NEW YORK, Feb. 22, 2017 /PRNewswire/ --
- Q4 & FY 2016 licensing revenue of $87.1 million and $368.5
million, respectively
- $28.1 million gain related
to the sale of the Sharper Image brand
- Estimated non-cash trademark and goodwill impairment
charge of approximately $443
million
Iconix Brand Group, Inc. (NASDAQ: ICON) ("Iconix" or the
"Company") today reported its financial results for the fourth
quarter and full year ended December
31, 2016.
John Haugh, CEO of Iconix
commented, "2016 was a year of transition for Iconix. Our
operating performance was in-line with our guidance. I believe
the changes we have made over the past year provide a strong
foundation to drive long term growth and shareholder value.
Key initiatives and positive steps that we took in
2016:
- We continued to build our team and hired new talent to augment
our existing skills and capabilities.
- We conducted an in-depth analysis of our brands, our partners
and the market, and developed a long term strategic plan to drive
growth, as we shared at our Investor Day in November.
- We divested 2 brands, consistent with our portfolio
management approach to brand ownership.
- We improved our financial stability by retiring over
$300 million of debt since the
beginning of 2016.
With this work we are on a path to organic growth, improved
earnings, an improved balance sheet and continued market
leadership."
Fourth Quarter & Full Year 2016 Financial Results
Licensing Revenue:
For the fourth quarter of 2016, licensing revenue was
approximately $87.1 million, an 8%
decline as compared to $94.7 million
in the prior year quarter. Revenue in the prior year's fourth
quarter included approximately $1.3
million of licensing revenue from the Badgley Mischka brand,
for which there was no comparable revenue in the fourth quarter of
2016, due to its sale in the first quarter of 2016. In the fourth
quarter of 2016 there was a slight positive impact from foreign
currency exchange rates primarily related to the Yen. Excluding
Badgley Mischka and the currency impact, revenue was down
approximately 7% for the quarter.
For the full year 2016, licensing revenue was approximately
$368.5 million, a 3% decline as
compared to $379.2 million in 2015.
Revenue in 2015 included approximately $5.0
million from the Badgley Mischka brand for which there was
no comparable revenue in 2016. In 2016, the Company
benefitted from a $3 million
favorable impact from foreign currency exchange rates primarily
related to the Yen. Excluding Badgley Mischka and the
currency impact, revenue was down approximately 2% for the
year.
Segment Data:
The Company is providing revised segment data that breaks out
international as a separate segment, consistent with how the
business is run. Historical segment data can be found on the
Company's website www.iconixbrand.com.
($, 000's)
|
|
|
|
|
Three Months Ended
Dec. 31,
|
|
Year Ended Dec.
31,
|
|
2016
|
2015
|
%
Change
|
|
2016
|
2015
|
%
Change
|
Licensing Revenue by
Segment:
|
|
|
|
|
|
|
|
Women's
|
18,773
|
22,564
|
-17%
|
|
106,527
|
118,038
|
-10%
|
Men's
|
11,807
|
13,121
|
-10%
|
|
48,635
|
55,208
|
-12%
|
Home
|
10,542
|
9,646
|
9%
|
|
38,370
|
36,473
|
5%
|
Entertainment
|
28,341
|
35,484
|
-20%
|
|
113,318
|
107,606
|
5%
|
International
|
17,679
|
13,840
|
28%
|
|
61,611
|
61,872
|
0%
|
Total Licensing
Revenue
|
87,142
|
94,654
|
-8%
|
|
368,461
|
379,197
|
-3%
|
SG&A Expenses:
Total SG&A expenses in the fourth quarter of 2016 were
$57.3 million, a 1% increase as
compared to approximately $56.6
million in the fourth quarter of 2015. In the fourth
quarter of 2016, SG&A included approximately $3.9 million of special charges related to
professional fees associated with continuing correspondence with
the Staff of the SEC, the SEC investigation, the class action and
derivative litigations, and costs related to the transition of
Iconix management, as compared to approximately $1.6 million in the fourth quarter of 2015. These
special charges are excluded from the Company's non-GAAP net income
and EPS. Excluding special charges, SG&A expenses were down
approximately 3% in the fourth quarter of 2016. Stock based
compensation was approximately $2.1
million in the fourth quarter of 2016, as compared to
approximately $1.6 million in the
fourth quarter of 2015.
For the full year 2016, total SG&A expenses were
$206.6 million, a 1% increase as
compared to $204.9 million in 2015.
In 2016, SG&A included approximately $14.3 million of special charges related to
professional fees associated with continuing
correspondence with the Staff of the SEC, the SEC investigation,
the class action and derivative litigations, and costs related to
the transition of Iconix management, as compared to approximately
$11.1 million in 2015. Excluding
special charges, SG&A expenses were down approximately 1% for
the full year 2016. Stock based compensation was
approximately $6.8 million in 2016,
as compared to approximately $11.4
million in 2015.
Asset Impairment:
In the fourth quarter of 2016, the Company will recognize a
non-cash impairment charge related to certain of the Company's
trademarks and goodwill, which is currently estimated by management
to be approximately $443 million. The
amount of such impairment charge remains subject to review. As
such, the amount of the impairment charge is subject to revision,
which revision would also result in an adjustment to the Company's
operating income, income before tax, income taxes, net income and
earnings per share for the quarterly and annual periods ended
December 31, 2016.
Upon finalization of the impairment charge prior to filing the
Company's Form 10-K for the year ended December 31, 2016, the Company will record, if
necessary, any resulting increase or decrease to the estimated
charge in its financial results for 2016.
A significant portion of the trademark impairment was driven by
the Company's continuing depressed market capitalization.
Additionally, a portion of the impairment was caused by the
revision to the Company's reported segments.
Operating Income (1):
Operating Income for the fourth quarter of 2016 was a loss of
approximately $385.8 million, as
compared to a loss of $398.2 million
in the fourth quarter of 2015. Operating Income for the full year
2016 was a loss of approximately $243.1
million, as compared to a loss of $262.7 million in 2015.
Non-GAAP Operating Income (adjusted only to exclude expected
impairment charges), for the fourth quarter of 2016 was
approximately $57.4 million, a 46%
increase as compared to $39.3 million
in the fourth quarter of 2015. Operating income in the fourth
quarter of 2016 includes a gain of approximately $28.1 million related to the sale of the Sharper
Image brand.
For the full year 2016, Non-GAAP Operating Income (adjusted only
to exclude expected impairment charges), was approximately
$200.1 million, a 14% increase as
compared to approximately $174.9
million in 2015. Operating Income in 2016 includes a
gain of approximately $38.1 million,
primarily related to the sale of the Sharper Image and Badgley
Mischka brands.
|
Three Months Ended
Dec. 31,
|
|
Year Ended Dec.
31,
|
($, 000's)
|
2016
|
2015
|
%
Change
|
|
2016
|
2015
|
%
Change
|
Operating
Income*:
|
|
|
|
|
|
|
|
Women's
|
15,118
|
20,062
|
-25%
|
|
94,043
|
103,289
|
-9%
|
Men's
|
7,367
|
2,086
|
253%
|
|
30,322
|
25,623
|
18%
|
Home
|
8,419
|
7,761
|
8%
|
|
31,887
|
30,473
|
5%
|
Entertainment
|
7,439
|
11,619
|
-36%
|
|
34,281
|
35,583
|
-4%
|
International
|
8,053
|
6,876
|
17%
|
|
30,739
|
34,225
|
-10%
|
Corporate
|
11,013
|
(9,125)
|
NA
|
|
(21,178)
|
(54,332)
|
61%
|
Total Operating
Income
|
57,409
|
39,279
|
46%
|
|
200,094
|
174,860
|
14%
|
|
|
|
|
|
|
|
|
|
Three Months Ended
Dec. 31,
|
|
Year Ended Dec.
31,
|
|
2016
|
2015
|
percentage
point change
|
|
2016
|
2015
|
percentage
point change
|
Operating
Margin:
|
|
|
|
|
|
|
|
Women's
|
81%
|
89%
|
-8%
|
|
88%
|
88%
|
0%
|
Men's
|
62%
|
16%
|
46%
|
|
62%
|
46%
|
16%
|
Home
|
80%
|
80%
|
0%
|
|
83%
|
84%
|
-1%
|
Entertainment
|
26%
|
33%
|
-7%
|
|
30%
|
33%
|
-3%
|
International
|
46%
|
50%
|
-4%
|
|
50%
|
55%
|
-5%
|
|
|
|
|
|
|
|
|
Total Operating
Income
|
66%
|
41%
|
24%
|
|
54%
|
46%
|
8%
|
|
*Note: Operating
Income above excludes the impact of the impairment charges related
to certain of the Company's trademarks and goodwill. Please
see reconciliation tables at the end of this press
release.
|
Interest Expense:
Interest expense in the fourth quarter of 2016 was approximately
$23.1 million, as compared to
interest expense of approximately $21.3
million in the fourth quarter of 2015. The Company's
reported interest expense includes non-cash interest related to its
outstanding convertible notes of approximately $4.1 million in the fourth quarter of 2016 and
approximately $7.3 million in the
fourth quarter of 2015.
Interest expense for the full year 2016 was approximately
$97.5 million, as compared to
approximately $86.2 million of
interest expense in 2015. The Company's reported interest
expense includes non-cash interest related to its outstanding
convertible notes of approximately $22.4
million in 2016 and approximately $28.6 million in 2015.
Other Income:
In the fourth quarter of 2016, the Company recognized a
$7.3 million gain, related to the
recoupment and final settlement of unearned incentive compensation
from the Company's former CEO in connection with previously
announced financial restatements. In the fourth quarter of 2016,
the Company also recognized a $14.4
million loss related to the early extinguishment of debt and
the write-down of deferred financing fees. Both of these items are
excluded from the Company's non-GAAP
results.
For the full year 2016, the Company recognized $17.5 million of other income related to the
recoupment of unearned incentive compensation from the Company's
former CEO, and a gain related to the Company's sale of its
minority interest in Complex Media, as compared to other income of
$50.9 million in 2015, which was
primarily related to a non-cash remeasurement gain associated with
the Company's acquisition of 100% of Iconix China. The Company also
recognized a $5.9 million loss
related to the early extinguishment of certain debt offset by a
gain related to the repurchase of a portion of the Company's 2018
convertible notes at a discount.
GAAP Net Income and GAAP Diluted EPS (1):
GAAP net income for the fourth quarter of 2016 reflects a loss
of approximately $297.5 million, as
compared to a loss of approximately $263.0
million in the fourth quarter of 2015. GAAP diluted EPS for
the fourth quarter of 2016 reflects a loss of approximately
$5.30 as compared to a loss of
approximately $5.44 in the fourth
quarter of 2015.
For the full year 2016, GAAP net income reflects a loss of
approximately $252.1 million, as
compared to a loss of approximately $189.3
million in 2015. GAAP diluted EPS for 2016 reflects a loss
of approximately $4.82 as compared to
a loss of $3.92 in 2015.
Non-GAAP Net Income and Non-GAAP Diluted EPS:
Non-GAAP net income for the fourth quarter of 2016 was
approximately $22.0 million, a 79%
increase as compared to approximately $12.3
million in the fourth quarter of 2015. Non-GAAP diluted EPS
for the fourth quarter of 2016 was approximately $0.38 as compared approximately $0.25 in the fourth quarter of 2015.
Non GAAP net income for the full year 2016 was approximately
$74.3 million, a 12% increase as
compared to $66.4 million in 2015.
Non-GAAP diluted EPS for 2016 was approximately $1.37 as compared to $1.33 in 2015.
Balance Sheet and Liquidity:
The Company ended 2016 with $326.7
million of total cash and $1.3
billion face value of debt. In 2016, the Company
reduced its debt balance by approximately $202 million, and in January 2017, the Company paid down an additional
$102 million of debt. At the end of
January 2017, the Company's cash and
debt balances were approximately $219
million, which includes approximately $67.6 million of restricted cash, and
$1.2 billion, respectively.
($, 000's)
|
Dec. 31,
2016
|
|
|
Dec 31,
2016
|
Cash
Summary:
|
|
|
Debt
Summary:
|
|
Unrestricted Domestic
Cash (wholly owned)
|
55,235
|
|
Senior Secured
Notes
|
651,784
|
Unrestricted Domestic
Cash (in consolidated JV's)
|
25,665
|
|
1.50% Convertible
Notes due 2018
|
295,050
|
Unrestricted
International Cash
|
68,511
|
|
Variable Funding
Note
|
100,000
|
Restricted
Cash
|
177,269
|
|
Senior Secured Term
Loan
|
263,720
|
|
|
|
|
|
Total Cash
|
$326,680
|
|
Total Debt (Face
Value)
|
$1,310,554
|
Free Cash Flow (3)
The Company generated approximately $139.9 million of free cash flow in the fourth
quarter of 2016, a 144% increase as compared to approximately
$57.3 million in the fourth quarter
of 2015. In 2016, the Company generated approximately $250.8 million of free cash flow, a 24% increase
as compared to approximately $202.4
million in 2015.
Free Cash Flow
Reconciliation:
|
|
|
|
|
|
|
|
($, 000's)
|
|
|
|
|
|
|
|
|
Three Months Ended
Dec. 31,
|
|
Year Ended Dec.
31,
|
|
2016
|
2015
|
%
Change
|
|
2016
|
2015
|
%
Change
|
Net cash provided by
operating activities
|
$36,398
|
$55,227
|
-34%
|
|
$115,326
|
$190,241
|
-39%
|
Plus:
Cash from sale of Sharper Image
|
98,250
|
-
|
NA
|
|
98,250
|
-
|
NA
|
Plus:
Cash from sale of Badgley
Mischka
|
-
|
-
|
-
|
|
14,000
|
-
|
NA
|
Plus:
Cash from sale of equity
interest in BBC Ice Cream
|
-
|
-
|
-
|
|
3,500
|
-
|
NA
|
Plus:
Cash from sale of equity
interest in China
|
-
|
-
|
NA
|
|
15,415
|
-
|
NA
|
Plus:
Cash received from sale of
trademarks
|
8,458
|
6,319
|
34%
|
|
14,595
|
24,192
|
-40%
|
Plus:
Cash from notes receivable
from licensees
|
4,112
|
2,416
|
70%
|
|
11,962
|
11,477
|
4%
|
Less:
Capital Expenditures
|
(2,592)
|
(299)
|
767%
|
|
(3,636)
|
(1,433)
|
154%
|
Less:
Distributions to non-controlling interests
|
(4,696)
|
(6,342)
|
-26%
|
|
(18,609)
|
(22,080)
|
-16%
|
Free Cash
Flow
|
$139,930
|
$57,321
|
144%
|
|
$250,803
|
$202,397
|
24%
|
2017 Guidance
The Company is providing guidance for 2017 as follows:
- The Company expects full year 2017 revenue to be in a range of
approximately $350 million to $365
million. This compares to revenue of approximately
$359 million in 2016, when excluding
revenue from the Sharper Image brand.
- The Company expects 2017 GAAP EPS to be in a range of
$0.43 to $0.58. GAAP EPS in
2017 is expected to include approximately $0.15 related to non-cash interest expense,
$0.05 of estimated special charges,
and a $0.07 loss related to the early
extinguishment of debt.
- The Company expects 2017 non-GAAP EPS to be in a range
$0.70 to $0.85. This compares to an
adjusted EPS of approximately $0.78
in 2016, when excluding gains from the sale of the Sharper Image
and Badgley Mischka brands, earnings associated with those brands
and using the Company's current diluted share count.
- The Company expects to generate free cash flow in 2017 of
approximately $105 million to $125
million.
Non-GAAP net income, non-GAAP diluted EPS and Free Cash Flow are
non-GAAP metrics, and reconciliation tables for each are included
in this press release.
(1)
|
In the fourth quarter
of 2016, the Company will recognize a non-cash impairment charge
related to certain of the Company's trademarks and goodwill, which
is currently estimated by management to be approximately $443
million. The amount of such impairment charge remains subject to
review. As such, the amount of the impairment charge is
subject to revision, which revision would also result in an
adjustment to the Company's operating income, income before tax,
income taxes, net income and earnings per share for the quarterly
and annual periods ended December 31, 2016.
|
Conference Call
The Company will host a conference call today at 5:00PM ET. The call can be accessed on the
Company's website at www.iconixbrand.com.
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),
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), UMBRO (R), LEE COOPER (R), ECKO UNLTD. (R), MARC ECKO (R) ARTFUL DODGER (R) and STRAWBERRY
SHORTCAKE (R). In addition, Iconix owns interests in the MATERIAL
GIRL (R), PEANUTS (R), ED HARDY (R),
TRUTH OR DARE (R), MODERN AMUSEMENT (R), BUFFALO (R), NICK GRAHAM (R), HYDRAULIC (R), and PONY (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.
Forward Looking Statements
In addition to historical information, this press release
contains forward-looking statements within the meaning of the
federal securities laws. Such forward-looking statements include
projections regarding the Company's beliefs and expectations about
future performance and, in some cases, may be identified by words
like "anticipate," "assume," "confident," "believe," "continue,"
"could," "estimate," "expect," "intend," "may," "plan,"
"potential," "predict," "project," "future," "will," "seek" and
similar terms or phrases. These statements include, among others,
statements relating to additional information that may require the
Company to restate further the financial statements and other
financial data in the periods impacted by the restatement and/or
additional historical periods. These statements are based on the
Company's beliefs and assumptions, which in turn are based on
currently available information. Forward-looking statements involve
known and unknown risks and uncertainties, which could cause actual
results to differ materially from those contained in any
forward-looking statement and could harm the Company's business,
prospects, results of operations, liquidity and financial condition
and cause its stock price to decline significantly. Many of these
factors are beyond the Company's ability to control or predict.
Important factors that could cause the Company's actual results to
differ materially from those indicated in the forward-looking
statements include, among others: the ability of the Company's
licensees to maintain their license agreements or to produce and
market products bearing the Company's brand names, the Company's
ability to retain and negotiate favorable licenses, the Company's
ability to meet its outstanding debt obligations and the events and
risks referenced in the sections titled "Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2015, as amended,
subsequent Quarterly Reports on Form 10-Q and in other documents
filed or furnished with the Securities and Exchange Commission.
These forward-looking statements are made only as of the date
hereof, and, except as required by applicable law, the Company
undertakes no obligation to update or revise publicly any
forward-looking statements.
Contact Information:
Jaime
Sheinheit
Iconix Brand Group
VP, Investor Relations
jsheinheit@iconixbrand.com
212.730.0030
Unaudited
Condensed Consolidated Income Statements
|
|
|
|
|
|
(in thousands,
except earnings per share data)
|
|
|
|
|
|
|
|
|
Three Months Ended
Dec. 31,
|
|
Year Ended Dec.
31,
|
|
2016
|
2015
|
%
Change
|
|
2016
|
2015
|
%
Change
|
|
|
|
|
|
|
|
|
Licensing
revenue
|
$87,142
|
$94,654
|
-8%
|
|
368,461
|
379,197
|
-3%
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
57,335
|
56,621
|
1%
|
|
206,589
|
204,946
|
1%
|
Depreciation and
amortization
|
960
|
1,083
|
-11%
|
|
3,461
|
4,720
|
-27%
|
Equity earnings on
joint ventures
|
(448)
|
(2,330)
|
-81%
|
|
(3,578)
|
(5,330)
|
-33%
|
Gain on sale of
trademarks
|
(28,113)
|
-
|
NA
|
|
(38,104)
|
-
|
NA
|
Goodwill impairment
(1)
|
18,331
|
35,132
|
NA
|
|
18,331
|
35,132
|
NA
|
Asset impairment
(1)
|
424,890
|
402,392
|
6%
|
|
424,890
|
402,392
|
6%
|
|
|
|
|
|
|
|
|
Operating income
(loss) (1)
|
($385,813)
|
($398,245)
|
3%
|
|
($243,128)
|
($262,663)
|
7%
|
|
|
|
|
|
|
|
|
Other (income)
expenses
|
|
|
|
|
|
|
|
Interest expense
|
23,065
|
21,283
|
8%
|
|
97,542
|
86,233
|
13%
|
Interest income
|
(345)
|
(1,201)
|
-71%
|
|
(1,580)
|
(4,230)
|
-63%
|
Other income, net
|
(7,328)
|
(124)
|
NA
|
|
(17,508)
|
(50,904)
|
-66%
|
Loss on extinguishment of debt, net
|
14,376
|
-
|
NA
|
|
5,903
|
-
|
NA
|
Foreign currency translation loss (gain)
|
(1,355)
|
(1,801)
|
-25%
|
|
(1,484)
|
(9,488)
|
-84%
|
Other expenses -
net
|
28,413
|
18,157
|
56%
|
|
82,873
|
21,611
|
283%
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes (1)
|
($414,226)
|
($416,402)
|
1%
|
|
($326,001)
|
($284,274)
|
-15%
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes (1)
|
(104,723)
|
(140,427)
|
-25%
|
|
(76,492)
|
(95,344)
|
-20%
|
|
|
|
|
|
|
|
|
Net income (loss)
(1)
|
($309,503)
|
($275,975)
|
-12%
|
|
($249,509)
|
($188,930)
|
-32%
|
|
|
|
|
|
|
|
|
Less: Net income
(loss) attributable to non-controlling interest
|
(11,955)
|
(12,962)
|
8%
|
|
2,625
|
373
|
604%
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Iconix Brand Group, Inc. (1)
|
($297,548)
|
($263,014)
|
-13%
|
|
($252,134)
|
($189,303)
|
-33%
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: (1)
|
|
|
|
|
|
|
|
Basic
|
(5.30)
|
(5.44)
|
3%
|
|
(4.82)
|
(3.92)
|
-23%
|
|
|
|
|
|
|
|
|
Diluted
|
(5.30)
|
(5.44)
|
3%
|
|
(4.82)
|
(3.92)
|
-23%
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
56,147
|
48,310
|
16%
|
|
52,338
|
48,293
|
8%
|
|
|
|
|
|
|
|
|
Diluted
|
56,147
|
48,310
|
16%
|
|
52,338
|
48,293
|
8%
|
|
|
The following tables
detail unaudited reconciliations from U.S. GAAP to non-GAAP amounts
and include reconciliations related to ASC Topic 470 as it relates
to accounting for convertible debt, incremental dilutive shares
related to our convertible debt that are covered by our existing
convertible note hedges, non-cash gains related to the
re-measurement of investments, foreign currency translation, gains
or losses on the extinguishment of debt, write-down of certain
intangible assets, settlement with former CEO of unearned incentive
comp, gain on sale of equity interest in Complex Media and special
charges related to professional fees associated with the continuing
correspondence with the Staff of the SEC, the SEC investigation,
internal investigations, the previously disclosed class action and
derivative litigations, and costs related to the transition of
Iconix management.
|
|
Note: All items in
the following reconciliation tables are attributable to Iconix
Brand Group, Inc. and exclude results related to non-controlling
interests. Certain numbers may not add due to rounding.
|
Non-GAAP Net
Income & Diluted EPS Reconciliation: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
EPS
|
|
Three Months Ended
Dec. 31,
|
|
Three Months Ended
Dec. 31,
|
|
2016
|
2015
|
%
Change
|
|
2016
|
2015
|
%
Change
|
|
|
|
|
|
|
|
|
GAAP net income &
EPS (1)
|
(297,548)
|
(263,014)
|
-13%
|
|
($5.30)
|
($5.44)
|
NA
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
non-cash interest related to ASC 470
|
4,059
|
7,343
|
-45%
|
|
$0.07
|
$0.15
|
-52%
|
loss on extinguishment of debt
|
14,376
|
-
|
NA
|
|
$0.26
|
-
|
NA
|
special charges
|
3,866
|
1,646
|
135%
|
|
$0.07
|
$0.03
|
102%
|
foreign currency translation gain/(loss)
|
(1,475)
|
(2,051)
|
-28%
|
|
($0.03)
|
($0.04)
|
-38%
|
write-down of certain intangible assets
|
425,843
|
420,800
|
1%
|
|
$7.58
|
$8.71
|
-13%
|
settlement w/ former CEO of unearned incentive comp
|
(7,263)
|
-
|
NA
|
|
($0.13)
|
$0.00
|
NA
|
Deduct: Income taxes
related to above
|
(119,846)
|
(152,434)
|
-21%
|
|
($2.13)
|
($3.16)
|
-32%
|
Net
|
319,560
|
275,304
|
16%
|
|
$5.69
|
$5.70
|
0%
|
|
|
|
|
|
|
|
|
Non-GAAP net income
& EPS
|
$22,012
|
$12,290
|
79%
|
|
$0.38
|
$0.25
|
52%
|
|
|
|
|
|
|
|
|
|
Year Ended Dec.
31,
|
|
Year Ended Dec.
31,
|
|
2016
|
2015
|
%
Change
|
|
2016
|
2015
|
%
Change
|
|
|
|
|
|
|
|
|
GAAP net income &
EPS (1)
|
(252,134)
|
(189,303)
|
33%
|
|
($4.82)
|
($3.92)
|
23%
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
non-cash interest related to ASC 470
|
22,398
|
28,643
|
-22%
|
|
$0.38
|
$0.55
|
-32%
|
gain on sale of equity interest in Complex Media
|
(10,164)
|
-
|
NA
|
|
($0.19)
|
-
|
NA
|
non-cash gain related to investment in joint venture
|
-
|
(49,990)
|
NA
|
|
-
|
($1.04)
|
NA
|
loss on extinguishment of debt
|
5,903
|
-
|
NA
|
|
$0.11
|
-
|
NA
|
special charges
|
14,314
|
11,136
|
29%
|
|
$0.27
|
$0.23
|
19%
|
foreign currency translation gain
|
(1,333)
|
(9,921)
|
-87%
|
|
($0.03)
|
($0.21)
|
-88%
|
write-down of certain intangible assets
|
425,843
|
420,800
|
1%
|
|
$8.14
|
$8.71
|
-7%
|
settlement w/ former CEO of unearned incentive comp
|
(7,263)
|
-
|
NA
|
|
($0.14)
|
-
|
NA
|
Deduct: Income taxes
related to above
|
(123,264)
|
(144,962)
|
-15%
|
|
($2.36)
|
($3.00)
|
-21%
|
Net
|
326,434
|
255,706
|
28%
|
|
$6.19
|
$5.25
|
18%
|
|
|
|
|
|
|
|
|
Non-GAAP net income
& EPS
|
$74,300
|
$66,403
|
12%
|
|
$1.37
|
$1.33
|
3%
|
Non-GAAP weighted
average diluted shares reconciliation: (2)
|
|
|
|
|
Three Months Ended
Dec. 31,
|
|
Year Ended Dec.
31,
|
|
2016
|
2015
|
%
Change
|
|
2016
|
2015
|
%
Change
|
|
|
|
|
|
|
|
|
GAAP weighted average
diluted shares
|
56,147
|
48,310
|
16%
|
|
52,338
|
48,293
|
8%
|
|
|
|
|
|
|
|
|
Add: anti-dilutive
shares resulting from net loss
|
1,913
|
1,647
|
16%
|
|
1,804
|
2,070
|
-13%
|
Less: additional
incremental dilutive shares covered by hedges for:
|
|
|
|
|
|
|
|
2.50% Convertible Notes
|
-
|
-
|
-
|
|
-
|
(256)
|
NA
|
1.50% Convertible Notes
|
-
|
-
|
-
|
|
-
|
(331)
|
NA
|
subtotal
|
-
|
-
|
-
|
|
-
|
(587)
|
NA
|
|
|
|
|
|
|
|
|
Non-GAAP weighted
avg. diluted shares
|
58,060
|
49,957
|
16%
|
|
54,142
|
49,776
|
9%
|
Forecasted
Non-GAAP Diluted EPS Reconciliation (2)
|
Year
Ending
|
|
Dec. 31,
2017
|
|
Low
|
High
|
|
|
|
Forecasted GAAP
diluted EPS
|
$0.43
|
$0.58
|
|
|
|
Adjustments for
non-cash interest related to ASC 470, net of tax
|
$0.15
|
$0.15
|
Special charges, net
of tax
|
$0.05
|
$0.05
|
Loss on
extinguishment of debt
|
$0.07
|
$0.07
|
|
|
|
Forecasted Non-GAAP
Diluted EPS
|
$0.70
|
$0.85
|
Forecasted
Reconciliation of Free Cash Flow: (3)
|
Year
Ending
|
|
Dec. 31,
2017
|
|
Low
|
High
|
|
|
|
Net cash provided by
operating activities
|
$110,000
|
$130,000
|
|
|
|
Plus:
cash from prior period sale of trademarks
|
13,822
|
13,822
|
Plus:
cash received on notes receivable from licensees
|
3,766
|
3,766
|
Less:
capital expenditures
|
(2,000)
|
(2,000)
|
Less:
distributions to minority interest
|
(20,500)
|
(20,500)
|
|
|
|
Free Cash
Flow
|
$105,088
|
$125,088
|
Adjusted
Operating Income : (1,4)
|
GAAP
|
|
Impairment
|
|
Adjusted
|
($, 000's)
|
Three Months
Ended Dec. 31,
|
|
Three Months
Ended Dec. 31,
|
|
Three Months
Ended Dec. 31,
|
|
2016
|
2015
|
|
2016
|
2015
|
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
Women's
|
(16,360)
|
17,847
|
|
31,478
|
2,215
|
|
15,118
|
20,062
|
Men's
|
(155,530)
|
(364,387)
|
|
162,896
|
366,473
|
|
7,367
|
2,086
|
Home
|
(41,575)
|
(30,083)
|
|
49,993
|
37,844
|
|
8,419
|
7,761
|
Entertainment
|
2,310
|
11,619
|
|
5,128
|
-
|
|
7,439
|
11,619
|
International
|
(185,672)
|
(24,116)
|
|
193,725
|
30,991
|
|
8,053
|
6,876
|
Corporate
|
11,013
|
(9,125)
|
|
-
|
-
|
|
11,013
|
(9,125)
|
Total Operating
Income
|
(385,813)
|
(398,245)
|
|
443,221
|
437,524
|
|
57,409
|
39,279
|
|
|
|
|
|
|
|
|
|
Adjusted
Operating Income: (1,4)
|
GAAP
|
|
Impairment
|
|
Adjusted
|
($, 000's)
|
Year
Ended Dec. 31,
|
|
Year
Ended Dec. 31,
|
|
Year
Ended Dec. 31,
|
|
2016
|
2015
|
|
2016
|
2015
|
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
Women's
|
62,565
|
101,074
|
|
31,478
|
2,215
|
|
94,043
|
103,289
|
Men's
|
(132,574)
|
(340,850)
|
|
162,896
|
366,473
|
|
30,322
|
25,623
|
Home
|
(18,106)
|
(7,371)
|
|
49,993
|
37,844
|
|
31,887
|
30,473
|
Entertainment
|
29,152
|
35,583
|
|
5,128
|
-
|
|
34,281
|
35,583
|
International
|
(162,986)
|
3,234
|
|
193,725
|
30,991
|
|
30,739
|
34,225
|
Corporate
|
(21,178)
|
(54,332)
|
|
-
|
-
|
|
(21,178)
|
(54,332)
|
Total Operating
Income
|
(243,128)
|
(262,664)
|
|
443,221
|
437,524
|
|
200,094
|
174,860
|
Footnotes
|
|
(1) In the
fourth quarter of 2016, the Company will recognize a non-cash
impairment charge related to certain of the Company's trademarks
and goodwill, which is currently estimated by management to be
approximately $443 million. The amount of such impairment charge
remains subject to review. As such, the amount of the
impairment charge is subject to revision, which revision would also
result in an adjustment to the Company's operating income, income
before tax, income taxes, net income and earnings per share for the
quarterly and annual periods ended December 31, 2016.
|
|
(2) 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, non-cash, non-recurring gains and charges, foreign
currency translation gains and losses, and charges related to
professional fees incurred as a result of the continuing
correspondence with the Staff of the SEC, the SEC investigation,
internal investigations, the previously disclosed class action and
derivative litigations, and costs related to the transition of
Iconix management, all 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
more reflective of the Company's business purpose, operations and
cash expenses.
|
|
Based on the average
closing stock price for the year ended December 31, 2016, there
were no potential dilutive shares related to our convertible notes
for GAAP purposes. Based on the average closing stock price
for the year ended December 31, 2015, 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) Free Cash Flow, a
non-GAAP financial measure, represents net cash provided by
operating activities, plus cash received from the sale of
trademarks and formation of joint ventures, less distributions to
non-controlling interests and capital expenditures. Free Cash
Flow excludes notes receivable from sale of trademarks and the
formation of joint ventures, cash used to acquire the membership
interests of our joint venture partners, 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
information regarding actual cash received in a specific period
from the Company's comprehensive business strategy of maximizing
the value of its brands through traditional licensing,
international joint ventures and other arrangements. We have
excluded the cash used to buy back our joint venture membership
interests from the above definition because we believe that, like
other acquisitions, such actions are capital transactions. It also
provides supplemental information to assist investors in evaluating
the Company's financial condition and ability to pursue
opportunities that enhance shareholder value.
|
|
(4) Non-GAAP
Operating Income, a non-GAAP financial measure, represents
Operating Income less the write-down of certain intangible
assets.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/iconix-brand-group-reports-financial-results-for-the-fourth-quarter--full-year-2016-300412050.html
SOURCE Iconix Brand Group, Inc.