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8-K
ICONIX BRAND GROUP, INC. filed this Form 8-K on 03/27/2019
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Adjusted EBITDA by Segment (1)  Three months ended December 31,   Twelve months ended December 31, 
($, 000's)  2018   2017   % Change   2018   2017   % Change 
                         
Womens   4,833    16,609    -71%   42,501    87,590    -51%
Mens   5,750    (934)   716%   13,584    11,781    15%
Home   4,060    5,117    -21%   19,970    25,141    -21%
International   3,533    8,984    -61%   24,958    27,861    -10%
Corporate   (6,303)   (10,846)   42%   (26,370)   (34,723)   24%
Adjusted EBITDA   11,873    18,930    -37%   74,643    117,650    -37%

 

Interest Expense, Other Income and Loss on extinguishment of debt:

 

Interest expense in the fourth quarter of 2018 was $14.9 million, as compared to interest expense of $21.8 million in the fourth quarter of 2017. In the fourth quarter of 2018, the Company recognized a $7.2 million gain resulting from the Company's accounting for the 5.75% Convertible Notes which requires recording the fair value of this debt at the end of each period with any change from the prior period accounted for as other income or loss in the current period's income statement.

 

Interest expense in the full year 2018 was $59.2 million, as compared to interest expense of $67.9 million in the full year 2017. In the full year 2018, the Company recognized a $81.0 million gain resulting from the Company’s accounting for the 5.75% Convertible Notes which requires recording the fair value of this debt at the end of each period with any change from the prior period accounting for as other income or loss in the current period’s income statement. Additionally, in the full year 2018, the Company acquired an additional 5% interest in its Iconix Australia joint venture and as a result, recognized a $8.4 million pre-tax non-cash gain on the remeasurement of the Company’s initial investment. In the full year 2018, the Company recognized a $1.0 million gain, as compared to a gain of $2.7 million in the full year 2017, each related to payments received from the sale of its minority interest in Complex Media in 2016.

 

In the full year 2018, the Company recognized a gain on extinguishment of debt of $4.5 million related to the early extinguishment of a portion of the Company’s 1.50% Convertible Notes due 2018 as compared to a loss of $20.9 million in the full year 2017 related to the early extinguishment of a portion of the Company’s term loan and the repurchase of a portion of the Company’s 1.50% Convertible Notes due 2018.

 

Provision for Income Taxes:

 

The effective income tax rate for the fourth quarter of 2018 is approximately -11.1% which resulted in a $6.7 million income tax provision, as compared to an effective income tax rate of 165.5% in the prior year quarter which resulted in a $66.8 million income tax benefit.  The effective income tax rate for the full year 2018 is approximately -7.9% which resulted in a $6.5 million income tax provision, as compared to an effective income tax rate for the full year 2017 of 14.7% which resulted in a $96.0 million income tax benefit.

 

The decrease in the effective tax rate for both the fourth quarter and the full year is primarily a result of foreign tax expense calculated in local jurisdictions where there are no net operating losses available to offset the current tax liabilities, partially offset by a tax benefit resulting from the tax impact of impairment expenses recorded on indefinite lived intangible assets.

 

GAAP Net Income and GAAP Diluted EPS:

 

GAAP net loss from continuing operations attributable to Iconix for the fourth quarter of 2018 reflects a loss of $69.1 million as compared to income of $24.7 million for the fourth quarter of 2017. GAAP diluted EPS from continuing operations for the fourth quarter of 2018 reflects a loss of $9.75 as compared to income of $3.97 for the fourth quarter of 2017.

 

 

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