2010 results include favorable impact on tax rate at PVH
Phillips-Van Heusen Corporation reported 2010 fourth quarter and full year results.
Fourth Quarter of 2010 Results:
• Earnings per share was $0.93 on a non-GAAP basis, which exceeded the Company's guidance and the consensus estimate and represents an increase of 52% compared to the prior year's fourth quarter non-GAAP earnings per share of $0.61.
• GAAP earnings per share was $0.72, which exceeded the Company's guidance and represents a 41% increase compared to the prior year's fourth quarter GAAP earnings per share of $0.51.
• Revenue was $1,398.1 million as compared to the prior year's fourth quarter revenue of $614.6 million. The revenue increase of $783.5 million is attributable to (i) $704.7 million of revenue generated by the Company's Tommy Hilfiger business; and (ii) a combined increase of $78.9 million, or 13%, in the revenue of the Company's Calvin Klein and Heritage Brands businesses.
• The effective tax rate was 26.0% on a non-GAAP basis and 2.8% on a GAAP basis.
In the fourth quarter of 2010, the Company completed the Tommy Hilfiger U.S. federal tax return for the pre-acquisition period. On that return, the Company included the effect of transferring certain brand intangibles to a European subsidiary. The effect of this transfer has reduced the Company's effective tax rate in 2010 and is expected to continue to provide a significant tax benefit in the future. The finalization of this transfer in the fourth quarter impacted the acquisition accounting associated with the Tommy Hilfiger transaction, as well as the second and third quarter's tax expense.
Commenting on these results, Emanuel Chirico, Chairman and Chief Executive Officer, noted, "We are extremely pleased with our 2010 results and the strong fourth quarter performance that enabled us to exceed our revenue and earnings guidance. The Tommy Hilfiger business has continued to exceed our expectations, and the integration of the two businesses has been seamless. Each of our Heritage Brands businesses, as well as our Calvin Klein business, also had an excellent year. These strong results enabled us to continue to reinvest in all of our brands through additional marketing spending, including significant increases at Tommy Hilfiger. In addition, with our strong cash flow performance, we have reduced our debt since the time of acquisition by approximately $400 million."
Mr. Chirico concluded, "We look forward to a strong 2011 that will be fueled by the international growth opportunities at Tommy Hilfiger and Calvin Klein. We believe we will be able to increase our profitability in 2011, despite the product cost increases that are being felt throughout our industry, through product design changes, sourcing realignment and sound inventory planning. We have the benefit of a strong global platform, operational efficiency, and highly recognized and sought after brands. We will continue to invest prudently in all of our brands through marketing and remain focused on balance sheet strength in order to pave the way for future growth and enhanced stockholder value."
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Phillips-Van Heusen Corporation