Phillips-Van Heusen’s Q4 Revenues Grow 9%

Phillips-Van Heusen Corporation, the owner of G.H. Bass, reported revenues increased 9% in the fourth quarter, to $614.6 million from revenue on a non-GAAP basis of $561.3
million.
On a GAAP basis, revenue increased 6% from $577.8 million.

Earnings per share was 61 cents on a non-GAAP basis, which exceeded
the
Company’s earnings guidance and the consensus estimate. Earnings
per
share in the prior year’s fourth quarter was $0.30 on a non-GAAP
basis. GAAP earnings per share was $0.51, which compares to a GAAP loss
per
share of $(0.74) in the prior year’s fourth quarter.

The momentum of Calvin
Klein’s global growth continued during the fourth
quarter, with a 22% increase in royalty revenue as compared to the
prior
year period. This growth is attributable to strength in jeans,
underwear, fragrance, women’s sportswear, dresses and outerwear.

The company’s wholesale and retail businesses also had a strong fourth
quarter, registering combined revenue growth of 10% compared to
the
prior year period’s non-GAAP amount, or 7% on a GAAP basis. The
Company’s wholesale businesses recorded a 7% revenue increase due,
in
part, to growth in the Company’s dress furnishings business. Also
contributing to this increase was the planned movement of holiday
shipments into the fourth quarter of 2009 from the third quarter
of 2009
in order to be closer to the holiday selling season. The Company’s

outlet retail divisions delivered fourth quarter 2009 comparable
store
sales growth of 11%.

Fourth Quarter Earnings Before
Interest and Taxes:

On a GAAP basis, earnings before interest
and taxes in the current
year’s fourth quarter was $52.8 million as compared to a loss
before
interest and taxes of $(49.8) million in the prior year period.
Restructuring and other items were $8.7 million in the fourth
quarter of
2009 and $85.1 million in the prior year’s fourth quarter. On a
non-GAAP
basis, earnings before interest and taxes in the current year’s
fourth
quarter increased to $61.6 million from $35.4 million in the
fourth
quarter of 2008. This increase was due to the revenue increases
discussed above, combined with a significant improvement in gross
margin
across all of our divisions, as the prior year’s fourth quarter
included
heavy promotional selling. Impacting fourth quarter 2009 earnings
was an
increase in expenses of approximately $30 million over the prior
year’s
fourth quarter related to higher advertising and incentive
compensation.

For the Full Year 2009:

• Non-GAAP earnings per share was $2.83 versus prior year’s
  non-GAAP
  earnings per share of $2.95. GAAP earnings per share was $3.08,
  an
  increase of 75% compared to GAAP earnings per share of $1.76 in
  the
  prior year.
• Revenue was flat to the prior year’s non-GAAP amount of $2.40
  billion.
  GAAP revenue was $2.49 billion in the prior year.
• Calvin Klein royalty revenue increased 6% compared to the prior
  year,
  as a 7% increase in royalty revenue on a constant exchange rate
  basis
  more than offset a $2.1 million negative impact from a stronger
  U.S.
  dollar over the period.

Balance Sheet

The Company ended the year with
$480.9 million in cash, an increase of
$152.7 million over the prior year. Receivables and inventories
ended
the quarter down 2% and 7%, respectively, from the prior year
period’s
balances reflecting the Company’s continued focus on managing
working
capital. Also contributing to the current year’s cash flow
increase was
a reduction in capital spending.

2010 Guidance

Tommy Hilfiger Acquisition

The
Company announced on March 15, 2010 that it had entered into a
definitive agreement to purchase Tommy Hilfiger B.V. The following

provides guidance for the Company’s full year and first quarter
2010,
without giving effect to the Tommy Hilfiger acquisition and
assuming the
Company continues on a standalone basis.

Full Year Guidance

Excluding
the Effect of the Tommy Hilfiger Acquisition

Earnings per
share in 2010 is currently projected to be in the range of
$3.20 to $3.28, an increase of 13% to 16% over 2009 on a non-GAAP
basis
and 4% to 6% on a GAAP basis. Revenue in 2010 is projected to be
$2.47
billion to $2.50 billion, or an increase of 3% to 4% versus 2009.
For
the full year, the Company is currently projecting that Calvin
Klein
royalty revenue will increase 5% to 7%. Combined revenue for the
Company’s existing wholesale and retail businesses is currently
planned
to grow between 3% and 4%. Comparable store sales for the
Company’s
existing retail businesses are currently projected to grow
approximately
2% to 3%.

First Quarter
Guidance

Excluding the Effect of the Tommy Hilfiger
Acquisition

For the first quarter of 2010, earnings per share
is currently expected
to be $0.73 to $0.75. First quarter revenue is currently expected
to be
approximately $590 million to $600 million in 2010, an increase of
6% to
8% from 2009 revenue. The Company is currently projecting Calvin
Klein
royalty revenue to increase 6% to 7% in the first quarter of 2009
as
compared to the prior year. The Company is currently projecting
revenue
for the Company’s combined wholesale and retail businesses to
increase
6% to 8% in the first quarter of 2009 as compared to the prior
year.
Comparable store sales for the Company’s retail businesses are
currently
projected to grow 6% to 7%. The Company will incur certain
one-time
transaction expenses during the first quarter of 2010 related to
the
Tommy Hilfiger acquisition, whether or not it is consummated,
which are
not included in the above first quarter guidance.

Impact
of the Tommy Hilfiger Acquisition

It is currently anticipated
that the Company’s acquisition of Tommy
Hilfiger B.V. will close in the second quarter of 2010. The
Company
currently expects the Tommy Hilfiger transaction to be immediately

accretive to earnings per share before one-time cash integration
costs
and transaction expenses. The Company currently estimates earnings

accretion of $0.20 to $0.25 per share on a non-GAAP basis in its
2010
fiscal year and earnings accretion of $0.75 to $1.00 per share in
its
2011 fiscal year. The 2010 earnings accretion estimate excludes
one-time
cash integration costs and transaction expenses of approximately
$100
million related to the transaction, or approximately $1.00 per
share.

CEO Comments

Commenting on these results,
Emanuel Chirico, Chairman and Chief
Executive Officer, noted, “We are extremely pleased with our 2009
results and the strong performance across all components of our
business, enabling us to exceed our previous earnings guidance.
Our
heritage brands delivered exceptional results in the fourth
quarter,
which reinforces what we know to be the strength and relevance of
our
brands to the consumer in the current “value-oriented”
environment. The
global growth momentum of the Calvin Klein brand also accelerated,
and
royalty revenue increased 22% in the fourth quarter.”

Mr.
Chirico continued, “We are positioned to have a strong year in 2010,
with new programs being implemented in our wholesale businesses, a
very
strong start to our outlet retail business and Calvin Klein
returning to
more historical global growth rates. Our performance is indicative
of
the drive our management team has to deliver earnings and growth
for the
benefit of our stakeholders. We will continue to strive to achieve
our
goals as we embark on the unification of two of the world’s
largest
apparel companies.”

Mr. Chirico concluded, “Both the PVH and
Tommy Hilfiger management teams
are working hard at completing the previously announced
acquisition of
Tommy Hilfiger, which we expect to close in the second quarter of
2010.
As we outlined when we announced the deal, the growth prospects
for the
combined company are strong and the businesses and cultures
complementary, resulting in a company that has an attractive
balance of
domestic and international operations, wholesale and retail
revenues,
greater breadth and depth in product categories and a platform
from
which we expect to drive greater value for our customers and
stockholders.”

Non-GAAP Exclusions:

The
discussions in this release that refer to non-GAAP amounts exclude
the following:

• Costs incurred in connection with the Company’s restructuring
  initiatives announced in the fourth quarter of 2008, including
  the
  shutdown of the Company’s domestic production of machine-made
  neckwear, a realignment of the Company’s global sourcing
  organization,
  reductions in warehousing capacity, lease termination fees for
  the
  majority of the Company’s Calvin Klein specialty retail stores
  and
  other initiatives to reduce corporate and administrative
  expenses.
  Such costs associated with these initiatives are as follows:
  • Pre-tax costs of $25.9 million in 2009, $17.2 million of
    which was
    incurred in the first three quarters of 2009 and $8.7
    million of
    which was incurred in the fourth quarter of 2009.
  • Pre-tax costs of $17.8 million that were incurred in the
    fourth
    quarter of 2008. In addition, pre-tax non-cash fixed asset
    impairment charges of $63.8 million were recorded in the
    fourth
    quarter of 2008 that principally related to approximately
    200 of
    the Company’s retail stores.
• The 2008 operating results and exit costs associated with the
  Company’s Geoffrey Beene outlet retail division, which was
  closed
  during 2008. The net pre-tax costs related to the operating
  results
  and exit costs associated with the Company’s Geoffrey Beene
  outlet
  retail division were $17.7 million in 2008, of which $3.5
  million
  related to the fourth quarter of 2008. Revenue related to the
  Geoffrey
  Beene outlet retail division was $94.9 million for the full year
  2008
  and $16.5 million for the fourth quarter of 2008.
• The tax benefit of the above pre-tax costs, and a net tax
  benefit of
  $29.6 million that was recorded primarily in the third quarter
  of
  2009, related principally to the lapse of the statute of
  limitations
  with respect to certain previously unrecognized tax positions.
  Taxes
  are estimated on the Company’s restructuring and other costs at
  the
  Company’s normalized tax rate before discrete items.