Attached files
file | filename |
---|---|
8-K - FORM 8-K - PVH CORP. /DE/ | c99105e8vk.htm |
EX-99.1 - EXHIBIT 99.1 - PVH CORP. /DE/ | c99105exv99w1.htm |
EX-99.2 - EXHIBIT 99.2 - PVH CORP. /DE/ | c99105exv99w2.htm |
Exhibit 99.3
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
(unaudited)
(unaudited)
Nine months ended 31 December 2009
Amsterdam, The Netherlands
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts
in thousands, except per share/option amounts and/or as otherwise indicated)
Contents | ||||
Consolidated statement of financial position |
3 | |||
Consolidated interim income statement |
4 | |||
Consolidated interim statement of comprehensive income |
5 | |||
Consolidated interim position and statement of Cash flow |
6 | |||
Consolidated interim Shareholders Equity Statement |
7 | |||
Notes to the consolidated interim financial information |
8 |
2
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
Consolidated statement of financial position
31 December | 31 March | |||||||||
Note | 2009 | 2009 | ||||||||
(unaudited) | ||||||||||
Non-current assets |
||||||||||
Property and equipment |
5 | 161,325 | 195,671 | |||||||
Goodwill and other intangible assets |
6 | 791,322 | 817,239 | |||||||
Deferred income tax assets |
21,863 | 31,453 | ||||||||
Derivative financial instruments |
7 | 117 | | |||||||
Loans and other receivables |
32,626 | 31,550 | ||||||||
1,007,253 | 1,075,913 | |||||||||
Current assets |
||||||||||
Inventories |
198,789 | 214,685 | ||||||||
Trade and other receivables |
154,070 | 288,138 | ||||||||
Current income tax receivable |
251 | 1,711 | ||||||||
Derivative financial instruments |
7 | 2,600 | 5,131 | |||||||
Cash and cash equivalents |
8 | 236,559 | 139,845 | |||||||
592,269 | 649,510 | |||||||||
Total assets |
1,599,522 | 1,725,423 | ||||||||
EQUITY |
||||||||||
Capital and reserves attributable to equity holders of the
Company |
||||||||||
Ordinary shares and share premium |
50,574 | 48,923 | ||||||||
Other reserves |
2,107 | 5,739 | ||||||||
Accumulated deficit |
(40,860 | ) | (48,714 | ) | ||||||
Total equity |
11,821 | 5,948 | ||||||||
LIABILITIES |
||||||||||
Subordinated Shareholder loan |
18 | 516,890 | 467,940 | |||||||
Non-current liabilities |
||||||||||
Borrowings |
11 | 514,241 | 564,164 | |||||||
Other non-current liabilities |
97,239 | 117,987 | ||||||||
Deferred income tax liabilities |
75,594 | 85,360 | ||||||||
Retirement benefit obligations |
11,574 | 12,034 | ||||||||
Provisions for other liabilities and charges |
12 | 14,833 | 7,059 | |||||||
Derivative financial instruments |
7 | 9,763 | 18,179 | |||||||
723,244 | 804,783 | |||||||||
Current liabilities |
||||||||||
Trade and other payables |
13 | 257,547 | 302,914 | |||||||
Short term borrowings |
11 | 35,610 | 61,600 | |||||||
Current income tax liabilities |
1,232 | 6,962 | ||||||||
Current portion provisions for other liabilities and charges |
12 | 49,359 | 70,508 | |||||||
Derivative financial instruments |
7 | 3,819 | 4,768 | |||||||
347,567 | 446,752 | |||||||||
Total liabilities |
1,587,701 | 1,719,475 | ||||||||
Total equity and liabilities |
1,599,522 | 1,725,423 | ||||||||
See Accompanying Notes to Special Purpose Consolidated Interim Financial Information
3
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
Consolidated interim income statement
For the nine months ended | ||||||||||
31 December | ||||||||||
Note | 2009 | 2008 | ||||||||
(unaudited) | (unaudited) | |||||||||
Revenue |
1,178,937 | 1,149,838 | ||||||||
Cost of goods sold |
(521,225 | ) | (490,775 | ) | ||||||
Gross Margin |
657,712 | 659,063 | ||||||||
Distribution and selling costs |
14 | (333,207 | ) | (326,474 | ) | |||||
Administrative expenses |
14 | (145,248 | ) | (137,110 | ) | |||||
Other expenses |
14 | (12,311 | ) | (23,291 | ) | |||||
(490,766 | ) | (486,875 | ) | |||||||
Depreciation, amortisation and impairment expenses |
5/6 | (75,928 | ) | (50,186 | ) | |||||
Operating result |
91,018 | 122,002 | ||||||||
Financial income |
15 | 6,777 | 32,083 | |||||||
Financial expense |
15 | (85,693 | ) | (88,893 | ) | |||||
Finance costs, net |
(78,916 | ) | (56,810 | ) | ||||||
Result before tax |
12,102 | 65,192 | ||||||||
Income tax |
16 | (4,249 | ) | (24,264 | ) | |||||
Result for the period |
7,853 | 40,928 | ||||||||
Attributable to: |
||||||||||
- Equity holders of the Group |
7,853 | 40,928 | ||||||||
Earnings per share for result for the period
attributable to the Equity holders of the Group
during the period |
||||||||||
- Basic |
17 | 0.04 | 0.20 | |||||||
- Diluted |
17 | 0.04 | 0.20 |
See Accompanying Notes to Special Purpose Consolidated Interim Financial Information
4
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
Consolidated interim statement of comprehensive income
For the nine months ended | ||||||||
31 December | ||||||||
2009 | 2008 | |||||||
(unaudited) | (unaudited) | |||||||
Result for the period |
7,853 | 40,928 | ||||||
Other comprehensive income |
||||||||
Cash flow hedges, net of taxes |
(146 | ) | (1,230 | ) | ||||
Currency translation effect |
(4,309 | ) | (15,236 | ) | ||||
Total Comprehensive income |
3,398 | 24,462 | ||||||
Attributable to: |
||||||||
- Equity holders of the Group |
3,398 | 24,462 |
See Accompanying Notes to Special Purpose Consolidated Interim Financial Information
5
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
Consolidated interim position and statement of Cash flow
For the nine months ended | ||||||||||
31 December | ||||||||||
Note | 2009 | 2008 | ||||||||
(unaudited) | (unaudited) | |||||||||
Cash flows from operating activities |
||||||||||
Cash generated from operations |
266,509 | 238,043 | ||||||||
Income tax paid |
(11,926 | ) | (11,372 | ) | ||||||
Net cash generated from operating activities |
254,583 | 226,671 | ||||||||
Cash flows from investing activities |
||||||||||
Acquisition of subsidiaries, net of cash acquired |
(14,913 | ) | (51,404 | ) | ||||||
Purchases of property and equipment |
(38,523 | ) | (69,224 | ) | ||||||
Purchases of intangible assets |
(3,770 | ) | (7,070 | ) | ||||||
Interest received |
630 | 857 | ||||||||
Net cash used in investing activities |
(56,576 | ) | (126,841 | ) | ||||||
Cash flows from financing activities |
||||||||||
Changes in short term borrowings |
(31,012 | ) | 23,494 | |||||||
Repayments of borrowings |
(33,119 | ) | (12,370 | ) | ||||||
Interest paid |
(28,844 | ) | (31,513 | ) | ||||||
Payments on financial lease obligations |
(4,070 | ) | (3,561 | ) | ||||||
Net cash used in financing activities |
(97,045 | ) | (23,950 | ) | ||||||
Net increase in cash, cash equivalents and bank
overdrafts |
100,962 | 75,880 | ||||||||
Cash, cash equivalents and bank overdrafts at
beginning of year |
139,845 | 74,752 | ||||||||
Exchange gains/(losses) on cash and bank overdrafts |
(4,248 | ) | (6,112 | ) | ||||||
Cash, cash equivalents and bank overdrafts at end
of period |
8 | 236,559 | 144,520 | |||||||
See Accompanying Notes to Special Purpose Consolidated Interim Financial Information
6
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
Consolidated interim Shareholders Equity Statement
Attributable to equity holders | ||||||||||||||||||
of the Group | ||||||||||||||||||
Ordinary | ||||||||||||||||||
shares and share | Other | Accumulated | ||||||||||||||||
Note | premium | reserves | Deficit | Total | ||||||||||||||
Balance at 31 March 2008 |
48,923 | 6,606 | (73,032 | ) | (17,503 | ) | ||||||||||||
Profit for the period |
| | 40,928 | 40,928 | ||||||||||||||
Other comprehensive income |
||||||||||||||||||
Cash flow hedges, net of taxes |
| (1,230 | ) | | (1,230 | ) | ||||||||||||
Currency translation effect |
| (15,236 | ) | | (15,236 | ) | ||||||||||||
Total comprehensive income for
the period ended 31 December
2008 |
| (16,466 | ) | 40,928 | 24,462 | |||||||||||||
Management Participation and
Option plan |
| 1,548 | | 1,548 | ||||||||||||||
Balance at 31 December 2008
(unaudited) |
48,923 | (8,312 | ) | (32,104 | ) | 8,507 | ||||||||||||
Balance at 31 March 2009 |
48,923 | 5,739 | (48,714 | ) | 5,948 | |||||||||||||
Profit for the period |
| | 7,853 | 7,853 | ||||||||||||||
Other comprehensive income |
||||||||||||||||||
Cash flow hedges, net of taxes |
| (146 | ) | | (146 | ) | ||||||||||||
Currency translation effect |
| (4,309 | ) | | (4,309 | ) | ||||||||||||
Total comprehensive income for
the period ended 31 December
2009 |
| (4,455 | ) | 7,853 | 3,398 | |||||||||||||
Management Participation and
Option plan |
9/10 | 1,651 | 824 | | 2,475 | |||||||||||||
Balance at 31 December 2009
(unaudited) |
50,574 | 2,108 | (40,861 | ) | 11,821 | |||||||||||||
See Accompanying Notes to Special Purpose Consolidated Interim Financial Information
7
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
Notes to the consolidated interim financial information
1. General information
Tommy Hilfiger B.V. (the Company) is a limited liability holding company which was incorporated
in the Netherlands on 5 July 2005. The address of its registered office is Stadhouderskade 6,
Amsterdam The Netherlands. The fiscal year (FY) of the Company starts at 1 April and ends on 31
March.
Tommy Hilfiger B.V. and its subsidiaries (together the Group) design, source and market mens and
womens sportswear and activewear, jeanswear, childrenswear and footwear under the Tommy Hilfiger
and Karl Lagerfeld trademarks. Through a range of strategic licensing agreements, the Group also
offers a broad array of related apparel, accessories, fragrance and home furnishings products. The
Groups products can be found in leading department and specialty stores throughout the United
States, Canada, Europe, Mexico, Central and South America, Hong Kong and other countries in the Far
East, as well as the Groups own network of specialty and company stores in the United States,
Canada, Japan and Europe.
The parent company is Tommy Hilfiger Holding S.à r.l. registered in Luxemburg. The ultimate
majority shareholders of the Company are funds advised by Apax Partners. The remainder is owned by
various other investors and management of the Company.
This Special Purpose Consolidated Interim Financial Information was approved for issue on 9 April
2010.
2. Basis of preparation
On 15 March 2010, Phillips-Van Heusen Corporation (PVH) announced to acquire the Company. The
transaction is subject to financing and other customary conditions, including receipt of required
regulatory approvals and is expected to close before August 2010. The Company has prepared this
Special Purpose Consolidated Interim Financial Information to conform to the requirements of PVHs
anticipated filing and related securities offerings. The Special Purpose Consolidated Interim
Financial Information for the nine months ended 31 December 2009 has been prepared in accordance
with IAS 34, Interim financial reporting and should be read in conjunction with the Special
Purpose Consolidated Financial Statements for the year ended 31 March 2009, which have been
prepared in accordance with International Financial Reporting Standards (IFRS) issued by the
International Accounting Standards Board (IASB).
The interim financial data as of 31 December 2009 and for the nine months ended 31 December 2009
and 31 December 2008 is unaudited; in the opinion of management, the interim data includes all
adjustments, consisting only of normal recurring adjustments, necessary to a fair statement of the
results for the interim periods.
2.1 Summary of significant accounting policies
The same accounting policies applied to the Special Purpose Consolidated Financial Statements for
the fiscal year ended 31 March 2009 were applied to the Special Purpose Consolidated Interim
Financial Information as of 31 December 2009, which were prepared in accordance with IAS 34,
Interim Financial Reporting. For a more detailed description of these accounting policies, please
refer to the Special Purpose Consolidated Financial Statements for the year ended 31 March 2009 as
included in the filing as described in the above paragraph, except for the adoption of the
following new standards, amendments to standards and interpretations, which have been adopted as
relevant to the Company for the first time.
Revised IAS 1 Presentation of Financial Statements
The amendments to IAS 1 mainly concern the presentation of changes in equity, in which changes as a
result of the transaction with shareholders should be presented separately. The Company opted to
present items of income and expense and components of other comprehensive income in two separate
statements as from April 1, 2009.
8
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
IFRS 2 (amendment), Share-based payment
IFRS 2 (amendment), Share-based payment deals with vesting conditions and cancellations. It
clarifies that vesting conditions are service conditions and performance conditions only. Other
features of a share-based payment are not vesting conditions. The amendment does not have impact on
the Groups financial statements.
The following new standards, amendments to standards and interpretations are mandatory for the
first time for the financial years beginning on or after 1 January 2009, but are not currently
relevant for the Group.
| IAS 23 (amendment), Borrowing costs. |
||
| IAS 32 (amendment), Financial instruments: Presentation. |
||
| IFRIC 13, Customer loyalty programmes. |
||
| IFRIC 15, Agreements for the construction of real estate. |
||
| IFRIC 16, Hedges of a net investment in a foreign operation. |
||
| IAS 39 (amendment), Financial instruments: Recognition and measurement. |
The following new standards, amendments to standards and interpretations have been issued, but are
not effective for the financial years beginning on or after 1 January 2009 and have not been early
adopted:
| IFRS 3 (Revised), Business combinations (effective for fiscal years starting on or
after 1 July 2009). The revised standard continues to apply the acquisition method to
business combinations, with some significant changes. For example, all payments to purchase
a business are to be recorded at fair value at the acquisition date, with contingent
payments classified as debt subsequently re-measured through the income statement. There is
a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in
the acquiree either at fair value or at the non-controlling interests proportionate share
of the acquirees net assets. All acquisition-related costs should be expensed. The Group
will apply IFRS 3 (Revised) prospectively to all business combinations from 1 April 2010. |
3. Seasonality
The Companys business is impacted by the general seasonal trends characteristic of the apparel and
retail industries. The Companys Wholesale revenue, particularly from its European operations, is
generally highest during the second and fourth fiscal quarters, while the Companys Retail sales
channel generally contributes its highest levels of revenue during the third fiscal quarter. As the
timing of Wholesale product shipments and other events affecting the retail business may vary,
results for any interim reporting period may not be indicative of results for the full year.
4. Geographical and divisional split
In the geographical and divisional split, revenue and operating result are shown by geographical
and by divisional area in which Tommy Hilfiger operates. The geographical areas in which Tommy
Hilfiger operates are Europe, North America, Rest of World (RoW) and Other. Other activities mainly
comprise the Groups Karl Lagerfeld businesses as well as corporate activities such as finance and
executive compensation.
The Company identifies the following divisions: retail, wholesale, licensing activities and Other.
Revenues are allocated to these divisions based on the location of the customers.
Royalties paid to Tommy Hilfiger Licensing LLC for the usage of the Tommy Hilfiger trademark by
other regions is shown separately. The royalties are accounted for at arms length prices charged
to unaffiliated customers. The intercompany royalties are eliminated during the consolidation.
9
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
The results per geographical area for the period ended 31 December 2009 are as follows:
North | Elimina- | |||||||||||||||||||||||
Europe | America | RoW | Other | tions | Total | |||||||||||||||||||
Revenue |
501,246 | 575,680 | 129,077 | 4,835 | (31,901 | ) | 1,178,937 | |||||||||||||||||
Royalties |
(68 | ) | (31,699 | ) | | (134 | ) | 31,901 | | |||||||||||||||
Net revenue |
501,178 | 543,981 | 129,077 | 4,701 | | 1,178,937 | ||||||||||||||||||
Operating result |
75,027 | 9,728 | 28,445 | (22,182 | ) | | 91,018 | |||||||||||||||||
Finance costs, net |
(78,916 | ) | ||||||||||||||||||||||
Income tax expense |
(4,249 | ) | ||||||||||||||||||||||
Result for the year |
7,853 | |||||||||||||||||||||||
The results per geographical area for the period ended 31 December 2008 are as follows:
North | Elimina- | |||||||||||||||||||||||
Europe | America | RoW | Other | tions | Total | |||||||||||||||||||
Revenue |
514,172 | 535,728 | 124,108 | 7,591 | (31,761 | ) | 1,149,838 | |||||||||||||||||
Royalties |
| (31,470 | ) | | (291 | ) | 31,761 | | ||||||||||||||||
Net revenue |
514,172 | 504,258 | 124,108 | 7,300 | | 1,149,838 | ||||||||||||||||||
Operating result |
76,591 | 34,050 | 30,629 | (19,267 | ) | | 122,002 | |||||||||||||||||
Finance costs, net |
(56,810 | ) | ||||||||||||||||||||||
Income tax expense |
(24,264 | ) | ||||||||||||||||||||||
Result for the year |
40,928 | |||||||||||||||||||||||
The results per division for the period ended 31 December 2009 are as follows:
Wholesale | Retail | Licensing | Other | Elimina- tions |
Total | |||||||||||||||||||
Net revenue |
487,527 | 664,564 | 22,145 | 4,701 | | 1,178,937 | ||||||||||||||||||
Operating result |
49,801 | 47,023 | 16,376 | (22,182 | ) | | 91,018 | |||||||||||||||||
Finance costs, net |
(78,916 | ) | ||||||||||||||||||||||
Income tax expense |
(4,249 | ) | ||||||||||||||||||||||
Result for the year |
7,853 | |||||||||||||||||||||||
The results per division for the period ended 31 December 2008 are as follows:
Wholesale | Retail | Licensing | Other | Elimina- tions |
Total | |||||||||||||||||||
Net revenue |
507,972 | 606,426 | 28,140 | 7,300 | | 1,149,838 | ||||||||||||||||||
Operating result |
48,900 | 72,461 | 19,909 | (19,267 | ) | | 122,002 | |||||||||||||||||
Finance costs, net |
(56,810 | ) | ||||||||||||||||||||||
Income tax expense |
(24,264 | ) | ||||||||||||||||||||||
Result for the year |
40,928 | |||||||||||||||||||||||
10
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
5. Property and Equipment
Property and equipment consists of the following at 31 December 2009 and 31 March 2009:
At cost | Total | |||
At 31 March 2009 |
||||
Acquisition cost |
354,333 | |||
Accumulated impairments and depreciation |
(158,662 | ) | ||
Net book amount |
195,671 | |||
Acquisition of subsidiary |
810 | |||
Additions |
32,173 | |||
Disposals |
(169 | ) | ||
Depreciation charge |
(36,316 | ) | ||
Impairment charge |
(25,977 | ) | ||
Exchange differences |
(4,867 | ) | ||
Closing net book amount 31 December 2009 |
161,325 | |||
At 31 December 2009 |
||||
Cost |
368,433 | |||
Accumulated impairments and depreciations |
(207,108 | ) | ||
Net book amount |
161,325 | |||
The main additions relate to investments in furniture and fixtures and leasehold improvements as a
result of opening new and refurbishing existing stores, which were largely offset by depreciation
charges for the period.
Impairment
The impairment loss for the first nine months ended 31 December 2009 of 25,977 (first nine months
ended 31 December 2008: nil) represents the write down of Furniture & Fixtures and Leasehold
Improvements for a number of owned and operated Retail stores in Europe and North America to the
recoverable amount. The impairment is caused by the overall economic slowdown and 3-5 year cash
flow forecasts for these stores. The impairment loss has been recognised in the income statement in
the line item Depreciation, amortisation and impairment.
11
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
6. Goodwill and Other Intangible Assets
As at 31 December 2009 and 31 March 2009, the Groups intangible assets and related accumulated
amortisation comprise the following:
At cost | Total | |||
At 1 April 2009 |
||||
Acquisition cost |
867,671 | |||
Accumulated impairments and depreciation |
(50,432 | ) | ||
Net book amount |
817,239 | |||
Acquisition of subsidiary |
1,474 | |||
Additions |
2,938 | |||
Depreciation charge |
(13,635 | ) | ||
Exchange differences |
(16,694 | ) | ||
Closing net book amount 31 December 2009 |
791,322 | |||
At 31 December 2009 |
||||
Cost |
853,894 | |||
Accumulated impairments and depreciations |
(62,572 | ) | ||
Net book amount |
791,322 | |||
Management has reviewed goodwill and indefinite life intangible assets for indications of
impairment since the end of the most recent financial period and no indications that may trigger an
impairment of those assets have been identified.
7. Derivative financial instruments
As at 31 December 2009 and 31 March 2009, the Groups derivative financial instruments are
comprised of the following:
31 December 2009 | 31 March 2009 | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
Current: Forward foreign exchange contracts hedge
accounting |
2,285 | 511 | 2,846 | | ||||||||||||
Current: Forward foreign exchange and option
contracts no hedge accounting |
315 | 3,308 | 2,285 | 4,768 | ||||||||||||
Non-current: Interest Rate Swaps hedge accounting |
117 | 9,763 | | 16,805 | ||||||||||||
Non-current: Interest Rate Swaps no hedge accounting |
| | | 1,374 | ||||||||||||
Total |
2,717 | 13,582 | 5,131 | 22,947 | ||||||||||||
Forward foreign exchange contracts
These contracts are both plain-vanilla and conditional forward contracts.
Highly probable forecasted purchases of cost of goods sold, denominated in US$ for the European and
Canadian operations are designated as hedged item in the cash flow hedge relationship which are
expected to occur at various dates during 3 to 10 months. Gains and losses recognised in the
hedging reserve in equity on forward foreign exchange contracts at 31 December 2009 will be
recognised in the initial carrying value of the purchased inventory that will be received by the
Group in 3 to 10 months. These inventory items will affect the income statement as costs of goods
sold in the period 6 to 12 months from the balance sheet date.
12
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
Interest
rate swaps hedge accounting
The Group has entered into interest rate swaps to off-set the effects of changing interest rates on
its floating rate senior credit facility. Highly probable forecasted variable interest charges on
the Senior debt are designated as hedged item in the cash flow hedge relationship. The effective
portion of the fair value changes on the interest swaps designated in a hedge accounting
relationship are deferred to the hedging reserve in equity until the underlying forecasted interest
cash flow occurs.
8. Cash and Cash Equivalents
31 December 2009 | 31 March 2009 | |||||||
Cash at banks and on hand |
230,835 | 136,616 | ||||||
Credit card receivables |
5,724 | 3,229 | ||||||
236,559 | 139,845 | |||||||
9. Management participation plan
Certain employees and service providers (the Participants) of the Company have been offered to
invest in a management participation plan (up to 12.5% of the Companys total ordinary shares). The
plan is administered by Stichting Administratiekantoor Elmira (STAK). The STAK holds the shares
and has issued Depositary Receipts to participants.
During the nine months ended 31 December 2009 470 additional Depositary Receipts were issued. On 1
September 2009 300 Depositary Receipts were granted with a subscription price of 176 per
Depositary Receipt. The fair market value of these Depositary Receipts was 3,111 and the fair
value per Depositary Receipt was 2,935. On 1 December 2009 170 Depositary Receipts were granted
with a subscription price of 176 per Depositary Receipt. The fair market value of these Depositary
Receipts was 4,707 and the fair value per Depositary Receipt was 4,531. The management
participation plan is regarded to be an equity settled share based compensation plan for which the
expenses of 1,651 thousand have been recognised in the consolidated income statement for the nine
months ended 31 December 2009. The remainder of the total Depositary Receipts is expected to be
issued before the closing of the acquisition by PVH.
10. Management option plan
Certain employees have been offered the opportunity to invest in options over Depositary Receipts
(the Options), up to 7.5% of the Companys total underlying ordinary shares.
On 30 September 2009 1,000 Options were granted with a contractual life of 5 years and 45 days. The
fair value of the Options of 1,967 is calculated using the Black & Scholes valuation model and
recognised as an expense. Main assumption applied:
| Exercise price 2,047 |
| Share price at date grant 3,111 |
| Expected volatility 60% |
| Risk-free interest rate 2.4% |
For the nine months ended 31 December 2009, an expense of 450 thousand has been recognised for
this Option plan. An amount of 374 was recognised for Option plans granted in previous years. The
remainder of the total Options is expected to be issued before the closing of the acquisition by
PVH.
13
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
11. Borrowings
Borrowings consist of the following as at 31 December 2009 and 31 March 2009:
31 December 2009 | 31 March 2009 | |||||||
Non-current |
||||||||
Senior debt |
407,164 | 450,674 | ||||||
Mezzanine loan |
89,837 | 100,000 | ||||||
Paid in kind interest on Mezzanine loan |
19,808 | 17,041 | ||||||
Unamortised loan fees |
(13,090 | ) | (15,377 | ) | ||||
Finance lease liabilities |
10,521 | 11,826 | ||||||
Total non-current |
514,241 | 564,164 | ||||||
Current |
||||||||
Short term portion of senior debt |
29,768 | 24,315 | ||||||
Short term borrowings |
| 32,454 | ||||||
Finance lease liabilities |
5,591 | 5,098 | ||||||
Interest payable |
3,352 | 3,773 | ||||||
Unamortised loan fees |
(3,101 | ) | (4,040 | ) | ||||
Total current |
35,610 | 61,600 | ||||||
Total borrowings |
549,851 | 625,764 | ||||||
During the period the main variation of senior debt, Mezzanine loan and short term borrowings was
due to repayments and foreign exchange results of 14.7 million.
At 31 December 2009 the total Revolving Credit facility amounts to 235 million (31 March 2009:
235 million). Under the Revolving Credit facility a total amount of 47,257 (31 March 2009:
60,650) is used for several guarantees and letter of Credits.
12. Provisions for other liabilities and charges
The components of the provisions are as follows:
Returns and | Restruc- | Asset | Onerous | |||||||||||||||||||||
Charge backs | turing | retirement | contracts | Others | Total | |||||||||||||||||||
At 31 March 2008 |
28,744 | 4,121 | 4,605 | 1,966 | 2,452 | 41,888 | ||||||||||||||||||
Additional provisions |
52,271 | 510 | 754 | 9,508 | (0 | ) | 63,043 | |||||||||||||||||
Used during year |
(29,639 | ) | (1,991 | ) | (109 | ) | (1,218 | ) | (193 | ) | (33,150 | ) | ||||||||||||
Exchange differences |
3,536 | 13 | 1,110 | 802 | 325 | 5,786 | ||||||||||||||||||
At 31 March 2009 |
54,912 | 2,653 | 6,360 | 11,058 | 2,584 | 77,567 | ||||||||||||||||||
Additional provisions |
45,147 | 618 | 645 | 1,135 | 480 | 48,025 | ||||||||||||||||||
Used during year |
(51,124 | ) | (3,190 | ) | (23 | ) | (3,529 | ) | | (57,866 | ) | |||||||||||||
Exchange differences |
(2,315 | ) | 94 | (292 | ) | (860 | ) | (161 | ) | (3,534 | ) | |||||||||||||
At 31 December 2009 |
46,620 | 175 | 6,690 | 7,804 | 2,903 | 64,192 | ||||||||||||||||||
14
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
31 December 2009 | 31 March 2009 | |||||||
Non-current |
14,833 | 7,059 | ||||||
Current |
49,359 | 70,508 | ||||||
64,192 | 77,567 | |||||||
13. Trade and Other payables
Employee certificates bonus plan
The Group has provided part of a cash bonus to be paid to eligible employees at the time of an
eventual change in ownership of the Company. The related expense is spread over the period during
which the employees become unconditionally entitled to the certificates and is recognised as a
liability.
The total expected costs are estimated at 18,607 of which 18,342 is provided for at 31 December 2009. |
14. Total expenses
The main variation in expenses can be explained by additional costs relating to new store openings
partly offset by cost saving initiatives.
15. Finance costs, net
The nine month period ended 31 December 2009 was impacted by exchange loss on intercompany
borrowings of 1.4 million (31.9 million gain for the nine months period ended 31 December 2008).
In addition in the nine month period ended 31 December 2009 the positive result on derivative
financial instruments amounted to 4.6 million (nine month period ended 31 December 2008 a loss of
9.7 million).
16. Income tax (expense)/credit
Income tax expenses are recognised based on managements best estimate of the weighted average
annual income tax rate expected for the full financial year. The estimated average annual tax rate
used for the nine months ended 31 December 2009 is 35.1%
17. Earnings per share
Nine month ended 31 December | ||||||||
2009 | 2008 | |||||||
Attributable to the equity holders of the Group |
7,853 | 40,928 | ||||||
Weighted average number of ordinary shares in issue |
200,000 | 200,000 | ||||||
Dilutive potential ordinary shares |
| | ||||||
Adjusted weighted average number of ordinary shares |
200,000 | 200,000 | ||||||
Result for the period |
||||||||
- Basic |
0.04 | 0.20 | ||||||
- Diluted |
0.04 | 0.20 |
15
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
18. Related Party transactions
Spanish and Portuguese agent
A related party holds an indirect 15% equity interest in Pepe Jeans SL, which serves as the Groups
sales and collection agent as well as franchisee in Spain and Portugal. Goods are purchased by Pepe
Jeans SL. from the Group, while commissions and fees are paid by the Group to Pepe Jeans SL
pursuant to the Agency agreement. Furthermore, the Group transferred the ownership of three stores
in Spain to the Spanish agent effectively 1 April 2008.
Mr. Thomas J. Hilfiger
Under his employment agreement with the Group, Mr. Thomas J. Hilfiger serves as Principal Designer
and Chairman of the Strategy and Design Board of the Company, and is entitled to an annual cash
payment for the fiscal year 2010 and all periods thereafter a cash amount based on worldwide sales
and licensing revenues of the Group and its subsidiaries and a number of benefits.
In the event of Mr. Hilfigers death or termination by the Group following his disability, his
employment agreement provides for payment of the full amount otherwise payable to Mr. Hilfiger for
the fiscal year which includes his death or termination following disability, and for the following
fiscal year.
Parent company
The parent company of the Group is Tommy Hilfiger S.à r.l. (incorporated in Luxembourg). The
ultimate controlling parties of the Group are funds advised by Apax Partners. Management services
are bought from Apax Partners on normal commercial terms and conditions.
Novel Enterprises Limited
A related party holds an indirect equity interest in Novel Enterprises Limited which provides goods
to the Group.
Transactions with related parties are based on terms that would be available to third parties.
Sales of services are negotiated with related parties on a cost-plus basis. The following
transactions were carried out with related parties:
Nine month period ended December | ||||||||
2009 | 2008 | |||||||
Sales of goods and services: |
||||||||
Spanish and Portuguese Agent |
5,041 | 9,077 | ||||||
5,041 | 9,077 | |||||||
Nine month period ended December | ||||||||
2009 | 2008 | |||||||
Purchases of goods and services: |
||||||||
Novel Enterprises Ltd |
14,708 | 20,344 | ||||||
Purchases of services: |
||||||||
Spanish and Portuguese Agent |
4,529 | 7,136 | ||||||
From an entity controlled by Apax partners |
126 | | ||||||
19,363 | 27,480 | |||||||
Year-end balances arising from sale/purchases of goods/services
31 December 2009 | 31 March 2009 | |||||||
Receivables from related parties: |
||||||||
Spanish and Portuguese agent |
4,048 | 2,953 | ||||||
Payables to related parties: |
||||||||
Spanish and Portuguese agent |
(91 | ) | | |||||
3,957 | 2,953 | |||||||
16
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
The receivables from related parties arise mainly from sale transactions and are generally due two
months after the date of sales. The receivables are unsecured in nature and bear no interest.
The payables to related parties arise mainly from financing transactions, purchase transactions,
and other services. The payables to the Spanish and Portuguese agent bear no interest.
Subordinated Shareholder loan
The shareholder provided a 320,452 subordinated loan for a term of 10 years, payable on demand
(however, any repayment is conditional to fulfillment of certain clauses in the agreements with
financial institutions), bearing interest at 14% per annum. The loan contains an option for the
Company to extend the loan under the same conditions after 10 years. This option qualifies as an
embedded derivative, which at the balance sheet date has a value of zero (31 March 2008: nil).
The shareholder loan bears an interest of 14% (2009: 14%). Tommy Hilfiger S.à r.l. has issued a
letter to the Company to financially support the Company for at least 12 months.
31 December 2009 | 31 March 2009 | |||||||
Shareholder loan and current account |
474,813 | 416,487 | ||||||
Accrued interest on shareholder loan |
42,077 | 51,453 | ||||||
Total shareholder loan |
516,890 | 467,940 | ||||||
Key management compensation
Nine month period ended December | ||||||||
2009 | 2008 | |||||||
Salaries and other short-term employee benefits |
13,380 | 9,567 | ||||||
Management participation plan |
| 1,427 | ||||||
Post-employment benefits |
246 | 287 | ||||||
13,626 | 11,281 | |||||||
19. Commitments and Contingencies
Legal matters
The Company is subject to various legal proceedings and claims that arise in the ordinary course of
business. Although the outcome of these other claims cannot be predicted with certainty, management
does not believe that the ultimate resolution of these matters will have a material adverse effect
on its financial condition or results of operations.
17
Tommy Hilfiger B.V.
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
Special Purpose Consolidated Interim Financial Information
Nine months ended 31 December 2009
(amounts in thousands, except per share/option amounts and/or as otherwise indicated)
Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
31 December 2009 | 31 March 2009 | |||||||
Property and equipment |
2,094 | 8,376 | ||||||
Intangible assets |
120 | | ||||||
2,214 | 8,376 | |||||||
Operating Leases
The Group leases offices, warehouses and showroom spaces, retail stores and office equipment under
operating leases, which expire not later than 2025.
The rental agreements are predominantly based on minimum lease payments. Several lease agreements
include contingent rents (particularly sales-dependent rent). The future aggregate minimum lease
payments under non-cancellable operating leases are as follows:
31 December 2009 | 31 March 2009 | |||||||
No later than 1 year |
102,956 | 98,307 | ||||||
Later than 1 year and no later than 5 years |
327,830 | 321,405 | ||||||
Later than 5 years |
226,827 | 275,453 | ||||||
657,613 | 695,165 | |||||||
Guarantees
The Group provided guarantees in the amount of 17,753 (2009: 17,413). The guarantees mainly
relate to store lease, customs and insurance obligations.
20. Events after the balance sheet date
Change of ownership
On 15 March 2010, Phillips-Van Heusen Corporation (PVH), a USA based apparel and fashion
company, announced to acquire Tommy Hilfiger B.V. for approximately $ 3.0 billion ( 2.2 billion).
The transaction is subject to financing and other customary conditions, including receipt of
required regulatory approvals and is expected to close before August 2010. Upon closing of the
transaction, it is expected that the balances related to the bank and shareholder loans will be
replaced by new financing and that the balances related to the management participation plan,
management option plan and employee certificates bonus plan will be settled.
China
On 31 March 2010, the Company announced it had entered into an agreement to assume direct control
of its wholesale and retail distribution in China from its licensee Dickson Concepts International
Limited, beginning 1 March 2011.
Contract with Mr. Thomas J. Hilfiger
Under his employment agreement with the Group, Mr. Thomas J. Hilfiger serves as principal designer
and Chairman of the Strategy and Design Board of the Company. Mr. Hilfigers contract states
various instances under which Mr. Hilfiger is entitled to a payment upon pre-defined exit events.
The exit events contemplated by Mr. Hilfigers employment contract relate to the sale of control of
the Group or substantially all its assets. Mr. Hilfiger has not opted for this payment when PVH
announced to acquire the Company and his current employment agreement with the Group will remain
unchanged.
18