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Phillips-Van Heusen in discussion to amend credit facility
27 Jan '11
5 min read
Non-GAAP Exclusions:
The discussions in this release that refer to non-GAAP amounts exclude the following:
• Costs incurred during 2009 in connection with restructuring initiatives implemented that year, including the shutdown of the Company's domestic production of machine-made neckwear, a realignment of the Company's global sourcing organization, reductions in warehousing capacity, lease termination fees for the majority of the Company's Calvin Klein specialty retail stores and other initiatives to reduce corporate and administrative expenses. The costs associated with these initiatives were $25.9 million in 2009, of which $4.7 million was incurred in the first quarter, $6.3 million was incurred in the second quarter, $6.2 million was incurred in the third quarter and $8.7 million was incurred in the fourth quarter.
• Estimated pre-tax costs of approximately $322 million expected to be incurred in 2010 in connection with the acquisition and integration of Tommy Hilfiger, including the following:
o a loss of $140.5 million associated with hedges against Euro to U.S. dollar exchange rates relating to the purchase price, of which $52.4 million was recorded in the first quarter and $88.1 million was recorded in the second quarter;
o transaction, restructuring and debt extinguishment costs of approximately $105 million, of which $51.6 million was incurred in the first quarter, $24.6 million was incurred in the second quarter, $13.7 million was incurred in the third quarter and approximately $15 million is expected to be incurred in the fourth quarter; and
o non-cash valuation amortization charges of approximately $76.8 million as a result of the Tommy Hilfiger acquisition, of which $53.3 million was incurred in the second quarter and the remainder of which was incurred in the third quarter.
• Estimated tax effects associated with the above pre-tax costs, which are based on the Company's assessment of deductibility. In making this assessment, the Company evaluated each item that it has recorded or expects to record as a restructuring, acquisition or integration cost to determine if such cost is tax deductible, and if so, in what jurisdiction the deduction would occur. All items above were identified as either primarily tax deductible in the United States, in which case the Company assumed a tax rate of 38.0%, or as non-deductible, in which case the Company assumed no tax benefit. The assumptions used were consistently applied for both GAAP and non-GAAP earnings amounts.
• Tax benefits of approximately $7.9 million and $30.4 million in 2010 and 2009, respectively, (recorded in the third quarter of each year) related to the lapses of the statute of limitations with respect to certain previously unrecognized tax positions.
The discussions in this release that refer to non-GAAP amounts exclude the following:
• Costs incurred during 2009 in connection with restructuring initiatives implemented that year, including the shutdown of the Company's domestic production of machine-made neckwear, a realignment of the Company's global sourcing organization, reductions in warehousing capacity, lease termination fees for the majority of the Company's Calvin Klein specialty retail stores and other initiatives to reduce corporate and administrative expenses. The costs associated with these initiatives were $25.9 million in 2009, of which $4.7 million was incurred in the first quarter, $6.3 million was incurred in the second quarter, $6.2 million was incurred in the third quarter and $8.7 million was incurred in the fourth quarter.
• Estimated pre-tax costs of approximately $322 million expected to be incurred in 2010 in connection with the acquisition and integration of Tommy Hilfiger, including the following:
o a loss of $140.5 million associated with hedges against Euro to U.S. dollar exchange rates relating to the purchase price, of which $52.4 million was recorded in the first quarter and $88.1 million was recorded in the second quarter;
o transaction, restructuring and debt extinguishment costs of approximately $105 million, of which $51.6 million was incurred in the first quarter, $24.6 million was incurred in the second quarter, $13.7 million was incurred in the third quarter and approximately $15 million is expected to be incurred in the fourth quarter; and
o non-cash valuation amortization charges of approximately $76.8 million as a result of the Tommy Hilfiger acquisition, of which $53.3 million was incurred in the second quarter and the remainder of which was incurred in the third quarter.
• Estimated tax effects associated with the above pre-tax costs, which are based on the Company's assessment of deductibility. In making this assessment, the Company evaluated each item that it has recorded or expects to record as a restructuring, acquisition or integration cost to determine if such cost is tax deductible, and if so, in what jurisdiction the deduction would occur. All items above were identified as either primarily tax deductible in the United States, in which case the Company assumed a tax rate of 38.0%, or as non-deductible, in which case the Company assumed no tax benefit. The assumptions used were consistently applied for both GAAP and non-GAAP earnings amounts.
• Tax benefits of approximately $7.9 million and $30.4 million in 2010 and 2009, respectively, (recorded in the third quarter of each year) related to the lapses of the statute of limitations with respect to certain previously unrecognized tax positions.
Phillips-Van Heusen Corporation
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