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PhillipsVan Heusen Corp. Reports Operating Results (10-Q)

September 10, 2010 | About:
10qk

10qk

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PhillipsVan Heusen Corp. (PVH) filed Quarterly Report for the period ended 2010-08-01.

Phillipsvan Heusen Corp. has a market cap of $3.6 billion; its shares were traded at around $54.36 with a P/E ratio of 17.4 and P/S ratio of 1.5. The dividend yield of Phillipsvan Heusen Corp. stocks is 0.3%. Phillipsvan Heusen Corp. had an annual average earning growth of 11.3% over the past 10 years.PVH is in the portfolios of John Buckingham of Al Frank Asset Management, Inc., Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

We funded the cash portion and related costs of the Tommy Hilfiger acquisition with cash on hand and the net proceeds of the following activities: (i) the sale on April 28, 2010 of 5.8 million shares of our common stock, for an offering price of $66.50 per share; (ii) the issuance of an aggregate of 8,000 shares of Series A convertible preferred stock for an aggregate gross purchase price of $200.0 million; (iii) the issuance of $600.0 million of 7 3/8% senior notes due 2020; and (iv) the borrowing of $1.9 billion of term loans under new credit facilities. In conjunction with this financing, we paid $303.6 million in the second quarter of 2010 to extinguish our 7 1/4% senior notes due 2011 and our 8 1/8% senior notes due 2013. In addition, we made a $100.0 million voluntary debt repayment on the term loans at the end of the second quarter of 2010. These items are more fully described in the section entitled Liquidity and Capital Resources below.

Interest expense increased to $39.7 million in the second quarter of 2010 from $8.4 million in the second quarter of the prior year principally as a result of the issuance during the second quarter of 2010 of $600.0 million of 7 3/8% senior notes due 2020 and term loans of $1.9 billion borrowed under new credit facilities, the net proceeds of which were used in connection with the purchase of Tommy Hilfiger. We subsequently made a $100.0 million voluntary debt repayment on the term loans at the end of the second quarter of 2010. Interest income of $0.5 million in the second quarter of 2010 was relatively flat to the prior years second quarter amount of $0.4 million.

Interest expense increased to $48.1 million in the twenty-six weeks ended August 1, 2010 from $16.7 million in the twenty-six week period of the prior year principally as a result of the issuance during the second quarter of 2010 of $600.0 million of 7 3/8% senior notes due 2020 and term loans of $1.9 billion borrowed under new credit facilities, the net proceeds of which were used in connection with the purchase of Tommy Hilfiger. We made a $100.0 million voluntary debt repayment on the term loans at the end of the second quarter of 2010. Interest income of $0.6 million in the twenty-six weeks ended August 1, 2010 was relatively flat to the prior years twenty-six week period amount of $0.9 million.

Net interest expense for the full year 2010 is expected to increase to a range of $130.0 million to $132.0 million from $32.2 million in the prior year principally as a result of the issuance during the second quarter of 2010 of $600.0 million of 7 3/8% senior notes due 2020 and term loans of $1.9 billion borrowed under new credit facilities, the proceeds of which were used in connection with the purchase of Tommy Hilfiger. We made a $100.0 million voluntary debt repayment on the term loans at the end of the second quarter of 2010 and we currently plan on making approximately $300 million of additional repayments at the end of 2010. (Please refer to the section entitled Liquidity and Capital Resources below for a further discussion.)

On May 6, 2010, we sold an aggregate of 8,000 shares of Series A convertible preferred stock, par value $100.00 per share, for an aggregate gross purchase price of $200.0 million. We received net proceeds of $188.6 million in connection with this issuance, which were used in the second quarter of 2010 to fund a portion of the purchase price for the Tommy Hilfiger acquisition. The Series A convertible preferred stock has a liquidation preference of $25,000 per share and is currently convertible at a price of $47.74 into 4.2 million shares of common stock. The conversion

Our new senior secured credit facility, which we entered into on May 6, 2010, consists of a Euro-denominated term loan A facility, a United States dollar-denominated term loan A facility, a Euro-denominated term loan B facility, a United States dollar-denominated term loan B facility, a United States dollar-denominated revolving credit facility and two multi-currency (one United States dollar and Canadian dollar, and the other Euro, Yen and Pound) revolving credit facilities. We borrowed $1.9 billion of term loans on May 6, 2010 and made a voluntary repayment of $100.0 million on these term loans during the second quarter of 2010. As of August 1, 2010, we had an aggregate of $1.8 billion of borrowings under the term loan facilities outstanding (based on the applicable exchange rates in effect on August 1, 2010). These new credit facilities provide for approximately $450 million of revolving credit facilities (based on the applicable exchange rates in effect on August 1, 2010), for which we had no revolving credit borrowings and $195.8 million of letters of credit outstanding as of August 1, 2010. The terms of each of the term loan A and B facilities contain a mandatory repayment schedule on a quarterly basis, such that the total annual repayments are as follows:

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