SEGMENT DATA

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

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 North America, primarily to department and specialty stores and e-commerce sites operated by key department store customers and pure play e-commerce retailers; (ii) operating retail stores, which are primarily located in premium outlet centers in North America, and e-commerce sites in North America, 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 brand names Calvin Klein, Calvin Klein Collection and Calvin Klein Platinum for a broad array of products and retail services in North America.

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 and Brazil, primarily to department and specialty stores, e-commerce sites operated by key department store customers and pure play e-commerce retailers, franchisees of Calvin Klein, distributors and licensees; (ii) operating retail stores and e-commerce sites in Europe, Asia and Brazil, 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 brand names Calvin Klein Collection, Calvin Klein Platinum and Calvin Klein for a broad array of products and retail services outside of North America. This segment also includes the Company’s proportionate share of the net income or loss of its investments in unconsolidated Calvin Klein foreign affiliates in Australia and India.

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 North America, primarily to department stores, principally Macy’s, Inc. and Hudson’s Bay Company, as well as e-commerce sites operated by key department store customers and pure play e-commerce retailers; (ii) operating retail stores, which are primarily located in premium outlet centers in North America, and e-commerce sites in North America, 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 name for a broad array of products in North America.

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 and China, primarily to department and specialty stores, e-commerce sites operated by key department store customers and pure play e-commerce retailers, franchisees of Tommy Hilfiger, distributors and licensees; (ii) operating retail stores in Europe, China and Japan and international e-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 name for a broad array of products outside of North America. This segment also includes the Company’s proportionate share of the net income or loss of its investments in unconsolidated Tommy Hilfiger foreign affiliates in Brazil, India and Australia. This segment included the Company’s proportionate share of the net income or loss of its investment in an unconsolidated Tommy Hilfiger foreign affiliate in China until April 13, 2016, on which date the Company acquired the remaining interest in the affiliate that it did not already own and began to consolidate the operations as a wholly owned subsidiary of the Company. Please see Note 3, “Acquisitions,” for a 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 and, to a lesser extent, e-commerce sites operated by key department store customers and pure play e-commerce retailers in North America of (i) dress shirts, neckwear and underwear 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) swimwear, fitness apparel, swim accessories and related products under the brand name Speedo; and (iv) women’s intimate apparel under the brand names Warner’s and Olga. This segment also includes the Company’s proportionate share of the net income or loss of its investment in its unconsolidated Heritage Brands foreign affiliate in Australia.

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 in North America, which primarily sell apparel, accessories and related products under the brand names Van Heusen and IZOD. The Company exited the Izod retail business in the third quarter of 2015 but continues to sell a limited selection of IZOD Golf apparel in some of its Van Heusen retail stores. The Company also sells Warner’s products on a limited basis in some of its Van Heusen retail stores.

The following tables present summarized information by segment:



	Thirteen Weeks Ended
(In millions)	5/1/16		5/3/15
Revenue – Calvin Klein North America
Net sales	$	338.8	$	299.3
Royalty revenue	30.3		29.7
Advertising and other revenue	11.5		9.8
Total	380.6		338.8

Revenue – Calvin Klein International
Net sales	316.3		291.6
Royalty revenue	18.6		17.7
Advertising and other revenue	7.2		5.8
Total	342.1		315.1

Revenue – Tommy Hilfiger North America
Net sales	321.1		341.5
Royalty revenue	11.0		9.6
Advertising and other revenue	2.5		2.8
Total	334.6		353.9

Revenue – Tommy Hilfiger International
Net sales	444.6		400.2
Royalty revenue	11.6		12.1
Advertising and other revenue	1.0		0.9
Total	457.2		413.2

Revenue – Heritage Brands Wholesale
Net sales	339.2		367.5
Royalty revenue	5.0		4.6
Advertising and other revenue	0.7		0.6
Total	344.9		372.7

Revenue – Heritage Brands Retail
Net sales	57.7		85.0
Royalty revenue	0.6		0.5
Advertising and other revenue	0.1		0.1
Total	58.4		85.6

Total Revenue
Net sales	1,817.7		1,785.1
Royalty revenue	77.1		74.2
Advertising and other revenue	23.0		20.0
Total	$	1,917.8	$	1,879.3



	Thirteen Weeks Ended
(In millions)	5/1/16			⁽¹⁾	5/3/15			⁽¹⁾
Income before interest and taxes – Calvin Klein North America	$	38.1		⁽³⁾⁽⁷⁾	$	40.4		⁽⁸⁾

Income before interest and taxes – Calvin Klein International	52.2			⁽³⁾⁽⁷⁾	49.3			⁽⁸⁾

Income before interest and taxes – Tommy Hilfiger North America	23.0			⁽⁴⁾	30.3

Income before interest and taxes – Tommy Hilfiger International	183.3			⁽⁶⁾	61.8

Income before interest and taxes – Heritage Brands Wholesale	27.9			⁽³⁾⁽⁵⁾	30.3			⁽⁸⁾

Income (loss) before interest and taxes – Heritage Brands Retail	2.1				(0.1		)	⁽⁹⁾

Loss before interest and taxes – Corporate⁽²⁾	(32.0		)	⁽³⁾	(35.2		)	⁽⁸⁾

Income before interest and taxes	$	294.6			$	176.8

⁽¹⁾

Income (loss) before interest and taxes for the thirteen weeks ended May 1, 2016 and May 3, 2015 was significantly impacted by the strengthening of the United States dollar against other currencies in which the Company transacts significant levels of business. Please see section entitled “Results of Operations” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 2 of this report for a further discussion.

⁽²⁾

Includes corporate expenses not allocated to any reportable segments, as well as the Company’s proportionate share of the net income or loss of its investment in Karl Lagerfeld. Corporate expenses represent overhead operating expenses and include expenses for senior corporate management, corporate finance, information technology related to corporate infrastructure and actuarial gains and losses from the Company’s pension and other postretirement plans (which are generally recorded in the fourth quarter).

⁽³⁾

Income (loss) before interest and taxes for the thirteen weeks ended May 1, 2016 includes costs of $7.5 million associated with the Company’s integration of Warnaco and the related restructuring. Such costs were included in the Company’s segments as follows: $0.2 million in Calvin Klein North America; $2.6 million in Calvin Klein International; $0.4 million in Heritage Brands Wholesale; and $4.3 million in corporate expenses not allocated to any reportable segments.


⁽⁴⁾	Income before interest and taxes for the thirteen weeks ended May 1, 2016 includes costs of $1.3 million in connection with the licensing to G-III Apparel Group, Ltd. (“G-III”) of the Tommy Hilfiger womenswear wholesale business in the United States and Canada.


⁽⁵⁾	Income before interest and taxes for the thirteen weeks ended May 1, 2016 includes costs of $2.6 million related to the discontinuation of several licensed product lines in the Company’s Heritage Brands dress furnishings business.

⁽⁶⁾

Income before interest and taxes for the thirteen weeks ended May 1, 2016 includes a noncash gain of $153.1 million to write-up the Company’s equity investment in TH China to fair value in connection with the acquisition of the 55% interest in TH China that it did not already own. Partially offsetting the gain are acquisition related costs of $24.2 million, principally related to valuation adjustments and amortization of short-lived assets, and a one-time cost of $5.9 million recorded on the Company’s equity investment in TH China. Please see Note 3, “Acquisitions,” for a further discussion.


⁽⁷⁾	Income before interest and taxes for the thirteen weeks ended May 1, 2016 includes costs of $5.5 million in connection with the restructuring related to the new global creative strategy for Calvin Klein announced in April 2016. Such costs were included in the Company’s segments as follows: $2.7 million in Calvin Klein North America; and $2.8 million in Calvin Klein International.

⁽⁸⁾

Income (loss) before interest and taxes for the thirteen weeks ended May 3, 2015 includes costs of $18.8 million associated with the Company’s integration of Warnaco and the related restructuring. Such costs were included in the Company’s segments as follows: $2.1 million in Calvin Klein North America; $3.9 million in Calvin Klein International; $3.6 million in Heritage Brands Wholesale; and $9.2 million in corporate expenses not allocated to any reportable segments.


⁽⁹⁾	Loss before interest and taxes for the thirteen weeks ended May 3, 2015 includes costs of $0.5 million related to the operation of and exit from the Company’s Izod retail business.

Intersegment transactions primarily consist of transfers of inventory principally from the Heritage Brands Wholesale segment to the Heritage Brands Retail segment, the Calvin Klein North America segment and the Tommy Hilfiger 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 and the Calvin Klein North America segment.