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Press release from Business Wire

Michael Kors Holdings Limited Announces Fourth Quarter and Annual Fiscal 2012 Results

<p class='bwalignc'> <b>Fourth Quarter Total Revenue Increased 58.3%; Comparable Store Sales Increased 36.1%</b> </p> <p class='bwalignc'> <b>Fourth Quarter Diluted EPS Increased 120.0% to $0.22</b> </p>

Tuesday, June 12, 2012

Michael Kors Holdings Limited Announces Fourth Quarter and Annual Fiscal 2012 Results07:00 EDT Tuesday, June 12, 2012 HONG KONG (Business Wire) -- Michael Kors Holdings Limited (NYSE:KORS) (the “Company”) today announced its financial results for the fourth quarter and fiscal year ended March 31, 2012. The Company is a global luxury lifestyle brand with a multi-channel strategy, unique design and strong infrastructure that provides a platform for continued global growth. John Idol, the Company's Chairman and Chief Executive Officer, said, “We are pleased with our results for the quarter and the year, as we experienced strong growth in both total revenue and net income. This year we continued executing our key growth strategies, resulting in a 58.3% and 62.1% increase in total revenues for the quarter and year, respectively.” For the fourth quarter ended March 31, 2012: Total revenue for the fourth quarter increased 58.3% to $380.0 million from $240.0 million in the fourth quarter of fiscal 2011. Retail net sales increased 80.3% to $172.2 million driven by 71 new store openings since the end of last year and a 36.1% increase in comparable store sales. Wholesale net sales increased 45.5% to $190.7 million and royalty revenue increased 26.9% to $17.1 million. Gross profit for the fourth quarter increased 63.4% to $219.1 million, and as a percentage of total revenue increased to 57.7% compared to 55.9% in the fourth quarter of fiscal 2011. Income from operations for the fourth quarter increased 84.9% to $78.8 million, and as a percentage of total revenue was 20.7%. Excluding a $2.0 million reimbursement of professional fees associated with the Company's initial public offering (“IPO”) in December 2011, income from operations for the fourth quarter was $76.8 million, or 20.2% as a percentage of total revenue. This compares to income from operations for the fourth quarter of fiscal 2011 of $42.6 million, or 17.8% as a percentage of total revenue. Net income for the fourth quarter was $43.6 million, or $0.22 per diluted share based on 196.9 million weighted average diluted shares outstanding. Excluding the aforementioned credit, net income was $41.6 million, or $0.21 per diluted share. Net income for the fourth quarter of fiscal 2011 was $17.4 million, or $0.10 per diluted share based on 179.2 million weighted average diluted shares outstanding. Mr. Idol continued, “Our results for the quarter were driven by strong performance across each of our retail, wholesale and licensing segments. Our North American comparable store sales increase was 37.2%, reflecting the strong demand for the Michael Kors luxury brand, our exciting assortment of fashion merchandise and our exceptional jet-set in-store experience. We also delivered significant growth in our wholesale segment, reflecting the strength of our brand and the favorable results from our transition to shop-in-shops in department stores. In Europe, total revenue increased 122.6% for the quarter as a result of a 13.6% comparable store sales increase, in addition to strong performance in our wholesale operations. In Japan, we are cautiously encouraged by our results for this business, which is in the start-up phase. Total licensing revenue grew 26.9% in the quarter due to strong sales of our licensed products led by the Michael Kors watch and eyewear lines. We are uniquely positioned to continue to build the Michael Kors global luxury lifestyle brand, and are pleased that our momentum has continued into the first quarter of fiscal 2013. The Company has proven retail and wholesale formats that are performing throughout the world. Michael Kors unique fashion designs continue to resonate with customers globally and we believe that our Company has tremendous opportunity for future growth.” For the year ended March 31, 2012: Total revenue for the year increased 62.1% to $1.3 billion from $803.3 million in fiscal 2011. Retail net sales increased 82.1% to $626.9 million driven by 71 new store openings since the end of last year and a 39.2% increase in comparable store sales. Wholesale net sales increased 47.5% to $610.2 million and royalty revenue increased 43.1% to $65.2 million. Gross profit for the year increased 68.8% to $753.1 million, and as a percentage of total revenue was 57.8% for the year as compared to 55.5% in fiscal 2011. Income from operations for the year increased 81.0% to $247.7 million, or 19.0% as a percentage of total revenue, and included a $10.6 million equity compensation charge associated with equity grants for periods prior to fiscal 2012, $3.2 million in expenses associated with the Company's IPO in December 2011 and a $10.7 million charge related to the employee share option redemption associated with our private placement. Excluding these charges, income from operations for fiscal 2012 was $272.1 million, or 20.9% as a percentage of total revenue. This compares to operating income of $136.9 million in fiscal 2011, or 17.0% as a percentage of total revenue. Net income was $147.4 million, or $0.78 per diluted share based on 189.3 million weighted average diluted shares outstanding. Excluding the aforementioned equity compensation charge, IPO-related expenses and share option charge, net income was $163.1 million, or $0.86 per diluted share. This compares to $72.5 million, or $0.40 per diluted share based on 179.2 million weighted average diluted shares outstanding in fiscal 2011. At March 31, 2012, the Company operated 237 retail stores, including concessions, compared to 166 retail stores, including concessions, at the end of the same prior-year period. The Company has 64 additional retail stores, including concessions, operated through licensing partners. There are 301 Michael Kors stores worldwide. Outlook For the first quarter of fiscal 2013, the Company expects total revenue to be in the range of $360 million to $370 million. This assumes a comparable store sales increase of approximately 35%. Diluted earnings per share are expected to be in the range of $0.18 to $0.20 for the quarter. This assumes 199.0 million diluted weighted average shares outstanding and a 38% tax rate. For fiscal 2013, the Company expects total revenue to be in the range of $1.7 billion to $1.8 billion. This assumes a comparable store sales increase of approximately 20%. Diluted earnings per share are expected to be in the range of $1.08 to $1.12 for the year. This assumes 201.2 million diluted weighted average shares outstanding and a 38% tax rate. Conference Call Information A conference call to discuss fourth quarter and annual results is scheduled for today, June 12, 2012 at 8:00 a.m. EDT. A replay of the call will be available today at 11:00 a.m. EDT; to access the replay, dial 1-877-870-5176 for domestic callers or dial 1-858-384-5517 for international callers and enter access code 1622346. The conference call will also be webcast live in the investor relations section of www.michaelkors.com. The webcast will be accessible on the website for approximately 90 days after the call. About Michael Kors Michael Kors is a world-renowned, award-winning designer of luxury accessories and ready to wear. His namesake company, established in 1981, currently produces a range of products through his Michael Kors, KORS Michael Kors and MICHAEL Michael Kors labels, including accessories, footwear, watches, jewelry, men's and women's ready to wear, and a full line of fragrance products. Michael Kors stores are operated, either directly or through licensing partners, in some of the most prestigious cities in the world, including New York, Beverly Hills, Chicago, London, Milan, Paris, Munich, Istanbul, Dubai, Seoul, Tokyo and Hong Kong. Forward Looking StatementsThis press release contains forward-looking statements.You should not place undue reliance on such statements because they are subject to numerous uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements include information concerning the Company's possible or assumed future results of operations, including descriptions of its business strategy.These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions.The forward-looking statements contained in this press release are based on assumptions that the Company has made in light of management's experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors that it believes are appropriate under the circumstances.You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect its actual financial results or results of operations and could cause actual results to differ materially from those in these forward-looking statements. These factors are more fully discussed in the “Risk Factors” section and elsewhere in the Company's Registration Statement on Form F-1, as amended (File No. 333-180022).             MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share data)(Unaudited)     Schedule 1   Three Months Ended Twelve Months Ended March 31, April 2, March 31, April 2, 2012 2011 2012 2011   Net sales $ 362,905 $ 226,536 $ 1,237,100 $ 757,800 Royalty revenue   17,085   13,467   65,154     45,539 Total revenue 379,990 240,003 1,302,254 803,339 Cost of goods sold   160,868   105,882   549,158     357,274 Gross profit 219,122 134,121 753,096 446,065 Total operating expenses   140,281   91,487   505,414     309,199 Income from operations 78,841 42,634 247,682 136,866 Interest expense, net 383 163 1,495 1,861 Foreign currency (gain) loss   1,291   4,594   (2,629 )   1,786 Income before provision for income taxes 77,167 37,877 248,816 133,219 Provision for income taxes   33,555   20,504   101,452     60,713 Net income 43,612 17,373 147,364 72,506 Net income applicable to preference shareholders   -   3,745   21,227     15,629 Net income available for ordinary shareholders $ 43,612 $ 13,628 $ 126,137   $ 56,877   Weighted average ordinary shares outstanding: Basic 191,184,171 140,554,377 158,258,126 140,554,377 Diluted 196,855,404 179,177,268 189,299,197 179,177,268   Net income per ordinary share (1): Basic $ 0.23 $ 0.10 $ 0.80 $ 0.40 Diluted $ 0.22 $ 0.10 $ 0.78 $ 0.40   Statements of Comprehensive Income: Net income $ 43,612 $ 17,373 $ 147,364 $ 72,506 Foreign currency translation adjustments   2,231   4,698   (4,768 )   3,803 Comprehensive income $ 45,843 $ 22,071 $ 142,596   $ 76,309   (1) The calculation for basic earnings per ordinary share is based on net income available for ordinary shareholders divided by basic ordinary shares. The calculation for diluted earnings per share is based on net income divided by diluted shares.             MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES   CONSOLIDATED BALANCE SHEETS(In thousands, except share data)(Unaudited)   Schedule 2   March 31, April 2,            Assets 2012 2011 Current assets Cash and cash equivalents $ 106,354 $ 21,065 Receivables, net 127,226 80,081 Inventories 187,413 117,173 Deferred tax assets 11,145 7,322 Prepaid expenses and other current assets   31,925     19,757 Total current assets 464,063 245,398 Property and equipment, net 170,755 119,323 Intangible assets, net 14,146 15,796 Goodwill 14,005 14,005 Deferred tax assets 3,952 1,951 Other assets   7,504     3,022 Total assets $ 674,425   $ 399,495         Liabilities and Shareholders' Equity Current liabilities Revolving line of credit $ 22,674 $ 12,765 Accounts payable 67,326 52,873 Accrued payroll and payroll related expenses 33,710 26,100 Accrued income taxes 8,199 18,701 Accrued expenses and other current liabilities   33,097     17,286 Total current liabilities 165,006 127,725 Note payable to parent - 101,650 Deferred rent 43,292 29,381 Deferred tax liabilities 6,300 5,495 Other long-term liabilities   3,590     3,218 Total liabilities 218,188 267,469   Contingently redeemable ordinary shares - 6,706   Shareholders' equity Convertible preference shares, no par value; 10,163,920 shares issued and outstanding at April 2, 2011. - - Ordinary shares, no par value; 650,000,000 shares authorized, and 192,731,390 shares issued and outstanding at March 31, 2012, and 140,554,377 shares issued and outstanding at April 2, 2011. - - Additional paid-in capital 228,321 40,000 Accumulated other comprehensive (loss) income (735 ) 4,033 Retained earnings   228,651     81,287 Total shareholders' equity   456,237     125,320 Total liabilities and shareholders' equity $ 674,425   $ 399,495               MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES   SUPPLEMENTAL INFORMATION FOR NON-GAAP MEASURES– CONSOLIDATED STATEMENTS OF INCOME(In thousands, except share and per share data)(Unaudited)       Schedule 3   Reconciliation of income from operations, as reported, to income from operations, as adjusted   Three Months Ended Twelve Months Ended March 31, April 2, March 31, April 2, 2012 2011 2012 2011   Income from operations, as reported $ 78,841 $ 42,634 $ 247,682 $ 136,866 Add back adjustments for one time charges: Stock option expense - - 10,600 - IPO fees (2,000 ) - 3,170 - Employee share option redemption - private placement   -     -   10,690     - Income from operations, as adjusted $ 76,841   $ 42,634 $ 272,142   $ 136,866     Reconciliation of net income, as reported, to net income, as adjusted   Three Months Ended Twelve Months Ended March 31, April 2, March 31, April 2, 2012 2011 2012 2011   Net income, as reported $ 43,612 $ 17,373 $ 147,364 $ 72,506 Add back adjustments for one time charges: Stock option expense - - 10,600 - IPO fees (2,000 ) - 3,170 - Employee share option redemption - private placement - - 10,690 - Less tax benefit on above   -     -   (8,686 )   - Net income, as adjusted $ 41,612   $ 17,373 $ 163,138   $ 72,506   Weighted average ordinary shares outstanding: Diluted 196,855,404 179,177,268 189,299,197 179,177,268   Net income per ordinary share, as adjusted: Diluted $ 0.21 $ 0.10 $ 0.86 $ 0.40   Use of Non-GAAP Financial Measures In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), the Company provides non-GAAP operating results that exclude certain charges or credits such as transaction expenses related to the Company's IPO, Stock option expense and other offering fees. These amounts are not in accordance with, or an alternative to, GAAP. The Company's management believes that these measures provide investors with transparency by helping illustrate the underlying financial and business trends relating to the Company's results of operations and financial condition and comparability between current and prior periods. Management uses the measures to establish and monitor budgets and operational goals and to evaluate the performance of the Company.             MICHAEL KORS HOLDINGS LIMITED AND SUBSIDIARIES   CONSOLIDATED SEGMENT DATA(In thousands)(Unaudited)           Schedule 4 Three Months Ended Twelve Months Ended March 31, April 2, March 31, April 2, 2012 2011 2012 2011 Revenue by Region: North America (U.S. and Canada) $ 339,332 $ 222,927 $ 1,183,234 $ 763,819 Europe 36,627 16,451 108,790 38,502 Other Regions   4,031   625   10,230   1,018 Total Revenue: $ 379,990 $ 240,003 $ 1,302,254 $ 803,339   Revenue by Segment: Net sales: Retail $ 172,187 $ 95,489 $ 626,940 $ 344,195 Wholesale 190,718 131,047 610,160 413,605 Licensing   17,085   13,467   65,154   45,539 Total Revenue: $ 379,990 $ 240,003 $ 1,302,254 $ 803,339   Income from Operations: Retail $ 33,959 $ 14,707 $ 121,851 $ 61,194 Wholesale 34,477 16,386 85,000 48,241 Licensing   10,405   11,541   40,831     27,431 Total Income from Operations $ 78,841 $ 42,634 $ 247,682   $ 136,866   Income from Operations, as adjusted*: Retail $ 33,105 $ 14,707 $ 129,230 $ 61,194 Wholesale 33,448 16,386 100,759 48,241 Licensing   10,288   11,541   42,153   27,431 Total Income from Operations, as adjusted $ 76,841 $ 42,634 $ 272,142 $ 136,866   *Adjusted results reflect one-time items shown in Schedule 3.   Investor Relations:ICR, Inc.Jean Fontana/Joseph Teklits, 203-682-8200jean.fontana@icrinc.comorMedia:Michael Kors Holdings LimitedLisa Pomerantz, 212-201-8128lisa.pomerantz@michaelkors.com