PVH Corp. reported a fourth-quarter revenue and earnings beat behind an “outstanding” quarter from Tommy Hilfiger and a “healthy” quarter from Calvin Klein, according to Emanuel Chirico, chairman and CEO.

Though revenue fell 1 percent in the period to $2.5 billion, that market topped Wall Street’s expectations of $2.4 billion. Net income for the quarter was $158.7 million, with earnings per share of $2.09. Adjusted for non-recurring gains, EPS was $1.84, beating analysts’ expectations of $1.75.

Commenting on these results, Emanuel Chirico, chairman and CEO, said, “We are very pleased with our fourth quarter and full year 2018 results, which demonstrated the power of our diversified business model. Tommy Hilfiger had an outstanding quarter, with strong growth across all product categories and regions. Calvin Klein delivered a healthy quarter, with particular strength in Europe, solidifying our confidence in the margin opportunity that we previously identified for 2019 and beyond. The outperformance against our guidance in the Tommy Hilfiger and Calvin Klein businesses was partially offset by weaker trends in our Heritage Brands business.”

Chirico continued, “During 2018, we focused on adapting to the changing consumer landscape and geopolitical realities, while taking swift action to address the challenges in our Calvin Klein business. Additionally, we focused on investing in our talent, supply chain, consumer data and insights, and digital capabilities, which we believe positions our businesses for long-term stockholder value creation.”

Chirico concluded, “We are well positioned going into 2019 and beyond as we execute against our strategic priorities and leverage the incredible talent across our organization. I believe that while we, like many other global consumer companies, will continue to face consumer and geopolitical headwinds, the incredible brand power behind Tommy Hilfiger and Calvin Klein will provide us with significant top and bottom line opportunities over the next several years.”

Fourth Quarter Business Review

Revenue in the fourth quarter of 2018 was negatively impacted compared to the prior year period as 2017 included an additional (53rd) week. The total negative impact in the fourth quarter of 2018 compared to the prior year period was approximately $125 million, comprised of (i) approximately$80 million due to one fewer week of revenue in the fourth quarter of 2018 as compared to the fourth quarter of 2017 and (ii) approximately $45 million of revenue that shifted out of the fourth quarter of 2018 due to the fiscal calendar misalignment in 2018 as compared to 2017. In addition, as a result of the 53rd week in 2017, the fourth quarter 2018 comparable store sales are more appropriately compared with the thirteen week period ended February 4, 2018 (which excludes for this purpose the first week of the fourth quarter of 2017). The fourth quarter 2018 comparable store sales discussed in this section are presented on this shifted basis.

Tommy Hilfiger

Revenue in the Tommy Hilfiger business for the quarter increased 2 percent to$1.2 billion (and increased 5 percent on a constant currency basis) compared to the prior year period, despite an approximately $60 million negative impact of the 53rd week in 2017. Tommy Hilfiger International revenue increased 3 percent to $721 million (and increased 7 percent on a constant currency basis) compared to the prior year period, driven by continued strong performance across all regions and channels. Comparable store sales on the shifted basis described above increased 16 percent. Tommy Hilfiger North America revenue increased 2 percent to $447 million (and also increased 2 percent on a constant currency basis) compared to the prior year period. Comparable store sales on the shifted basis described above increased 5 percent.

Earnings before interest and taxes on a GAAP basis for the quarter increased to $168 million, inclusive of a $5 million negative impact due to foreign currency translation, from $47 million in the prior year period. Included in earnings before interest and taxes for the current quarter were costs of $4 million related to the April 2016 acquisition of the 55 percent interest in the company’s former Tommy Hilfiger joint venture in China that it did not already own (the “TH China acquisition”), consisting of noncash amortization of short-lived assets. Included in earnings before interest and taxes for the prior year period were costs of (i) $83 million in connection with an amendment to Mr. Tommy Hilfiger’s employment agreement pursuant to which the company made a cash buyout of a portion of the future payments to Mr. Hilfiger (the “Mr. Hilfiger amendment”) and (ii) $7 million related to the TH China acquisition, primarily consisting of noncash amortization of short-lived assets. Earnings before interest and taxes on a non-GAAP basis for these periods, as discussed below, exclude these amounts.

Earnings before interest and taxes on a non-GAAP basis for the quarter increased to $171 million, inclusive of a $5 million negative impact due to foreign currency translation, from $137 million in the prior year period. The earnings increase was principally due to the revenue increase noted above, as well as gross margin improvements and a leveraging of expenses across all regions.

Calvin Klein

Revenue in the Calvin Klein business for the quarter decreased 2 percent to$953 million (and was flat on a constant currency basis) compared to the prior year period, including a negative impact of approximately $50 million from the 53rd week in 2017. Calvin Klein International revenue increased 2 percent to $523 million (and increased 6 percent on a constant currency basis) compared to the prior year period. International comparable store sales on the shifted basis described above increased 6 percent. Calvin Klein North America revenue decreased 7 percent to $430 million (and also decreased 7 percent on a constant currency basis) compared to the prior year period, mainly due to the negative impact of the 53rd week and continued softness in the CALVIN KLEIN JEANS business. North America comparable store sales on the shifted basis described above decreased 1 percent.

Earnings before interest and taxes on a GAAP basis for the quarter decreased to $44 million, inclusive of a $3 million negative impact due to foreign currency translation, from $79 million in the prior year period. Included in earnings before interest and taxes for the current quarter were costs of $41 million in connection with the restructuring associated with the strategic changes for the Calvin Klein business announced in January 2019 (the “Calvin Klein restructuring”), consisting of $27 million of severance, $7 million of noncash asset impairments, $4 million of contract termination and other costs, and $2 million of inventory markdowns. Earnings before interest and taxes on a non-GAAP basis for these periods, as discussed below, exclude these amounts.

Earnings before interest and taxes on a non-GAAP basis for the quarter increased to $84 million, inclusive of a $3 million negative impact due to foreign currency translation, from $79 million on a GAAP basis in the prior year period (there were no non-GAAP exclusions in the prior year period). The earnings increase was principally due to lower expenses, which more than offset the negative impact from the revenue decline noted above.

Heritage Brands

Revenue in the Heritage Brands business for the quarter decreased 5 percent to $363 million compared to the prior year period, including a negative impact of approximately $15 million from the 53rd week in 2017. Comparable store sales on the shifted basis described above were flat.

Loss before interest and taxes for the quarter was $8 million as compared to income before interest and taxes of $8 million in the prior year period. The earnings decrease was principally due to the revenue decrease noted above, as well as gross margin pressure in the quarter.

Fourth Quarter Consolidated Results:

Fourth quarter revenue decreased 1 percent to $2.5 billion (and increased 2 percent on a constant currency basis) compared to the prior year period, including a $125 million negative impact as a result of 2017 including an additional (53rd) week.

Earnings per share on a GAAP basis was $2.09 for the fourth quarter of 2018 compared to $1.39 in the prior year period. These results include the amounts for the applicable period described under the heading “Non-GAAP Exclusions” later in this release. Earnings per share on a non-GAAP basis for these periods, as discussed below, exclude these amounts.

Earnings per share on a non-GAAP basis was $1.84 for the fourth quarter of 2018 compared to $1.58 in the prior year period. Earnings per share on both a GAAP and non-GAAP basis for the fourth quarter of 2018 included a $0.09 negative impact related to foreign currency translation.

Earnings before interest and taxes on a GAAP basis for the quarter increased to $134 million, inclusive of an $8 million negative impact due to foreign currency translation, from $58 million in the prior year period. Included in earnings before interest and taxes for the current quarter were $59 million of costs consisting of (i) $41 million related to the Calvin Klein restructuring, (ii) a $15 million actuarial loss recognized on retirement plans, and (iii) $4 million related to the TH China acquisition. Included in earnings before interest and taxes for the prior year period were $119 million of net costs consisting of (i) $83 million in connection with the Mr. Hilfiger amendment, (ii) $28 million in connection with the company’s redemption and issuance of senior notes, including $24 million related to the early redemption of the company’s $700 million 4 1/2 percent senior notes and $4 million related to the company’s issuance of €600 million 3 1/8 percent senior notes, (iii) $7 million related to the TH China acquisition, (iv) a $3 million actuarial loss recognized on retirement plans, and (v) a $2 million net gain in connection with the consolidation within the company’s warehouse and distribution network in North America, which included the impact of the sale of a warehouse and distribution center. Earnings before interest and taxes on a non-GAAP basis for these periods, as discussed below, exclude these amounts.

Earnings before interest and taxes on a non-GAAP basis for the quarter increased to $193 million, inclusive of an $8 million negative impact due to foreign currency translation, compared to $177 million in the prior year period. The improvement in earnings was principally driven by growth in the Tommy Hilfiger and Calvin Klein businesses. Partially offsetting these increases were an earnings decline in the Heritage Brands business and an $8 million increase in corporate expenses due, in part, to investments in digital and information technology initiatives.

Net interest expense decreased to $29 million from $33 million in the prior year period primarily due to the cumulative impact of debt repayments made during 2018 and 2017.

The effective tax rate on a GAAP basis was (51.6) percent as compared to (329.9) percent in the prior year period. Included in the fourth quarter of 2017 was a provisional net tax benefit of $53 million recorded in connection with the U.S. Tax Cuts and Jobs Act of 2017 (the “U.S. Tax Legislation”). The company completed in the fourth quarter of 2018 its final analysis of the impacts of the U.S. Tax Legislation and recorded a net tax benefit of $25 million to adjust the provisional amount during the measurement period allowed by the Securities and Exchange Commission. The fourth quarter of 2018 also included a $41 million tax benefit from the remeasurement of certain of the company’s net deferred tax liabilities in connection with the enactment of legislation in the Netherlands known as the “2019 Dutch Tax Plan,” which became effective on January 1, 2019 and includes a gradual reduction of the corporate income tax rate by 2021. The fourth quarter of 2017 also included discrete tax benefits of $25 million related to the resolution of uncertain tax positions and the exercise of stock options by the company’s Chairman and Chief Executive Officer. The effective tax rate on a non-GAAP basis for these periods exclude these amounts. The effective tax rate on a non-GAAP basis was 15 percent as compared to 14.4 percent in the prior year period.

Full Year 2018 Consolidated Results:

Due to the 53rd week in 2017, the full year 2018 comparable store sales are more appropriately compared with the 52 week period ended February 4, 2018 (which excludes for this purpose the first week of 2017). The full year 2018 comparable store sales discussed in this section are presented on this shifted basis.

Revenue for 2018 increased 8 percent to $9.7 billion (and also increased 8 percent on a constant currency basis) compared to the prior year. The revenue increase was due to:

  • A 12 percent increase (10 percent increase on a constant currency basis) in theTommy Hilfiger business compared to the prior year, driven principally by continued strong performance across all regions and channels. International comparable store sales on the shifted basis described above increased 13 percent. North America comparable store sales on the shifted basis described above increased 5 percent.
  • An 8 percent increase (7 percent increase on a constant currency basis) in the Calvin Klein business compared to the prior year, driven by growth in Europe and Asia, as well as in the North America wholesale business. International comparable store sales on the shifted basis described above increased 5 percent. North America comparable store sales on the shifted basis described above increased 1 percent.
  • A 1 percent increase in the Heritage Brands business compared to the prior year. Comparable store sales on the shifted basis described above increased 1 percent.

Earnings per share on a GAAP basis was $9.65 for 2018 compared to $6.84 in the prior year. These results include the amounts for the applicable period described under the heading “Non-GAAP Exclusions” later in this release. Earnings per share on a non-GAAP basis for these periods, as discussed below, exclude these amounts.

Earnings per share on a non-GAAP basis was $9.60 for 2018 compared to$7.94 in the prior year. Earnings per share on both a GAAP and non-GAAP basis for 2018 included a $0.05 positive impact related to foreign currency translation.

Earnings before interest and taxes on a GAAP basis for 2018 increased to$892 million, inclusive of a $5 million positive impact due to foreign currency translation, from $632 million in the prior year. These results include the amounts for the applicable period described under the heading “Non-GAAP Exclusions” later in this release. Earnings before interest and taxes on a non-GAAP basis for these periods, as discussed below, exclude these amounts.

Earnings before interest and taxes on a non-GAAP basis for 2018 was $971 million, inclusive of a $5 million positive impact due to foreign currency translation, compared to $864 million in the prior year. The improvement in earnings was driven by growth in the Tommy Hilfiger and Calvin Klein businesses. Partially offsetting these increases were an earnings decline in the Heritage Brands business and a $20 million increase in corporate expenses due, in part, to investments in digital and information technology initiatives.

Net interest expense for 2018 decreased to $116 million from $122 million in the prior year primarily due to the cumulative impact of debt repayments made during 2018 and 2017.

The effective tax rate on a GAAP basis for 2018 was 4 percent as compared to (5.1) percent in the prior year. Included in the prior year was a provisional net tax benefit of $53 million recorded in connection with the U.S. Tax Legislation. In 2018, the company completed its final analysis of the impacts of the U.S. Tax Legislation and recorded a net tax benefit of $25 million to adjust the provisional amount during the measurement period allowed by the Securities and Exchange Commission. The effective tax rate on a GAAP basis for 2018 also included a $41 million tax benefit from the remeasurement of certain of the company’s net deferred tax liabilities in connection with the 2019 Dutch Tax Plan. The effective tax rate on a GAAP basis for 2017 also included discrete tax benefits of $38 million related to the resolution of uncertain tax positions and the exercise of stock options by the company’s Chairman and Chief Executive Officer. The effective tax rate on a non-GAAP basis for these periods exclude these amounts. The effective tax rate on a non-GAAP basis for 2018 was 13.4 percent as compared to 16 percent in the prior year.

Inventory levels increased 9 percent as compared to 2017, primarily due to an expected increase in sales for the first quarter of 2019 as compared to the prior year period, as well as an acceleration of receipts in advance of potential tariffs on goods imported from China.

Stock Repurchase Program:

During 2018, the company repurchased approximately 2.2 million shares of its common stock for $300 million (9 million shares for $992 millionsince inception) under the $1.250 billion stock repurchase program authorized by the Board of Directors through June 3, 2020. On March 26, 2019, the Board of Directors authorized a further $750 million increase to the program and extended it to June 3, 2023. Stock repurchases under the program may be made from time to time over the period through open market purchases, accelerated share repurchase programs, privately negotiated transactions or other methods, as the company deems appropriate. Purchases are made based on a variety of factors, such as price, corporate requirements and overall market conditions, applicable legal requirements and limitations, restrictions under the company’s debt arrangements, trading restrictions under the company’s insider trading policy and other relevant factors. The program may be modified by the Board, including to increase or decrease the repurchase limitation or extend, suspend, or terminate the program, at any time, without prior notice.

2019 Outlook:

The company’s 2019 guidance assumes that two acquisitions will close in the second quarter of 2019. The first is the company’s pending acquisition of the approximately 78 percent interest in Gazal Corporation Limited (“Gazal”) that it does not already own (the “Australia acquisition”). The company and Gazal jointly own and manage a joint venture, PVH Brands Australia Pty. Limited (“PVH Australia”), which licenses and operates businesses under the “TOMMY HILFIGER,” “CALVIN KLEIN” and “Van Heusen” brands, along with other licensed and owned brands. PVH Australia will come under the company’s full ownership as a result of the Australiaacquisition. The second is the company’s pending acquisition of theTommy Hilfiger retail business in Hong Kong and certain other countries in Central and Southeast Asia from the company’s current licensee in those markets, Dickson Concepts (International) Limited (the “TH CSAP acquisition”). These pending acquisitions are expected to add approximately $150 million of revenue in 2019.

Please see the section entitled “Full Year and Quarterly Reconciliations of GAAP to Non-GAAP Amounts” at the end of this release for further detail and reconciliations of GAAP to non-GAAP amounts discussed in this section.

Full Year Guidance

The company currently projects that 2019 earnings per share on a GAAP basis will be in a range of $8.90 to $9.00 compared to $9.65 in 2018. The company currently projects that 2019 earnings per share on a non-GAAP basis will be in a range of $10.30 to $10.40 compared to $9.60 in 2018. Both the GAAP and non-GAAP projections include the estimated negative impact of approximately $0.22 per share related to foreign currency translation.

Revenue in 2019 is projected to increase approximately 4 percent (increase approximately 5 percent on a constant currency basis) as compared to 2018. Revenue for the Tommy Hilfiger business is projected to increase approximately 6 percent (increase approximately 8 percent on a constant currency basis). Revenue for the Calvin Klein business is projected to increase approximately 2 percent (increase approximately 3 percent on a constant currency basis). Revenue for the Heritage Brands business is projected to increase approximately 3 percent.

Net interest expense in 2019 is projected to increase to approximately$128 million compared to $116 million in 2018 primarily due to higher interest rates, as well as an increase in short-term borrowings, including as a result of the pending acquisitions mentioned above and costs expected to be incurred in connection with the Calvin Klein restructuring. The company estimates that the 2019 effective tax rate will be in a range of 15 percent to 16 percent on a GAAP basis and in a range of 14.5 percent to 15.5 percent on a non-GAAP basis.

The company’s estimate of 2019 earnings per share on a non-GAAP basis excludes approximately $120 million of pre-tax net costs, consisting of (i) $130 million of pre-tax costs expected to be incurred in connection with the Calvin Klein restructuring, primarily consisting of severance, noncash asset impairments, lease and other contract termination costs, and inventory markdowns, including as a result of the closure of the company’s flagship store on Madison Avenue in New York, New York, (ii) $60 millionof pre-tax costs expected to be incurred in connection with the closure of the company’s TOMMY HILFIGER flagship and anchor stores in the United States, primarily consisting of severance, noncash asset impairments and lease and other contract termination costs, (iii) a net pre-tax gain of $70 million expected to be recorded in connection with the Australia acquisition and the TH CSAP acquisition, consisting of a noncash gain to write up the company’s equity investments in Gazal and PVH Australia to fair value, partially offset by pre-tax costs related to both pending acquisitions, primarily consisting of noncash valuation adjustments and amortization of short-lived assets, and the resulting estimated tax effects of these pre-tax items.

First Quarter Guidance

The company currently projects that first quarter 2019 earnings per share on a GAAP basis will be in a range of $0.25 to $0.30 compared to $2.29in the prior year period. The company currently projects that first quarter 2019 earnings per share on a non-GAAP basis will be in a range of $2.40 to $2.45 compared to $2.36 in the prior year period. Both the GAAP and non-GAAP projections include an estimated negative impact of approximately $0.14 per share related to foreign currency translation.

Revenue in the first quarter of 2019 is projected to increase approximately 2 percent (increase approximately 6 percent on a constant currency basis) compared to the prior year period. Revenue for the Tommy Hilfiger business in the first quarter is projected to increase approximately 4 percent (increase approximately 10 percent on a constant currency basis). Revenue for the Calvin Klein business in the first quarter is projected to increase approximately 1 percent (increase approximately 5 percent on a constant currency basis). Revenue for the Heritage Brands business in the first quarter is projected to increase approximately 1 percent.

Net interest expense in the first quarter of 2019 is projected to increase to approximately $31 million compared to $28 million in the prior year period primarily due to higher interest rates and an increase in short-term borrowings. The company estimates that the first quarter 2019 effective tax rate will be in a range of 55 percent to 60 percent on a GAAP basis and in a range of 21 percent to 22 percent on a non-GAAP basis.

The company’s estimate of first quarter 2019 earnings per share on a non-GAAP basis excludes approximately $185 million of pre-tax costs, consisting of (i) $125 million of pre-tax costs expected to be incurred in connection with the Calvin Klein restructuring and (ii) $60 million of pre-tax costs expected to be incurred in connection with the closure of the company’s TOMMY HILFIGER flagship and anchor stores in the United States, and the resulting estimated tax effects of these pre-tax costs.

Non-GAAP Exclusions:

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

  • Pre-tax costs of approximately $130 million expected to be incurred in 2019 related to the Calvin Klein restructuring, primarily consisting of severance, noncash asset impairments, lease and other contract termination costs, and inventory markdowns, including as a result of the closure of the company’s flagship store on Madison Avenue in New York, New York, of which $125 million is expected to be incurred in the first quarter.
  • Pre-tax costs of approximately $60 million expected to be incurred in the first quarter of 2019 in connection with the closure of the company’s TOMMY HILFIGER flagship and anchor stores in the United States, primarily consisting of severance, noncash asset impairments and lease and other contract termination costs.
  • Net pre-tax gain of approximately $70 million expected to be recorded in 2019 in connection with the Australia acquisition and the TH CSAP acquisition, consisting of a noncash gain to write up the company’s equity investments in Gazal and PVH Australia to fair value, partially offset by pre-tax costs related to both pending acquisitions, primarily consisting of noncash valuation adjustments and amortization of short-lived assets.
  • Pre-tax costs of $41 million incurred in the fourth quarter of 2018 related to the Calvin Klein restructuring, consisting of $27 million of severance, $7 million of noncash asset impairments, $4 million of contract termination and other costs, and $2 million of inventory markdowns.
  • Pre-tax costs of $24 million incurred in 2018 related to the TH China acquisition, consisting of noncash amortization of short-lived assets, of which $7 million was incurred in the first quarter, $7 million was incurred in the second quarter, $6 million was incurred in the third quarter and $4 million was incurred in the fourth quarter.
  • Pre-tax loss of $15 million recorded in the fourth quarter of 2018 related to the recognized actuarial loss on retirement plans.
  • Discrete tax benefit of $41 million recorded in the fourth quarter of 2018 related to the remeasurement of certain of the company’s net deferred tax liabilities in connection with the 2019 Dutch Tax Plan.
  • Discrete net tax benefit of $25 million recorded in the fourth quarter of 2018 to adjust the provisional net tax benefit recorded in 2017 in connection with the U.S. Tax Legislation, primarily consisting of the release of a valuation allowance on the company’s foreign tax credits.
  • Pre-tax costs of $83 million incurred in the fourth quarter of 2017 in connection with the Mr. Hilfiger amendment.
  • Pre-tax costs of $54 million incurred in the first quarter of 2017 in connection with the agreements to restructure the company’s supply chain relationship with Li & Fung Trading Limited (“Li & Fung”), under which the company terminated its non-exclusive buying agency agreement with Li & Fung during 2017.
  • Pre-tax costs of $28 million incurred in the fourth quarter of 2017 in connection with the company’s redemption and issuance of senior notes, including $24 million related to the early redemption of the $700 million 4 1/2 percent senior notes and $4 million related to the issuance of €600 million 3 1/8 percent senior notes.
  • Pre-tax costs of $27 million incurred in 2017 related to the TH China acquisition, primarily consisting of noncash amortization of short-lived assets, of which $7 million was incurred in the first quarter, $7 million was incurred in the second quarter, $6 million was incurred in the third quarter and $7 million was incurred in the fourth quarter.
  • Pre-tax costs of $19 million incurred in 2017 in connection with the relocation of the Tommy Hilfiger office in New York, including noncash depreciation expense, of which $7 million was incurred in the first quarter, $7 million was incurred in the second quarter and $5 million was incurred in the third quarter.
  • Pre-tax costs of $9 million incurred in the first quarter of 2017 in connection with the noncash settlement of certain of the company’s benefit obligations related to its retirement plans as a result of an annuity purchased for certain participants, under which such obligations were transferred to an insurer.
  • Pre-tax net costs of $8 million incurred in 2017 in connection with the consolidation within the company’s warehouse and distribution network in North America, of which $2 million of costs were incurred in the first quarter, $6 million of costs were incurred in the second quarter, $3 million of costs were incurred in the third quarter and a net gain of $2 million was recorded in the fourth quarter, which included the impact of the sale of a warehouse and distribution center.
  • Pre-tax loss of $3 million recorded in the fourth quarter of 2017 related to the recognized actuarial loss on retirement plans.
  • Discrete tax benefits of $23 million recorded in 2017 primarily related to the resolution of uncertain tax positions, of which $13 million was recorded in the third quarter and $10 million was recorded in the fourth quarter.
  • Discrete net tax benefit of $53 million recorded in the fourth quarter of 2017 in connection with the U.S. Tax Legislation, consisting of a $265 million benefit primarily from the remeasurement of the company’s net deferred tax liabilities, partially offset by a $38 million valuation allowance on the company’s foreign tax credits and a $174 million transition tax on earnings of foreign subsidiaries deemed to be repatriated.
  • Discrete tax benefit of $15 million recorded in the fourth quarter of 2017 related to an excess tax benefit from the exercise of stock options by the company’s Chairman and Chief Executive Officer.
  • Estimated tax effects associated with the above pre-tax items, which are based on the company’s assessment of deductibility. In making this assessment, the company evaluated each item that it had identified above as a non-GAAP exclusion to determine if such item is taxable or tax deductible, and if so, in what jurisdiction the tax expense or tax deduction would occur. All items above were identified as either primarily taxable or tax deductible, with the tax effect taken at the statutory income tax rate of the local jurisdiction, or as non-taxable or non-deductible, in which case the company assumed no tax effect.

Photo courtesy PVH Corp.