UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
NovemberMay 3, 20192020

OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromtoto

Commission File Number 001-07572
PVH CORP.
(Exact name of registrant as specified in its charter)

Delaware13-1166910
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
Delaware13-1166910
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
200 Madison Avenue,New York,New York10016
(Address of principal executive offices)(Zip Code)
(212) (212) 381-3500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $1.00 par valuePVHNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒Accelerated filer  ☐
Non-accelerated filer  
☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of common stock of the registrant as of DecemberJune 2, 20192020 was 72,958,317.71,039,094.




PVH CORP.
INDEX
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Forward-looking statements in this Quarterly Report on Form 10-Q, including, without limitation, statements relating to our future revenue, earnings and cash flows, plans, strategies, objectives, expectations and intentions, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not be anticipated, including, without limitation, (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) we may be considered to be highly leveraged and we use a significant portion of our cash flows to service our indebtedness, as a result of which we might not have sufficient funds to operate our businesses in the manner we intend or have operated in the past; (iii) the levels of sales of our apparel, footwear and related products, both to our wholesale customers and in our retail stores, the levels of sales of our licensees at wholesale and retail, and the extent of discounts and promotional pricing in which we and our licensees and other business partners are required to engage, all of which can be affected by weather conditions, changes in the economy, fuel prices, reductions in travel, fashion trends, consolidations, repositionings and bankruptcies in the retail industries, repositionings of brands by our licensors, and other factors; (iv) our ability to manage our growth and inventory, including our ability to realize benefits from acquisitions;acquisitions; (v) quota restrictions, the imposition of safeguard controls and the imposition of duties or tariffs on goods from the countries where we or our licensees produce goods under our trademarks, such as the recently imposed increased tariffs, and threatened increased tariffs on goods imported into the United States from China, any of which, among other things, could limit the ability to produce products in cost-effective countries or in countries that have the labor and technical expertise needed, or require that we absorb costs or try to pass costs onto consumers, which could materially impact our revenue and profitability; (vi) the availability and cost of raw materials; (vii) our ability to adjust timely to changes in trade regulations and the migration and development of manufacturers (which can affect where our products can best be produced); (viii) changes in available factory and shipping capacity, wage and shipping cost escalation, civil conflict, war or terrorist acts, the threat of any of the foregoing, or political or labor instability in any of the countries where our or our licensees’ or other business partners’ products are sold, produced or are planned to be sold or produced; (ix) disease epidemics and health related concerns, such as the current COVID-19 pandemic, which could result in (and, in the case of the COVID-19 pandemic, has resulted in some of the following) supply chain disruptions due to closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infectedaffected areas, as well asclosed stores, reduced consumer traffic and purchasing, as consumers become ill or limit or cease shopping in order to avoid exposure;exposure, or governments impose mandatory business closures, travel restrictions or the like to prevent the spread of disease, and market or other changes that could result (or, with respect to the COVID-19 pandemic, could continue to result) in noncash impairments of the Company’s goodwill and other intangible assets, operating lease right-of-use assets, and property, plant and equipment; (x) acquisitions and divestitures and issues arising with acquisitions, divestitures and proposed transactions, including, without limitation, the ability to integrate an acquired entity or business into us with no substantial adverse effect on the acquired entity’s, the acquired business’s or our existing operations, employee relationships, vendor relationships, customer relationships or financial performance, and the ability to operate effectively and profitably our continuing businesses after the sale or other disposal of a subsidiary, business or the assets thereof; (xi) the failure of our licensees to market successfully licensed products or to preserve the value of our brands, or their misuse of our brands; (xii) significant fluctuations of the United States dollar against foreign currencies in which we transact significant levels of business; (xiii) our retirement plan expenses recorded throughout the year are calculated using actuarial valuations that incorporate assumptions and estimates about financial market, economic and demographic conditions, and differences between estimated and actual results give rise to gains and losses, which can be significant, that are recorded immediately in earnings, generally in the fourth quarter of the year; (xiv) the impact of new and revised tax legislation and regulations; and (xv) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.

We do not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimate regarding revenue, earnings or cash flows, whether as a result of the receipt of new information, future events or otherwise.


PART I -- FINANCIAL INFORMATION

Item 1 - Financial Statements
Consolidated Statements of Operations for the Thirteen Weeks Ended May 3, 2020 and May 5, 2019
1
Consolidated Income Statements for the Thirteen and Thirty-Nine Weeks Ended November 3, 2019 and November 4, 2018
1
Consolidated Statements of Comprehensive (Loss) Income for the Thirteen and Thirty-Nine Weeks Ended NovemberMay 3, 20192020 and November 4, 2018May 5, 2019
2
Consolidated Balance Sheets as of NovemberMay 3, 2019,2020, February 3,2, 2020 and May 5, 2019 and November 4, 2018
3
Consolidated Statements of Cash Flows for the Thirty-NineThirteen Weeks Ended NovemberMay 3, 20192020 and November 4, 2018May 5, 2019
4
Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Non-Controlling Interest for the Thirty-NineThirteen Weeks Ended NovemberMay 3, 20192020 and November 4, 2018May 5, 2019
5
Notes to Consolidated Financial Statements
76
39
5456
5557












PART II -- OTHER INFORMATION
58
56
Item 1A - Risk Factors
5658
5658
5759
5961






PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS


PVH Corp.
Consolidated Income Statements of Operations
Unaudited
(In millions, except per share data)

Thirteen Weeks Ended
May 3,May 5,
20202019
Net sales$1,257.2  $2,237.3  
Royalty revenue69.0  89.4  
Advertising and other revenue17.8  29.6  
Total revenue1,344.0  2,356.3  
Cost of goods sold (exclusive of depreciation and amortization)678.1  1,060.4  
Gross profit665.9  1,295.9  
Selling, general and administrative expenses940.1  1,161.5  
Goodwill and other intangible assets impairments933.5  —  
Non-service related pension and postretirement income(3.6) (2.2) 
Debt modification and extinguishment costs—  5.2  
Other noncash loss, net3.1  —  
Equity in net (loss) income of unconsolidated affiliates(11.2) 3.7  
(Loss) income before interest and taxes(1,218.4) 135.1  
Interest expense22.5  31.0  
Interest income1.3  1.1  
(Loss) income before taxes(1,239.6) 105.2  
Income tax (benefit) expense(142.4) 23.6  
Net (loss) income(1,097.2) 81.6  
Less: Net loss attributable to redeemable non-controlling interest(0.4) (0.4) 
Net (loss) income attributable to PVH Corp.$(1,096.8) $82.0  
Basic net (loss) income per common share attributable to PVH Corp.$(15.37) $1.09  
Diluted net (loss) income per common share attributable to PVH Corp.$(15.37) $1.08  
 Thirteen Weeks Ended Thirty-Nine Weeks Ended
 November 3, November 4, November 3, November 4,
 2019 2018 2019 2018
Net sales    $2,433.5
 $2,377.4
 $6,919.8
 $6,794.1
Royalty revenue    113.1
 112.2
 288.3
 283.1
Advertising and other revenue    41.1
 34.9
 100.1
 95.6
Total revenue    2,587.7
 2,524.5
 7,308.2
 7,172.8
Cost of goods sold (exclusive of depreciation and amortization)1,181.5
 1,159.7
 3,317.7
 3,220.0
Gross profit    1,406.2
 1,364.8
 3,990.5
 3,952.8
Selling, general and administrative expenses    1,141.6
 1,091.3
 3,457.6
 3,215.8
Non-service related pension and postretirement income2.0
 2.7
 6.1
 7.8
Debt modification and extinguishment costs—
 —
 5.2
 —
Other noncash gain—
 —
 113.1
 —
Equity in net income of unconsolidated affiliates2.9
 6.1
 7.5
 13.2
Income before interest and taxes269.5
 282.3
 654.4
 758.0
Interest expense    29.2
 30.3
 88.5
 90.0
Interest income    1.4
 0.9
 3.8
 3.1
Income before taxes241.7
 252.9
 569.7
 671.1
Income tax expense32.8
 10.3
 86.1
 84.9
Net income208.9
 242.6
 483.6
 586.2
Less: Net loss attributable to redeemable non-controlling interest(0.3) (0.5) (1.1) (1.5)
Net income attributable to PVH Corp.$209.2
 $243.1
 $484.7
 $587.7
Basic net income per common share attributable to PVH Corp.$2.83
 $3.18
 $6.49
 $7.65
Diluted net income per common share attributable to PVH Corp.$2.82
 $3.15
 $6.46
 $7.56

See accompanying notes.

1

PVH Corp.
Consolidated Statements of Comprehensive (Loss) Income
Unaudited
(In millions)


Thirteen Weeks Ended
May 3,May 5,
20202019
Net (loss) income$(1,097.2) $81.6  
Other comprehensive (loss) income:
Foreign currency translation adjustments(112.6) (111.6) 
Net unrealized and realized gain related to effective cash flow hedges, net of tax expense of $4.1 and $0.47.8  13.4  
Net gain on net investment hedges, net of tax expense of $3.7 and $7.211.5  22.4  
Total other comprehensive loss(93.3) (75.8) 
Comprehensive (loss) income(1,190.5) 5.8  
Less: Comprehensive loss attributable to redeemable non-controlling interest(0.4) (0.4) 
Comprehensive (loss) income attributable to PVH Corp.$(1,190.1) $6.2  
 Thirteen Weeks Ended Thirty-Nine Weeks Ended
 November 3, November 4, November 3, November 4,
 2019 2018 2019 2018
        
Net income$208.9
 $242.6
 $483.6
 $586.2
Other comprehensive income (loss):       
Foreign currency translation adjustments11.5
 (58.8) (130.8) (396.9)
Net unrealized and realized (loss) gain related to effective cash flow hedges, net of tax (benefit) expense of $(0.4), $0.9, $(1.8) and $5.2(20.4) 17.2
 (7.5) 108.2
Net (loss) gain on net investment hedges, net of tax (benefit) expense of $(0.8), $4.0, $7.5 and $24.8(2.3) 12.0
 23.6
 75.9
Total other comprehensive loss(11.2) (29.6) (114.7) (212.8)
Comprehensive income197.7
 213.0
 368.9
 373.4
Less: Comprehensive loss attributable to redeemable non-controlling interest(0.3) (0.5) (1.1) (1.5)
Comprehensive income attributable to PVH Corp.$198.0
 $213.5
 $370.0
 $374.9

See accompanying notes.


2



PVH Corp.
Consolidated Balance Sheets
(In millions, except share and per share data)
May 3,February 2,May 5,
202020202019
UNAUDITEDAUDITEDUNAUDITED
ASSETS
Current Assets:
Cash and cash equivalents$800.7  $503.4  $494.3  
Trade receivables, net of allowances for credit losses of $54.0, $21.1 and $23.0545.6  741.4  851.6  
Other receivables21.3  23.7  24.4  
Inventories, net1,561.2  1,615.7  1,608.4  
Prepaid expenses160.1  159.9  173.4  
Other99.4  112.9  101.3  
 Assets held for sale—  237.2  —  
Total Current Assets3,188.3  3,394.2  3,253.4  
Property, Plant and Equipment, net976.5  1,026.8  962.3  
Operating Lease Right-of-Use Assets1,638.0  1,675.8  1,606.0  
Goodwill2,759.1  3,677.6  3,625.7  
Tradenames2,768.9  2,830.2  2,838.4  
Other Intangibles, net616.4  650.5  685.6  
Other Assets, including deferred taxes of $49.4, $40.3 and $27.6347.0  375.9  383.6  
Total Assets$12,294.2  $13,631.0  $13,355.0  
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable$783.9  $882.8  $696.2  
Accrued expenses751.3  929.6  789.5  
Deferred revenue51.7  64.7  55.9  
Current portion of operating lease liabilities399.0  363.5  334.3  
Short-term borrowings322.1  49.6  299.7  
Current portion of long-term debt13.6  13.8  31.0  
Liabilities related to assets held for sale—  57.1  —  
Total Current Liabilities2,321.6  2,361.1  2,206.6  
Long-Term Portion of Operating Lease Liabilities1,493.2  1,532.0  1,499.4  
Long-Term Debt2,854.2  2,693.9  2,759.4  
Other Liabilities, including deferred taxes of $433.7, $558.1 and $543.01,114.2  1,234.5  1,128.3  
Redeemable Non-Controlling Interest(2.4) (2.0) (0.2) 
Stockholders’ Equity:
Preferred stock, par value $100 per share; 150,000 total shares authorized —  —  —  
Common stock, par value $1 per share; 240,000,000 shares authorized; 86,122,983; 85,890,276 and 85,817,270 shares issued86.1  85.9  85.8  
Additional paid in capital - common stock3,085.2  3,075.4  3,032.7  
Retained earnings3,652.5  4,753.0  4,423.3  
Accumulated other comprehensive loss(733.4) (640.1) (583.7) 
Less: 15,094,838; 13,597,113 and 10,702,140 shares of common stock held in treasury, at cost(1,577.0) (1,462.7) (1,196.6) 
Total Stockholders’ Equity4,513.4  5,811.5  5,761.5  
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity$12,294.2  $13,631.0  $13,355.0  
 November 3, February 3, November 4,
 2019 2019 2018
 UNAUDITED AUDITED UNAUDITED
ASSETS     
Current Assets:     
Cash and cash equivalents    $555.2
 $452.0
 $398.5
Trade receivables, net of allowances for doubtful accounts of $25.7, $21.6 and $26.9972.7
 777.8
 937.0
Other receivables    26.1
 26.0
 28.6
Inventories, net    1,768.1
 1,732.4
 1,686.9
Prepaid expenses    161.3
 168.7
 173.4
Other98.7
 81.7
 83.4
Total Current Assets3,582.1
 3,238.6
 3,307.8
Property, Plant and Equipment, net994.7
 984.5
 923.7
Operating Lease Right-of-Use Assets1,648.1
 —
 —
Goodwill    3,738.5
 3,670.5
 3,655.2
Tradenames    2,837.1
 2,863.7
 2,859.4
Other Intangibles, net882.5
 705.5
 715.6
Other Assets, including deferred taxes of $29.2, $40.5 and $15.3336.2
 400.9
 369.2
Total Assets$14,019.2
 $11,863.7
 $11,830.9
      
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY  
Current Liabilities:     
Accounts payable    $780.5
 $924.2
 $752.5
Accrued expenses951.3
 891.6
 830.1
Deferred revenue    44.8
 65.3
 39.3
Current portion of operating lease liabilities347.3
 —
 —
Short-term borrowings    387.5
 12.8
 276.7
Current portion of long-term debt    41.3
 —
 —
Total Current Liabilities    2,552.7
 1,893.9
 1,898.6
Long-Term Portion of Operating Lease Liabilities1,517.5
 —
 —
Long-Term Debt2,738.4
 2,819.4
 2,878.3
Other Liabilities, including deferred taxes of $624.1, $565.2 and $655.31,226.4
 1,322.4
 1,372.3
Redeemable Non-Controlling Interest(0.9) 0.2
 0.5
Stockholders’ Equity:     
Preferred stock, par value $100 per share; 150,000 total shares authorized    —
 —
 —
Common stock, par value $1 per share; 240,000,000 shares authorized; 85,876,613; 85,446,141 and 85,444,411 shares issued85.9
 85.4
 85.4
Additional paid in capital - common stock    3,061.9
 3,017.3
 3,002.9
Retained earnings    4,820.4
 4,350.1
 4,191.4
Accumulated other comprehensive loss(622.6) (507.9) (534.3)
Less: 12,574,071; 10,042,510 and 9,533,692 shares of common stock held in treasury, at cost(1,360.5) (1,117.1) (1,064.2)
Total Stockholders’ Equity    5,985.1
 5,827.8
 5,681.2
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity$14,019.2
 $11,863.7
 $11,830.9



See accompanying notes.

3



PVH Corp.
Consolidated Statements of Cash Flows
Unaudited
(In millions)
Thirteen Weeks Ended
May 3,May 5,
20202019
OPERATING ACTIVITIES
Net (loss) income$(1,097.2) $81.6  
Adjustments to reconcile to net cash used by operating activities:
Depreciation and amortization81.1  76.5  
Equity in net loss (income) of unconsolidated affiliates11.2  (3.7) 
Deferred taxes(127.9) (10.1) 
Stock-based compensation expense10.0  13.9  
Impairment of goodwill and other intangible assets933.5  —  
Impairment of other long-lived assets16.0  83.7  
Debt modification and extinguishment costs—  5.2  
Other noncash loss, net3.1  —  
Changes in operating assets and liabilities:
Trade receivables, net186.5  (86.3) 
Other receivables1.4  0.6  
Inventories, net35.8  99.8  
Accounts payable, accrued expenses and deferred revenue(262.8) (286.6) 
Prepaid expenses(1.4) (28.0) 
Other, net67.9  (19.8) 
Net cash used by operating activities(142.8) (73.2) 
INVESTING ACTIVITIES
Purchases of property, plant and equipment (56.4) (76.7) 
Proceeds from sale of the Speedo North America business169.1  —  
Net cash provided (used) by investing activities112.7  (76.7) 
FINANCING ACTIVITIES
Net proceeds from short-term borrowings272.0  286.9  
Proceeds from 3 5/8 senior notes, net of related fees186.6  —  
Proceeds from 2019 facilities, net of related fees—  1,643.5  
Repayment of 2016 facilities—  (1,649.3) 
Repayment of 2019 facilities(3.4) —  
Net proceeds from settlement of awards under stock plans—  1.9  
Cash dividends(2.7) (5.7) 
Acquisition of treasury shares(114.8) (77.5) 
Payments of finance lease liabilities(1.3) (1.5) 
Net cash provided by financing activities336.4  198.3  
Effect of exchange rate changes on cash and cash equivalents(9.0) (6.1) 
Increase in cash and cash equivalents297.3  42.3  
Cash and cash equivalents at beginning of period503.4  452.0  
Cash and cash equivalents at end of period$800.7  $494.3  
 Thirty-Nine Weeks Ended
 November 3, November 4,
 2019 2018
OPERATING ACTIVITIES   
Net income$483.6
 $586.2
Adjustments to reconcile to net cash provided by operating activities:   
Depreciation and amortization    236.5
 248.0
Equity in net income of unconsolidated affiliates(7.5) (13.2)
Deferred taxes    2.6
 2.3
Stock-based compensation expense    43.2
 41.9
Impairment of long-lived assets89.3
 4.7
Debt modification and extinguishment costs5.2
 —
Other noncash gain(113.1) —
Changes in operating assets and liabilities:   
Trade receivables, net    (196.2) (316.1)
Other receivables(0.8) 7.9
Inventories, net    32.3
 (172.9)
Accounts payable, accrued expenses and deferred revenue    (88.2) (122.5)
Prepaid expenses    (14.9) 2.9
Employer pension contribution(0.7) (10.0)
Contingent purchase price payments to Mr. Calvin Klein—
 (15.9)
Other, net    (39.5) 61.8
Net cash provided by operating activities431.8
 305.1
INVESTING ACTIVITIES(1)
   
Acquisitions, net of cash acquired(192.4) (15.9)
Purchases of property, plant and equipment    (233.1) (269.8)
Proceeds from sale of building59.4
 —
Investments in unconsolidated affiliates(2.5) —
Net cash used by investing activities(368.6) (285.7)
FINANCING ACTIVITIES(1)
   
Net proceeds from short-term borrowings324.4
 257.2
Proceeds from 2019 facilities, net of related fees1,639.8
 —
Repayment of 2016 facilities(1,649.3) (85.0)
Repayment of 2019 facilities(10.2) —
Net proceeds from settlement of awards under stock plans1.9
 20.3
Cash dividends    (11.3) (11.6)
Acquisition of treasury shares    (240.2) (270.4)
Payments of finance lease liabilities(4.1) (4.0)
Net cash provided (used) by financing activities51.0
 (93.5)
Effect of exchange rate changes on cash and cash equivalents    (11.0) (21.3)
Increase (Decrease) in cash and cash equivalents103.2
 (95.4)
Cash and cash equivalents at beginning of period    452.0
 493.9
Cash and cash equivalents at end of period    $555.2
 $398.5
(1)See Note 1917 for information on Noncash Investing and Financing Transactions.Supplemental Cash Flow Information.


See accompanying notes.

4



PVH Corp.
Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Non-Controlling Interest
Unaudited
(In millions, except share and per share data)


Thirteen Weeks Ended May 5, 2019
Stockholders’ Equity
Common StockAdditional
Paid In
Capital-
Common
Stock		Accumulated
Other
Comprehensive Loss		Total Stockholders’ Equity
Redeemable
Non-Controlling
Interest		Preferred
Stock		Shares$1 par
Value		Retained
Earnings		Treasury
Stock
February 3, 2019$0.2  $—  85,446,141  $85.4  $3,017.3  $4,350.1  $(507.9) $(1,117.1) $5,827.8  
Net income attributable to PVH Corp.82.0  82.0  
Foreign currency translation adjustments(111.6) (111.6) 
Net unrealized and realized gain related to effective cash flow hedges, net of tax expense of $0.413.4  13.4  
Net gain on net investment hedges, net of tax expense of $7.222.4  22.4  
Comprehensive income attributable to PVH Corp.6.2  
Cumulative-effect adjustment related to the adoption of accounting guidance for leases(3.1) (3.1) 
Settlement of awards under stock plans371,129  0.41.5  1.9  
Stock-based compensation expense13.9  13.9  
Cash dividends ($0.075 per common share)(5.7) (5.7) 
Acquisition of 659,630 treasury shares(79.5) (79.5) 
Net loss attributable to redeemable non-controlling interest(0.4) 
May 5, 2019$(0.2) $—  85,817,270  $85.8  $3,032.7  $4,423.3  $(583.7) $(1,196.6) $5,761.5  
 Thirty-Nine Weeks Ended November 4, 2018
   Stockholders’ Equity
     Common Stock 
Additional
Paid In
Capital-
Common
Stock
   
Accumulated
Other
Comprehensive Loss
   Total Stockholders’ Equity
 
Redeemable
Non-Controlling
Interest
 
Preferred
Stock
 Shares 
$1 par
Value
  
Retained
Earnings
  
Treasury
Stock
 
February 4, 2018$2.0
 $—
 84,851,079
 $84.9
 $2,941.2
 $3,625.2
 $(321.5) $(793.4) $5,536.4
Net income attributable to PVH Corp.          179.4
     179.4
Foreign currency translation adjustments            (172.2)   (172.2)
Net unrealized and realized gain related to effective cash flow hedges, net of tax expense of $2.7            50.1
   50.1
Net gain on net investment hedges, net of tax expense of $12.0            37.0
   37.0
Comprehensive income attributable to PVH Corp.                94.3
Cumulative-effect adjustment related to the adoption of accounting guidance for revenue recognition          (1.9)     (1.9)
Cumulative-effect adjustment related to the adoption of accounting guidance for income tax accounting on intercompany sales or transfers of assets other than inventory          (8.0)     (8.0)
Settlement of awards under stock plans    481,647
 0.4
 12.8
       13.2
Stock-based compensation expense        11.6
       11.6
Cash dividends ($0.075 per common share)          (5.9)     (5.9)
Acquisition of 494,898 treasury shares              (75.1) (75.1)
Net loss attributable to redeemable non-controlling interest(0.5)                
May 6, 20181.5
 —
 85,332,726
 85.3
 2,965.6
 3,788.8
 (406.6) (868.5) 5,564.6
Net income attributable to PVH Corp.          165.2
     165.2
Foreign currency translation adjustments            (165.9)   (165.9)
Net unrealized and realized gain related to effective cash flow hedges, net of tax expense of $1.6            40.9
   40.9
Net gain on net investment hedges, net of tax expense of $8.8            26.9
   26.9
Comprehensive income attributable to PVH Corp.                67.1
Settlement of awards under stock plans    103,053
 0.1
 6.8
       6.9
Stock-based compensation expense        15.2
       15.2
Cash dividends ($0.0375 per common share)          (2.9)     (2.9)
Acquisition of 553,837 treasury shares              (85.5) (85.5)
Net loss attributable to redeemable non-controlling interest(0.5)                
August 5, 20181.0
 —
 85,435,779
 85.4
 2,987.6
 3,951.1
 (504.7) (954.0) 5,565.4
Net income attributable to PVH Corp.          243.1
     243.1
Foreign currency translation adjustments            (58.8)   (58.8)
Net unrealized and realized gain related to effective cash flow hedges, net of tax expense of $0.9            17.2
   17.2
Net gain on net investment hedges, net of tax expense of $4.0            12.0
   12.0
Comprehensive income attributable to PVH Corp.                213.5
Settlement of awards under stock plans    8,632
 —
 0.2
       0.2
Stock-based compensation expense        15.1
       15.1
Cash dividends ($0.0375 per common share)          (2.8)     (2.8)
Acquisition of 812,640 treasury shares              (110.2) (110.2)
Net loss attributable to redeemable non-controlling interest(0.5)                
November 4, 2018$0.5
 $—
 85,444,411
 $85.4
 $3,002.9
 $4,191.4
 $(534.3) $(1,064.2) $5,681.2






Thirteen Weeks Ended May 3, 2020
Stockholders’ Equity
Common StockAdditional
Paid In
Capital-
Common
Stock		Accumulated
Other
Comprehensive Loss		Total Stockholders’ Equity
Redeemable
Non-Controlling
Interest		Preferred
Stock		Shares$1 par
Value		Retained
Earnings		Treasury
Stock
February 2, 2020$(2.0) $—  85,890,276  $85.9  $3,075.4  $4,753.0  $(640.1) $(1,462.7) $5,811.5  
Net loss attributable to PVH Corp.(1,096.8) (1,096.8) 
Foreign currency translation adjustments(112.6) (112.6) 
Net unrealized and realized gain related to effective cash flow hedges, net of tax expense of $4.17.8  7.8  
Net gain on net investment hedges, net of tax expense of $3.711.5  11.5  
Comprehensive loss attributable to PVH Corp.(1,190.1) 
Cumulative-effect adjustment related to the adoption of accounting guidance for credit losses(1.0) (1.0) 
Settlement of awards under stock plans232,707  0.2  (0.2) —  
Stock-based compensation expense10.0  10.0  
Cash dividends ($0.0375 per common share)(2.7) (2.7) 
Acquisition of 1,497,725 treasury shares(114.3) (114.3) 
Net loss attributable to redeemable non-controlling interest(0.4) 
May 3, 2020$(2.4) $—  86,122,983  $86.1  $3,085.2  $3,652.5  $(733.4) $(1,577.0) $4,513.4  



PVH Corp.
Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Non-Controlling Interest (continued)
Unaudited
(In millions, except share and per share data)


 Thirty-Nine Weeks Ended November 3, 2019
   Stockholders’ Equity
     Common Stock 
Additional
Paid In
Capital-
Common
Stock
   
Accumulated
Other
Comprehensive Loss
   Total Stockholders’ Equity
 
Redeemable
Non-Controlling
Interest
 
Preferred
Stock
 Shares 
$1 par
Value
  
Retained
Earnings
  
Treasury
Stock
 
February 3, 2019$0.2
 $—
 85,446,141
 $85.4
 $3,017.3
 $4,350.1
 $(507.9) $(1,117.1) $5,827.8
Net income attributable to PVH Corp.          82.0
     82.0
Foreign currency translation adjustments            (111.6)   (111.6)
Net unrealized and realized gain related to effective cash flow hedges, net of tax expense of $0.4            13.4
   13.4
Net gain on net investment hedges, net of tax expense of $7.2            22.4
   22.4
Comprehensive income attributable to PVH Corp.                6.2
Cumulative-effect adjustment related to the adoption of accounting guidance for leases          (3.1)     (3.1)
Settlement of awards under stock plans    371,129
 0.4
 1.5
       1.9
Stock-based compensation expense        13.9
       13.9
Cash dividends ($0.075 per common share)          (5.7)     (5.7)
Acquisition of 659,630 treasury shares              (79.5) (79.5)
Net loss attributable to redeemable non-controlling interest(0.4)                
May 5, 2019(0.2) —
 85,817,270
 85.8
 3,032.7
 4,423.3
 (583.7) (1,196.6) 5,761.5
Net income attributable to PVH Corp.          193.5
     193.5
Foreign currency translation adjustments            (30.7)   (30.7)
Net unrealized and realized loss related to effective cash flow hedges, net of tax benefit of $1.8            (0.5)   (0.5)
Net gain on net investment hedges, net of tax expense of $1.1            3.5
   3.5
Comprehensive income attributable to PVH Corp.                165.8
Settlement of awards under stock plans    48,714
 0.1
 (0.1)       —
Stock-based compensation expense        14.4
       14.4
Cash dividends ($0.0375 per common share)          (2.8)     (2.8)
Acquisition of 711,895 treasury shares              (67.2) (67.2)
Net loss attributable to redeemable non-controlling interest(0.4)                
August 4, 2019(0.6) —
 85,865,984
 85.9
 3,047.0
 4,614.0
 (611.4) (1,263.8) 5,871.7
Net income attributable to PVH Corp.          209.2
     209.2
Foreign currency translation adjustments            11.5
   11.5
Net unrealized and realized loss related to effective cash flow hedges, net of tax benefit of $0.4            (20.4)   (20.4)
Net loss on net investment hedges, net of tax benefit of $0.8            (2.3)   (2.3)
Comprehensive income attributable to PVH Corp.                198.0
Settlement of awards under stock plans    10,629
 —
 —
       —
Stock-based compensation expense        14.9
       14.9
Cash dividends ($0.0375 per common share)          (2.8)     (2.8)
Acquisition of 1,160,036 treasury shares              (96.7) (96.7)
Net loss attributable to redeemable non-controlling interest(0.3)                
November 3, 2019$(0.9) $—
 85,876,613
 $85.9
 $3,061.9
 $4,820.4
 $(622.6) $(1,360.5) $5,985.1

See accompanying notes.


5

PVH CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. GENERAL

PVH Corp. and its consolidated subsidiaries (collectively, the “Company”) constitute a global apparel company with a brand portfolio consisting of nationally and internationally recognized trademarks, including TOMMYHILFIGER, CALVIN KLEIN, Van Heusen, IZOD, ARROW, Warner’s, Olga,True&Co. and Geoffrey Beene, which are owned, and Speedo, which is licensed in perpetuity for North America and the Caribbean, as well asvarious other owned, licensed and, to a lesser extent, private label brands. The Company also licensed Speedo for North America and the Caribbean from Speedo International Limited until April 6, 2020, at which time the Company completed the sale of its Speedo North America business to Pentland Group PLC (“Pentland”), the parent company of the Speedo brand (the “Speedo transaction”). Upon the closing of the transaction, the Company deconsolidated the net assets of the Speedo North America business and no longer licenses the Speedo trademark. The Company designs and markets branded dress shirts, neckwear, sportswear (casual apparel), jeanswear, performance apparel, intimate apparel, underwear, swimwear, swim products, handbags, accessories, footwear and other related products and licenses its owned brands globally over a broad array of product categories and for use in numerous discrete jurisdictions. References to the aforementioned and other brand names are to registered and common law trademarks owned by the Company or licensed to the Company by third parties and are identified by italicizing the brand name.

The consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated in consolidation. Investments in entities that the Company does not control but has the ability to exercise significant influence over are accounted for using the equity method of accounting. The Company’s Consolidated Income Statements of Operations include its proportionate share of the net income or loss of these entities. Please see Note 6, “Investments in Unconsolidated Affiliates,” for further discussion. The Company and Arvind Limited (“Arvind”) have a joint venture in Ethiopia, PVH Arvind Manufacturing Private Limited Company (“PVH Ethiopia”), in which the Company owns a 75% interest. PVH Ethiopia is consolidated and the minority shareholder’s proportionate share (25%) of the equity in this joint venture is accounted for as a redeemable non-controlling interest. Please see Note 5, “Redeemable Non-Controlling Interest,,” for further discussion.

The Company’s fiscal years are based on the 52-53 week periods ending on the Sunday closest to February 1 and are designated by the calendar year in which the fiscal year commences. References to a year are to the Company’s fiscal year, unless the context requires otherwise.

The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not contain all disclosures required by accounting principles generally accepted in the United States for complete financial statements. Reference is made to the Company’s audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended February 3, 2019.2, 2020.

The preparation of the interim financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates.

The results of operations for the thirteen and thirty-nine weeks ended NovemberMay 3, 20192020 and November 4, 2018May 5, 2019 are not necessarily indicative of those for a full fiscal year due, in part, to the COVID-19 pandemic as well as seasonal factors. The data contained in these consolidated financial statements are unaudited and are subject to year-end adjustments. However, in the opinion of management, all known adjustments (which were normal and recurring in nature) have been made to present fairly the consolidated operating results for the unaudited periods.


COVID-19 Pandemic
Certain reclassifications have been made
The COVID-19 pandemic had a significant adverse impact on the Company’s business, financial condition, cash flows and results of operations in the first quarter of 2020 and continues into the second quarter of 2020. Virtually all of the Company’s retail stores were temporarily closed for varying periods of time throughout the first quarter as a result of the pandemic, with some stores beginning to reopen early in the second quarter under reduced operating hours. The Company’s wholesale customers and licensing partners also experienced significant business disruptions, which also resulted in a decrease in the Company’s revenue. In addition, the pandemic has impacted some of the Company’s suppliers, including third-party manufacturers, logistics providers and other vendors and has also disrupted the supply chains of its licensees. These supply chains may experience future disruptions as a result of either closed factories or factories operating with reduced workforces.

6

Given the uncertainties surrounding the impacts of the COVID-19 pandemic on the Company's future financial condition and results of operations, the Company has taken certain actions to preserve its liquidity and strengthen its financial flexibility. The Company suspended share repurchases under its stock repurchase program and suspended its dividends in mid-March. In addition, the Company has taken certain actions, which are ongoing, to (i) reduce payroll costs, through salary and incentive compensation reductions, furloughs, decreased working hours and hiring freezes, as well as taking advantage of applicable government relief programs, (ii) eliminate or reduce discretionary and variable operating expenses, including marketing, travel, consulting services, and creative and design costs, (iii) reduce working capital, with a particular focus on tightly managing its inventories, including reducing and cancelling inventory commitments, redeploying basic inventory items to subsequent seasons and consolidating future seasonal collections, as well as negotiating extended payment terms with its suppliers, and (iv) reduce capital expenditures.

In April 2020, the Company entered into a new $275.0 million 364-day unsecured revolving credit facility and issued an additional €175.0 million euro-denominated principal amount of 3 5/8% senior notes due 2024. In June 2020, the Company amended its senior unsecured credit facilities to provide temporary relief of certain financial covenants under these facilities during future periods. Please see Note 9, “Debt,” for further discussion.

The Company also assessed the impacts of the pandemic on the estimates and assumptions used in preparing these consolidated financial statements, including, but not limited to the allowance for credit losses, inventory reserves, carrying values of goodwill, intangible assets, and other long-lived assets, and the prior year periodseffectiveness of hedging instruments. Based on these assessments, the Company recorded pre-tax noncash impairment charges of $961.8 million in the first quarter of 2020, including $879.0 million related to present thatgoodwill, $54.5 million related to other intangible assets, $16.0 million related to store assets and $12.3 million related to an equity method investment, and recorded increases to its inventory reserves and allowances for credit losses of $59.1 million and $32.9 million, respectively. Please see Note 7, “Goodwill and Other Intangible Assets,” for further discussion of the impairments related to goodwill and other intangible assets, Note 12, “Fair Value Measurements,” for further discussion of the impairments related to store assets and Note 6, “Investments in Unconsolidated Affiliates,” for further discussion of the impairment related to an equity method investment.

The estimates and assumptions used in these assessments were based on management’s judgment and may be subject to change as new events occur and additional information on a basis consistent withis obtained. In particular, there is significant uncertainty about the current year.duration and extent of the impact of the COVID-19 pandemic and, if economic conditions caused by the pandemic do not recover as currently estimated by management, the Company’s financial condition, cash flows and results of operations may be materially and adversely impacted.

2. REVENUE

The Company generates revenue primarily from sales of finished products under its owned and licensed trademarks through its wholesale and retail operations. The Company also generates royalty and advertising revenue from licensing the rights to its trademarks to third parties. Revenue is recognized upon the transfer of control of products or services to the Company’s customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those products or services.
Product Sales
The Company generates revenue from the wholesale distribution of its products to traditional retailers (including for sale through their digital commerce sites), pure play digital commerce retailers, franchisees, licensees and distributors. Revenue is


recognized upon transfer of control of goods to the customer, which generally occurs when title to goods is passed and risk of loss transfers to the customer. Depending on the contract terms, transfer of control is upon shipment of goods to or upon receipt of goods by the customer. Payment is typically due within 30 to 90 days. The Company has provided temporary extensions to its standard payment terms for certain customers in connection with the COVID-19 pandemic. The amount of revenue recognized is net of returns, sales allowances and other discounts that the Company offers to its wholesale customers. The Company estimates returns based on an analysis of historical experience and specific customer arrangements and estimates sales allowances and other discounts based on seasonal negotiations, historical experience and an evaluation of current market conditions.
The Company also generates revenue from the retail distribution of its products through its freestanding stores, shop-in-shop/concession locations and digital commerce sites. Revenue is recognized at the point of sale in the stores and shop-in-shop/concession locations and upon estimated time of delivery for sales through the Company’s digital commerce sites, at which point control of the products passes to the customer. The amount of revenue recognized is net of returns, which are estimated
7

based on an analysis of historical experience. Costs associated with coupons are recorded as a reduction of revenue at the time of coupon redemption.
The Company excludes from revenue taxes collected from customers and remitted to government authorities related to sales of the Company’s products. Shipping and handling costs that are billed to customers are included in net sales.
Customer Loyalty Programs

The Company uses loyalty programs that offer customers of its retail businesses specified amounts off of future purchases for a specified period of time after certain levels of spending are achieved. Customers that are enrolled in the programs earn loyalty points for each purchase made.
Loyalty points earned under the customer loyalty programs provide the customer a material right to acquire additional products and give rise to the Company having a separate performance obligation. For each transaction where a customer earns loyalty points, the Company allocates revenue between the products purchased and the loyalty points earned based on the relative standalone selling prices. Revenue allocated to loyalty points is recorded as deferred revenue until the loyalty points are redeemed or expire.
Gift Cards
The Company sells gift cards to customers in its retail stores. The Company does not charge administrative fees on gift cards nor do they expire. Gift card purchases by a customer are prepayments for products to be provided by the Company in the future and are therefore considered to be performance obligations of the Company. Upon the purchase of a gift card by a customer, the Company records deferred revenue for the cash value of the gift card. Deferred revenue is relieved and revenue is recognized when the gift card is redeemed by the customer. The portion of gift cards that the Company does not expect to be redeemed (referred to as “breakage”) is recognized proportionately over the estimated customer redemption period, subject to the constraint that it must be probable that a significant reversal of revenue will not occur, if the Company determines that it does not have a legal obligation to remit the value of such unredeemed gift cards to any jurisdiction.
License Agreements
The Company generates royalty and advertising revenue from licensing the rights to access its trademarks to third parties, including the Company’s joint ventures. The license agreements are generally exclusive to a territory or product category, have terms in excess of one year and, in most cases, include renewal options. In exchange for providing these rights, the license agreements require the licensees to pay the Company a royalty and, in certain agreements, an advertising fee. In both cases, the Company generally receives the greater of (i) a sales-based percentage fee and (ii) a contractual minimum fee for each annual performance period under the license agreement.
In addition to the rights to access its trademarks, the Company provides ongoing support to its licensees over the term of the agreements. As such, the Company’s license agreements are licenses of symbolic intellectual property and, therefore, revenue is recognized over time. For license agreements where the sales-based percentage fee exceeds the contractual minimum fee, the Company recognizes revenues as the licensed products are sold as reported to the Company by its licensees. For license agreements where the sales-based percentage fee does not exceed the contractual minimum fee, the Company recognizes the contractual minimum fee as revenue ratably over the contractual period.
Under the terms of the license agreements, payments are generally due quarterly from the licensees. The Company records deferred revenue when amounts are received or receivable from the licensee in advance of the recognition of revenue.


As of NovemberMay 3, 2019,2020, the contractual minimum fees on the portion of all license agreements not yet satisfied totaled $1.1$1.2 billion, of which the Company expects to recognize $44.4$204.2 million as revenue during the remainder of 2019, $235.92020, $249.0 million in 20202021 and $825.9$737.6 million thereafter.
8

Deferred Revenue
Changes in deferred revenue, relatedwhich primarily relate to customer loyalty programs, gift cards and license agreements for the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 and November 4, 2018May 5, 2019 were as follows:
(In millions)Thirty-Nine Weeks Ended
 11/3/19 11/4/18
Deferred revenue balance at beginning of period$65.3
 $39.2
Impact of adopting the new revenue standard—
 15.6
Net additions to deferred revenue during the period41.1
 34.2
Reductions in deferred revenue for revenue recognized during the period (1)
(61.6) (49.7)
Deferred revenue balance at end of period$44.8
 $39.3

(In millions)Thirteen Weeks Ended
5/3/205/5/19
Deferred revenue balance at beginning of period$64.7  $65.3  
Net additions to deferred revenue during the period29.6  42.0  
Reductions in deferred revenue for revenue recognized during the period (1)
(42.6) (51.4) 
Deferred revenue balance at end of period$51.7  $55.9  

(1) Represents the amount of revenue recognized during the period that was included in the deferred revenue balance at the beginning of the period as adjusted in 2018 for the impact of adopting the new revenue standard, and does not contemplate revenue recognized from amounts deferred during the period. These amounts include $1.8 million and $1.7 million of revenue recognized during the thirteen weeks ended November 3, 2019 and November 4, 2018, respectively.

The Company also had long-term deferred revenue liabilities included in other liabilities in its Consolidated Balance Sheets of $1.6$9.7 million, $2.3$10.3 million and $2.6$2.1 million as of NovemberMay 3, 2019,2020, February 3,2, 2020 and May 5, 2019, and November 4, 2018, respectively.

Optional Exemptions
The Company elected not to disclose the remaining performance obligations for contracts that have an original expected term of one year or less and expected sales-based percentage fees for the portion of all license agreements not yet satisfied.

Please see Note 20,18, “Segment Data,” for information on the disaggregation of revenue by segment and distribution channel.

3. INVENTORIES

Inventories are comprised principally of finished goods and are stated at the lower of cost or net realizable value, except for certain retail inventories in North America that are stated at the lower of cost or market using the retail inventory method. Cost for substantially all wholesale inventories in North America and certain wholesale and retail inventories in Asia is determined using the first-in, first-out method. Cost for all other inventories is determined using the weighted average cost method. The Company reviews current business trends, inventory aging and discontinued merchandise categories to determine adjustments that it estimates will be needed to liquidate existing clearance inventories and record inventories at either the lower of cost or net realizable value or the lower of cost or market using the retail inventory method, as applicable.



4. ACQUISITIONS AND DIVESTITURES

TH CSAP Acquisition

The Company acquired on July 1, 2019 the Tommy Hilfiger retail business in Central and Southeast Asia from the Company’s previous licensee in these marketsthat market (the “TH CSAP acquisition”). As a result of the TH CSAP acquisition, the Company now operates directly the Tommy Hilfiger retail business in these markets.the Central and Southeast Asia market.

The acquisition date fair value of the consideration paid was $74.3 million. The estimated fair value of the assets acquired consisted of $63.9 million of goodwill and $10.4 million of other net assets. The goodwill of $63.9 million was assigned as of the acquisition date to the Company’s Tommy Hilfiger International segment, which is the Company’s reporting unit that is expected to benefit from the synergies of the combination. Goodwill is not expected to be deductible for tax purposes. The Company is still in the process of finalizing the valuation of the assets acquired;acquired, which will be completed in the second quarter of 2020; thus the allocation of the acquisition consideration is subject to change.

Australia Acquisition

The Company acquired on May 31, 2019 the approximately 78% ownership interests in Gazal Corporation Limited (“Gazal”) that it did not already own (the “Australia acquisition”). Prior to the Australia acquisition, the Company and Gazal jointly owned and managed a joint venture, PVH Brands Australia Pty. Limited (“PVH Australia”), with each owning a 50% interest. PVH Australia licensed and operated businesses in Australia, New Zealand and other parts of Oceania under the TOMMY HILFIGER, CALVIN KLEIN and Van Heusen brands, along with other licensedowned and ownedlicensed brands. PVH Australia came under the Company’s full control as a result of the acquisition. The Company now operates directly the Tommy Hilfiger, Calvin Klein and Van Heusen businesses in this region.those businesses.
9


Prior to May 31, 2019, the Company accounted for its approximately 22% interest in Gazal and its 50% interest in PVH Australia under the equity method of accounting. Following the completion of the Australia acquisition, the results of Gazal and PVH Australia have been consolidated in the Company’s consolidated financial statements.

Gain on Previously Held Equity Investments

The carrying values of the Company’s approximately 22% interest in Gazal and 50% interest in PVH Australia prior to the acquisition were $16.5 million and $41.9 million, respectively. In connection with the acquisition, these investments were remeasured to fair values of $40.1 million and $131.4 million, respectively, resulting in the recognition of an aggregate noncash gain of $113.1 million during the second quarter of 2019, which was included in other noncash gain in the Company’s Consolidated Income Statements.2019.

The fair value of the Company’s investment in Gazal was determined using the trading price of Gazal’s common stock, which was listed on the Australian Securities Exchange, on the date of the acquisition. The Company classified this as a Level 1 fair value measurement due to the use of an unadjusted quoted price in an active market. The fair value of Gazal included the fair value of Gazal’s 50% interest in PVH Australia. As such, the Company derived the fair value of its investment in PVH Australia from the fair value of Gazal by adjusting for (i) Gazal’s non-operating assets and net debt position and (ii) the estimated future operating cash flows of Gazal’s standalone operations, which were discounted at a rate of 12.5% to account for the relative risks of the estimated future cash flows. The Company classified this as a Level 3 fair value measurement due to the use of significant unobservable inputs.

Mandatorily Redeemable Non-Controlling Interest

Pursuant to the terms of the acquisition agreement, key members of Gazal and PVH Australia management exchanged a portion of their interests in Gazal for approximately 6% of the outstanding shares in the previously wholly owned subsidiary of the Company that acquired 100% of the ownership interests in the Australia business. The Company is obligated to purchase this 6% interest within two years of the acquisition closing in two tranches as follows: tranche 1 – 50% of the shares one year after the closing, but upthe holders had the option to defer half of this tranche may be deferred at the holders’ option to tranche 2; and tranche 2 – all remaining shares two years after the closing. With respect to tranche 1, the holders elected not to defer their shares and, as a result, the Company purchased all of the tranche 1 shares in June 2020. The purchase price for the tranche 1 and tranche 2 shares is based on a multiple of the subsidiary’s adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) less net debt as of the end of the measurement year, and the multiple varies depending on the level of EBITDA compared to a target.

The Company recognized a liability of $26.2 million for the fair value of the 6% interest on the date of the acquisition, which is being accounted for as a mandatorily redeemable non-controlling interest. The fair value of the liability was determined using a Monte Carlo simulation model, which utilizes inputs, including the volatility of financial results, in order to model the


probability of different outcomes. The Company classified this as a Level 3 fair value measurement due to the use of significant unobservable inputs. In subsequent periods, the liability for the mandatorily redeemable non-controlling interest is adjusted each reporting period to its redemption value based on conditions that exist as of each subsequent balance sheet date, provided that the liability cannot be adjusted below the amount initially recorded at the acquisition date. The Company reflectsrecords any adjustment insuch adjustments to the redemption valueliability in interest expense in the Company’s Consolidated Income Statement. TheStatement of Operations.

For the tranche 1 shares, the measurement period ended in 2019 and the $16.3 million liability as of May 3, 2020 was equal to the aggregate purchase price for the tranche 1 shares paid to the management shareholders in June 2020 under the conditions specified in terms of the acquisition agreement. For the tranche 2 shares, the Company recorded a lossgain of $2.6$3.7 million in interest expense during the thirteen weeks ended NovemberMay 3, 20192020 in connection with the remeasurement of the mandatorily redeemable non-controlling interest to its redemption value,liability, which reflects the negative impact of the COVID-19 pandemic on the subsidiary’s results in the first quarter of 2020 and resulted in a reduction to the liability for the tranche 2 shares. The $12.9 million liability for the tranche 2 shares at May 3, 2020 represents the amount thatinitially recorded at the acquisition date, as the amount the Company estimates it would be paidpay under the conditions specified in the terms of the acquisition agreement if settlement had occurred as of NovemberMay 3, 2019. 2020 of $12.1 million is less than the amount initially recorded. If the payment made for the tranche 2 shares at the settlement date is less than the liability recorded, the Company would record an extinguishment gain upon settlement.

The liability for the mandatorily redeemable non-controlling interest was $28.8$29.2 million as of NovemberMay 3, 20192020 based on exchange rates in effect on that date, of which $15.2$16.3 million related to the tranche 1 shares was included in accrued expenses and $13.6$12.9 million related to the tranche 2 shares was included in other liabilities in the Company’s Consolidated Balance Sheet.

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Fair Value of the Acquisition

The acquisition date fair value of the business acquired was $324.6 million, consisting of:
(In millions)  
Cash consideration $124.7
Fair value of the Company’s investment in PVH Australia 131.4
Fair value of the Company’s investment in Gazal 40.1
Fair value of mandatorily redeemable non-controlling interest 26.2
Elimination of pre-acquisition receivable owed to the Company 2.2
Total acquisition date fair value of the business acquired $324.6
(In millions)
Cash consideration$124.7 
Fair value of the Company’s investment in PVH Australia131.4 
Fair value of the Company’s investment in Gazal40.1 
Fair value of mandatorily redeemable non-controlling interest26.2 
Elimination of pre-acquisition receivable owed to the Company2.2 
Total acquisition date fair value of the business acquired$324.6 


Allocation of the Acquisition Date Fair Value

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
(In millions)
Cash and cash equivalents$6.6 
Trade receivables15.1 
Inventories89.9 
Prepaid expenses1.3 
Other current assets3.5 
Assets held for sale58.8 
Property, plant and equipment18.4 
Goodwill65.9 
Intangible assets222.2 
Operating lease right-of-use assets56.4 
Total assets acquired538.1 
Accounts payable14.4 
Accrued expenses22.5 
Short-term borrowings50.5 
Current portion of operating lease liabilities10.9 
Long-term portion of operating lease liabilities43.9 
Deferred tax liability69.6 
Other liabilities1.7 
Total liabilities assumed213.5 
Total acquisition date fair value of the business acquired$324.6 
(In millions)  
Cash and cash equivalents $6.6
Trade receivables 15.1
Inventories 89.9
Prepaid expenses 1.3
Other current assets 3.5
Assets held for sale 58.8
Property, plant and equipment 18.4
Goodwill 66.9
Intangible assets 222.2
Operating lease right-of-use assets 56.4
Total assets acquired 539.1
Accounts payable 14.4
Accrued expenses 23.5
Short-term borrowings 50.5
Current portion of operating lease liabilities 10.9
Long-term portion of operating lease liabilities 43.9
Deferred tax liability 69.6
Other liabilities 1.7
Total liabilities assumed 214.5
Total acquisition date fair value of the business acquired $324.6




Prior to the closing of the Australia acquisition, Gazal had entered into an agreement to sell an office building and warehouse to a third party and, as such, the building was classified as held for sale on the acquisition date. TheIn June 2019, the Company completed the sale of the building was subsequently sold to a third partyand warehouse for $59.4 million, incurring costs of $1.0 million, and leased back the building without an option to repurchase. No gain or loss was recognized on the Company in June 2019. Please see Note 16, “Leases,” for further discussion of this sale-leaseback transaction.

The goodwill of $66.9$65.9 million was assigned as of the acquisition date to the Company’s Tommy Hilfiger International and Calvin Klein International segments in the amounts of $57.7$56.8 million and $9.2$9.1 million, respectively, which include the Company’s reporting units that are expected to benefit from the synergies of the combination. Goodwill willis not be deductible for tax purposes. The other intangible assets of $222.2 million consisted of reacquired perpetual license rights of $204.9 million, which are indefinite lived,indefinite-lived, order backlog of $0.3 million, which was amortized on a straight-line basis over 0.5 years, and customer relationships of $17.0 million which are subject to amortizationbeing amortized on a straight-line basis over 0.5 years and 10.0 years, respectively.years. The Company is stillfinalized the purchase price allocation during the first quarter of 2020.
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Sale of the Speedo North America Business

The Company entered into a definitive agreement on January 9, 2020 to sell its Speedo North America business to Pentland, the parent company of the Speedo brand, for $170.0 million in the process of finalizing the valuation ofcash, subject to a working capital adjustment. The Company classified the assets and liabilities assumed; thus, the allocation of the acquisition dateSpeedo North America business as held for sale in the Company’s Consolidated Balance Sheet as of February 2, 2020 and recorded a pre-tax noncash loss of $142.0 million during the fourth quarter of 2019 (including a $116.4 million noncash impairment charge related to the Speedo perpetual license right) to reduce the carrying value of the Speedo North America business to its estimated fair value, isless costs to sell. The estimated fair value, less costs to sell, reflected the amount of consideration the Company expected to receive upon closing of the transaction, inclusive of the working capital adjustment.

The Company completed the sale of its Speedo North America business on April 6, 2020 for net proceeds of $169.1 million, subject to change.

Acquisitiona final adjustment based on terms of the Geoffrey Beene Tradename

Theagreement, and deconsolidated the net assets of the business. In connection with the closing of the transaction, the Company acquired on April 20, 2018recorded a pre-tax noncash loss of $5.9 million in the Geoffrey Beene tradenamefirst quarter of 2020 resulting from Geoffrey Beene, LLC (“Geoffrey Beene”). Priorthe remeasurement of the loss recorded in the fourth quarter of 2019, primarily due to changes to the acquisition,net assets of the Speedo North America business subsequent to February 2, 2020. The loss was recorded in other noncash loss, net in the Company’s Consolidated Statement of Operations and included in the Heritage Brands Wholesale segment.

Upon the closing of the transaction, U.S.-based employees who were engaged primarily in the Speedo North America business terminated their employment with the Company. However, the Company licensedretained the rightsliability for any deferred vested benefits earned under its retirement plans. No further benefits will be accrued under the plans and as a result, the Company recognized a gain of $2.8 million in the first quarter of 2020 with a corresponding decrease to design, marketits pension benefit obligation. The gain was included in other noncash loss, net in the Company’s Consolidated Statement of Operations. Please see Note 8, “Retirement and distribute Geoffrey Beene dress shirts and neckwear from Geoffrey Beene.Benefit Plans,” for further discussion.

The tradename was acquiredassets and liabilities of the Speedo North America business classified as held for $17.0sale in the Company’s Consolidated Balance Sheet as of February 2, 2020 were included in the Heritage Brands Wholesale segment and consisted of the following:

(In millions)
Assets held for sale:
Trade receivables$48.8 
Inventories, net54.3 
Prepaid expenses0.6 
Other current assets0.6 
Property, plant and equipment, net6.1 
Operating lease right-of-use assets9.0 
Goodwill48.1 
Other intangibles, net (1)
95.3 
Allowance for reduction of assets held for sale(25.6)
Total assets held for sale$237.2 
Liabilities related to assets held for sale:
Accounts payable$38.7 
Accrued expenses5.4 
Current portion of operating lease liabilities0.6 
Long-term portion of operating lease liabilities10.6 
Other liabilities1.8 
Total liabilities related to assets held for sale$57.1 

(1) Other intangibles, net includes a perpetual license right of $87.4 million consistingand customer relationships of $15.9 million paid in cash, $0.7 million of royalties prepaid to Geoffrey Beene by the Company under the license agreement, and $0.4 million of liabilities assumed by the Company. The transaction was accounted for as an asset acquisition.$7.9 million.



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5. REDEEMABLE NON-CONTROLLING INTEREST

The Company and Arvind formed PVH Ethiopia, in which the Company owns a 75% interest, during 2016. The Company consolidates PVH Ethiopia in its consolidated financial statements. PVH Ethiopia was formed to operate a manufacturing facility that produces finished products for the Company for distribution primarily in the United States.

The shareholders agreement governing PVH Ethiopia (the “Shareholders Agreement”) contains a put option under which Arvind can require the Company to purchase all of its shares in the joint venture during various future periods as specified in the Shareholders Agreement. The first such period immediately precedes the ninth anniversary of PVH Ethiopia’s date of incorporation. The Shareholders Agreement also contains call options under which the Company can require Arvind to sell to the Company (i) all or a portion of its shares during various future periods as specified in the Shareholders Agreement; (ii) all of its shares in the event of a change of control of Arvind; or (iii) all of its shares in the event that Arvind ceases to hold at least 10% of the outstanding shares. The Company’s first call option referred to in clause (i) immediately follows the fifth anniversary of the date of incorporation of PVH Ethiopia. The put and call prices are the fair market value of the shares on the redemption date based upon a multiple of PVH Ethiopia’s EBITDA for the prior 12 months, less PVH Ethiopia’s net debt.

The fair value of the redeemable non-controlling interest (“RNCI”) as of the date of formation of PVH Ethiopia was $0.1 million. The carrying amount of the RNCI is adjusted to equal the redemption amount at the end of each reporting period, provided that this amount at the end of each reporting period cannot be lower than the initial fair value adjusted for the minority shareholder’s share of net income or loss. Any adjustment to the redemption amount of the RNCI is determined after attribution of net income or loss of the RNCI and will be recognized immediately in retained earnings of the Company, since it is probable that the RNCI will become redeemable in the future based on the passage of time. The carrying amount of the RNCI as of NovemberMay 3, 20192020 was $(0.9)$(2.4) million, which is greater than the redemption amount. The carrying amount decreased from $0.2$(2.0) million as of February 3, 20192, 2020 as a result of a net loss attributable to the RNCI for the thirty-ninethirteen weeks ended November May 3, 20192020 of $1.1$0.4 million. The carrying amount of the RNCI as of November 4, 2018May 5, 2019 was $0.5$(0.2) million.


6. INVESTMENTS IN UNCONSOLIDATED AFFILIATES

The Company had investments in unconsolidated affiliates of $148.4$142.1 million, $207.1$176.3 million and $198.0$208.5 million as of NovemberMay 3, 2019,2020, February 3,2, 2020 and May 5, 2019, and November 4, 2018, respectively. These investments are accounted for under the equity method of accounting and included in other assets in the Company’s Consolidated Balance Sheets.

The Company received dividendsowns an economic interest of $13.6approximately 8% in Karl Lagerfeld Holding B.V. (“Karl Lagerfeld”). The Company determined that recent and projected business results for Karl Lagerfeld, which included an adverse impact of the COVID-19 pandemic, was an indicator of an other-than-temporary impairment with respect to the Company’s investment in Karl Lagerfeld as of May 3, 2020. The Company calculated the fair value of its investment using future operating cash flow projections that were discounted at a rate of 10.9%, which accounted for the relative risks of the estimated future cash flows. The Company classified this as a Level 3 fair value measurement due to the use of significant unobservable inputs. The Company determined the fair value of its investment was lower than its carrying amount as of May 3, 2020, and as a result recorded a noncash other-than temporary impairment of $12.3 million and $3.6 million from these investmentsto fully impair the investment during the thirty-ninethirteen weeks ended NovemberMay 3, 2019 and November 4, 2018, respectively, and made payments related2020. The impairment was included in equity in net (loss) income of unconsolidated affiliates in the Company’s Consolidated Statement of Operations. The impairment charge was recorded in corporate expenses not allocated to these investments of $2.5 million duringany reportable segments, consistent with how the thirty-nine weeks ended November 3, 2019 to contributeCompany has historically recorded its proportionate share of funding for the period.net income or loss of its investment in Karl Lagerfeld.

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PVH Legwear
The Company and a wholly owned subsidiary of the Company’s Heritage Brands socks and hosiery licensee formed a joint venture, PVH Legwear LLC (“PVH Legwear”) in the thirty-nine weeks ended November 3, 2019, in which the Company owns a 49% economic interest. PVH Legwear was formed for the purpose of consolidating the Company’s socks and hosiery businesses for all Company brands in the United States and Canada. PVH Legwear licenses from the Company the rights to distribute and sell in these countries TOMMY HILFIGER, CALVIN KLEIN, IZOD, Van Heusen and Warner’s socks and hosiery. Additionally, PVH Legwear sells socks and hosiery under other owned and licensed tradenames. PVH Legwear began operations in December 2019. This investment is being accounted for under the equity method of accounting.

Gazal and PVH Australia
Prior to May 31, 2019, the Company held an approximately 22% ownership interest in Gazal and a 50% ownership interest in PVH Australia. These investments were accounted for under the equity method of accounting until the closing of the Australia acquisition on May 31, 2019, on which date the Company derecognized its equity investments in Gazal and PVH Australia and began to consolidate the operations of Gazal and PVH Australia into its financial statements. Please see Note 4, “Acquisitions,” for further discussion.

7. GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the thirty-ninethirteen weeks ended NovemberMay 3, 2019,2020, by segment (please see Note 20,18, “Segment Data,” for further discussion of the Company’s reportable segments), were as follows:
(In millions)Calvin Klein North AmericaCalvin Klein InternationalTommy Hilfiger North AmericaTommy Hilfiger InternationalHeritage Brands WholesaleHeritage Brands RetailTotal
Balance as of February 2, 2020
Goodwill, gross$780.4  $896.1  $204.4  $1,598.3  $198.4  $11.9  $3,689.5  
Accumulated impairment losses—  —  —  —  —  (11.9) (11.9) 
Goodwill, net780.4  896.1  204.4  1,598.3  198.4  —  3,677.6  
Impairment(287.3) (394.0) —  —  (197.7) —  (879.0) 
Currency translation and other1.0  (13.3) (1.4) (25.1) (0.7) —  (39.5) 
Balance as of May 3, 2020
Goodwill, gross781.4  882.8  203.0  1,573.2  197.7  11.9  3,650.0  
Accumulated impairment losses(287.3) (394.0) —  —  (197.7) (11.9) (890.9) 
Goodwill, net$494.1  $488.8  $203.0  $1,573.2  $—  $—  $2,759.1  
(In millions)Calvin Klein North America Calvin Klein International Tommy Hilfiger North America Tommy Hilfiger International Heritage Brands Wholesale Heritage Brands Retail Total
Balance as of February 3, 2019             
Goodwill, gross    $780.3
 $909.5
 $204.4
 $1,529.8
 $246.5
 $11.9
 $3,682.4
Accumulated impairment losses    —
 —
 —
 —
 —
 (11.9) (11.9)
Goodwill, net    780.3
 909.5
 204.4
 1,529.8
 246.5
 —
 3,670.5
Australia acquisition—
 9.2
 —
 57.7
 —
 —
 66.9
TH CSAP acquisition—
 —
 —
 63.9
 —
 —
 63.9
Currency translation0.2
 (18.4) —
 (44.6) —
 —
 (62.8)
Balance as of November 3, 2019             
Goodwill, gross    780.5
 900.3
 204.4
 1,606.8
 246.5
 11.9
 3,750.4
Accumulated impairment losses    —
 —
 —
 —
 —
 (11.9) (11.9)
Goodwill, net    $780.5
 $900.3
 $204.4
 $1,606.8
 $246.5
 $—
 $3,738.5


The goodwill acquired in the Australia and TH CSAP acquisitions was assigned as of the respective acquisition dates to the Company’s reporting units that are expected to benefit from the synergies of the combinations.

The Company performed its annual impairment assessment forassesses the recoverability of goodwill which is done at the reporting unit level, and other indefinite-lived intangible assets as ofannually, at the beginning of the third quarter of 2019. Please see Note 1, “Summary of Significant Accounting Policies,” ineach fiscal year, and between annual tests if an event occurs or circumstances change that would indicate that it is more likely than not that the Notes to Consolidated Financial Statements included in Item 8 ofcarrying amount may be impaired. Impairment testing for goodwill is done at the Company’s Annual Report on Form 10-Kreporting unit level. Impairment testing for other indefinite-lived intangible assets is done at the year ended February 3, 2019individual asset level. Intangible assets with finite lives are amortized over their estimated useful life and are tested for discussion ofimpairment, along with other long-lived assets, when events and circumstances indicate that the Company’s goodwillassets might be impaired. Indefinite-lived intangible assets and intangible assets with finite lives are tested for impairment testing process.prior to assessing the recoverability of goodwill.

Goodwill

The COVID-19 pandemic had a significant adverse impact on the Company’s annualbusiness during the first quarter of 2020, resulting in an unprecedented decline in revenue and earnings, and is driving an extended decline in the Company’s stock price and associated market capitalization. While there is significant uncertainty about the duration and extent of the impact of the pandemic, the Company expects there will be a significant negative impact to its future earnings and cash flows. The Company determined that the impact of COVID-19 was a triggering event that required the Company to perform a quantitative interim goodwill impairment test for 2019 yielded estimated fair values in excess of the carrying amounts for all of the Company’s reporting units and therefore no impairment of goodwill was identified. The reporting unit with the least excess fair value had an estimated fair value that exceeded its carrying amount by 15%.test.

Additionally, no impairment of indefinite-lived intangible assets was identified asAs a result of this interim test, the Company recorded $879.0 million of noncash impairment charges during the first quarter of 2020, which was included in goodwill and other intangible assets impairments in the Company’s annual indefinite-lived intangible assetConsolidated Statement of Operations. The impairment test for 2019. The fair values of all ofcharges, which related to the Heritage Wholesale North America, Calvin Klein Retail North America, Calvin Klein Wholesale North America, Calvin Klein Licensing and Advertising International, and Calvin Klein International reporting units, were recorded to the Company’s indefinite-lived intangible assets substantially exceeded their carrying amounts,segments as follows: $197.7 million in the Heritage Brands Wholesale segment, $287.3 million in the Calvin Klein North America segment, and $394.0 million in the Calvin Klein International segment. The Company’s impairment assessment was performed in accordance with the exceptionaccounting guidance adopted in the first quarter of 2020 that simplifies the Company’s perpetual license right, which had a fair value that exceeded itstesting for goodwill impairment, as discussed in Note 20, “Recent Accounting Guidance.”

Of these reporting units, Calvin Klein Wholesale North America, Calvin Klein Licensing and Advertising International, and Calvin Klein International were determined to be only partially impaired. The remaining carrying amount by 3% atof goodwill allocated to these reporting units as of May 3, 2020 was $162.3 million, $143.4 million and $346.9 million, respectively. Holding all other assumptions constant, a 100 basis point change in the testing date. The excessannual revenue growth rate assumptions for these businesses would result in a change to the estimated fair value of the perpetual license right declined


compared to the prior year, primarily driven by an increasereporting units of approximately $80.0 million, $20.0 million and $140.0 million, respectively. Likewise, a 100 basis point change in the weighted average cost of capital as comparedwould result in a change to the prior year. The carrying amountestimated fair value of the perpetual license right was $203.8reporting units of approximately $60.0 million, as of November 3, 2019.$15.0 million and $125.0 million, respectively. While the perpetual license right wasthese reporting units were not determined to be fully impaired, it isthey may be at risk of further impairment in the future impairment in the event the related business doesbusinesses do not perform as projected, including if they fail to recover as planned following the COVID-19 pandemic, or if market factors utilized in the impairment analysis deteriorate, including an unfavorable change in long-term growth rates or the weighted average cost of capital.
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With respect to the Company’s other reporting units that were not determined to be impaired, the Tommy Hilfiger International reporting unit had an estimated fair value that exceeded its carrying amount of $2,948.5 million by 5%. The carrying amount of goodwill allocated to this reporting unit as of May 3, 2020 was $1,557.5 million. Holding all other assumptions constant, a 100 basis point change in the annual revenue growth rate of the Tommy Hilfiger International business conducted under the perpetual license would result in a change to the estimated fair value of the Company’s perpetual license rightreporting unit of approximately $25.0$355.0 million. Likewise, a 100 basis point change in the weighted average cost of capital would result in a change to the estimated fair value of the Company’sreporting unit of approximately $320.0 million. While the Tommy Hilfiger International reporting unit was not determined to be impaired, it may be at risk of future impairment in the event the related business does not perform as projected, including if it fails to recover as planned following the COVID-19 pandemic, or if market factors utilized in the impairment analysis deteriorate, including an unfavorable change in the long-term growth rate or the weighted average cost of capital.

The fair value of the reporting units for goodwill impairment testing was determined using an income approach and validated using a market approach. The income approach was based on discounted projected future (debt-free) cash flows for each reporting unit. The discount rates applied to these cash flows were based on the weighted average cost of capital for each reporting unit, which takes market participant assumptions into consideration. Estimated future operating cash flows were discounted at rates of 10.0%, 10.5% or 11.0%, depending on the reporting unit, to account for the relative risks of the estimated future cash flows. For the market approach, used to validate the results of the income approach method, the Company used both the guideline company and similar transaction methods. The guideline company method analyzes market multiples of revenue and EBITDA for a group of comparable public companies. The market multiples used in the valuation are based on the relative strengths and weaknesses of the reporting unit compared to the selected guideline companies. Under the similar transactions method, valuation multiples are calculated utilizing actual transaction prices and revenue and EBITDA data from target companies deemed similar to the reporting unit. The Company classified the fair values of its reporting units as Level 3 fair value measurements due to the use of significant unobservable inputs.

Indefinite-Lived Intangible Assets

The Company also determined that the impact of the COVID-19 pandemic on its business was a triggering event that prompted the need to perform interim impairment testing of its indefinite-lived intangible assets. For the TOMMY HILFIGER, CALVIN KLEIN, Van Heusen, Warner’s and Olga tradenames and the reacquired perpetual license rightrights for TOMMY HILFIGER in India, the Company elected to first assess qualitative factors to determine whether it was more likely than not that the fair value of any asset was less than its carrying amount. For these assets, no impairment was identified as a result of the Company’s annual indefinite-lived intangible asset impairment test for 2019 and the fair values of these indefinite-lived intangible assets substantially exceeded their carrying amounts. The asset with the least excess fair value had an estimated fair value that exceeded its carrying amount by approximately 85% as of the date of the Company’s 2019 annual test. Considering this and other factors, the Company determined qualitatively that it was not more likely than not that the fair values of these indefinite-lived intangible assets were less than their carrying amounts and concluded that the quantitative impairment test was not required.

For the ARROW and Geoffrey Beene tradenames and the reacquired perpetual license rights recorded in connection with the Australia acquisition, the Company elected to bypass the qualitative assessment and proceeded directly to the quantitative impairment test. As a result of this quantitative interim impairment testing, the Company recorded $47.2 million of noncash impairment charges during the first quarter of 2020 to write down the two tradenames. This included $35.6 million to write down the ARROW tradename, that had a carrying amount of $78.9 million, to a fair value of $43.3 million, and $11.6 million to write down the Geoffrey Beene tradename, that had a carrying amount of $17.0 million, to a fair value of $5.4 million. The $47.2 million of impairment charges was included in goodwill and other intangible assets impairments in the Company’s Consolidated Statement of Operations and allocated to the Company’s Heritage Brands Wholesale segment. Holding all other assumptions constant, a 100 basis point change in the annual revenue growth rate of the Arrowbusiness would result in a change to the estimated fair value of the tradename of approximately $50.0$5.0 million. Likewise, a 100 basis point change in the weighted average cost of capital would result in a change to the estimated fair value of the tradename of approximately $5.0 million. Holding all other assumptions constant, a 100 basis points change to the annual revenue growth rate or weighted average cost of capital in the Geoffrey Beenebusiness would result in an immaterial change to the estimated fair value of the tradename.

With regard to the reacquired perpetual license rights recorded in connection with the Australia acquisition, the Company determined that its fair value substantially exceeded its carrying amount and, therefore, the asset was not impaired.

The fair value of the ARROW and Geoffrey Beene tradenames was determined using an income-based relief-from-royalty method. Under this method, the value of an asset is estimated based on the hypothetical cost savings that accrue as a result of
15

not having to license the tradename from another party. These cash flows are discounted to present value using a discount rate that factors in the relative risk of the intangible asset. The Company discounted the cash flows used to value the ARROW and Geoffrey Beene tradenames at a rate of 10.0%. The fair value of the Company’s reacquired perpetual license rights recorded in connection with the Australia acquisition was determined using an income approach which estimates the net cash flows directly attributable to the subject intangible asset. These cash flows are discounted to present value using a discount rate that factors in the relative risk of the intangible asset. The Company discounted the cash flows used to value the reacquired perpetual license rights recorded in connection with the Australia acquisition at a rate of 10.0%. The Company classified the fair values of these indefinite-lived intangible assets as Level 3 fair value measurements due to the use of significant unobservable inputs.

Finite-Lived Intangible Assets

Additionally, the Company recorded $7.3 million of noncash impairment charges during the first quarter of 2020 to write down certain finite-lived customer relationship intangible assets, to a fair value of 0. These impairments were included in goodwill and other intangible assets impairments in the Company’s Consolidated Statement of Operations and allocated to the Company’s segments as follows: $4.7 million in the Heritage Brands Wholesale segment and $2.6 million in the Calvin Klein North America segment. The Company determined qualitatively that these assets, which have a relatively short remaining useful life, were not recoverable and, therefore, impaired due to the adverse impact of the COVID-19 pandemic on the current and projected performance of the underlying businesses.

8. RETIREMENT AND BENEFIT PLANS

The Company, as of NovemberMay 3, 2019,2020, has 5 noncontributory qualified defined benefit pension plans covering substantially all employees resident in the United States who meet certain age and service requirements. The plans provide monthly benefits upon retirement generally based on career average compensation and years of credited service. Vesting in plan benefits generally occurs after five years of service. The Company refers to these five plans as its “Pension Plans.”
The Company also has 3 noncontributory unfunded non-qualified supplemental defined benefit pension plans, including:

–A plan for certain current and former members of Tommy Hilfiger’s domestic senior management. The plan is frozen and, as a result, participants do not accrue additional benefits.
–A capital accumulation program for certain current and former senior executives. Under the individual participants’ agreements, the participants in the program will receive a predetermined amount during the ten years following the attainment of age 65, provided that prior to the termination of employment with the Company, the participant has been in the plan for at least ten years and has attained age 55.
–A plan for certain employees resident in the United States who meet certain age and service requirements that provides benefits for compensation in excess of Internal Revenue Service earnings limits and requires payments to vested employees upon, or shortly after, employment termination or retirement.
–A plan for certain current and former members of Tommy Hilfiger’s domestic senior management. The plan is frozen and, as a result, participants do not accrue additional benefits.
–A capital accumulation program for certain current and former senior executives. Under the individual participants’ agreements, the participants in the program will receive a predetermined amount during the ten years following the attainment of age 65, provided that prior to the termination of employment with the Company, the participant has been in the plan for at least ten years and has attained age 55.
–A plan for certain employees resident in the United States who meet certain age and service requirements that provides benefits for compensation in excess of Internal Revenue Service earnings limits and requires payments to vested employees upon, or shortly after, employment termination or retirement.

The Company refers to these 3 plans as its “SERP Plans.”

The components of net benefit cost recognized were as follows:
Pension PlansSERP Plans
Thirteen Weeks EndedThirteen Weeks Ended
(In millions)5/3/205/5/195/3/205/5/19
Service cost$11.1  $8.2  $1.9  1.5  
Interest cost6.4  6.9  0.9  1.0  
Expected return on plan assets(10.9) (10.1) —  —  
Speedo deconsolidation gain(2.2) —  (0.6) —  
Total$4.4  $5.0  $2.2  $2.5  
 Pension Plans Pension Plans
 Thirteen Weeks Ended Thirty-Nine Weeks Ended
(In millions)11/3/19 11/4/18 11/3/19 11/4/18
        
Service cost$8.4
 $8.4
 $25.1
 $25.3
Interest cost    6.9
 6.5
 20.9
 19.5
Expected return on plan assets    (10.0) (10.1) (30.2) (30.2)
Total    $5.3
 $4.8
 $15.8
 $14.6


The Company completed the sale of its Speedo North America business to Pentland on April 6, 2020. Upon the closing of the transaction, U.S.-based employees who were engaged primarily in the Speedo North America business terminated their employment with the Company. However, the Company retained the liability for any deferred vested benefits earned under its retirement plans. No further benefits will be accrued under the plans and as a result, the Company recognized a gain of $2.8 million in the first quarter of 2020 with a corresponding decrease to its pension benefit obligation. The gain was included in
16


 SERP Plans SERP Plans
 Thirteen Weeks Ended Thirty-Nine Weeks Ended
(In millions)11/3/19 11/4/18 11/3/19 11/4/18
        
Service cost$1.4
 $1.5
 $4.3
 $4.4
Interest cost    1.1
 0.9
 3.2
 2.9
Total    $2.5
 $2.4
 $7.5
 $7.3
other noncash loss, net in the Company’s Consolidated Statement of Operations. Please see Note 4, “Acquisitions and Divestitures,” for further discussion of the sale of the Speedo North America business.

The Company also provides certain postretirement health care and life insurance benefits to certain retirees resident in the United States. As a result of the Company’s acquisition of The Warnaco Group, Inc. (“Warnaco”), the Company also provides certain postretirement health care and life insurance benefits to certain Warnaco retirees resident in the United States. Retirees contribute to the cost of the applicable plan, both of which are unfunded and frozen. The Company refers to these 2 plans as its “Postretirement Plans.” Net benefit cost related to the Postretirement Plans was immaterial for the thirteen and thirty-nine weeks ended NovemberMay 3, 20192020 and November 4, 2018.May 5, 2019.



The service cost component of net benefit cost is recorded in selling, general and administrative (“SG&A”) expenses and the other components of net benefit cost are recorded in non-service related pension and postretirement income in the Company’s Consolidated Income Statements.Statements of Operations.

TheCurrently, the Company made a contribution of $0.7 million to its Pension Plans during the third quarter of 2019 and does not expect to make any additionalmaterial contributions to the Pension Plans in 2019.2020. The Company’s actual contributions may differ from planned contributions due to many factors, including changes in tax and other laws, as well as significant differences between expected and actual pension asset performance or interest rates.

9. DEBT

Short-Term Borrowings

The Company has the ability to draw revolving borrowings under itsthe senior unsecured credit facilities as discussed below in the section entitled “2019 Senior Unsecured Credit Facilities” below.Facilities.” The Company had $306.0$168.0 million outstanding under these facilities as of NovemberMay 3, 2019.2020. The weighted average interest rate on funds borrowed as of NovemberMay 3, 20192020 was 3.06%1.93%. The maximum amount of revolving borrowings outstanding under these facilities during the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 was $378.4$745.7 million.

The Company also has the ability to draw revolving borrowings under its new 364-day unsecured revolving credit facility, as discussed in the section entitled “2020 Unsecured Revolving Credit Facility” below. The Company had no borrowings outstanding under this facility as of or during the thirteen weeks ended May 3, 2020.

Additionally, the Company has the availabilityability to borrow under short-term lines of credit, overdraft facilities and short-term revolving credit facilities denominated in various foreign currencies. These facilities provided for borrowings of up to $134.3$174.4 million based on exchange rates in effect on NovemberMay 3, 20192020 and are utilized primarily to fund working capital needs. The Company had $81.5$73.8 million outstanding under these facilities as of NovemberMay 3, 2019, inclusive of borrowings under a facility utilized by the Company’s recently acquired business in Australia.2020. The weighted average interest rate on funds borrowed as of NovemberMay 3, 20192020 was 2.08%1.94%. The maximum amount of borrowings outstanding under these facilities during the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 was $99.5$73.8 million.

Commercial Paper

The Company has the ability to issue, from time to time, unsecured commercial paper notes with maturities that vary but do not exceed 397 days from the date of issuance primarily to fund working capital needs. The Company had $80.3 million of borrowings outstanding under the commercial paper note program as of May 3, 2020, all of which matured in May 2020. The weighted average interest rate on funds borrowed under the program as of May 3, 2020 was 2.05%. The maximum amount of borrowings outstanding under the program during the thirteen weeks ended May 3, 2020 was $165.0 million.

The commercial paper program allows for borrowings of up to $675.0 million to the extent that the Company has borrowing capacity under the United States dollar-denominated revolving credit facility included in the 2019 facilities (as defined below). Accordingly, the combined aggregate amount of (i) borrowings outstanding under the commercial paper note program and (ii) the revolving borrowings outstanding under the United States dollar-denominated revolving credit facility at any one time cannot exceed $675.0 million. The maximum aggregate amount of borrowings outstanding under the commercial paper program and the United States dollar-denominated portion of the revolving credit facility during the thirteen weeks ended May 3, 2020 was $659.9 million.

2020 Unsecured Revolving Credit Facility

On April 8, 2020, the Company entered into a 364-day $275.0 million United States dollar-denominated unsecured revolving credit facility (the “2020 facility”). The Company may increase the commitment under the 2020 facility by an aggregate amount not to exceed $100.0 million, subject to certain customary conditions. The 2020 facility will mature on April 7, 2021. The
17


Company incurred $2.0 million of debt issuance costs during the first quarter of 2020, which are being amortized over the term of the debt agreement.

Currently, the Company’s obligations under the 2020 facility are unsecured and are not guaranteed by any of the Company’s subsidiaries. However, within 120 days after the occurrence of a specified credit ratings decrease (as set forth in the 2020 facility), (i) the Company must cause each of its wholly owned United States subsidiaries (subject to certain customary exceptions) to become a guarantor under the 2020 facility and (ii) the Company and each subsidiary guarantor will be required to grant liens, as collateral agent, on substantially all of their respective assets (subject to customary exceptions).

The outstanding borrowings under the 2020 facility are prepayable at any time without penalty (other than customary breakage costs). The borrowings under the 2020 facility bear an interest rate equal to an applicable margin plus, as determined at the Company’s option, either (a) a base rate determined by reference to the greater of (i) the prime rate, (ii) the United States federal funds effective rate plus 1/2 of 1.00% and (iii) a one-month reserve adjusted Eurocurrency rate plus 1.00% or (b) an adjusted Eurocurrency rate, calculated in a manner set forth in the 2020 facility.

The initial applicable margin with respect to the borrowings will be 2.250% for adjusted Eurocurrency rate loans and 1.250% for base rate loans. The applicable margin for borrowings will be adjusted based upon the Company’s public debt rating after the date of delivery of notice of a change in the Company’s public debt rating by Standard & Poor’s and Moody’s.

The Company had no borrowings outstanding under the 2020 facility during the thirteen weeks ended May 3, 2020.

The 2020 facility requires the Company to comply with customary affirmative, negative and financial covenants, including a minimum interest coverage ratio and maximum net leverage ratio, which are subject to change in the event that, and in the same manner as, the minimum interest coverage ratio and maximum net leverage ratio covenants under the 2019 facilities are amended. Refer to the section entitled “2019 Senior Unsecured Credit Facilities” below for discussion of an amendment to the 2019 facilities in June 2020. A breach of any of these operating or financial covenants would result in a default under the 2020 facility. If an event of default occurs and is continuing, the lenders could elect to declare all amounts then outstanding, together with accrued interest, to be immediately due and payable, which would result in acceleration of the Company’s other debt.

The 2020 facility contains other customary events of default in addition to violations of covenants discussed above, including but not limited to nonpayment; material inaccuracy of representations and warranties; certain bankruptcies and liquidations; cross-default to material indebtedness; certain material judgments; certain events related to the Employee Retirement Income Security Act of 1974, as amended; and a change in control (as defined in the 2020 facility).

18


Long-Term Debt

The carrying amounts of the Company’s long-term debt were as follows:
(In millions)5/3/202/2/205/5/19
Senior unsecured Term Loan A facilities due 2024 (1)(2)
$1,558.4  $1,569.5  $1,644.0  
7 3/4% debentures due 202399.7  99.7  99.6  
3 5/8% senior unsecured euro notes due 2024 (2)
564.3  (3)(4)382.9  (3) 385.8  (3) 
3 1/8% senior unsecured euro notes due 2027 (2)
645.4  655.6  661.0  
Total2,867.8  2,707.7  2,790.4  
Less: Current portion of long-term debt13.6  13.8  31.0  
Long-term debt$2,854.2  $2,693.9  $2,759.4  
(In millions)11/3/19 2/3/19 11/4/18
      
Senior unsecured Term Loan A facilities due 2024 (1)(2)
$1,633.8
 $—
 $—
Senior secured Term Loan A facility due 2021—
 1,643.8
 1,708.3
7 3/4% debentures due 202399.7
 99.6
 99.6
3 5/8% senior unsecured euro notes due 2024 (2)
385.7
 396.5
 394.4
3 1/8% senior unsecured euro notes due 2027 (2)
660.5
 679.5
 676.0
Total    2,779.7
 2,819.4
 2,878.3
Less: Current portion of long-term debt    41.3
 —
 —
Long-term debt    $2,738.4
 $2,819.4
 $2,878.3


(1) The outstanding principal balance for the United States dollar-denominated Term Loan A facility and the euro-denominated Term Loan A facility was $1,086.4$1,029.6 million and €496.9€490.6 million, respectively, as of NovemberMay 3, 2019.2020.

(2) The carrying amount of the Company’s euro-denominated Term Loan A facility and senior unsecured euro notes includes the impact of changes in the exchange rate of the United States dollar against the euro.

(3) Includes €350.0 million principal amount of 3 5/8% senior unsecured euro notes due 2024 that were issued on June 20, 2016.

(4) Includes an additional €175.0 million principal amount of 3 5/8% senior unsecured euro notes due 2024 that were issued on April 24, 2020.

Please see Note 12, “Fair Value Measurements,” for the fair value of the Company’s long-term debt as of NovemberMay 3, 2019,2020, February 3, 20192, 2020 and November 4, 2018.



May 5, 2019.

As of NovemberMay 3, 2019,2020, the Company’s mandatory long-term debt repayments for the remainder of 20192020 through 20242025 were as follows:
(In millions)
Fiscal Year
Amount (1)
Remainder of 2020$10.2  
202138.7  
2022102.3  
2023222.8  
20241,860.2  
2025—  

(In millions) 
Fiscal Year
Amount (1)
Remainder of 2019$10.3
202041.3
202161.9
2022103.1
2023223.8
20241,689.4

(1) A portion of the Company’s mandatory long-term debt repayments are denominated in euro and subject to changes in the exchange rate of the United States dollar against the euro.

Total debt repayments for the remainder of 20192020 through 20242025 exceed the total carrying amount of the Company’s Term Loan A facilities, 7 3/4% debentures due 2023 and 3 5/8% senior euro notes due 2024 as of NovemberMay 3, 20192020 because the carrying amount reflects the unamortized portions of debt issuance costs and the original issue discounts.

As of NovemberMay 3, 2019,2020, after taking into account the effect of the Company’s interest rate swap agreements discussed in the section entitled “2019 Senior Unsecured Credit Facilities,” which were in effect as of such date, approximately 60%65% of the Company’s long-term debt had fixed interest rates, with the remainder at variable interest rates.

2016 Senior Secured Credit Facilities

On May 19, 2016, the Company entered into an amendment to its senior secured credit facilities (as amended, the “2016 facilities”). The Company replaced the 2016 facilities with new senior unsecured credit facilities on April 29, 2019 as discussed in the section entitled “2019 Senior Unsecured Credit Facilities” below. The 2016 facilities, as of the date they were replaced,
19


consisted of a $2,347.4 million United States dollar-denominated Term Loan A facility and senior secured revolving credit facilities consisting of (i) a $475.0 million United States dollar-denominated revolving credit facility, (ii) a $25.0 million United States dollar-denominated revolving credit facility available in United States dollars and Canadian dollars and (iii) a €185.9 million euro-denominated revolving credit facility available in euro, British pound sterling, Japanese yen and Swiss francs.

2019 Senior Unsecured Credit Facilities

The Company refinanced the 2016 facilities on April 29, 2019 (the “Closing Date”) by entering into senior unsecured credit facilities (the “2019 facilities”), the proceeds of which, along with cash on hand, were used to repay all of the outstanding borrowings under the 2016 facilities, as well as the related debt issuance costs.

The 2019 facilities consist of a $1,093.2 million United States dollar-denominated Term Loan A facility (the “USD TLA facility”), a €500.0 million euro-denominated Term Loan A facility (the “Euro TLA facility” and together with the USD TLA facility, the “TLA facilities”) and senior unsecured revolving credit facilities consisting of (i) a $675.0 million United States dollar-denominated revolving credit facility, (ii) a CAD $70.0 million Canadian dollar-denominated revolving credit facility available in United States dollars or Canadian dollars, (iii) a €200.0 million euro-denominated revolving credit facility available in euro, British pound sterling, Japanese yen, Swiss francs, Australian dollars and other agreed foreign currencies and (iv) a $50.0 million United States dollar-denominated revolving credit facility available in United States dollars or Hong Kong dollars. The 2019 facilities are due on April 29, 2024. In connection with the refinancing of the senior credit facilities, the Company paid debt issuance costs of $10.4 million (of which $3.5 million was expensed as debt modification costs and $6.9 million is being amortized over the term of the debt agreement) and recorded debt extinguishment costs of $1.7 million to write off previously capitalized debt issuance costs.

Each of the senior unsecured revolving facilities, except for the $50.0 million United States dollar-denominated revolving credit facility available in United States dollars or Hong Kong dollars, also include amounts available for letters of credit and have a portion available for the making of swingline loans. The issuance of such letters of credit and the making of any swingline loan reduces the amount available under the applicable revolving credit facility. So long as certain conditions are satisfied, the Company may add one or more senior unsecured term loan facilities or increase the commitments under the senior


unsecured revolving credit facilities by an aggregate amount not to exceed $1,500.0 million. The lenders under the 2019 facilities are not required to provide commitments with respect to such additional facilities or increased commitments.

The Company had loans outstanding of $1,633.8$1,558.4 million, net of debt issuance costs and based on applicable exchange rates, under the TLA facilities, $306.0$168.0 million of borrowings outstanding under the senior unsecured revolving credit facilities and $20.4$24.2 million of outstanding letters of credit under the senior unsecured revolving credit facilities as of NovemberMay 3, 2019.2020.

The terms of the TLA facilities require the Company to make quarterly repayments of amounts outstanding under the 2019 facilities, which commenced with the calendar quarter endingended September 30, 2019. Such required repayment amounts equal 2.50% per annum of the principal amount outstanding on the Closing Date for the first eight calendar quarters following the Closing Date, 5.00% per annum of the principal amount outstanding on the Closing Date for the four calendar quarters thereafter and 7.50% per annum of the principal amount outstanding on the Closing Date for the remaining calendar quarters, in each case paid in equal installments and in each case subject to certain customary adjustments, with the balance due on the maturity date of the TLA facilities. The outstanding borrowings under the 2019 facilities are prepayable at any time without penalty (other than customary breakage costs). Any voluntary repayments made by the Company would reduce the future required repayment amounts.

The Company made payments of $10.2$3.4 million on its term loans under the 2019 facilities during the thirteen weeks ended May 3, 2020. The Company made no payments on its term loans under the 2019 facilities and repaid2016 facilities during the thirteen weeks ended May 5, 2019 other than the repayment of the 2016 facilities in connection with the refinancing of the 2016 senior credit facilities during the thirty-nine weeks ended November 3, 2019. The Company made payments of $85.0 million during the thirty-nine weeks ended November 4, 2018 on its term loans under the 2016 facilities.

The United States dollar-denominated borrowings under the 2019 facilities bear interest at a rate equal to an applicable margin plus, as determined at the Company's option, either (a) a base rate determined by reference to the greater of (i) the prime rate, (ii) the United States federal funds effective rate plus 1/2 of 1.00% and (iii) a one-month reserve adjusted Eurocurrency rate plus 1.00% or (b) an adjusted Eurocurrency rate, calculated in a manner set forth in the 2019 facilities.

The Canadian dollar-denominated borrowings under the 2019 facilities bear interest at a rate equal to an applicable margin plus, as determined at the Company’s option, either (a) a Canadian prime rate determined by reference to the greater of (i) the rate of interest per annum that Royal Bank of Canada establishes as the reference rate of interest in order to determine interest rates for loans in Canadian dollars to its Canadian borrowers and (ii) the average of the rates per annum for Canadian dollar bankers'
20


acceptances having a term of one month or (b) an adjusted Eurocurrency rate, calculated in a manner set forth in the 2019 facilities.

Borrowings available in Hong Kong dollars under the 2019 facilities bear interest at a rate equal to an applicable margin plus an adjusted Eurocurrency rate, calculated in a manner set forth in the 2019 facilities.

The borrowings under the 2019 facilities in currencies other than United States dollars, Canadian dollars or Hong Kong dollars bear interest at a rate equal to an applicable margin plus an adjusted Eurocurrency rate, calculated in a manner set forth in the 2019 facilities.

The current applicable margin with respect to the TLA facilities and each revolving credit facility isas of May 3, 2020 was 1.250% for adjusted Eurocurrency rate loans and 0.250% for base rate or Canadian prime rate loans. The applicable margin for borrowings under the TLA facilities and the revolving credit facilities is subject to adjustment (i) after the date of delivery of the compliance certificate and financial statements, with respect to each of the Company’s fiscal quarters, based upon the Company’s net leverage ratio or (ii) after the date of delivery of notice of a change in the Company’s public debt rating by Standard & Poor’s or Moody’s.

The Company entered into interest rate swap agreements designed with the intended effect of converting notional amounts of its variable rate debt obligation to fixed rate debt. Under the terms of the agreements, for the outstanding notional amount, the Company’s exposure to fluctuations in the one-month London interbank offered rate (“LIBOR”) is eliminated and the Company pays a fixed rate plus the current applicable margin. The following interest rate swap agreements were entered into or in effect during the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 and/or November 4, 2018:May 5, 2019:

(In millions)
Designation DateCommencement DateInitial Notional AmountNotional Amount Outstanding as of May 3, 2020Fixed RateExpiration Date
March 2020February 2021$50.0  $—  0.562%February 2023
February 2020February 202150.0  —  1.1625%February 2023
February 2020February 202050.0  50.0  1.2575%February 2023
August 2019February 202050.0  50.0  1.1975%February 2022
June 2019February 202050.0  50.0  1.409%February 2022
June 2019June 201950.0  50.0  1.719%July 2021
January 2019February 202050.0  50.0  2.4187%February 2021
November 2018February 2019139.2  126.6  2.8645%February 2021
October 2018February 2019115.7  159.8  2.9975%February 2021
June 2018August 201850.0  50.0  2.6825%February 2021
June 2017February 2018306.5  —  1.566%February 2020

(In millions)          
Designation Date Commencement Date Initial Notional Amount Notional Amount Outstanding as of November 3, 2019 Fixed Rate Expiration Date
August 2019 February 2020 $50.0
 $—
 1.1975% February 2022
June 2019 February 2020 50.0
 —
 1.409% February 2022
June 2019 June 2019 50.0
 50.0
 1.719% July 2021
January 2019 February 2020 50.0
 —
 2.4187% February 2021
November 2018 February 2019 139.2
 139.1
 2.8645% February 2021
October 2018 February 2019 115.7
 178.3
 2.9975% February 2021
June 2018 August 2018 50.0
 50.0
 2.6825% February 2021
June 2017 February 2018 306.5
 119.0
 1.566% February 2020
July 2014 February 2016 682.6
 —
 1.924% February 2018

The notional amounts of the outstanding interest rate swaps that commenced in February 2018 and February 2019 are adjusted according to pre-set schedules during the terms of the swap agreements such that, based on the Company’s projections for future debt repayments, the Company’s outstanding debt under the USD TLA facility is expected to always equal or exceed the combined notional amount of the then-outstanding interest rate swaps.

The 2019 facilities contain customary events of default, including but not limited to nonpayment; material inaccuracy of representations and warranties; violations of covenants; certain bankruptcies and liquidations; cross-default to material indebtedness; certain material judgments; certain events related to the Employee Retirement Income Security Act of 1974, as amended; and a change in control (as defined in the 2019 facilities).

The 2019 facilities require the Company to comply with customary affirmative, negative and financial covenants, including a minimum interest coverage ratio and a maximum net leverage. A breachleverage ratio. As of anyMay 3, 2020, the Company was in compliance with all applicable financial and non-financial covenants under these facilities. Given the disruption to the Company’s business caused by the COVID-19 pandemic and to ensure financial flexibility, the Company amended these facilities in June 2020 to provide temporary relief of these operating orcertain financial covenants would resultuntil the date on which a compliance certificate is delivered for the second quarter of 2021 (the “relief period”) unless the Company elects to terminate the relief period and satisfies the conditions for doing so (the “June 2020 Amendment”). The June 2020 Amendment provides for the following during the relief period, among other things: (i) suspension of compliance with the maximum net leverage ratio through and including the first quarter of 2021, (ii) suspension of the minimum interest coverage ratio through and including the first quarter of 2021, (iii) addition of a minimum liquidity covenant of $400.0 million, (iv) addition of a restricted payment covenant and (v) imposition of stricter limitations on the incurrence of indebtedness and liens. The limitation on restricted payments require that the Company suspend payments of dividends on its common stock and purchases of shares under its stock repurchase program during the relief
21


period. The June 2020 Amendment also provides that during the relief period the applicable margin will be increased 0.25%. In addition, under the June 2020 Amendment, in the event there is a defaultspecified credit ratings downgrade by Standard & Poor’s and Moody’s during the relief period (as set forth in the June 2020 Amendment), within 120 days thereafter (i) the Company must cause each of its wholly owned United States subsidiaries (subject to certain customary exceptions) to become a guarantor under the 2019 facilities.facilities and (ii) the Company and each subsidiary guarantor will be required to grant liens, as collateral agent, on substantially all of their respective assets (subject to customary exceptions).

The Company expects to maintain compliance with the financial covenants (as amended) under the 2019 facilities for at least the next 12 months based on its current forecasts. If an event of default occurs and is continuing, the lenders could elect to declare all amounts then outstanding, together with accrued interest, to be immediately due and payable, which would result in accelerationadverse impacts of the COVID-19 pandemic on the Company’s other debt.business worsen and its earnings and operating cash flows do not start to recover as currently estimated by management, there can be no assurance that the Company will be able to maintain compliance with these financial covenants (as amended) in the future. There can be no assurance that the Company would be able to obtain future waivers in a timely manner, on terms acceptable to the Company, or at all. If the Company was not able to maintain compliance or obtain a future covenant waiver under its credit facilities, there can be no assurance that the Company would be able to raise sufficient debt or equity capital, or divest assets, to refinance or repay such facilities.

7 3/4% Debentures Due 2023

The Company has outstanding $100.0 million of debentures due November 15, 2023 that accrue interest at the rate of 7 3/4%. The debentures are not redeemable at the Company’s option prior to maturity.

3 5/8% Euro Senior Notes Due 2024

The Company has outstanding €350.0€525.0 million euro-denominated principal amount of 3 5/8% senior notes due July 15, 2024.2024, of which €175.0 million principal amount was issued on April 24, 2020. Interest on the notes is payable in euros. The Company incurred €2.8 million (approximately $3.0 million based on exchange rates in effect on the payment date) of fees during the first quarter of 2020 in connection with the issuance of the additional €175.0 million notes, which are being amortized over the term of the notes. The Company may redeem some or all of these notes at any time prior to April 15, 2024 by paying a “make whole” premium plus any accrued and unpaid interest. In addition, the Company may redeem some or all of these notes on or after April 15, 2024 at their principal amount plus any accrued and unpaid interest.

3 1/8% Euro Senior Notes Due 2027

The Company has outstanding €600.0 million euro-denominated principal amount of 3 1/8% senior notes due December 15, 2027. Interest on the notes is payable in euros. The Company may redeem some or all of these notes at any time prior to September 15, 2027 by paying a “make whole” premium plus any accrued and unpaid interest. In addition, the Company may redeem some or all of these notes on or after September 15, 2027 at their principal amount plus any accrued and unpaid interest.
The Company’s financing arrangements contain financial and non-financial covenants and customary events of default. As of NovemberMay 3, 2019,2020, the Company was in compliance with all applicable financial and non-financial covenants under its financing arrangements.

The Company also has standby letters of credit outside of its 2019 facilities primarily to collateralize the Company's insurance and lease obligations. The Company had $36.3 million of these standby letters of credit outstanding as of May 3, 2020.

Please see Note 8,9, “Debt,” in the Notes to Consolidated Financial Statements included in Item 8 of the Company’s Annual Report on Form 10-K for the year ended February 3, 20192, 2020 for further discussion of the Company’s debt.




10. INCOME TAXES

The effective income tax rates for the thirteen weeks ended NovemberMay 3, 2020 and May 5, 2019 were 11.5% and November 4, 2018 were 13.6% and 4.1%22.4%, respectively. The effective income tax ratesrate for the thirty-ninethirteen weeks ended NovemberMay 3, 2020 reflected a $(142.4) million income tax benefit recorded on $(1,239.6) million of pre-tax losses. The effective income tax rate for the thirteen weeks ended May 5, 2019 and November 4, 2018 were 15.1% and 12.7%, respectively.reflected a $23.6 million income tax expense recorded on $105.2 million of pre-tax income.
The effective income tax ratesrate for the thirteen and thirty-nine weeks ended NovemberMay 3, 2019 were2020 was lower than the United States statutory income tax rate primarily due to (i) the benefitimpact of certain discrete items, including the favorable impact on certain liabilities$879.0 million of pre-tax goodwill impairment charges, which were mostly non-deductible for uncertain tax positions resulting from the expiration of applicable statutes of limitation, whichpurposes and resulted in a benefit to10.2% decrease in the Company’s effective income tax rates of 13.7% and 4.5% forrate. The pre-tax goodwill
22

impairment charges were factored into the thirteen and thirty-nine weeks ended November 3, 2019, respectively, partially offset by (ii) the tax on foreign earnings in excess of a deemed return on tangible assets of foreign corporations (known as “GILTI”) imposed by the United States Tax Cuts and Jobs Act of 2017 (the “U.S. Tax Legislation”), which more than offset the benefit of overall lower tax rates in certain international jurisdictions where the Company files tax returns. TheCompany’s annualized effective income tax rate for the thirty-nine weeks ended November 3, 2019 also included the favorableand, as such, will have a corresponding impact of a tax exemption on the noncash gain recorded in the second quarter of 2019 to write up the Company’s equity investments in Gazal and PVH Australia to fair value in connection with the Australia acquisition that resulted in a 3.7% benefit to the Company’s effective tax rate.
Thequarterly effective income tax rates for the thirteen and thirty-nine weeks ended November 4, 2018 were lower than the United States statutory income tax rate primarily due to (i) the benefitremainder of certain discrete items, including the favorable impact on certain liabilities for uncertain tax positions resulting from the expiration of applicable statutes of limitation, which resulted in a benefit to the Company’s effective income tax rates of 16.6% and 5.9% for the thirteen and thirty-nine weeks ended November 4, 2018, respectively, and (ii) the benefit of overall lower tax rates in certain international jurisdictions where the Company files tax returns.2020.

The Company files income tax returns in more than 40 international jurisdictions each year. A substantial amount of the Company’s earnings are in international jurisdictions, particularly the Netherlands and Hong Kong, where income tax rates, coupled with special rates levied on income from certain of the Company’s jurisdictional activities, are lower than the United States statutory income tax rate.

11. DERIVATIVE FINANCIAL INSTRUMENTS

Cash Flow Hedges

The Company has exposure to changes in foreign currency exchange rates related to anticipated cash flows associated with certain international inventory purchases. The Company uses foreign currency forward exchange contracts to hedge against a portion of this exposure.

The Company also has exposure to interest rate volatility related to its term loans under the 2019 facilities. The Company has entered into interest rate swap agreements to hedge against a portion of this exposure. Please see Note 9, “Debt,” for further discussion of the 2019 facilities and these agreements.

The Company records the foreign currency forward exchange contracts and interest rate swap agreements at fair value in its Consolidated Balance Sheets and does not net the related assets and liabilities. The foreign currency forward exchange contracts associated with certain international inventory purchases and the interest rate swap agreements are designated as effective hedging instruments (collectively, “cash flow hedges”). The changes in the fair value of the cash flow hedges are recorded in equity as a component of accumulated other comprehensive loss (“AOCL”). No amounts were excluded from effectiveness testing. During the thirteen weeks ended May 3, 2020, the Company dedesignated certain cash flow hedges due to the impacts of the COVID-19 pandemic, which resulted in the release of an immaterial gain from AOCL into the Company’s Consolidated Statement of Operations. The Company continues to believe that transactions relating to its other designated cash flow hedges are probable to occur as of May 3, 2020.

Net Investment Hedges

The Company has exposure to changes in foreign currency exchange rates related to the value of its investments in foreign subsidiaries denominated in a currency other than the United States dollar. To hedge against a portion of this exposure, the Company designated the carrying amounts of its (i) €600.0 million euro-denominated principal amount of 3 1/8% senior notes due 2027 and €350.0(ii) €525.0 million euro-denominated principal amount of 3 5/8% senior notes due 2024, of which €175.0 million principal amount was issued during the first quarter of 2020, (collectively, “foreign currency borrowings”), that it hadwere issued in the United States,by PVH Corp., a U.S.-based entity, as net investment hedges of its investments in certain of its foreign subsidiaries that use the euro as their functional currency. Please see Note 9, “Debt,” for further discussion of the Company’s foreign currency borrowings.



The Company records the foreign currency borrowings at carrying value in its Consolidated Balance Sheets. The carrying value of the foreign currency borrowings is remeasured at the end of each reporting period to reflect changes in the foreign currency exchange spot rate. Since the foreign currency borrowings are designated as net investment hedges, such remeasurement is recorded in equity as a component of AOCL. The fair value and the carrying value of the foreign currency borrowings designated as net investment hedges were $1,177.0$1,167.1 million and $1,046.2$1,209.7 million, respectively, as of NovemberMay 3, 2019, $1,098.32020, $1,178.6 million and $1,076.0$1,038.5 million, respectively, as of February 3, 20192, 2020 and $1,102.2$1,144.1 million and $1,070.4$1,046.8 million, respectively, as of November 4, 2018.May 5, 2019. The Company evaluates the effectiveness of its net investment hedges at inception and at the beginning of each quarter thereafter. No amounts were excluded from effectiveness testing.

Undesignated Contracts

The Company records immediately in earnings changes in the fair value of hedges that are not designated as effective hedging instruments (“undesignated contracts”), including all of the foreign currency forward exchange contracts related to intercompany transactions and intercompany loans that are not of a long-term investment nature. Any gains and losses that are immediately recognized in earnings on such contracts are largely offset by the remeasurement of the underlying intercompany balances.

23


The Company does not use derivative or non-derivative financial instruments for trading or speculative purposes. The cash flows from the Company’s hedges are presented in the same category in the Company’s Consolidated Statements of Cash Flows as the items being hedged.

The following table summarizes the fair value and presentation of the Company’s derivative financial instruments in its Consolidated Balance Sheets:
 (In millions)Assets Liabilities
 11/3/19 2/3/19 11/4/18 11/3/19 2/3/19 11/4/18
 Other Current AssetsOther Assets Other Current AssetsOther Assets Other Current AssetsOther Assets Accrued ExpensesOther Liabilities Accrued ExpensesOther Liabilities Accrued ExpensesOther Liabilities
Contracts designated as cash flow hedges:                 
Foreign currency forward exchange contracts (inventory purchases)$21.3
$0.1
 $24.0
$0.7
 $33.7
$1.7
 $3.3
$0.4
 $3.5
$0.7
 $0.3
$0.1
Interest rate swap agreements0.2
0.1
 1.4
—
 2.0
0.9
 4.9
1.8
 1.2
1.6
 0.1
—
Total contracts designated as cash flow hedges21.5
0.2
 25.4
0.7
 35.7
2.6
 8.2
2.2
 4.7
2.3
 0.4
0.1
Undesignated contracts:                 
Foreign currency forward exchange contracts1.5
—
 0.1
—
 0.1
—
 1.7
—
 2.0
—
 3.5
—
Total$23.0
$0.2
 $25.5
$0.7
 $35.8
$2.6
 $9.9
$2.2
 $6.7
$2.3
 $3.9
$0.1

 (In millions)AssetsLiabilities
 5/3/202/2/205/5/195/3/202/2/205/5/19
Other Current AssetsOther AssetsOther Current AssetsOther AssetsOther Current AssetsOther AssetsAccrued ExpensesOther LiabilitiesAccrued ExpensesOther LiabilitiesAccrued ExpensesOther Liabilities
Contracts designated as cash flow hedges:
Foreign currency forward exchange contracts (inventory purchases)$38.7  $2.2  $21.4  $0.4  $35.6  $1.5  $0.8  $—  $1.2  $0.1  $0.5  $—  
Interest rate swap agreements—  —  0.1  —  0.9  —  10.8  2.7  5.5  0.4  1.7  1.9  
Total contracts designated as cash flow hedges38.7  2.2  21.5  0.4  36.5  1.5  11.6  2.7  6.7  0.5  2.2  1.9  
Undesignated contracts:
Foreign currency forward exchange contracts1.2  0.3  1.5  —  0.7  —  1.9  —  0.9—  1.7  —  
Total$39.9  $2.5  $23.0  $0.4  $37.2  $1.5  $13.5  $2.7  $7.6  $0.5  $3.9  $1.9  

The notional amount outstanding of foreign currency forward exchange contracts was $1,336.9$1,187.9 million at NovemberMay 3, 2019.2020. Such contracts expire principally between November 2019May 2020 and MarchAugust 2021.



The following tables summarize the effect of the Company’s hedges designated as cash flow and net investment hedging instruments:
Gain (Loss) Recognized in Other Comprehensive (Loss) Income
(In millions)
Thirteen Weeks Ended5/3/205/5/19
Foreign currency forward exchange contracts  (inventory purchases)$21.8  $30.1  
Interest rate swap agreements(9.4) (1.1) 
Foreign currency borrowings (net investment hedges)15.2  29.6  
Total$27.6  $58.6  
  (Loss) Gain Recognized in Other Comprehensive (Loss) Income
  
(In millions) 
Thirteen Weeks Ended 11/3/19 11/4/18
Foreign currency forward exchange contracts     (inventory purchases) $(23.4) $23.4
Interest rate swap agreements (0.3) 0.4
Foreign currency borrowings (net investment hedges) (3.1) 16.0
Total     $(26.8) $39.8
     
Thirty-Nine Weeks Ended 11/3/19 11/4/18
Foreign currency forward exchange contracts     (inventory purchases) $19.1
 $89.8
Interest rate swap agreements (5.4) 1.1
Foreign currency borrowings (net investment hedges) 31.1
 100.7
Total $44.8
 $191.6

Amount of Gain (Loss) Reclassified from AOCL into Income (Expense), Consolidated Statements of Operations Location, and Total Amount of Consolidated Statements of Operations Line Item
(In millions)Amount ReclassifiedLocationTotal Statements of Operations Amount
Thirteen Weeks Ended5/3/205/5/195/3/205/5/19
Foreign currency forward exchange contracts (inventory purchases)$2.2  $15.0  Cost of goods sold$678.1  $1,060.4  
Interest rate swap agreements(1.7) 0.2  Interest expense22.5  31.0  
Total$0.5  $15.2  
  Amount of (Loss) Gain Reclassified from AOCL into (Expense) Income, Consolidated Income Statement Location, and Total Amount of Consolidated Income Statement Line Item
(In millions) Amount Reclassified Location Total Income Statement Amount
Thirteen Weeks Ended 11/3/19 11/4/18   11/3/19 11/4/18
Foreign currency forward exchange contracts (inventory purchases) $(2.3) $5.5
 Cost of goods sold $1,181.5
 $1,159.7
Interest rate swap agreements (0.6) 0.2
 Interest expense 29.2
 30.3
Total $(2.9) $5.7
   

 

           
Thirty-Nine Weeks Ended 11/3/19 11/4/18   11/3/19 11/4/18
Foreign currency forward exchange contracts (inventory purchases) $23.4
 $(23.1) Cost of goods sold $3,317.7
 $3,220.0
Interest rate swap agreements (0.4) 0.6
 Interest expense 88.5
 90.0
Total $23.0
 $(22.5)   

 



A net gain in AOCL on foreign currency forward exchange contracts at NovemberMay 3, 20192020 of $27.6$46.0 million is estimated to be reclassified in the next 12 months in the Company’s Consolidated Income Statement of Operations to costs of goods sold as the
24


underlying inventory hedged by such forward exchange contracts is sold. In addition, a net loss in AOCL for interest rate swap agreements at NovemberMay 3, 20192020 of $4.7$10.8 million is estimated to be reclassified to interest expense within the next 12 months. Amounts recognized in AOCL for foreign currency borrowings would be recognized in earnings only upon the sale or substantially complete liquidation of the hedged net investment.



The following table summarizes the effect of the Company’s undesignated contracts recognized in SG&A expenses in its Consolidated Income Statements:Statements of Operations:
(In millions)Gain (Loss) Recognized in Income (Expense)
Thirteen Weeks Ended5/3/205/5/19
Foreign currency forward exchange contracts$0.6  $(0.1) 
(In millions) Gain (Loss) Recognized in Income (Expense)
Thirteen Weeks Ended 11/3/19 11/4/18
Foreign currency forward exchange contracts $—
 $(3.0)
     
Thirty-Nine Weeks Ended 11/3/19 11/4/18
Foreign currency forward exchange contracts $0.7
 $(3.0)


The Company had no derivative financial instruments with credit risk-related contingent features underlying the related contracts as of NovemberMay 3, 20192020.
.

12. FAIR VALUE MEASUREMENTS

In accordance with accounting principles generally accepted in the United States, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level hierarchy prioritizes the inputs used to measure fair value as follows:

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 – Observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data.

Level 3 – Unobservable inputs reflecting the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability based on the best information available.

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial assets and liabilities that are required to be remeasured at fair value on a recurring basis:
5/3/202/2/205/5/19
(In millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:
Foreign currency forward exchange contracts    N/A$42.4  N/A$42.4  N/A$23.3  N/A$23.3  N/A$37.8  N/A$37.8  
Interest rate swap agreementsN/A—  N/A—  N/A0.1  N/A0.1  N/A0.9  N/A0.9  
Total AssetsN/A$42.4  N/A$42.4  N/A$23.4  N/A$23.4  N/A$38.7  N/A$38.7  
Liabilities:
Foreign currency forward exchange contracts    N/A$2.7  N/A$2.7  N/A$2.2  N/A$2.2  N/A$2.2  N/A$2.2  
Interest rate swap agreementsN/A13.5  N/A13.5  N/A5.9  N/A5.9  N/A3.6  N/A3.6  
Total LiabilitiesN/A$16.2  N/A$16.2  N/A$8.1  N/A$8.1  N/A$5.8  N/A$5.8  
 11/3/19 2/3/19 11/4/18
(In millions)Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets:                       
Foreign currency forward exchange contracts    N/A $22.9
 N/A $22.9
 N/A $24.8
 N/A $24.8
 N/A $35.5
 N/A $35.5
Interest rate swap agreementsN/A 0.3
 N/A 0.3
 N/A 1.4
 N/A 1.4
 N/A 2.9
 N/A 2.9
Total AssetsN/A $23.2
 N/A $23.2
 N/A $26.2
 N/A $26.2
 N/A $38.4
 N/A $38.4
                        
Liabilities:                       
Foreign currency forward exchange contracts    N/A $5.4
 N/A $5.4
 N/A $6.2
 N/A $6.2
 N/A $3.9
 N/A $3.9
Interest rate swap agreementsN/A 6.7
 N/A 6.7
 N/A 2.8
 N/A 2.8
 N/A 0.1
 N/A 0.1
Total LiabilitiesN/A $12.1
 N/A
$12.1
 N/A $9.0
 N/A $9.0
 N/A $4.0
 N/A $4.0


The fair value of the foreign currency forward exchange contracts is measured as the total amount of currency to be purchased, multiplied by the difference between (i) the forward rate as of the period end and (ii) the settlement rate specified in each contract. The fair value of the interest rate swap agreements is based on observable interest rate yield curves and represents the expected discounted cash flows underlying the financial instruments.

25


There were no transfers between any levels of the fair value hierarchy for any of the Company’s fair value measurements.



The Company’s non-financial assets, which primarily consist of goodwill, other intangible assets, property, plant and equipment, and operating lease right-of-use assets, are not required to be measured at fair value on a recurring basis, and instead are reported at their carrying amount. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying amount may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial assets are assessed for impairment. If the fair value is determined to be lower than the carrying amount, an impairment charge is recorded to write down the asset to its fair value. As a result of the significant adverse impacts of the COVID-19 pandemic on its business, the Company determined that sufficient indicators existed to trigger the performance of an interim impairment analysis for certain of the Company’s non-financial assets as of May 3, 2020.

The following tables show the fair valuevalues of the Company’s non-financial assets and liabilities that were required to be remeasured at fair value on a non-recurring basis (consisting of operating lease right-of-use assets and property, plant and equipment) during the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 and November 4, 2018,May 5, 2019, and the total impairments recorded as a result of the remeasurement process:
 11/3/2019
(In millions)Fair Value Measurement Using Fair Value
As Of
Impairment Date		 Total
Impairments
 Level 1 Level 2 Level 3  
Operating lease right-of-use assetsN/A N/A $18.2
 $18.2
 $77.9
Property, plant and equipment, netN/A N/A —
 —
 11.4

(In millions)Fair Value Measurement UsingFair Value As Of Impairment DateTotal Impairments
5/3/2020Level 1Level 2Level 3
Property, plant and equipment, netN/AN/A$1.1  $1.1  $16.0  
GoodwillN/AN/A652.6  652.6  879.0  
TradenamesN/AN/A48.7  48.7  47.2  
Other intangible assets, netN/AN/A—  —  7.3  
Investments in unconsolidated affiliatesN/AN/A—  —  12.3  
5/5/2019
Operating lease right-of-use assetsN/AN/A16.8  16.8  77.0  
Property, plant and equipment, netN/AN/A—  —  6.7  

Property, plant and equipment with a carrying amount of $17.1 million was written down to a fair value of $1.1 million during the thirteen weeks ended May 3, 2020, primarily as a result of the adverse impacts the COVID-19 pandemic has had, and is expected to continue to have, on the Company’s retail stores with lease terms expiring by the end of fiscal 2021 with no intention of renewal, including temporary store closures and reduced traffic and consumer spending trends. Fair value of the Company’s property, plant and equipment was determined based on the estimated discounted future cash flows associated with the assets using sales trends and market participant assumptions.

Goodwill with a carrying amount of $1,531.6 million was written down to a fair value of $652.6 million during the thirteen weeks ended May 3, 2020. Please see Note 7, “Goodwill and Other Intangible Assets,” for further discussion.

Tradenames with a carrying amount of $95.9 million were written down to a fair value of $48.7 million during the thirteen weeks ended May 3, 2020. Please see Note 7, “Goodwill and Other Intangible Assets,” for further discussion.

Other intangible assets with a carrying amount of $7.3 million were written down to a fair value of 0 during the thirteen weeks ended May 3, 2020. Please see Note 7, “Goodwill and Other Intangible Assets,” for further discussion.

The Company’s equity method investment in Karl Lagerfeld with a carrying amount of $12.3 million was written down to a fair value of 0 during the thirteen weeks ended May 3, 2020. Please see Note 6, “Investments in Unconsolidated Affiliates,” for further discussion.

The $961.8 million of impairment charges during the thirteen weeks ended May 3, 2020 were recorded in the Company’s Consolidated Statement of Operations, of which $933.5 million was included in goodwill and other intangible assets impairments, $16.0 million was included in SG&A expenses, and $12.3 million was included in equity in net (loss) income of unconsolidated affiliates. The $961.8 million of impairment charges was recorded to the Company’s segments as follows: $395.8 million in the Calvin Klein International segment, $293.1 million in the Calvin Klein North America segment, $249.6 million in the Heritage Brands Wholesale segment, $4.1 million in the Tommy Hilfiger North America segment, $3.8 million in the Heritage Brands Retail segment, $3.1 million in the Tommy Hilfiger International segment and $12.3 million was recorded in corporate expenses not allocated to any reportable segments.

26
 11/4/2018
(In millions)Fair Value Measurement Using Fair Value
As Of
Impairment Date		 Total
Impairments
 Level 1 Level 2 Level 3  
Property, plant and equipment, netN/A N/A $—
 $—
 $4.7


Operating lease right-of-use assets with a carrying amount of $96.1$93.8 million were written down to a fair value of $18.2$16.8 million during the thirty-ninethirteen weeks ended November 3,May 5, 2019 primarily as a result of the closure during the first quarter of 2019 of the Company’s TOMMY HILFIGER flagship and anchor stores in the United States (the “TH U.S. store closures”) and the closure during the first quarter of 2019 of the Company’s CALVIN KLEIN flagship store on Madison Avenue in New York, New York in connection with the Calvin Klein restructuring (as defined in Note 17, “Exit Activity Costs”(the “Calvin Klein restructuring”). Please see Note 17 for further discussion of the Calvin Klein restructuring costs. The fairFair value of the Company’s operating lease right-of-use assets was determined based on the discounted cash flows of estimated sublease income using market participant assumptions.

Property, plant and equipment with a carrying amount of $11.4$6.7 million was written down to a fair value of 0 during the thirty-ninethirteen weeks ended November 3,May 5, 2019 primarily in connection with the TH U.S. store closures and the closure of the Company’s CALVIN KLEIN 205 W39 NYC brand (formerly Calvin Klein Collection), and the financial performance in certain of the Company’s retail stores, including certain CALVIN KLEIN stores affected by the realignment ofconnection with the Calvin Klein creative direction globally. Please see Note 17, “Exit Activity Costs,” for further discussion of the Calvin Klein restructuring costs.restructuring. Fair value of the Company’s property, plant and equipment was determined based on the estimated discounted future cash flows associated with the assets using sales trends and market participant assumptions.

The $89.3$83.7 million of impairment charges wasduring the thirteen weeks ended May 5, 2019 were included in SG&A expenses, of which $49.7$48.6 million was recorded in the Tommy Hilfiger North America segment, $33.9$32.2 million was recorded in the Calvin Klein North America segment $5.6and $2.9 million was recorded in the Calvin Klein International segment and $0.1 million was recorded in the Heritage Brands Retail segment.

Property, plant and equipment with a carrying amount of $4.7 million was written down to a fair value of 0 during the thirty-nine weeks ended November 4, 2018 primarily in connection with the financial performance in certain of the Company’s retail stores. Fair value of the Company’s property, plant and equipment was determined based on the estimated discounted future cash flows associated with the assets using sales trends and market participant assumptions. The $4.7 million of impairment charges was included in SG&A expenses, of which $2.0 million was recorded in the Calvin Klein International segment, $1.8 million was recorded in the Calvin Klein North America segment, $0.7 million was recorded in the Tommy Hilfiger International segment and $0.2 million was recorded in the Tommy Hilfiger North America segment.



The carrying amounts and the fair values of the Company’s cash and cash equivalents, short-term borrowings and long-term debt were as follows:
5/3/202/2/205/5/19
(In millions)Carrying AmountFair
Value		Carrying AmountFair
Value		Carrying AmountFair
Value
     
Cash and cash equivalents$800.7  $800.7  $503.4  $503.4  $494.3  $494.3  
Short-term borrowings322.1  322.1  49.6  49.6  299.7  299.7  
Long-term debt (including portion classified as current)2,867.8  2,759.6  2,707.7  2,869.7  2,790.4  2,907.7  
 11/3/19 2/3/19 11/4/18
(In millions)Carrying Amount 
Fair
Value
 Carrying Amount 
Fair
Value
 Carrying Amount 
Fair
Value
  
  
      
  
Cash and cash equivalents$555.2
 $555.2
 $452.0
 $452.0
 $398.5
 $398.5
Short-term borrowings387.5
 387.5
 12.8
 12.8
 276.7
 276.7
Long-term debt (including portion classified as current)2,779.7
 2,931.9
 2,819.4
 2,853.7
 2,878.3
 2,929.0

The fair values of cash and cash equivalents and short-term borrowings approximate their carrying amounts due to the short-term nature of these instruments. The Company estimates the fair value of its long-term debt using quoted market prices as of the last business day of the applicable quarter. The Company classifies the measurement of its long-term debt as a Level 1 measurement. The carrying amounts of long-term debt reflect the unamortized portions of debt issuance costs and the original issue discounts.

13. STOCK-BASED COMPENSATION

The Company grants stock-based awards under its 2006 Stock Incentive Plan (the “2006 Plan”“Plan”). Shares issued as a result of stock-based compensation transactions generally have been funded with the issuance of new shares of the Company’s common stock.

The Company may grant the following types of incentive awards under the 2006 Plan: (i) non-qualified stock options (“stock options”); (ii) incentive stock options; (iii) stock appreciation rights; (iv) restricted stock; (v) restricted stock units (“RSUs”); (vi) performance shares; (vii) performance share units (“PSUs”); and (viii) other stock-based awards. Each award granted under the 2006 Plan is subject to an award agreement that incorporates, as applicable, the exercise price, the term of the award, the periods of restriction, the number of shares to which the award pertains, performance periods and performance measures, and such other terms and conditions as the plan committee determines. Awards granted under the 2006 Plan are classified as equity awards, which are recorded in stockholders’ equity in the Company’s Consolidated Balance Sheets.

Through NovemberMay 3, 2019,2020, the Company has granted under the 2006 Plan (i) service-based stock options, RSUs and restricted stock; and (ii) contingently issuable PSUs and RSUs. There was no restricted stock outstanding as of NovemberMay 3, 2019.2020.

According to the terms of the 2006 Plan, for purposes of determining the number of shares available for grant, each share underlying a stock option award reduces the number available by 1 share and each share underlying an RSU or PSU award reduces the number available by 2 shares.

Net (loss) income for the thirty-ninethirteen weeks ended NovemberMay 3, 2020 and May 5, 2019 and November 4, 2018 included $43.2$10.0 million and $41.9$13.9 million, respectively, of pre-tax expense related to stock-based compensation, with related recognized income tax benefits of $5.1$1.4 million and $8.4$1.9 million, respectively.

27


The Company receives a tax deduction for certain transactions associated with its stock-based plan awards. The actual income tax benefits realized from these transactions during the thirty-ninethirteen weeks ended NovemberMay 3, 2020 and May 5, 2019 and November 4, 2018 were $8.7$1.7 million and $13.3$7.8 million, respectively. The tax benefits realized included discrete net excess tax (deficiencies) benefits of $0.9$(4.5) million and $4.9$1.3 million recognized in the Company’s provision for income taxes during the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 and November 4, 2018,May 5, 2019, respectively.

Stock Options

Stock options granted to employees are generally exercisable in four equal annual installments commencing one year after the date of grant. The underlying stock option award agreements generally provide for accelerated vesting upon the award recipient’s retirement (as defined in the 2006 Plan). Such stock options are granted with a 10-year term and the per share exercise price cannot be less than the closing price of the common stock on the date of grant.

The Company estimates the fair value of stock options at the date of grant using the Black-Scholes-Merton model. The estimated fair value of the stock options granted is expensed over the stock options’ vesting periods.



The following summarizes the assumptions used to estimate the fair value of stock options granted during the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 and November 4, 2018May 5, 2019 and the resulting weighted average grant date fair value per stock option:
5/3/205/5/19
Weighted average risk-free interest rate0.53 %2.34 %
Weighted average expected stock option term (in years)6.256.25
Weighted average Company volatility44.77 %28.03 %
Expected annual dividends per share$0.15  $0.15  
Weighted average grant date fair value per stock option$20.14  $41.15  
 11/3/19 11/4/18
Weighted average risk-free interest rate2.15% 2.78%
Weighted average expected stock option term (in years)6.25
 6.25
Weighted average Company volatility29.88% 26.92%
Expected annual dividends per share    $0.15
 $0.15
Weighted average grant date fair value per stock option$37.14
 $51.66

The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for periods corresponding to the expected stock option term. The expected stock option term represents the weighted average period of time that stock options granted are expected to be outstanding, based on vesting schedules and the contractual term of the stock options. Company volatility is based on the historical volatility of the Company’s common stock over a period of time corresponding to the expected stock option term. Expected dividends are based on the Company’s anticipated common stock cash dividend rate atrate; the datedividend assumption for the stock options granted during the first quarter of grant.2020 was not affected by the Company's suspension of its cash dividend beginning with the second quarter of 2020 in response to the impacts of the COVID-19 pandemic on its business, as such suspension was viewed as temporary.

The Company has continued to utilize the simplified method to estimate the expected term for its “plain vanilla” stock options granted due to a lack of relevant historical data resulting, in part, from changes in the pool of employees receiving stock option grants. The Company will continue to evaluate the appropriateness of utilizing such method.

Stock option activity for the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 was as follows:
(In thousands, except per stock option data)Stock OptionsWeighted Average Exercise Price
Per Stock Option
Outstanding at February 2, 2020902  $109.25  
  Granted158  47.96  
  Exercised—  —  
  Cancelled17  77.65  
Outstanding at May 3, 20201,043  $100.47  
Exercisable at May 3, 2020685  $108.20  
(In thousands, except per stock option data)Stock Options 
Weighted Average Exercise Price
Per Stock Option
Outstanding at February 3, 2019791
 $107.81
  Granted169
 111.92
  Exercised25
 78.56
  Cancelled26
 120.33
Outstanding at November 3, 2019909
 $109.02
Exercisable at November 3, 2019595
 $105.80

28


RSUs

RSUs granted to employees since 2016 generally vest in four equal annual installments commencing one year after the date of grant. Outstanding RSUs granted to employees prior to 2016 generally vest in three annual installments of 25%, 25% and 50% commencing two years after the date of grant. Service-based RSUs granted to non-employee directors vest in full one year after the date of grant. The underlying RSU award agreements (excluding agreements for non-employee director awards) generally provide for accelerated vesting upon the award recipient’s retirement (as defined in the 2006 Plan). The fair value of RSUs is equal to the closing price of the Company’s common stock on the date of grant and is expensed over the RSUs’ vesting periods.


RSU activity for the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 was as follows:
(In thousands, except per RSU data)RSUsWeighted Average Grant Date Fair Value Per RSU
Non-vested at February 2, 2020996  $117.28  
  Granted347  47.96  
  Vested248  120.80  
  Cancelled19  123.26  
Non-vested at May 3, 20201,076  $94.00  
(In thousands, except per RSU data)RSUs Weighted Average Grant Date Fair Value Per RSU
Non-vested at February 3, 2019847
 $122.97
  Granted606
 110.14
  Vested344
 116.09
  Cancelled92
 123.44
Non-vested at November 3, 20191,017
 $117.61




PSUs

Contingently issuable PSUs granted to certain of the Company’s senior executives since 2015 are subject to a three-yearthree-year performance period. For such awards, the final number of shares to be earned, if any, is contingent upon the Company’s achievement of goals for the applicable performance period, of which 50% is based upon the Company’s absolute stock price growth during the applicable performance period and 50% is based upon the Company’s total shareholder return during the applicable performance period relative to other companies included in the S&P 500 as of the date of grant. For awards granted in 2016,2017, the three-year performance period ended during the first quarter of 20192020 and holders of the awards earned an aggregate of 67,000did not earn any shares whichsince the market condition was between the threshold and target levels.not satisfied. The Company records expense ratably over the applicable vesting period regardless of whether the market condition is satisfied because the awards are subject to market conditions. The fair value of the awards granted was established for each grant on the grant date using the Monte Carlo simulation model.

The following summarizes the assumptions used to estimate the fair value of PSUs granted during the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 and November 4, 2018May 5, 2019 and the resulting weighted average grant date fair value per PSU:
5/3/205/5/19
Risk-free interest rate0.20 %2.26 %
Expected Company volatility48.91 %29.88 %
Expected annual dividends per share$0.15  $0.15  
Weighted average grant date fair value per PSU$58.82  $129.46  
 11/3/19 11/4/18
Risk-free interest rate2.13% 2.62%
Expected Company volatility30.25% 29.78%
Expected annual dividends per share$0.15
 $0.15
Weighted average grant date fair value per PSU$119.46
 $159.53

The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for the term corresponding to the three-year performance-period. Company volatility is based on the historical volatility of the Company’s common stock over a period of time corresponding to the three-year performance-period. Expected dividends are based on the Company’s anticipated common stock cash dividend rate; the dividend assumption for the PSUs granted during the first quarter of 2020 was not affected by the Company's suspension of its cash dividend beginning with the second quarter of 2020 in response to the impacts of the COVID-19 pandemic on its business, as such suspension was viewed as temporary.

For certain of the awards granted, the after-tax portion of the award is subject to a holding period of one year after the vesting date. For such awards, the grant date fair value was discounted 15.05% in 2020 and 6.20% in 2019 and 7.09% in 2018 for the restriction of liquidity, which was calculated using the Chaffe model.

29


PSU activity for the thirty-ninethirteen weeks endedNovember May 3, 20192020 was as follows:
(In thousands, except per PSU data)PSUsWeighted Average Grant Date Fair Value Per PSU
Non-vested at February 2, 2020181  $119.63  
  Granted at target74  58.82  
  Reduction due to market condition not satisfied70  96.47  
  Vested—  —  
  Cancelled—  —  
Non-vested at May 3, 2020185  $104.29  
(In thousands, except per PSU data)PSUs Weighted Average Grant Date Fair Value Per PSU
Non-vested at February 3, 2019194
 $106.76
  Granted at target72
 119.46
  Reduction due to market condition achieved below target10
 87.16
  Vested67
 87.16
  Cancelled8
 117.27
Non-vested at November 3, 2019181
 $119.63





14. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following tables present the changes in AOCL, net of related taxes, by component for the thirty-ninethirteen weeks endedNovember May 3, 20192020 and November 4, 2018:May 5, 2019:

(In millions)		Foreign currency translation adjustmentsNet unrealized and realized gain (loss) on effective cash flow hedgesTotal
Balance, February 2, 2020$(665.7) $25.6  $(640.1) 
Other comprehensive (loss) income before reclassifications(101.1) 
(1)(2)
8.5  (92.6) 
Less: Amounts reclassified from AOCL—  0.7  0.7  
Other comprehensive (loss) income(101.1) 7.8  (93.3) 
Balance, May 3, 2020$(766.8) $33.4  $(733.4) 

(In millions)		Foreign currency translation adjustments Net unrealized and realized gain (loss) on effective cash flow hedges Total
Balance, February 3, 2019$(537.6) $29.7
 $(507.9)
Other comprehensive (loss) income before reclassifications(107.2)
(1)(2) 
13.8
 (93.4)
Less: Amounts reclassified from AOCL—
 21.3
 21.3
Other comprehensive loss(107.2) (7.5) (114.7)
Balance, November 3, 2019$(644.8) $22.2
 $(622.6)



(In millions)		Foreign currency translation adjustmentsNet unrealized and realized gain on effective cash flow hedgesTotal
Balance, February 3, 2019$(537.6) $29.7  $(507.9) 
Other comprehensive (loss) income before reclassifications(89.2) 
(1)(2)
27.7  (61.5) 
Less: Amounts reclassified from AOCL—  14.3  14.3  
Other comprehensive (loss) income(89.2) 13.4  (75.8) 
Balance, May 5, 2019$(626.8) $43.1  $(583.7) 

(In millions)		Foreign currency translation adjustments Net unrealized and realized (loss) gain on effective cash flow hedges Total
Balance, February 4, 2018$(249.4) $(72.1) $(321.5)
Other comprehensive (loss) income before reclassifications(321.0)
(1)(2) 
86.9
 (234.1)
Less: Amounts reclassified from AOCL—
 (21.3) (21.3)
Other comprehensive (loss) income(321.0) 108.2
 (212.8)
Balance, November 4, 2018$(570.4) $36.1
 $(534.3)


(1) Foreign currency translation adjustments included a net gain on net investment hedges of $23.6$11.5 million and $75.9$22.4 million during the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 and November 4, 2018,May 5, 2019, respectively.

(2) Unfavorable foreign currency translation adjustments were principally driven by a strengthening of the United States dollar against the euro.
30



The following table presents reclassifications out offrom AOCL to earnings for the thirteen and thirty-nine weeks ended NovemberMay 3, 20192020 and November 4, 2018:May 5, 2019:

Amount Reclassified from AOCLAffected Line Item in the Company’s Consolidated Statements of Operations
Thirteen Weeks Ended
(In millions)5/3/205/5/19
Realized gain (loss) on effective cash flow hedges:
Foreign currency forward exchange contracts (inventory purchases)$2.2  $15.0  Cost of goods sold
Interest rate swap agreements(1.7) 0.2  Interest expense
Less: Tax effect(0.2) 0.9  Income tax (benefit) expense
Total, net of tax$0.7  $14.3  

Amount Reclassified from AOCLAffected Line Item in the Company’s Consolidated Income Statements
 Thirteen Weeks Ended Thirty-Nine Weeks Ended 
(In millions)11/3/19 11/4/18 11/3/19 11/4/18 
Realized (loss) gain on effective cash flow hedges:        
Foreign currency forward exchange contracts (inventory purchases)$(2.3) $5.5
 $23.4
 $(23.1)Cost of goods sold
Interest rate swap agreements(0.6) 0.2
 (0.4) 0.6
Interest expense
Less: Tax effect0.2
 (0.1) 1.7
 (1.2)Income tax expense
Total, net of tax$(3.1) $5.8
 $21.3
 $(21.3) 





15. STOCKHOLDERS’ EQUITY

Acquisition of Treasury Shares

The Company’s Board of Directors has authorized over time since 2015 an aggregate $2.0 billion stock repurchase program through June 3, 2023. The program may be modified by the Board of Directors, including to increase or decrease the repurchase limitation or extend, suspend, or terminate the program, at any time, without prior notice.

The Company suspended share repurchases under the stock repurchase program beginning in mid-March 2020 in order to increase its cash position and preserve financial flexibility in response to the impacts of the COVID-19 pandemic on its business. In addition, under the terms of the June 2020 Amendment, share repurchases are not permitted during the relief period (as defined). Please see Note 9, “Debt,” for further discussion. The existing stock repurchase program remains authorized by the Board of Directors and the Company may resume share repurchases after the restrictions under the June 2020 Amendment lapse.

Repurchases under the program, when it is being used, may be made from time to time over the period through open market purchases, accelerated share repurchase programs, privately negotiated transactions or other methods, as the Company deems appropriate. Purchases are made based on a variety of factors, such as price, corporate requirements and overall market conditions, applicable legal requirements and limitations, trading restrictions under the Company’s insider trading policy and other relevant factors. The program may be modified by the Board of Directors, including to increase or decrease the repurchase limitation or extend, suspend, or terminate the program, at any time, without prior notice.

During the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 and November 4, 2018,May 5, 2019, the Company purchased 2.41.4 million shares and 1.70.5 million shares, respectively, of its common stock under the program in open market transactions for $223.3$110.7 million and $247.4$61.2 million, respectively. As of NovemberMay 3, 2019,2020, the repurchased shares were held as treasury stock and $784.9$572.6 million of the authorization remained available for future share repurchases.

Treasury stock activity also includes shares that were withheld in conjunction with the settlement of RSUs and PSUs to satisfy tax withholding requirements.

Common Stock Dividends
16. LEASES

The Company leases approximately 1,835 Company-operated freestanding retail store locations across more than 35 countries, generally with initial leasedeclared a $0.0375 per share dividend payable to its common stockholders of record as of March 4, 2020, in respect of which the Company made dividend payments totaling $2.7 million on March 31, 2020. Following the payment of the $0.0375 per common share dividend on March 31, 2020, the Company suspended its dividends in order to increase its cash position and preserve financial flexibility in response to the impacts of the COVID-19 pandemic on its business. In addition, under the terms of three to ten years. The Company also leases warehouses, distribution centers, showrooms, office space and a factory in Ethiopia, generally with initial lease terms of ten to 20 years, as well as certain equipment and other assets, generally with initial lease terms of one to five years.

Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of fixed lease payments over the expected lease term. The Company uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable for the Company's leases. The Company's incremental borrowing rates are based on the term of the lease, the economic environment of the lease, and the effect of collateralization. Certain leases include one or more renewal options, generally for the same period as the initial term of the lease. The exercise of lease renewal options is generally at the Company’s sole discretion and, as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company does not include the renewal option period in the expected lease term and the associated leaseJune 2020 Amendment, dividend payments are not included in the measurement of the right-of-use asset and lease liability. Certain leases also contain termination options with an associated penalty. Generally, the Company is reasonably certain not to exercise these options and as such, they are not included in the determination of the expected lease term. The Company recognizes operating lease expense on a straight-line basis over the lease term.

Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Leases generally provide for payments of nonlease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. For lease agreements entered into or modified after February 3, 2019, the Company accounts for lease components and nonlease components together as a single lease component and, as such, includes fixed payments of nonlease components in the measurement of the right-of-use assets and lease liabilities. Variable lease payments, such as percentage rentals based on location sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred as variable lease costs and are not recorded on the balance sheet.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictions or covenants.

In conjunction with the Australia acquisitionpermitted during the second quarter of 2019, the Company acquired an office building and warehouse owned by Gazal. Prior to the acquisition, Gazal had entered into an agreement with a third party to sell the building and as such, the building was classified as held for sale and recorded at its fair value less estimated costs to sell on the acquisition date.relief period (as defined). Please see Note 4, “Acquisitions,9, “Debt,” for further discussion. In June 2019, theThe Company completed the sale of the office building and warehouse for $59.4declared 2 $0.0375 per share dividends payable to its common stockholders totaling $5.7 million incurring costs of $1.0 million, and leased back the building without an option to repurchase. No gain or loss was recognized on the transaction. The lease was classified as an operating lease with an initial lease term of five years and includes 3 options to renew for a period of five years each. Exercise of these renewal options is


not reasonably certain and as a result, the Company recognized an operating lease right-of-use asset and operating lease liability based on the initial term of the lease.

The components of the net lease cost forduring the thirteen and thirty-nine weeks ended November 3, 2019 were as follows:May 5, 2019.
    Thirteen Weeks Ended Thirty-Nine Weeks Ended
(In millions) Line Item in the Company’s Consolidated Income Statement 11/3/19 11/3/19
Finance lease cost:      
Amortization of right-of-use-assets SG&A expenses (depreciation and amortization) $1.3
 $4.0
Interest on lease liabilities Interest expense 0.1
 0.4
Total finance lease cost   1.4
 4.4
Operating lease cost SG&A expenses 115.3
 343.6
Short-term lease cost SG&A expenses 9.0
 17.8
Variable lease cost SG&A expenses 30.9
 97.8
Less: sublease income SG&A expenses (0.1) (0.2)
Total net lease cost   $156.5
 $463.4


31
Supplemental balance sheet information related to leases as of November 3, 2019 was as follows:
(In millions) Line Item in the Company’s Consolidated Balance Sheet 11/3/19
Right-of-use assets:    
Operating lease Operating lease right-of-use assets $1,648.1
Finance lease Property, plant and equipment, net 14.8
    $1,662.9
Current lease liabilities:    
Operating lease Current portion of operating lease liabilities $347.3
Finance lease Accrued expenses 4.7
    $352.0
Other lease liabilities:    
Operating lease Long-term portion of operating lease liabilities $1,517.5
Finance lease Other liabilities 11.1
    $1,528.6


Supplemental cash flow information related to leases for the thirty-nine weeks ended November 3, 2019 was as follows:
  Thirty-Nine Weeks Ended
(In millions) 11/3/19
Cash paid for amounts included in the measurement of lease liabilities:  
Operating cash flows from operating leases $355.4
Operating cash flows from finance leases 0.4
Financing cash flows from finance leases 4.1
Non-cash transactions:  
Right-of-use assets obtained in exchange for new operating lease liabilities 311.4
Right-of-use assets obtained in exchange for new finance lease liabilities 3.4




The following summarizes the weighted average remaining lease term and weighted average discount rate related to the Company’s right-of-use assets and lease liabilities recorded on the balance sheet as of November 3, 2019:
11/3/19
Weighted average remaining lease term (years):
Operating leases6.92
Finance leases4.36
Weighted average discount rate:
Operating leases4.34%
Finance leases3.25%


At November 3, 2019, the maturities of the Company’s lease liabilities were as follows:
(In millions) 
Finance
Leases
 
Operating
Leases
 Total
Remainder of 2019 $1.4
 $86.2
 $87.6
2020 5.1
 436.0
 441.1
2021 4.5
 375.8
 380.3
2022 2.5
 302.4
 304.9
2023 0.9
 228.3
 229.2
Thereafter 2.9
 763.5
 766.4
Total lease payments $17.3
 $2,192.2
 $2,209.5
Less: Interest (1.5) (327.4) (328.9)
Total lease liabilities $15.8
 $1,864.8
 $1,880.6


The Company’s lease liabilities exclude $14.8 million of future lease payment obligations related to leases for two new warehouses that were entered into but did not commence as of November 3, 2019. These leases are expected to commence in March 2020 with initial lease terms of five to ten years.

17. EXIT ACTIVITY COSTS

Calvin Klein Restructuring Costs

The Company announced on January 10, 2019 a restructuring in connection with strategic changes for itsCalvin Klein business (the “Calvin Klein restructuring”). The strategic changes included (i) the closure of the CALVIN KLEIN 205 W39 NYC brand (formerly Calvin Klein Collection), (ii) the closure of the flagship store on Madison Avenue in New York, New York, (iii) the restructuring of the Calvin Klein creative and design teams globally, and (iv) the consolidation of operations for the men’s Calvin Klein Sportswear and Calvin Klein Jeans businesses. In connection with the Calvin Klein restructuring, the Company recorded pre-tax costs during 2018 and the thirteen and thirty-nine weeks ended November 3, 2019 and expects to incur total costs as follows:
(In millions)Total Costs Expected to be Incurred Costs Incurred During the Thirteen Weeks Ended 11/3/19 Costs Incurred During the Thirty-Nine Weeks Ended 11/3/19 Cumulative Costs Incurred To Date
Severance, termination benefits and other employee costs$52.9
 $1.2
 $25.6
 $52.9
Long-lived asset impairments (1)
45.1
 —
 38.2
 45.1
Contract termination and other costs32.9
 2.3
 26.2
 30.5
Inventory markdowns15.1
 —
 12.9
 15.1
Total$146.0
 $3.5
 $102.9
 $143.6

(1) Includes the impact of the closure of the flagship store on Madison Avenue in New York, New York in the first quarter of 2019.



Of the charges for severance, termination benefits and other employee costs, long-lived asset impairments and contract termination and other costs incurred during the thirty-nine weeks ended November 3, 2019, $59.5 million relate to SG&A expenses of the Calvin Klein North America segment and $30.5 million relate to SG&A expenses of the Calvin Klein International segment. Of the charges for inventory markdowns incurred during the thirty-nine weeks ended November 3, 2019, $6.5 million relate to cost of goods sold of the Calvin Klein North America segment and $6.4 million relate to cost of goods sold of the Calvin Klein International segment. Of the $143.6 million cumulative costs incurred to date in connection with the restructuring activities, $84.9 million related to the Calvin Klein North America segment and $58.7 million related to the Calvin Klein International segment. The Company expects to incur total costs of approximately $146 million through the end of 2019 in connection with the restructuring activities, of which approximately $86 million is estimated to relate to the Calvin Klein North America segment and approximately $60 million is estimated to relate to the Calvin Klein International segment. Please see Note 20, “Segment Data,” for further discussion of the Company’s reportable segments.

Please see Note 12, “Fair Value Measurements,” for further discussion of the long-lived asset impairments recorded during the thirty-nine weeks ended November 3, 2019.

The liabilities at November 3, 2019 related to these costs were principally recorded in accrued expenses in the Company’s Consolidated Balance Sheets and were as follows:
(In millions)Liability at 2/3/19 Costs Incurred During the Thirty-Nine Weeks Ended 11/3/19 Costs Paid During the Thirty-Nine Weeks Ended 11/3/19 Liability at 11/3/19
Severance, termination benefits and other employee costs$25.8
 $25.6
 $40.0
 $11.4
Contract termination and other costs2.3
 26.2
 24.5
 4.0
Total$28.1
 $51.8
 $64.5
 $15.4


18.16. NET (LOSS) INCOME PER COMMON SHARE

The Company computed its basic and diluted net (loss) income per common share as follows:
Thirteen Weeks Ended
(In millions, except per share data)5/3/205/5/19
Net (loss) income attributable to PVH Corp.$(1,096.8) $82.0  
Weighted average common shares outstanding for basic net (loss) income per common share71.4  75.2  
Weighted average impact of dilutive securities—  0.7  
Total shares for diluted net (loss) income per common share71.4  75.9  
Basic net (loss) income per common share attributable to PVH Corp.$(15.37) $1.09  
Diluted net (loss) income per common share attributable to PVH Corp.$(15.37) $1.08  
 Thirteen Weeks Ended Thirty-Nine Weeks Ended
(In millions, except per share data)11/3/19 11/4/18 11/3/19
11/4/18
        
Net income attributable to PVH Corp.$209.2
 $243.1
 $484.7
 $587.7
        
Weighted average common shares outstanding for basic net income per common share73.9
 76.4
 74.6
 76.8
Weighted average impact of dilutive securities0.3
 0.7
 0.4
 0.9
Total shares for diluted net income per common share74.2
 77.1
 75.0
 77.7
        
Basic net income per common share attributable to PVH Corp.$2.83
 $3.18
 $6.49
 $7.65
        
Diluted net income per common share attributable to PVH Corp.$2.82
 $3.15
 $6.46
 $7.56


Potentially dilutive securities excluded from the calculation of diluted net (loss) income per common share as the effect would be anti-dilutive were as follows:
Thirteen Weeks Ended
(In millions)5/3/205/5/19
Weighted average potentially dilutive securities2.0  0.5  
 Thirteen Weeks Ended Thirty-Nine Weeks Ended
(In millions)11/3/19 11/4/18 11/3/19 11/4/18
        
Weighted average potentially dilutive securities1.4
 0.3
 1.1
 0.2

Diluted net loss per common share attributable to PVH Corp. for the thirteen weeks ended May 3, 2020 excluded all potentially dilutive securities because there was a net loss attributable to PVH Corp. for the period and, as such, the inclusion of these securities would have been anti-dilutive.

Shares underlying contingently issuable awards that have not met the necessary conditions as of the end of a reporting period are not included in the calculation of diluted net (loss) income per common share for that period. The Company had contingently issuable PSU awards outstanding that did not meet the performance conditions as of November 3,May 5, 2019 and November 4, 2018 and, therefore, were excluded from the calculation of diluted net (loss) income per common share for the thirteen and thirty-nine


weeks ended November 3, 2019 and November 4, 2018.May 5, 2019. The maximum number of potentially dilutive shares that could be issued upon vesting for suchthese PSU awards was 0.4 million and 0.2 million as of NovemberMay 3, 20192020 and November 4, 2018,May 5, 2019, respectively. These amounts were also excluded from the computation of weighted average potentially dilutive securities in the table above.


19. NONCASH INVESTING AND FINANCING TRANSACTIONS17. SUPPLEMENTAL CASH FLOW INFORMATION

Noncash Investing and Financing Transactions

The Company completed the Australia acquisition during the thirty-nine weeks ended November 3,second quarter of 2019. Omitted fromIncluded in the Company’s Consolidated Statement of Cash Flows for the thirty-nine weeks ended November 3, 2019total acquisition consideration was the followingcertain noncash acquisition consideration: (i)consideration, including the issuance to key members of Gazal and PVH Australia management of approximately 6% of the outstanding shares in the subsidiary of the Company that holds 100% of the ownership interests in the Australia business, for which the Company recognized a $26.2 million liability on the date of the acquisition and (ii) the elimination of a $2.2 million pre-acquisition receivable owed to the Company by PVH Australia. In connection with the acquisition, the Company also remeasured its previously held equity investments in Gazal and PVH Australia to fair value, resulting in noncash increases of $23.6 million and $89.5 million, respectively, to these equity investments balances. Subsequent to the acquisition, theacquisition. The Company recorded a lossgain of $2.6$3.7 million during the thirty-ninethirteen weeks ended NovemberMay 3, 2019 resulting from2020 in connection with the remeasurement of the liability forin the 6% interest issuedfirst quarter of 2020, which resulted in a reduction to key members of Gazal and PVH Australia management to its redemption value as of November 3, 2019.the liability. The liability was $28.8$29.2 million as of NovemberMay 3, 20192020 based on exchange rates in effect on that date.

 Please see Note 4, “Acquisitions and Divestitures,” for further discussion.

Omitted from net proceeds from short-term borrowings in the Company’s Consolidated Statement of Cash Flows for the thirteen weeks ended May 3, 2020 were $0.4 million of debt issuance costs incurred in connection with the Company’s 2020 facility that were accrued as of May 3, 2020.

Omitted from proceeds from 3 5/8 senior notes, net of related fees in the Company’s Consolidated Statement of Cash Flows for the thirteen weeks ended May 3, 2020 were $0.7 million of debt issuance costs incurred in connection with the issuance of €175.0 million principal amount of 3 5/8% senior notes due 2024 that were accrued as of May 3, 2020.

32

Omitted from proceeds from 2019 facilities, net of related fees in the Company’s Consolidated Statement of Cash Flows for the thirteen weeks ended May 5, 2019 was $4.0 million of debt issuance costs incurred in connection with the refinancing of its senior credit facilities that were accrued as of May 5, 2019.

The Company recorded a loss of $1.7 million during the thirteen weeks ended May 5, 2019 to write-off previously capitalized debt issuance costs in connection with the refinancing of its senior credit facilities.

Omitted from acquisition of treasury shares in the Company’s Consolidated StatementsStatement of Cash Flows for the thirty-ninethirteen weeks ended November 3, May 5, 2019 and November 4, 2018 were $3.2was $2.0 million and $1.9 million respectively, of shares repurchased under the stock repurchase program for which the trades occurred but remained unsettled as of the end of the respective period.


Lease Transactions
The Company recorded a loss of $1.7 million during the thirty-nine weeks ended November 3, 2019 to write-off previously capitalized debt issuance costs in connection with the refinancing of its senior credit facilities.

The Company completed the acquisition of the Geoffrey Beene tradename during the thirty-nine weeks ended November 4, 2018. Omitted from acquisitions, net ofSupplemental cash acquired in the Company’s Consolidated Statement of Cash Flows for the thirty-nine weeks ended November 4, 2018 was $0.7 million of acquisition consideration related to royalties prepaid to Geoffrey Beene by the Company under the prior license agreement and $0.4 million of liabilities assumed by the Company.

Omitted from purchases of property, plant and equipment in the Company’s Consolidated Statement of Cash Flows for the thirty-nine weeks ended November 4, 2018 were $2.9 million of assets acquired through finance leases. Please see Note 16, “Leases,” for supplemental noncash transactionsflow information related to finance leases during the was as follows:
Thirteen Weeks Ended
(In millions)5/3/205/5/19
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$81.5  $116.0  
Operating cash flows from finance leases0.1  0.1  
Financing cash flows from finance leases1.3  1.5  
Non-cash transactions:
Right-of-use assets obtained in exchange for new operating lease liabilities89.0  85.1  
Right-of-use assets obtained in exchange for new finance lease liabilities1.7  0.9  
thirty-nine weeks ended November 3, 2019.

20.18. SEGMENT DATA

The Company manages its operations through its operating divisions, which are presented as 6 reportable segments: (i) Tommy Hilfiger North America; (ii) Tommy Hilfiger International; (iii) Calvin Klein North America; (iv) Calvin Klein International; (v) Heritage Brands Wholesale; and (vi) Heritage Brands Retail.

Tommy Hilfiger North America Segment - This segment consists of the Company’s Tommy Hilfiger North America division. This segment derives revenue principally from (i) marketing TOMMY HILFIGER branded apparel and related products at wholesale in the United States and Canada, primarily to department stores, warehouse clubs, and off-price and independent retailers, as well as digital commerce sites operated by department store customers and pure play digital commerce retailers; (ii) operating retail stores, which are primarily located in premium outlet centers in the United States and Canada, and a digital commerce site in the United States, which sell TOMMY HILFIGER branded apparel, accessories and related products; and (iii) licensing and similar arrangements relating to the use by third parties of the TOMMY HILFIGER brand names for a broad array of product categories in North America. This segment also includes the Company’s proportionate share of the net income or loss of its investment in its unconsolidated foreign affiliate in Mexico relating to the affiliate’s Tommy Hilfiger business and, since December 2019, the Company’s proportionate share of the net income or loss of its investment in its unconsolidated PVH Legwear LLC (“PVH Legwear”) affiliate relating to the affiliate’s Tommy Hilfiger business.

Tommy Hilfiger International Segment - This segment consists of the Company’s Tommy Hilfiger International division. This segment derives revenue principally from (i) marketing TOMMY HILFIGER branded apparel and related products at wholesale principally in Europe, Asia, and since May 31, 2019, Australia, primarily to department and specialty stores, and digital commerce sites operated by department store customers and pure play digital commerce retailers, as well as through distributors and franchisees; (ii) operating retail stores, and concession locations and digital commerce sites in Europe, Asia (including the TH CSAP acquisition) and, since May 31, 2019, Australia, and international digital commerce sites, which sell TOMMY HILFIGER


branded apparel, accessories and related products; and (iii) licensing and similar arrangements relating to the use by third parties of the TOMMY HILFIGER brand names for a broad array of product categories outside of North America. This segment also includes the Company’s proportionate share of the net income or loss of its investments in its unconsolidated Tommy Hilfiger foreign affiliates in Brazil and India. This segment included the Company’s proportionate share of the net income or loss of its investment in PVH Australia relating to its Tommy Hilfiger business until May 31, 2019, on which date the Company completed the Australia acquisition and began to consolidate the operations of PVH Australia into its financial statements. Please see Note 4, “Acquisitions and Divestitures,” for further discussion.

33


Calvin Klein North America Segment - This segment consists of the Company’s Calvin Klein North America division. This segment derives revenue principally from (i) marketing CALVIN KLEIN branded apparel and related products at wholesale in the United States and Canada, primarily to warehouse clubs, department and specialty stores, and off-price and independent retailers, as well as digital commerce sites operated by department store customers and pure play digital commerce retailers; (ii) operating retail stores, which are primarily located in premium outlet centers, and digital commerce sites in the United States and Canada, which sell CALVIN KLEIN branded apparel, accessories and related products; and (iii) licensing and similar arrangements relating to the use by third parties of the CALVIN KLEIN brand names for a broad array of product categories in North America. This segment also includes the Company’s proportionate share of the net income or loss of its investment in its unconsolidated foreign affiliate in Mexico relating to the affiliate’s Calvin Klein business and, since December 2019, the Company’s proportionate share of the net income or loss of its investment in its unconsolidated PVH Legwear affiliate relating to the affiliate’s Calvin Klein business.

Calvin Klein International Segment - This segment consists of the Company’s Calvin Klein International division. This segment derives revenue principally from (i) marketing CALVIN KLEIN branded apparel and related products at wholesale principally in Europe, Asia, Brazil and, since May 31, 2019, Australia, primarily to department and specialty stores, and digital commerce sites operated by department store customers and pure play digital commerce retailers, as well as through distributors and franchisees; (ii) operating retail stores, concession locations and digital commerce sites in Europe, Asia, Brazil and since May 31, 2019, Australia, which sell CALVIN KLEIN branded apparel, accessories and related products; and (iii) licensing and similar arrangements relating to the use by third parties of the CALVIN KLEIN brand names for a broad array of product categories outside of North America. This segment also includes the Company’s proportionate share of the net income or loss of its unconsolidated Calvin Klein foreign affiliate in India. This segment included the Company’s proportionate share of the net income or loss of its investment in PVH Australia relating to its Calvin Klein business until May 31, 2019, on which date the Company completed the Australia acquisition and began to consolidate the operations of PVH Australia into its financial statements. Please see Note 4, “Acquisitions and Divestitures,” for further discussion.

Heritage Brands Wholesale Segment - This segment consists of the Company’s Heritage Brands Wholesale division. This segment derives revenue primarily from the marketing to department, chain and specialty stores, warehouse clubs, and mass market, off-price and independent retailers (in stores and online), as well as digital commerce sites operated by select wholesale partners and pure play digital commerce retailers in North America of (i) men’s dress shirts and neckwear under various owned and licensed brand names, including several private label brands; (ii) men’s sportswear principally under the brand names Van Heusen, IZOD, and ARROW; (iii) women’s intimate apparel under the Warner’s, Olga and True&Co. brands; and (iv) men’s, women’s and children’s swimwear, pool and deck footwear, and swim-related products and accessories under the Speedo trademark;trademark until April 6, 2020 when the Company completed the sale of its Speedo North America business to Pentland. Please see Note 4, “Acquisitions and (iv) women’s intimate apparel under the Warner’s, Olga, and True&Co. brands. Additionally, thisDivestitures,” for further discussion. This segment also derives revenue from Company-operatedCompany operated digital commerce sites in the United States throughfor SpeedoUSA.com, TrueAndCo.com, VanHeusen.comTrue&Co., Van Heusen,IZOD.com and until April 6, 2020, styleBureauSpeedo.com.. In addition, since May 31, 2019, this segment also derives revenue from the Heritage Brands business in Australia. As well, this segment includes the Company’s proportionate share of the net income or loss of its investment in its unconsolidated foreign affiliate in Mexico relating to the affiliate’s Heritage Brands business and, since December 2019, the Company’s proportionate share of the net income or loss of its investment in its unconsolidated PVH Legwear affiliate relating to the affiliate’s Heritage Brands business. This segment included the Company’s proportionate share of the net income or loss of its investment in PVH Australia relating to its Heritage Brands business until May 31, 2019, on which date the Company completed the Australia acquisition and began to consolidate the operations of PVH Australia into its financial statements. Please see Note 4, “Acquisitions and Divestitures,” for further discussion.

Heritage Brands Retail Segment - This segment consists of the Company’s Heritage Brands Retail division. This segment derives revenue principally from operating retail stores, primarily located in outlet centers throughout the United States and Canada, which primarily sell apparel, accessories and related products. All of the Company’s Heritage Brands stores offer a broad selection of Van Heusen men’s and women’s apparel, along with various of the Company’s dress shirt and neckwear offerings, and IZOD and Warner’s products. The majority of these stores feature multiple brand names on the store signage, with the remaining stores operating under the Van Heusen name.

34


The Company’s revenue by segment was as follows:
 Thirteen Weeks Ended  Thirty-Nine Weeks Ended 
(In millions)11/3/19
(1) 
11/4/18
(1) 
 11/3/19
(1) 
11/4/18
(1) 
Revenue – Tommy Hilfiger North America         
Net sales    $388.8
 $394.9
  $1,126.7
 $1,151.6
 
Royalty revenue    25.8
 23.8
  62.6
 56.7
 
Advertising and other revenue    8.2
 5.6
  18.3
 13.8
 
Total    422.8
 424.3
  1,207.6
 1,222.1
 
          
Revenue – Tommy Hilfiger International         
Net sales    803.7
 688.1
  2,145.4
 1,897.6
 
Royalty revenue    12.3
 14.4
  37.9
 39.4
 
Advertising and other revenue    5.1
 5.7
  15.3
 17.8
 
Total    821.1
 708.2
  2,198.6
 1,954.8
 
          
Revenue – Calvin Klein North America         
Net sales386.1
 420.3
  1,130.6
 1,212.6
 
Royalty revenue49.9
 45.9
  114.8
 111.9
 
Advertising and other revenue19.3
 14.8
  42.7
 38.5
 
Total455.3
 481.0
  1,288.1
 1,363.0
 
          
Revenue – Calvin Klein International         
Net sales486.8
 452.8
  1,368.3
 1,336.9
 
Royalty revenue19.3
 21.7
  55.1
 56.2
 
Advertising and other revenue7.5
 7.7
  20.3
 22.2
 
Total513.6
 482.2
  1,443.7
 1,415.3
 
          
Revenue – Heritage Brands Wholesale         
Net sales305.7
 357.9
  960.4
 1,000.7
 
Royalty revenue4.9
 5.4
  15.0
 15.8
 
Advertising and other revenue0.9
 1.0
  3.1
 3.0
 
Total311.5
 364.3
  978.5
 1,019.5
 
          
Revenue – Heritage Brands Retail         
Net sales62.4
 63.4
  188.4
 194.7
 
Royalty revenue0.9
 1.0
  2.9
 3.1
 
Advertising and other revenue0.1
 0.1
  0.4
 0.3
 
Total63.4
 64.5
  191.7
 198.1
 
          
Total Revenue         
Net sales    2,433.5
 2,377.4
  6,919.8
 6,794.1
 
Royalty revenue    113.1
 112.2
  288.3
 283.1
 
Advertising and other revenue    41.1
 34.9
  100.1
 95.6
 
Total    $2,587.7
 $2,524.5
  $7,308.2
 $7,172.8
 

Thirteen Weeks Ended
(In millions)5/3/20
(1)(2)
5/5/19
(1)
Revenue – Tommy Hilfiger North America
Net sales$161.1  $347.8  
Royalty revenue16.8  18.7  
Advertising and other revenue3.4  5.3  
Total181.3  371.8  
Revenue – Tommy Hilfiger International
Net sales453.9  662.7  
Royalty revenue8.8  13.2  
Advertising and other revenue2.5  4.4  
Total465.2  680.3  
Revenue – Calvin Klein North America
Net sales163.9  378.4  
Royalty revenue25.1  33.4  
Advertising and other revenue7.1  12.2  
Total196.1  424.0  
Revenue – Calvin Klein International
Net sales262.3  441.1  
Royalty revenue14.2  17.9  
Advertising and other revenue4.0  6.6  
Total280.5  465.6  
Revenue – Heritage Brands Wholesale
Net sales195.3  350.3  
Royalty revenue3.4  5.1  
Advertising and other revenue0.8  1.0  
Total199.5  356.4  
Revenue – Heritage Brands Retail
Net sales20.7  57.0  
Royalty revenue0.7  1.1  
Advertising and other revenue—  0.1  
Total21.4  58.2  
Total Revenue
Net sales1,257.2  2,237.3  
Royalty revenue69.0  89.4  
Advertising and other revenue17.8  29.6  
Total$1,344.0  $2,356.3  

(1) Revenue was impacted by fluctuations of the United States dollar against foreign currencies in which the Company transacts significant levels of business.
35



(2) Revenue was significantly negatively impacted by the COVID-19 pandemic, including as a result of temporary store closures and reduced traffic and consumer spending trends. The Company’s wholesale customers and licensing partners also experienced significant business disruptions as a result of the pandemic, resulting in a decrease in the Company’s revenue from these channels.


The Company’s revenue by distribution channel was as follows:
Thirteen Weeks Ended
(In millions)5/3/205/5/19
Wholesale net sales$808.2  $1,360.7  
Retail net sales449.0  876.6  
Net sales1,257.2  2,237.3  
Royalty revenue69.0  89.4  
Advertising and other revenue17.8  29.6  
Total$1,344.0  $2,356.3  
 Thirteen Weeks Ended Thirty-Nine Weeks Ended
(In millions)11/3/19 11/4/18 11/3/19 11/4/18
Wholesale net sales$1,431.2
 $1,415.5
 $3,929.7
 $3,830.1
Retail net sales1,002.3
 961.9
 2,990.1
 2,964.0
Net sales2,433.5
 2,377.4
 6,919.8
 6,794.1
        
Royalty revenue113.1
 112.2
 288.3
 283.1
Advertising and other revenue41.1
 34.9
 100.1
 95.6
Total$2,587.7
 $2,524.5
 $7,308.2
 $7,172.8


The Company’s (loss) income before interest and taxes by segment was as follows:
Thirteen Weeks Ended
(In millions)5/3/20
(1)(2)
5/5/19
(1)
Loss before interest and taxes – Tommy Hilfiger North America$(50.0) 
(4)
$(14.7) 
(8)
(Loss) Income before interest and taxes – Tommy Hilfiger International(38.8) 
(4)
106.8  
(Loss) Income before interest and taxes – Calvin Klein North America(327.8) 
(4)(5)
1.4  
(9)
(Loss) Income before interest and taxes – Calvin Klein International(433.8) 
(4)(5)
46.9  
(9)
(Loss) Income before interest and taxes – Heritage Brands Wholesale(287.9) 
(5)(6)
39.0  
(Loss) Income before interest and taxes – Heritage Brands Retail(23.0) 
(4)
1.0  
Loss before interest and taxes – Corporate (3) 
(57.1) 
(7)
(45.3) 
(Loss) Income before interest and taxes$(1,218.4) $135.1  
 Thirteen Weeks Ended  Thirty-Nine Weeks Ended 
(In millions)11/3/19
(1) 
 11/4/18
(1) 
 11/3/19
(1) 
 11/4/18
(1) 
Income before interest and taxes – Tommy Hilfiger North America$39.3
  $64.6
  $72.9
(7)(9) 
 $179.6
 
            
Income before interest and taxes – Tommy Hilfiger International137.6
(3) 
 112.6
(11) 
 344.2
(4) 
 263.6
(11) 
            
Income before interest and taxes – Calvin Klein North America64.6
(5) 
 51.2
  77.3
(6)(7) 
 154.5
 
            
Income before interest and taxes – Calvin Klein International58.7
(3)(5) 
 69.7
  112.2
(4)(6)(7) 
 180.0
 
            
Income before interest and taxes – Heritage Brands Wholesale14.5
(3) 
 23.8
  67.5
(4) 
 90.1
 
            
(Loss) Income before interest and taxes – Heritage Brands Retail(0.8)  0.4
  3.3
  8.3
 
            
Loss before interest and taxes – Corporate (2)    
(44.4)  (40.0) 
(23.0)
(4)(8)(10) 
 (118.1) 
            
Income before interest and taxes$269.5
  $282.3
  $654.4
  $758.0
 


(1)(1) (Loss) Income before interest and taxes was impacted by fluctuations of the United States dollar against foreign currencies in which the Company transacts significant levels of business.
Income (loss) before interest and taxes was impacted by fluctuations of the United States dollar against foreign currencies in which the Company transacts significant levels of business.

(2)
Includes corporate expenses not allocated to any reportable segments, the Company’s proportionate share of the net income or loss of its investments in Gazal (prior to the Australia acquisition closing) and Karl Lagerfeld Holding B.V., and the results of PVH Ethiopia. Please see Note 4, “Acquisitions,” for further discussion. Corporate expenses represent overhead operating expenses and include expenses for senior corporate management, corporate finance, information technology related to corporate infrastructure, certain digital investments, actuarial gains and losses on the Company’s Pension Plans, SERP Plans and Postretirement Plans (which are generally recorded in the fourth quarter) and gains and losses from changes in the fair value of foreign currency option contracts.

(3)
Income before interest and taxes for the thirteen weeks ended November 3, 2019 included costs of $8.6 million in connection with the Australia and TH CSAP acquisitions, primarily consisting of noncash valuation adjustments. Such costs were included in the Company’s segments as follows: $5.4 million in Tommy Hilfiger International, $2.4 million in Calvin Klein International and $0.8 million in Heritage Brands Wholesale. Please see Note 4, “Acquisitions,” for further discussion.

(4)
Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $13.4 million in connection with the Australia and TH CSAP acquisitions, primarily consisting of noncash valuation adjustments, and one-time costs of $2.1 million recorded on the Company’s equity investments in Gazal and PVH Australia prior to the Australia acquisition closing. Such costs were included in the Company’s segments as follows: $7.9 million in Tommy Hilfiger


International, $3.9(2) (Loss) Income before interest and taxes was significantly negatively impacted by the COVID-19 pandemic, including as a result of the unprecedented decline in revenue noted above as well as $961.8 million in Calvin Klein International, $1.2 million in Heritage Brands Wholesaleof noncash impairment charges related to goodwill, tradenames, other intangible assets, store assets and $2.5 million inan equity method investment.

(3) Includes corporate expenses not allocated to any reportable segments.segments, the Company’s proportionate share of the net income or loss of its investments in Gazal (prior to the Australia acquisition closing) and Karl Lagerfeld and the results of PVH Ethiopia. Corporate expenses represent overhead operating expenses and include expenses for senior corporate management, corporate finance, information technology related to corporate infrastructure, certain digital investments, certain corporate responsibility initiatives, and actuarial gains and losses on the Company’s Pension Plans, SERP Plans and Postretirement Plans (which are generally recorded in the fourth quarter).

(4) Loss before interest and taxes for the thirteen weeks ended May 3, 2020 included noncash impairment charges of $16.0 million related to the Company’s store assets. The $16.0 million of impairment charges were included in the Company’s segments as follows: $4.1 million in Tommy Hilfiger North America, $3.1 million in Tommy Hilfiger International, $3.2 million in Calvin Klein North America, $1.8 million in Calvin Klein International and $3.8 million in Heritage Brands Retail. Please see Note 12, “Fair Value Measurements,” for further discussion.

(5) Loss before interest and taxes for the thirteen weeks ended May 3, 2020 included noncash impairment charges of $933.5 million, primarily related to goodwill, tradenames and other intangible assets. The $933.5 million of impairment charges
36


were included in the Company’s segments as follows: $289.9 million in Calvin Klein North America, $394.0 million in Calvin Klein International and $249.6 million in Heritage Brands Wholesale. Please see Note 7, “Goodwill and Other Intangible Assets,” for further discussion.

(6) Loss before interest and taxes for the thirteen weeks ended May 3, 2020 included a net noncash loss of $3.1 million in connection with the sale of the Speedo North America business in April 2020. Please see Note 4, “Acquisitions and Divestitures,” for further discussion.

(5)
(7) Loss before interest and taxes for the thirteen weeks ended May 3, 2020 included a noncash impairment charge of $12.3 million related to the Company’s equity method investment in Karl Lagerfeld. Please see Note 6, “Investments in Unconsolidated Affiliates,” for further discussion.

(8) Loss before interest and taxes for the thirteen weeks ended May 5, 2019 included costs of $54.9 million incurred in connection with the TH U.S. store closures, primarily consisting of noncash lease asset impairments. Please see Note 12, “Fair Value Measurements,” for further discussion.

(9) Income before interest and taxes for the thirteen weeks ended May 5, 2019 included costs of $70.3 million incurred in connection with the Calvin Klein restructuring, primarily consisting of lease asset impairments and severance. Such costs were included in the Company’s segments as follows: $50.9 million in Calvin Klein North America and $19.4 million in Calvin Klein International. Please see Note 12, “Fair Value Measurements,” for further discussion of the lease asset impairments.

Income before interest and taxes for the thirteen weeks ended November 3, 2019 included costs of $3.5 million incurred in connection with the Calvin Klein restructuring. Such costs were included in the Company’s segments as follows: $0.9 million in Calvin Klein North America and $2.6 million in Calvin Klein International. Please see Note 17, “Exit Activity Costs,” for further discussion.

(6)
Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $102.9 million incurred in connection with the Calvin Klein restructuring. Such costs were included in the Company’s segments as follows: $66.0 million in Calvin Klein North America and $36.9 million in Calvin Klein International. Please see Note 17, “Exit Activity Costs,” for further discussion.

(7)
Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $59.8 million in connection with agreements the Company entered into in the second quarter of 2019 to terminate early the licenses for the global Calvin Klein and Tommy Hilfiger North America socks and hosiery businesses in conjunction with the Company’s plan to consolidate the socks and hosiery business for all Company brands in North America in a newly formed joint venture, which began operations in December 2019, and to bring in-house the international Calvin Klein socks and hosiery wholesale businesses. Such costs were included in the Company’s segments as follows: $7.5 million in Tommy Hilfiger North America, $25.5 million in Calvin Klein North America and $26.8 million in Calvin Klein International.

(8)
Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included a noncash gain of $113.1 million to write up the Company’s equity investments in Gazal and PVH Australia to fair value in connection with the Australia acquisition. Please see Note 4, “Acquisitions,” for further discussion.

(9)
Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $54.9 million incurred in connection with the TH U.S. store closures, primarily consisting of noncash lease asset impairments. Please see Note 12, “Fair Value Measurements,” for further discussion.

(10)
Income before interest and taxes for the thirty-nine weeks ended November 3, 2019 included costs of $6.2 million related to the refinancing of the Company’s senior credit facilities. Please see Note 9, “Debt,” for further discussion.

(11)
Income before interest and taxes for the thirteen and thirty-nine weeks ended November 4, 2018 included costs of $6.3 million and $19.9 million, respectively, associated with the acquisition of the 55% ownership interests in TH Asia, Ltd., the Company’s former joint venture for TOMMY HILFIGER in China, that the Company did not already own, consisting of noncash amortization of short-lived assets.

Intersegment transactions primarily consist of transfers of inventory principally from the Heritage Brands Wholesale segment to the Heritage Brands Retail segment, the Tommy Hilfiger North America segment and the Calvin Klein North America segment. These transfers are recorded at cost plus a standard markup percentage. Such markup percentage on ending inventory is eliminated principally in the Heritage Brands Retail segment, the Tommy Hilfiger North America segment and the Calvin Klein North America segment.

21.19. GUARANTEES

The Company is deemed to have guaranteed lease payments for substantially all G. H. Bass & Co. (“Bass”) retail stores included in the 2013 sale of substantially all of the assets of the Company’s Bass business pursuant to the terms of noncancelable leases expiring on various dates through 2022. The obligations deemed to be guaranteed include minimum rent payments and relate to leases that commenced prior to the sale of the Bass assets. In certain instances, the Company’s obligations remain in effect when an option is exercised to extend the term of the lease. The maximum amount deemed to have been guaranteed for all leases as of November 3, 2019 was $3.9 million and the Company has the right to seek recourse from the buyer of the Bass assets for the full amount. The liability for the guaranteed lease payments was immaterial as of November 3, 2019, February 3, 2019 and November 4, 2018.

The Company has guaranteed a portion of the debt of one of its joint ventures in India. The maximum amount guaranteed as of NovemberMay 3, 20192020 was approximately $7.8$10.7 million which is subject tobased on exchange rate fluctuation.rates in effect on that date. The guarantee is in effect for the entire term of the debt. The liability for this guarantee obligation was immaterial as of NovemberMay 3, 2019,2020, February 3,2, 2020 and May 5, 2019 and November 4, 2018.



The Company has guaranteed to a financial institution the repayment of a store security depositdeposits in Japan paid to a landlordlandlords on behalf of the Company. The amount guaranteed as of NovemberMay 3, 20192020 was approximately $4.6$5.4 million which is subject tobased on exchange rate fluctuation.rates in effect on that date. The Company has the right to seek recourse from the landlordlandlords for the full amount. The guarantee expires on March 28, 2022.guarantees expire between 2022 and 2025. The liability for thisthese guarantee obligationobligations was immaterial as of NovemberMay 3, 2019,2020, February 3,2, 2020 and May 5, 2019 and November 4, 2018.

The Company has guaranteed the payment of amounts on behalf of certain other parties, none of which are material individually or in the aggregate.

22.20. RECENT ACCOUNTING GUIDANCE

Recently Adopted Accounting Guidance

The Financial Accounting Standards Board (“FASB”)FASB issued in FebruaryJune 2016 an update to accounting guidance that introduces a new guidance on leases. The new guidance, among other changes, requires lesseesimpairment model used to recognize a right-of-use asset and a lease liability in the balance sheetmeasure credit losses for most leases, but retains an expense recognition model similar to the previous guidance. The lease liability iscertain financial assets measured at amortized cost, including trade and other receivables. This update requires entities to record an allowance for credit losses using a forward-looking expected loss impairment model that considers historical experience, current conditions, and reasonable and supportable forecasts that affect collectibility, rather than the present value of the fixed lease payments over the lease term and the right-of-use asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs. The guidance also requires additional quantitative and qualitative disclosures.incurred loss model required under existing guidance. The Company adopted the guidanceupdate in the first quarter of 20192020 using the modified retrospective approach applied as of the period of adoption with a cumulative-effect adjustment to opening retained earnings and as such, prior periods have not been restated.modified-retrospective approach. Upon adoption, the Company (i) recognized operating lease right-of-use assets of $1.7 billion and lease liabilities of $1.9 billion, (ii) recorded a cumulative-effect adjustment of initially applying the update as a $1.0 million decrease to retained earnings of $3.1 million and (iii) recordedwith an offsetting decrease to other reclassification adjustments within its Consolidated Balance Sheet related to, among other things, deferred rent.

The effects ofassets. Otherwise, the adoption on the Company’s Consolidated Balance Sheet as of February 3, 2019 were as follows:
(In millions)As Reported 2/3/19 Adjustments Adjusted 2/3/19
Assets     
Prepaid expenses    $168.7
 $(21.3) $147.4
Operating Lease Right-of-Use Assets—
 1,708.2
 1,708.2
Other Assets400.9
 (10.3) 390.6
Liabilities    
Accrued expenses891.6
 (17.0) 874.6
Current portion of operating lease liabilities—
 350.5
 350.5
Long-Term Portion of Operating Lease Liabilities—
 1,514.1
 1,514.1
Other Liabilities1,322.4
 (167.9) 1,154.5
Stockholders’ Equity    
Retained earnings    4,350.1
 (3.1) 4,347.0

The Company also elected the package of practical expedients permitted under the transition guidance, which allows the Company not to reassess whether any existing contracts are or contain a lease, the lease classification for any existing leases, and the capitalization of initial direct costs for any existing leases, as of the adoption date. The Company’s accounting for finance leases (formerly called capital leases) remains substantially unchanged. The adoption of the guidancestandard did not have a material impact on the Company’s results of operations or cash flows. Please see Note 16, “Leases,” for additional disclosures required by the guidance.consolidated financial statements.

The FASB issued in AugustJanuary 2017 an update to accounting guidance to simplify the application of hedge accounting in certain situations and allow companies to better align their hedge accounting with their risk management activities.test for goodwill impairment. The update eliminates the requirement to separatelycalculate the implied fair value of goodwill to measure and report hedge ineffectiveness and requires companies to recognize all elementsthe amount of hedge accounting that impact earnings in the same income statement linegoodwill impairment
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charge, if any, under the second step of the goodwill impairment test. Under the update, the goodwill impairment charge would be measured as the hedged item.amount by which a reporting unit’s carrying amount exceeds its fair value. The update also simplifiesimpairment charge recognized, if any, should not exceed the requirements for hedge documentation and effectiveness assessments and amends the presentation and disclosure requirements.total amount of goodwill allocated to that reporting unit. The Company adopted this updateperformed an interim goodwill impairment assessment in accordance with the updated guidance in the first quarter of 2020. Please see Note 7, “Goodwill and Other Intangible Assets,” for further discussion.

Accounting Guidance Issued But Not Adopted as of May 3, 2020

The FASB issued in December 2019 an update to accounting guidance to simplify the accounting for income taxes by eliminating certain exceptions to the existing guidance and clarifying and amending certain guidance to reduce diversity in practice. The update eliminates certain exceptions to the guidance related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The update also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The update will be effective for the Company in the first quarter of 2021, with early adoption permitted. Most amendments in the update are required to be adopted using a modifiedprospective approach, while other amendments must be adopted using a modified-retrospective approach or retrospective approach, exceptapproach. The Company is currently evaluating the update to determine the impact of the adoption on the Company’s consolidated financial statements.

The FASB issued in March 2020 an update related to the effects of reference rate reform on financial reporting. The amendments in the update provide temporary optional expedients and exceptions for


applying generally accepted accounting principles to contract modifications, hedging relationships and other transactions affected by the presentationexpected market transition from LIBOR and disclosure guidance, which is beingother interbank offered rates to alternative reference rates if certain criteria are met. The amendments can be applied on a prospective basis as required.through December 31, 2022. The adoption of thisCompany is currently evaluating the update did not have anyto determine the impact on the Company’s consolidated financial statements.

The FASB issued in August 2018 an update to accounting guidance related to implementation costs incurred in a cloud computing arrangement that is a service contract. The update aligns the requirements for capitalizing implementation costs incurred under such arrangements with the requirements for capitalizing costs incurred to develop or obtain internal-use software. Under previous accounting guidance, the Company generally expensed the implementation costs incurred in connection with a cloud computing arrangement that is a service contract. The Company early adopted this update in the first quarter of 2019 using a prospective approach. As a result of the adoption, the Company capitalized $8.7 million of costs incurred in the thirty-nine weeks ended November 3, 2019 to implement cloud computing arrangements, primarily related to digital and consumer data platforms. Such costs were included in prepaid expenses and other assets in the Company’s Consolidated Balance Sheet. The Company expects to incur additional costs to implement cloud computing arrangements during the remainder of 2019 and expects the implementation costs capitalized in its Consolidated Balance Sheet will increase accordingly. 
23.21. OTHER COMMENTS

Wuxi Jinmao Foreign Trade Co., Ltd. (“Wuxi”), one of the Company’s finished goods inventory suppliers, has a wholly owned subsidiary with which the Company entered into a loan agreement in 2016. Under the agreement, Wuxi’s subsidiary borrowed a principal amount of $13.8 million for the development and operation of a fabric mill. Principal payments are due in semi-annual installments beginning March 31, 2018 through September 30, 2026. The outstanding principal balance of the loan bears interest at a rate of (i) 4.50% per annum until the sixth anniversary of the closing date of the loan and (ii) LIBOR plus 4.00% thereafter. The Company received no principal payments during the thirteen weeks ended May 3, 2020. The Company received principal payments of $0.4 million and $0.2 million during the thirty-ninethirteen weeks ended November 3, 2019 and November 4, 2018, respectively.May 5, 2019. The outstanding balance, including accrued interest, was $13.2 million, $13.8$13.4 million and $13.6$13.4 million as of NovemberMay 3, 2019,2020, February 3,2, 2020 and May 5, 2019, and November 4, 2018, respectively, and was included in other assets (current and non-current) in the Company’s Consolidated Balance Sheets.

The Company records warehousing and distribution expenses, which are subject to exchange rate fluctuations, as a component of SG&A expenses in its Consolidated Income Statements.Statements of Operations. Warehousing and distribution expenses incurred in the thirteen and thirty-nine weeks ended NovemberMay 3, 2020 and May 5, 2019 totaled $91.0$79.6 million and $250.3$77.1 million, respectively. Warehousingrespectively, and distribution expenses incurredincluded costs of $6.8 million in the thirteen and thirty-nine weeks ended November 4, 2018 totaled $73.0May 3, 2020 related to the consolidation within the Company’s warehouse and distribution network in North America.

The Company is exposed to credit losses primarily through trade receivables from its customers and licensees. The Company records an allowance for credit losses as a reduction to its trade receivables for amounts that the Company does not expect to recover. The allowance for credit losses is determined through an analysis of the aging of accounts receivable and assessments of collectibility based on historic trends, the financial condition of the Company’s customers and licensees, including any known or anticipated bankruptcies, and an evaluation of current economic conditions as well as the Company’s expectations of conditions in the future. The Company writes off uncollectible trade receivables once collection efforts have been exhausted and third parties confirm the balance is not recoverable. As of May 3, 2020 and February 2, 2020, the allowance for credit losses on trade receivables was $54.0 million and $211.6$21.1 million, respectively. The $32.9 million increase in the allowance was primarily due to the evaluation of certain customer and licensee account balances in connection with changes in their financial condition and/or developments regarding their credit, including the adverse impacts of the COVID-19 pandemic.




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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


We aggregate our reporting segments into three main businesses: (i) Tommy Hilfiger, which consists of the businesses we operate under our TOMMY HILFIGER trademarks; (ii) Calvin Klein, which consists of the businesses we operate under our CALVIN KLEIN trademarks; and (iii) Heritage Brands, which consists of the businesses we operate under our Van Heusen, IZOD, ARROW, Warner’s, Olga, True&Co. and Geoffrey Beene trademarks, the Speedo trademark, which we license in perpetuitylicensed for North America and the Caribbean until April 6, 2020, and other owned and licensed trademarks. References to the brand names TOMMY HILFIGER, CALVIN KLEIN, Van Heusen, IZOD, ARROW, Warner’s, Olga, True&Co., Geoffrey Beene and Speedo and to other brand names are to registered and common law trademarks owned by us or licensed to us by third parties and are identified by italicizing the brand name.


OVERVIEW

The following discussion and analysis is intended to help you understand us, our operations and our financial performance. It should be read in conjunction with our consolidated financial statements and the accompanying notes, which are included in the immediately preceding item of this report.

We are one of the largest brandedglobal apparel companies in the world withand, in March 2020, we marked our 100-year anniversary as a history going back over 135 years. Ourlisted company on the New York Stock Exchange. We manage a diversified brand portfolio, consists of nationally and internationally recognized trademarks, including TOMMYHILFIGER, CALVINKLEIN, Van Heusen, IZOD, ARROW, Warner’s, Olga, True&Co. , andIZOD Geoffrey Beene, ARROW,. We had a perpetual license for Speedo (licensed in perpetuity for North America and the Caribbean from Speedo International Limited), Warner’s, Olga, True&Co. and Geoffrey Beene.until April 6, 2020. Our brand portfolio also consists of various other owned, licensed and, to a lesser extent, private label brands.

Our business strategy is to position our brands to sell globally at various price points and in multiple channels of distribution. This enables us to offer products to a broad range of consumers, while minimizing competition among our brands and reducing our reliance on any one demographic group, product category, price point, distribution channel or region. We also license the use of our trademarks to third parties and joint ventures for product categories and in regions where we believe our licensees’ expertise can better serve our brands.

Our revenue was $9.657$9.9 billion in 2018,2019, of which over 50% was generated outside of the United States. Our global designer lifestyle brands, TOMMYHILFIGER and CALVINKLEIN, together generated over 80%approximately 85% of our revenue.

RESULTS OF OPERATIONS OVERVIEW

COVID-19 Pandemic Update

The COVID-19 pandemic has had, and is expected to continue to have, a significant adverse impact on our business, financial condition, cash flows and results of operations in 2020.

Virtually all of our retail stores were temporarily closed for varying periods of time throughout the first quarter of 2020 as a result of the pandemic. Stores were closed for six weeks on average during the first quarter, with some stores beginning to reopen starting early in the second quarter. Approximately 85% of our retail stores globally have reopened as of the date of this report, although most are operating on reduced hours and occupancy levels. Our brick and mortar wholesale customers and licensing partners also experienced significant business disruptions as a result of the pandemic, resulting in a decrease in our revenue from these channels. Most of our brick and mortar wholesale customers have reopened the majority of their locations across all regions as of the date of this report. However, due to the significant levels of inventory that remain in their stores, the majority of our North American and European brick and mortar wholesale customers have stopped accepting shipments beginning in March, which has not materially improved into the second quarter.

In addition, COVID-19 has also impacted some of our suppliers, including third-party manufacturers, logistics providers and other vendors. With some of our partners operating at reduced capacity, we continue to monitor for any potential delays or disruptions in our supply chain and will implement mitigation plans if needed.

We have taken the following actions, which are ongoing, to reduce our operating expenses in response to COVID-19: (i) reducing payroll costs, including salary and incentive compensation reductions, furloughs, decreased working hours, and hiring freezes, as well as taking advantage of applicable government relief programs, and (ii) eliminating or reducing other discretionary and variable operating expenses, including marketing, travel, consulting services, and creative and design costs.
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We have also taken actions to preserve liquidity and strengthen our financial flexibility. Please see the section entitled “Liquidity and Capital Resources” below for further discussion.

COVID-19 resulted in an unprecedented decline in our revenue and earnings during the first quarter of 2020, including $962 million of pre-tax noncash impairment charges, primarily related to goodwill, as well as increases in our inventory and accounts receivable reserves of $59 million and $33 million, respectively.

While there is significant uncertainty as to the duration and extent of the impact of the COVID-19 pandemic, we expect the pandemic will continue to have a significant negative impact on our revenue and net income for the remainder of 2020. Even as government restrictions are lifted and retail stores reopen, the ongoing economic impacts and health concerns associated with the pandemic may continue to affect consumer behavior, spending levels, shopping preferences and tourism and could result in reduced traffic and consumer spending trends that adversely impact our financial position and results of operations.

Operations Overview

We generate net sales from (i) the wholesale distribution to retailers, franchisees, licensees and distributors of dress shirts, neckwear, sportswear (casual apparel), jeanswear, performance apparel, intimate apparel, underwear, swim products,swimwear, handbags, accessories, footwear and other related products under owned and licensed trademarks, including through digital commerce sites operated by our wholesale partners and pure play digital commerce retailers, and (ii) the sale of certain of these products through (a) approximately 1,8351,820 Company-operated freestandingfree-standing retail store locations worldwide under our TOMMY HILFIGER, CALVIN KLEIN HILFIGER, CALVINKLEINand certain of our heritage brands trademarks, (b) approximately 1,500 Company-operated shop-in-shop/concession locations worldwide under our TOMMY HILFIGERand and CALVIN KLEIN trademarks, and (c) digital commerce sites in over 30 countries under each of our TOMMY HILFIGERand and CALVIN KLEINtrademarks and in the United States through our SpeedoUSA.com, TrueAndCo.com, VanHeusen.com, IZOD.com and styleBureau.comdirectly operated digital commerce sites.sites for True&Co., Van Heusen, IZOD, and until April 6, 2020, Speedo. Additionally, we generate royalty, advertising and other revenue from fees for licensing the use of our trademarks. We manage our operations through our operating divisions, which are presented as six reportable segments: (i) Tommy Hilfiger North America; (ii) Tommy Hilfiger International; (iii) Calvin Klein North America; (iv) Calvin Klein International; (v) Heritage Brands Wholesale; and (vi) Heritage Brands Retail.



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We have entered into the following transactions, which impact our results of operations and comparability among the periods, including our full year 20192020 expectations as compared to full year 2018,2019, as discussed in the section entitled “Results of Operations” below:

•We entered into a definitive agreement on January 9, 2020 to sell our Speedo North America business to Pentland Group PLC (“Pentland”), the parent company of the Speedo brand, and completed the sale of the business on April 6, 2020 for net proceeds of $169 million, subject to a final adjustment based on the terms of the agreement (the “Speedo transaction”). Upon the closing of the transaction, we deconsolidated the net assets of the Speedo North America business. We recorded a pre-tax noncash loss of $142 million in the fourth quarter of 2019 in connection with the pending Speedo transaction consisting of (i) a noncash impairment of our perpetual license right for the Speedo trademark and (ii) a noncash loss to reduce the carrying value of the business to its estimated fair value, less costs to sell. We recorded an additional net pre-tax noncash loss of $3 million in the first quarter of 2020 upon closing of the transaction. Please see Note 4, “Acquisitions and Divestitures,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

•We entered into agreements on July 3, 2019 to terminate early the licenses for the global Calvin Klein and Tommy Hilfiger North America socks and hosiery businesses (the “Socks and Hosiery transaction”) in conjunction with our planorder to consolidate the socks and hosiery businesses for all of our brands in the United States and Canada in a newly formed joint venture, PVH Legwear LLC (“PVH Legwear”), in which we own a 49% economic interest, and to bring in-house the international Calvin Klein socks and hosiery wholesale businesses. PVH Legwear began operationswas formed with a wholly owned subsidiary of our former Heritage Brands socks and hosiery licensee, and has licensed from us since December 2019 the rights to distribute and sell TOMMY HILFIGER, CALVIN KLEIN, IZOD, Van Heusen and Warner’s socks and hosiery in December 2019.the United States and Canada. We recorded a pre-tax charge of $60 million in the thirty-nine weeks ended November 3,during 2019 in connection with these agreements.

•
We announced on June 3, 2019 that we and G-III Apparel Group, Ltd. (“G-III”) had entered into a license agreement for the design, production and wholesale distribution
•We completed two acquisitions in the second quarter of 2019. The first acquisition, which closed on May 31, 2019, was to acquire the approximately 78% interest in Gazal Corporation Limited (“Gazal”) that we did not already own (the “Australia acquisition”). Prior to the closing, we, along with Gazal, jointly owned and managed a joint venture, PVH Brands Australia Pty. Limited (“PVH Australia”), which licensed and operated businesses under the TOMMY HILFIGER, CALVIN KLEIN and Van Heusen brands, along with other licensed and owned brands. PVH Australia came under our full control as a result of the acquisition and we now operate directly those businesses. The aggregate net purchase price for the shares acquired was $59 million, net of cash acquired and after taking into account the proceeds from the divestiture to a third party of an office building and warehouse owned by Gazal in June 2019. The second was our acquisition on July 1, 2019 of the Tommy Hilfiger retail business in Central and Southeast Asia from our previous licensee in that market (the “TH CSAP acquisition”) for $74 million, as a result of which we now operate directly the Tommy Hilfiger retail business in the Central and Southeast Asia market. Please see Note 4, “Acquisitions and Divestitures,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

CALVIN KLEIN JEANS women’s jeanswear collections in the United States and Canada (the “G-III license”), which resulted in the discontinuation of our directly operated Calvin Klein North America women’s jeanswear wholesale business in 2019.

•
We completed two acquisitions in the second quarter of 2019. The first acquisition, which closed on May 31, 2019, was to acquire the approximately 78% interest in Gazal Corporation Limited (“Gazal”) that we did not already own (the “Australia acquisition”). Prior to the closing, we, along with Gazal, jointly owned and managed a joint venture, PVH Brands Australia Pty. Limited (“PVH Australia”), which licensed and operated businesses under the TOMMY HILFIGER, CALVIN KLEIN and Van Heusen brands, along with other licensed and owned brands. PVH Australia came under our full control as a result of the acquisition. The aggregate net purchase price for the shares acquired was $59 million, net of cash acquired and after taking into account the proceeds from the divestiture to a third party of an office building and warehouse owned by Gazal in June 2019. The second was our acquisition on July 1, 2019 of the Tommy Hilfiger retail business in Central and Southeast Asia from our previous licensee in that market (the “TH CSAP acquisition”) for $74 million. Please see Note 4, “Acquisitions” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

In connection with the Australia and TH CSAP acquisitions, we recorded an aggregate net pre-tax gain of $95$83 million in the thirty-nine weeks ended November 3,during 2019, including (i) a noncash gain of $113 million to write up our existing equity investments in Gazal and PVH Australia to fair value, partially offset by (ii) $15$21 million of pre-tax costs, primarily consisting of noncash valuation adjustments and one-time expenses recorded on our equity investments in Gazal and PVH Australia prior to the Australia acquisition closing, and (iii) a $3$9 million expense recorded in interest expense, net resulting from the remeasurement of our mandatorily redeemable non-controlling interest that was recognized in connection with the Australia acquisition. We expect to incur additionalrecorded pre-tax expensesincome of approximately $10 million during the remainder of 2019, including (i) $6 million of costs, primarily consisting of noncash valuation adjustments, and (ii) a $4 million expense to be recordedin the first quarter of 2020 in interest expense, net resulting from the remeasurement of ourthe mandatorily redeemable non-controlling interest that was recognized in connection with the Australia acquisition.

•We refinancedentered into a licensing agreement on April 29,May 30, 2019 with G-III Apparel Group, Ltd. (“G-III”) for the design, production and wholesale distribution of CALVIN KLEIN JEANS women’s jeanswear collections in the United States and Canada (the “G-III license”), which resulted in the discontinuation of our senior credit facilities and recorded pre-tax debt modification and extinguishment charges of $5 million. Please see the section entitled “Liquidity and Capital Resources” below for further discussion.directly operated Calvin Klein North America women’s jeanswear wholesale business in 2019.

•
•We closed our TOMMY HILFIGER flagship and anchor stores in the United States (the “TH U.S. store closures”) in the first quarter of 2019 and recorded pre-tax costs of $55 million, primarily consisting of noncash lease asset impairments. Please see Note 12, “Fair Value Measurements,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion of the noncash lease asset impairments.

•
We announced on January 10, 2019 a restructuring in connection with strategic changes for ourCalvin Klein business (the “Calvin Klein restructuring”). The strategic changes included (i) the closure of the CALVIN KLEIN 205 W39 NYC brand (formerly Calvin Klein Collection), (ii) the closure of the flagship store on Madison Avenue in New York, New York (collectively with (i), the “CK Collection closure”), (iii) the restructuring of the Calvin Klein creative and design teams globally, and (iv) the consolidation of operations for the men’s Calvin Klein Sportswear and Calvin Klein Jeans businesses. We recorded pre-tax costs of $41 million in the fourth quarter of 2018 in connection with the Calvin Klein restructuring. We recorded pre-tax costs of $103 million in the thirty-nine weeks ended November 3, 2019, consisting of a $30 million noncash lease asset impairment resulting from the closure of the flagship store on Madison Avenue in New York, New York, $26 million of contract termination and other costs, $26 million of severance, $9 million of other noncash asset impairments and $13 million of inventory markdowns. We expect to incur additional pre-tax costs


of approximately $2 million during the remainder of 2019 in connection with the Calvin Klein restructuring. Please see Note 17, “Exit Activity Costs,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.discussion of the noncash lease asset impairments.

•
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•We announced on January 10, 2019 a restructuring in connection with strategic changes for our Calvin Klein business (the “Calvin Klein restructuring”). The strategic changes included (i) the closure of the CALVIN KLEIN 205 W39 NYC brand (formerly Calvin Klein Collection), (ii) the closure of the flagship store on Madison Avenue in New York, New York, (iii) the restructuring of the Calvin Klein creative and design teams globally, and (iv) the consolidation of operations for the men’s Calvin Klein Sportswear and Calvin Klein Jeans businesses. All costs related to this restructuring were incurred by the end of 2019. We recorded pre-tax costs of $103 million during 2019 in connection with the Calvin Klein restructuring, consisting of a $30 million noncash lease asset impairment resulting from the closure of the flagship store on Madison Avenue in New York, New York, $26 million of contract termination and other costs, $26 million of severance, $9 million of other noncash asset impairments and $13 million of inventory markdowns, of which $70 million was incurred in the first quarter of 2019.

We acquired on April 20, 2018 the Geoffrey Beene tradename from Geoffrey Beene, LLC (“Geoffrey Beene”) for $17 million, of which $16 million was paid in cash. Prior to the acquisition, we had licensed the rights to design, market and distribute Geoffrey Beene dress shirts and neckwear from Geoffrey Beene.

•
We acquired on April 13, 2016 the 55% interest in our former joint venture for TOMMY HILFIGER in China that we did not already own (the “TH China acquisition”). We recorded pre-tax charges of $24 million in 2018, of which $20 million was incurred during the thirty-nine weeks ended November 4, 2018, consisting of noncash amortization of short-lived assets.

Our Tommy Hilfiger and Calvin Klein businesses each have substantial international components that expose us to significant foreign exchange risk. Our Heritage Brands business also has international components but those components are not significant to the business. Our results of operations in local foreign currencies are translated into United States dollars using an average exchange rate over the representative period. Accordingly, our results of operations arerevenue is unfavorably impacted during times of a strengthening United States dollar against the foreign currencies in which we generate significant revenue and favorably impacted during times of a weakening United States dollar against those currencies. Our earnings are similarly affected by foreign currency translation in periods that we generate income; however, in periods that we generate losses, as is currently expected in 2020, our results will be favorably impacted during times of a strengthening United States dollar against the foreign currencies in which we generate losses and favorablyunfavorably impacted during times of a weakening United States dollar against those currencies. Over 50% of our $9.657 billion of2019 revenue in 2018 was subject to foreign currency translation. Based on currentThe United States dollar strengthened against most major currencies in the latter part of 2018 and in 2019, particularly the euro, which is the foreign currency exchange rates,in which we transact the most business. We currently expect foreign currency translation to have a decreaseslight negative impact on our revenue in revenue of approximately $220 million and a decrease in net income of approximately $25 million in 20192020 as compared to 2018 due to the impact of foreign currency translation.2019.

There is also a transactional impact on our financial results because inventory typically is purchased in United States dollars by our foreign subsidiaries. As with translation, ourOur results of operations willwill be unfavorably impacted during times of a strengthening United States dollar, as the increased local currency value of inventory results in a higher cost of goods in local currency when the goods are sold, and favorably impacted during times of a weakening United States dollar, as the decreased local currency value of inventory results in a lower cost of goods in local currency when the goods are sold. We use foreign currency forward exchange contracts to hedge against a portion of the exposure related to this transactional impact. The contracts cover at least 70% of the projected inventory purchases in United States dollars by our foreign subsidiaries. These contracts are generally entered into 12 months in advance of the related inventory purchases. Therefore, the impact of fluctuations of the United States dollar on the cost of inventory purchases covered by these contracts may be realized in our results of operations in the year following their inception, as the underlying inventory hedged by the contracts is sold. The strengthening of the United States dollar against most major currencies in the latter part of 2018 and in 2019, particularly the euro, is expected to negatively impact our gross margin during 2020. Additionally, there is a transactional impact related to changes in selling, general and administrative (“SG&A”) expenses as a result of fluctuations in foreign currency exchange rates. Based on current foreign currency exchange rates, weWe currently expect a slight benefit tonegative transactional impact on our net income in 20192020 as compared to 2018 due to the transactional impact.2019.

Further, we have exposure to changes in foreign currency exchange rates related to our €950€1,125 million aggregate principal amount of euro-denominated senior notes asthat are held in the United States. The strengthening of the United States dollar against the euro would require us to use a lower amount of our cash flows from operations to pay interest and make long-term debt repayments, whereas the weakening of the United States dollar against the euro would require us to use a greater amount of our cash flows from operations to pay interest and make long-term debt repayments. We designated the carrying amount of these euro-denominated senior notes that we had issued in the United Statesby PVH Corp., a U.S.-based entity, as net investment hedges of our investments in certain of our foreign subsidiaries that use the euro as their functional currency. As a result, the remeasurement of these foreign currency borrowings at the end of each period is recorded in equity.

Retail comparable store sales discussed below refer to sales from Company-operated retail stores that have been open and operated by us for at least 12 months, as well as sales from Company-operated digital commerce sites for those businesses and regions that have operated the related digital commerce site for at least 12 months. Sales from retail stores and Company-operated digital commerce sites that are closed or shut down during the year are excluded from the calculation of retail comparable store sales. Sales for retail stores that are relocated, materially altered in size or closed for a certain numberprolonged period of consecutive daystime and sales from Company-operated digital commerce sites that are materially altered are also excluded from the calculation of retail comparable store sales until such stores or sites have been in their new location or in their newly renovated state, as applicable, for at least 12 months. Retail comparable store sales are based on local currencies and comparable weeks. Due to the extensive store closures resulting from the COVID-19 pandemic, retail comparable store sales are not reported for the first quarter of 2020, as we do not believe this metric is currently meaningful.
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SEASONALITY

OurAbsent the effects of the COVID-19 global pandemic, our business generally follows a seasonal pattern. Our wholesale businesses tend to generate higher levels of sales in the first and third quarters, while our retail businesses tend to generate higher levels of sales in the fourth quarter. Royalty, advertising and other revenue tends to be earned somewhat evenly throughout the year, although the third quarter has the highest level of royalty revenue due to higher sales by licensees in advance of the holiday selling season. We expect this seasonal pattern will


generally continue. Working capital requirements vary throughout the year to support these seasonal patterns and business trends.

Due to the above seasonal factors, as well as the COVID-19 pandemic, our results of operations for the thirty-ninethirteen weeks ended NovemberMay 3, 20192020 are not necessarily indicative of those for a full fiscal year.

RESULTS OF OPERATIONS

Thirteen Weeks Ended NovemberMay 3, 20192020 Compared With Thirteen Weeks Ended November 4, 2018May 5, 2019

Total Revenue

Total revenue in the thirdfirst quarter of 20192020 was $2.588$1.344 billion as compared to $2.525$2.356 billion in the thirdfirst quarter of the prior year. The increasedecrease in revenue of $63 million,$1.012 billion, or 3%43%, was due principally to the netimpact of the COVID-19 pandemic on our business and included the aggregate effect of the following items:

•
The net addition of an aggregate $111 million of revenue, or a 10% increase over the prior year period, attributable to our Tommy Hilfiger International and Tommy Hilfiger North America segments, which included a negative impact of $29 million,or 3%, related to foreign currency translation. Tommy Hilfiger International segment revenue increased 16% (including a 4% negative foreign currency impact), primarily driven by continued outperformance in Europe and the addition of revenue resulting from the Australia and TH CSAP acquisitions. Tommy Hilfiger International comparable store sales increased 8%. Revenue in our Tommy Hilfiger North America segment was flat, as growth in the North America wholesale business was offset by a 5% decline in North America comparable store sales due to continued weakness in traffic and consumer spending trends, especially in stores located in international tourist locations.

•The net additionreduction of an aggregate $6$406 million of revenue, or a 39% decrease over the prior year period, attributable to our Tommy Hilfiger International and Tommy Hilfiger North America segments, which included a negative impact of 1% increaserelated to foreign currency translation. Tommy Hilfiger International segment revenue decreased 32% (including a 2% negative foreign currency impact). Revenue in our Tommy Hilfiger North America segment decreased 51%.

•The reduction of an aggregate $413 million of revenue, or 46% decrease over the prior year period, attributable to our Calvin Klein International and Calvin Klein North America segments, which included a negative impact of $19 million, or 2%,1% related to foreign currency translation. Calvin Klein International segment revenue increased 7%decreased 40% (including a 4%2% negative foreign currency translation impact), driven by continued solid growth in Europe and the addition of revenue resulting from the Australia acquisition. These increases were partially offset by softness in Asia due, in part, to the business disruptions caused by ongoing protests in Hong Kong and the trade tensions between the United States and China. Calvin Klein International comparable store sales decreased 2%. Revenue in our Calvin Klein North America segment decreased 5% principally due to a decrease in the wholesale business, including the effect of the G-III license, and a 4% decline in North America comparable store sales due to continued weakness in traffic and consumer spending trends, especially in stores located in international tourist locations.54%.

•The reduction of an aggregate $54$194 million of revenue, or a 13%47% decrease compared to the prior year period, attributable to our Heritage Brands Retail and Heritage Brands Wholesale segments,segments.

Our revenue in the first quarter of 2020 reflected a 47% increase in sales through our directly operated digital commerce businesses driven by strong growth across all regions, which partially offset the decline in revenue through our other distribution channels.

There is significant uncertainty with respect to the impact for 2020 of the COVID-19 pandemic on our business and the
businesses of our licensees and other business partners. We currently expect that revenue will decrease significantly in the second quarter and full year 2020 compared to 2019, inclusive of a negative impact related to foreign currency translation, primarily due to weaknessthe negative impacts to our businesses caused by the COVID-19 pandemic. Revenue for the full year 2020 is also expected to decrease by approximately $200 million due to the aggregate net effect of reductions resulting from (i) the Speedo transaction, which closed on April 6, 2020, and (ii) the G-III license, which commenced in 2019, partially offset by an addition of revenue resulting from (iii) the Australia and TH CSAP acquisitions, which closed in the North America wholesale business and a 2% decline in comparable store sales.second quarter of 2019.

Gross Profit

Gross profit is calculated as total revenue less cost of goods sold and gross margin is calculated as gross profit divided by total revenue. Included as cost of goods sold are costs associated with the production and procurement of product, such as inbound freight costs, purchasing and receiving costs and inspection costs. Also included as cost of goods sold are the amounts recognized on foreign currency forward exchange contracts as the underlying inventory hedged by such forward exchange contracts is sold. Warehousing and distribution expenses are included in SG&A expenses. All of our royalty, advertising and other revenue is included in gross profit because there is no cost of goods sold associated with such revenue. As a result, our gross profit may not be comparable to that of other entities.

Gross profit in the thirdfirst quarter of 20192020 was $1.406 billion,$666 million, or 54.3%49.5% of total revenue, as compared to $1.365$1.296 billion, or 54.1%55.0% of total revenue, in the thirdfirst quarter of the prior year. The 20550 basis point increase in gross margin decrease was primarily driven by faster growth(i) additional inventory reserves recorded as a result of the COVID-19 pandemic and (ii) the unfavorable impact of the stronger
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United States dollar on our international businesses that purchase inventory in United States dollars, particularly our Tommy Hilfiger InternationalEuropean businesses, as the increased local currency value of inventory resulted in higher cost of goods in local currency when the goods were sold.

There is significant uncertainty with respect to the impact for 2020 of the COVID-19 pandemic on our business and Calvin Klein International segments than inthe businesses of our North America segments, as our International segments generally carry higher gross margins,licensees and other business partners. We currently expect that gross margin improvements realized in our Calvin Klein North America business. These increases were partially offset by a gross margin decline in our Tommy Hilfiger North America retail business, principally due to more promotional sellingfor the full year 2020 will decrease as compared to 2019 primarily due to (i) the third quarterneed for increased promotional selling, inventory liquidation and additional inventory reserves as a result of the prior year,COVID-19 pandemic and short-lived noncash(ii) the unfavorable impact of the stronger United States dollar on our international businesses that purchase inventory valuation adjustments recorded in connection withUnited States dollars, particularly our European businesses, as the Australia and TH CSAP acquisitions.increased local currency value of inventory results in higher cost of goods in local currency when the goods are sold.






SG&A Expenses

SG&A expenses in the thirdfirst quarter of 20192020 were $1.142 billion,$940 million, or 44.1%70.0% of total revenue, as compared to $1.091$1.161 billion, or 43.2%49.3% of total revenue, in the thirdfirst quarter of the prior year. The 90 basis pointsignificant increase in SG&A expenses as a percentage of total revenue was principally attributable to (i) a change in the mix of business due to faster growth in our Tommy Hilfiger International and Calvin Klein International segments than in our North America segments, as our International segments generally carry higher SG&A expenses as percentages of total revenue, (ii) a deleveraging of expenses driven by the significant decline in revenue resulting from the COVID-19 pandemic, including as a result of payroll costs incurred for certain retail associates who received full pay and benefits for certain periods while our North America businesses,retail stores were temporarily closed, (ii) the pre-tax noncash impairments of our store assets resulting from the impact of the pandemic on our business and (iii) additional accounts receivable reserves recorded as a result of the pandemic. These increases were partially offset by (i) a reduction in expenses as a result of the cost savings initiatives we implemented in April 2020, including temporary furloughs, salary and incentive compensation reductions, government relief and lower discretionary spending, and (ii) the absence in 2020 of costs incurredthat were recorded in the first quarter of 2019 in connection with the Calvin Klein restructuring and the AustraliaTH U.S. store closures.

In light of the negative impacts on our business resulting from the COVID-19 pandemic, we are taking measures to significantly reduce SG&A expenses in 2020, including the cost savings initiatives we implemented in April 2020. As such, we currently expect our SG&A expenses for the full year 2020 will be significantly lower as compared to 2019, including as a result of the reduction in expenses resulting from these measures and TH CSAP acquisitions. These increases were offset slightly by the absence in 20192020 of costs that were recorded inrelated to (i) the third quarter of 2018 in connection withCalvin Klein restructuring, (ii) the Socks and Hosiery transaction and (iii) the TH China acquisition, consistingU.S. store closures. However, we expect our SG&A expenses as a percentage of noncash amortization of short-lived assets.
Non-Service Related Pension and Postretirement Income

Non-service related pension and postretirement income intotal revenue for the third quarter of 2019 was $2 millionfull year 2020 will significantly increase as compared to $3 million in the third quarter of the prior year.

Equity in Net Income of Unconsolidated Affiliates

The equity in net income of unconsolidated affiliates was $3 million in the third quarter of 2019 as compared to $6 million in the third quarter of the prior year. These amounts relate to our share of income (loss) from our joint venture for the TOMMY HILFIGER and CALVIN KLEIN brands and certain of our heritage brands in Mexico (“PVH Mexico”), our joint ventures for the TOMMY HILFIGER brand in India and Brazil, our joint venture for the CALVIN KLEIN brand in India, and our newly formed PVH Legwear joint venture. Also included is our share of income (loss) from our investment in Karl Lagerfeld Holding B.V. (“Karl Lagerfeld”). Included in the third quarter of the prior year was our share of income from our PVH Australia joint venture and our investment in Gazal, as we completed the Australia acquisition in the second quarter of 2019. Our investments in the continuing joint ventures and Karl Lagerfeld are being accounted for under the equity method of accounting. Please see the section entitled “Investments in Unconsolidated Affiliates” within “Liquidity and Capital Resources” below for further discussion.

Interest Expense, Net

Net interest expense decreased to $28 million in the third quarter of 2019 from $29 million in the third quarter of the prior year. Included in net interest expense in the third quarter of 2019 is an expense of $3 million resulting from the remeasurement of our mandatorily redeemable non-controlling interest that was recognized in connection with the Australia acquisition.

Income Taxes

The effective income tax rate for the third quarter of 2019 was 13.6% compared to 4.1% in the third quarter of the prior year.

Our effective income tax rate for the third quarter of 2019 was lower than the United States statutory income tax rate primarily due to (i) a deleveraging of expenses driven by the benefit of certain discrete items, including the favorable impact on certain liabilities for uncertain tax positionsexpected decline in revenue resulting from the expiration of applicable statutes of limitation, which resulted in a benefit to our effective tax rate of 13.7%, partially offset byCOVID-19 pandemic, (ii) the tax on foreign earnings in excesspre-tax noncash impairments of a deemed return on tangibleour store assets of foreign corporations (known as “GILTI”) imposed by the United States Tax Cuts and Jobs Act of 2017 (the “U.S. Tax Legislation”), which more than offset the benefit of overall lower tax rates in certain jurisdictions where we file tax returns.

Our effective income tax rate for the third quarter of 2018 was lower than the United States statutory income tax rate primarily due to (i) the benefit of certain discrete items, including the favorable impact on certain liabilities for uncertain tax positions resulting from the expirationimpact of applicable statutesthe pandemic on our business, and (iii) the additional accounts receivable reserves recorded as a result of limitation, whichthe pandemic. There is significant uncertainty with respect to the impact of the COVID-19 pandemic on our business and our SG&A expenses may be subject to significant material change.

Goodwill and Other Intangible Assets Impairment

We recorded pre-tax noncash impairment charges of $933 million in the first quarter of 2020 resulting from the impact of the COVID-19 pandemic on our business, including $879 million related to goodwill and $54 million related to other intangible assets, primarily our ARROW and GeoffreyBeene tradenames. The impairments resulted in a benefit to our effective tax rate of 16.6%, and (ii) the benefit of overall lower tax rates in certain international jurisdictions where we file tax returns.

We file income tax returns in more than 40 international jurisdictions each year. A substantial amountfrom interim impairment assessments of our earnings are in international jurisdictions, particularly the Netherlandsgoodwill and Hong Kong, where income tax rates, coupled with special rates levied on income from certain of our jurisdictional activities, are lower than the United States statutory income tax rate.





Redeemable Non-Controlling Interest

We have a joint venture in Ethiopia with Arvind Limited named PVH Manufacturing Private Limited Company (“PVH Ethiopia”) inother intangible assets, which we own a 75% interest. We consolidatewere required to perform in the first quarter of 2020 due to the adverse impact of the pandemic on our current and estimated future business results of PVH Ethiopiaand cash flows, as well as the significant decrease in our consolidated financial statements. PVH Ethiopia was formed to operatemarket capitalization as a manufacturing facility that produces finished products for us for distribution primarilyresult of a sustained decline in the United States.

The net loss attributable to the redeemable non-controlling interest (“RNCI”) in PVH Ethiopia was immaterial in the third quarters of 2019 and 2018.our common stock price. Please see Note 5, “Redeemable Non-Controlling Interest,7, “Goodwill and Other Intangible Assets,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

Thirty-Nine Weeks Ended November 3, 2019 Compared With Thirty-Nine Weeks Ended November 4, 2018

Total Revenue

Total revenue in the thirty-nine weeks ended November 3, 2019 was $7.308 billion as compared to $7.173 billion in the thirty-nine week period of the prior year. The increase in revenue of $135 million, or 2%, was due to the net effect of the following items:

The net addition of an aggregate $229 million of revenue, or a 7% increase over the prior year period, attributable to our Tommy Hilfiger International and Tommy Hilfiger North America segments, which included a negative impact of $112 million, or 4%, related to foreign currency translation. Tommy Hilfiger International segment revenue increased 12% (including a 6% negative foreign currency impact), driven principally by outperformance in Europe and the addition of revenue resulting from the Australia acquisition. Tommy Hilfiger International comparable store sales increased 9%. Revenue in the Tommy Hilfiger North America segment decreased 1%, driven by a 6% decline in Tommy Hilfiger North America comparable store sales due to continued weakness in traffic and consumer spending trends, especially in stores located in international tourist locations, partially offset by growth in the North America wholesale business.

The net reduction of an aggregate $46 million of revenue, or a 2% decrease compared to the prior year period, attributable to our Calvin Klein International and Calvin Klein North America segments, which included a negative impact of $73 million, or 3%, related to foreign currency translation. Calvin Klein International segment revenue increased 2% (including a 5% negative foreign currency impact), as continued solid growth in Europe and the addition of revenue resulting from the Australia acquisition were partly offset by the negative impacts of (i) softness experienced in Asia due, in part, to the business disruptions caused by the ongoing protests in Hong Kong and the trade tensions between the United States and China and (ii) the reduction of revenue resulting from the CK Collection closure. Calvin Klein International comparable store sales decreased 2%. Revenue in the Calvin Klein North America segment decreased 5%, driven by a 4% decrease in Calvin Klein North America comparable store sales due to continued weakness in traffic and consumer spending trends, especially in stores located in international tourist locations, and the effect of the G-III license.

The decrease of an aggregate $47 million of revenue, or a 4% decrease compared to the prior year period, attributable to our Heritage Brands Retail and Heritage Brands Wholesale segments, primarily due to weakness in the North America wholesale business and a 3% decline in comparable store sales.

We currently expect that full year revenue will increase approximately 1% in 2019 compared to 2018, inclusive of a negative impact of approximately 3% related to foreign currency translation. Revenue for the Tommy Hilfiger business is expected to increase approximately 6% compared to 2018, inclusive of a negative impact of approximately 3% related to foreign currency translation. Revenue for the Calvin Klein business is expected to decrease approximately 2% compared to 2018, inclusive of a negative impact of approximately 2% related to foreign currency translation. Revenue for the Heritage Brands business is expected to decrease approximately 3% compared to 2018. Our 2019 guidance reflects the addition of revenue resulting from the Australia and TH CSAP acquisitions that closed in the second quarter of 2019, and the impact of the CK Collection closure and the G-III license.

Gross Profit

Gross profit in the thirty-nine weeks ended November 3, 2019 was $3.990 billion, or 54.6% of total revenue, as compared to $3.953 billion, or 55.1% of total revenue, in the thirty-nine week period of the prior year. The 50 basis point decrease in gross margin was principally driven by a gross margin decline in our Tommy Hilfiger North America business due to more


promotional selling as compared to the prior year period, as well as inventory markdowns recorded in connection with the Calvin Klein restructuring and short-lived noncash inventory valuation adjustments recorded in connection with the Australia and TH CSAP acquisitions. These decreases were partially offset by the favorable impact of faster growth in our Tommy Hilfiger International and Calvin Klein International segments than in our North America segments, as our International segments generally carry higher gross margins, as well as gross margin improvements realized in our Calvin Klein North America business.

We currently expect that gross margin for the fourth quarter of 2019 will increase as compared to 2018 primarily due to gross margin improvements in our Calvin Klein business, partially offset by a gross margin decline in our Tommy Hilfiger North America business. We currently expect that gross margin for the full year 2019 will decrease slightly as compared to 2018 primarily due to (i) an expected gross margin decline in our Tommy Hilfiger North America business, (ii) an expected negative impact of tariffs imposed and expected to be imposed on goods imported from China into the United States, and (iii) short-lived noncash inventory valuation adjustments incurred and expected to be incurred in connection with the Australia and TH CSAP acquisitions. These decreases are expected to be largely offset by the impact of expected faster growth in our Tommy Hilfiger International and Calvin Klein International segments than in our North America segments, as our International segments generally carry higher gross margins, and gross margin improvements in our Calvin Klein business.

SG&A Expenses

SG&A expenses in the thirty-nine weeks ended November 3, 2019 were $3.458 billion, or 47.3% of total revenue, as compared to $3.216 billion, or 44.8% of total revenue, in the thirty-nine week period of the prior year. The 250 basis point increase in SG&A expenses as a percentage of total revenue was principally attributable to costs incurred in connection with (i) the Calvin Klein restructuring, (ii) the Socks and Hosiery transaction, and (iii) the TH U.S. store closures. These increases were partially offset by the absence in 2019 of costs that were recorded in the thirty-nine weeks ended November 4, 2018 in connection with the TH China acquisition, consisting of noncash amortization of short-lived assets.

We currently expect that SG&A expenses as a percentage of total revenue for the fourth quarter of 2019 will also increase compared to 2018, although the increase will be significantly less pronounced than for the thirty-nine weeks ended November 3, 2019 as certain costs, including the costs for the Socks and Hosiery transaction and the TH U.S. store closures, do not repeat in the fourth quarter. We currently expect that SG&A expenses for the full year 2019 will increase as compared to 2018 due to (i) an increase in costs incurred and expected to be incurred in connection with the Calvin Klein restructuring, (ii) costs incurred in connection with the TH U.S. store closures, (iii) costs incurred in connection with the Socks and Hosiery transaction and (iv) a change in the mix of business due to faster growth in our Tommy Hilfiger International and Calvin Klein International segments than in our North America segments, as our International segments generally carry higher SG&A expenses as percentages of total revenue. These increases will be partially offset by the absence in 2019 of costs that were recorded in 2018 in connection with the TH China acquisition, consisting of noncash amortization of short-lived assets.

Non-Service Related Pension and Postretirement Income

Non-service related pension and postretirement income in the thirty-nine weeks ended November 3, 2019first quarter of 2020 was $6$4 million as compared to $8$2 million in the thirty-nine week periodfirst quarter of the prior year.

We currently expect that non-service related pension and postretirement income for the full year 20192020 will be approximately $8$16 million compared to non-service related pension and postretirement (cost) of $(5)$(90) million in 2018.2019. Our 2019 non-service related pension and postretirement (cost) included a $98 million actuarial loss on our retirement plans recorded in the fourth quarter. Non-service related pension and postretirement income (cost) recorded throughout the year is calculated using actuarial valuations that incorporate assumptions and estimates about financial market, economic and demographic conditions. Differences between estimated and actual results give rise to gains and losses that are recorded immediately in earnings, generally in the fourth quarter of the year, which can create volatility in our results of operations. Our 2018 non-service related pension and postretirement (cost) included a $(15) million actuarial loss on our retirement plans recorded in the fourth quarter. Our expectation of 2019 non-service2020 non-
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service related pension and post-retirement income does not include the impact of an actuarial gain or loss. However, based on currentif recent market economic, and demographic conditions,volatility due, in part, to the COVID-19 pandemic continues, we may incur a significant actuarial loss in 2020 as a result of the fourth quarter of 2019difference between actual and expected returns on plan assets or if such conditions continue.there is a decline in discount rates. Our actual 20192020 non-service related pension and postretirement income (cost) may be significantly different than our projections.



Debt Modification and Extinguishment Costs

We incurred costs totaling $5 million during the thirty-nine weeks ended November 3,first quarter of 2019 in connection with the refinancing of our senior credit facilities. Please see the section entitled “Liquidity and Capital Resources” below for further discussion.

Other Noncash GainLoss. net

We recorded a net pre-tax noncash gainloss of $113$3 million in the thirty-nine weeks ended November 3, 2019 to write up our equity investments in Gazal and PVH Australia to fair valuefirst quarter of 2020 in connection with the Australia acquisition.Speedo transaction. Please see Note 4, “Acquisitions and Divestitures,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

Equity in Net (Loss) Income of Unconsolidated Affiliates

The equity in net (loss) income of unconsolidated affiliates was $8an $(11) million loss in the thirty-nine weeks ended November 3, 2019first quarter of 2020 as compared to $13$4 million of income in the thirty-nine week periodfirst quarter of the prior year. These amounts relate to our share of (loss) income (loss) from our PVH Australia joint venture (prior tofor the Australia acquisition on May 31, 2019), our PVHTOMMY HILFIGER, CALVIN KLEIN, Warner’s, Olga and Speedo brands in Mexico, joint venture, our joint ventures for the TOMMY HILFIGER brand in India and Brazil, our joint venture for the CALVIN KLEIN brand in India, and our newly formed PVH Legwear joint venture.venture for the TOMMYHILFIGER, CALVIN KLEIN, IZOD, Van Heusen and Warner’s brands and other owned and licensed trademarks in the United States and Canada that began operations in December 2019, and PVH Australia (prior to acquiring it on May 31, 2019 through the Australia acquisition). Also included is our share of income (loss) income from our investments in Karl Lagerfeld Holding B.V. (“Karl Lagerfeld”) and in Gazal (prior to the Australia acquisitionacquiring it on May 31, 2019)2019 through the Australia acquisition). The equity in net (loss) income of unconsolidated affiliates for the thirty-nine weeks ended November 3,first quarter of 2020 decreased as compared to 2019 includes onlyprimarily due to (i) a partial year$12 million pre-tax noncash impairment of our investment in Karl Lagerfeld recorded in the first quarter of 2020 resulting from the impact of the COVID-19 pandemic on its business and (ii) the absence in 2020 of income from our investmentsrecognized in Gazal and PVH Australia and one-time expensesthe first quarter of $2 million recorded2019 on our equity investments in Gazal and PVH Australia, prior to the closing of the Australia acquisition closing.acquisition. Our investments in the continuing joint ventures and Karl Lagerfeld are being accounted for under the equity method of accounting. Subsequent to the closing of the Australia acquisition, we began to consolidate the resultsoperations of Gazal and PVH Australia into our financial statements. Please see the section entitled “Investments in Unconsolidated Affiliates” within “Liquidity and Capital Resources” below for further discussion.

We currently expect that our equity in net income of unconsolidated affiliates for the full year 20192020 will decrease as compared to 2018 as2019 primarily due to (i) the impairment of our investment in Karl Lagerfeld recorded in the first quarter of 2020, (ii) a reduction in income we recognized on our investments in Gazal and PVH Australia in 2019 was only fordue to the portionnegative impact of the COVID-19 pandemic on our unconsolidated affiliates’ businesses in 2020, partially offset by (iii) an increase in income on our investment in PVH Legwear as compared to 2019, as we recognize a full year prior to the acquisition closing.of income in 2020.

Interest Expense, Net

Net interest expense decreased to $85$21 million in the thirty-nine weeks ended November 3, 2019first quarter of 2020 from $87$30 million in the thirty-nine week periodfirst quarter of the prior year. Included in netyear, primarily due to lower interest expense inrates on our senior unsecured credit facilities as compared to the currentprior year period is an expenseand a gain of $3$4 million resulting from the remeasurement of our mandatorily redeemable non-controlling interest that was recognized in connection with the Australia acquisition.

NetWe currently expect that net interest expense for the full year 2019 is currently expected to be approximately $114 million2020 will increase as compared to $1162019 primarily due (i) to the issuance in April 2020 of an additional €175 million euro-denominated principal amount of 3 5/8% senior notes due 2024 and (ii) an anticipated increase in 2018. Our expectationborrowings outstanding under our senior unsecured revolving credit facilities, other short-term revolving credit facilities and unsecured commercial paper note program throughout 2020 as a result of 2019 net interest expense includes a $7 million expense expected to resultthe impacts of COVID-19 on our business, including significant reductions in our earnings and cash flows from the remeasurement of our mandatorily redeemable non-controlling interest that was recognized in connection with the Australia acquisition.operations.

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Income Taxes

The effective income tax rate for the thirty-nine weeks ended November 3, 2019first quarter of 2020 was 15.1%11.5% compared to 12.7%22.4% in the thirty-nine week periodfirst quarter of the prior year. The effective income tax rate for the first quarter of 2020 reflected a $(142) million income tax benefit recorded on $(1.240) billion of pre-tax losses. The effective income tax rate for the first quarter of 2019 reflected a $24 million income tax expense recorded on $105 million of pre-tax income.

Our effective income tax rate for the thirty-nine weeks ended November 3, 2019first quarter of 2020 was lower than the United States statutory income tax rate primarily due to (i) the benefitimpact of certain discrete items, including the favorable impact on certain liabilities$879 million of pre-tax goodwill impairment charges, which were mostly non-deductible for uncertain tax positions resulting from the expiration of applicable statutes of limitation, whichpurposes and resulted in a benefit to10.2% decrease in our effective income tax rate of 4.5%, and (ii) the favorable impact of a tax exemption on the noncash gain recorded to write uprate. The pre-tax goodwill impairment charges were factored into our existing equity investments in Gazal and PVH Australia to fair value in connection with the Australia acquisition, which resulted in a benefit to our effective tax rate of 3.7%, partially offset by (iii) the GILTI tax imposed by the U.S. Tax Legislation, which more than offset the benefit of overall lower tax rates in certain international jurisdictions where we file tax returns.

Ourannualized effective income tax rate and, as such, will have a corresponding impact on our quarterly effective income tax rates for the thirty-nine weeks ended November 4, 2018 was lower thanremainder of 2020.

In response to the COVID-19 pandemic, local governments enacted, or are in the process of enacting, measures to provide aid and economic stimulus to companies. On March 27, 2020, the United States statutorygovernment enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which includes various income tax rate primarily dueprovisions aimed at providing economic relief. We currently expect a slight favorable cash flow impact in 2020 as a result of the deferral of income tax payments under the CARES Act and other local government relief initiatives. We also considered the significant adverse impact of COVID-19 on our business in assessing the realizability of our deferred tax assets. Based on this assessment, we determined that no additional valuation allowances were needed against our deferred tax assets, however we will continue to (i)monitor the benefitimpacts of certain discrete items, including the favorable impactCOVID-19 on certain liabilities for uncertainour ability to realize our deferred tax positions resulting from the expiration of applicable statutes of limitation, which resulted in a benefit to our effective tax rate of 5.9%, and (ii) the benefit of overall lower tax rates in certain international jurisdictions where we file tax returns.assets.



We file income tax returns in more than 40 international jurisdictions each year. A substantial amount of our earnings are in international jurisdictions, particularly the Netherlands and Hong Kong, where income tax rates, coupled with special rates levied on income from certain of our jurisdictional activities, are lower than the United States statutory income tax rate.

We currently expect thatGiven the significant uncertainty with respect to the impact of the COVID-19 pandemic on our effective income tax rate for the fourth quarterbusiness and results of 2019 will reflect a favorable settlementoperations, we have not provided an estimate of a multi-year audit from an international jurisdiction. We currently expect that our effective income tax rate for the full year 2019 will be in a range of 11.5% to 12.0%. Our expectation that our effective income tax rate for the full year 2019 will be lower than the United States statutory income tax rate is principally due to the overall benefit of certain discrete items, including (i) the favorable impact on certain liabilities for uncertain tax positions, including an expected favorable settlement of a multi-year audit from an international jurisdiction in the fourth quarter, and (ii) the tax exemption on the noncash gain recorded to write up our existing equity investments in Gazal and PVH Australia to fair value in connection with the Australia acquisition. Our expectation that the effective income tax rate for the full year 2019 will increase compared to 4.0% for the full year 2018 is primarily due to (i) the absence of a 5.3% benefit to our 2018 effective income tax rate related to the remeasurement of certain of our net deferred tax liabilities in connection with the enactment of legislation in the Netherlands known as the “2019 Dutch Tax Plan” and (ii) the absence of a 3.2% benefit to our 2018 effective income tax rate related to the U.S. Tax Legislation, partially offset by (iii) the favorable impact of a tax exemption on the noncash gain recorded in 2019 to write up our existing equity investments in Gazal and PVH Australia to fair value.2020.

Our tax rate is affected by many factors, including the mix of international and domestic pre-tax earnings, discrete events arising from specific transactions, and new regulations, as well as audits by tax authorities and the evaluationreceipt of new facts and information, any of which can cause us to change our estimate for uncertain tax positions.

RNCIRedeemable Non-Controlling Interest

We have a joint venture in Ethiopia with Arvind Limited named PVH Manufacturing Private Limited Company (“PVH Ethiopia”) in which we own a 75% interest. We consolidate the results of PVH Ethiopia in our consolidated financial statements. PVH Ethiopia was formed to operate a manufacturing facility that produces finished products for us for distribution primarily in the United States.

The net loss attributable to the RNCIredeemable non-controlling interest (“RNCI”) in PVH Ethiopia was immaterial in the thirty-nine weeks ended November 3, 2019first quarters of 2020 and November 4, 2018. We currently expect that the net loss attributable to the RNCI for the full year 2019 will be immaterial.2019. Please see Note 5, “Redeemable Non-Controlling Interest,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity Update

The COVID-19 pandemic has had, and is expected to continue to have, a significant adverse impact on our business, results of operations, financial condition and cash flows in 2020. While there is significant uncertainty about the duration and extent of the impact of the pandemic, we expect there will be a significant negative impact to our cash flows in 2020, resulting from a loss of revenue and earnings. Given the unprecedented impacts of the COVID-19 pandemic on our business, we have taken the following actions to preserve liquidity and strengthen our financial flexibility:

•Suspended share repurchases under the stock repurchase program in mid-March, following $111 million in repurchases completed in the first quarter.
•Suspended our cash dividend beginning with the second quarter.Our first quarter cash dividend of $0.0375 per common share was paid on March 31, 2020.
•Entered into a new $275 million 364-day revolving credit facility.
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•Issued an additional €175 million euro-denominated principal amount of 3 5/8% senior notes due 2024.
•Obtained a waiver in June 2020 of the leverage and interest coverage ratios under our senior unsecured credit facilities (referred to as the “June 2020 Amendment”).
•Focused management of our working capital, with particular focus on tightly managing inventories, including reducing and cancelling inventory commitments, redeploying basic inventory items to subsequent seasons and consolidating future seasonal collections, as well as negotiating extended payment terms with our suppliers.

In addition, we closed the sale of our Speedo North America business to Pentland for net proceeds of $169 million, subject to a final adjustment based on the terms of the agreement.

We ended the first quarter of 2020 with $801 million of cash on hand and approximately $1 billion of borrowing capacity available under our various debt facilities. We believe that we have taken appropriate actions to manage through the uncertainty related to COVID-19 and are continuously reevaluating all aspects of our spending and cash flow generation as the situation evolves.

Cash Flow Summary

Cash and cash equivalents at NovemberMay 3, 20192020 was $555$801 million, an increase of $103$297 million from the amount at February 3, 20192, 2020 of $452$503 million. The change in cash and cash equivalents included the impact of (i) $306 million of borrowings outstanding under our senior unsecured revolving credit facilities, (ii) a $59 million net payment made during the second quarter of 2019 in connection with the Australia acquisition, (iii) a $74 million payment made during the second quarter of 2019 in connection with the TH CSAP acquisition, (iv) $220$111 million of common stock repurchases under the stock repurchase program and (v) $10(with no further repurchases for the remainder of 2020), (ii) $169 million of long-term debt repayments. The seasonalitynet proceeds in connection with the Speedo transaction and (iii) $187 million of our business results in significant fluctuations in our cash balance between fiscal year end and subsequent interim periodsproceeds from the issuance of an additional €175M euro-denominated principal amount of 3 5/8% senior notes due to the timing of inventory purchases and peak sales periods. 2024.

Cash flow for the full year 20192020 will be impacted by various factors in addition to those noted above and below in this “Liquidity and Capital Resources” section,section. Given the dynamic nature of the COVID-19 pandemic, our estimates of cash flows in 2020 may be subject to material significant change, including (i) expected long-term debt repaymentsas a result of approximately $50 millionthe impact of the pandemic on our 2020 earnings, additional borrowings under existing or new financing arrangements, excess inventories, delays in collection of, or inability to collect on, certain trade receivables, and (ii) expected common stock repurchases underother working capital changes that we may experience as a result of the stock repurchase program of approximately $300 million.pandemic.

As of NovemberMay 3, 2019,2020, approximately $524$511 million of cash and cash equivalents was held by international subsidiaries. Our intent is to reinvest indefinitely substantially all of our earnings in foreign subsidiaries outside of the United States. However, if management decides at a later date to repatriate these earnings to the United States, we may be required to accrue and pay additional taxes, including any applicable foreign withholding tax and United States state income taxes. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated due to the complexities associated with the hypothetical calculation.

Operations

Cash providedused by operating activities was $432$143 million in the thirty-nine weeks ended November 3, 2019first quarter of 2020 compared to $305$73 million in the thirty-nine weeks ended November 4, 2018.first quarter of 2019. The increase in cash providedused by operating activities as compared to the prior year period was primarily driven by changes in working capital, including a favorable change in trade receivables and inventories, partially offset by asignificant decrease in net income as adjusted for noncash charges.



charges, partially offset by a favorable change in our working capital primarily due to trade receivables. Our cash flows from operations in the first quarter of 2020 was significantly impacted by widespread temporary store closures and other significant adverse impacts of the COVID-19 pandemic. In connectionan effort to mitigate the impacts of the pandemic and preserve liquidity, we are focused on working capital management, in particular tightly managing inventories, including reducing and cancelling inventory commitments, redeploying basic inventory items to subsequent seasons and consolidating future seasonal collections, as well as negotiating extended payment terms with our acquisition of Calvin Klein, we were obligated to pay Mr. Calvin Klein contingent purchase price payments based on 1.15% of total worldwide net sales (as defined in the acquisition agreement, as amended) of products bearing any of the CALVIN KLEIN brands with respect to sales made through February 12, 2018. A significant portion of the sales on which the payments to Mr. Klein were made were wholesale sales by us and our licensees and other partners to retailers. Contingent purchase price payments totaled $16 millionin the thirty-nine weeks ended November 4, 2018. The final payment due to Mr. Klein was made in the second quarter of 2018.suppliers.

Capital Expenditures

Our capital expenditures in the thirty-nine weeks ended November 3, 2019first quarter of 2020 were $233$56 million compared to $270$77 million in the thirty-nine weeks ended November 4, 2018.first quarter of 2019. We currently expect that capital expenditures for the full year 2020 will decrease to approximately $190 million from $345 million in 2019, will be approximately $375 millionas we tightly manage spending to preserve liquidity in response to the impacts of the COVID-19 pandemic on our business, and will include only certain minimum required expenditures in our retail stores and expenditures for projects currently in progress, primarily related to (i) investments in new stores and store expansions, (ii) continued investments to support the multi-year upgrade and enhanceof our operating, supply chain and logistics systems and our digital commerce platforms and (iii) the expansion ofsystems worldwide and (ii) enhancements to our warehouse and distribution network in North America.network.

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Investments in Unconsolidated Affiliates

We received dividends of $14 million and $4 million from our investments in unconsolidated affiliates during the thirty-nine weeks ended November 3, 2019 and November 4, 2018, respectively. These dividends are included in our net cash provided by operating activities in our Consolidated Statements of Cash Flows for the respective period.

We madecurrently expect to make a payment of approximately $2 million in the full year 2020 to our newly formed PVH Legwear joint venture during the thirty-nine weeks ended November 3, 2019 to contribute our share of the joint venture funding. This payment is included in our net cash used by investing activities in our Consolidated Statement of Cash Flows for the period. We made an additional payment of $25 million in December 2019 to contribute our share of the PVH Legwear joint venture funding, at which time PVH Legwear began operations.


Loan to a Supplier


Wuxi Jinmao Foreign Trade Co., Ltd. (“Wuxi”), one of our finished goods inventory suppliers, has a wholly owned subsidiary with which we entered into a loan agreement in 2016. Under the agreement, Wuxi’s subsidiary borrowed a principal amount of $14 million for the development and operation of a fabric mill. Principal payments are due in semi-annual installments beginning March 31, 2018 through September 30, 2026. The outstanding principal balance of the loan bears interest at a rate of (i) 4.50% per annum until the sixth anniversary of the closing date of the loan and (ii) London interbank offered rate (“LIBOR”) plus 4.00% thereafter. We received principal payments of $400,000 and $200,000 during the thirty-nine weeks ended November 3, 2019 and November 4, 2018, respectively.first quarter of 2019. The outstanding balance, including accrued interest, was $13 million as of NovemberMay 3, 2019,2020, February 2, 2020 and $14 million as of both February 3, 2019 and November 4, 2018.May 5, 2019.


Speedo Transaction
TH CSAP Acquisition

We completed the acquisitionsale of the Tommy Hilfiger retailour Speedo North America business in Central and Southeast Asiato Pentland on July 1, 2019April 6, 2020 for $74net proceeds of $169 million. Please see Note 4, “Acquisitions and Divestitures,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

Australia Acquisition

We completed the Australia acquisition on May 31, 2019. Prior to this acquisition, we had an approximately 22% interest in Gazal and a 50% interest in PVH Australia, both of which were accounted for under the equity method of accounting. This transaction resulted in a net cash payment of $59 million, including (i) a payment of $118 million, net of cash acquired of $7 million, as cash consideration for the acquisition and (ii) proceeds of $59 million related to the sale of an office building and warehouse owned by Gazal. Please see Note 4, “Acquisitions,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

Acquisition of the Geoffrey Beene Tradename

We acquired the Geoffrey Beene tradename on April 20, 2018 for $17 million, of which $16 million was paid in cash. Please see Note 4, “Acquisitions,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.



Dividends

Our common stock currently pays annual dividends totaling $0.15 per share. Dividends on common stock totaled $11$3 million in the first quarter of 2020 as compared to $6 million in the first quarter of 2019.

Following the payment of a $0.0375 per common share dividend on March 31, 2020, we suspended our dividends, which have historically paid annual dividends of $0.15 per share of our common stock, in order to increase our cash position and $12 millionpreserve financial flexibility in response to the impacts of the COVID-19 pandemic on our business. In addition, under the terms of the June 2020 Amendment, dividend payments are not permitted during the thirty-nine weeks ended November 3, 2019 and November 4, 2018, respectively. Norelief period (as defined). Please see the section entitled “2019 Senior Unsecured Credit Facilities” below for further common stock dividends are scheduled to be declared in 2019.discussion.

Acquisition of Treasury Shares

Our Board of Directors has authorized over time since 2015 an aggregate $2.0 billion stock repurchase program through June 3, 2023. The program may be modified by the Board of Directors, including to increase or decrease the repurchase limitation or extend, suspend, or terminate the program, at any time, without prior notice.

We suspended share repurchases under the stock repurchase program beginning in mid-March 2020 in order to increase our cash position and preserve financial flexibility in response to the impacts of the COVID-19 pandemic on our business. In addition, under the terms of the June 2020 Amendment, share repurchases are not permitted during the relief period (as defined). Please see the section entitled “2019 Senior Unsecured Credit Facilities” below for further discussion. The existing stock repurchase program remains authorized by the Board of Directors and we may resume share repurchases after the restrictions under the June 2020 Amendment lapse.

Repurchases under the program, when it is being used, may be made from time to time over the period through open market purchases, accelerated share repurchase programs, privately negotiated transactions or other methods, as we deem appropriate. Purchases are made based on a variety of factors, such as price, corporate requirements and overall market conditions, applicable legal requirements and limitations, trading restrictions under our insider trading policy and other relevant factors. The program may be modified by the Board of Directors, including to increase or decrease the repurchase limitation or extend, suspend, or terminate the program, at any time, without prior notice.


During the thirty-nine weeks ended November 3,first quarters of 2020 and 2019, and November 4, 2018, we purchased approximately 2.41.4 million shares and 1.7 million500,000 shares, respectively, of our common stock under the program in open market transactions for $223$111 million and $247$61 million, respectively. Purchases of $3 million and $2 million were accrued for in the Consolidated Balance SheetsSheet as of November 3, 2019 and November 4, 2018, respectively.May 5, 2019. Purchases of $2 million$500,000 that were accrued for in the Consolidated Balance Sheet as of February 4, 20182, 2020 were paid in the first quarter of 2018. The2020. As of May 3, 2020, the repurchased shares were held as treasury stock and $785$573 million of the authorization remained available for future share repurchases as of November 3, 2019.repurchases.

Treasury stock activity also includes shares that were withheld principally in conjunction with the settlement of restricted stock units and performance share units to satisfy tax withholding requirements.

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Mandatorily Redeemable Non-Controlling Interest
The Australia acquisition agreement provided for key members of Gazal and PVH Australia management to exchange a portion of their interests in Gazal for approximately 6% of the outstanding shares in our previously wholly owned subsidiary that acquired 100% of the ownership interests in the Australia business. We are obligated to purchase this 6% interest within two years of the acquisition closing in two tranches as follows: tranche 1 – 50% of the shares one year after the closing, but the holders had the option to defer half of this tranche to tranche 2; and tranche 2 – all remaining shares two years after the closing. With respect to tranche 1, the holders elected not to defer their shares to tranche 2 and, as a result, we purchased all of the tranche 1 shares in June 2020. The purchase price for the tranche 1 and tranche 2 shares is based on a multiple of the subsidiary’s adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) less net debt as of the end of the measurement year, and the multiple varies depending on the level of EBITDA compared to a target. The liability for the mandatorily redeemable non-controlling interest was $29 million as of May 3, 2020 based on exchange rates in effect on that date, of which $16 million was paid to the management shareholders in June 2020 for the purchase of the tranche 1 shares. Please see Note 4, “Acquisitions and Divestitures,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

Financing Arrangements

Our capital structure was as follows:
(In millions)11/3/19 2/3/19 11/4/18
Short-term borrowings    $387
 $13
 $277
Current portion of long-term debt    41
 —
 —
Finance lease liabilities16
 17
 14
Long-term debt    2,738
 2,819
 2,878
Stockholders’ equity    5,985
 5,828
 5,681

(In millions)5/3/202/2/205/5/19
Short-term borrowings$322  $50  $300  
Current portion of long-term debt14  14  31  
Finance lease obligations15  15  16  
Long-term debt2,854  2,694  2,759  
Stockholders’ equity4,513  5,811  5,762  
In addition, we had $555 million, $452 million and $399 million of cash and cash equivalents as of
November 3, 2019, February 3, 2019 and November 4, 2018, respectively.

Short-Term Borrowings

We have the ability to draw revolving borrowings under ourthe senior unsecured credit facilities as discussed below in the section entitled “2019 Senior Unsecured Credit Facilities” below.Facilities.” We had $306$168 million outstanding under these facilities as of NovemberMay 3, 2019, which is expected to be repaid by the end of 2019.2020. The weighted average interest rate on funds borrowed as of NovemberMay 3, 20192020 was 3.06%1.93%. The maximum amount of revolving borrowings outstanding under these facilities during the first quarter of 2020 was $746 million.

thirty-nine
We also have the ability to draw revolving borrowings under our new 364-day unsecured revolving credit facility, as discussed in the section entitled “2020 Unsecured Revolving Credit Facility” below. We had no borrowings outstanding under this facility as of or during the thirteen weeks ended November May 3, 2019 was $378 million.2020.


Additionally, we have the availabilityability to borrow under short-term lines of credit, overdraft facilities and short-term revolving credit facilities denominated in various foreign currencies. These facilities provided for borrowings of up to $134$174 million based on exchange rates in effect on NovemberMay 3, 20192020 and are utilized primarily to fund working capital needs. We had $81$74 million outstanding under these facilities as of NovemberMay 3, 2019, inclusive of borrowings under a facility utilized by our recently acquired business in Australia.2020. The weighted average interest rate on funds borrowed as of NovemberMay 3, 20192020 was 2.08%1.94%. The maximum amount of borrowings outstanding under these facilities during the first quarter of 2020 was $74 million.

Commercial Paper
thirty-nine weeks ended
 November
We have the ability to issue, from time to time, unsecured commercial paper notes with maturities that vary but do not exceed 397 days from the date of issuance primarily to fund working capital needs. We had $80 million of borrowings outstanding under the commercial paper note program as of May 3, 20192020, all of which matured in May 2020. The weighted average interest rate on funds borrowed under the program as of May 3, 2020 was $992.05%. The maximum amount of borrowings outstanding under the program during the first quarter of 2020 was $165 million.


The commercial paper program allows for borrowings of up to $675 million to the extent that we have borrowing capacity under the United States dollar-denominated revolving credit facility included in the 2019 facilities (as defined below). Accordingly, the combined aggregate amount of (i) borrowings outstanding under the commercial paper note program and (ii) the revolving borrowings outstanding under the United States dollar-denominated revolving credit facility at any one time cannot exceed $675 million. The maximum aggregate amount of borrowings outstanding under the commercial paper program

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and the United States dollar-denominated portion of the revolving credit facility during the first quarter of 2020 was $660 million.

2020 Unsecured Revolving Credit Facility

On April 8, 2020, we entered into a 364-day $275 million United States dollar-denominated unsecured revolving credit facility (the “2020 facility”). We may increase the commitment under the 2020 facility by an aggregate amount not to exceed $100 million, subject to certain customary conditions. The 2020 facility will mature on April 7, 2021. We paid $2 million of debt issuance costs during the first quarter of 2020 in connection with the 2020 facility.

Currently, our obligations under the 2020 facility are unsecured and are not guaranteed by any of our subsidiaries. However, within 120 days after the occurrence of a specified credit ratings decrease (as set forth in the 2020 facility), (i) we must cause each of our wholly owned United States subsidiaries (subject to certain customary exceptions) to become a guarantor under the 2020 facility and (ii) we and each subsidiary guarantor will be required to grant liens, as collateral agent, on substantially all of our respective assets (subject to customary exceptions).

The outstanding borrowings under the 2020 facility are prepayable at any time without penalty (other than customary breakage costs). The borrowings under the 2020 facility bear an interest rate equal to an applicable margin plus, as determined at our option, either (a) a base rate determined by reference to the greater of (i) the prime rate, (ii) the United States federal funds effective rate plus 1/2 of 1.00% and (iii) a one-month reserve adjusted Eurocurrency rate plus 1.00% or (b) an adjusted Eurocurrency rate, calculated in a manner set forth in the 2020 facility.

The initial applicable margin with respect to the borrowings will be 2.250% for adjusted Eurocurrency rate loans and 1.250% for base rate loans. The applicable margin for borrowings will be adjusted based upon our public debt rating after the date of delivery of notice of a change in our public debt rating by Standard & Poor’s and Moody’s.

We had no borrowings outstanding under the 2020 facility during the first quarter of 2020.

The 2020 facility requires us to comply with customary affirmative, negative and financial covenants, including minimum interest coverage ratio and maximum net leverage ratio, which are subject to change in the event that, and in the same manner as, the minimum interest coverage ratio and maximum net leverage ratio covenants under the 2019 facilities are amended. Refer to the section entitled “2019 Senior Unsecured Credit Facilities” below for discussion of an amendment to the 2019 facilities in June 2020.

Finance Lease Liabilities

Our cash payments for finance lease liabilities totaled $4$1 million in each of the thirty-nine weeks ended November 3, 2019first quarters of 2020 and November 4, 2018.2019.

2016 Senior Secured Credit Facilities

On May 19, 2016, we entered into an amendment to our senior secured credit facilities (as amended, the “2016 facilities”). We replaced the 2016 facilities with new senior unsecured credit facilities on April 29, 2019 as discussed in the section entitled “2019 Senior Unsecured Credit Facilities” below. The 2016 facilities, as of the date they were replaced, consisted of a $2.347 billion United States dollar-denominated Term Loan A facility and senior secured revolving credit facilities consisting of (i) a $475 million United States dollar-denominated revolving credit facility, (ii) a $25 million United States dollar-denominated revolving credit facility available in United States dollars and Canadian dollars and (iii) a €186 million euro-denominated revolving credit facility available in euro, British pound sterling, Japanese yen and Swiss francs.

2019 Senior Unsecured Credit Facilities

We refinanced the 2016 facilities on April 29, 2019 (the “Closing Date”) by entering into senior unsecured credit facilities (the “2019 facilities”), the proceeds of which, along with cash on hand, were used to repay all of the outstanding borrowings under the 2016 facilities, as well as the related debt issuance costs.

The 2019 facilities consist of a $1.093 billion United States dollar-denominated Term Loan A facility (the “USD TLA facility”), a €500 million euro-denominated Term Loan A facility (the “Euro TLA facility” and together with the USD TLA facility, the “TLA facilities”) and senior unsecured revolving credit facilities consisting of (i) a $675 million United States dollar-denominated revolving credit facility, (ii) a CAD $70 million Canadian dollar-denominated revolving credit facility available in United States dollars or Canadian dollars, (iii) a €200 million euro-denominated revolving credit facility available
50


in euro, British pound sterling, Japanese yen, Swiss francs, Australian dollars and other agreed foreign currencies and (iv) a $50 million United States dollar-denominated revolving credit facility available in United States dollars or Hong Kong dollars. The 2019 facilities are due on April 29, 2024. In connection with the refinancing of our senior credit facilities, we paid debt issuance costs of $10 million (of which $3 million was expensed as debt modification costs and $7 million is being amortized over the term of the debt agreement) and recorded debt extinguishment costs of $2 million to write off previously capitalized debt issuance costs.

Each of the senior unsecured revolving facilities, except for the $50 million United States dollar-denominated revolving credit facility available in United States dollars or Hong Kong dollars, also include amounts available for letters of credit and have a portion available for the making of swingline loans. The issuance of such letters of credit and the making of any swingline loan reduces the amount available under the applicable revolving credit facility. So long as certain conditions are satisfied, we may add one or more senior unsecured term loan facilities or increase the commitments under the senior unsecured revolving credit facilities by an aggregate amount not to exceed $1.5 billion. The lenders under the 2019 facilities are not required to provide commitments with respect to such additional facilities or increased commitments.

We had loans outstanding of $1.634$1.558 billion, net of debt issuance costs and based on applicable exchange rates, under the TLA facilities, $306$168 million of borrowings outstanding under the senior unsecured revolving credit facilities and $20$24 million of outstanding letters of credit under the senior unsecured revolving credit facilities as of NovemberMay 3, 2019.2020.
The terms of the TLA facilities require us to make quarterly repayments of amounts outstanding under the 2019 facilities, which commenced with the calendar quarter endingended September 30, 2019. Such required repayment amounts equal 2.50% per annum of the principal amount outstanding on the Closing Date for the first eight calendar quarters following the Closing Date, 5.00% per annum of the principal amount outstanding on the Closing Date for the four calendar quarters thereafter and 7.50% per annum of the principal amount outstanding on the Closing Date for the remaining calendar quarters, in each case paid in equal installments and in each case subject to certain customary adjustments, with the balance due on the maturity date of the TLA facilities. The outstanding borrowings under the 2019 facilities are prepayable at any time without penalty (other than customary breakage costs). Any voluntary repayments we make would reduce the future required repayment amounts.

We made payments of $10$3 million on our term loans under the 2019 facilities during the first quarter of 2020, and we repaidexpect to make mandatory long-term debt repayments of approximately $14 million during the full year 2020. We made no payments on our term loans under the 2019 facilities and the 2016 facilities during the first quarter of 2019 other than the repayment of the 2016 facilities in connection with the refinancing of the 2016 senior credit facilities during the thirty-nine weeks ended November 3, 2019. We made payments of $85 million during the thirty-nine weeks ended November 4, 2018 on our term loans under the 2016 facilities.



The United States dollar-denominated borrowings under the 2019 facilities bear interest at a rate equal to an applicable margin plus, as determined at our option, either (a) a base rate determined by reference to the greater of (i) the prime rate, (ii) the United States federal funds effective rate plus 1/2 of 1.00% and (iii) a one-month reserve adjusted Eurocurrency rate plus 1.00% or (b) an adjusted Eurocurrency rate, calculated in a manner set forth in the 2019 facilities.

The Canadian dollar-denominated borrowings under the 2019 facilities bear interest at a rate equal to an applicable margin plus, as determined at our option, either (a) a Canadian prime rate determined by reference to the greater of (i) the rate of interest per annum that Royal Bank of Canada establishes as the reference rate of interest in order to determine interest rates for loans in Canadian dollars to its Canadian borrowers and (ii) the average of the rates per annum for Canadian dollar bankers' acceptances having a term of one month or (b) an adjusted Eurocurrency rate, calculated in a manner set forth in the 2019 facilities.

Borrowings available in Hong Kong dollars under the 2019 facilities bear interest at a rate equal to an applicable margin plus an adjusted Eurocurrency rate, calculated in a manner set forth in the 2019 facilities.

The borrowings under the 2019 facilities in currencies other than United States dollars, Canadian dollars or Hong Kong dollars bear interest at a rate equal to an applicable margin plus an adjusted Eurocurrency rate, calculated in a manner set forth in the 2019 facilities.

The current applicable margin with respect to the TLA facilities and each revolving credit facility isas of May 3, 2020 was 1.250% for adjusted Eurocurrency rate loans and 0.250% for base rate or Canadian prime rate loans. The applicable margin for borrowings under the TLA facilities and the revolving credit facilities is subject to adjustment (i) after the date of delivery of the compliance certificate and financial statements, with respect to each of our fiscal quarters, based upon our net leverage ratio or (ii) after the date of delivery of notice of a change in our public debt rating by Standard & Poor’s or Moody’s.

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We entered into interest rate swap agreements designed with the intended effect of converting notional amounts of our variable rate debt obligation to fixed rate debt. Under the terms of the agreements, for the outstanding notional amount, our exposure to fluctuations in the one-month LIBOR is eliminated and we pay a fixed rate plus the current applicable margin. The following interest rate swap agreements were entered into or in effect during the thirty-nine weeks ended November 3, 2019first quarter of 2020 and/or November 4, 2018:the first quarter of 2019:
(In millions)
Designation DateCommencement DateInitial Notional AmountNotional Amount Outstanding as of May 3, 2020Fixed RateExpiration Date
March 2020February 2021$50  $—  0.562%February 2023
February 2020February 202150  —  1.1625%February 2023
February 2020February 202050  50  1.2575%February 2023
August 2019February 202050  50  1.1975%February 2022
June 2019February 202050  50  1.409%February 2022
June 2019June 201950  50  1.719%July 2021
January 2019February 202050  50  2.4187%February 2021
November 2018February 2019139  127  2.8645%February 2021
October 2018February 2019116  160  2.9975%February 2021
June 2018August 201850  50  2.6825%February 2021
June 2017February 2018306  —  1.566%February 2020
(In millions)          
Designation Date Commencement Date Initial Notional Amount Notional Amount Outstanding as of November 3, 2019 Fixed Rate Expiration Date
August 2019 February 2020 $50
 $—
 1.1975% February 2022
June 2019 February 2020 50
 —
 1.409% February 2022
June 2019 June 2019 50
 50
 1.719% July 2021
January 2019 February 2020 50
 —
 2.4187% February 2021
November 2018 February 2019 139
 139
 2.8645% February 2021
October 2018 February 2019 116
 178
 2.9975% February 2021
June 2018 August 2018 50
 50
 2.6825% February 2021
June 2017 February 2018 306
 119
 1.566% February 2020
July 2014 February 2016 683
 —
 1.924% February 2018

The notional amounts of the outstanding interest rate swaps that commenced in February 2018 and February 2019 are adjusted according to pre-set schedules during the terms of the swap agreements such that, based on our projections for future debt repayments, our outstanding debt under the USD TLA facility is expected to always equal or exceed the combined notional amount of the then-outstanding interest rate swaps.

Our 2019 facilities require us to comply with customary affirmative, negative and financial covenants, including a minimum interest coverage ratio and a maximum net leverage ratio. As of May 3, 2020, we were in compliance with all applicable financial and non-financial covenants under these facilities. Given the disruption to our business caused by the COVID-19 pandemic and to ensure financial flexibility, we entered into the “June 2020 Amendment” to provide temporary relief of certain financial covenants until the date on which a compliance certificate is delivered for the second quarter of 2021 (the “relief period”) unless we elect to terminate the relief period and satisfy the conditions for doing so. The June 2020 Amendment provides for the following during the relief period, among other things: (i) suspension of compliance with the maximum net leverage ratio through and including the first quarter of 2021, (ii) suspension of the minimum interest coverage ratio through and including the first quarter of 2021, (iii) addition of a minimum liquidity covenant of $400 million, (iv) addition of a restricted payment covenant and (v) imposition of stricter limitations on the incurrence of indebtedness and liens. The limitation on restricted payments require that we suspend payments of dividends on our common stock and purchases of shares under our stock repurchase program during the relief period. The June 2020 Amendment also provides that during the relief period the applicable margin will be increased 0.25%. In addition, under the June 2020 Amendment, in the event there is a specified credit ratings downgrade by Standard & Poor’s and Moody’s during the relief period (as set forth in the June 2020 Amendment), within 120 days thereafter (i) we must cause each of our wholly owned United States subsidiaries (subject to certain customary exceptions) to become a guarantor under our 2019 facilities and (ii) we and each subsidiary guarantor will be required to grant liens, as collateral agent, on substantially all of our respective assets (subject to customary exceptions).

We expect to maintain compliance with the financial covenants (as amended) under our 2019 facilities for at least the next 12 months based on our current forecasts. If the adverse impacts of the COVID-19 pandemic on our business worsen and our earnings and operating cash flows do not start to recover as currently estimated by us, there can be no assurance that we will be able to maintain compliance with our financial covenants (as amended) in the future. There can be no assurance that we would be able to obtain future waivers in a timely manner, on terms acceptable to us, or at all. If we were not able to maintain compliance or obtain a future covenant waiver under our credit facilities, there can be no assurance that we would be able to raise sufficient debt or equity capital, or divest assets, to refinance or repay such facilities.

7 3/4% Debentures Due 2023

We have outstanding $100 million of debentures due November 15, 2023 that accrue interest at the rate of 7 3/4%. The debentures are not redeemable at our option prior to maturity.
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3 5/8% Euro Senior Notes Due 2024

We have outstanding €350€525.0 million euro-denominated principal amount of 3 5/8% senior notes due July 15, 2024.2024, of which €175.0 million principal amount was issued on April 24, 2020. Interest on the notes is payable in euros. We paid €2 million (approximately $2 million based on exchange rates in effect on the payment date) of fees during the first quarter of 2020 in connection with the issuance of the additional €175 million notes. We may redeem some or all of these notes at any time prior to April 15, 2024 by paying a “make whole” premium plus any accrued and unpaid interest. In addition, we may redeem some or all of these notes on or after April 15, 2024 at their principal amount plus any accrued and unpaid interest.

3 1/8% Euro Senior Notes Due 2027

We have outstanding €600 million euro-denominated principal amount of 3 1/8% senior notes due December 15, 2027. Interest on the notes is payable in euros. We may redeem some or all of these notes at any time prior to September 15, 2027 by paying a “make whole” premium plus any accrued and unpaid interest. In addition, we may redeem some or all of these notes on or after September 15, 2027 at their principal amount plus any accrued and unpaid interest.

Our financing arrangements contain financial and non-financial covenants and customary events of default. As of NovemberMay 3, 2019,2020, we were in compliance with all applicable financial and non-financial covenants under our financing arrangements.

As of NovemberMay 3, 2019,2020, our issuer credit was rated BBB- by Standard & Poor’s with a stablenegative outlook and our corporate credit was rated Baa3 by Moody’s with a stable outlook.outlook, and our commercial paper was rated A-3 by Standard & Poor’s and P-3 by Moody’s. In assessing our credit strength, we believe that both Standard & Poor’s and Moody’s considered, among other things, our capital structure and financial policies, our consolidated balance sheet, our historical acquisition activity and other financial information, as well as industry and other qualitative factors.

Please see Note 9, “Debt,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for a schedule of mandatory long-term debt repayments for the remainder of 20192020 through 2024.2025.

Please see Note 8,9, “Debt,” in the Notes to Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for the year ended February 3, 20192, 2020 for further discussion of our debt.



CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. Our significant accounting policies are outlined in Note 1, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for the year ended February 3, 2019.2, 2020.

Goodwill and Indefinite-lived Intangible Assets Impairment Testing

We performed our annual impairment assessment forassess the recoverability of goodwill which is done at the reporting unit level, and other indefinite-lived intangible assets as ofannually, at the beginning of the third quarter of 2019. Oureach fiscal year, and between annual goodwill impairment test for 2019 yielded estimated fair values in excess oftests if an event occurs or circumstances change that would indicate that it is more likely than not that the carrying amountsamount may be impaired. Impairment testing for all of our reporting units and therefore no impairment of goodwill was identified. Theis done at the reporting unit with the least excess fair value had an estimated fair value that exceeded its carrying amount by 15%. Additionally, no impairment oflevel. Impairment testing for other indefinite-lived intangible assets is done at the individual asset level. Intangible assets with finite lives are amortized over their estimated useful life and are tested for impairment, along with other long-lived assets, when events and circumstances indicate that the assets might be impaired. Indefinite-lived intangible assets and intangible assets with finite lives are tested for impairment prior to assessing the recoverability of goodwill.

Goodwill

The COVID-19 pandemic had a significant adverse impact on our business during the first quarter of 2020, resulting in an unprecedented decline in revenue and earnings, and is driving an extended decline in our stock price and associated market capitalization. While there is significant uncertainty about the duration and extent of the impact of the pandemic, we expect there will be a significant negative impact to our future earnings and cash flows. We determined that the impact of COVID-19 was identified asa triggering event that required us to perform a quantitative interim goodwill impairment test.

As a result of our annual indefinite-lived intangible assetthis interim test, we recorded $879 million of noncash impairment test for 2019. The fair valuescharges during the first quarter of all of our indefinite-lived2020, which was included in goodwill and other intangible assets substantially exceeded their carrying amounts,impairments in our Consolidated Statement of Operations. The impairment charges, which related to the Heritage Wholesale North America, Calvin Klein Retail North America, Calvin Klein Wholesale
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North America, Calvin Klein Licensing and Advertising International, and Calvin Klein International reporting units, were recorded to our segments as follows: $198 million in the Heritage Brands Wholesale segment, $287 million in the Calvin Klein North America segment, and $394 million in the Calvin Klein International segment. Our impairment assessment was performed in accordance with the exceptionaccounting guidance adopted in the first quarter of our perpetual license right, which had a fair value2020 that exceeded itssimplifies the testing for goodwill impairment, as discussed in Note 20, “Recent Accounting Guidance.”

Of these reporting units, Calvin Klein Wholesale North America, Calvin Klein Licensing and Advertising International, and Calvin Klein International were determined to be only partially impaired. The remaining carrying amount by 3% atof goodwill allocated to these reporting units as of May 3, 2020 was $162 million, $143 million and $347 million, respectively. Holding all other assumptions constant, a 100 basis point change in the testing date. The excessannual revenue growth rate assumptions for these businesses would result in a change to the estimated fair value of the perpetual license right declined compared to the prior year, primarily driven by an increasereporting units of approximately $80 million, $20 million and $140 million, respectively. Likewise, a 100 basis point change in the weighted average cost of capital as comparedwould result in a change to the prior year. The carrying amountestimated fair value of the perpetual license right was $203.8reporting units of approximately $60 million, as of November 3, 2019.$15 million and $125 million, respectively. While the perpetual license right wasthese reporting units were not determined to be fully impaired, it isthey may be at risk of further impairment in the future impairment in the event the related business doesbusinesses do not perform as projected, including if they fail to recover as planned following the COVID-19 pandemic, or if market factors utilized in the impairment analysis deteriorate, including an unfavorable change in long-term growth rates or the weighted average cost of capital.

With respect to our other reporting units that were not determined to be impaired, the Tommy Hilfiger International reporting unit had an estimated fair value that exceeded its carrying amount of $2,949 million by 5%. The carrying amount of goodwill allocated to this reporting unit as of May 3, 2020 was $1,558 million. Holding all other assumptions constant, a 100 basis point change in the annual revenue growth rate of the Tommy Hilfiger International business conducted under the perpetual license would result in a change to the estimated fair value of our perpetual license rightthe reporting unit of approximately $25$355 million. Likewise, a 100 basis point change in the weighted average cost of capital would result in a change to the estimated fair value of the reporting unit of approximately $320 million. While the Tommy Hilfiger International reporting unit was not determined to be impaired, it may be at risk of future impairment in the event the related business does not perform as projected, including if it fails to recover as planned following the COVID-19 pandemic, or if market factors utilized in the impairment analysis deteriorate, including an unfavorable change in the long-term growth rate or the weighted average cost of capital.

The fair value of the reporting units for goodwill impairment testing was determined using an income approach and validated using a market approach. The income approach was based on discounted projected future (debt-free) cash flows for each reporting unit. The discount rates applied to these cash flows were based on the weighted average cost of capital for each reporting unit, which takes market participant assumptions into consideration. Estimated future operating cash flows were discounted at rates of 10%, 10.5% or 11%, depending on the reporting unit, to account for the relative risks of the estimated future cash flows. For the market approach, used to validate the results of the income approach method, we used both the guideline company and similar transaction methods. The guideline company method analyzes market multiples of revenue and EBITDA for a group of comparable public companies. The market multiples used in the valuation are based on the relative strengths and weaknesses of the reporting unit compared to the selected guideline companies. Under the similar transactions method, valuation multiples are calculated utilizing actual transaction prices and revenue and EBITDA data from target companies deemed similar to the reporting unit. We classified the fair values of our reporting units as Level 3 fair value measurements due to the use of significant unobservable inputs.

Indefinite-Lived Intangible Assets

We also determined that the impact of the COVID-19 pandemic on our business was a triggering event that prompted the need to perform interim impairment testing of our indefinite-lived intangible assets. For the TOMMY HILFIGER, CALVIN KLEIN, Van Heusen, Warner’s and Olga tradenames and the reacquired perpetual license rightrights for TOMMY HILFIGER in India, we elected to first assess qualitative factors to determine whether it was more likely than not that the fair value of any asset was less than its carrying amount. For these assets, no impairment was identified as a result of our annual indefinite-lived intangible asset impairment test for 2019 and the fair values of these indefinite-lived intangible assets substantially exceeded their carrying amounts. The asset with the least excess fair value had an estimated fair value that exceeded its carrying amount by approximately 85% as of the date of our 2019 annual test. Considering this and other factors, we determined qualitatively that it was not more likely than not that the fair values of these indefinite-lived intangible assets were less than their carrying amounts and concluded that the quantitative impairment test was not required.

For the ARROW and Geoffrey Beene tradenames and the reacquired perpetual license rights recorded in connection with the Australia acquisition, we elected to bypass the qualitative assessment and proceeded directly to the quantitative impairment test. As a result of this quantitative interim impairment testing, we recorded $47 million of noncash impairment charges during the first quarter of 2020 to write down the two tradenames. This included $36 million to write down the ARROW tradename, that
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had a carrying amount of $79 million, to a fair value of $43 million, and $12 million to write down the Geoffrey Beene tradename, that had a carrying amount of $17 million, to a fair value of $5 million. The $47 million of impairment charges was included in goodwill and other intangible assets impairments in our Consolidated Statement of Operations and allocated to our Heritage Brands Wholesale segment. Holding all other assumptions constant, a 100 basis point change in the annual revenue growth rate of the Arrow business would result in a change to the estimated fair value of the tradename of approximately $50$5 million. Likewise, a 100 basis point change in the weighted average cost of capital would result in a change to the estimated fair value of the tradename of approximately $5 million. Holding all other assumptions constant, a 100 basis points change to the annual revenue growth rate or weighted average cost of capital in the Geoffrey Beene business would result in an immaterial change to the estimated fair value of the tradename.

With regard to the reacquired perpetual license rights recorded in connection with the Australia acquisition, we determined that its fair value substantially exceeded its carrying amount and, therefore, the asset was not impaired.

The fair value of the ARROW and Geoffrey Beene tradenames was determined using an income-based relief-from-royalty method. Under this method, the value of an asset is estimated based on the hypothetical cost savings that accrue as a result of not having to license the tradename from another party. These cash flows are discounted to present value using a discount rate that factors in the relative risk of the intangible asset. We discounted the cash flows used to value the ARROW and Geoffrey Beene tradenames at a rate of 10%. The fair value of our reacquired perpetual license rights recorded in connection with the Australia acquisition was determined using an income approach which estimates the net cash flows directly attributable to the subject intangible asset. These cash flows are discounted to present value using a discount rate that factors in the relative risk of the intangible asset. We discounted the cash flows used to value the reacquired perpetual license rights recorded in connection with the Australia acquisition at a rate of 10%. We classified the fair values of these indefinite-lived intangible assets as Level 3 fair value measurements due to the use of significant unobservable inputs.

Recently Adopted Accounting Guidance

We adopted, effective the first quarter of 2019,2020, accounting guidance related to leases. Thecredit losses, that introduces a new impairment model used to measure credit losses for certain financial assets measured at amortized cost, including trade and other receivables. This guidance requires entities to record an allowance for credit losses using a forward-looking expected loss impairment model that we recognize a right-of-use assetconsiders historical experience, current conditions, and a lease liability inreasonable and supportable forecasts that affect collectibility, rather than the balance sheet for most leases, but retains an expense recognitionincurred loss model similar to the currentrequired under previous guidance. Please see Note 22, “Recent Accounting Guidance,” and Note 16, “Leases,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion. We also adopted, effective the first quarter of 2019,2020, accounting guidance related to implementation costs incurred in a cloud computing arrangement that is a service contract. The update alignsgoodwill impairment, which eliminates the requirements for capitalizing implementation costs incurredrequirement to calculate the implied fair value of goodwill to measure the amount of the goodwill impairment charge, if any, under such arrangements with the requirements for capitalizing costs incurred to develop or obtain internal-use software. Under previous accounting guidance, we generally expensedsecond step of the implementation costs incurred in connection with a cloud computing arrangement that is a service contract.goodwill impairment test. Please see Note 22,20, “Recent Accounting Guidance,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report for further discussion.

During the thirty-ninethirteen weeks ended November May 3, 2019,2020, there were no significant changes to our critical accounting policies from those described in our Annual Report on Form 10-K for the year ended February 3, 2019,2, 2020, except for the items mentioned above.




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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial instruments held by us as of NovemberMay 3, 20192020 include cash and cash equivalents, short-term borrowings, long-term debt, foreign currency forward exchange contracts and interest rate swap agreements. Note 12, “Fair Value Measurements,” in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report outlines the fair value of our financial instruments as of NovemberMay 3, 2019.2020. Cash and cash equivalents held by us are affected by short-term interest rates, which are currently low. The potential for a significant decrease in short-term interest rates is low due to the currently low rates of return we are receiving on our cash and cash equivalents and, therefore, a further decrease would not have a material impact on our interest income. However, there is potential for a more significant increase in short-term interest rates, which could have a more material impact on our interest income. Given our balance of cash and cash equivalents at NovemberMay 3, 2019,2020, the effect of a 10 basis point change in short-term interest rates on our interest income would be approximately $600,000$800,000 annually. Borrowings under our 2019 facilities bear interest at a rate equal to an applicable margin plus a variable rate. As such, our 2019 facilities expose us to market risk for changes in interest rates. We have entered into interest rate swap agreements for the intended purpose of reducing our exposure to interest rate volatility. As of NovemberMay 3, 2019,2020, after taking into account the effect of our interest rate swap agreements that were in effect as of such date, approximately 60%65% of our long-term debt was at a fixed interest rate, with the remainder at variable interest rates. Given our long-term debt position at NovemberMay 3, 2019,2020, the effect of a 10 basis point change in interest rates on our variable interest expense would be approximately $1 million$500,000 annually. Please refer to “Liquidity and Capital Resources” in the Management’s Discussion and Analysis section included in Part I, Item 2 of this report for further discussion of our credit facilities and interest rate swap agreements.

Our Tommy Hilfiger and Calvin Klein businesses each have substantial international components that expose us to significant foreign exchange risk. Our Heritage Brands business also has international components but those components are not significant to the business. Over 50% of our $9.657$9.909 billion of revenue in 20182019 was generated outside of the United States. Changes in exchange rates between the United States dollar and other currencies can impact our financial results in two ways: a translational impact and a transactional impact.

The translational impact refers to the impact that changes in exchange rates can have on our results of operations and financial position. The functional currencies of our foreign subsidiaries are generally the applicable local currencies. Our consolidated financial statements are presented in United States dollars. The results of operations in local foreign currencies are translated into United States dollars using an average exchange rate over the representative period and the assets and liabilities in local foreign currencies are translated into United States dollars using the closing exchange rate at the balance sheet date. Foreign exchange differences that arise from the translation of our foreign subsidiaries’ assets and liabilities into United States dollars are recorded as foreign currency translation adjustments in other comprehensive (loss) income. Accordingly, our results of operations and other comprehensive (loss) income will be unfavorably impacted during times of a strengthening United States dollar, particularly against the euro, the Brazilian real, the Japanese yen, the Korean won, the British pound sterling, the Australian dollar, the Canadian dollar and the Chinese yuan renminbi, and favorably impacted during times of a weakening United States dollar against those currencies. Our results of operations will be similarly affected by foreign currency translation in periods that we generate net income; however, in periods that we generate net losses, as is currently expected in 2020, our results of operations will be favorably impacted during times of a strengthening United States dollar against the foreign currencies in which we generate losses and unfavorably impacted during times of a weakening United States dollar against those currencies.

We currently expect foreign currency translation to have a slight negative impact on our revenue in 2020 as compared to 2019.

In the thirty-ninethirteen weeks ended NovemberMay 3, 2019,2020, we recognized unfavorable foreign currency translation adjustments of $131$113 million within other comprehensive (loss) income principally driven by a strengthening of the United States dollar against the euro of 3%2% since February 3, 2019.2, 2020. Our foreign currency translation adjustments recorded in other comprehensive (loss) income are significantly impacted by the substantial amount of goodwill and other intangible assets denominated in the euro, which represented 32%36% of our $7.5$6.1 billion total goodwill and other intangible assets as of NovemberMay 3, 2019.2020. This translational impact was partially mitigated by the change in the fair value of our net investment hedges discussed below.

A transactional impact on financial results is common for apparel companies operating outside the United States that purchase goods in United States dollars, as is the case with most of our foreign operations. As with translation, ourOur results of operations will be unfavorably impacted during times of a strengthening United States dollar as the increased local currency value of inventory results in a higher cost of goods in local currency when the goods are sold and favorably impacted during times of a weakening United States dollar as the decreased local currency value of inventory results in a lower cost of goods in local currency when the goods are sold. We also have exposure to changes in foreign currency exchange rates related to certain intercompany transactions and SG&A expenses. We currently use and plan to continue to use foreign currency forward exchange contracts or other derivative instruments to mitigate the cash flow or market value risks associated with these inventory and intercompany
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transactions, but we are unable to entirely eliminate these risks. The foreign currency forward exchange contracts cover at least 70% of the projected inventory purchases in United States dollars by our foreign subsidiaries.

We currently expect a negative transactional impact on our net income in 2020 as compared to 2019.

Given our foreign currency forward exchange contracts outstanding at NovemberMay 3, 2019,2020, the effect of a 10% change in foreign currency exchange rates against the United States dollar would result in a change in the fair value of these contracts of


approximately $110$95 million. Any change in the fair value of these contracts would be substantially offset by a change in the fair value of the underlying hedged items.

In order to mitigate a portion of our exposure to changes in foreign currency exchange rates related to the value of our investments in foreign subsidiaries denominated in the euro, we designated the carrying amount of our €950 million€1.125 billion aggregate principal amount of euro-denominated senior notes that we had issued in the United Statesby PVH Corp., a U.S.-based entity, as net investment hedges of our investments in certain of our foreign subsidiaries that use the euro as their functional currency. The effect of a 10% change in the euro against the United States dollar would result in a change in the fair value of the net investment hedges of approximately $105$120 million. Any change in the fair value of the net investment hedges would be more than offset by a change in the value of our investments in certain of our European subsidiaries. Additionally, during times of a strengthening United States dollar against the euro, we would be required to use a lower amount of our cash flows from operations to pay interest and make long-term debt repayments on our euro-denominated senior notes, whereas during times of a weakening United States dollar against the euro, we would be required to use a greater amount of our cash flows from operations to pay interest and make long-term debt repayments on our euro-denominated seniorthese notes.

Included in the calculations of expense and liabilities for our pension plans are various assumptions, including return on assets, discount rates, mortality rates and future compensation increases. Actual results could differ from these assumptions, which would require adjustments to our balance sheet and could result in volatility in our future pension expense. Holding all other assumptions constant, a 1% change in the assumed rate of return on assets would result in a change to 20192020 net benefit cost related to the pension plans of approximately $6$7 million. Likewise, a 0.25% change in the assumed discount rate would result in a change to 20192020 net benefit cost of approximately $30$45 million.

ITEM 4 - CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Operating & Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Operating & Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Operating & Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We implemented internal controls in connection with our adoption of the new lease accounting standard in the first quarter of 2019. There have been no other changes in our internal control over financial reporting during the period to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are currently undertaking a major multi-year SAP S/4 implementation to upgrade our platforms and systems worldwide. The implementation will occur in phases over the next several years. We successfully launched the Global Finance functionality on the SAP S/4 platform in Asia and North America in the first quarter of 2020.

As a result of this multi-year implementation, we expect certain changes to our processes and procedures, which in turn, could result in changes to our internal control over financial reporting. While we expect this implementation to strengthen our internal controls over financial reporting by automating certain manual processes and standardizing business processes and reporting across our organization, we will continue to evaluate and monitor our internal controls over financial reporting as processes and procedures in the affected areas evolve. For a discussion of risks related to the implementation of new systems and hardware, please refer to risk factor “We rely significantly on information technology. Our business and reputation could be adversely impacted if our computer systems, or systems of our business partners and service providers, are disrupted or cease to operate effectively or if we or they are subject to a data security or privacy breach” in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended February 2, 2020.



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PART II – OTHER INFORMATION


ITEM 1 - LEGAL PROCEEDINGS

We are a party to certain litigations which, in management’s judgment based, in part, on the opinions of legal counsel, will not have a material adverse effect on our financial position.


ITEM 1A - RISK FACTORS

Please refer to Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended February 3, 20192, 2020 for a description of certain significant risks and uncertainties to which our business, operationsfinancial condition and financial conditionresults of operations are subject. There have been no material changes to these risk factors as of NovemberMay 3, 20192020.
.



ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


ISSUER PURCHASES OF EQUITY SECURITIES


           Period
(a) Total Number of Shares (or Units) Purchased(1)(2)
 
(b) Average Price Paid per Share (or Unit)(1)(2)
 
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(1)
 
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(1)
August 5, 2019 -       
September 1, 2019308,974
 $72.86
 308,700
 $858,905,027
September 2, 2019 -       
October 6, 2019458,859
 86.71
 457,530
 819,237,668
October 7, 2019 -       
November 3, 2019392,203
 87.77
 391,387
 784,914,789
Total1,160,036
 $83.38
 1,157,617
 $784,914,789

           Period
(a) Total Number of Shares (or Units) Purchased(1)(2)
(b) Average Price Paid per Share (or Unit)(1)(2)
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(1)
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(1)
February 2, 2020
March 1, 2020926,028  $84.33  925,871  $605,184,957  
March 2, 2020
April 5, 2020492,685  66.73  484,753  572,591,498  
April 6, 2020
May 3, 202079,012  42.28  —  572,591,498  
Total1,497,725  $76.32  1,410,624  $572,591,498  
(1) Our Board of Directors has authorized over time since 2015 an aggregate $2.0 billion stock repurchase program through June 3, 2023, of which $750 million was authorized on March 26, 2019.2023. Repurchases under the program may be made from time to time over the period through open market purchases, accelerated share repurchase programs, privately negotiated transactions or other methods, as we deem appropriate. Purchases are made based on a variety of factors, such as price, corporate requirements and overall market conditions, applicable legal requirements and limitations, trading restrictions under our insider trading policy and other relevant factors. The program may be modified by the Board of Directors, including to increase or decrease the repurchase limitation or extend, suspend, or terminate the program, at any time, without prior notice. We suspended share repurchases under the stock repurchase program beginning in mid-March 2020 in order to increase our cash position and preserve financial flexibility in response to the impacts of the COVID-19 pandemic on our business. In addition, under the terms of the June 2020 Amendment, share repurchases are not permitted through and including the first quarter of 2021. The existing stock repurchase program remains authorized by the Board of Directors and we may resume share repurchases after the restrictions under the June 2020 Amendment lapse.

(2) Our 2006 Stock Incentive Plan provides us with the right to deduct or withhold, or require employees to remit to us, an amount sufficient to satisfy any applicable tax withholding requirements applicable to stock-based compensation awards. To the extent permitted, employees may elect to satisfy all or part of such withholding requirements by tendering previously owned shares or by having us withhold shares having a fair market value equal to the minimum statutory tax withholding rate that could be imposed on the transaction. Included in this table are shares withheld during the thirdfirst quarter of 20192020 in connection with the settlement of restricted stock units to satisfy tax withholding requirements, in addition to the shares repurchased as part of the stock repurchase program discussed above.





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ITEM 6 - EXHIBITS
The following exhibits are included herein:
3.1
3.2
4.1
4.2
Indenture, dated as of November 1, 1993, between Phillips-Van Heusen Corporation and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.01 to our Registration Statement on Form S-3 (Reg. No. 33-50751) filed on October 26, 1993); First Supplemental Indenture, dated as of October 17, 2002, to Indenture, dated as of November 1, 1993, between Phillips-Van Heusen Corporation and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.15 to our Quarterly Report on Form 10-Q for the period ended November 3, 2002); Second Supplemental Indenture, dated as of February 12, 2002, to Indenture, dated as of November 1, 1993, between Phillips-Van Heusen Corporation and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K, filed on February 26, 2003); Third Supplemental Indenture, dated as of May 6, 2010, between Phillips-Van Heusen Corporation and The Bank of New York Mellon (formerly known as The Bank of New York), as Trustee (incorporated by reference to Exhibit 4.16 to our Quarterly Report on Form 10-Q for the period ended August 1, 2010); Fourth Supplemental Indenture, dated as of February 13, 2013, to Indenture, dated as of November 1, 1993, between PVH Corp. and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.11 to our Quarterly Report on Form 10-Q for the period ended May 5, 2013).
4.3
4.3
4.4
+31.1
+10.1
+10.2
+10.3
+10.4
+10.5
+31.1
+31.2
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  *,+32.1
  *,+32.2
+101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
+101.SCH
Inline XBRL Taxonomy Extension Schema Document
+101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document


+101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
+101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
+101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
  +Filed or furnished herewith.

* Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PVH CORP.
Registrant

Dated:December 9, 2019PVH CORP.
Registrant

Dated:June 11, 2020/s/ JAMES W. HOLMES
James W. Holmes
Senior Vice President and Controller (Principal Accounting Officer)


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