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08 Earnings Get in touch with Transcript Welcome all people Calvin Klein Hip Briefs towards the Warnaco Group Inc. 2nd quarter 2008 earnings meeting connect with.This early morning I am joined by Joe Gromek, Warnaco's President and CEO, Larry Rutkowski, our CFO, and Frank Tworecke, our Team President, Sportswear. Helen McCluskey, our Group President, Intimate Clothing and Swimwear is not able to be part of us now as she is in Beijing.We'll commence this morning with a few standard reviews within the quarter by Joe. Larry will critique the financials, then update our 2008 steerage, after which you can Frank and Joe will just take you thru some section highlights. Next our remarks, there will be a possibility to suit your needs to talk to queries.Present day remarks are based on Warnaco's adjusted results on the continuing basis, which exclude restructuring expense, pension money, and certain tax connected items, including the non recurring tax charge related into the repatriation of proceeds with the sale of Lejaby. The company thinks it is actually significant for people of company's economical statements for being built informed of your altered fiscal facts related to your company's money from continuing functions as such steps are made use of by management to guage the working effectiveness with the company's continuing enterprise on the similar foundation.A reconciliation of true effects into the modified is out there while in the schedules accompanying present-day press release. As now we have done on earlier calls, our working final results will probably be mentioned excluding the allocation of shared support price. These allocation amounts may be present in the tables hooked up to our earnings release at the same time as within our Kind 10 Qs and ten K.Ultimately, modern get in touch with may perhaps include feedback regarding the Warnaco Group's business enterprise outlook and will comprise ahead seeking statements. Any ahead looking assertion and all other statements which may be manufactured on this call that aren't depending on historical details are subject to threats and uncertainties. True benefits may well vary materially; facts concerning numerous factors that can result in effects to vary materially with the facts which will be mentioned is offered in Warnaco's filings with all the SEC which include Warnaco's Kind eight K furnished nowadays.Now allow me switch the call in excess of to Warnaco's President and CEO, Joe Gromek.We are happy to report a different solid quarter. Clearly, the positive momentum now we have seasoned during the last numerous quarters has continued into Q2. Net revenues climbed 22% and earnings per share from continuing operations enhanced 54%. Our diversified world wide business enterprise design continues to accomplish with all geographies and segments reporting increased revenues and profitability.Global revenues amplified 46% and even with a hard domestic environment US revenues grew 5%. Robust manufacturers, ground breaking products improvement, and strong execution about the part of our world staff, all contributed to this optimistic general performance.We carry on to progress the real key strategies we set up for our small business in excess of two several years ago. Very first, maximizing the opportunity of our Calvin Klein company; next, growing internationally; and third, expanding direct to buyer.Calvin Klein world wide revenues increased 34% during the quarter. We demonstrated energy throughout the board in Underwear, Denims, Equipment and Swimwear. We carry on to leverage our regional and country platforms to generate Calvin Klein business and accelerate our immediate to customer initiatives in Europe, Asia, as well as Americas. Our target stays to double our Calvin Klein revenues around another five years.Intercontinental revenues accounted for nearly 50% of full company revenues. Even though new reports recommend that some European economies have softened, we've been continuing to expertise reliable expansion. We reported robust advancement in all international locations, with Europe up 51%, Asia up 42%, along with the Americas up 41%.The effective general performance in Europe displays not simply our expansion into Eastern Europe, but ongoing momentum in both of those the Denims and Underwear small business as we leverage our present business infrastructure also as comp keep advancement at retail Calvin Klein Womens Underwear. We imagine this momentum reflects the solid customer need for our Calvin Klein models and also the substantial wholesale and retail alternatives in mature and rising markets.Turning to immediate to purchaser, revenues rose 39% together with a 20% increase in comparable retail outlet product sales. In the course of the quarter we additional forty three new points of distribution. At quarter close we operated in excess of 800 shops within our immediate to buyer channel throughout the globe.We remain very happy with all the performance of our Calvin Klein Underwear and our Calvin Klein Jeans outlets and therefore are starting to roll out Calvin Klein Accessory outlets in Europe and Asia. We have been on intend to include very well more than eighty,000 sq ft of additional retail place in 2008 as we increase immediate to shopper to around 20% of our whole business enterprise.We continue to deal with our heritage firms for profitability. Core intimates, had a great quarter and claimed equally top rated and base line development. We were also encouraged because of the improvement in Chaps working margins and whilst Speedo revenues and functioning margins were off a little, Speedo continues to crank out quite a bit of pleasure in advance with the Beijing Olympics.In summary, we recorded a robust quarter and initially 50 % demonstrating the power of our brand names, the achievement of our business design, and superior execution around the a part of our all over the world crew. Although we've been conscious of macroeconomic issues, we feel our approaches will continue to gas development and generate long-term shareholder price.Our confidence underscores the choice now to yet again increase advice calvin klein biography. Long term, we see chances for regular and sustainable development.Now, let me switch the call above Larry to give you the financial highlights.Turning to our altered next quarter success, revenues rose 22% to $504 million, $15 million of which is from incremental club product sales inside the quarter. Gross margin greater 240 foundation points to 45%. SG as a percent of net revenues declined sixty basis factors to 33% reflecting our disciplined attention to value efficiencies.Running earnings was $55 million in comparison to $31 million within the prior calendar year quarter. Profits from continuing functions improved 56% to $33 million or $0.71 for every diluted share, up from $21 million or $0.forty six for every diluted share inside the prior year quarter.The prior year cash flow included $6.three million or $0.ten for every diluted share, up other earnings associated to transactional forex gains. Reflected running outcomes, the interpretation of international forex improved next quarter 2008 net revenues, gross margin, and operating profits were about $17 million, $8 million, and $2 million respectively, as opposed to the next quarter of fiscal 2007 Calvin Klein Womens Boxer Brief.Our next quarter powerful tax rate was 32%, up from 26% inside the initially quarter. The increase demonstrates the extra tax expense to realize the firm's predicted once-a-year efficient charge of roughly 29%.Checking out the harmony sheet, cash and money equivalents at quarter stop were being $155 million compared to $163 million as of June 30th, 2007. Accounts receivable enhanced to $311 million from $279 million as of June 30th, 2007, principally because of on the increased sales, a really sturdy June, along with the advancement of our European organization. Net inventories as of July 5th were $316 million, down from $357 million as of the close on the next quarter 2007, largely as being a results of discontinued operations.Over a normalized foundation, inventories were up 4% although revenues were being up 22%. We have been snug with our inventories, that happen to be trending perfectly underneath our earnings advancement. Also, we've commenced refinancing and plan to enter a brand new $300 million asset based revolving credit history facility, which we count on to shut throughout the third quarter. As element of this refinancing, the business expects to retire the exceptional stability of its Term B loans.Now, turning to steerage; as a result of our strong initially 50 % performance, we have been escalating our direction. We now expect internet revenues to improve 13% to 15% over comparable fiscal 2007 concentrations, and on an adjusted basis, excluding restructuring cost, selected non money tax products, and assuming small pension expenditure, earnings from continuing functions are envisioned to generally be inside the choice of $2.eighty to $2.90 for each diluted share.Now permit me switch the decision about to Frank, to discuss Sportswear.The Sportswear Team continues to develop on its good momentum offering solid running effects throughout all geographies. Second quarter revenues increased by 29% whilst operating earnings grew by 80 basis factors to 13% of sales.