Iconix Brand Group Inc. (Nasdaq:ICON) reported a loss of $6.3 million, or 13 cents a share, after a number of special charges. On Nov. 6, the company had pre-announced lower-than-expected Q3 earnings and its intent to restate previous financial statements.

The restatements followed the exit of long-time CEO, Neil Cole, in August, as well as the departures of both its CFO and COO in the spring.

The biggest of the charges in the latest quarter was $12.2 million of accounts receivable reserves and write-offs related to a review of the company's license agreements and relationships with its licensees. The write-downs primarily relate to its men's business segment, which includes its men's fashion and men's sports brands, with Ecko and Rocawear contributing most of the write-offs.

Another $3.8 million in charges related to adjustments from the preparation of the company's 2014 federal tax return. Finally, $7.1 million represented charges for professional fees associated with the continuing correspondence with the staff of the U.S. Securities and Exchange Commission, and severance costs related to the transition of Iconix management.

Non-GAAP diluted EPS for the third quarter was 9 cents a share, down 88 percent against 72 cents in the prior year quarter. Adjusted EBITDA was approximately $30.5 million, a 53 percent drop. Net earnings were $33.7 million, or 58 cents, a year ago.

Licensing revenue for the quarter declined 2.9 percent to $88.9 million. Excluding the effect of foreign currency exchange rates, licensing revenue was flat in the quarter. Net revenues sunk 19.4 percent to $88.9 million due to a change in accounting for revenues from joint partnerships.

“I would like to emphasize that the underlying fundamentals of our business are strong,” said Peter Cuneo, chairman and interim CEO of Iconix, on a conference call with analysts. “While we are going through a difficult transition period, I am confident we can be successful. Iconix continues to benefit from a diversified portfolio of consumer brands, a profitable business model and strong free cash flow generation.”

An internal review identified errors regarding the classification of certain expenses as well as an adequate support and estimation of certain revenues and of retail support for certain licenses. The restatements had no impact to 2013 net income; lowered income by $3.9 million, or 2.5 percent in 2014, and slightly raised 2015 net income.

Cuneo also said the company generated approximately $145 million of free cash flow in the nine months, continues to expect free cash flow in the range of $170 million to $175 million this year, and looks to generate free cash flow in a range of $170 million to $185 million in 2016.

Regardless, Cuneo said Iconix’s board is taking several steps to make sure the restatement issues are “fully remedied.” These include the hiring of Dave Jones as its new CFO with additional hires in finance, accounting and IT functions planned. A search for a new CEO is also underway and the board intends to separate the roles of chairman and CEO. Iconix will also be implementing additional procedures and controls relating to transactions and other business arrangements with licensees and in its joint ventures.

Regarding the third quarter, Iconix’s mens' segment sales declined 17.2 percent to $20.2 million due to the weakness at Rocawear, Ecko and Ed Hardy. Other brands in the segment include Starter, Umbro, Ocean Pacific and Pony.

Iconix officials did not elaborate on the quarterly performance of its other mens’ brands although officials noted that Pony, acquired earlier this year, was performing below expectations.

Asked about Starter coming up for renewal as an exclusive at Wal-Mart, David Blumberg, Iconix’s head of strategic development, noted that Iconix just redid its Ocean Pacific with Wal-Mart and expects to renew Starter as well.

In its other segments, Women's revenues grew 4.6 percent to $34.5 million, with gains at Mossimo at Target, Mudd and Candies at Kohl's and Danskin Now at Walmart. Entertainment revenues expanded 8.1 percent to $25.1 million due to the acquisition of Strawberry Shortcake. Home declined 17.0 percent to $9.1 million due to declines at Sharper Image.

In updating its guidance for the current year, Iconix now expects licensing revenue is expected to be between $370 million and $380 million, down from a previous range of $410 million to $425 million. Non-GAAP EPS is expected to be between $1.35 and $1.40, down from previous guidance of $2 to $2.15.

Jones, the CFO, said $24 million of the revenue reduction reflects reduced expectations for Peanuts with some mass retailers opting to allocate more shelf space to Star Wars than expected. Another $4 million in the reduction related to lower expectations for Rocawear, Ecko and Ed Hardy while $8 million related to the accounting adjustments recorded as a result of the special committee and current management's reviews. The lower guidance also reflects a change to exclude acquisition assumptions from guidance.

–Tom Ryan