SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period enMarch 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ...................to...................
Commission file numbe0-9831
LIZ CLAIBORNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2842791
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1441 Broadway, New York, New York 10018
(Address of principal executive offices) (Zip Code)
(212) 354-4900
(Registrant's telephone number, including area code)
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 d Yes X No .
The number of shares of Registrant's Common Stock, par value $1.00
per share, outstanding at May 10, 1996 was 73,097,550.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 30, 1996 and
December 30, 1995 3
Consolidated Statements of Income for the Three Month Periods
Ended March 30, 1996 and April 1, 1995 4
Consolidated Statements of Cash Flows for the Three Month Periods
Ended March 30, 1996 and April 1, 1995 5
Notes to Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands except share data)
(Unaudited)
March 30, December 30,
ASSETS 1996 1995
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CURRENT ASSETS:
Cash and cash equivalents $ 16,423 $ 54,722
Marketable securities 288,342 383,128
Accounts receivable - trade 272,392 126,053
Inventories 341,287 393,363
Deferred income tax benefits 32,164 30,235
Other current assets 71,404 77,710
Total current assets 1,022,012 1,065,211
PROPERTY AND EQUIPMENT - NET 236,714 239,467
OTHER ASSETS 21,985 24,565
$ 1,280,711 $ 1,329,243
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 93,308 $ 138,800
Accrued expenses 128,986 155,449
Income taxes payable 26,732 12,648
Total current liabilities 249,026 306,897
LONG-TERM DEBT 1,086 1,115
DEFERRED INCOME TAXES 7,339 7,722
COMMITMENTS AND CONTINGENCIES
PUT WARRANTS 36,682 25,283
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, authorized shares - 50,000,000,
issued shares - none -- --
Common stock, $1 par value, authorized shares - 250,000,000,
issued shares - 88,218,617 88,219 88,219
Capital in excess of par value 25,979 35,075
Retained earnings 1,288,429 1,255,325
Cumulative translation adjustment (980) (1,256)
1,401,647 1,377,363
Common stock in treasury, at cost, 15,074,812 shares in 1996 and
14,526,922 shares in 1995 (415,069) (389,137)
Total stockholders' equity 986,578 988,226
$ 1,280,711 $ 1,329,243
The accompanying notes to consolidated financial statements are an integral part
of these statements.
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LIZ CLAIBORNE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(All amounts in thousands, except per common share data)
(Unaudited)
Three Months Ended
March 30, April 1,
1996 1995
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NET SALES $ 556,558 $ 527,076
Cost of goods sold 345,316 335,009
GROSS PROFIT 211,242 192,067
Selling, general & administrative expenses 157,656 150,406
OPERATING INCOME 53,586 41,661
Investment and other income-net 3,800 2,924
INCOME BEFORE PROVISION
FOR INCOME TAXES 57,386 44,585
Provision for income taxes 21,500 16,500
NET INCOME $ 35,886 $ 28,085
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 73,407 76,074
EARNINGS PER COMMON SHARE $0.49 $0.37
DIVIDENDS DECLARED PER COMMON SHARE $0.11 $0.11
The accompanying notes to consolidated financial statements are an integral part of these statements.
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LIZ CLAIBORNE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All dollar amounts in thousands)
(Unaudited)
Three Months Ended
March 30, April 1,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 35,886 $ 28,085
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 8,807 9,617
Other - net 1,203 (151)
Change in current assets and liabilities:
(Increase) in accounts receivable (146,339) (80,175)
Decrease in inventories 52,076 59,921
(Increase) decrease in deferred
income tax benefits (1,362) 733
Decrease in other current assets 6,306 9,601
(Decrease) in accounts payable (45,492) (55,780)
(Decrease) in accrued expenses (26,461) (18,918)
Increase in income taxes payable 14,084 13,200
Net cash used in operating activities (101,292) (33,867)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment instruments (83,146) (1,598)
Sales of investment instruments 176,634 72,236
Purchases of property and equipment (5,902) (7,669)
Other-net 2,260 1,158
Net cash provided by investing activities 89,846 64,127
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (29) (25)
Proceeds from exercise of common stock options 4,026 --
Proceeds from sale of put warrants 1,601 1,550
Dividends paid (8,182) (8,555)
Repurchase of common stock (24,545) (34,167)
Net cash used in financing activities (27,129) (41,197)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 276 (723)
NET CHANGE IN CASH AND CASH EQUIVALENTS (38,299) (11,660)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 54,722 71,419
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16,423 $ 59,759
The accompanying notes to consolidated financial statements are an integral part of these statements.
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(6)
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted from this report, as is permitted by such rules and regulations;
however, the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's latest annual report.
2. In the opinion of management, the information furnished reflects all
adjustments, all of which are of a normal recurring nature, necessary
for a fair presentation of the results for the reported interim
periods. Results of operations for interim periods are not necessarily
indicative of results for the full year.
3. Effective June 30, 1995, the Company entered into an agreement with a
third party to operate under license the shoe business formerly
operated by the Company's Shoe Division. As part of the transaction,
the Company received $18.0 million in cash, plus other consideration
valued at $4.9 million, in exchange for inventory and other assets. The
Shoe Division had net sales of $21 million in the first quarter of
fiscal 1995. The operating results of the shoe business for that period
were not material to the Company's overall operating results.
4. In December 1994, the Company recorded a $30.0 million restructuring
charge. The amount included $16.8 million related to the phase out of its First
Issue business, $10.2 million for the streamlining of operating and
administrative functions and $3.0 million for the restructuring of its Moderate
Division. Principal items included in the charge are estimated contract
termination costs, severance and related benefits for staff reductions, losses
on contracts and write-off of certain assets. This charge reduced net income by
$18.9 million, or $.24 per common share, in the fourth quarter of 1994. The
remaining balance of the restructuring charge as of March 30, 1996 was $11.1
million. Of the $18.9 million expended for restructuring costs, $7.7 million was
related to severance costs, $5.6 million to losses on contracts and write-offs
of certain assets, and $5.6 million to other miscellaneous costs. The majority
of the remaining liabilities should be paid or settled during 1996. First Issue
accounted for $17.4 million of net sales in the first quarter of 1995 and
incurred an operating loss of $4.6 million. The 26 First Issue locations
remaining at December 30, 1995, have been converted to other Company-operated
retail formats or closed during the first quarter of 1996.
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LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. The following are summaries of available-for-sale securities:
(Dollars in thousands)
March 30, 1996
Gross Estimated
Unrealized Fair
Cost Gains Losses Value
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Tax exempt notes and bonds $ 275,157 $ 786 $ (243) $ 275,700
U.S. & foreign government securities 13,600 -- (378) 13,222
Collateralized mortgage obligation 7,118 -- (522) 6,596
Total debt securities 295,875 786 (1,143) 295,518
Equity securities 1,721 -- (132) 1,589
$ 297,596 $ 786 $ (1,275) $ 297,107
(Dollars in thousands)
December 30,1995
Gross Estimated
Unrealized Fair
Cost Gains Losses Value
Tax exempt notes and bonds $ 409,763 $ 1,285 $ (86) $ 410,962
U.S. & foreign government securities 12,124 187 (129) 12,182
Collateralized mortgage obligation 7,118 -- (231) 6,887
Total debt securities 429,005 1,472 (446) 430,031
Equity securities 1,721 -- -- 1,721
$ 430,726 $ 1,472 $ (446) $ 431,752
(Dollars in thousands)
March 30, 1996
Estimated
Fair
Cost Value
Due in one year or less $ 42,991 $ 42,465
Due after one year through three years 228,988 229,572
Due after three years 23,896 23,481
295,875 295,518
Equity securities 1,721 1,589
$ 297,596 $ 297,107
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(8)
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
At March 30, 1996, and December 30, 1995, the above investments
included $7,176,000 and $46,903,000, respectively, of tax exempt notes
and bonds which are classified as cash and cash equivalents and equity
securities which are included in other long-term assets in the
consolidated balance sheets.
For the three month period ended March 30, 1996, gross realized gains
and (losses) on sales of available-for-sale securities totaled
$1,218,000 and ($86,000), respectively. For the three month period
ended April 1, 1995, gross realized gains on sales of
available-for-sale securities totaled $88,000. The net adjustment to
unrealized holding gains and losses on available-for-sale securities
for the three month periods ended March 30, 1996 and April 1, 1995, was
a charge of $916,000 (net of $599,000 in deferred income taxes) and a
credit of $1,375,000 (net of $807,000 in deferred income taxes),
respectively, which were included in retained earnings. As of March 30,
1996 and December 30, 1995, the fair value adjustment for
available-for-sale securities was a charge of $306,000 (net of $183,000
in deferred income taxes) and a credit of $610,000 (net of $416,000 in
deferred income taxes), respectively, which were included in retained
earnings.
6. Inventories are stated at the lower of cost (first-in, first-out for
wholesale operations and retail method for retail and outlet operations) or
market and consist of the following:
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(Dollars in thousands)
March 30, December 30,
1996 1995
----- ----
Raw materials $ 36,520 $ 41,972
Work-in-process 14,328 17,018
Finished goods 290,439 334,373
------- -------
$341,287 $393,363
======== ========
7. Property and equipment - net
(Dollars in thousands)
March 30, December 30,
1996 1995
----- ----
Land and buildings $124,229 $124,195
Machinery and equipment 140,763 137,847
Furniture and fixtures 54,144 52,848
Leasehold improvements 129,036 127,422
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448,172 442,312
Less: Accumulated depreciation
and amortization 211,458 202,845
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$236,714 $239,467
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LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. In 1996, in connection with its previously announced stock repurchase
program, the Company sold new and terminated previously outstanding put warrants
in privately negotiated transactions based on the then-current market price of
the Common Stock. The new warrants, if exercised, will require the Company to
purchase up to a total of 500,000 shares of its Common Stock in September and
December 1996 on the respective expiration dates of the warrants. The proceeds
of $1.6 million from the sale of put warrants have been credited to capital in
excess of par value. In March 1996, warrants on 250,000 shares of common stock
expired unexercised. The Company's potential $36.7 million obligation to buy
back 1,250,000 shares of Common Stock has been charged to capital in excess of
par value and recorded as Put Warrants.
9. On April 4, 1996, the Company's Board of Directors declared a quarterly
cash dividend on the Company's Common Stock at the rate of $0.1125 per
share, to be paid on June 3, 1996 to stockholders of record at the
close of business on May 6, 1996.
10. During the quarters ended March 30, 1996 and April 1, 1995, the Company
made income tax payments of $7,225,000 and $2,153,000, respectively.
For the three months ended March 30, 1996 and April 1, 1995, the
Company made interest payments of $57,000 and $33,000, respectively.
11. The Company enters into foreign exchange contracts to hedge
transactions denominated in foreign currencies for periods of up to 12 months
and to hedge expected payment of intercompany transactions with its non-U.S.
subsidiaries. Gains and losses on contracts which hedge specific foreign
currency denominated commitments are recognized in the period in which the
transaction is completed. As of March 30, 1996, the Company had contracts
maturing in 1996 to purchase at contracted forward rates 17,007,000 Japanese yen
and to sell 31,000,000 Canadian dollars and 4,000,000 British pounds sterling.
The aggregate U.S. dollar value of all foreign exchange contracts is
approximately $29,239,000. Unrealized gains and losses for outstanding foreign
exchange contracts were not material at March 30, 1996.
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the 1996 first quarter increased $29.5 million, or 6%, from the
1995 first quarter. This result reflected increased net sales of women's
sportswear and Dana Buchman product, and to a lesser extent, increased sales of
the outlet operations, partially offset by significantly lower net sales of the
Cosmetics Division. The 1996 first quarter reflected $9 million in sales of
product lines introduced during the quarter (Liz & Co. petites, and dana b. &
karen, casual career offerings of the Dana Buchman Division). The 1995 quarter
included $21 million in sales of Liz Claiborne shoes; this business was licensed
to a third party as of June 30, 1995. Approximately 25% of the period-to-period
sales increase was attributable to the change in trade terms (from 10% to 8%,
the prevailing standard in the industry) previously announced, which was
effective as of January 1, 1996. As a result of this change, the net sales of
the Company's misses and petite sportswear (including LIZ & CO.), Dress, and
Elisabeth Divisions increased by approximately 2% over the results they would
have reported without the change, with corresponding dollar increases in gross
margin and selling, general and administrative ("SG&A" )
expenses.
As previously announced, the Company has realigned its better women's sportswear
product lines as follows: the Casual Unit (consisting of misses Lizsport,
Lizwear and Liz & Co. product); the Collection Division (consisting of misses
Collection and Studio (casual careerwear) product); and the Special Sizes Unit
(consisting of Elisabeth sportswear and dresses, and petite Lizsport,
Collection, Lizwear, Liz & Co., and Studio product). The 1996 first quarter
increase in sportswear net sales reflected a 9% increase in the sales of the
Casual Unit, to $161 million, reflecting higher average unit selling prices due
to a higher proportion of regular price sales principally within Liz & Co. and
Lizwear, on slightly lower unit volume; a 31% increase in the sales of the
Special Sizes Unit, to $117 million, due to a significant increase in unit
volume principally reflecting additional product required by the Company's new
Elisabeth stores (62 at 1996 first quarter end, of which 13 were converted from
First Issue stores during the quarter, compared with 21 at 1995 first quarter
end); and a 31% increase in the sales of the Collection Division, to $73
million, principally reflecting increases in unit volume due to the inclusion
and expansion of the Studio line. Sales of the Dana Buchman Division increased
54%, to $48 million, due to higher unit volume, with approximately one third of
the increase due to the dana b. & karen line. Net sales of the outlet operations
increased 17%, to $31 million, reflecting the opening of new stores (76 at 1996
quarter end as compared with 70 at 1995 quarter end).
The 1996 first quarter gross profit margin percentage improved to 38.0%, from
36.4% for the 1995 first quarter, with gross profit dollars increasing $19
million, or 10%. Approximately half of the improvement in gross profit margin
percentage was due to the change in trade terms referred to above. The gross
profit results also reflected an improved air/vessel ratio, and improved margins
over depressed prior levels within the Moderate Division principally due to
lower markdowns on lower excess inventory positions. Overall margins were
favorably impacted by the larger percentage of sales represented by the Dana
Buchman Division (which is generally a higher margin business). The improvement
in gross margin percentage was moderated by margin declines within the Cosmetics
Division, reflecting the lower net sales level, as well as within the Company's
domestic retail store operations.
Legislation which would further restrict the importation and/or increase the
cost of textiles and apparel produced abroad has periodically been introduced in
Congress. Although it is unclear whether any new legislation will be enacted
into law, it appears likely that various new legislative or executive
initiatives will be proposed. These initiatives may include a reevaluation of
the trading status of certain countries, including Most Favored Nation ("MFN")
treatment for the People's Republic of China ("PRC") and/or retaliatory duties,
quotas or other trade sanctions, which, if enacted, would increase the cost of
products purchased from suppliers in such countries. The PRC's MFN treatment was
renewed in July 1995 for an additional year. In light of the very substantial
portion of the Company's products which are manufactured by foreign suppliers,
the enactment of new legislation or the administration of current international
trade regulations, or executive action affecting international textile
agreements, could adversely affect the Company's operations.
SG&A expenses increased $7 million, or 5%, on a period-to-period basis,
representing 28.3% of first quarter 1996 sales as compared to 28.5% of 1995
first quarter sales. The Company expended substantially all of the funds
generated as a result of the change in trade terms in a national advertising
campaign, an expanded in-store presentation program and similar brand enhancing
activities. Also contributing to the SG&A results were additional expenses
related to the expansion of the Company's retail operations and the Dana Buchman
Division. The 1995 first quarter included $3 million of direct expenses related
to the Company's former shoe business.
The period-to-period increase in investment and other income-net principally
reflected an increase in the Company's investment portfolio, notwithstanding the
ongoing stock repurchase program.
As a result of the factors described above, the Company's income before
provision for income taxes increased on a period-to-period basis 28.7% for the
first quarter of 1996. These results included continuing operating losses within
the Moderate Division and (viewed on a stand alone basis) the Company's retail
operations. The provision for income taxes reflected the change in pre-tax
income and an increase in the effective tax rate; as a result, net income
increased 27.8%.
The earnings per common share computation reflected a lower number of
outstanding shares on a period-to-period basis as a result of the Company's
stock repurchase program.
The retail environment remains highly promotional, and the tone of business
continues to be difficult. The Company is continuing the process of implementing
a comprehensive business transformation effort which includes process
reengineering and profit improvement programs, and is progressing towards a
number of previously announced three-year goals for this initiative. Although
the Company remains cautious, management is optimistic that 1996 operating
results will continue to show improvement, although any such improvement will be
moderated by continuing losses within certain divisions. As part of its ongoing
strategic review process, the Company continues to evaluate certain business
operations.
FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY
Net cash used in operating activities was $101.3 million through March 30, 1996,
compared to $33.9 through April 1, 1995, primarily because of an increase in
accounts receivable of $146.3 in 1996, compared to an increase of $80.2 million
in 1995. Net cash provided by investing activities was $89.8 million in 1996,
compared to $64.1 million in 1995. The fluctuations in net cash provided by
investing activities is related to the increase or decrease in marketable
securities on a period-to-period basis. Net cash used in financing activities
was $27.1 million in 1996, compared to $41.2 million in 1995. The reduction in
net cash used in financing activities primarily reflects a decrease in the
amount expended in the Company's stock repurchase program and the proceeds from
exercise of stock options. As of May 10, 1996, the Company had expended or
committed to expend, through the sale of put warrants (see Note 8 of Notes to
Consolidated Financial Statements), approximately $ 520 million of the $550
million authorized under its stock repurchase program, covering an aggregate of
19.5 million shares.
Inventories at March 30, 1996 were $341.3 million, down from $393.4 million at
year-end and $363.1 million at April 1, 1995. On a period-to-period basis,
inventory levels reflected a reduction of ongoing inventory levels within the
outlet operations and the sale of inventory related to the Company's former shoe
business, offset in part by planned earlier receipt of spring and summer
merchandise across substantially all of the Company's wholesale apparel
divisions and the expansion of the Company's retail operations.
The Company's anticipated capital expenditures for 1996 currently approximate
$35 million, of which $6 million has been expended through March 30, 1996. These
expenditures consist primarily of certain building and equipment expenses,
including a realignment of the Company's distribution facilities, and the
upgrading of management information systems. These expenditures will be financed
through available capital and future earnings. Any increased working capital
needs will be met by current funds. Bank lines of credit, which are available to
finance import transactions and direct borrowings were $270 million as of March
30, 1996. The Company expects to be able to adjust these lines as required.
Statements contained herein that relate to the Company's future performance,
including, without limitation, statements with respect to the Company's
anticipated results for fiscal 1996, shall be deemed forward-looking statements
within the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995, as a number of factors affecting the Company's business and
operations could cause actual results to differ materially from those
contemplated by the forward-looking statements. Those factors include the
overall level of consumer spending and the performance of the Company's products
within the prevailing retail environment, as well as such other factors as are
set forth in the Company's 1995 Annual Report on Form 10-K, including, without
limitation, those set forth under the heading "Business - Competition; Certain
Risks."
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company and certain of its present and former officers and directors are
parties to several pending legal proceedings and claims, including an action
styled Ressler et al. vs. Liz Claiborne, Inc., et al., pending in the United
States District Court for the Eastern District of New York. The plaintiffs seek
compensatory damages on behalf of a class of purchasers of the Company's Common
Stock during the period commencing September 21, 1992 through and including July
16, 1993, and allege that the defendants violated the federal securities laws
by, among other things, making misrepresentations or omissions of material facts
that artificially inflated the market price of the Common Stock during the class
period. An earlier-filed lawsuit before the same court as Ressler, styled
Fishbaum vs. Chazen, et. al., made allegations similar to the Ressler complaint
and sought damages on behalf of a class of purchasers of the Company's Common
Stock for the period commencing March 30, 1993, through and including July 16,
1993. An amended complaint was filed in the Ressler action in May 1994 to add
Fishbaum as a plaintiff. In June 1994, the court granted the defendants' motion
to dismiss the Fishbaum complaint, with leave to amend, on the grounds that the
complaint did not adequately set forth the requisite element of scienter. In
July 1994, the Company moved to dismiss the Ressler complaint. In August 1995,
the Court granted that motion, again with leave to amend, on the grounds that
the Ressler complaint failed to comply with pleading requirements of the Federal
Rules of Civil Procedure. However, the Court rejected the contention that
scienter had not been adequately pled. In response to the defendants' motion for
reconsideration of that latter point, the Court indicated that the Company could
present the scienter issue again in moving to dismiss a new amended complaint.
In October 1995, a second amended complaint was filed in the Ressler action. In
December 1995, the defendants moved to dismiss that complaint. .
In April 1994, two stockholder derivative actions, which contain substantially
similar allegations, styled Goldberg Family Trust vs. Chazen, et al. and Liz
Claiborne, Inc., nominal defendant, and Laz Schneider vs. Chazen, et al. and Liz
Claiborne, Inc., nominal defendant, were brought in the Court of Chancery of the
State of Delaware against certain of the Company's directors and two of its
former Vice Chairmen. The complaints contain allegations that the individual
defendants breached their fiduciary obligations to the Company and its
stockholders, committed corporate mismanagement and wasted corporate assets in
connection with the Company's stock repurchase program and the defense of
pending legal proceedings, and were unjustly enriched in connection with the
sale of shares of the Company's Common Stock between September 1992 and July
1993 by certain of its present and former officers and directors. In July 1994,
the Laz Schneider action was consolidated into the Goldberg action. In August
1994, the defendants moved to dismiss the consolidated complaint. The motion is
pending.
The Company believes that the litigations described above are without merit and
intends to vigorously defend these actions. Although the outcome of any such
litigation or claim cannot be determined with certainty, management is of the
opinion that the final outcome of these litigations should not have a material
adverse effect on the Company's results of operations or financial position.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule as of March 30, 1996.
(b) The Company did not file any reports on Form 8-K in the quarter.
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
LIZ CLAIBORNE, INC.
DATE: May 13 , 1996 BY /s/ Samuel M. Miller
--------------------
SAMUEL M. MILLER
Senior Vice President - Finance
Chief Financial and Accounting Officer
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 16,423
<SECURITIES> 288,342
<RECEIVABLES> 272,392
<ALLOWANCES> 0
<INVENTORY> 341,287
<CURRENT-ASSETS> 1,022,012
<PP&E> 448,172
<DEPRECIATION> 211,458
<TOTAL-ASSETS> 1,280,711
<CURRENT-LIABILITIES> 249,026
<BONDS> 0
0
0
<COMMON> 88,219
<OTHER-SE> 898,359
<TOTAL-LIABILITY-AND-EQUITY> 1,280,711
<SALES> 556,558
<TOTAL-REVENUES> 556,558
<CGS> 345,316
<TOTAL-COSTS> 502,972
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57
<INCOME-PRETAX> 57,386
<INCOME-TAX> 21,500
<INCOME-CONTINUING> 35,886
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,886
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
