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 ended April 5, 1997 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 days Yes X No.
The number of shares of Registrant's Common Stock, par value $1.00
per share, outstanding at May 16, 1997 was 70,637,996
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(2)
PAGE
NUMBER
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of April 5, 1997 and
December 28, 1996 ........................................... 3
Consolidated Statements of Income for the Three Month Periods
Ended April 5, 1997 and March 30, 1996 ...................... 4
Consolidated Statements of Cash Flows for the Three Month Periods
Ended April 5, 1997 and March 30, 1996 ...................... 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 ................................................ 12-13
Item 6. Exhibits and Reports on Form 8-K ................................. 13
SIGNATURE ..................................................................... 14
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(3)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands except share data)
(Unaudited)
April 5, December 28,
ASSETS 1997 1996
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CURRENT ASSETS:
Cash and cash equivalents $ 46,650 $ 322,881
Marketable securities 362,153 205,855
Accounts receivable - trade 307,238 158,168
Inventories 302,015 349,427
Deferred income tax benefits 32,573 31,555
Other current assets 72,969 74,212
Total current assets 1,123,598 1,142,098
PROPERTY AND EQUIPMENT - NET 219,182 223,284
OTHER ASSETS 32,785 17,368
$1,375,565 $ 1,382,750
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 120,592 $ 163,666
Accrued expenses 154,002 152,241
Income taxes payable 27,118 10,762
Total current liabilities 301,712 326,669
DEFERRED INCOME TAXES 7,535 8,253
COMMITMENTS AND CONTINGENCIES
PUT WARRANTS 39,852 27,336
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 29,817 38,577
Retained earnings 1,409,839 1,382,247
Cumulative translation adjustment (3,287) (4,311)
1,524,588 1,504,732
Common stock in treasury, at cost, 17,494,177 shares in 1997
and 17,212,585 shares in 1996 (498,122) (484,240)
Total stockholders' equity 1,026,466 1,020,492
$1,375,565 $ 1,382,750
The accompanying notes to consolidated financial statements are an
integral part of these statements.
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<CAPTION>
(4)
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(All amounts in thousands, except per common share data)
(Unaudited)
Three Months Ended
(14 Weeks) (13 Weeks)
April 5, March 30,
1997 1996
<S> <C> <C>
NET SALES $ 596,556 $ 556,558
Cost of goods sold 365,235 345,316
GROSS PROFIT 231,321 211,242
Selling, general & administrative expenses 168,499 157,656
OPERATING INCOME 62,822 53,586
Investment and other income-net 4,099 3,800
INCOME BEFORE PROVISION
FOR INCOME TAXES 66,921 57,386
Provision for income taxes 24,800 21,500
NET INCOME $ 42,121 $ 35,886
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 70,929 73,407
EARNINGS PER COMMON SHARE $0.59 $0.49
DIVIDENDS PAID PER COMMON SHARE $0.11 $0.11
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
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<CAPTION>
(5)
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All dollar amounts in thousands)
(Unaudited)
Three Months Ended
(14 Weeks) (13 Weeks)
April 5, March 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 42,121 $ 35,886
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 11,414 8,807
Other - net 1,769 1,203
Change in current assets and liabilities:
(Increase) in accounts receivable (149,070) (146,339)
Decrease in inventories 47,412 52,076
(Increase) in deferred income tax benefits (346) (1,362)
Decrease in other current assets 1,243 6,306
(Decrease) in accounts payable (43,074) (45,492)
(Decrease) in accrued expenses (20,401) (26,490)
Increase in income taxes payable 16,356 14,084
Net cash used in operating activities (92,576) (101,321)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment instruments (206,054) (83,146)
Sales of investment instruments 48,002 176,634
Purchases of property and equipment (5,011) (5,902)
Purchase of trademark (3,750) --
Other - net 222 2,260
Net cash (used in) provided by investing activities (166,591) 89,846
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options 5,585 4,026
Proceeds from sale of put warrants 1,977 1,601
Dividends paid (7,929) (8,182)
Repurchase of common stock (17,721) (24,545)
Net cash used in financing activities (18,088) (27,100)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,024 276
NET CHANGE IN CASH AND CASH EQUIVALENTS (276,231) (38,299)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 322,881 54,722
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 46,650 $ 16,423
The accompanying notes to consolidated financial statements are an
integral part of these statements.
</TABLE>
<PAGE>
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.
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. Certain items previously reported in specific captions in the
accompanying financial statements have been reclassified to conform
with the current year's classifications. Results of operations for
interim periods are not necessarily indicative of results for the full
year.
2. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share." Under SFAS No. 128, the presentation of both Basic and
Diluted Earnings per Share is required on the Income Statement for
periods ending after December 15, 1997, at which time restatement for
prior periods will be required. Had the provisions of SFAS No. 128 been
in effect for the first quarter of 1997, the Company would have
reported Diluted Earnings per Share for the periods ended April 5, 1997
and March 30, 1996 of $.59 and $.49, respectively, which are equal to
the Basic Earnings per Share currently disclosed.
3. The Company's phase out of its First Issue business was initiated in
December 1994 and completed during the first quarter of 1996. In the
first quarter of 1996, First Issue accounted for $3.2 million of net
sales and incurred an operating loss of $.3 million.
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LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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4. The following are summaries of available-for-sale marketable securities and maturities:
(Dollars in thousands)
April 5, 1997
Gross Estimated
Unrealized Fair
Cost Gains Losses Value
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Tax exempt notes and bonds $ 318,855 $ 41 $ (1,434) $ 317,462
U.S. & foreign government securities 73,705 -- (337) 73,368
Collateralized mortgage obligations 7,110 -- (595) 6,515
399,670 41 (2,366) 397,345
Equity securities 236 -- (109) 127
$ 399,906 $ 41 $ (2,475) $ 397,472
(Dollars in thousands)
December 28,1996
Gross Estimated
Unrealized Fair
Cost Gains Losses Value
Tax exempt notes and bonds $ 354,392 $ 357 $ (288) $ 354,461
Commercial paper 148,651 -- -- 148,651
U.S. & foreign government securities 12,877 74 (272) 12,679
Collateralized mortgage obligations 7,112 -- (442) 6,670
523,032 431 (1,002) 522,461
Equity securities 236 -- (39) 197
$ 523,268 $ 431 $ (1,041) $ 522,658
(Dollars in thousands)
April 5, 1997
Estimated
Fair
Cost Value
Due in one year or less $ 68,064 $ 67,564
Due after one year through three years 329,807 328,181
Due after three years 1,799 1,600
399,670 397,345
Equity securities 236 127
$ 399,906 $ 397,472
</TABLE>
<PAGE>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
At April 5, 1997, and December 28, 1996, the above investments included
$35,192,000 and $316,606,000, respectively, of tax exempt notes and
bonds and commercial paper 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 April 5, 1997, gross realized gains
and (losses) on sales of available-for-sale securities totaled $199,000
and ($3,000), respectively. 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. The net
adjustment to unrealized holding gains and losses on available-for-sale
securities for the three month periods ended April 5, 1997 and March
30, 1996, was a charge of $1,152,000 (net of $672,000 in deferred
income taxes) and $916,000 (net of $599,000 in deferred income taxes),
respectively, which were included in retained earnings.
5. 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)
April 5, December 28,
1997 1996
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Raw materials $ 41,053 $ 28,198
Work in process 16,340 17,209
Finished goods 244,622 304,020
$302,015 $349,427
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6. Property and equipment - net
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<CAPTION>
(Dollars in thousands)
<S> <C> <C>
April 5, December 28,
1997 1996
Land and buildings $124,144 $124,125
Machinery and equipment 141,420 138,620
Furniture and fixtures 56,267 55,022
Leasehold improvements 127,554 126,956
449,385 444,723
Less: Accumulated depreciation
and amortization 230,203 221,439
$219,182 $223,284
</TABLE>
<PAGE>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. In the first quarter of 1997, in connection with its stock repurchase
program, the Company sold new put warrants in privately negotiated transactions
based on the then-current market price of the common stock. During the quarter
warrants on 250,000 shares of common stock expired unexercised. 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 1997 on the
respective expiration dates of the warrants. The proceeds of $2.0 million from
the sale of the new put warrants have been credited to capital in excess of par
value. The Company's potential $39.9 million obligation to buy back 1,000,000
shares of common stock has been charged to capital in excess of par value and
recorded as Put Warrants. Subsequent to April 5, 1997, warrants on 250,000
shares of common stock, expiring in November 1997, were sold with proceeds of
$964,000, and warrants on 250,000 shares expired unexercised. The net effect of
the subsequent items is an increase in the Company's potential obligation to buy
back common stock to $42.1 million.
8. On March 20, 1997, 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 2, 1997 to stockholders of record
at the close of business on May 5, 1997.
9. For the three months ended April 5, 1997 and March 30, 1996, the
Company made income tax payments of $7,687,000 and $7,225,000,
respectively. For the three months ended April 5, 1997 and March 30,
1996, the Company made interest payments of $31,000 and $57,000,
respectively.
10. The Company enters into foreign exchange contracts to hedge
transactions denominated in foreign currencies for periods of less than one year
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 and are accounted for as part of the underlying
transaction. As of April 5, 1997, the Company had contracts maturing through May
1997 to sell 6,000,000 Canadian dollars and contracts maturing through October
1997 to sell 2,500,000 British pounds sterling. The aggregate U.S. dollar value
of the foreign exchange contracts is approximately $8,553,000. Unrealized gains
and losses for outstanding foreign exchange contracts were not material at April
5, 1997.
<PAGE>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First quarter 1997 (14 weeks) net sales were $597 million, a 7% increase over
the $557 million for the 1996 first quarter (13 weeks). This result principally
reflected increased net sales of women's sportswear and Dana Buchman product as
well as the Company's outlet operations, partially offset by lower net sales of
dresses. The increase in women's sportswear reflected a 21% increase in the
sales of the Casual Unit, to $194 million, due to a significant increase in unit
volume, partially offset by a 29% decrease in the net sales of the Collection
Division, to $52 million, due to lower unit volume, reflecting weakness in
demand. Also contributing to the sales increase was $6 million of net sales of
Elisabeth/Liz & Co., the casual knitwear line first shipped in September 1996.
Net sales of the outlet operations increased 40%, to $43 million, principally
reflecting improved store productivity and additional stores (81 at 1997
quarter end as compared with 76 a year earlier). The sales increase reflected
$11 million of net sales of CURVE for women and CURVE for men, the Company's
latest fragrances (initially shipped in July 1996), more than offsetting the
continuing decline in net sales of the Company's ongoing fragrance products. As
previously reported, the Company is exploring entry into a licensing arrangement
covering its fragrance business. Net sales of the Dana Buchman Division
increased 16%, to $56 million, due to higher unit volume. Net sales of menswear
increased 23%, to $31 million, due to higher average unit selling prices and, to
a lesser degree, higher unit volume. These net sales increases were moderated by
a 13% decrease in dress sales, to $31 million, due in equal parts to lower unit
volume and lower average unit selling prices, reflecting weakness in demand.
Effective with the 1997 fiscal year, the Company lowered its internal transfer
pricing for goods sold by its wholesale divisions to its domestic retail stores
to a cost basis. The change reduces the net sales figures reported by the
wholesale divisions and increases the gross margin dollars and percentage
of the domestic retail operations. This change has no effect on the
Company's consolidated results and did not have any material effect on the
divisional disclosures contained herein.
The 1997 first quarter gross profit margin improved to 38.8%, from 38.0% for the
1996 first quarter, principally reflecting better margins on close-out sales,
improved margins within the outlet operations and the larger percentage of
sales represented by the Cosmetics and Dana Buchman Divisions (both of which are
generally higher margin businesses). Menswear gross margins also improved,
reflecting a higher proportion of regular price sales. Cosmetics margins were
higher, reflecting the increased net sales level as compared with the prior
period's highly depressed level. The overall gross margin imrovement was
moderated by significantly lower margins within the Collection and Studio lines
(due to weakness in demand) as well as the Special Markets Unit (principally
reflecting the repositioning of existing brands).
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 1996 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.
Selling, general and administrative ("SG&A") expenses for the 1997 first quarter
increased $11 million, or 6.9%, over the 1996 first quarter, representing 28.2%
of first quarter 1997 sales as compared to 28.3% of first quarter 1996 sales.
The dollar increases principally reflected the employee and related costs
associated with the additional week in the 1997 quarter, as well as marketing
expenses related to the new CURVE fragrances and continued expansion of the
Company's brand enhancing activities (including a national advertising campaign
and in-store service and presentation program). Additional expenses associated
with the expansion of the Dana Buchman Division and outlet operations
also contributed to the SG&A dollar increase. These increases were partially
offset by continuing expense reduction initiatives.
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, moderated by a reduction in the rate of return
realized on the investment portfolio.
As a result of the factors described above, the Company's income before
provision for income taxes increased 16.6% for the first quarter of 1997. These
results included continuing operating losses within the Special Markets Unit.
The provisions for income taxes reflected the changes in pre-tax income and a
decrease in the effective tax rate in 1997; as a result, net income increased
17.4% for the first quarter of 1997.
The earnings per common share computation reflected 2.5 million fewer shares
outstanding on a period-to-period basis as a result of the Company's stock
repurchase program.
The retail environment remains intensely competitive and highly promotional, and
the tone of business continues to be challenging. 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. Management believes that ongoing product improvements as well as the
Company's stepped up marketing activities will continue to enhance customer and
consumer response to its product offerings, resulting in continued growth in
sales and earnings in 1997, although any such improvement will be moderated by
continuing decreases within certain divisions.
FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY
Net cash used in operating activities decreased to $93 million during the 1997
quarter, from $101 million during the 1996 quarter, primarily due to the
increase in net income to $42 million for the first quarter of 1997 from $36
million for the first quarter of 1996. Changes in the components of working
capital generally offset each other for the quarter. Net cash used in investing
activities was $167 million in 1997, compared to net cash provided by investing
activities of $90 million in 1996. The fluctuations in net cash used in and
provided by investing activities are related to the net increase or decrease in
marketable securities on a period-to-period basis. Net cash used in financing
activities was $18 million in the 1997 quarter, compared to $27 million in
1996, principally reflecting a decrease in the amount expended in the Company's
stock repurchase program. As of May 16 , 1997, the Company had expended, or
committed to expend through the sale of put warrants (see Note 7 of Notes to
Consolidated Financial Statements), approximately $629 million of the $675
million authorized under its stock repurchase program, covering an aggregate of
22.2 million shares.
Inventories at April 5, 1997 were $302 million, down from $349 million at 1996
year-end and $341 million at March 30, 1996. The reduced inventory level
principally reflected a reduction of ongoing inventory within the outlet
operations and certain wholesale apparel and non-apparel divisions, as well as
planned lower inventory of Collection and Studio due to weakness in demand.
The Company's anticipated capital expenditures for 1997 currently approximate
$70 million, of which $5 million has been expended through April 5, 1997. These
expenditures consist primarily of the expansion of the Company's distribution
facilities, including certain building and equipment expenses and renovation of
New York showrooms and offices. The Company has recently commenced
implementation of a significant information systems upgrade project, which will
involve substantial changes to the Company's present hardware and software
systems that the Company expects to provide certain competitive benefits and
render its information systems "Year 2000" compliant. Management currently
expects that full implementation of this project will involve a commitment of
approximately $45-$60 million over the next three years; approximately $17
million of such amount is included in the Company's $70 million anticipated
capital expenditures for 1997 referred to above. Capital 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 through the issuance of letters of
credit, were $275 million as of April 5, 1997. 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 the remainder of fiscal 1997, 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 1996 Annual Report on Form 10-K,
including, without limitation, those set forth under the heading "Business -
Competition; Certain Risks". As previously announced, the Company has introduced
a new upper-moderate label and has repositioned its moderate brands under its
recently designated Special Markets Unit. The Company's efforts to date within
the moderate market (which is generally a lower margin business) have not been
profitable. This business is accompanied by certain risks, including risks
associated with generating acceptance by new customers (including mass
merchants) of new product lines and the general risks inherent with any such
expansion.
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 April 5, 1997.
(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 20, 1997 BY /s/ Samuel M. Miller
--------------------
SAMUEL M. MILLER
Senior Vice President - Finance
Chief Financial and Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> APR-05-1997
<CASH> 46,650
<SECURITIES> 362,153
<RECEIVABLES> 307,238
<ALLOWANCES> 0
<INVENTORY> 302,015
<CURRENT-ASSETS> 1,123,598
<PP&E> 449,385
<DEPRECIATION> 230,203
<TOTAL-ASSETS> 1,375,565
<CURRENT-LIABILITIES> 301,712
<BONDS> 0
0
0
<COMMON> 88,219
<OTHER-SE> 938,247
<TOTAL-LIABILITY-AND-EQUITY> 1,375,565
<SALES> 596,556
<TOTAL-REVENUES> 596,556
<CGS> 365,235
<TOTAL-COSTS> 533,734
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31
<INCOME-PRETAX> 66,921
<INCOME-TAX> 24,800
<INCOME-CONTINUING> 42,121
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,121
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
