planned in the third quarter. Previous guidance included
a $20 million planned increase in the fourth quarter over the prior
year period.
Fourth quarter 2016 earnings per share on a GAAP basis is
currently projected to be in a range of $0.99 to $1.04 compared to
$1.63 in the prior year period. The Company currently projects that
fourth quarter 2016 earnings per share on a non-GAAP basis will be
in a range of $1.13 to $1.18 compared to $1.52 in the prior year
period. Both projections include a $0.23 per share negative impact
related to foreign currency exchange rates, as described above.
Revenue in the fourth quarter of 2016 is currently projected to
decrease approximately 1% (increase approximately 1% on a constant
currency basis) compared to the prior year period. Negatively
impacting revenue in the current year’s fourth quarter as compared
to the prior year period is a 2% revenue reduction resulting from
the Mexico deconsolidation and the G-III license. Revenue for the
Calvin Klein business in the fourth quarter is currently projected
to decrease approximately 5% (decrease approximately 3% on a
constant currency basis), which includes a revenue reduction
resulting from the Mexico deconsolidation. Revenue for the Tommy
Hilfiger business in the fourth quarter is currently projected to
increase approximately 3% (increase approximately 5% on a constant
currency basis), which includes a revenue reduction resulting from
the G-III license. Revenue for the Heritage Brands business in the
fourth quarter is currently projected to decrease approximately
3%.
The Company currently projects that fourth quarter 2016 net
interest expense will be $31 million compared to $28 million in the
prior year period, primarily due to the negative impacts of the
interest rate swap noted above and the issuance of €350 million of
senior notes in June 2016, partially offset by the positive impacts
of debt repayments made during 2015 and expected to be made in 2016
and the amendment of the Company’s credit facility in the second
quarter of 2016. The Company currently estimates that the fourth
quarter effective tax rate will be in a range of 14% to 17% on a
GAAP basis and 17% to 20% on a non-GAAP basis.
The Company’s fourth quarter earnings per share estimate on a
non-GAAP basis excludes $16 million of pre-tax costs expected to be
incurred in connection with the TH China acquisition, primarily
consisting of noncash amortization of short-lived assets, and the
estimated tax effects of these pre-tax costs.
Non-GAAP Exclusions:
The discussions in this release that refer to non-GAAP amounts
exclude the following:
- Pre-tax costs of approximately $10
million incurred in 2016 in connection with the integration of
Warnaco and the related restructuring, of which $7 million was
incurred in the first quarter and $2 million was incurred in the
second quarter.
- Pre-tax costs of $3 million incurred in
the first quarter of 2016 related to the discontinuation of several
licensed product lines in the Heritage Brands dress furnishings
business.
- Pre-tax costs of $4 million incurred in
2016 in connection with the G-III license, of which $1 million was
incurred in each of the first and second quarters and $2 million
was incurred in the third quarter.
- Pre-tax costs of $6 million incurred in
the first quarter of 2016 in connection with the restructuring
associated with the new global creative strategy for Calvin
Klein.
- Pre-tax noncash gain of $153 million
recorded in the first quarter of 2016 to write-up the Company’s
equity investment in TH China to fair value in connection with the
TH China acquisition, which was completed in the first quarter of
2016. Partially offsetting the pre-tax gain are transaction-related
pre-tax costs of $83 million expected to be incurred in 2016,
primarily consisting of noncash charges related to valuation
adjustments and amortization of short-lived assets. Of these
pre-tax costs, $30 million was incurred in the first quarter, $20
million was incurred in the second quarter, $17 million was
incurred in the third quarter and $16 million is expected to be
incurred in the fourth quarter.
- Pre-tax noncash loss of $77 million
recorded in the third quarter of 2016 in anticipation of the Mexico
deconsolidation. The loss will be remeasured in connection with the
closing of the transaction in the fourth quarter and will be
impacted by many factors subsequent to October 30, 2016, such as,
but not limited to, fluctuations in the Mexican peso exchange rate
and changes to the Mexico subsidiary’s balance sheet, revenues and
income.
- Pre-tax costs of $16 million incurred
in the second quarter of 2016 in connection with the amendment of
the Company’s credit facility.
- Pre-tax gain of $18 million recorded in
the third quarter of 2016 in connection with a payment made to the
Company to exit a Tommy Hilfiger retail flagship store in
Europe.
- Discrete tax benefits of $14 million
recorded in 2016 related to the resolution of uncertain tax
positions, of which $6 million was recorded in the first quarter
and $8 million was recorded in the third quarter.
- A tax expense of $16 million recorded
in the third quarter of 2016 on the assets held for sale in
anticipation of the Mexico deconsolidation.
- Pre-tax costs of $73 million incurred
in 2015 in connection with the integration of Warnaco and the
related restructuring, of which $19 million was incurred in the
first quarter, $13 million was incurred in the second quarter, $19
million was incurred in the third quarter and $23 million was
incurred in the fourth quarter.
- Pre-tax costs of $17 million incurred
in 2015 principally related to the discontinuation of several
licensed product lines in the Heritage Brands dress furnishings
business, of which $3 million was incurred in the second quarter,
$13 million was incurred in the third quarter and less than $1
million was incurred in the fourth quarter.
- Pre-tax costs of $10 million incurred
in 2015 related to the operation of and exit from the Izod retail
business, of which $1 million was incurred in the first quarter, $6
million was incurred in the second quarter, $3 million was incurred
in the third quarter and $1 million was incurred in the fourth
quarter.
- Pre-tax costs of $3 million incurred in
the fourth quarter of 2015 in connection with the G-III
license.
- A pre-tax gain of $2 million recorded
in the second quarter of 2015 on the Company’s equity investment in
the parent company of the Karl Lagerfeld brand.
- A pre-tax gain of $20 million recorded
in the fourth quarter of 2015 related to recognized actuarial gains
on retirement plans.
- Discrete tax benefits of $35 million
recorded in 2015 primarily related to the resolution of uncertain
tax positions and the impact of tax law and tax rate changes on
deferred taxes, of which $2 million was recorded in the first
quarter, $1 million was recorded in the second quarter, $19 million
was recorded in the third quarter and $13 million was recorded in
the fourth quarter.
- Estimated tax effects associated with
the above pre-tax items, which are based on the Company’s
assessment of deductibility. In making this assessment, the Company
evaluated each item that it had identified above as a non-GAAP
exclusion to determine if such item is taxable or tax deductible,
and if so, in what jurisdiction the tax expense or tax deduction
would occur. All items above were identified as either primarily
taxable or tax deductible, with the tax effect taken at the
statutory income tax rate of the local jurisdiction, or as
non-taxable or non-deductible, in which case the Company assumed no
tax effect.
As a supplement to the Company’s reported operating results, the
Company presents constant currency financial information, which is
a non-GAAP financial measure. The Company presents results in this
manner because it is a global company that reports financial
information in U.S. dollars in accordance with GAAP. Foreign
currency exchange rate fluctuations affect the amounts reported by
the Company in U.S. dollars with respect to its foreign revenues
and profit. Additionally, the Company’s international businesses
often purchase inventory in U.S. dollars and, as the U.S. dollar
strengthens, the increased local currency value of inventory
results in higher cost of goods in local currency when the goods
are sold. Exchange rate fluctuations can have a significant effect
on reported operating results. The Company believes presenting
constant currency information provides useful information to
investors, as it provides information to assess how its businesses
performed excluding the effects of changes in foreign currency
exchange rates and assists investors in evaluating the
effectiveness of the Company’s operations and underlying business
trends in a manner that is consistent with management’s evaluation
of business performance.
The Company calculates constant currency financial information
by translating its foreign revenues and profit for the current year
period into U.S. dollars at the average exchange rates in effect
during the comparable prior year period (rather than at the actual
exchange rates in effect during the current year period).
Additionally, for international businesses that purchase inventory
in U.S. dollars, the Company calculates cost of goods sold for the
current period on a constant currency basis assuming such inventory
was purchased at the average exchange rates in effect during the
comparable prior year period.
Constant currency performance should be viewed in addition to,
and not in lieu of or as superior to, the Company’s operating
performance calculated in accordance with GAAP. The constant
currency information presented may not be comparable to similarly
described measures reported by other companies.
Please see Tables 1 through 9 and the sections entitled
“Reconciliations of 2016 Constant Currency Amounts” and “Full Year
and Quarterly Reconciliations of GAAP to Non-GAAP Amounts” later in
this release for reconciliations of GAAP to non-GAAP amounts.
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 Thursday, December 1,
2016 at 9:00 a.m. EST. Please log on to the Company’s web site
at www.pvh.com and go to the Events page included in the
Investors section 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 as described above to
listen to the replay. In addition, an audio replay of the
conference call is available for 48 hours starting approximately
two hours after it is held. The replay of the conference call can
be accessed by calling (domestic) 888-203-1112 and (international)
719-457-0820 and using passcode 8980277. 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.
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 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, (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 Company may be considered to be highly leveraged and uses
a significant portion of its cash flows to service its
indebtedness, as a result of which the Company might not have
sufficient funds to operate its businesses in the manner it intends
or has operated in the past; (iii) 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; (iv) 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
benefits from acquisitions; (v) the Company’s operations and
results could be affected by quota restrictions and the imposition
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, 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), changes in available factory and
shipping capacity, wage and shipping cost escalation, civil
conflict, war or terrorist acts, the threat of any of the
foregoing, or political and labor instability in any of the
countries where the Company’s or its licensees’ or other business
partners’ products are sold, produced or are planned to be sold or
produced; (vi) 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, as well as reduced consumer traffic and
purchasing, as consumers become ill or limit or cease shopping in
order to avoid exposure; (vii) acquisitions and divestitures
and issues arising with acquisitions, divestitures and proposed
transactions, including, without limitation, the ability to
integrate an acquired entity or business into the Company with no
substantial adverse effect on the acquired entity’s, the acquired
business’s or the Company’s existing operations, employee
relationships, vendor relationships, customer relationships or
financial performance, and the disposal of the net assets of a
divested entity; (viii) 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;
(ix) the Company’s results could be adversely affected by the
strengthening of the U.S. dollar against foreign currencies in
which we transact significant levels of business; (x) the Company’s
retirement plan expenses recorded throughout the year are
calculated using actuarial valuations that incorporate assumptions
and estimates about financial market, economic and demographic
conditions, and differences between estimated and actual results
give rise to gains and losses that are recorded immediately in
earnings, generally in the fourth quarter of the year; and
(xi) other risks and uncertainties indicated from time to time
in the Company’s filings with the Securities and Exchange
Commission (“SEC”).
This press release includes, and the conference call/webcast
will include, certain non-GAAP financial measures, as defined under
SEC rules. Reconciliations of these measures are included in the
financial information later in this release, as well as in the
Company’s Current Report on Form 8-K furnished to the SEC in
connection with this earnings release, which is available on the
Company’s website at www.pvh.com and on the SEC’s website at
www.sec.gov.
The Company does not undertake any obligation to update publicly
any forward-looking statement, including, without limitation, any
estimate regarding revenue or earnings, whether as a result of the
receipt of new information, future events or otherwise.
PVH
CORP. Consolidated GAAP Income Statements (In
millions, except per share data)
Quarter Ended Nine Months Ended
10/30/16
11/1/15
10/30/16
11/1/15
Net sales $ 2,123.4 $ 2,040.9 $ 5,786.5 $ 5,591.9 Royalty
revenue 93.9 97.4 240.9 247.0 Advertising and other revenue 27.0
26.2 68.0 68.9 Total revenue $ 2,244.3
$ 2,164.5 $ 6,095.4 $ 5,907.8 Gross profit on
net sales $ 1,070.7 $ 977.4 $ 2,923.4 $ 2,772.8 Gross profit on
royalty, advertising and other revenue 120.9 123.6
308.9 315.9 Total gross profit 1,191.6 1,101.0 3,232.3
3,088.7 Selling, general and administrative expenses 918.0
853.8 2,657.9 2,519.2 Debt modification and extinguishment
costs 15.8 Other noncash (loss) gain, net (76.9 ) 76.2
Equity in net income of unconsolidated affiliates 1.2
6.4 0.7 15.0 Earnings before interest and
taxes 197.9 253.6 635.5 584.5 Interest expense, net 29.2
27.4 86.3 85.2 Pre-tax income 168.7
226.2 549.2 499.3 Income tax expense 42.6 4.3
101.0 61.1 Net income 126.1 221.9 448.2 438.2
Less: Net loss attributable to redeemable non-controlling interest
(1) (0.1 ) (0.1 ) Net income attributable to
PVH Corp. $ 126.2 $ 221.9 $ 448.3 $ 438.2
Diluted net income
per common share attributable to PVH Corp. (2) $ 1.56
$ 2.67 $ 5.52 $ 5.26
Quarter
Ended Nine Months Ended
10/30/16
11/1/15
10/30/16
11/1/15
Depreciation and amortization expense $ 84.4 $ 63.0 $ 237.6
$ 187.0
Please see following pages for information related to non-GAAP
measures discussed in this release.
(1) On June 29, 2016, the Company and Arvind Limited formed
a joint venture in Ethiopia, PVH Arvind Manufacturing Private
Limited Company, in which the Company owns a 75% interest.
(2) Please see Note A in the Notes to Consolidated GAAP Income
Statements for reconciliations of GAAP diluted net income per
common share to diluted net income per common share on a non-GAAP
basis.
PVH CORP. Non-GAAP Measures (In millions,
except per share data)
The Company believes presenting its results for the periods
ended October 30, 2016 and November 1, 2015 excluding (i) the costs
incurred in the first and second quarters of 2016 and the first,
second and third quarters of 2015 in connection with its
integration of The Warnaco Group, Inc. (“Warnaco”) and the related
restructuring; (ii) the costs incurred in the first quarter of 2016
and the second and third quarters of 2015 in connection with the
discontinuation of several licensed product lines in its Heritage
Brands dress furnishings business; (iii) the costs incurred in the
first, second and third quarters of 2016 in connection with the
licensing to G-III Apparel Group, Ltd. (“G-III”) of the Tommy
Hilfiger womenswear wholesale business in the U.S. and Canada (the
“G-III license”), which will result in the discontinuation of the
Company’s directly operated Tommy Hilfiger North America womenswear
wholesale business in the fourth quarter of 2016; (iv) the costs
incurred in the first quarter of 2016 in connection with the
restructuring associated with the new global creative strategy for
Calvin Klein; (v) the noncash gain recorded in the first quarter of
2016 to write-up its equity investment in TH Asia, Ltd. (“TH
China”), its joint venture for Tommy Hilfiger in China, to fair
value in connection with the acquisition of the 55% interest that
it did not already own (the “TH China acquisition”); (vi) the
one-time costs recorded in the first quarter of 2016 on its equity
investment in TH China prior to the TH China acquisition closing;
(vii) the costs incurred in the first, second and third quarters of
2016 in connection with the TH China acquisition, primarily
consisting of noncash charges related to valuation adjustments and
amortization of short-lived assets; (viii) the costs incurred in
the second quarter of 2016 related to the amendment of its credit
facility; (ix) the noncash loss recorded in the third quarter of
2016 in anticipation of the deconsolidation of the Company’s
subsidiary that principally operated and managed its Calvin Klein
business in Mexico, which is expected to occur at 11:59 p.m. EST on
November 30, 2016 in connection with the closing of the joint
venture transaction in Mexico (the “Mexico deconsolidation”); (x)
the gain recorded in the third quarter of 2016 in connection with a
payment made to the Company to exit a Tommy Hilfiger retail
flagship store in Europe; (xi) the costs incurred in the first,
second and third quarters of 2015 in connection with the operation
of and exit from its Izod retail business; (xii) the gain recorded
in the second quarter of 2015 on its equity investment in the
parent company of the Karl Lagerfeld brand (“Karl Lagerfeld”);
(xiii) the tax effects associated with the foregoing pre-tax items;
(xiv) the tax benefits recorded in the first and third quarters of
2016 and the first, second and third quarters of 2015 associated
with discrete items related to the resolution of uncertain tax
positions; and (xv) the tax expense recorded in the third quarter
of 2016 on the assets held for sale in anticipation of the Mexico
deconsolidation, which are on a non-GAAP basis, provides useful
information to investors. The Company excludes such amounts that it
deems non-recurring or non-operational and believes that this (i)
facilitates comparing current results against past and future
results by eliminating amounts that it believes are not comparable
between periods, thereby permitting management to evaluate
performance and investors to make decisions based on the ongoing
operations of the Company and (ii) assists investors in evaluating
the effectiveness of the Company’s operations and underlying
business trends in a manner that is consistent with management’s
evaluation of business performance. The Company believes that
investors often look at ongoing operations of an enterprise as a
measure of assessing performance. The Company uses its results
excluding these amounts to evaluate its operating performance and
to discuss its business with investment institutions, the Company’s
Board of Directors and others. The Company’s results excluding
certain of the items described above are also the basis for certain
incentive compensation calculations. The non-GAAP measures should
be viewed in addition to, and not in lieu of or superior to, the
Company’s operating performance measures calculated in accordance
with GAAP. The non-GAAP information presented may not be comparable
to similarly titled measures reported by other companies.
The following table presents the non-GAAP measures that are
discussed in this release. Please see Tables 1 through 9 for
reconciliations of the GAAP amounts to amounts on a non-GAAP
basis.
Quarter
Ended Nine Months Ended
10/30/16
11/1/15
10/30/16
11/1/15
Non-GAAP Measures Total gross profit(1) $ 1,193.4 $
1,106.8 $ 3,239.6 $ 3,069.2 Selling, general and administrative
expenses(2) 919.0 824.8 2,599.4 2,423.4 Debt modification and
extinguishment costs (3) — Other noncash (loss) gain, net (4) — —
Equity in net income of unconsolidated affiliates(5) 6.6 12.8
Earnings before interest and taxes(6) 275.6 288.4 646.8 658.6
Income tax expense(7) 36.7 39.9 108.2 112.9 Net income attributable
to PVH Corp.(8) 209.8 221.1 452.4 460.5 Diluted net income per
common share attributable to PVH Corp.(9) $ 2.60 $ 2.66 $ 5.57 $
5.53 Depreciation and amortization expense(10) $ 68.9
$ 61.4 $ 201.2 $ 182.2
PVH CORP. Non-GAAP Measures (continued) (In
millions, except per share data)
(1)
Please see Table 3 for reconciliations of
GAAP gross profit to gross profit on a non-GAAP basis.
(2)
Please see Table 4 for reconciliations of
GAAP selling, general and administrative expenses (“SG&A”) to
SG&A on a non-GAAP basis.
(3)
Please see Table 5 for reconciliation of
GAAP debt modification and extinguishment costs to debt
modification and extinguishment costs on a non-GAAP basis.
(4)
Please see Table 6 for reconciliations of
GAAP other noncash (loss) gain, net to other noncash (loss) gain,
net on a non-GAAP basis.
(5)
Please see Table 7 for reconciliations of
GAAP equity in net income of unconsolidated affiliates to equity in
net income of unconsolidated affiliates on a non-GAAP basis.
(6)
Please see Table 2 for reconciliations of
GAAP earnings before interest and taxes to earnings before interest
and taxes on a non-GAAP basis.
(7)
Please see Table 8 for reconciliations of
GAAP income tax expense to income tax expense on a non-GAAP basis
and an explanation of the calculation of the tax effects associated
with the pre-tax items identified as non-GAAP exclusions.
(8)
Please see Table 1 for reconciliations of
GAAP net income to net income on a non-GAAP basis.
(9)
Please see Note A in the Notes to
Consolidated GAAP Income Statements for reconciliations of GAAP
diluted net income per common share to diluted net income per
common share on a non-GAAP basis.
(10)
Please see Table 9 for reconciliations of
GAAP depreciation and amortization expense to depreciation and
amortization expense on a non-GAAP basis.
PVH CORP.
Reconciliations of GAAP to Non-GAAP Amounts (In millions,
except per share data)
Table 1 -
Reconciliations of GAAP net income to net income on a non-GAAP
basis
Quarter Ended Nine
Months Ended
10/30/16
11/1/15
10/30/16
11/1/15
Net income attributable to PVH Corp. $ 126.2 $ 221.9 $ 448.3
$ 438.2 Diluted net income per common share attributable to
PVH Corp.(1) $ 1.56 $ 2.67 $ 5.52 $ 5.26 Pre-tax items
excluded:
Gross profit charges associated with the
TH China acquisition (short-livednoncash inventory valuation
adjustments)
1.8 7.3 Gross profit associated with the operation of and
exit from the Izod retail business (3.0 ) (28.3 )
Gross profit charges principally
associated with the discontinuation ofseveral licensed product
lines in the Heritage Brands dress furnishings business
8.8 8.8 SG&A expenses associated with the integration of
Warnaco and related restructuring 18.9 9.8 50.8 SG&A
expenses associated with the operation of and exit from the Izod
retail business 5.8 37.4
SG&A expenses associated with the
discontinuation of several licensedproduct lines in the Heritage
Brands dress furnishings business
4.3 2.6 7.6 SG&A expenses associated with the G-III
license 1.6 4.2
SG&A expenses associated with the new
global creative strategy for Calvin Klein and related
restructuring
5.5
SG&A expenses associated with the TH
China acquisition (primarilyconsisting of amortization of
short-lived assets)
15.5 54.5
Gain recorded in connection with a payment
made to the Company to exit aTommy Hilfiger retail flagship store
in Europe (recorded in SG&A)
(18.1 ) (18.1 )
Gain to write-up the Company’s equity
investment in TH China to fair value(recorded in other noncash
(loss) gain, net)
(153.1 )
Loss recorded in anticipation of the
Mexico deconsolidation (recorded inother noncash (loss) gain,
net)
76.9 76.9
One-time expenses recorded on the
Company’s equity investment in THChina (recorded in equity in net
income of unconsolidated affiliates)
5.9
Gain recorded on the equity investment in
Karl Lagerfeld (recorded in equityin net income of unconsolidated
affiliates)
(2.2 ) Debt modification and extinguishment costs 15.8
Tax effects of the above pre-tax items(2) (2.8 ) (17.1 )
(10.1 ) (30.3 ) Discrete tax benefits related to the
resolution of uncertain tax positions (7.8 ) (18.5 ) (13.6 ) (21.5
) Tax expense on the assets held for sale in anticipation of
the Mexico deconsolidation 16.5 16.5
Net income on a non-GAAP basis attributable to PVH Corp. $
209.8 $ 221.1 $ 452.4 $ 460.5 Diluted net income per common
share on a non-GAAP basis attributable to PVH Corp.(1) $ 2.60
$ 2.66 $ 5.57 $ 5.53
(1) Please see Note A in the
Notes to the Consolidated GAAP Income Statements for
reconciliations of GAAP diluted net income per common share to
diluted net income per common share on a non-GAAP basis. (2) Please
see Table 8 for an explanation of the calculation of the tax
effects of the above items.
PVH CORP.
Reconciliations of GAAP to Non-GAAP Amounts (continued)
(In millions)
Table 2 -
Reconciliations of GAAP earnings before interest and taxes to
earnings before interest and taxes on a non-GAAP basis
Quarter
Ended Nine Months Ended
10/30/16
11/1/15
10/30/16
11/1/15
Earnings before interest and taxes $ 197.9 $ 253.6 $ 635.5 $
584.5 Items excluded:
Gross profit charges associated with the
TH China acquisition(short-lived noncash inventory valuation
adjustments)
1.8 7.3 Gross profit associated with the operation of and
exit from the Izod retail business (3.0 ) (28.3 )
Gross profit charges principally
associated with the discontinuationof several licensed product
lines in the Heritage Brands dressfurnishings business
8.8 8.8 SG&A expenses associated with the integration of
Warnaco and related restructuring 18.9 9.8 50.8 SG&A
expenses associated with the operation of and exit from the Izod
retail business 5.8 37.4
SG&A expenses associated with the
discontinuation of severallicensed product lines in the Heritage
Brands dress furnishings business
4.3 2.6 7.6 SG&A expenses associated with the G-III
license 1.6 4.2
SG&A expenses associated with the new
global creative strategy forCalvin Klein and related
restructuring
5.5
SG&A expenses associated with the TH
China acquisition (primarilyconsisting of amortization of
short-lived assets)
15.5 54.5
Gain recorded in connection with a payment
made to the Companyto exit a Tommy Hilfiger retail flagship store
in Europe (recorded in SG&A)
(18.1 ) (18.1 )
Gain to write-up the Company’s equity
investment in TH China tofair value (recorded in other noncash
(loss) gain, net)
(153.1 )
Loss recorded in anticipation of the
Mexico deconsolidation(recorded in other noncash (loss) gain,
net)
76.9 76.9
One-time expenses recorded on the
Company’s equity investment inTH China (recorded in equity in net
income of unconsolidated affiliates)
5.9
Gain recorded on the equity investment in
Karl Lagerfeld (recordedin equity in net income of unconsolidated
affiliates)
(2.2 ) Debt modification and extinguishment costs
15.8 Earnings before interest and taxes
on a non-GAAP basis $ 275.6 $ 288.4 $ 646.8
$ 658.6
PVH CORP. Reconciliations of GAAP to Non-GAAP Amounts
(continued) (In millions)
Table 3 -
Reconciliations of GAAP gross profit to gross profit on a non-GAAP
basis
Quarter Ended Nine Months Ended
10/30/16
11/1/15
10/30/16
11/1/15
Gross profit $ 1,191.6 $ 1,101.0 $ 3,232.3 $ 3,088.7
Items excluded:
Gross profit charges associated with the
TH China acquisition(short-lived noncash inventory valuation
adjustments)
1.8 7.3 Gross profit associated with the operation of and
exit from the Izod retail business (3.0 ) (28.3 )
Gross profit charges principally
associated with thediscontinuation of several licensed product
lines in the HeritageBrands dress furnishings business
8.8 8.8 Gross profit on a
non-GAAP basis $ 1,193.4 $ 1,106.8 $ 3,239.6
$ 3,069.2
Table 4 -
Reconciliations of GAAP SG&A to SG&A on a non-GAAP
basis
Quarter
Ended Nine Months Ended
10/30/16
11/1/15
10/30/16
11/1/15
SG&A $ 918.0 $ 853.8 $ 2,657.9 $ 2,519.2 Items
excluded: SG&A expenses associated with the integration
of Warnaco and related restructuring (18.9 ) (9.8 ) (50.8 )
SG&A expenses associated with the
operation of and exit fromthe Izod retail business
(5.8 ) (37.4 )
SG&A expenses associated with the
discontinuation of severallicensed product lines in the Heritage
Brands dress furnishings business
(4.3 ) (2.6 ) (7.6 ) SG&A expenses associated with the
G-III license (1.6 ) (4.2 )
SG&A expenses associated with the new
global creativestrategy for Calvin Klein and related
restructuring
(5.5 )
SG&A expenses associated with the TH
China acquisition(primarily consisting of amortization of
short-lived assets)
(15.5 ) (54.5 )
Gain related to a payment made to the
Company to exit aTommy Hilfiger retail flagship store in Europe
18.1 18.1 SG&A on a non-GAAP
basis $ 919.0 $ 824.8 $ 2,599.4
$ 2,423.4
PVH CORP. Reconciliations of GAAP to Non-GAAP Amounts
(continued) (In millions)
Table 5 -
Reconciliation of GAAP debt modification and extinguishment costs
to debt modification and extinguishment costs on a non-GAAP
basis
Nine Months Ended
10/30/16
Debt modification and extinguishment costs $ 15.8
Items excluded: Costs incurred related to the amendment of
the Company’s credit facility (15.8 ) Debt modification and
extinguishment costs on a non-GAAP basis $ —
Table 6 -
Reconciliations of GAAP other noncash (loss) gain, net to noncash
(loss) gain, net on a non-GAAP basis
Quarter Ended Nine Months Ended
10/30/16
10/30/16
Other noncash (loss) gain, net $ (76.9 ) $ 76.2 Items
excluded: Gain to write-up the Company’s equity investment
in TH China to fair value (153.1 ) Loss recorded in
anticipation of the Mexico deconsolidation 76.9 76.9 Other
noncash (loss) gain, net on a non-GAAP basis $ —
$
—
PVH CORP. Reconciliations of GAAP to Non-GAAP Amounts
(continued) (In millions)
Table 7 -
Reconciliations of GAAP equity in net income of unconsolidated
affiliates to equity in net income of unconsolidated affiliates on
a non-GAAP basis
Nine Months Ended
10/30/16
11/1/15
Equity in net income of unconsolidated affiliates $ 0.7 $
15.0 Items excluded: One-time expenses recorded on
the Company’s equity investment in TH China 5.9 Gain
recorded on the equity investment in Karl Lagerfeld (2.2 )
Equity in net income of unconsolidated affiliates on a
non-GAAP basis $ 6.6 $ 12.8
Table 8 -
Reconciliations of GAAP income tax expense to income tax expense on
a non-GAAP basis
Quarter
Ended Nine Months Ended 10/30/16
11/1/15 10/30/16
11/1/15 Income tax expense $ 42.6 $ 4.3
$ 101.0 $ 61.1 Items excluded: Tax effects of pre-tax
items identified as non-GAAP exclusions (1) 2.8 17.1 10.1 30.3
Discrete tax benefits related to the resolution of uncertain
tax positions 7.8 18.5 13.6 21.5 Tax expense on the assets
held for sale in anticipation of the Mexico deconsolidation (16.5 )
(16.5 ) Income tax expense on a non-GAAP basis
$ 36.7 $ 39.9 $ 108.2 $ 112.9
(1) The estimated tax effects
associated with the Company’s non-GAAP exclusions are based on the
Company’s assessment of deductibility. In making this assessment,
the Company evaluated each pre-tax item that it had identified
above as a non-GAAP exclusion to determine if such item is taxable
or tax deductible, and if so, in what jurisdiction the tax expense
or tax deduction would occur. All of the pre-tax items identified
as non-GAAP exclusions were identified as either primarily taxable
or tax deductible, with the tax effect taken at the statutory
income tax rate of the local jurisdiction, or as non-taxable or
non-deductible, in which case the Company assumed no tax effect.
PVH CORP. Reconciliations of GAAP to
Non-GAAP Amounts (continued) (In millions)
Table 9 -
Reconciliations of GAAP depreciation and amortization expense to
depreciation and amortization expense on a non-GAAP
basis
Quarter
Ended Nine Months Ended
10/30/16
11/1/15
10/30/16
11/1/15
Depreciation and amortization expense $ 84.4 $ 63.0 $ 237.6
$ 187.0 Items excluded: Amortization of short-lived
assets associated with the TH China acquisition (14.3 ) (32.2 )
Depreciation and amortization associated with the G-III
license (1.2 ) (3.8 )
Depreciation and amortization associated
with the integration ofWarnaco and related restructuring
(1.6 ) (0.4 ) (4.8 ) Depreciation and amortization
expense on a non-GAAP basis $ 68.9 $ 61.4 $
201.2 $ 182.2
PVH CORP. Notes to
Consolidated GAAP Income Statements (In millions, except per
share data)
A. The Company computed
its diluted net income per common share as follows:
Quarter Ended Quarter Ended 10/30/16
11/1/15 GAAP Non-GAAP
GAAP Non-GAAP
Results Adjustments (1)
Results Results
Adjustments (2)
Results
Net income attributable to PVH Corp. $ 126.2 $ (83.6 ) $
209.8 $ 221.9 $ 0.8 $ 221.1 Weighted average common shares
80.0 80.0 82.4 82.4 Weighted average dilutive securities 0.7
0.7 0.7 0.7 Total shares 80.7 80.7 83.1
83.1 Diluted net income per common share attributable
to PVH Corp. $ 1.56 $ 2.60 $ 2.67 $ 2.66
Nine Months Ended Nine
Months Ended 10/30/16 11/1/15 GAAP
Non-GAAP GAAP Non-GAAP
Results Adjustments
(1)
Results Results
Adjustments (2)
Results
Net income attributable to PVH Corp. $ 448.3 $ (4.1 ) $
452.4 $ 438.2 $ (22.3 ) $ 460.5 Weighted average common
shares 80.6 80.6 82.6 82.6 Weighted average dilutive securities 0.6
0.6 0.7 0.7 Total shares 81.2 81.2
83.3 83.3 Diluted net income per common share
attributable to PVH Corp. $ 5.52 $ 5.57 $ 5.26
$ 5.53
(1)
Represents the impact on net income in the
periods ended October 30, 2016 from the elimination of (i) the
costs incurred in connection with the integration of Warnaco and
the related restructuring; (ii) the costs incurred in connection
with the discontinuation of several licensed product lines in the
Heritage Brands dress furnishings business; (iii) the costs
incurred in connection with the G-III license; (iv) the costs
incurred in connection with the restructuring associated with the
new global creative strategy for Calvin Klein; (v) the noncash gain
recorded to write-up the Company’s equity investment in TH China to
fair value in connection with the TH China acquisition; (vi) the
one-time costs recorded on the Company’s equity investment in TH
China prior to the TH China acquisition closing; (vii) the costs
incurred in connection with the TH China acquisition, primarily
consisting of noncash charges related to valuation adjustments and
amortization of short-lived assets; (viii) the noncash loss
recorded in anticipation of the Mexico deconsolidation; (ix) the
gain recorded in connection with a payment made to the Company to
exit a Tommy Hilfiger retail flagship store in Europe; (x) the
costs incurred in connection with the amendment of the Company’s
credit facility; (xi) the tax effects associated with the foregoing
pre-tax items; (xii) the tax benefits associated with discrete
items related to the resolution of uncertain tax positions; and
(xiii) the tax expense on the assets held for sale in anticipation
of the Mexico deconsolidation. Please see Table 1 for a
reconciliation of GAAP net income to net income on a non-GAAP
basis.
(2) Represents the impact on net income in the periods ended
November 1, 2015 from the elimination of (i) the costs incurred in
connection with the integration of Warnaco and the related
restructuring; (ii) the costs incurred in connection with the
operation of and exit from the Izod retail business; (iii) the
costs incurred principally in connection with the discontinuation
of several licensed product lines in the Heritage Brands dress
furnishings business; (iv) the gain recorded on the equity
investment in Karl Lagerfeld; (v) the tax effects associated with
the foregoing pre-tax items; and (vi) the tax benefits associated
with discrete items related to the resolution of uncertain tax
positions. Please see Table 1 for a reconciliation of GAAP net
income to net income on a non-GAAP basis.
PVH CORP. Consolidated Balance Sheets
(In millions) 10/30/16 11/1/15 ASSETS
Current Assets: Cash and Cash Equivalents $ 662.4 $ 369.9
Receivables 788.4 866.2 Inventories 1,258.3 1,332.0 Other Current
Assets 189.9 196.8 Assets Held For Sale 49.1 — Total Current
Assets 2,948.1 2,764.9 Property, Plant and Equipment 730.2 731.8
Goodwill and Other Intangible Assets 7,154.8 6,921.9 Other Assets
235.5 285.9 $ 11,068.6 $ 10,704.5 LIABILITIES,
REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Accounts Payable and Accrued Expenses $ 1,309.6 $ 1,214.7
Short-Term Borrowings 20.8 27.6 Current Portion of Long-Term Debt —
124.1 Current Liabilities Related to Assets Held For Sale 26.0 —
Other Liabilities 1,613.6 1,601.2 Long-Term Debt 3,303.1 3,191.3
Redeemable Non-Controlling Interest 1.2 — Stockholders’ Equity
4,794.3 4,545.6 $ 11,068.6 $ 10,704.5
Note: Year over year balances are impacted by changes in foreign
currency exchange rates.
PVH CORP.
Segment Data (In millions)
REVENUE BY
SEGMENT
Quarter Ended Quarter Ended 10/30/16
11/1/15
Calvin Klein North
America
Net sales $ 444.4 $ 420.1 Royalty revenue 43.1 43.9 Advertising and
other revenue 14.4 13.8 Total 501.9 477.8
Calvin Klein
International
Net sales 364.0 308.8 Royalty revenue 18.8 21.0 Advertising and
other revenue 6.5 6.5 Total 389.3 336.3
Total Calvin
Klein Net sales 808.4 728.9
Royalty revenue 61.9 64.9 Advertising and
other revenue 20.9 20.3 Total
891.2
814.1
Tommy Hilfiger North
America
Net sales 383.6 416.5 Royalty revenue 14.8 13.4 Advertising and
other revenue 3.8 4.0 Total 402.2 433.9
Tommy Hilfiger
International
Net sales 512.3 439.1 Royalty revenue 11.6 13.6 Advertising and
other revenue 1.1 1.0 Total 525.0 453.7
Total Tommy
Hilfiger Net sales 895.9 855.6
Royalty revenue 26.4 27.0 Advertising and
other revenue 4.9 5.0 Total
927.2 887.6
Heritage Brands
Wholesale
Net sales 354.2 384.0 Royalty revenue 5.1 4.9 Advertising and other
revenue 1.1 0.8 Total 360.4 389.7
Heritage Brands
Retail
Net sales 64.9 72.4 Royalty revenue 0.5 0.6 Advertising and other
revenue 0.1 0.1 Total 65.5 73.1
Total Heritage
Brands Net sales 419.1 456.4
Royalty revenue 5.6 5.5 Advertising and
other revenue 1.2 0.9 Total
425.9 462.8
Total
Revenue
Net sales 2,123.4 2,040.9 Royalty
revenue 93.9 97.4 Advertising and other
revenue 27.0 26.2 Total $
2,244.3 $ 2,164.5
PVH CORP.
Segment Data (continued) (In millions)
EARNINGS BEFORE
INTEREST AND TAXES BY SEGMENT
Quarter Ended Quarter Ended 10/30/16
11/1/15 Results Results Under
Non-GAAP Under Non-GAAP
GAAP
Adjustments(1)
Results
GAAP
Adjustments(2)
Results
Calvin Klein North America $ (0.7 ) $ (76.9 ) $ 76.2 $ 80.2
$ (2.7 ) $ 82.9 Calvin Klein International 69.6
69.6 61.5 (3.9 ) 65.4
Total Calvin Klein
68.9 (76.9
) 145.8
141.7 (6.6 ) 148.3
Tommy Hilfiger North America 41.3 (1.6 ) 42.9 57.1
57.1 Tommy Hilfiger International 75.0 0.8
74.2 68.6 68.6
Total Tommy Hilfiger
116.3 (0.8 )
117.1 125.7
125.7 Heritage Brands
Wholesale 41.2 41.2 25.3 (14.5 ) 39.8 Heritage Brands Retail
2.4 2.4 0.5 (2.8 ) 3.3
Total Heritage
Brands 43.6
43.6 25.8
(17.3 ) 43.1
Corporate (30.9 ) (30.9 ) (39.6 ) (10.9 ) (28.7 )
Total
earnings before interest and taxes $ 197.9
$ (77.7 ) $ 275.6
$ 253.6 $ (34.8 )
$ 288.4
(1)
Adjustments for the quarter ended October
30, 2016 represent the elimination of (i) the costs incurred in
connection with the G-III license; (ii) the costs incurred in
connection with the TH China acquisition, principally consisting of
noncash charges related to amortization of short-lived assets;
(iii) the noncash loss recorded in anticipation of the Mexico
deconsolidation; and (iv) the gain recorded in connection with a
payment made to the Company to exit a Tommy Hilfiger retail
flagship store in Europe.
(2) Adjustments for the quarter ended November 1, 2015
represent the elimination of (i) the costs incurred in connection
with the integration of Warnaco and the related restructuring; (ii)
the costs incurred in connection with the operation of and exit
from the Izod retail business; and (iii) the costs incurred
principally in connection with the discontinuation of several
licensed product lines in the Heritage Brands dress furnishings
business.
PVH
CORP. Segment Data (continued) (In millions)
REVENUE BY
SEGMENT
Nine Months Ended
Nine Months Ended
10/30/16 11/1/15 Calvin Klein North
America Net sales $ 1,144.5 $ 1,037.0 Royalty revenue 101.4
103.1 Advertising and other revenue 34.6 34.7 Total 1,280.5
1,174.8
Calvin Klein
International
Net sales 986.5 865.2 Royalty revenue 54.2 57.0 Advertising and
other revenue 19.1 19.6 Total 1,059.8 941.8
Total
Calvin Klein Net sales 2,131.0
1,902.2 Royalty revenue 155.6 160.1
Advertising and other revenue 53.7 54.3
Total 2,340.3
2,116.6
Tommy Hilfiger North
America
Net sales 1,100.7 1,142.8 Royalty revenue 35.0 32.9 Advertising and
other revenue 8.5 9.4 Total 1,144.2 1,185.1
Tommy Hilfiger
International
Net sales 1,399.0 1,239.5 Royalty revenue 33.3 38.0 Advertising and
other revenue 2.7 2.8 Total 1,435.0 1,280.3
Total
Tommy Hilfiger Net sales 2,499.7
2,382.3 Royalty revenue 68.3 70.9
Advertising and other revenue 11.2 12.2
Total 2,579.2
2,465.4
Heritage Brands
Wholesale
Net sales 964.1 1,059.5 Royalty revenue 15.3 14.3 Advertising and
other revenue 2.9 2.2 Total 982.3 1,076.0
Heritage Brands
Retail
Net sales 191.7 247.9 Royalty revenue 1.7 1.7 Advertising and other
revenue 0.2 0.2 Total 193.6 249.8
Total Heritage
Brands Net sales 1,155.8 1,307.4
Royalty revenue 17.0 16.0 Advertising and
other revenue 3.1 2.4 Total
1,175.9
1,325.8
Total
Revenue
Net sales 5,786.5 5,591.9 Royalty
revenue 240.9 247.0 Advertising and other
revenue 68.0 68.9 Total $
6,095.4 $ 5,907.8
PVH CORP.
Segment Data (continued) (In millions)
EARNINGS BEFORE
INTEREST AND TAXES BY SEGMENT
Nine Months Ended Nine Months Ended
10/30/16 11/1/15 Results
Results Under Non-GAAP Under
Non-GAAP
GAAP
Adjustments(1)
Results
GAAP
Adjustments(2)
Results
Calvin Klein North America $ 92.6 $ (79.8 ) $ 172.4 $ 166.7
$ (5.6 ) $ 172.3 Calvin Klein International 172.3
(5.4 ) 177.7 145.5 (7.6 ) 153.1
Total Calvin Klein
264.9 (85.2
) 350.1
312.2 (13.2 )
325.4 Tommy Hilfiger North America 110.4 (4.2
) 114.6 146.2 146.2 Tommy Hilfiger International 287.8
103.5 184.3 169.3 169.3
Total Tommy
Hilfiger 398.2
99.3 298.9
315.5 315.5
Heritage Brands Wholesale 77.4 (3.0 ) 80.4 72.9 (23.5 ) 96.4
Heritage Brands Retail 8.2 8.2 (2.3 ) (9.1 )
6.8
Total Heritage Brands 85.6
(3.0 ) 88.6
70.6 (32.6 )
103.2 Corporate (113.2 ) (22.4 ) (90.8
) (113.8 ) (28.3 ) (85.5 )
Total earnings before interest
and taxes $ 635.5 $ (11.3
) $ 646.8 $ 584.5
$ (74.1 ) $ 658.6
(1)
Adjustments for the nine months ended
October 30, 2016 represent the elimination of (i) the costs
incurred in connection with the integration of Warnaco and the
related restructuring; (ii) the costs incurred in connection with
the discontinuation of several licensed product lines in the
Heritage Brands dress furnishings business; (iii) the costs
incurred in connection with the G-III license; (iv) the costs
incurred in connection with the restructuring associated with the
new global creative strategy for Calvin Klein; (v) the noncash gain
recorded to write-up the Company’s equity investment in TH China to
fair value in connection with the TH China acquisition; (vi) the
one-time costs recorded on the Company’s equity investment in TH
China prior to the TH China acquisition closing; (vii) the costs
incurred in connection with the TH China acquisition, primarily
consisting of noncash charges related to valuation adjustments and
amortization of short-lived assets; (viii) the noncash loss
recorded in anticipation of the Mexico deconsolidation; (ix) the
gain recorded in connection with a payment made to the Company to
exit a Tommy Hilfiger retail flagship store in Europe; and (x) the
costs incurred in connection with the amendment of the Company’s
credit facility.
(2) Adjustments for nine months ended November 1, 2015
represent the elimination of (i) the costs incurred in connection
with the integration of Warnaco and the related restructuring; (ii)
the costs incurred in connection with the operation of and exit
from the Izod retail business, (iii) the costs incurred principally
in connection with the discontinuation of several licensed product
lines in the Heritage Brands dress furnishings business; and (iv)
the gain recorded on the equity investment in Karl Lagerfeld.
PVH CORP. Reconciliations of 2016 Constant Currency
Amounts (In millions)
As a supplement to the Company’s reported operating results, the
Company presents constant currency financial information, which is
a non-GAAP financial measure. The Company presents results in this
manner because it is a global company that reports financial
information in U.S. dollars in accordance with generally accepted
accounting principles in the U.S. Foreign currency exchange rate
fluctuations affect the amounts reported by the Company in U.S.
dollars with respect to its foreign revenues and profit.
Additionally, the Company’s international businesses often purchase
inventory in U.S. dollars and, as the U.S. dollar strengthens, the
increased local currency value of inventory results in higher cost
of goods in local currency when the goods are sold. Exchange rate
fluctuations can have a significant effect on reported operating
results. The Company believes presenting constant currency
information provides useful information to investors, as it
provides information to assess how its businesses performed
excluding the effects of changes in foreign currency exchange rates
and assists investors in evaluating the effectiveness of the
Company’s operations and underlying business trends in a manner
that is consistent with management’s evaluation of business
performance.
The Company calculates constant currency financial information
by translating its foreign revenues and profit for the current year
period into U.S. dollars at the average exchange rates in effect
during the comparable prior year period (rather than at the actual
exchange rates in effect during the current year period).
Additionally, for international businesses that purchase inventory
in U.S. dollars, the Company calculates cost of goods sold for the
current period on a constant currency basis assuming such inventory
was purchased at the average exchange rates in effect during the
comparable prior year period.
Constant currency performance should be viewed in addition to,
and not in lieu of or superior to, the Company’s operating
performance calculated in accordance with GAAP. The constant
currency information presented may not be comparable to similarly
described measures reported by other companies.
GAAP Revenue % Change
Quarter Ended GAAP
Impact of Foreign
Exchange
Constant Currency
10/30/16 11/1/15 Calvin Klein North
America $ 501.9 $ 477.8 5.0 % (0.6 )% 5.6 % Calvin Klein
International 389.3 336.3 15.8 % (1.2 )% 17.0 % Total Calvin Klein
891.2 814.1 9.5 % (0.8 )% 10.3 % Tommy Hilfiger North
America $ 402.2 $ 433.9 (7.3 )% 0.1 % (7.4 )% Tommy Hilfiger
International 525.0 453.7 15.7 % (2.4 )% 18.1 % Total Tommy
Hilfiger 927.2 887.6 4.5 % (1.1 )% 5.6 % Total Revenue $
2,244.3 $ 2,164.5 3.7 % (0.7 )% 4.4 %
GAAP
Revenue % Change Nine Months Ended GAAP
Impact of Foreign
Exchange
Constant Currency
10/30/16 11/1/15 Total Calvin Klein $ 2,340.3
$ 2,116.6 10.6 % (1.9 )% 12.5 % Total Tommy Hilfiger $
2,579.2 $ 2,465.4 4.6 % (1.0 )% 5.6 % Total Revenue $
6,095.4 $ 5,907.8 3.2 % (1.2 )% 4.4 %
PVH CORP. Full Year and Quarterly Reconciliations of
GAAP to Non-GAAP Amounts
The Company is presenting its 2016 estimated results excluding
(a) the costs incurred in the first and second quarters in
connection with its integration of Warnaco and the related
restructuring; (b) the costs incurred in the first quarter in
connection with the discontinuation of several licensed product
lines in its Heritage Brands dress furnishings business; (c) the
costs incurred in the first, second and third quarters in
connection with the G-III license, which will result in the
discontinuation of the Company’s directly operated Tommy Hilfiger
North America womenswear wholesale business in the fourth quarter
of 2016; (d) the costs incurred in the first quarter in connection
with the restructuring associated with the new global creative
strategy for Calvin Klein; (e) the noncash gain recorded in the
first quarter to write-up its equity investment in TH China in
connection with the TH China acquisition; (f) the one-time costs
recorded in the first quarter on its equity investment in TH China
prior to the TH China acquisition closing; (g) the costs incurred
in the first, second and third quarters and expected to be incurred
in the fourth quarter in connection with the TH China acquisition,
primarily consisting of noncash charges related to valuation
adjustments and amortization of short-lived assets; (h) the noncash
loss recorded in the third quarter in anticipation of the Mexico
deconsolidation, which will be remeasured in connection with the
closing of the transaction in the fourth quarter and will be
impacted by many factors subsequent to October 30, 2016, such as,
but not limited to, fluctuations in the Mexican peso exchange rate
and changes to the Mexican subsidiary’s balance sheet, revenues and
income; (i) the gain recorded in the third quarter in connection
with a payment made to the Company to exit a Tommy Hilfiger retail
flagship store in Europe; (j) the costs incurred in the second
quarter in connection with the amendment of its credit facility;
(k) the estimated tax effects associated with the foregoing pre-tax
items; (l) the tax benefits recorded in the first and third
quarters associated with discrete items related to the resolution
of uncertain tax positions; and (m) the tax expense recorded in the
third quarter on the assets held for sale in anticipation of the
Mexico deconsolidation. The 2016 estimated results are on a
non-GAAP basis. The Company believes presenting these results on a
non-GAAP basis provides useful additional information to investors.
The Company excludes such amounts that it deems non-recurring or
non-operational and believes that this (i) facilitates comparing
current results against past and future results by eliminating
amounts that it believes are not comparable between periods,
thereby permitting management to evaluate performance and investors
to make decisions based on the ongoing operations of the Company
and (ii) assists investors in evaluating the effectiveness of the
Company’s operations and underlying business trends in a manner
that is consistent with management’s evaluation of business
performance. The Company has provided the reconciliations set
forth below to present its estimates on a GAAP basis and excluding
these amounts. The Company uses its results excluding these
amounts to evaluate its operating performance and to discuss its
business with investment institutions, the Company’s Board of
Directors and others. The Company’s results excluding certain
of the items described above are also the basis for certain
incentive compensation calculations. The non-GAAP measures should
be viewed in addition to, and not in lieu of or superior to, the
Company’s operating performance measures calculated in accordance
with GAAP. The non-GAAP information presented may not be comparable
to similarly titled measures reported by other companies. The
estimated tax effects associated with the above pre-tax items are
based on the Company’s assessment of deductibility. In making this
assessment, the Company evaluated each item that it had identified
above as a non-GAAP exclusion to determine if such item is taxable
or tax deductible, and if so, in what jurisdiction the tax expense
or tax deduction would occur. All items above were identified as
either primarily taxable or tax deductible, with the tax effect
taken at the statutory income tax rate of the local jurisdiction,
or as non-taxable or non-deductible, in which case the Company
assumed no tax effect.
Net Income Per
Common Share Reconciliations
Current Guidance Previous Guidance Full
Year2016(Estimated) Fourth Quarter2016(Estimated)
Full Year
2016(Estimated)
Third Quarter2016(Estimated) GAAP net income
per common share attributable to PVH Corp. $6.51 - $6.56 $0.99 -
$1.04 $7.50 - $7.60 $2.30 - $2.35
Estimated per common share impact of
itemsidentified as non-GAAP exclusions
$(0.19) $(0.14) $0.95 $(0.05)
Net income per common share attributable
to PVHCorp. excluding impact of items identified as non-GAAP
exclusions
$6.70 - $6.75 $1.13 - $1.18 $6.55 - $6.65 $2.35 - $2.40
2016 Tax Rate
Reconciliation
Full Year 2016(Estimated)
Fourth Quarter 2016(Estimated)
GAAP tax rate 18% - 18.5% 14% - 17%
Estimated tax effects of items identified
as non-GAAP exclusions,discrete tax benefits related to the
resolution of uncertain tax positionsand tax expense recorded on
the assets held for sale in anticipation of the Mexico
deconsolidation
(1)% (3)% Tax rate on a non-GAAP basis 19% - 19.5% 17% - 20%
PVH CORP. Full Year and Quarterly Reconciliations of
GAAP to Non-GAAP Amounts (continued)
The GAAP net income per common share attributable to PVH Corp.
amounts presented in the above table, as well as the amounts
excluded in providing non-GAAP earnings guidance, would be expected
to change as a result of acquisition, restructuring, divestment or
similar transactions or activities, the timing and strategy of
restructuring and integration initiatives or other one-time events,
if any, that the Company engages in or suffers during the period or
any market or other changes affecting the Company’s expected
actuarial gain or loss on retirement plans. The loss recorded in
anticipation of the Mexico deconsolidation will be remeasured upon
the closing of the transaction in the fourth quarter and will be
impacted by many factors subsequent to October 30, 2016, such as,
but not limited to, fluctuations in the Mexican peso exchange rate
and changes to the Mexican subsidiary’s balance sheet, revenues and
income. The Company has no current understanding or agreement
regarding any other such transaction or definitive plans regarding
any such activity that has not been announced or completed.
2016
Estimated Revenue on a Constant Currency Basis
Reconciliation
Full Year
2016(Estimated)(Consolidated)
Full Year 2016(Estimated)(Calvin
Klein)
Full Year
2016(Estimated)(TommyHilfiger)
Fourth
Quarter2016(Estimated)(Consolidated)
Fourth Quarter2016(Estimated)(Calvin
Klein)
Fourth
Quarter2016(Estimated)(TommyHilfiger)
GAAP revenueincrease (decrease)
2% 6% 4% (1)% (5)% 3%
Impact of foreign exchange
(1)% (2)% (1)% (2)% (2)% (2)%
Non-GAAP revenueincrease (decrease)on a
constantcurrency basis
3% 8% 5% 1% (3)% 5%
Please refer to the section entitled “Reconciliations of 2016
Constant Currency Amounts” for a description of the presentation of
constant currency amounts.
PVH CORP. Full Year and
Quarterly Reconciliations of GAAP to Non-GAAP Amounts
(continued)
Reconciliation of
GAAP Diluted Net Income Per Common Share to Diluted Net Income Per
Common Share on a Non-GAAP Basis
(In millions, except per share data)
Full Year 2015 Fourth Quarter 2015 (Actual) (Actual)
ResultsUnderGAAP
Adjustments
(1)
Non-GAAPResults
ResultsUnderGAAP
Adjustments
(2)
Non-GAAPResults
Net income $ 572.4 $ (13.3 ) $ 585.7 $ 134.2 $ 9.0 $ 125.2
Total weighted average shares 83.1 83.1 82.4
82.4 Diluted net income per common share $ 6.89 $
7.05 $ 1.63 $ 1.52 (1) Represents the
impact on net income in the year ended January 31, 2016 from the
elimination of (i) $73.4 million of costs incurred in connection
with the integration of Warnaco and the related restructuring; (ii)
$10.3 million of costs incurred in connection with the operation of
and exit from the Izod retail business; (iii) $16.5 million of
costs incurred principally in connection with the discontinuation
of several licensed product lines in the Heritage Brands dress
furnishings business; (iv) $3.2 million of costs incurred in
connection with the G-III license; (v) the gain of $2.2 million
recorded on the equity investment in Karl Lagerfeld; (vi) the
recognized actuarial gain of $20.2 million on retirement plans;
(vii) $33.2 million of tax effects associated with the foregoing
pre-tax items; and (viii) the tax benefits of $34.5 million
associated with discrete items primarily related to the resolution
of uncertain tax positions and the impact of tax law and tax rate
changes on deferred taxes. (2) Represents the impact on net
income in the quarter ended January 31, 2016 from the elimination
of (i) $22.6 million of costs incurred in connection with the
integration of Warnaco and the related restructuring; (ii) $1.2
million of costs incurred in connection with the exit from the Izod
retail business; (iii) $0.1 million of costs incurred in connection
with the discontinuation of several licensed product lines in the
Heritage Brands dress furnishings business; (iv) $3.2 million of
costs incurred in connection with the G-III license; (v) the
recognized actuarial gain of $20.2 million on retirement plans;
(vi) $2.9 million of tax effects associated with the foregoing
pre-tax items; and (vii) the tax benefits of $13.0 million
associated with discrete items primarily related to the resolution
of uncertain tax positions and the impact of tax law and tax rate
changes on deferred taxes.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161130006323/en/
PVH Corp.Dana Perlman, (212) 381-3502Treasurer
and Senior Vice President, Business Development and Investor
Relationsinvestorrelations@pvh.com
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