Licensing revenues in the fourth quarter reached $47.4 million, up 76% from $26.9 million in the fourth quarter of 2007. The company, which owns, licenses and markets the  Ocean Pacific, Danskin, Roca Wear and Starter brands, said its net income for the fourth quarter ended Dec. 31 increased 117% to approximately $19.2 million, or 31 cents a share, from $8.9 million, or 18 cents, a year ago. 


EBITDA for the fourth quarter increased 109% to $42.2 million from $20.2 million in the prior year quarter, and free cash flow for the quarter increased 72% to approximately $26.2 million, as compared to approximately $15.2 million in the prior year quarter.

 

Full year results

 

For the full year, EBITDA increased 128% to $127.6 million, as compared to approximately $56.1 million and free cash flow increased 123% to $99.2 million, as compared to $44.5 million in the prior year.

 

Net income as reported on the company's income statement for 2007 increased 96% to $63.8 million, as compared to $32.5 million the prior year and diluted earnings per share as reported on the company's income statement was $1.04 versus $0.72 in the prior year.

 

The company recognized non-cash tax benefits in the prior year compared to being fully taxed for 2007. Comparing net income on a tax-effected basis, the company reported net income of approximately $63.8 million for 2007, as compared to approximately $26.3 million (tax-effected) in the prior year.

 

In comparing diluted earnings per share on a tax-effected basis, the company reported diluted earnings per share of $1.04 in 2007, as compared to $0.58 (tax-effected) in 2006.

 

Full year 2007 results include a one-time pre-tax gain equal to approximately $3.2 million or $0.03 diluted earnings per share associated with the company's Unzipped litigation. The gain is reflected on the company's income statement as a benefit of approximately $6.0 million (net of related legal expenses incurred in the year) and is offset by an increase of approximately $2.8 million in additional interest expense recorded in connection with the litigation. EBITDA, free cash flow, and tax effected earnings per share are non-GAAP metrics and reconciliation tables for all three are attached to this press release.

Management comments


“2007 was our third year solely as a brand management business and the third consecutive year in which we doubled licensing revenue and earnings,” said Neil Cole, chairman and CEO. “The fact that we were able to achieve this in what has become a very challenging retail environment demonstrates the resilience of our business model, which has no inventory exposure and is supported by contractually guaranteed revenue and a diverse portfolio of 16 brands. We are currently working on many exciting organic growth initiatives both in the U.S. and increasingly around the world and we will continue to execute our acquisition strategy. We are cognizant of the challenges that exist in the market, but are confident that the Iconix business model is positioned to permit us to capitalize on market opportunities and continue to achieve revenue and earnings growth.”

2008 Guidance:


The company is re-affirming its previously issued 2008 guidance of diluted earnings per share of between $1.35 and $1.40 while raising its revenue guidance to a range of $250-$260 million. The new guidance reflects new revenue opportunities the company is forecasting for based on its core business and acquisition strategy coupled with increased investments in infrastructure and compensation.


Iconix Brand Group, Inc. and Subsidiaries


                           Condensed Consolidated Income Statements
                                 (in thousands, except earnings per share data)


 

                          Three Months Ended Dec 31,     Year Ended Dec 31,
                          _________________________  _________________________
                               2007          2006        2007         2006
                          _________________________  _________________________
                           (Unaudited)   (Unaudited)

    Licensing revenue        $47,411       $26,903     $160,004      $80,694


    Selling, general and
     administrative
     expenses                 14,122         6,955       44,254       24,527
    Special charges – net     (7,094)          594       (6,039)       2,494
                          _________________________  _________________________
    Operating income          40,383        19,354      121,789       53,673


    Other expenses:
     Interest expense
      – net                   11,258         5,846       25,512       13,837
                          _________________________  _________________________
    Income before income
     taxes                    29,125        13,508       96,277       39,836
                          _________________________  _________________________
    Income taxes               9,898         4,655       32,522        7,335
                          _________________________  _________________________
    Net income               $19,227        $8,853      $63,755      $32,501
                          =========================  =========================


    Earnings per share:
            Basic              $0.34         $0.19        $1.12        $0.81
                          =========================  =========================
            Diluted            $0.31         $0.18        $1.04        $0.72
                          =========================  =========================


    Weighted average
     number of common
     shares outstanding:
            Basic             57,067        45,464       56,694       39,937
                          =========================  =========================
            Diluted           61,860        50,292       61,426       45,274
                          =========================  =========================