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Iconix Brand Group Announces Intention To Restate Previously Filed Financial

The following excerpt is from the company's SEC filing.

Statements, Announces Preliminary Third Quarter 2015 Results and Updates 2015 Guidance

NEW YORK, New YorkNovember 5, 2015Iconix Brand Group, Inc. (Nasdaq: ICON) (Iconix or the Company) today announced that the Company intends to restate certain of its historical financial statements. The Company also announced preliminary third quarter 2015 results and updated guidance for the full year 2015.

As previously announced, the Company will hold a conference call on Monday, November 9, 2015 at 8:30 AM ET to discuss its third quarter results. The Company will also discuss the restatement at that time, as well as provide guidance for 2016.

Financial Restatement

As previously announced, a Special Committee of the Companys Board, along with its independent legal and accounting advisors has been conducting a review of the accounting treatment related to certain transactions. The advisors have presented their analysis and conclusions to the Special Committee and to the Companys current management team. The Special Committee has now completed the review.

Based on the Special Committees review and additional review by the Companys Audit Committee and current management team, the Board of Directors, Audit Committee and the Companys current management team concluded that the Company will restate its historical financial statements in respect of (i) the fourth quarter and annual results of 2013, (ii) the 2014 fiscal year and each quarterly period thereof and (iii) the first and second quarters of 2015, to correct certain errors in accounting.

The Company believes that the amount of such adjustments will have no impact on the Companys 2013 operating income, are estimated to reduce the Companys 2014 operating income by approximately $6.0 million, and are estimated to increase the Companys first half of 2015 operating income by approximately $1.6 million. The adjustments do not impact cash and will have no impact on the Companys previously reported free cash flow or securitized net cash flow within our securitized financing facility.

These restatements include (i) the classification of contractually obligated expenses, retail support and other costs as selling, general and administrative expenses, as opposed to netting such expenses against licensing or other revenue, as applicable, (ii) inadequate support for revenue recognition relating to certain license agreements, and (iii) inadequate estimation of accruals related to retail support for certain license agreements.

The estimated adjustments are detailed in the tables at the end of this press release.

The Company intends to present restated financial statements as soon as practicable in an amended and restated annual report on Form 10-K for the year ended December 31, 2014, and amended and restated quarterly reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015.

Accordingly, investors should no longer rely upon the Companys previously filed financial statements and other financial disclosures in respect of the Restatement Periods.

The Company also remains engaged in a previously disclosed comment letter process with the Staff of the U.S. Securities and Exchange Commission relating to an ongoing review of the Companys Form 10-K for the year ended December 31, 2014. The ultimate outcome of the Staffs comment letter process is unknown at this time.

Preliminary Results for the Third Quarter 2015

The Companys third quarter 2015 results will include three items as described below:

a) As a part of a comprehensive review of the Companys license agreements and relationships with its licensees, it was determined that additional reserves of approximately $12.2 million should be taken with respect to certain of the Companys accounts receivable. The $12.2 million will be included in the Companys selling, general and administrative expenses and will have a negative impact to third quarter 2015 diluted EPS of approximately $0.16.

b) During the Companys preparation of its 2014 Federal tax return it was determined that an adjustment of approximately $3.8 million in the third quarter was necessary. This adjustment will have a negative impact to third quarter 2015 diluted EPS of approximately $0.08.

c) During the third quarter of 2015, the Company incurred approximately $7.1 million of charges for professional fees associated with the continuing correspondence with the Staff of the...


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