Editor's note: In the previous version of this article, we mistakenly indicated that Abercrombie & Fitch
Retailer Phillips-Van Heusen
In doing so, Phillips-Van Heusen is bucking the recent trend we've seen from retailers such as Gap
For the quarter, the company turned in solid improvements in operating income and net income. If you remove the cost from the early retirement of preferred shares, diluted earnings per share grew to $0.43 from $0.28 last year.
The company maintains a relatively strong balance sheet and historically generates a decent amount of free cash flow, which has largely been combined with debt and preferred shares to fund acquisitions. It's a somewhat risky strategy, but as long as the balance sheet remains strong and the company sees greater growth from its acquisitions than its cost of capital, it's a good combination. The company does pay a dividend, but has not increased it in years. Due to its debt and preferred shares, it's not likely to in the near future.
Over the last couple of years, Phillips-Van Heusen has incurred a number of restructuring and refinancing costs. If you want a clearer picture of the company's performance over a given period, you may want to factor out these items. However, Phillips-Van Heusen has claimed quite a few of them; if you're looking at the company's track record as a whole, it's probably best to include them.
In its press release, the company provides many variations of its income statement (and reconciliations to EBITDA) for the last couple of years. Buried in the middle is the actual balance sheet -- without a statement of cash flows. Management may believe it's aiding investors by providing a Baskin Robbins-like variety of income statements that factor out "one-time" restructuring and refinancing costs (which have appeared in each of the last three years now). However, the company would do better to provide a statement of cash flows and let investors make their own adjustments to GAAP numbers as necessary.