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DEBT | 12 Months Ended
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Feb. 03, 2019
Debt Disclosure [Abstract] |
DEBT | DEBT Short-Term Borrowings The Company has the ability to draw revolving borrowings under its senior secured credit facilities, as discussed in the section entitled “2016 Senior Secured Credit Facilities” below. The Company had $7.8 million outstanding under these facilities as of February 3, 2019. The weighted average interest rate on funds borrowed as of February 3, 2019 was 4.45%. The maximum amount of revolving borrowings outstanding under these facilities during 2018 was $274.4 million. The Company had no borrowings outstanding under these facilities as of February 4, 2018. Additionally, the Company has the availability 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 $101.9 million based on exchange rates in effect on February 3, 2019 and are utilized primarily to fund working capital needs. The Company had $5.1 million and $19.5 million outstanding under these facilities as of February 3, 2019 and February 4, 2018, respectively. The weighted average interest rate on funds borrowed as of February 3, 2019 and February 4, 2018 was 0.21% and 1.19%, respectively. The maximum amount of borrowings outstanding under these facilities during 2018 was $38.6 million. Long-Term Debt The carrying amounts of the Company’s long-term debt were as follows:
(In millions) | 2018 |  | 2017
Senior secured Term Loan A facility due 2021 | $ | 1,643.8 |  |  | $ | 1,792.1 |
7 3/4% debentures due 2023 | 99.6 |  |  | 99.5 |
3 5/8% senior unsecured euro notes due 2024 (1) | 396.5 |  |  | 430.8 |
3 1/8% senior unsecured euro notes due 2027 (1) | 679.5 |  |  | 738.9 |
Total | 2,819.4 |  |  | 3,061.3 |
Less: Current portion of long-term debt | — |  |  | — |
Long-term debt | $ | 2,819.4 |  |  | $ | 3,061.3 |
(1) | The carrying amount of the Company’s senior unsecured euro notes includes the impact of changes in the exchange rate of the United States dollar against the euro.
Please see Note 11, “Fair Value Measurements,” for the fair value of the Company’s long-term debt as of February 3, 2019 and February 4, 2018. As of February 3, 2019, the Company’s mandatory long-term debt repayments for the next five years were as follows:
(In millions) |
Fiscal Year | Amount
2019 | $ | — |
2020 | 123.5 |
2021 | 1,525.8 |
2022 | — |
2023 | 100.0 |
Total debt repayments for the next five years exceed the total carrying amount of the Company’s Term Loan A facility and 7 3/4% debentures due 2023 as of February 3, 2019 because the carrying amount reflects the unamortized portions of debt issuance costs and the original issue discounts. As of February 3, 2019, after taking into account the effect of the Company’s interest rate swap agreements discussed in the section entitled “2016 Senior Secured Credit Facilities,” which were in effect as of such date, approximately 50% of the Company’s long-term debt had fixed interest rates, with the remainder at variable interest rates. 2016 Senior Secured Credit Facilities The Company has senior secured credit facilities due May 19, 2021 (the “2016 facilities”) that consist 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. The senior secured revolving credit facilities also include amounts available for letters of credit. A portion of each of the United States dollar-denominated revolving credit facilities is also 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 term loan facilities or increase the commitments under the senior secured revolving credit facilities by an aggregate amount not to exceed the sum of (1) the sum of (x) $1,350.0 million plus (y) the aggregate amount of all voluntary prepayments of loans under the Term Loan A and the senior secured revolving credit facilities (to the extent, in the case of voluntary prepayments of loans under the senior secured revolving credit facilities, there is an equivalent permanent reduction of the revolving commitments) plus (z) an amount equal to the aggregate revolving commitments of any defaulting lender (to the extent the commitments with respect thereto have been terminated) and (2) an additional unlimited amount as long as the ratio of the Company’s senior secured net debt to consolidated adjusted earnings before interest, taxes, depreciation and amortization (in each case calculated as set forth in the documentation relating to the 2016 facilities) would not exceed 3 to 1 after giving pro forma effect to the incurrence of such increase. The lenders under the 2016 facilities are not required to provide commitments with respect to such additional facilities or increased commitments. The Company had prior senior secured credit facilities (the “2014 facilities”) that were amended by the 2016 facilities on May 19, 2016 (the “Amendment Date”). Among other things, this amendment provided for (i) the Company to borrow an additional $582.0 million principal amount of loans under the Term Loan A facility, (ii) the repayment of all outstanding loans under the previously outstanding Term Loan B facility with the proceeds of the additional loans under the Term Loan A facility, and (iii) the termination of the Term Loan B facility. The Company paid debt issuance costs of $10.9 million (of which $4.6 million was expensed as debt modification costs and $6.3 million is being amortized over the term of the related debt agreement) and recorded debt extinguishment costs of $11.2 million to write-off previously capitalized debt issuance costs. The Company had loans outstanding of $1,643.8 million, net of original issue discounts and debt issuance costs, under the Term Loan A facility, $7.8 million of borrowings outstanding under the senior secured revolving credit facilities and $20.4 million of outstanding letters of credit under the senior secured revolving credit facilities as of February 3, 2019. The terms of the Term Loan A facility require the Company to make quarterly repayments of amounts outstanding under the 2016 facilities, which commenced with the calendar quarter ended June 30, 2016. Such amounts equal 5.00% per annum of the principal amount outstanding on the Amendment Date for the first eight calendar quarters following the Amendment Date, 7.50% per annum of the principal amount for the four calendar quarters thereafter and 10.00% per annum of the principal amount 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 Term Loan A facility. The Company made payments of $150.0 million, $250.0 million and $350.0 million during 2018, 2017 and 2016, respectively, on its term loans under the 2016 facilities and 2014 facilities. As a result of the voluntary repayments the Company has made to date, it is not required to make a long-term debt repayment until June 2020. The Company’s obligations under the 2016 facilities are guaranteed by substantially all of its existing and future direct and indirect United States subsidiaries, with certain exceptions. Obligations of the European borrower, PVH B.V., under the 2016 facilities are guaranteed by the Company, substantially all of the Company’s existing and future direct and indirect United States subsidiaries (with certain exceptions) and Tommy Hilfiger Europe B.V., one of the Company’s wholly owned subsidiaries. The Company and its United States subsidiary guarantors have pledged certain of their assets as security for the obligations under the 2016 facilities. The outstanding borrowings under the 2016 facilities are prepayable at any time without penalty (other than customary breakage costs). The terms of the 2016 facilities require the Company to repay certain amounts outstanding thereunder with (a) net cash proceeds of the incurrence of certain indebtedness, (b) net cash proceeds of certain asset sales or other dispositions (including as a result of casualty or condemnation) that exceed certain thresholds, to the extent such proceeds are not reinvested or committed to be reinvested in the business in accordance with customary reinvestment provisions, and (c) a percentage of excess cash flow that exceeds the voluntary debt payments the Company has made during the applicable year, which percentage is based upon its net leverage ratio during the relevant fiscal period. The United States dollar-denominated borrowings under the 2016 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 rate plus 1/2 of 1.00% and (iii) a one-month adjusted Eurocurrency rate plus 1.00% or (b) an adjusted Eurocurrency rate, calculated in a manner set forth in the 2016 facilities. The Canadian dollar-denominated borrowings under the 2016 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 sum of (x) the average of the rates per annum for Canadian dollar bankers’ acceptances having a term of one month and (y) 0.75%, or (b) an adjusted Eurocurrency rate, calculated in a manner set forth in the 2016 facilities. The borrowings under the 2016 facilities in currencies other than United States dollars or Canadian dollars bear interest at a rate equal to an applicable margin plus an adjusted Eurocurrency rate, calculated in a manner set forth in the 2016 facilities. The current applicable margin with respect to the Term Loan A facility and each revolving credit facility is 1.50% for adjusted Eurocurrency rate loans and 0.50% for base rate loans, respectively. After the date of delivery of the compliance certificate and financial statements with respect to each of the Company’s fiscal quarters, the applicable margin for borrowings under the Term Loan A facility and the revolving credit facilities is subject to adjustment based upon the Company’s net leverage ratio. 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 2018, 2017 and 2016:
(In millions) |  |  |  |  |  |  |  |  |  |
Designation Date |  | Commencement Date |  | Initial Notional Amount |  | Notional Amount Outstanding as of February 3, 2019 |  | Fixed Rate |  | Expiration Date
January 2019 |  | February 2020 |  | $ | 50.0 |  |  | $ | — |  |  | 2.4187% |  | February 2021
November 2018 |  | February 2019 |  | 139.2 |  |  | — |  |  | 2.8645% |  | February 2021
October 2018 |  | February 2019 |  | 115.7 |  |  | — |  |  | 2.9975% |  | February 2021
June 2018 |  | August 2018 |  | 50.0 |  |  | 50.0 |  |  | 2.6825% |  | February 2021
June 2017 |  | February 2018 |  | 306.5 |  |  | 181.5 |  |  | 1.566% |  | February 2020
July 2014 |  | February 2016 |  | 682.6 |  |  | — |  |  | 1.924% |  | February 2018
The notional amounts of the outstanding interest rate swap that commenced in February 2018 and the interest rate swaps that will commence in February 2019 will be 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 2016 facilities is expected to always equal or exceed the combined notional amount of the then-outstanding interest rate swaps. The 2016 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; certain events related to certain of the guarantees by the Company and certain of its subsidiaries, and certain pledges of the Company’s assets and those of certain of the Company’s subsidiaries, as security for the obligations under the 2016 facilities; and a change in control (as defined in the 2016 facilities). The 2016 facilities also contain covenants that restrict the Company’s ability to finance future operations or capital needs, to take advantage of other business opportunities that may be in its interest or to satisfy its obligations under its other outstanding debt. These covenants restrict its ability to, among other things:
• | incur or guarantee additional debt or extend credit;
• | make restricted payments, including paying dividends or making distributions on, or redeeming or repurchasing, the Company’s capital stock or certain debt;
• | make acquisitions and investments;
• | dispose of assets;
• | engage in transactions with affiliates;
• | enter into agreements restricting the Company’s subsidiaries’ ability to pay dividends;
• | create liens on the Company’s assets or engage in sale/leaseback transactions; and
• | effect a consolidation or merger, or sell, transfer, or lease all or substantially all of the Company’s assets.
The 2016 facilities require the Company to comply with certain financial covenants, including minimum interest coverage and maximum net leverage. A breach of any of these operating or financial covenants would result in a default under the 2016 facilities. 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 its other debt. If the Company were unable to repay any such borrowings when due, the lenders could proceed against the Company’s collateral, which also secures some of its other indebtedness. 4 1/2% Senior Notes Due 2022 The Company had outstanding $700.0 million principal amount of 4 1/2% senior notes due December 15, 2022. The Company redeemed these notes on January 5, 2018 in connection with the issuance of €600.0 million euro-denominated principal amount of 3 1/8% senior notes due December 15, 2027, as discussed below. The Company paid a premium of $15.8 million to the holders of these notes in connection with the redemption and recorded debt extinguishment costs of $8.1 million to write-off previously capitalized debt issuance costs associated with these notes during 2017. 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%. Pursuant to the indenture governing the debentures, the Company must maintain a certain level of stockholders’ equity in order to pay cash dividends and make other restricted payments, as defined in the indenture governing the debentures. The debentures are not redeemable at the Company’s option prior to maturity. 3 5/8% Euro Senior Notes Due 2024 The Company issued on June 20, 2016 €350.0 million euro-denominated principal amount of 3 5/8% senior notes due July 15, 2024. Interest on the notes is payable in euros. The Company paid €6.4 million (approximately $7.3 million based on exchange rates in effect on the payment date) of fees during 2016 in connection with the issuance of these notes, which are 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. The Company’s ability to create liens on the Company’s assets or engage in sale/leaseback transactions is restricted as defined in the indenture governing the notes. 3 1/8% Euro Senior Notes Due 2027 The Company issued on December 21, 2017 €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 paid €8.7 million (approximately $10.3 million based on exchange rates in effect on the payment date) of fees during 2017 in connection with the issuance of these notes, which are amortized over the term of the notes. 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 ability to create liens on the Company’s assets or engage in sale/leaseback transactions is restricted as defined in the indenture governing the notes. Substantially all of the Company’s assets have been pledged as collateral to secure the Company’s obligations under its 2016 facilities and the 7 3/4% debentures due 2023. As of February 3, 2019, the Company was in compliance with all applicable financial and non-financial covenants under its financing arrangements. Interest paid was $114.6 million, $120.2 million and $109.8 million during 2018, 2017 and 2016, respectively.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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