ICONIX BRAND GROUP INC NEW YORK, Feb. 22, 2017 /PRNewswire/ --
-- Q4 & FY 2016 licensing revenue of $87.1 million and $368.5 million,
respectively
-- $28.1 million gain related to the sale of the Sharper Image brand
-- Estimated non-cash trademark and goodwill impairment charge of
approximately $443 million
Iconix Brand Group, Inc. (NASDAQ: ICON) ("Iconix" or the "Company") today reported its financial results for the fourth quarter and full year ended December 31, 2016.
John Haugh, CEO of Iconix commented, "2016 was a year of transition for Iconix. Our operating performance was in-line with our guidance. I believe the changes we have made over the past year provide a strong foundation to drive long term growth and shareholder value.
Key initiatives and positive steps that we took in 2016:
-- We continued to build our team and hired new talent to augment our
existing skills and capabilities.
-- We conducted an in-depth analysis of our brands, our partners and the
market, and developed a long term strategic plan to drive growth, as we
shared at our Investor Day in November.
-- We divested 2 brands, consistent with our portfolio management approach
to brand ownership.
-- We improved our financial stability by retiring over $300 million of
debt since the beginning of 2016.
With this work we are on a path to organic growth, improved earnings, an improved balance sheet and continued market leadership."
Fourth Quarter & Full Year 2016 Financial Results
Licensing Revenue:
For the fourth quarter of 2016, licensing revenue was approximately $87.1 million, an 8% decline as compared to $94.7 million in the prior year quarter. Revenue in the prior year's fourth quarter included approximately $1.3 million of licensing revenue from the Badgley Mischka brand, for which there was no comparable revenue in the fourth quarter of 2016, due to its sale in the first quarter of 2016. In the fourth quarter of 2016 there was a slight positive impact from foreign currency exchange rates primarily related to the Yen. Excluding Badgley Mischka and the currency impact, revenue was down approximately 7% for the quarter.
For the full year 2016, licensing revenue was approximately $368.5 million, a 3% decline as compared to $379.2 million in 2015. Revenue in 2015 included approximately $5.0 million from the Badgley Mischka brand for which there was no comparable revenue in 2016. In 2016, the Company benefitted from a $3 million favorable impact from foreign currency exchange rates primarily related to the Yen. Excluding Badgley Mischka and the currency impact, revenue was down approximately 2% for the year.
Segment Data:
The Company is providing revised segment data that breaks out international as a separate segment, consistent with how the business is run. Historical segment data can be found on the Company's website www.iconixbrand.com.
($, 000's)
Three Months Ended Dec. 31, Year Ended Dec. 31,
--------------------------- -------------------
2016 2015 % Change 2016 2015 % Change
---- ---- -------- ---- ---- --------
Licensing Revenue by Segment:
Women's 18,773 22,564 -17% 106,527 118,038 -10%
Men's 11,807 13,121 -10% 48,635 55,208 -12%
Home 10,542 9,646 9% 38,370 36,473 5%
Entertainment 28,341 35,484 -20% 113,318 107,606 5%
International 17,679 13,840 28% 61,611 61,872 0%
Total Licensing Revenue 87,142 94,654 -8% 368,461 379,197 -3%
====== ====== === ======= ======= ===
SG&A Expenses:
Total SG&A expenses in the fourth quarter of 2016 were $57.3 million, a 1% increase as compared to approximately $56.6 million in the fourth quarter of 2015. In the fourth quarter of 2016, SG&A included approximately $3.9 million of special charges related to professional fees associated with continuing correspondence with the Staff of the SEC, the SEC investigation, the class action and derivative litigations, and costs related to the transition of Iconix management, as compared to approximately $1.6 million in the fourth quarter of 2015. These special charges are excluded from the Company's non-GAAP net income and EPS. Excluding special charges, SG&A expenses were down approximately 3% in the fourth quarter of 2016. Stock based compensation was approximately $2.1 million in the fourth quarter of 2016, as compared to approximately $1.6 million in the fourth quarter of 2015.
For the full year 2016, total SG&A expenses were $206.6 million, a 1% increase as compared to $204.9 million in 2015. In 2016, SG&A included approximately $14.3 million of special charges related to professional fees associated with continuing correspondence with the Staff of the SEC, the SEC investigation, the class action and derivative litigations, and costs related to the transition of Iconix management, as compared to approximately $11.1 million in 2015. Excluding special charges, SG&A expenses were down approximately 1% for the full year 2016. Stock based compensation was approximately $6.8 million in 2016, as compared to approximately $11.4 million in 2015.
Asset Impairment:
In the fourth quarter of 2016, the Company will recognize a non-cash impairment charge related to certain of the Company's trademarks and goodwill, which is currently estimated by management to be approximately $443 million. The amount of such impairment charge remains subject to review. As such, the amount of the impairment charge is subject to revision, which revision would also result in an adjustment to the Company's operating income, income before tax, income taxes, net income and earnings per share for the quarterly and annual periods ended December 31, 2016.
Upon finalization of the impairment charge prior to filing the Company's Form 10-K for the year ended December 31, 2016, the Company will record, if necessary, any resulting increase or decrease to the estimated charge in its financial results for 2016.
A significant portion of the trademark impairment was driven by the Company's continuing depressed market capitalization. Additionally, a portion of the impairment was caused by the revision to the Company's reported segments.
Operating Income (1):
Operating Income for the fourth quarter of 2016 was a loss of approximately $385.8 million, as compared to a loss of $398.2 million in the fourth quarter of 2015. Operating Income for the full year 2016 was a loss of approximately $243.1 million, as compared to a loss of $262.7 million in 2015.
Non-GAAP Operating Income (adjusted only to exclude expected impairment charges), for the fourth quarter of 2016 was approximately $57.4 million, a 46% increase as compared to $39.3 million in the fourth quarter of 2015. Operating income in the fourth quarter of 2016 includes a gain of approximately $28.1 million related to the sale of the Sharper Image brand.
For the full year 2016, Non-GAAP Operating Income (adjusted only to exclude expected impairment charges), was approximately $200.1 million, a 14% increase as compared to approximately $174.9 million in 2015. Operating Income in 2016 includes a gain of approximately $38.1 million, primarily related to the sale of the Sharper Image and Badgley Mischka brands.
Three Months Ended Dec. 31, Year Ended Dec. 31,
--------------------------- -------------------
($, 000's) 2016 2015 % Change 2016 2015 % Change
---- ---- -------- ---- ---- --------
Operating Income*:
Women's 15,118 20,062 -25% 94,043 103,289 -9%
Men's 7,367 2,086 253% 30,322 25,623 18%
Home 8,419 7,761 8% 31,887 30,473 5%
Entertainment 7,439 11,619 -36% 34,281 35,583 -4%
International 8,053 6,876 17% 30,739 34,225 -10%
Corporate 11,013 (9,125) NA (21,178) (54,332) 61%
Total Operating Income 57,409 39,279 46% 200,094 174,860 14%
====== ====== === ======= ======= ===
Three Months Ended Dec. 31, Year Ended Dec. 31,
--------------------------- -------------------
2016 2015 percentage 2016 2015 percentage
point change point change
--- --- ------------
Operating Margin:
Women's 81% 89% -8% 88% 88% 0%
Men's 62% 16% 46% 62% 46% 16%
Home 80% 80% 0% 83% 84% -1%
Entertainment 26% 33% -7% 30% 33% -3%
International 46% 50% -4% 50% 55% -5%
Total Operating Income 66% 41% 24% 54% 46% 8%
=== === === === === ===
*Note: Operating Income above excludes the impact of the impairment charges related to certain of the Company's trademarks and goodwill. Please see reconciliation tables at the end of this press release.
Interest Expense:
Interest expense in the fourth quarter of 2016 was approximately $23.1 million, as compared to interest expense of approximately $21.3 million in the fourth quarter of 2015. The Company's reported interest expense includes non-cash interest related to its outstanding convertible notes of approximately $4.1 million in the fourth quarter of 2016 and approximately $7.3 million in the fourth quarter of 2015.
Interest expense for the full year 2016 was approximately $97.5 million, as compared to approximately $86.2 million of interest expense in 2015. The Company's reported interest expense includes non-cash interest related to its outstanding convertible notes of approximately $22.4 million in 2016 and approximately $28.6 million in 2015.
Other Income:
In the fourth quarter of 2016, the Company recognized a $7.3 million gain, related to the recoupment and final settlement of unearned incentive compensation from the Company's former CEO in connection with previously announced financial restatements. In the fourth quarter of 2016, the Company also recognized a $14.4 million loss related to the early extinguishment of debt and the write-down of deferred financing fees. Both of these items are excluded from the Company's non-GAAP results.
For the full year 2016, the Company recognized $17.5 million of other income related to the recoupment of unearned incentive compensation from the Company's former CEO, and a gain related to the Company's sale of its minority interest in Complex Media, as compared to other income of $50.9 million in 2015, which was primarily related to a non-cash remeasurement gain associated with the Company's acquisition of 100% of Iconix China. The Company also recognized a $5.9 million loss related to the early extinguishment of certain debt offset by a gain related to the repurchase of a portion of the Company's 2018 convertible notes at a discount.
GAAP Net Income and GAAP Diluted EPS (1):
GAAP net income for the fourth quarter of 2016 reflects a loss of approximately $297.5 million, as compared to a loss of approximately $263.0 million in the fourth quarter of 2015. GAAP diluted EPS for the fourth quarter of 2016 reflects a loss of approximately $5.30 as compared to a loss of approximately $5.44 in the fourth quarter of 2015.
For the full year 2016, GAAP net income reflects a loss of approximately $252.1 million, as compared to a loss of approximately $189.3 million in 2015. GAAP diluted EPS for 2016 reflects a loss of approximately $4.82 as compared to a loss of $3.92 in 2015.
Non-GAAP Net Income and Non-GAAP Diluted EPS:
Non-GAAP net income for the fourth quarter of 2016 was approximately $22.0 million, a 79% increase as compared to approximately $12.3 million in the fourth quarter of 2015. Non-GAAP diluted EPS for the fourth quarter of 2016 was approximately $0.38 as compared approximately $0.25 in the fourth quarter of 2015.
Non GAAP net income for the full year 2016 was approximately $74.3 million, a 12% increase as compared to $66.4 million in 2015. Non-GAAP diluted EPS for 2016 was approximately $1.37 as compared to $1.33 in 2015.
Balance Sheet and Liquidity:
The Company ended 2016 with $326.7 million of total cash and $1.3 billion face value of debt. In 2016, the Company reduced its debt balance by approximately $202 million, and in January 2017, the Company paid down an additional $102 million of debt. At the end of January 2017, the Company's cash and debt balances were approximately $219 million, which includes approximately $67.6 million of restricted cash, and $1.2 billion, respectively.
($, 000's) Dec. 31, 2016 Dec 31, 2016
------------- ------------
Cash Summary: Debt Summary:
Unrestricted Domestic Cash (wholly owned) 55,235 Senior Secured Notes 651,784
Unrestricted Domestic Cash (in consolidated JV's) 25,665 1.50% Convertible Notes due 2018 295,050
Unrestricted International Cash 68,511 Variable Funding Note 100,000
Restricted Cash 177,269 Senior Secured Term Loan 263,720
Total Cash $326,680 Total Debt (Face Value) $1,310,554
======== ==========
Free Cash Flow (3)
The Company generated approximately $139.9 million of free cash flow in the fourth quarter of 2016, a 144% increase as compared to approximately $57.3 million in the fourth quarter of 2015. In 2016, the Company generated approximately $250.8 million of free cash flow, a 24% increase as compared to approximately $202.4 million in 2015.
Free Cash Flow Reconciliation:
($, 000's)
Three Months Ended Dec. 31, Year Ended Dec. 31,
--------------------------- -------------------
2016 2015 % Change 2016 2015 % Change
---- ---- -------- ---- ---- --------
Net cash provided by operating activities $36,398 $55,227 -34% $115,326 $190,241 -39%
Plus: Cash from sale of Sharper Image 98,250 - NA 98,250 - NA
Plus: Cash from sale of Badgley - - - 14,000 - NA
Mischka
Plus: Cash from sale of equity - - - 3,500 - NA
interest in BBC Ice Cream
Plus: Cash from sale of equity - - NA 15,415 - NA
interest in China
Plus: Cash received from sale of 8,458 6,319 34% 14,595 24,192 -40%
trademarks
Plus: Cash from notes receivable 4,112 2,416 70% 11,962 11,477 4%
from licensees
Less: Capital Expenditures (2,592) (299) 767% (3,636) (1,433) 154%
Less: Distributions to non-controlling interests (4,696) (6,342) -26% (18,609) (22,080) -16%
Free Cash Flow $139,930 $57,321 144% $250,803 $202,397 24%
======== ======= === ======== ======== ===
2017 Guidance
The Company is providing guidance for 2017 as follows:
-- The Company expects full year 2017 revenue to be in a range of
approximately $350 million to $365 million. This compares to revenue of
approximately $359 million in 2016, when excluding revenue from the
Sharper Image brand.
-- The Company expects 2017 GAAP EPS to be in a range of $0.43 to $0.58.
GAAP EPS in 2017 is expected to include approximately $0.15 related to
non-cash interest expense, $0.05 of estimated special charges, and a
$0.07 loss related to the early extinguishment of debt.
-- The Company expects 2017 non-GAAP EPS to be in a range $0.70 to $0.85.
This compares to an adjusted EPS of approximately $0.78 in 2016, when
excluding gains from the sale of the Sharper Image and Badgley Mischka
brands, earnings associated with those brands and using the Company's
current diluted share count.
-- The Company expects to generate free cash flow in 2017 of approximately
$105 million to $125 million.
Non-GAAP net income, non-GAAP diluted EPS and Free Cash Flow are non-GAAP metrics, and reconciliation tables for each are included in this press release.
(1) In the fourth quarter of 2016, the
Company will recognize a non-
cash impairment charge related to
certain of the Company's
trademarks and goodwill, which is
currently estimated by management
to be approximately $443 million.
The amount of such impairment
charge remains subject to review.
As such, the amount of the
impairment charge is subject to
revision, which revision would
also result in an adjustment to
the Company's operating income,
income before tax, income taxes,
net income and earnings per share
for the quarterly and annual
periods ended December 31, 2016.
Conference Call
The Company will host a conference call today at 5:00PM ET. The call can be accessed on the Company's website at www.iconixbrand.com.
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), JOE BOXER (R), RAMPAGE (R), MUDD (R), MOSSIMO (R), LONDON FOG (R), OCEAN PACIFIC (R), DANSKIN (R), ROCAWEAR (R), CANNON (R), ROYAL VELVET (R), FIELDCREST (R), CHARISMA (R), STARTER (R), WAVERLY (R), ZOO YORK (R), UMBRO (R), LEE COOPER (R), ECKO UNLTD. (R), MARC ECKO (R) ARTFUL DODGER (R) and STRAWBERRY SHORTCAKE (R). In addition, Iconix owns interests in the MATERIAL GIRL (R), PEANUTS (R), ED HARDY (R), TRUTH OR DARE (R), MODERN AMUSEMENT (R), BUFFALO (R), NICK GRAHAM (R), HYDRAULIC (R), and PONY (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.
Forward Looking Statements
In addition to historical information, this press release contains forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include projections regarding the Company's beliefs and expectations about future performance and, in some cases, may be identified by words like "anticipate," "assume," "confident," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek" and similar terms or phrases. These statements include, among others, statements relating to additional information that may require the Company to restate further the financial statements and other financial data in the periods impacted by the restatement and/or additional historical periods. These statements are based on the Company's beliefs and assumptions, which in turn are based on currently available information. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement and could harm the Company's business, prospects, results of operations, liquidity and financial condition and cause its stock price to decline significantly. Many of these factors are beyond the Company's ability to control or predict. Important factors that could cause the Company's actual results to differ materially from those indicated in the forward-looking statements include, among others: the ability of the Company's licensees to maintain their license agreements or to produce and market products bearing the Company's brand names, the Company's ability to retain and negotiate favorable licenses, the Company's ability to meet its outstanding debt obligations and the events and risks referenced in the sections titled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, as amended, subsequent Quarterly Reports on Form 10-Q and in other documents filed or furnished with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements.
Contact Information:
Jaime Sheinheit
Iconix Brand Group
VP, Investor Relations
jsheinheit@iconixbrand.com
212.730.0030
Unaudited Condensed Consolidated Income Statements
(in thousands, except earnings per share data)
Three Months Ended Dec. 31, Year Ended Dec. 31,
--------------------------- -------------------
2016 2015 % Change 2016 2015 % Change
---- ---- -------- ---- ---- --------
Licensing revenue $87,142 $94,654 -8% 368,461 379,197 -3%
Selling, general and administrative expenses 57,335 56,621 1% 206,589 204,946 1%
Depreciation and amortization 960 1,083 -11% 3,461 4,720 -27%
Equity earnings on joint ventures (448) (2,330) -81% (3,578) (5,330) -33%
Gain on sale of trademarks (28,113) - NA (38,104) - NA
Goodwill impairment (1) 18,331 35,132 NA 18,331 35,132 NA
Asset impairment (1) 424,890 402,392 6% 424,890 402,392 6%
------- ------- --- ------- ------- ---
Operating income (loss) (1) ($385,813) ($398,245) 3% ($243,128) ($262,663) 7%
========= ========= === ========= ========= ===
Other (income) expenses
Interest expense 23,065 21,283 8% 97,542 86,233 13%
Interest income (345) (1,201) -71% (1,580) (4,230) -63%
Other income, net (7,328) (124) NA (17,508) (50,904) -66%
Loss on extinguishment of debt, net 14,376 - NA 5,903 - NA
Foreign currency translation loss (gain) (1,355) (1,801) -25% (1,484) (9,488) -84%
------ ------ --- ------ ------ ---
Other expenses - net 28,413 18,157 56% 82,873 21,611 283%
Income (loss) before income taxes (1) ($414,226) ($416,402) 1% ($326,001) ($284,274) -15%
Provision (benefit) for income taxes (1) (104,723) (140,427) -25% (76,492) (95,344) -20%
-------- -------- --- ------- ------- ---
Net income (loss) (1) ($309,503) ($275,975) -12% ($249,509) ($188,930) -32%
========= ========= === ========= ========= ===
Less: Net income (loss) attributable to non-controlling interest (11,955) (12,962) 8% 2,625 373 604%
======= ======= === ===== === ===
Net income (loss) attributable to Iconix Brand Group, Inc. (1) ($297,548) ($263,014) -13% ($252,134) ($189,303) -33%
========= ========= === ========= ========= ===
Earnings (loss) per share: (1)
Basic (5.30) (5.44) 3% (4.82) (3.92) -23%
===== ===== === ===== ===== ===
Diluted (5.30) (5.44) 3% (4.82) (3.92) -23%
===== ===== === ===== ===== ===
Weighted average number of common shares outstanding:
Basic 56,147 48,310 16% 52,338 48,293 8%
====== ====== === ====== ====== ===
Diluted 56,147 48,310 16% 52,338 48,293 8%
====== ====== === ====== ====== ===
The following tables detail unaudited
reconciliations from U.S. GAAP to non-
GAAP amounts and include
reconciliations related to ASC Topic
470 as it relates to accounting for
convertible debt, incremental dilutive
shares related to our convertible debt
that are covered by our existing
convertible note hedges, non-cash
gains related to the re-measurement of
investments, foreign currency
translation, gains or losses on the
extinguishment of debt, write-down of
certain intangible assets, settlement
with former CEO of unearned incentive
comp, gain on sale of equity interest
in Complex Media and special charges
related to professional fees associated
with the continuing correspondence with
the Staff of the SEC, the SEC
investigation, internal investigations,
the previously disclosed class action
and derivative litigations, and costs
related to the transition of Iconix
management.
Note: All items in the following
reconciliation tables are attributable
to Iconix Brand Group, Inc. and exclude
results related to non-controlling
interests. Certain numbers may not add
due to rounding.
Non-GAAP Net Income & Diluted EPS Reconciliation: (2)
NET INCOME EPS
---------- ---
Three Months Ended Dec. 31, Three Months Ended Dec. 31,
--------------------------- ---------------------------
2016 2015 % Change 2016 2015 % Change
---- ---- -------- ---- ---- --------
GAAP net income & EPS (1) (297,548) (263,014) -13% ($5.30) ($5.44) NA
Add:
non-cash interest related to ASC 470 4,059 7,343 -45% $0.07 $0.15 -52%
loss on extinguishment of debt 14,376 - NA $0.26 - NA
special charges 3,866 1,646 135% $0.07 $0.03 102%
foreign currency translation gain/(loss) (1,475) (2,051) -28% ($0.03) ($0.04) -38%
write-down of certain intangible assets 425,843 420,800 1% $7.58 $8.71 -13%
settlement w/ former CEO of unearned incentive comp (7,263) - NA ($0.13) $0.00 NA
Deduct: Income taxes related to above (119,846) (152,434) -21% ($2.13) ($3.16) -32%
-------- -------- --- ------ ------ ---
Net 319,560 275,304 16% $5.69 $5.70 0%
Non-GAAP net income & EPS $22,012 $12,290 79% $0.38 $0.25 52%
======= ======= === ===== ===== ===
Year Ended Dec. 31, Year Ended Dec. 31,
------------------- -------------------
2016 2015 % Change 2016 2015 % Change
---- ---- -------- ---- ---- --------
GAAP net income & EPS (1) (252,134) (189,303) 33% ($4.82) ($3.92) 23%
Add:
non-cash interest related to ASC 470 22,398 28,643 -22% $0.38 $0.55 -32%
gain on sale of equity interest in Complex Media (10,164) - NA ($0.19) - NA
non-cash gain related to investment in joint venture - (49,990) NA - ($1.04) NA
loss on extinguishment of debt 5,903 - NA $0.11 - NA
special charges 14,314 11,136 29% $0.27 $0.23 19%
foreign currency translation gain (1,333) (9,921) -87% ($0.03) ($0.21) -88%
write-down of certain intangible assets 425,843 420,800 1% $8.14 $8.71 -7%
settlement w/ former CEO of unearned incentive comp (7,263) - NA ($0.14) - NA
Deduct: Income taxes related to above (123,264) (144,962) -15% ($2.36) ($3.00) -21%
-------- -------- --- ------ ------ ---
Net 326,434 255,706 28% $6.19 $5.25 18%
Non-GAAP net income & EPS $74,300 $66,403 12% $1.37 $1.33 3%
======= ======= === ===== ===== ===
Non-GAAP weighted average diluted shares reconciliation: (2)
Three Months Ended Dec. 31, Year Ended Dec. 31,
--------------------------- -------------------
2016 2015 % Change 2016 2015 % Change
---- ---- -------- ---- ---- --------
GAAP weighted average diluted shares 56,147 48,310 16% 52,338 48,293 8%
Add: anti-dilutive shares resulting from net loss 1,913 1,647 16% 1,804 2,070 -13%
Less: additional incremental dilutive shares covered by hedges for:
2.50% Convertible Notes - - - - (256) NA
1.50% Convertible Notes - - - - (331) NA
--- --- --- --- ---- ---
subtotal - - - - (587) NA
Non-GAAP weighted avg. diluted shares 58,060 49,957 16% 54,142 49,776 9%
====== ====== === ====== ====== ===
Forecasted Non-GAAP Diluted EPS Reconciliation (2) Year Ending
-------------------------------------------------
Dec. 31, 2017
-------------
Low High
--- ----
Forecasted GAAP diluted EPS $0.43 $0.58
Adjustments for non-cash interest related to ASC 470, net of tax $0.15 $0.15
Special charges, net of tax $0.05 $0.05
Loss on extinguishment of debt $0.07 $0.07
Forecasted Non-GAAP Diluted EPS $0.70 $0.85
===== =====
Forecasted Reconciliation of Free Cash Flow: (3) Year Ending
-----------------------------------------------
Dec. 31, 2017
-------------
Low High
--- ----
Net cash provided by operating activities $110,000 $130,000
Plus: cash from prior period sale of trademarks 13,822 13,822
Plus: cash received on notes receivable from licensees 3,766 3,766
Less: capital expenditures (2,000) (2,000)
Less: distributions to minority interest (20,500) (20,500)
Free Cash Flow $105,088 $125,088
======== ========
Adjusted GAAP Impairment Adjusted
Operating Income : (1,4)
($, 000's) Three Months Three Months Three Months
Ended Dec. 31, Ended Dec. 31, Ended Dec. 31,
-------------- -------------- --------------
2016 2015 2016 2015 2016 2015
---- ---- ---- ---- ---- ----
Women's (16,360) 17,847 31,478 2,215 15,118 20,062
Men's (155,530) (364,387) 162,896 366,473 7,367 2,086
Home (41,575) (30,083) 49,993 37,844 8,419 7,761
Entertainment 2,310 11,619 5,128 - 7,439 11,619
International (185,672) (24,116) 193,725 30,991 8,053 6,876
Corporate 11,013 (9,125) - - 11,013 (9,125)
Total Operating Income (385,813) (398,245) 443,221 437,524 57,409 39,279
======== ======== ======= ======= ====== ======
Adjusted GAAP Impairment Adjusted
Operating Income: (1,4)
($, 000's) Year Year Year
Ended Dec. 31, Ended Dec. 31, Ended Dec. 31,
-------------- -------------- --------------
2016 2015 2016 2015 2016 2015
---- ---- ---- ---- ---- ----
Women's 62,565 101,074 31,478 2,215 94,043 103,289
Men's (132,574) (340,850) 162,896 366,473 30,322 25,623
Home (18,106) (7,371) 49,993 37,844 31,887 30,473
Entertainment 29,152 35,583 5,128 - 34,281 35,583
International (162,986) 3,234 193,725 30,991 30,739 34,225
Corporate (21,178) (54,332) - - (21,178) (54,332)
Total Operating Income (243,128) (262,664) 443,221 437,524 200,094 174,860
======== ======== ======= ======= ======= =======
Footnotes
---------
(1) In the fourth quarter of 2016, the
Company will recognize a non-cash
impairment charge related to certain of
the Company's trademarks and goodwill,
which is currently estimated by
management to be approximately $443
million. The amount of such impairment
charge remains subject to review. As
such, the amount of the impairment
charge is subject to revision, which
revision would also result in an
adjustment to the Company's operating
income, income before tax, income
taxes, net income and earnings per
share for the quarterly and annual
periods ended December 31, 2016.
(2) Non-GAAP net income and non-GAAP
diluted EPS (along with non-GAAP
weighted average diluted shares) are
non-GAAP financial measures which
represent net income excluding any non-
cash interest related to ASC Topic 470,
non-cash, non-recurring gains and
charges, foreign currency translation
gains and losses, and charges related
to professional fees incurred as a
result of the continuing correspondence
with the Staff of the SEC, the SEC
investigation, internal investigations,
the previously disclosed class action
and derivative litigations, and costs
related to the transition of Iconix
management, all net of tax, and any
incremental dilutive shares related to
our convertible notes that are covered
by their respective hedges. The Company
believes these are useful financial
measures in evaluating its financial
condition because they are more
reflective of the Company's business
purpose, operations and cash expenses.
Based on the average closing stock price
for the year ended December 31, 2016,
there were no potential dilutive shares
related to our convertible notes for
GAAP purposes. Based on the average
closing stock price for the year ended
December 31, 2015, there were potential
dilutive shares related to our
convertible notes for GAAP purposes;
however, the Company will not be
responsible for issuing a portion of
these shares as they are covered by our
convertible notes hedges.
(3) Free Cash Flow, a non-GAAP
financial measure, represents net cash
provided by operating activities, plus
cash received from the sale of
trademarks and formation of joint
ventures, less distributions to non-
controlling interests and capital
expenditures. Free Cash Flow excludes
notes receivable from sale of
trademarks and the formation of joint
ventures, cash used to acquire the
membership interests of our joint
venture partners, mandatory debt
service requirements, and other non-
discretionary expenditures. Free Cash
Flow should not be considered in
isolation, as a measure of residual
cash flow available for discretionary
purposes, or as an alternative to
operating results presented in
accordance with GAAP. The Company
believes Free Cash Flow is useful
because it provides information
regarding actual cash received in a
specific period from the Company's
comprehensive business strategy of
maximizing the value of its brands
through traditional licensing,
international joint ventures and other
arrangements. We have excluded the cash
used to buy back our joint venture
membership interests from the above
definition because we believe that,
like other acquisitions, such actions
are capital transactions. It also
provides supplemental information to
assist investors in evaluating the
Company's financial condition and
ability to pursue opportunities that
enhance shareholder value.
(4) Non-GAAP Operating Income, a non-
GAAP financial measure, represents
Operating Income less the write-down
of certain intangible assets.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/iconix-brand-group-reports-financial-results-for-the-fourth-quarter--full-year-2016-300412050.html
SOURCE Iconix Brand Group, Inc.
