Liz Claiborne reduces total debt to $744 million

05 Mar '09

6 min read

Liz Claiborne Inc announced earnings for the fourth quarter and full year 2008. For the fourth quarter of 2008 and on a GAAP basis, the loss per share from continuing operations was ($8.36) compared to a loss per share from continuing operations of ($4.34) for the fourth quarter of 2007.

Adjusted loss per share from continuing operations for the fourth quarter of 2008 was ($0.04) compared to adjusted diluted earnings per share ("EPS") from continuing operations of $0.26 for the fourth quarter of 2007. Net sales from continuing operations for the fourth quarter of 2008 were approximately $911 million, a decrease of $261 million, or 22.2%, from the comparable 2007 period, inclusive of a $112 million decrease associated with brands or certain brand activities that have been licensed, closed or exited and have not been presented as part of discontinued operations.

For the full year 2008, the loss per share from continuing operations was ($8.69) compared to a loss per share from continuing operations of($3.68) for the full year 2007. Adjusted diluted EPS from continuing operations for the full year 2008 were $0.80 compared to adjusted diluted EPS from continuing operations of $1.20 for the full year 2007. Net sales from continuing operations for the full year 2008 were approximately $3.985 billion, a decrease of $457 million, or 10.3%, from the comparable 2007 period, inclusive of a $412 million decrease associated with brands or certain brand activities that have been licensed, closed or exited and have not been presented as part of discontinued operations.

The adjusted results for the fourth quarter and full year 2008 and 2007 exclude the impact of expenses incurred in connection with the Company's streamlining and brand-exiting activities and non-cash goodwill and trademark impairment charges. The Company believes that the adjusted results for the fourth quarter and full year 2008 represent a more meaningful presentation of its historical operations and financial performance since these results provide period to period comparisons that are consistent and more easily understood.

William L. McComb, Chief Executive Officer of Liz Claiborne Inc. said: "We recorded non-cash goodwill impairment charges in the quarter of $382 million in our Domestic-Based Direct Brands segment. These charges were required under the application of the current accounting convention for impairment because our market capitalization declined to a level below our book value, despite the fact that these brands have strong cash flows and our belief that this portfolio has strong long-term growth potential in both sales and earnings. We do not believe our market capitalization today reflects the true long-term value of our company in spite of obvious risk and volatility in the short term resulting from current economic conditions."

"We also recorded a goodwill impairment charge of $301 million in our International-Based Direct Brandssegment. This is also the result of the application of the impairment testing rules and conventions as well as declines in actual and projected segment performance and cash flows. These fourth quarter charges are in addition to the $10 million trademark impairment charges we recorded in the third quarter. None of these impairment charges has any impact on our business operations, cash flows or compliance with the financial covenants under our bank agreement."

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