FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X]ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from .........to.........
Commission Title Number 0-9831
LIZ CLAIBORNE SAVINGS PLAN
(FULL TITLE OF PLAN)
LIZ CLAIBORNE, INC.
(NAME OF ISSUER OF THE SECURITIES HELD
PURSUANT TO THE PLAN)
1441 BROADWAY
NEW YORK, NEW YORK 10018
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES
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FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements
See Index to Financial Statements and Schedule at page F-1 and the accompanying
Financial Statements.
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Exhibits
10(a) Liz Claiborne Savings Plan ("Savings Plan"), as amended and
restated, is incorporated herein by reference from Exhibit 10(f) to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 30, 1989.
10(b) Amendment Nos. 1 and 2 to the Savings Plan are incorporated herein
by reference from Exhibit 10(g) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 26, 1992.
10(c) Amendment Nos. 3 and 4 to the Savings Plan are incorporated herein
by reference from Exhibit 10(g)(i) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 25, 1993.
10(d)Amendment No. 5 to the Savings Plan is incorporated herein by reference
from Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the
period ended July 2, 1994.
10(e) Amendment No. 6 to the Savings Plan, is incorporated herein by
reference from Exhibit 10(e)(iii) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 28, 1996 (the "1996
Annual Report").
10(f)Amendment No. 7 to the Savings Plan is incorporated herein by reference
from Exhibit 10(e)(iv) to the Company's 1996 Annual Report.
10(g)Amendment No. 8 to the Savings Plan is incorporated herein by reference
from Exhibit 10(e)(v) to the Company's Annual Report on Form 10-k for the
year ended January 3, 1998.
10(h) Trust Agreement dated as of July 1, 1994 between the Company and
IDS Trust Company (the "Trust") related to the Plan is incorporated
herein by reference from Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the period ended July 2, 1994.
24 Consent of Independent Public Accountants
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this annual report to be signed by the
undersigned hereunto duly authorized.
LIZ CLAIBORNE SAVINGS PLAN
(Name of Plan)
By /s/ Samuel M. Miller
Samuel M. Miller
Member of Administrative
June 29, 1998 Committee
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LIZ CLAIBORNE SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page
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Number
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 2
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Participants
as of December 31, 1997 and 1996 3 to 4
Statements of Changes in Net Assets Available for Plan Participants for the
Years Ended December 31, 1997,
1996 and 1995 5 to 7
Notes to Financial Statements 8 to 13
Supplemental Schedule:
Schedule I. Investments 14
Note: Schedules other than that referred to above have been omitted as
inapplicable or not required under the instructions contained in Regulation S-X
or the information is included elsewhere in the financial statements or the
notes thereto.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of
The Liz Claiborne Savings Plan:
We have audited the accompanying statements of net assets available for plan
participants of the Liz Claiborne Savings Plan (the "Plan") as of December 31,
1997 and 1996, and the related statements of changes in net assets available for
plan participants for each of the three years in the period ended December 31,
1997. These financial statements and the schedule referred to below are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan participants of the
Plan as of December 31, 1997 and 1996, and the changes in net assets available
for plan participants for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary schedule of investments
is presented for the purpose of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic financial statements.
In addition, the Fund Information in the statements of net assets available for
plan participants and the statements of changes in net assets available for plan
participants is presented for purposes of additional analysis rather than to
present the net assets available for plan participants and changes in net assets
available for plan participants of each fund. The schedule and Fund Information
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/Arthur Andersen LLP
New York, New York
June 26, 1998
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LIZ CLAIBORNE SAVINGS PLAN
Statement of Net Assets Available for Plan Participants
As of December 31, 1997
LIZ INC IDS FED IDS AMER EXP IDS NEW OPPEN TEMPLETON LIZ CO
FUNDS ACCOUNT INCOME MUTUAL EQUITY INDEX DIMENSIONS DISCOVERY FOREIGN STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PLAN ASSETS
Cash $67,896 $21,448 $48,377 $73,358 $88,444 $10,476 $10,264 $53,199 $373,462
Investments 20,433,019 2,792,666 6,211,052 16,193,963 12,326,985 543,670 952,983 10,650,387 70,104,725
Accrued dividends
and interest --- --- --- --- --- --- --- 2,694 2,694
Loans to participants 736,540 174,220 327,506 492,227 662,044 48,162 42,237 387,738 2,870,674
--------- --------- ---------- ---------- ---------- ------- --------- --------- ----------
TOTAL PLAN ASSETS 21,237,455 2,988,334 6,586,935 16,759,548 13,077,473 602,308 1,005,484 11,094,018 73,351,555
----------- ----------- --------- ---------- ---------- ------- ---------- ---------- ----------
PLAN LIABILITIES
Due to Plan
Sponsor-forfeitures 545,095 --- --- --- --- --- --- --- 545,095
-------- --------- ---------- ---------- ----------- ------- --------- ---------- -----------
TOTAL PLAN LIABILITIES 545,095 --- --- --- --- --- --- --- 545,095
------- ---------- ---------- ---------- ----------- ------- --------- ----------- -----------
NET ASSETS AVAILABLE FOR
PLAN PARTICIPANTS $20,692,360 $2,988,334 $6,586,935 $16,759,548 $13,077,473 $602,308$1,005,484 $11,094,018 $72,806,460
=========== ========== ========== =========== =========== ================== =========== ===========
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The accompanying notes to financial statements are an integral
part of this statement.
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LIZ CLAIBORNE SAVINGS PLAN
Statement of Net Assets Available for Plan Participants
As of December 31, 1996
LIZ INC IDS FED IDS AMER EXP IDS NEW LIZ CO
FUNDS ACCOUNT INCOME MUTUAL EQUITY INDEX DIMENSIONS STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
PLAN ASSETS
Investments $20,763,118 $2,106,225 $4,740,770 $11,986,514 $8,786,923 $10,296,867 $58,680,417
Accrued dividends
and interest --- --- --- --- --- 2,256 2,256
Loans to participants 722,542 163,858 340,965 430,241 580,673 343,986 2,582,265
----------- ----------- ---------- -------------- ---------------- ---------------- ----------------
TOTAL PLAN ASSETS 21,485,660 2,270,083 5,081,735 12,416,755 9,367,596 10,643,109 61,264,938
----------- ----------- ---------- -------------- ---------------- ---------------- ----------------
PLAN LIABILITIES
Due to Plan
Sponsor-forfeitures 194,582 --- --- --- --- --- 194,582
Due to Plan participants 153,851 153,851
---------- ----------- ---------- -------------- ---------------- ---------------- ----------------
TOTAL PLAN LIABILITIES 348,433 --- --- --- --- --- 348,433
---------- ----------- ---------- -------------- ---------------- ---------------- ----------------
NET ASSETS AVAILABLE FOR
PLAN PARTICIPANTS $21,137,227 $2,270,083 $5,081,735 $12,416,755 $9,367,596 $10,643,109 $60,916,505
=========== =========== ========== ================ ================ ================ ================
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The accompanying notes to financial statements are an integral
part of this statement.
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LIZ CLAIBORNE SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Participants
For the Year Ended December 31, 1997
LIZ INC IDS FED IDS AMER EXP IDS NEW OPPEN TEMPLETON LIZ CO
FUNDS ACCOUNT INCOME MUTUAL EQUITY INDEX DIMENSIONS DISCOVERY FOREIGN STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Interest Income $372,651 $13,726 $26,708 $39,045 $49,788 $2,727 $4,186 $52,182 $561,013
Dividends --- 147,829 885,353 --- 919,052 11,218 99,893 108,542 2,171,887
Securities Transactions:
Proceeds 12,235,293 915,376 1,037,557 2,859,795 1,936,763 236,154 322,942 6,235,501 25,779,381
Aggregate Cost
(Weighted Average
Basis) 12,104,897 909,548 967,492 2,515,751 1,745,814 241,662 308,231 6,001,487 24,794,882
--------- ---------- --------- ----------- ----------- -------- --------- ---------- -----------
Net Gain (Loss) 130,396 5,828 70,065 344,044 190,949 (5,508) 14,711 234,014 984,499
--------- ---------- --------- ----------- ----------- -------- --------- ---------- -----------
Changes in Unrealized
Appreciation/
(Depreciation)
of Investments 769,340 35,147 (6,413) 3,585,529 1,215,714 20,804 (94,492) 626,036 6,151,665
CONTRIBUTION AND
PAYMENT ACTIVITIES:
Employer Contributions,
net of forfeitures 343,665 96,914 262,536 276,807 403,077 38,478 46,911 204,062 1,672,450
Employee Contributions 1,415,234 410,911 990,276 1,422,793 1,888,531 159,906 179,197 1,028,621 7,495,469
Employee Transfers (1,369,873) 324,172 (139,612) 294,074 48,657 393,257 927,110 (477,785) ---
Amounts Withdrawn
by Participants (2,106,280) (316,276) (583,713) (1,619,499) (1,005,891) (18,574) (172,032) (1,324,763) (7,147,028)
---------- ---------- ---------- ----------- ----------- -------- ---------- ---------- -----------
Change in Net
Assets Available for
Plan Participants (444,867) 718,251 1,505,200 4,342,793 3,709,877 602,308 1,005,484 450,909 11,889,955
NET ASSETS AVAILABLE
FOR PLAN PARTICIPANTS,
BEGINNING BALANCE 21,137,227 2,270,083 5,081,735 12,416,755 9,367,596 --- --- 10,643,109 60,916,505
----------- ---------- ---------- ----------- ----------- -------- ---------- ---------- -----------
NET ASSETS AVAILABLE
FOR PLAN
PARTICIPANTS,
ENDING BALANCE $20,692,360 $2,988,334 $6,586,935 $16,759,548 $13,077,473 $602,308 $1,005,484 $11,094,018 $72,806,460
=========== ========== ========== =========== =========== ======== ========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
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LIZ CLAIBORNE SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Participants
For the Year Ended December 31, 1996
LIZ INC IDS FED IDS AMER EXP IDS NEW LIZ CO
FUNDS AC COUNT INCOME MUTUAL EQUITY INDEX DIMENSIONS STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Interest Income $789,013 $12,903 $24,138 $27,141 $35,951 $38,660 $927,806
Dividends --- 122,245 434,850 --- 334,070 116,554 1,007,719
Securities Transactions:
Proceeds 14,959,684 718,802 1,029,238 1,777,349 1,038,177 4,503,918 24,027,168
Aggregate Cost
(Weighted Average Basis) 14,843,581 731,738 1,004,693 1,634,643 957,037 4,271,577 23,443,269
----------- --------- --------- ---------- --------- ---------------- ----------------
Net Gain (Loss) 116,103 (12,936) 24,545 142,706 81,140 232,341 583,899
----------- --------- -------- --------- --------- ---------------- ----------------
Changes in Unrealized Appreciation/
(Depreciation) of Investments 459,809 (25,593) 73,355 1,988,416 955,002 2,669,086 6,120,075
CONTRIBUTION AND PAYMENT ACTIVITIES:
Employer Contributions,
net of forfeitures 464,391 151,618 324,069 344,517 479,809 251,896 2,016,300
Employee Contributions 1,512,647 534,553 1,121,883 1,194,448 1,732,824 879,932 6,976,287
Employee Transfers (1,634,340) (81,058) 191,450 282,438 1,877,952 (636,442) ---
Amounts Withdrawn by Participants (2,146,177) (214,915) (467,175) (969,150) (728,142) (782,479) (5,308,038)
----------- --------- --------- --------- ---------- ---------------- ----------------
Change in Net Assets Available
for Plan Participants (438,554) 486,817 1,727,115 3,010,516 4,768,606 2,769,548 12,324,048
NET ASSETS AVAILABLE FOR PLAN
PARTICIPANTS, BEGINNING BALANCE 21,575,781 1,783,266 3,354,620 9,406,239 4,598,990 7,873,561 48,592,457
----------- --------- --------- ---------- ---------- ---------------- ----------------
NET ASSETS AVAILABLE FOR PLAN
PARTICIPANTS, ENDING BALANCE $21,137,227 $2,270,083 $5,081,735 $12,416,755 $9,367,596 $10,643,109 $60,916,505
=========== ========== ========== =========== ========== ================ ================
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
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LIZ CLAIBORNE SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Participants
For the Year Ended December 31, 1995
LIZ INC IDS FED IDS AMER EXP IDS NEW LIZ CO
FUNDS ACCOUNT INCOME MUTUAL EQUITY INDEX DIMENSIONS STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Interest Income $1,122,917 $10,096 $18,061 $20,033 $23,100 $34,596 $1,228,803
Dividends --- 65,815 121,936 --- 180,568 116,551 484,870
Securities Transactions:
Proceeds 8,284,162 280,007 430,239 1,435,758 405,650 1,646,973 12,482,789
Aggregate Cost
(Weighted Average Basis) 8,161,651 273,642 401,317 1,223,681 357,307 1,642,150 12,059,748
---------- ---------- ---------- ---------- ------------- ---------------- ----------------
Net Gain 122,511 6,365 28,922 212,077 48,343 4,823 423,041
---------- ---------- ---------- ---------- ------------- ---------------- ----------------
Changes in Unrealized Appreciation
of Investments 269,569 55,564 263,192 2,186,211 493,185 2,822,198 6,089,919
CONTRIBUTION AND PAYMENT ACTIVITIES:
Employer Contributions,
net of forfeitures 547,959 187,363 354,748 282,660 442,295 228,691 2,043,716
Employee Contributions 1,896,647 627,755 1,129,910 1,014,653 1,429,228 740,023 6,838,216
Employee Transfers (1,833,389) 336,762 508,247 146,786 830,223 11,371 ---
Amounts Withdrawn by Participants (2,477,864) (145,568) (212,006) (992,249) (230,913) (804,547) (4,863,147)
---------- ---------- ---------- ---------- ------------- ---------------- ----------------
Change in Net Assets Available
for Plan Participants (351,650) 1,144,152 2,213,010 2,870,171 3,216,029 3,153,706 12,245,418
NET ASSETS AVAILABLE FOR PLAN
PARTICIPANTS, BEGINNING BALANCE 21,927,431 639,114 1,141,610 6,536,068 1,382,961 4,719,855 36,347,039
----------- ---------- ---------- ---------- ------------- ---------------- ----------------
NET ASSETS AVAILABLE FOR PLAN
PARTICIPANTS, ENDING BALANCE $21,575,781 $1,783,266 $3,354,620 $9,406,239 $4,598,990 $7,873,561 $48,592,457
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</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE>
LIZ CLAIBORNE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(1) Description of the Plan
The Liz Claiborne Savings Plan (as amended, the "Plan") was adopted by
Liz Claiborne, Inc. (the "Company") effective January 1, 1985. An
administrative committee (the "Administrative Committee") has been
appointed by the Board of Directors of the Company to supervise the
administrative and investment operations of the Plan. Administrative
expenses are paid by the Company. The Plan is a trusteed, defined
contribution plan subject to the reporting and disclosure
requirements, participation and vesting standards, and fiduciary
responsibility provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"), as amended. The provisions of the Plan comply
with the requirements of ERISA. The Plan trustee and recordkeeper is
Amercan Express Trust Company.
Employees of the Company and certain of its wholly-owned subsidiaries
who are not covered by certain collective bargaining agreements become
eligible to participate in the Plan on the first of the month after they
have attained age 21, have completed 12 consecutive months of service
and have worked at least 1,000 hours during those 12 months.
The Plan provides for contributions by the participating employees of
amounts ranging from 1% to 15% of compensation, as defined in the Plan,
and for contributions by the Company, which includes for purposes
hereof, the Company and certain of its wholly-owned subsidiaries, equal
to 50% of each participant's contributions, limited to the first 5% of
compensation contributed. Participants' contributions are made at the
option of each employee, except that certain participants may be
restricted as to the amount of the contribution pursuant to the
provisions of the Internal Revenue Code, as amended (the "Code").
The participants have access to their account information through a
toll-free number and the ability to obtain current account balances,
change contribution rates or investment elections, request a loan or
receive specific information about fund performance on a daily basis.
Participants may suspend elective contributions and enroll again at any
time as long as they are eligible employees.
Participants become vested in their Company matching contribution
account based on their number of years of service with the Company. The
vesting schedule is as follows:
Years of service Vested
with the Company Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
Participants' interest in their Company matching contribution account is
fully vested and nonforfeitable in the event of death, disability or
retirement at or after Normal Retirement Date (age 65).
<PAGE>
The portion of a participant's Company matching contribution account
balance which is not vested at the time of separation of service with
the Company is retained in the Plan. Pursuant to the terms of the Plan
document, these forfeitures are used to offset any employer
contributions for the current year or in the next succeeding year. For
the years ended December 31, 1997, 1996 and 1995, forfeitures amounted
to $710,166, $194,582 and $202,051, respectively.
Upon termination of employment, the value of a participant's vested
account is payable in stock of the Company, or in cash, or the
participant may elect to roll it over to an IRA or a future employer's
plan. At the participant's election, such distribution may be requested
immediately, or (i) if the balance is less than $5,000, distribution
will be processed by December 31 of that year, or (ii) if the account
balance is in excess of $5,000, in equal installments over a period from
two to ten years, or (iii) if the account balance is in excess of $5,000
and the participant reaches age 65, distribution will be processed for
December 31 of that year.
As allowed under Internal Revenue Service rules, participants may
withdraw funds from their account while employed if needed to satisfy an
immediate and heavy financial need. Any amount withdrawn will be subject
to income taxes and may be subject to an additional tax based on early
withdrawal.
Active participants may borrow up to 50% of their vested account balance
and have multiple loans outstanding at one time. The minimum loan amount
is $1,000 and the maximum amount is $50,000. The interest rate
applicable to a loan is the prime rate at the time the loan is granted
plus one percent. The rate in effect on December 31, 1997 was 9.50%.
The participant has a choice of repaying the loan over a period between
12 to 54 months. Participants repay their loans through payroll
deductions. In addition, any outstanding principal balance may be repaid
in full on any business day. Upon termination of employment, the
participant must repay the outstanding principal balance in full. In the
event the loan is not repaid in full, it is treated as a taxable
distribution.
(2) Investment programs:
Each employee may direct American Express Trust Company to invest their
contributions in one or more of the following investment funds:
Liz Claiborne Income Account
A collective investment fund managed by American Express Trust Company
which invests mainly in fixed income contracts issued by insurance
companies and banks, and other stable value contracts. The fund's
investment goal is to preserve principal while maximizing current
income. The fund had 1,695 and 1,902 participants at December 31, 1997
and 1996, respectively.
IDS Federal Income
A diversified income mutual fund managed by American Express Financial
Corporation which generally invests at least 65% of its assets in U.S.
government and government agency securities. The fund may also invest in
options on governmental securities, pools of mortgage loans issued by
financial or non-governmental mortgage institutions, non-governmental
mortgage related securities and debt, and cash and cash equivalents. The
fund's investment goal is to seek a high level of current income and
safety of principal consistent with investments in U.S. government and
government agency securities. The fund had 796 and 863 participants at
December 31, 1997 and 1996, respectively.
<PAGE>
IDS Mutual
A diversified mutual fund managed by American Express Financial
Corporation which invests in a balance of common stocks and senior
securities (preferred stocks and debt securities), convertible
securities, derivative instruments and money market instruments issued
by U.S. and foreign companies. The fund's investment goal is to provide
a balance of growth of capital and current income. No more than 65% of
the fund's assets may be invested in common stocks and no less than 35%
in senior securities, convertible securities, derivative instruments and
money market instruments. The fund had 1,489 and 1,534 participants at
December 31, 1997 and 1996, respectively.
American Express Trust Equity Index II
A collective fund managed by American Express Trust Company which
invests primarily in common stock of U.S. companies upon which the
Standard & Poor's 500 Stock Index is based. The fund's investment goal
is to achieve a total rate of return as close as possible to that of
Standard & Poor's 500 Index. This fund is a collective investment fund
which invests primarily in the American Express Equity Index Base Fund.
The fund may also invest in high-quality money market securities and
stock index futures contracts. The fund had 1,862 and 1,780 participants
at December 31, 1997 and 1996, respectively.
IDS New Dimensions
A diversified mutual fund managed by American Express Financial
Corporation that invests primarily in common stocks of U.S. and foreign
companies which the fund's manager believes to show potential for
significant growth. The fund's investment goal is to provide long-term
growth of capital. The fund also invests in preferred stocks, debt
securities, derivative instruments and money market instruments. The
fund had 1,809 and 1,758 participants at December 31, 1997 and 1996,
respectively.
Oppenheimer Discovery
An aggressive growth fund managed by Oppenheiner Funds which seeks to
achieve long-term growth of capital. The fund invests primarily in
common stocks of medium sized companies involved in new technologies and
companies with new or innovative products and services. The fund had 275
participants at December 31, 1997.
Templeton Foreign
An international specialty growth fund managed by the Franklin Templeton
Group which seeks to achieve long-term capital growth. The fund invests
primarily in common stock of companies outside the United States,
preferred stocks and certain debt securities. The fund had 322
participants at December 31, 1997.
Liz Claiborne Company Stock
The fund's investment goal is to provide participants with a way to
invest in Liz Claiborne, Inc. The Plan Trustee buys shares of Liz
Claiborne, Inc. common stock at current market prices on the New York
Stock Exchange. The Company's contribution may also be made directly to
the Plan in shares of Liz Claiborne, Inc. common stock (Note 8). The
fund had 1,742 and 1,689 participants at December 31, 1997 and 1996,
respectively.
A portion of any of the Plan's investment funds may consist of
short-term interest bearing accounts to meet the distribution needs or
administrative requirements of the Plan. The Company will generally make
contributions to the Trustee as soon as administratively practicable
after each biweekly pay date.
<PAGE>
3) Investments:
Investments are carried at market value. Security transactions are
recorded on a settlement date basis. The difference resulting from the
recording of transactions between trade date and settlement date was not
material. Dividend income is recorded at the ex-dividend date. Income
from other investments is recorded as earned on an accrual basis.
The market value of individual investments that represent 5% or more of
the Plan's total net assets available for plan participants as of
December 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
Liz Claiborne Income Account
American Express Trust Income Fund II $ 20,433,019 $ 14,595,194
Metropolitan Life-Fixed Income Contract -- 6,167,924
IDS Mutual 6,211,052 4,740,770
American Express Trust Equity Index II 16,193,963 11,986,514
IDS New Dimensions 12,326,985 8,786,923
Liz Claiborne, Inc. Common Stock 10,388,107 9,854,744
</TABLE>
The Company and certain of its officers and directors are parties to
several pending legal proceedings and claims. Although the effect of
such litigation cannot be determined with certainty, management of the
Company is of the opinion that the final outcome should not have a
material adverse effect on the Company's results of operations or
financial position or on the Plan's net assets.
(4) Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(5) Valuation of accounts:
Participants' accounts are stated at market value at the end of each
business day. In addition, an investment adjustment reflecting accrued
earnings is determined for each investment fund and is allocated among
accounts entitled to share in the adjustment.
(6) Realized and unrealized gains and losses
Realized and unrealized gains and losses on plan assets are determined
based on the value of the assets at the beginning of the plan year or
at the time of purchase during the year.
7) Federal income taxes:
On behalf of the Plan, the Company has received a favorable
determination letter, dated March 4, 1996, from the Internal Revenue
Service to the effect that the Plan is qualified under Section 401 of
the Internal Revenue Code. Since the Plan is qualified, participants are
not taxed on contributions or on the related earnings until they receive
distributions from the Plan or default on their loan repayments.
Additionally, the Plan is not taxed on its dividend and interest income
or any capital gains whether realized or unrealized.
(8) Plan termination:
The Plan may be terminated at any time at the Company's sole discretion.
Upon termination, contributions by the Company and participants cease
and all Company contributions which had been credited to each
participant's account would fully vest. At this time, management has no
intention to terminate the Plan.
(9) Related party transactions:
The members of the Plan's Administrative Committee currently serve in
the following respective positions: Chairman of the Board and Chief
Executive Officer; and Senior Vice President- Finance and Chief
Financial Officer. One of the investment funds of the Plan invests
exclusively in shares of the Company's Common Stock (Note 2). The Plan
owned 248,445 shares of Common Stock at December 31, 1997, with a cost
based on beginning market value of $9,759,653 and a market value of
$10,388,107 and at December 31, 1996, owned 255,139 shares of Common
Stock with a cost based on beginning market value of $7,188,164 and a
market value of $9,854,744.
(10) Reconciliation to Form 5500:
As of December 31, 1997 and 1996, there was $1,267,818 and $2,218,460,
respectively, of vested benefits payable to terminated participants that
were paid in the first quarter of 1998 and 1997, respectively. These
amounts are recorded as liabilities in the Plan's Form 5500; however,
these amounts are not recorded as liabilities in the accompanying
statements of net assets available for plan participants in accordance
with generally accepted accounting principles.
The following table reconciles net assets available for plan
participants per the accompanying financial statements to the Form 5500
to be filed by the Company for the years ended December 31, 1997 and
1996:
<TABLE>
<CAPTION>
1997 1996
1997 Net Assets Net Assets
Benefits Available for Available for
Paid Plan Benefits Plan Benefits
<S> <C> <C> <C>
Per financial statements $7,147,028 $72,806,460 $60,916,505
Accrued benefit payments 1,267,818 (1,267,818) (2,218,460)
Reversal of 1996 accrual for
benefit payments (2,218,460) -- --
Per Form 5500 $6,196,386 $71,538,642 $58,698,045
</TABLE>
As of December 31, 1997 and 1996, there was approximately $17,758,000
and $15,227,000, respectively, of vested benefits payable to terminated
participants.
(11) Other Information:
There were no loans, fixed income obligations or leases which were
either in default or classified as uncollectible during the years ended
December 31, 1997, 1996 and 1995.
(12) Subsequent Event:
Effective April 1, 1998, participants are permitted to invest funds
under the Plan in a Self-Directed Brokerage Account that allows them
access to more than 200 mutual funds from eleven mutual fund families.
Initially, a $3,000 minimum amount is required to open an account, which
will be transferred from current account balances in the Plan. Once the
account is opened, all future transfers to the account must be at least
$500 and must be transferred from a participant's other investment funds
in the Plan. Deferrals may not be deposited directly into the account
and direct withdrawals and loans are prohibited. Transfers from the
Self-Directed Brokerage Account to the Plan will be deposited into the
American Express Trust Income Fund. An administrative fee of $75 is
charged by American Express when the account is opened. Participants may
incur penalties for early redemptions of a mutual fund that is not held
for 90 days (except in the case of IDS funds).
<PAGE>
<TABLE>
<CAPTION>
LIZ CLAIBORNE SAVINGS PLAN
SCHEDULE OF INVESTMENTS
AS OF DECEMBER 31, 1997
SCHEDULE I
NUMBER OF
SHARES OR COST BASED CURRENT
FUNDS UNITS ON BEG MKT VALUE
<S> <C> <C> <C>
AMERICAN EXPRESS TRUST INCOME FUND II 1,174,678 $19,663,679 $20,433,019
IDS FEDERAL INCOME 552,347 2,757,519 2,792,666
IDS MUTUAL 452,437 6,217,465 6,211,052
AMERICAN EXPRESS TRUST EQUITY INDEX II 625,684 12,608,434 16,193,963
IDS NEW DIMENSIONS 516,595 11,111,271 12,326,985
OPPENHEIMER DISCOVERY 11,301 522,866 543,670
TEMPLETON FOREIGN 95,777 1,047,475 952,983
LIZ CLAIBORNE COMPANY STOCK
LIZ CLAIBORNE, INC. COMMON STOCK 248,445 9,759,653 10,388,107
AMERICAN EXPRESS TRUST MONEY MARKET 264,698 264,698 262,280
---------------- ----------------
10,024,351 10,650,387
---------------- ----------------
$63,953,060 $70,104,725
================ ================
LOANS TO PARTICIPANTS ,
AT INTEREST RATES RANGING FROM 7 % TO 10% $2,870,674 $2,870,674
================ ================
</TABLE>
EXHIBIT 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K, into Liz Claiborne, Inc.'s previously filed
Registration Statement on Form S-8 File No. 2-95258.
/s/Arthur Andersen LLP
New York, New York
June 29, 1998
