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PVH Annual Report 2011

Richard Chan, MBA
Richard Chan, MBA

- PVH is a clothing company founded in 1876 that owns brands such as Calvin Klein, Tommy Hilfiger, and IZOD. - It has grown significantly through acquisitions, most notably Tommy Hilfiger in 2010 for $3 billion. - Financially, its stock price and segment income have risen in recent years. It also has a strong balance sheet with over $1.8 billion in goodwill from acquisitions.

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Richard Chan Jody Han
Overview About PVH Recent Stock Price Segment Income Income Statement Balance Sheet - Assets Cash Flow F&I Ratios Goodwill Conclusion
PVH Phillips-Van Heusen started in 1876 Was primarily a dress shirt company First collar-attached shirt was introduced in 1929 2012 Fortune 500 Ranking: #419
Acquisitions 1987 G. H. Bass & Co. 1995 IZOD 2003 Calvin Klein 2004 Arrow 2010 Tommy Hilfiger 2013 Warnaco
Stock Price Tommy Hilfiger acquired for $3B PVH Corp.'s THG Buys 50% In Arvind Limited's JV PVH license takes Izod south of the border Ike Behar Expands Licensing PVH Corp.'s THG Global Licensing With Ittierre S&P assigns 'BB' rtg to PVH notes LA With Ram Pacific Pte Ltd. For IZOD Piper Jaffray Downgrades Neutral THG and Inbrands announce JV in Brazil Completes Acquisition Of Warnaco Group Inc Phillips-Van Heusen Changes Name to PVH LA with Concept One Accessories for Headwear LA Dishang Group's Fashion Brands For IZOD LA with American Essentials for Legwear LA with Stepping Stones for Infant LA Oracon for Mens ARROW Clothing in Brazil $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 1/4/2010 4/4/2010 7/4/2010 10/4/2010 1/4/2011 4/4/2011 7/4/2011 10/4/2011 1/4/2012 4/4/2012 7/4/2012 10/4/2012 1/4/2013 PVH Share Price PVH
Brands (Segments)
Segment Income FY09 to FY10 $203M 11M 6M 17M 19M 38M 52M 56M (238M) $244M FY 2009 Heritage Wholesale - Dress Heritage Wholesale - Sports Heritage Retail Calvin Klein Licensing Tommy Hilfiger NA Tommy Hilfiger Int'l Other (CK Apparel) Corporate FY 2010
Segment Income FY10 to FY11 $560M 12M (47M) (16M) 14M 44M 149M 16M 184M $203M FY 2010 Heritage Wholesale - Dress Heritage Wholesale - Sports Heritage Retail Calvin Klein Licensing Tommy Hilfiger NA Tommy Hilfiger Int'l Other (CK Apparel) Corporate FY 2011
Income Statement
Balance Sheet Assets
Cash Flow Investing & Financing 2011 2010 2009
Ratios 2008-01 2009-01 2010-01 2011-01 2012-01 INDUSTRY Current Ratio 2.32 2.48 2.74 1.97 1.67 1.44 Acid Test/Quick Ratio 1.18 1.48 1.85 1.00 0.67 0.94 Receiveables Turnover 15.75 14.57 12.73 14.89 13.06 5.25 Average Collection Period 23.2 25.0 28.7 24.5 27.9 69.5 Inventory Turnover 3.83 4.27 4.45 4.54 3.73 1.51 Days in Inventory 95.24 85.52 82.09 80.32 97.84 241.72 Profit Margin 7.5% 3.7% 6.8% 1.2% 5.4% 4.9% Operating Margin 12.7% 7.0% 10.2% 4.4% 9.5% 6.8% Asset Turnover 111.6% 114.0% 105.7% 101.6% 87.0% 48.0% Return on Assets 8.4% 4.2% 7.1% 1.2% 4.7% 3.8% Return on Equity 19.1% 9.4% 14.9% 3.0% 12.3% 6.2% Earnings per share ($) $3.29 $1.78 $3.14 $0.82 $4.46 Price Earnings Ratio 12.79 10.69 12.51 71.18 17.31 15.89 Payout Ratio 4.4% 8.7% 4.9% 18.5% 3.5% 21.4% Debt to Assets 56.0% 54.6% 50.0% 64.0% 59.8% 28.3% Interest Coverage Ratio 9.68 5.29 7.24 1.60 4.35 6.62 Free Cash Flow ($MM) $126.00 $151.00 $190.00 $251.00 $321.00 Free Cash Flow net Div ($MM) $118.00 $143.00 $182.00 $241.00 $310.00 LiquiditySolvencyProfitability
Goodwill from Acquisitions Tommy Hilfiger Goodwill recorded - $1.27B Estimated Carrying Value of Net Assets - $1.69B Cash portion funded through: Cash on hand The sale on April 28, 2010 of 5,750 shares of the Companys common stock Issuances of an aggregate of 8 shares of Series A convertible preferred stock, which are convertible into 4,189 shares of the companys common stock, for an aggregate gross purchase price of $200M Issuance of $600M of 7 3/8% senior Notes due 2020 Borrowing of approximately $1.9B of term loans under new credit facilities *in thousands
Goodwill from Acquisitions - CK 2003 Acquisition Contingent Price Payments to Mr. Calvin Klein 1.15% of estimate WW Sales through 2018 2009 $38.9M 2010 $45.3M 2011 $51.3M 2012 $55.0M Est.
Indefinite-lived intangible assets tested annually 3Q Fair Value of goodwill Discounted Cash Flow Approach Weighted Average Cost of Capital Includes risk premium, risk free rates No impairment of goodwill or other intangible assets resulted from any of these tests 2011/2010/2009 Goodwill from Acquisitions Impairments
Carrying Amounts of Goodwill $1,820.5 M $1,822.5 M $ 419.2 M 45.3 M 1,271.8 M 6.4 M (4.2M) 81.9 M 51.3 M (49.3M) 2009 Goodwill Balance CK Contingent Payment Tommy Hilfiger Tommy Hilfiger Handbag Disposal of Goodwill Currency 2010 Goodwill Balance CK Contingent Payment Currency 2011 Goodwill Balance
PVH Annual Report 2011
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PVH Annual Report 2011

  • 2. Overview About PVH Recent Stock Price Segment Income Income Statement Balance Sheet - Assets Cash Flow F&I Ratios Goodwill Conclusion
  • 3. PVH Phillips-Van Heusen started in 1876 Was primarily a dress shirt company First collar-attached shirt was introduced in 1929 2012 Fortune 500 Ranking: #419
  • 4. Acquisitions 1987 G. H. Bass & Co. 1995 IZOD 2003 Calvin Klein 2004 Arrow 2010 Tommy Hilfiger 2013 Warnaco
  • 5. Stock Price Tommy Hilfiger acquired for $3B PVH Corp.'s THG Buys 50% In Arvind Limited's JV PVH license takes Izod south of the border Ike Behar Expands Licensing PVH Corp.'s THG Global Licensing With Ittierre S&P assigns 'BB' rtg to PVH notes LA With Ram Pacific Pte Ltd. For IZOD Piper Jaffray Downgrades Neutral THG and Inbrands announce JV in Brazil Completes Acquisition Of Warnaco Group Inc Phillips-Van Heusen Changes Name to PVH LA with Concept One Accessories for Headwear LA Dishang Group's Fashion Brands For IZOD LA with American Essentials for Legwear LA with Stepping Stones for Infant LA Oracon for Mens ARROW Clothing in Brazil $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 1/4/2010 4/4/2010 7/4/2010 10/4/2010 1/4/2011 4/4/2011 7/4/2011 10/4/2011 1/4/2012 4/4/2012 7/4/2012 10/4/2012 1/4/2013 PVH Share Price PVH
  • 7. Segment Income FY09 to FY10 $203M 11M 6M 17M 19M 38M 52M 56M (238M) $244M FY 2009 Heritage Wholesale - Dress Heritage Wholesale - Sports Heritage Retail Calvin Klein Licensing Tommy Hilfiger NA Tommy Hilfiger Int'l Other (CK Apparel) Corporate FY 2010
  • 8. Segment Income FY10 to FY11 $560M 12M (47M) (16M) 14M 44M 149M 16M 184M $203M FY 2010 Heritage Wholesale - Dress Heritage Wholesale - Sports Heritage Retail Calvin Klein Licensing Tommy Hilfiger NA Tommy Hilfiger Int'l Other (CK Apparel) Corporate FY 2011
  • 10. Balance Sheet Assets
  • 11. Cash Flow Investing & Financing 2011 2010 2009
  • 12. Ratios 2008-01 2009-01 2010-01 2011-01 2012-01 INDUSTRY Current Ratio 2.32 2.48 2.74 1.97 1.67 1.44 Acid Test/Quick Ratio 1.18 1.48 1.85 1.00 0.67 0.94 Receiveables Turnover 15.75 14.57 12.73 14.89 13.06 5.25 Average Collection Period 23.2 25.0 28.7 24.5 27.9 69.5 Inventory Turnover 3.83 4.27 4.45 4.54 3.73 1.51 Days in Inventory 95.24 85.52 82.09 80.32 97.84 241.72 Profit Margin 7.5% 3.7% 6.8% 1.2% 5.4% 4.9% Operating Margin 12.7% 7.0% 10.2% 4.4% 9.5% 6.8% Asset Turnover 111.6% 114.0% 105.7% 101.6% 87.0% 48.0% Return on Assets 8.4% 4.2% 7.1% 1.2% 4.7% 3.8% Return on Equity 19.1% 9.4% 14.9% 3.0% 12.3% 6.2% Earnings per share ($) $3.29 $1.78 $3.14 $0.82 $4.46 Price Earnings Ratio 12.79 10.69 12.51 71.18 17.31 15.89 Payout Ratio 4.4% 8.7% 4.9% 18.5% 3.5% 21.4% Debt to Assets 56.0% 54.6% 50.0% 64.0% 59.8% 28.3% Interest Coverage Ratio 9.68 5.29 7.24 1.60 4.35 6.62 Free Cash Flow ($MM) $126.00 $151.00 $190.00 $251.00 $321.00 Free Cash Flow net Div ($MM) $118.00 $143.00 $182.00 $241.00 $310.00 LiquiditySolvencyProfitability
  • 13. Goodwill from Acquisitions Tommy Hilfiger Goodwill recorded - $1.27B Estimated Carrying Value of Net Assets - $1.69B Cash portion funded through: Cash on hand The sale on April 28, 2010 of 5,750 shares of the Companys common stock Issuances of an aggregate of 8 shares of Series A convertible preferred stock, which are convertible into 4,189 shares of the companys common stock, for an aggregate gross purchase price of $200M Issuance of $600M of 7 3/8% senior Notes due 2020 Borrowing of approximately $1.9B of term loans under new credit facilities *in thousands
  • 14. Goodwill from Acquisitions - CK 2003 Acquisition Contingent Price Payments to Mr. Calvin Klein 1.15% of estimate WW Sales through 2018 2009 $38.9M 2010 $45.3M 2011 $51.3M 2012 $55.0M Est.
  • 15. Indefinite-lived intangible assets tested annually 3Q Fair Value of goodwill Discounted Cash Flow Approach Weighted Average Cost of Capital Includes risk premium, risk free rates No impairment of goodwill or other intangible assets resulted from any of these tests 2011/2010/2009 Goodwill from Acquisitions Impairments
  • 16. Carrying Amounts of Goodwill $1,820.5 M $1,822.5 M $ 419.2 M 45.3 M 1,271.8 M 6.4 M (4.2M) 81.9 M 51.3 M (49.3M) 2009 Goodwill Balance CK Contingent Payment Tommy Hilfiger Tommy Hilfiger Handbag Disposal of Goodwill Currency 2010 Goodwill Balance CK Contingent Payment Currency 2011 Goodwill Balance

Editor's Notes

  • #16: The Company performed its required annual impairment tests for goodwill and other indefinite-lived intangible assets at the beginning of the third quarters of 2011, 2010 and 2009. No impairment of goodwill or other intangible assets resulted from any of these tests.