EXIT ACTIVITY COSTS

12 Months Ended

Feb. 02, 2020

Calvin Klein Restructuring Costs

The Company announced on January 10, 2019 a restructuring in connection with strategic changes for its 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. In connection with the Calvin Klein restructuring, the Company recorded pre-tax costs during 2019 and 2018 as shown in the following table. All expected costs related to this restructuring were incurred by the end of 2019.



(In millions)	Costs Incurred During 2018		Costs Incurred During 2019		Cumulative Costs Incurred
Severance, termination benefits and other employee costs	$	27.3	$	25.6	$	52.9
Long-lived asset impairments ⁽¹⁾	6.9		38.2		45.1
Contract termination and other costs	4.3		26.2		30.5
Inventory markdowns	2.2		12.9		15.1
Total	$	40.7	$	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 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 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 charges for severance, termination benefits and other employee costs, long-lived asset impairments and contract termination and other costs incurred during 2018, $18.9 million relate to SG&A expenses of the Calvin Klein North America segment and $19.6 million relate to SG&A expenses of the Calvin Klein International segment. The charges for inventory markdowns incurred during 2018 were recorded in cost of goods sold of the Company’s Calvin Klein International segment. Please see Note 21, “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 2019 and 2018.

The liabilities at February 2, 2020 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 2019		Costs Paid During 2019		Liability at 2/2/20
Severance, termination benefits and other employee costs	$	25.8	$	25.6	$	44.9	$	6.5
Contract termination and other costs	2.3		26.2		27.3		1.2
Total	$	28.1	$	51.8	$	72.2	$	7.7