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8-K
ICONIX BRAND GROUP, INC. filed this Form 8-K on 03/27/2019
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In the first quarter of 2018, the Company adopted a new revenue recognition accounting standard (ASU No. 2014-09 Revenue from Contracts with Customers – Topic 606). Adoption of this standard increased the fourth quarter of 2018 revenue by approximately $2.3 million and increased revenue for the full year 2018 by approximately $3.9 million.

 

SG&A Expenses:

 

Total SG&A expenses in the fourth quarter of 2018 were $29.0 million, a 29% decrease compared to $40.9 million in the fourth quarter of 2017. Most of the decline for the quarter was a decrease in compensation, advertising and professional expenses.

 

Total SG&A expenses in the full year 2018 were $121.4 million, a 6% increase compared to $114.6 million in the full year 2017. Included in these expenses was an $8.2 million bad debt expense as a result of the Sears bankruptcy filing. Excluding the bad debt expense related to the Sears bankruptcy, SG&A expenses decreased 1% year over year.

 

Trademark, Goodwill and Investment Impairment:

 

In the fourth quarter of 2018, the Company recorded a non-cash trademark impairment charge of $58.7 million, primarily in the Womens segment related to the write-down in the Mossimo, Joe Boxer and Mudd trademarks, to reduce various trademarks in those segments to fair value. The Company also recorded a non-cash investment impairment charge of $2.5 million in the fourth quarter of 2018 due to impairment of the Company’s investment in iBrands.

 

For the full year 2018, the Company recorded a non-cash trademark impairment charge of $136.4 million primarily in the Womens segment, which was primarily related to the Mossimo, Joe Boxer and Mudd brands. The Company also recorded a non-cash goodwill impairment charge of $37.8 million in the full year 2018 due to impairment of goodwill in the Womens segment.

 

Operating Income and Adjusted EBITDA (1):

 

Adjusted EBITDA is a non-GAAP metric, and a reconciliation table is included below.

 

Operating loss for the fourth quarter of 2018 was $52.1 million, as compared to operating loss of $18.3 million in the fourth quarter of 2017.  Adjusted EBITDA in the fourth quarter of 2018 was $11.9 million which represents operating loss of $52.1 million excluding trademark and investment impairments of $61.2 million and other net charges of $2.8 million. Adjusted EBITDA in the fourth quarter of 2017 was $18.9 million which represents operating loss of $18.3 million excluding trademark and investment impairments of $28.5 million and other net charges of $8.7 million. Refer to footnote 1 below for a full detailed reconciliation of operating loss to adjusted EBITDA. The change period over period is primarily as a result of the change in revenue as is outlined above.

 

Operating loss for the full year 2018 was $119.0 million, as compared to operating loss of $564.7 million in the full year 2017. Adjusted EBITDA in the full year 2018 was $74.6 million which represents operating loss of $119.0 million excluding goodwill, trademark and investment impairments of $176.7 million and other net charges of $16.9 million. Adjusted EBITDA in the full year 2017 was $117.7 million which represents operating loss of $564.7 million excluding goodwill, trademark and investment impairments of $654.0 million and other net charges of $28.3 million. Refer to footnote 1 below for a full detailed reconciliation of operating loss to adjusted EBITDA. The change year over year is primarily as a result of the change in revenue as is outlined above.

 

 

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