Attached files
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| 8-K - ICONIX BRAND GROUP, INC. | v238348_8k.htm |
| EX-2.1 - ICONIX BRAND GROUP, INC. | v238348_ex2-1.htm |
Exhibit 99.1
Iconix Brand Group Reports Third Quarter 2011 Financial Results
-- Q3 revenue of $92.7 million, a 10% increase over prior year quarter excluding one-time item in Q3 2010
-- Nine-month non-GAAP diluted earnings per share increased to $1.27 versus $1.12 for the prior year period
-- Providing 2012 revenue guidance of $370 to $385 million and non-GAAP diluted EPS guidance of $1.77 to $1.84
-- Acquiring Sharper Image Brand
-- Announces $200 million stock repurchase program
NEW YORK, Oct. 27, 2011 /PRNewswire/ -- Iconix Brand Group, Inc. (NASDAQ: ICON) ("Iconix" or the "Company"), today announced financial results for the third quarter ended September 30, 2011.
Q3 2011 results for Iconix Brand Group, Inc.:
Total revenue for the third quarter of 2011 was approximately $92.7 million compared to approximately $96.9 million in the third quarter of 2010. Third quarter 2010 revenue included approximately $12.5 million related to a contract the Company signed with ABC Network for the Peanuts holiday television specials. EBITDA attributable to Iconix for the third quarter was approximately $55.3 million, a 6% increase over the prior year quarter. Free cash flow attributable to Iconix for the third quarter was approximately $44.9 million, a 9% increase over the prior year quarter. On a non-GAAP basis, which excludes non-cash interest related to the Company's two convertible notes, net income attributable to Iconix was $30.1 million, a 1% increase over the prior year quarter. Non-GAAP diluted EPS for the third quarter was $0.40 compared to $0.40 in the prior year quarter. GAAP net income attributable to Iconix for the third quarter was approximately $26.0 million compared to $27.4 million in the prior year quarter and GAAP diluted EPS was $0.34 compared to $0.37 in the prior year quarter.
Nine months ended September 30, 2011:
Total revenue for the nine months ended September 30, 2011 was approximately $274.3 million, a 12% increase as compared to approximately $244.6 million for the prior year period. EBITDA attributable to Iconix for the nine month period increased 14% from the prior year period to approximately $172.2 million. Free cash flow for the nine month period was approximately $134.3 million, a 14% increase over the prior year period. On a non-GAAP basis, which excludes non-cash interest related to the Company's two convertible notes and two non-recurring items recorded in the second quarter (see reconciliation tables below), net income attributable to Iconix for the nine month period increased 15% to approximately $96.2 million as compared to the prior year period and non-GAAP diluted earnings per share increased to $1.27 versus $1.12 for the prior year period. On a GAAP basis, net income attributable to Iconix for the nine month period increased 29% to approximately $98.9 million as compared to the prior year period and GAAP diluted earnings per share was $1.31 versus $1.03 for the prior year period.
EBITDA, free cash flow, non-GAAP net income and non-GAAP EPS are all non-GAAP metrics and reconciliation tables for each are attached to this press release.
Neil Cole, Chairman and CEO of Iconix Brand Group, Inc. commented, "We are pleased to report another strong quarter for our Company and believe our results further demonstrate the power of our business model and the strength of our brands. As we look to 2012, we are excited about the many opportunities ahead as we continue to grow our platform through new retail partners, new categories and new geographies. This week we announced two new exciting initiatives including our first DTR with JC Penney for our Royal Velvet brand and our first entry into the consumer electronics market with our acquisition of Sharper Image. With now 28 diverse consumer brands in our portfolio that represent approximately $12 billion in annual retail sales we have come a long way, and looking ahead we are very focused on delivering continued value to our shareholders."
2011 Guidance for Iconix Brand Group, Inc.:
The Company is reaffirming its full year 2011 revenue guidance of $355-$365 million, its full year 2011 non-GAAP diluted EPS guidance of $1.63-$1.68, its full year 2011 GAAP diluted EPS guidance of $1.61-$1.66 and its full year 2011 free cash flow guidance of $167-$172 million. The Company expects Sharper Image to be earnings neutral in 2011 due to timing of the close and transaction costs.
2012 Guidance for Iconix Brand Group, Inc.:
The Company is providing 2012 revenue guidance of $370-$385 million, 2012 non-GAAP diluted EPS guidance of $1.77-$1.84, 2012 GAAP diluted EPS guidance of $1.62-$1.69 and 2012 free cash flow guidance of $187-$194 million. This guidance relates to the existing portfolio of brands including Sharper Image and does not include any additional acquisitions.
Other Company News:
The Company announced today that it signed a definitive agreement to acquire The Sharper Image brand. This acquisition will be the Company's first entry into the consumer electronics sector. See separate press release for additional details.
The Company also announced today that its Board of Directors has authorized a program to repurchase up to $200 million of its common stock. See separate press release for additional details.
See reconciliation tables below for non-GAAP metrics. These non-GAAP metrics may be inconsistent with similar measures presented by other companies and should only be used in conjunction with our results reported according to U.S. GAAP. Any financial measure other than those prepared in accordance with U.S. GAAP should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.
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), BADGLEY MISCHKA (R), JOE BOXER (R), RAMPAGE (R), MUDD (R), LONDON FOG (R), MOSSIMO (R), OCEAN PACIFIC (R), DANSKIN (R) ROCA WEAR (R), CANNON (R), ROYAL VELVET (R), FIELDCREST (R), CHARISMA (R), STARTER (R), ZOO YORK (R) and WAVERLY (R). In addition, Iconix owns an interest in the ARTFUL DODGER (R), ED HARDY (R), ECKO (R), MARC ECKO (R), MATERIAL GIRL(TM) and PEANUTS (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.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. The statements that are not historical facts contained in this press release are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors, all of which are difficult or impossible to predict and many of which are beyond the control of the Company, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, but are not limited to, uncertainty regarding the results of the Company's acquisition of additional licenses, continued market acceptance of current products and the ability to successfully develop and market new products particularly in light of rapidly changing fashion trends, the impact of supply and manufacturing constraints or difficulties relating to the Company's licensees' dependence on foreign manufacturers and suppliers, uncertainties relating to customer plans and commitments, the ability of licensees to successfully market and sell branded products, competition, uncertainties relating to economic conditions in the markets in which the Company operates, the ability to hire and retain key personnel, the ability to obtain capital if required, the risks of litigation and regulatory proceedings, the risks of uncertainty of trademark protection, the uncertainty of marketing and licensing acquired trademarks and other risks detailed in the Company's SEC filings. The words "believe", "anticipate", "estimate", "expect", "confident", "continue", "will", "project", "provide" "guidance" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date the statement was made. All forward-looking statements are qualified by these cautionary statements and apply only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
Condensed Consolidated Income Statements
(in thousands, except earnings per share data)
|
(Unaudited)
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(Unaudited)
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|||||||||||||||
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Three Months Ended Sept. 30,
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Nine Months Ended Sept. 30,
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|||||||||||||||
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2011
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2010
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2011
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2010
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|||||||||||||
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Licensing and other revenue
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$ | 92,683 | $ | 96,887 | $ | 274,332 | $ | 244,604 | ||||||||
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Selling, general and administrative expenses
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33,729 | 42,032 | 97,396 | 90,719 | ||||||||||||
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Expenses related to specific litigation
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- | 33 | 92 | 240 | ||||||||||||
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Operating income
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58,954 | 54,822 | 176,844 | 153,645 | ||||||||||||
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Interest and other expense, net
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12,816 | 9,763 | 13,768 | 29,686 | ||||||||||||
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Equity earnings on joint ventures
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(98 | ) | (25 | ) | (3,236 | ) | (2,242 | ) | ||||||||
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Other expenses – net
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12,718 | 9,738 | 10,532 | 27,444 | ||||||||||||
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Income before income taxes
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46,236 | 45,084 | 166,312 | 126,201 | ||||||||||||
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Provision for income taxes
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15,209 | 13,252 | 55,313 | 40,042 | ||||||||||||
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Net income
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$ | 31,027 | $ | 31,832 | $ | 110,999 | $ | 86,159 | ||||||||
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Less: Net income attributable to non-controlling interest
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5,059 | 4,423 | 12,056 | 9,435 | ||||||||||||
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Net income attributable to Iconix Brand Group, Inc.
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$ | 25,968 | $ | 27,409 | $ | 98,943 | $ | 76,724 | ||||||||
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Earnings per share:
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||||||||||||||||
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Basic
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$ | 0.35 | $ | 0.38 | $ | 1.36 | $ | 1.07 | ||||||||
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Diluted
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$ | 0.34 | $ | 0.37 | $ | 1.31 | $ | 1.03 | ||||||||
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Weighted average number of common shares outstanding:
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||||||||||||||||
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Basic
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73,297 | 72,326 | 73,016 | 72,013 | ||||||||||||
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||||||||||||||||
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Diluted
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75,746 | 74,920 | 75,520 | 74,632 | ||||||||||||
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Selected Balance Sheet Items:
(in thousands)
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(Unaudited)
9/30/2011
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12/31/2010
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||||||
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Total Assets
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$ | 2,147,041 | $ | 1,951,470 | ||||
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Total Liabilities
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$ | 874,835 | $ | 812,556 | ||||
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Stockholders' Equity
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$ | 1,272,206 | $ | 1,138,914 | ||||
The following tables detail unaudited reconciliations from non-GAAP amounts to U.S. GAAP and include reconciliations related to the adoption of ASC Topic 470 as it relates to accounting for convertible debt, which became effective retroactively for the fiscal years beginning after December 15, 2008.
Note: All items in the following reconciliation tables are attributable to Iconix Brand Group, Inc. and exclude results related to non-controlling interests.
(in thousands, except per share data)
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(Unaudited)
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(Unaudited)
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|||||||||||||||
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Three months ended
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Nine months ended
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Net income reconciliation
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Sept. 30,
2011
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Sept. 30,
2010
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Sept. 30,
2011
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Sept. 30,
2010
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Non-GAAP net income (1)
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$ | 30,112 | $ | 29,827 | $ | 96,171 | $ | 83,328 | ||||||||
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GAAP net income
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$ | 25,968 | $ | 27,409 | $ | 98,943 | $ | 76,724 | ||||||||
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Adjustments:
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Non-cash interest related to ASC Topic 470
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6,396 | 3,506 | 14,493 | 10,050 | ||||||||||||
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Non-cash gain related to investment in Ed Hardy
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- | - | (21,465 | ) | - | |||||||||||
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Write-off of deferred financing fees and OID
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- | - | 2,651 | - | ||||||||||||
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Taxes related to above items
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(2,252 | ) | (1,088 | ) | 1,549 | (3,446 | ) | |||||||||
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Net
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4,144 | 2,418 | (2,772 | ) | 6,604 | |||||||||||
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Non-GAAP net income
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$ | 30,112 | $ | 29,827 | $ | 96,171 | $ | 83,328 | ||||||||
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(Unaudited)
Three months ended
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(Unaudited)
Nine months ended
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Diluted EPS reconciliation
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Sept. 30,
2011
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Sept. 30,
2010
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Sept. 30,
2011
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Sept. 30,
2010
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Non-GAAP diluted EPS (1)
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$ | 0.40 | $ | 0.40 | $ | 1.27 | $ | 1.12 | ||||||||
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GAAP diluted EPS
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$ | 0.34 | $ | 0.37 | $ | 1.31 | $ | 1.03 | ||||||||
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Adjustments for non-cash interest related ASC 470, non-cash gain related to investment in Ed Hardy, and write-off of deferred financing fees and original issue discount, net of tax
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$ | 0.05 | $ | 0.03 | $ | (0.04 | ) | $ | 0.09 | |||||||
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Non-GAAP diluted EPS
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$ | 0.40 | * | $ | 0.40 | $ | 1.27 | $ | 1.12 | |||||||
*May not add due to rounding
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Forecasted Diluted EPS
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Year Ending
Dec. 31, 2011
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Year Ending
Dec. 31, 2012
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High
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Low
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High
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Low
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Non-GAAP diluted EPS (1)
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$ | 1.68 | $ | 1.63 | $ | 1.84 | $ | 1.77 | ||||||||
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GAAP diluted EPS
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$ | 1.66 | $ | 1.61 | $ | 1.69 | $ | 1.62 | ||||||||
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Adjustments for non-cash interest related ASC 470, non-cash gain related to investment in Ed Hardy, and write-off of deferred financing fees and original issue discount, net of tax
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$ | 0.02 | $ | 0.02 | $ | 0.15 | $ | 0.15 | ||||||||
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Non-GAAP Diluted EPS
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$ | 1.68 | $ | 1.63 | $ | 1.84 | $ | 1.77 | ||||||||
(1) Non-GAAP net income and non-GAAP EPS are non-GAAP financial measures which represent net income excluding any non-cash interest related to the adoption of ASC Topic 470, non-cash gains and non-recurring charges related to the early extinguishment of debt, net of tax. The Company believes these are useful financial measures in evaluating its financial condition because they are representative of only actual cash results.
(in thousands)
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(Unaudited)
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(Unaudited)
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|||||||||||||||
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Three months ended
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Nine months ended
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Sept. 30,
2011
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Sept. 30,
2010
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Sept. 30,
2011
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Sept. 30,
2010
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EBITDA (2)
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$ | 55,331 | $ | 52,070 | $ | 172,245 | $ | 150,920 | ||||||||
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Reconciliation of EBITDA:
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Net Income
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25,968 | 27,409 | 98,943 | 76,724 | ||||||||||||
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Add: Income taxes
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15,209 | 13,252 | 55,313 | 40,042 | ||||||||||||
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Add: Net interest expense and Ed Hardy gain
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12,229 | 9,112 | 11,929 | 27,588 | ||||||||||||
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Add: Depreciation and amortization of certain intangibles
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1,925 | 2,297 | 6,060 | 6,566 | ||||||||||||
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EBITDA
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$ | 55,331 | $ | 52,070 | $ | 172,245 | $ | 150,920 | ||||||||
(2) EBITDA, a non-GAAP financial measure, represents net income before income taxes, interest, Ed Hardy gain, depreciation and amortization expenses. The Company believes EBITDA provides additional information for determining its ability to meet future debt service requirements, investing and capital expenditures.
(in thousands)
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(Unaudited)
Three months ended
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(Unaudited)
Nine months ended
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Sept. 30,
2011
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Sept. 30,
2010
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Sept. 30,
2011
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Sept. 30,
2010
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Free Cash Flow (3)
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$ | 44,943 | $ | 41,272 | $ | 134,305 | $ | 118,193 | ||||||||
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Reconciliation of Free Cash Flow:
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Net Income
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25,968 | 27,409 | 98,943 | 76,724 | ||||||||||||
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Add: Non-cash income taxes, non-cash interest related to convertible debt, depreciation, amortization of certain intangibles and finance fees, non-cash compensation expense, bad debt expense, net equity earnings from certain joint ventures, non-cash gain/loss from sale of trademarks and re-measurement of investments.(4)
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19,255 | 13,905 | 38,083 | 42,160 | ||||||||||||
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Less: Capital expenditures
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(280 | ) | (42 | ) | (2,721 | ) | (691 | ) | ||||||||
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Free Cash Flow
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$ | 44,943 | $ | 41,272 | $ | 134,305 | $ | 118,193 | ||||||||
(in thousands)
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Year Ending
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Year Ending
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|||||||||||||||
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Dec. 31, 2011
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Dec. 31, 2012
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High
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Low
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High
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Low
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Forecasted Free Cash Flow (3)
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$ | 172,000 | $ | 167,000 | $ | 194,000 | $ | 187,000 | ||||||||
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Reconciliation of Free Cash Flow:
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||||||||||||||||
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Net Income
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$ | 126,000 | $ | 122,000 | $ | 129,000 | $ | 123,000 | ||||||||
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Add: Non-cash income taxes, non-cash interest related to convertible debt, depreciation, amortization of certain intangibles and finance fees, non-cash compensation expense, bad debt expense, net equity earnings from certain joint ventures and non-cash gain/loss from sale of trademarks and re-measurement of investments
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49,000 | 49,000 | 68,000 | 67,000 | ||||||||||||
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Less: Capital expenditures
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(3,000 | ) | (4,000 | ) | (3,000 | ) | (3,000 | ) | ||||||||
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Forecasted Free Cash Flow
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$ | 172,000 | $ | 167,000 | $ | 194,000 | $ | 187,000 | ||||||||
(3) Free Cash Flow, a non-GAAP financial measure, represents net income before depreciation, amortization, non-cash compensation expense, bad debt expense, net equity earnings from certain joint ventures, non-cash income taxes, non-cash interest related to convertible debt, non-cash gains/loss from sale of trademarks and re-measurement of investments, less capital expenditures. The Free Cash Flow also excludes any changes in Balance Sheet items. The Company believes Free Cash Flow is useful in evaluating its financial condition because it is representative of cash flow from operations that is available for repaying debt, investing and capital expenditures.
(4) Reflects adjustment to previously reported amounts for quarterly flow of non-cash taxes for 2010 and has no impact on a full year basis.