Phillips-Van Heusen Corporation [NYSE: PVH]
reported 2007 fourth quarter and full year results.
For the fourth quarter 2007:
Earnings per share increased 17% to $0.55 from $0.47 in the prior year’s
fourth quarter.
Net income was $30.3 million compared to $26.8 million in the prior
year’s fourth quarter.
Revenue increased 5% to $584.5 million from $557.0 million in the
prior year’s fourth quarter. Notwithstanding
this increase, revenue was negatively impacted by the retail calendar
shift and the extra week of revenue (53rd week)
in 2006. Excluding the impact of the shift and the extra week, revenue
growth would have been 20%. (Please refer to the “2007
Retail Calendar Shift” section in this
release.)
For the year 2007:
Earnings per share was $3.21, an increase of 22% over the prior year’s
earnings per share of $2.64.
Net income was $183.3 million compared to prior year net income of
$155.2 million.
Revenue increased 16% to $2,425.2 million from $2,090.6 million in the
prior year.
Fourth Quarter Results
The Calvin Klein licensing business continued to fuel both revenue and
earnings growth in the fourth quarter. Total revenue growth in the
Calvin Klein licensing business was 14% and operating earnings increased
37% as compared to the prior year. This performance was driven by
continued strength across virtually all product categories, with
fragrances, jeans and underwear performing exceptionally well. The
Calvin Klein MAN fragrance, launched in the third quarter of 2007, along
with the men’s and women’s
CKIN2U and euphoria fragrance lines, continued to perform well. In
addition, jeans and underwear experienced significant international and
domestic growth which, when combined with the success of other recently
introduced product categories, further contributed to the revenue and
earnings increase.
Revenue in the Company’s combined wholesale
and retail businesses increased 4% and operating earnings decreased 10%
for the fourth quarter of 2007. Factors that negatively affected
operating earnings included: (i) approximately $8 million of start-up
costs associated with the Company’s
Timberland wholesale sportswear business and Calvin Klein specialty
retail stores; (ii) the negative impact on 2007 of the extra week of
revenue (53rd week) in 2006, which resulted in
the 13 week period in the fourth quarter of 2007 being compared to a 14
week period in 2006; (iii) the calendar shift caused by the 53rd
week in 2006, which resulted in a week of holiday selling being reported
in the third quarter of 2007 when the same calendar week in 2006 was
reported in the fourth quarter; and (iv) heavy promotional selling as a
result of the weak retail environment during and after the holiday
season in order to maintain clean inventory levels heading into fiscal
2008, which negatively affected the Company’s
moderate wholesale sportswear and retail businesses. Partially
offsetting these negative factors was strong earnings growth in the
dress furnishings, IZOD women’s sportswear
and Calvin Klein outlet retail businesses. Earnings for the fourth
quarter were also positively impacted by a shift in net advertising
spending, as approximately $10 million shifted from the fourth quarter
into the third quarter when compared to the prior year.
Revenue growth in the fourth quarter of 2007 in the Company’s
combined wholesale and retail businesses was negatively impacted by the
calendar shift and the extra week of revenue in 2006 as discussed above.
Excluding the impact of the calendar shift and the extra week, revenue
increased 21% for these businesses. (Please refer to the “2007
Retail Calendar Shift” section in this
release.) This revenue increase was driven by the addition of sales
associated with the Company’s new Neckwear
Group, which was formed subsequent to the acquisition of substantially
all of the assets of Superba, Inc. in January 2007, and the Company’s
IZOD women’s sportswear business, which began
shipping for Fall 2007. Comparable store sales for the thirteen weeks
increased 1% when compared to the same thirteen week period in the prior
year, with the Company’s Calvin Klein outlet
retail business achieving comparable sales growth of 8%, partially
offset by a 1% comparable sales decline in the Company’s
heritage outlet retail businesses.
Full Year Results
Full year results were driven by a 27% increase in revenue and,
excluding the gain of $32.0 million in 2006 on the sale of certain
investments, a 38% increase in operating earnings in the Calvin Klein
licensing business as compared to the prior year. The 38% increase in
operating earnings translated to an operating margin increase of 400
basis points, driven by the significant financial leverage in the
licensing model. Including the gain on sale in the prior year, operating
earnings in 2007 in the Calvin Klein licensing business increased 3%
over 2006.
The Company’s combined wholesale and retail
businesses achieved a 15% increase in total revenue and an 18% increase
in operating earnings, despite the difficult fourth quarter, driven, in
part, by the strong results of the Company’s
new Neckwear Group. The 18% increase includes expenses of $11.3 million
incurred in 2006 associated with the closing of the Company’s
manufacturing facility in Ozark, Alabama.
Balance Sheet
The Company ended the year with $270 million in cash, a decrease of $96
million compared with the prior year. This decrease was primarily driven
by the completion during the fourth quarter of the Company’s
stock repurchase program, in which the Company utilized $200 million of
its cash to repurchase 5.2 million shares of its common stock.
Inventories ended the year clean and were 13% over the prior year,
primarily due to the new IZOD women’s
sportswear business, the new Calvin Klein specialty retail stores and
the newly acquired Calvin Klein Collection businesses. Inventories were
up 4% excluding these new businesses, which supported an earlier Easter
selling season.
CEO Comments
Commenting on these results, Emanuel Chirico, Chairman and Chief
Executive Officer, noted, “Given the
difficult retail environment, we are extremely pleased with our fourth
quarter and full year results. Calvin Klein continues to exhibit
strength both domestically and internationally and is driving our
revenue and earnings growth. Our strategy of operating multiple brands
across multiple channels of distribution has also helped us achieve our
strong results in spite of the macroeconomic challenges that the overall
retail environment has been facing. Additionally, it enables us to
continue investing in new areas of growth, as well as in marketing in
order to maintain the strength of our brands and keep them relevant to
our target consumers.”
Mr. Chirico continued, “We remain focused on
investing in and growing our businesses and maximizing the potential of
each of our brands. Specific growth initiatives include the 2007
launches of both IZOD women’s sportswear and
Calvin Klein specialty retail, as well as the upcoming launch of
Timberland men’s sportswear, targeted for
Fall 2008. In addition, we were able to bring in-house the Calvin Klein,
IZOD and Eagle neckwear businesses, allowing us to further leverage the
operating platform of our Neckwear Group. There continues to be high
global demand for our Calvin Klein brand, and this demand continues to
grow as we enter into additional markets, such as China, India and
Russia, and new product categories, such as cosmetics. As a testament to
our commitment to grow all of our brands internationally, we have
recently expanded our wholesale operations to include sales of certain
of our products to department and specialty stores throughout Canada and
parts of Europe, and have entered into many new license agreements for
our brands with partners across the globe. In fact, approximately 25% of
our consolidated earnings before interest and taxes is generated
internationally, driven by the significant international component of
the Calvin Klein licensing business. As we move forward into 2008, we
will continue to keep these international growth opportunities in the
forefront of our strategy.”
Mr. Chirico concluded, “Our strong earnings
growth and positive cash flow over the past few years has enabled us to
return value to our stockholders through a $200 million stock repurchase
program, which we completed in fiscal 2007. Even subsequent to this
repurchase, we remain with $270 million in cash. Our strong balance
sheet, coupled with significant credit availability, allows us to
continue to seek opportunities for acquisitions that will enhance our
future growth. We will also continue to make significant investments in
2008 in people and infrastructure to support our new growth initiatives,
as well as the growth in our existing businesses. We believe that our
multi-brand, multi-channel business model coupled with the investments
in our businesses provide us with a solid foundation as we face and meet
the challenges of 2008.”
2008 Guidance
Earnings Per Share and Revenue
The Company is planning 2008 earnings per share in a range of $3.30 to
$3.40, which reflects a cautious view of 2008 and a belief that the
current difficult economic environment will continue throughout the
year. Total revenue for the full year 2008 is projected to be
approximately $2.6 billion, or an increase of approximately 7% to 8%
over 2007.
For the full year, the Company is currently projecting for the Calvin
Klein licensing business that revenue will grow 10% and operating income
will grow between 15% and 17%. Total revenue for the Company’s
wholesale and retail businesses is planned to grow, in the aggregate,
between 6% and 7%. Operating margins for the wholesale and retail
businesses, however, will be impacted by pressure at retail and are
projected to be down 150 to 200 basis points.
For the first quarter of 2008, earnings per share is expected to be
$0.86 to $0.88. First quarter revenue is expected to be approximately
$615 million to $625 million in 2008, or an increase of 4% to 6% over
2007.
The first quarter projection takes into account approximately $5 million
of start-up costs associated with the Calvin Klein specialty retail and
Timberland sportswear businesses. Additional start-up costs of
approximately $5 million are also expected to be incurred in these
businesses in the second quarter of 2008. As a result, full year
start-up costs of approximately $10 million are expected to occur in the
first half of 2008, while start-up costs in 2007 occurred principally in
the second half.
The first quarter and full year guidance anticipates that the heritage
outlet retail businesses will be under significant sales pressure. As a
result, the Company is planning a comparable store sales decrease of 5%
in these heritage businesses for the first quarter and a decrease of 2%
to 3% for the full year. In contrast, in the Calvin Klein outlet retail
business, comparable store sales growth is planned at 5% for both the
first quarter and full year. Comparable store sales for the Company’s
total outlet retail business are projected to be down 3% for the first
quarter and down 1% to 2% for the year.
Cash Flow
Cash flow for 2008 is estimated to be $80 million to $90 million, which
is after approximately $100 million of capital spending to support the
Company’s new growth initiatives, as well as
for infrastructure investments to support the growth of its existing
businesses.
2007 Retail Calendar Shift
Quarterly comparative revenue growth in 2007 was impacted by the extra
week of revenue (53rd week) in 2006. The
impact on the full year 2006 of the extra week of revenue is relatively
immaterial at approximately $10 million. However, the impact of the 53rd
week in 2006 is causing the 13 calendar weeks in each fiscal quarter of
2007 to be compared to a different 13 calendar week period (14 calendar
week period in the fourth quarter) in 2006. The following table presents
adjustments to the Company’s 2006 revenue
that would be required to both eliminate the effect of the 53rd
week, and to adjust the 2006 revenue to align with the 2007 fiscal
calendar:
($ in millions)
First Quarter
$15.0
Second Quarter
15.0
Third Quarter
30.0
Fourth Quarter
(70.0
)
Year
($10.0
)
2006 Non-GAAP Exclusions
Non-GAAP earnings per share in 2006 excludes (a) a pre-tax gain of $32.0
million associated with the sale on January 31, 2006 by the Company of
minority interests in certain entities that operate various licensed
Calvin Klein jeans and sportswear businesses in Europe and Asia; (b)
pre-tax costs of $10.5 million resulting from the departure in February
2006 of Mark Weber, the Company’s former
Chief Executive Officer; (c) pre-tax costs of $11.3 million associated
with the closing in May 2006 of the Company’s
apparel manufacturing facility in Ozark, Alabama; and (d) an inducement
payment of $10.2 million and costs of $0.7 million associated with the
secondary common stock offering completed in the second quarter of 2006.
Please see reconciliations of GAAP to non-GAAP earnings per share for
2006 in this release.
The Company webcasts its conference calls to review its earnings
releases. The Company’s conference call to
review its year end earnings release is scheduled for Tuesday, March 25,
2008 at 11:00 a.m. EST. Please log on either to the Company’s
web site at www.pvh.com and go
to the News Releases page or to www.companyboardroom.com
to listen to the live webcast of the conference call. The webcast will
be available for replay for one year after it is held, commencing
approximately two hours after the live broadcast ends. Please log on to www.pvh.com
or www.companyboardroom.com
as described above to listen to the replay. In addition, an audio replay
of the conference call is available for 48 hours starting one hour after
it is held. The replay of the conference call can be accessed by calling
1-888-203-1112 and using passcode # 4054238. 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, earnings and cash flows, plans, strategies, objectives,
expectations and intentions, are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements are
inherently subject to risks and uncertainties, many of which cannot be
predicted with accuracy, and some of which might not be anticipated,
including, without limitation, the following: (i) the Company’s
plans, strategies, objectives, expectations and intentions are subject
to change at any time at the discretion of the Company; (ii) the levels
of sales of the Company’s apparel, footwear
and related products, both to its wholesale customers and in its retail
stores, the levels of sales of the Company’s
licensees at wholesale and retail, and the extent of discounts and
promotional pricing in which the Company and its licensees and other
business partners are required to engage, all of which can be affected
by weather conditions, changes in the economy, fuel prices, reductions
in travel, fashion trends, consolidations, repositionings and
bankruptcies in the retail industries, repositionings of brands by the
Company’s licensors and other factors; (iii)
the Company’s plans and results of operations
will be affected by the Company’s ability to
manage its growth and inventory, including the Company’s
ability to continue to realize revenue growth from developing and
growing Calvin Klein; (iv) the Company’s
operations and results could be affected by quota restrictions and the
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 (particularly
petroleum-based synthetic fabrics, which are currently in high demand),
the Company’s ability to adjust timely to
changes in trade regulations and the migration and development of
manufacturers (which can affect where the Company’s
products can best be produced), and civil conflict, war or terrorist
acts, the threat of any of the foregoing, or political and labor
instability in the United States or any of the countries where the
Company’s products are or are planned to be
produced; (v) disease epidemics and health related concerns, which could
result in closed factories, reduced workforces, scarcity of raw
materials and scrutiny or embargoing of goods produced in infected
areas; (vi) acquisitions and issues arising with acquisitions and
proposed transactions, including without limitation, the ability to
integrate an acquired entity into the Company with no substantial
adverse affect on the acquired entity’s or
the Company’s existing operations, employee
relationships, vendor relationships, customer relationships or financial
performance; (vii) the failure of the Company’s
licensees to market successfully licensed products or to preserve the
value of the Company’s brands, or their
misuse of the Company’s brands and (viii)
other risks and uncertainties indicated from time to time in the Company’s
filings with the Securities and Exchange Commission.
This press release includes, and the conference call/webcast will
include, certain non-GAAP financial measures, as defined under SEC
rules. A reconciliation of these measures is included in the financial
information later in this release, as well as in the Company’s
Current Report on Form 8-K furnished to the SEC in connection with this
earnings release, which is available on the Company’s
website at www.pvh.com and on the SEC’s
website at www.sec.gov.
The Company does not undertake any obligation to update publicly any
forward-looking statement, including, without limitation, any estimate
regarding revenue, earnings or cash flows, whether as a result of the
receipt of new information, future events or otherwise.
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Income Statements
(In thousands, except per share data)
Quarter Ended
Quarter Ended
2/3/08
2/4/07
Net sales
$
507,007
$
487,629
Royalty revenue
54,985
51,952
Advertising and other revenue
22,531
17,440
Total revenue
$
584,523
$
557,021
Gross profit on net sales
$
214,837
$
210,220
Gross profit on royalty, advertising and other revenue
77,516
69,392
Total gross profit
292,353
279,612
Selling, general and administrative expenses
239,636
232,453
Earnings before interest and taxes
52,717
47,159
Interest expense, net
4,487
2,972
Pre-tax income
48,230
44,187
Income tax expense
17,896
17,429
Net income
$
30,334
$
26,758
Diluted net income per common share(1)
$
0.55
$
0.47
(1) Please see Note 2a to the Notes
to Consolidated Income Statements for a reconciliation of diluted
net income per common share.
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Income Statements
(In thousands, except per share data)
Year Ended
2/4/07
Results
Year Ended
Under
Non-GAAP
2/3/08
GAAP
Adjustments(1)
Results(1)
Net sales
$
2,127,721
$
1,849,172
$
1,849,172
Royalty revenue
214,425
182,336
182,336
Advertising and other revenue
83,029
59,140
59,140
Total revenue
$
2,425,175
$
2,090,648
$
2,090,648
Gross profit on net sales
$
893,533
$
788,388
$
788,388
Gross profit on royalty,
advertising and other revenue
297,454
241,476
241,476
Total gross profit
1,190,987
1,029,864
1,029,864
Selling, general and administrative expenses
882,492
796,601
$
(21,829
)
774,772
Gain on sale of investments
3,335
32,043
(32,043
)
Earnings before interest and taxes
311,830
265,306
(10,214
)
255,092
Interest expense, net
17,009
16,873
16,873
Pre-tax income
294,821
248,433
(10,214
)
238,219
Income tax expense
111,502
93,204
(3,789
)
89,415
Net income
183,319
155,229
(6,425
)
148,804
Preferred stock dividends on converted stock
3,230
3,230
Inducement payment and offering costs
10,948
(10,948
)
Net income available to common stockholders
$
183,319
$
141,051
$
4,523
$
145,574
Diluted net income per common share(2)
$
3.21
$
2.64
$
2.62
(1)
Adjustments for the year ended February 4, 2007 consist of (a) a
pre-tax gain of $32.0 million associated with the sale by the
Company on January 31, 2006 of minority interests in certain
entities that operate various licensed Calvin Klein jeans and
sportswear businesses in Europe and Asia; (b) pre-tax costs of
$10.5 million resulting from the departure in February 2006 of
Mark Weber, the Company's former Chief Executive Officer; (c)
pre-tax costs of $11.3 million associated with closing the
Company's apparel manufacturing facility in Ozark, Alabama in May
2006; and (d) an inducement payment and offering costs of $10.9
million. The inducement payment and offering costs related to the
conversion of the remaining outstanding shares of the Company's
Series B convertible preferred stock by the holders of such stock
into 11.6 million shares of common stock and the subsequent sale
in a registered offering of 10.1 million shares of such stock by
the holders in May 2006. The inducement payment and offering costs
include (a) an inducement payment of $0.88 per share of common
stock received upon conversion, or an aggregate of $10.2 million;
and (b) certain costs, totaling $0.7 million, incurred by the
Company in connection with the secondary common stock offering.
The inducement payment was based on the net present value of the
dividends that the Company would have been obligated to pay the
holders of the Series B convertible preferred stock through the
earliest date on which it was estimated that the Company would
have had the right to convert the Series B convertible preferred
stock, net of the net present value of the dividends payable on
the shares of common stock into which the Series B convertible
preferred stock was convertible over the same period.
(2)
Please see Note 2b to the Notes to Consolidated Income Statements
for a reconciliation of diluted net income per common share.
Notes to Consolidated Income Statements:
1. The Company believes presenting non-GAAP results for the year ended
February 4, 2007 provides useful information to investors because many
investors make decisions based on the ongoing operations of an
enterprise. The Company believes that investors often look at ongoing
operations as a measure of assessing performance and as a basis for
comparing past results against future results. Thus, the Company
believes that the following items do not represent normal operating
items and, as such, has provided reconciliations to present its ongoing
results of operations excluding these items: (a) the gain realized in
2006 associated with the sale by the Company on January 31, 2006 of
minority interests in certain entities that operate various licensed
Calvin Klein jeans and sportswear businesses in Europe and Asia; (b)
costs resulting from the departure in February 2006 of Mark Weber, the
Company’s former Chief Executive Officer; (c)
costs associated with the May 2006 closing of the Company’s
apparel manufacturing facility in Ozark, Alabama; and (d) the inducement
payment and offering costs associated with the conversion of preferred
shares and the sale in a registered offering of shares of common stock
issued upon conversion that were paid and/or incurred in 2006. The
Company uses its results excluding these items to discuss its business
with investment institutions, the Company’s
Board of Directors and others. Such results are also the basis for
certain incentive compensation calculations.
2a. The Company computed its quarterly diluted net income per
common share as follows:
(In thousands, except per share data)
Quarter Ended
Quarter Ended
2/3/08
2/4/07
Net income
$
30,334
$
26,758
Weighted average common shares outstanding
54,038
55,678
Weighted average impact of dilutive securities
1,010
1,634
Total shares
55,048
57,312
Diluted net income per common share
$
0.55
$
0.47
2b. The Company computed its annual diluted net income per common
share as follows:
(In thousands, except per share data)
Year Ended
2/4/07
Results
Non-
Year Ended
Under
GAAP
2/3/08
GAAP
Adjustments
Results
Net income
$
183,319
$
155,229
$
(6,425)
(1)
$
148,804
Less:
Preferred stock dividends on converted stock
3,230
(3,230)
(2)
Inducement payment and offering costs
10,948
(10,948)
(3)
Net income available to common stockholders
$
183,319
$
141,051
$
7,753
$
148,804
Weighted average common shares outstanding
55,695
52,110
52,110
Weighted average impact of dilutive securities
1,387
1,373
1,373
Weighted average impact of converted preferred stock
3,241
(4)
3,241
Total shares
57,082
53,483
3,241
56,724
Diluted net income per common share
$
3.21
$
2.64
$
2.62
(1)
Includes (a) the gain associated with the sale by the Company on
January 31, 2006 of minority interests in certain entities that
operate various licensed Calvin Klein jeans and sportswear
businesses in Europe and Asia; (b) costs resulting from the
departure in February 2006 of Mark Weber, the Company's former Chief
Executive Officer; and (c) costs associated with the closing in May
2006 of the Company's apparel manufacturing facility in Ozark,
Alabama.
(2)
Elimination of dividends on preferred stock which would not have
been included in the diluted net income per common share computation
under the if-converted method if the inducement payment and offering
costs had not been incurred. Eliminating such costs requires a
recalculation when applying the if-converted method of calculating
diluted net income per common share.
(3)
Elimination of the inducement payment and offering costs associated
with the conversion of preferred shares and the sale in a registered
offering of shares of common stock issued upon conversion that were
paid and/or incurred in May 2006. The inducement payment and
offering costs include (a) an inducement payment of $0.88 per share
of common stock received upon conversion, or an aggregate of $10.2
million; and (b) certain costs, totaling $0.7 million, incurred by
the Company in connection with the secondary common stock offering.
(4)
Additional shares which would have been included in the diluted net
income per common share computation under the if-converted method if
the inducement payment and offering costs had not been incurred.
PHILLIPS-VAN HEUSEN CORPORATION
Consolidated Balance Sheets
(In thousands)
February 3,
February 4,
2008
2007
ASSETS
Current Assets:
Cash and Cash Equivalents
$
269,914
$
366,099
Trade Receivables
154,355
92,948
Other Receivables
31,622
6,418
Inventories
322,223
284,894
Other Current Assets
58,105
49,504
Total Current Assets
836,219
799,863
Property, Plant and Equipment
232,028
172,040
Goodwill and Other Intangible Assets
1,062,079
1,013,556
Other Assets
42,068
27,886
$
2,172,394
$
2,013,345
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts Payable and Accrued Expenses
$
360,148
$
298,026
Other Liabilities
456,411
373,624
Long-Term Debt
399,552
399,538
Stockholders’ Equity
956,283
942,157
$
2,172,394
$
2,013,345
PHILLIPS-VAN HEUSEN CORPORATION
Business Data
(In thousands)
Quarter
Quarter
Ended
Ended
2/3/08
2/4/07
Revenue – Wholesale
and Retail
Net sales
$
507,007
$
487,629
Royalty revenue
5,953
6,632
Advertising and other revenue
1,566
1,443
Total
514,526
495,704
Revenue – Calvin Klein
Licensing
Royalty revenue
49,032
45,320
Advertising and other revenue
20,965
15,997
Total
69,997
61,317
Total Revenue
Net sales
507,007
487,629
Royalty revenue
54,985
51,952
Advertising and other revenue
22,531
17,440
Total
$
584,523
$
557,021
Operating earnings – Wholesale and Retail
$
36,070
$
40,075
Operating earnings – Calvin Klein
Licensing
33,367
24,355
Corporate expenses
16,720
17,271
Earnings before interest and taxes
$
52,717
$
47,159
PHILLIPS-VAN HEUSEN CORPORATION
Business Data
(In thousands, except percentages)
Year Ended
2/4/07
Results
Year Ended
Under
Non-GAAP
2/3/08
GAAP
Adjustments
Results
Revenue – Wholesale
and Retail
Net sales
$
2,127,721
$
1,849,172
$
1,849,172
Royalty revenue
24,682
26,455
26,455
Advertising and other revenue
7,475
6,420
6,420
Total
2,159,878
1,882,047
1,882,047
Revenue – Calvin Klein
Licensing
Royalty revenue
189,743
155,881
155,881
Advertising and other revenue
75,554
52,720
52,720
Total
265,297
208,601
208,601
Total Revenue
Net sales
2,127,721
1,849,172
1,849,172
Royalty revenue
214,425
182,336
182,336
Advertising and other revenue
83,029
59,140
59,140
Total
$
2,425,175
$
2,090,648
$
2,090,648
Operating earnings – Wholesale and Retail
$
241,251
$
205,055
$
11,294(2
)
$
216,349
Operating earnings – Calvin Klein
Licensing
128,868(1
)
125,090
(32,043
)(3)
93,047
Corporate expenses
58,289
64,839
(10,535
)(4)
54,304
Earnings before interest and taxes
$
311,830
$
265,306
$
(10,214
)
$
255,092
The domestic and international components of earnings before interest
and taxes were as follows for 2007:
Dollars
Percentage
Domestic
$
233,835
75%
International
77,995
25%
Total
$
311,830
100%
(1)
Includes a gain of $3,335 associated with the release of cash held
in escrow in connection with the sale in the first quarter of 2006
of minority interests in certain entities that operate various
licensed Calvin Klein jeans and sportswear businesses in Europe and
Asia.
(2)
Consists of costs associated with the closing in May 2006 of the
Company's apparel manufacturing facility in Ozark, Alabama.
(3)
Consists of the gain associated with the sale by the Company on
January 31, 2006 of minority interests in certain entities that
operate various licensed Calvin Klein jeans and sportswear
businesses in Europe and Asia.
(4)
Consists of costs resulting from the departure in February 2006 of
Mark Weber, the Company's former Chief Executive Officer.
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