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 July 1, 2000
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
[_] SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............to..................
Commission file number: 0-9831
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 August 11, 2000 was 53,258,984.
<PAGE>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
JULY, 1, 2000
PAGE
NUMBER
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of July 1, 2000,
January 1, 2000 and July 3, 1999 ............................... 3
Condensed Consolidated Statements of Income for the Six
and Three Months Periods Ended July 1, 2000 and July 3, 1999 ... 4
Condensed Consolidated Statements of Cash Flows for the
Six Months Periods Ended July 1, 2000 and July 3, 1999 ........ 5
Notes to Condensed Consolidated Financial Statements ........... 6-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................ 13-18
OTHER INFORMATION
Item 1. Legal Proceedings .............................................. 18-19
Item 4. Submission of Matters to a Vote of Security Holders ............ 19
Item 5. Statement Regarding Forward-Looking Disclosure ................. 20
Item 6. Exhibits and Reports on Form 8-K ............................... 21
SIGNATURES .............................................................. 22
2
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<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands except share data)
(Unaudited) (Unaudited)
July 1, January 1, July 3,
2000 2000 1999
---------- ---------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 28,549 $ 37,940 $ 80,706
Marketable securities 9,043 -- --
Accounts receivable - trade 327,943 298,924 299,290
Inventories 407,226 418,348 403,376
Deferred income tax benefits 22,899 27,764 33,190
Other current assets 77,483 75,633 85,967
---------- ---------- ----------
Total current assets 873,143 858,609 902,529
---------- ---------- ----------
PROPERTY AND EQUIPMENT - NET 290,749 284,171 271,429
GOODWILL AND INTANGIBLES - NET 235,445 227,663 172,109
OTHER ASSETS 37,182 41,358 12,687
---------- ---------- ----------
TOTAL ASSETS $1,436,519 $1,411,801 $1,358,754
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 189,711 $ 184,556 $ 131,180
Accrued expenses 133,309 160,220 147,410
Income taxes payable 4,577 7,535 11,343
---------- ---------- ----------
Total current liabilities 327,597 352,311 289,933
---------- ---------- ----------
LONG TERM DEBT 219,561 116,085 --
OTHER NON CURRENT LIABILITIES 15,000 15,000 15,000
DEFERRED INCOME TAXES 24,307 23,111 16,954
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST AND PUT WARRANTS 4,096 3,125 7,782
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 88,219
Capital in excess of par value 83,371 80,257 73,101
Retained earnings 1,894,909 1,827,720 1,717,741
Accumulated other comprehensive loss (2,004) (3,263) (2,803)
----------- ----------- -----------
2,064,495 1,992,933 1,876,258
Common stock in treasury, at cost, 35,143,928, 31,498,577
and 25,187,948 shares (1,218,537) (1,090,764) (847,173)
----------- ----------- -----------
Total stockholders' equity 845,958 902,169 1,029,085
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,436,519 $1,411,801 $1,358,754
=========== =========== ===========
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
3
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<TABLE>
<CAPTION>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(All amounts in thousands, except per common share data)
(Unaudited) (Unaudited)
------------------------------------------------------
Six Months Ended Three Months Ended
--------------------------- -------------------------
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $1,471,126 $1,308,464 $ 661,667 $ 607,675
Cost of goods sold 900,498 808,821 393,913 370,664
----------- ----------- ----------- -----------
GROSS PROFIT 570,628 499,643 267,754 237,011
Selling, general & administrative expenses 443,331 381,224 214,802 188,334
----------- ----------- ----------- -----------
OPERATING INCOME 127,297 118,419 52,952 48,677
Other Income (Expense), net 2,318 (599) 19 (333)
Interest (Expense) Income, net (7,828) 2,254 (3,827) 1,317
----------- ----------- ----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 121,787 120,074 49,144 49,661
Provision for income taxes 43,843 43,800 17,692 18,100
----------- ----------- ----------- -----------
NET INCOME $ 77,944 $ 76,274 $ 31,452 $ 31,561
=========== =========== =========== ===========
NET INCOME PER WEIGHTED AVERAGE SHARE, BASIC $1.43 $1.20 $0.58 $0.50
NET INCOME PER WEIGHTED AVERAGE SHARE, DILUTED $1.42 $1.20 $0.58 $0.50
WEIGHTED AVERAGE SHARES, BASIC 54,510 63,600 54,049 63,240
WEIGHTED AVERAGE SHARES, DILUTED 54,910 63,777 54,525 63,433
DIVIDENDS PAID PER COMMON SHARE $0.23 $0.23 $0.11 $0.11
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
4
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<TABLE>
<CAPTION>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All dollar amounts in thousands)
(Unaudited)
--------------------------------
Six Months Ended
--------------------------------
July 1, July 3,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 77,944 $ 76,274
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 37,781 30,907
Other - net 8,859 2,263
Change in current assets and liabilities:
(Increase)in accounts receivable (29,019) (38,043)
Decrease in inventories 11,122 90,168
Decrease in deferred income tax benefits 3,448 2,573
(Increase) in other current assets (2,050) (321)
Increase (decrease) in accounts payable 5,155 (96,778)
(Decrease) increase in accrued expenses (25,938) 5,939
(Decrease) increase in income taxes payable (2,958) 309
----------- ----------
Net cash provided by operating activities 84,344 73,291
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment instruments (14,572) --
Disposals of investment instruments 9,930 65,152
Purchases of property and equipment (32,012) (35,438)
Payments for acquisitions, net of cash acquired (12,840) (138,311)
Other - net (3,566) (540)
----------- -----------
Net cash (used in) investing activities (53,060) (109,137)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in commercial paper, net 103,476 --
Proceeds from exercise of common stock options 15,407 2,692
Dividends paid (12,255) (14,294)
Purchase of common stock, net of put warrant premiums (146,456) (36,540)
----------- -----------
Net cash (used in) financing activities (39,828) (48,142)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (847) 35
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (9,391) (83,953)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 37,940 164,659
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,549 $ 80,706
=========== ===========
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
5
<PAGE>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
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 on Form 10-K. Certain
items previously reported in specific captions in the accompanying financial
statements have been reclassified to conform with the current period's
classifications.
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.
2. ACQUISITIONS AND LICENSING COMMITMENTS
On November 2, 1999, the Company completed the purchase of the entire equity
interest of Podell Industries, Inc.; on June 8, 1999, the Company completed the
purchase of 85.0 percent of the equity interest of Lucky Brand Dungarees, Inc.;
and on February 12, 1999, the Company completed the purchase of 84.5 percent of
the equity interest of Segrets, Inc.
In August 1999, the Company consummated a license agreement with Kenneth Cole
Productions, Inc.; in January 1998 and December 1999 the Company consummated
license agreements with an affiliate of Donna Karan International, Inc.; and in
July 1998, the Company consummated a license agreement with Candie's, Inc. The
Company acts as licensee under these agreements.
Reference is made to the Company's latest annual report on Form 10-K for further
information regarding the above transactions.
6
<PAGE>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. COMPREHENSIVE INCOME
Comprehensive income is comprised of net income, the effects of foreign currency
translation and changes in unrealized gains and losses on securities. Total
comprehensive income for interim periods was as follows:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
July 1, July 3, July 1, July 3,
(Dollars in thousands) 2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Comprehensive income, net of tax:
Net income $77,944 $76,274 $31,452 $31,561
Foreign currency translation (847) 35 (794) 16
Changes in unrealized gains or losses
on securities 2,537 183 1,181 (32)
Reclassification adjustment for gains
or losses included in net income (431) (300) (431) (149)
-------- -------- -------- --------
Comprehensive income, net of tax: $79,203 $76,192 $31,408 $31,396
======== ======== ======== ========
</TABLE>
4. MARKETABLE SECURITIES
The following are summaries of available-for-sale marketable securities and
maturities:
(Dollars in thousands)
July 1, 2000
------------------------------------------
Gross Unrealized Estimated
Cost Gains Losses Fair Value
-------- ------- ------ ----------
Equity securities $ 4,643 $ 4,400 $ -- $ 9,043
-------- ------- ------ ----------
$ 4,643 $ 4,400 $ -- $ 9,043
======== ======= ====== ==========
(Dollars in thousands)
July 3, 1999
------------------------------------------
Gross Unrealized Estimated
Cost Gains Losses Fair Value
-------- ------- ------ ----------
Tax exempt notes and bonds $ 69,569 $ -- $ -- $ 69,569
Equity securities $ 7,557 $ 289 $ -- $ 7,846
-------- ------- ------ ----------
$ 77,126 $ 289 $ -- $ 77,415
======== ======= ====== ==========
At July 3, 1999, all of the above investments were classified as cash
equivalents. There were no available-for-sale marketable securities at January
1, 2000.
For the six-month periods ended July 1, 2000 and July 3, 1999, gross realized
gains on sales of available-for-sale securities totaled $5,403,000 and $749,000,
respectively. The net adjustment to unrealized holding gains and losses on
available-for-sale securities for the six month periods ended July 1, 2000 and
July 3, 1999, were a credit of $3,954,000 (net of $1,423,000 in deferred income
taxes) and a charge of $117,000 (net of $68,000 in deferred income taxes),
respectively, which was included in retained earnings.
7
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LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. INVENTORIES, NET
Inventories are stated at the lower of cost (using the first-in, first-out
method) or market and consist of the following:
(Dollars in thousands)
July 1, January 1, July 3,
2000 2000 1999
---------- ---------- ---------
Raw materials $ 31,390 $ 24,028 $ 19,227
Work in process 6,770 7,516 7,739
Finished goods 369,066 386,804 376,410
---------- ---------- ---------
$ 407,226 $ 418,348 $ 403,376
========== ========== =========
6. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
(Dollars in thousands)
July 1, January 1, July 3,
2000 2000 1999
---------- ---------- ----------
Land and buildings $ 131,726 $ 131,681 $ 134,097
Machinery and equipment 261,898 243,262 230,964
Furniture and fixtures 70,552 67,928 64,196
Leasehold improvements 155,684 145,100 131,046
---------- ---------- ----------
619,860 587,971 560,303
Less: Accumulated depreciation
and amortization 329,111 303,800 288,874
---------- ---------- ----------
$ 290,749 $ 284,171 $ 271,429
========== ========== ==========
8
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LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. RESTRUCTURING CHARGE
In December 1998, the Company recorded a $27.0 million (pre-tax) restructuring
charge. The amount included $14.4 million related to the closure of 30
underperforming specialty retail stores and $12.6 million for the streamlining
of operating and administrative functions. Principal items included in the
charge are estimated contract termination costs, severance and related benefits
for staff reductions and the write-off of certain assets. This charge reduced
net income by $17.1 million, or $.26 per common share. The remaining balance of
the restructuring reserve was $5.1 million as of January 1, 2000, and $3.7
million as of July 1, 2000. For the six months ended July 1, 2000, the Company
recorded spending against this reserve of $1.4 million.
8. CASH DIVIDENDS and COMMON STOCK REPURCHASE
On July 13, 2000, the Company's Board of Directors declared a quarterly cash
dividend on the Company's common stock at the rate of $.1125 per share, to be
paid on September 8, 2000 to stockholders of record at the close of business on
August 18, 2000. Also, on October 14, 1999, the Company's Board of Directors
authorized the Company to purchase up to an additional $450 million of its
common stock in open market purchases and privately negotiated transactions. As
of August 11, 2000, we have $160.8 million remaining in our buyback
authorization.
9. EARNINGS PER COMMON SHARE
The following is an analysis of the differences between basic and diluted
earnings per share in accordance with SFAS No. 128 "Earnings per Share."
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
July 1, July 3, July 1, July 3,
(Dollars in thousands) 2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 77,944 $ 76,274 $ 31,452 $ 31,561
Weighted average common
Shares outstanding 54,510 63,600 54,049 63,240
Effect of dilutive securities:
Stock options and restricted stock grants 400 163 476 193
Put warrants -- 14 -- --
-------- -------- -------- --------
Weighted average common Shares outstanding
and common share equivalents 54,910 63,777 54,525 63,433
======== ======== ======== ========
</TABLE>
9
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LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
10. CONSOLIDATED STATEMENTS OF CASH FLOWS SUPPLEMENTARY DISCLOSURES
During the six months ended July 1, 2000, the Company made income tax payments
of $37,123,000 and interest payments of $4,206,000. During the six months ended
July 3, 1999, the Company made income tax payments of $30,584,000 and no
interest payments.
11. FORWARD CONTRACTS
The Company enters into foreign exchange forward contracts to hedge transactions
denominated in foreign currencies for periods of less than one year. Gains and
losses on contracts which hedge specific foreign currency denominated
commitments are recognized in the period in which the transactions are completed
and are accounted for as part of the underlying transaction. As of July 1, 2000,
the Company had forward contracts maturing through December 2000 to sell
19,000,000 Canadian dollars and contracts maturing through December 2000 to sell
1,750,000 British pounds sterling and contracts maturing through December 2000
to sell 350,000,000 Spanish Peseta. The aggregate U.S. dollar value of the
foreign exchange contracts is approximately $17,930,000. Unrealized gains and
losses for outstanding foreign exchange forward contracts were not material at
July 1, 2000.
12. SEGMENT REPORTING
The Company has three segments: Wholesale Apparel, Wholesale Non-Apparel and
Retail. The Wholesale Apparel Segment consists of women's and men's apparel
designed and marketed under various trademarks owned or licensed by the Company.
The Wholesale Non-Apparel segment consists of accessories, jewelry and cosmetics
designed and marketed under certain of those and other trademarks. The Retail
segment operates specialty retail and outlet stores that sell these apparel and
non-apparel products to the public.
<TABLE>
<CAPTION>
For the Six Months ended July 1, 2000
Wholesale Wholesale Other/
(in thousands) Apparel Non-Apparel Retail Elim. Total
------------------------------- ---------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Revenue from external customers $1,100,425 $ 146,100 $ 218,226 $ 6,375 $1,471,126
Intercompany sales 83,624 7,593 -- (91,217) --
---------- ----------- --------- --------- ----------
1,184,049 153,693 218,226 (84,842) 1,471,126
Segment operating profit (loss) $ 121,377 $ 7,302 $ 22,963 $(24,345) $ 127,297
========== =========== ========= ========= ==========
</TABLE>
10
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LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended July 3, 1999
Wholesale Wholesale Other/
(in thousands) Apparel Non-Apparel Retail Elim. Total
------------------------------- ---------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Revenue from external customers $ 971,546 $ 127,063 $ 205,632 $ 4,223 $1,308,464
Intercompany sales 92,795 12,629 -- (105,424) --
---------- ----------- --------- --------- ----------
1,064,341 139,692 205,632 (101,201) 1,308,464
Segment operating profit (loss) $ 117,859 $ 6,209 $ 18,263 $(23,912) $ 118,419
========== =========== ========= ========= ==========
For the Second Quarter Ended July 1, 2000
Wholesale Wholesale Other/
(in thousands) Apparel Non-Apparel Retail Elim. Total
------------------------------- ---------- ----------- --------- --------- ----------
Revenue from external customers $ 473,630 $ 62,668 $ 121,460 $ 3,909 $ 661,667
Intercompany sales 42,476 4,089 -- (46,565) --
---------- ----------- --------- --------- ----------
516,106 66,757 121,460 (42,656) 661,667
Segment operating profit (loss) $ 51,836 $ 1,815 $ 21,133 $(21,832) $ 52,952
========== =========== ========= ========= ==========
For the Second Quarter Ended July 3, 1999
Wholesale Wholesale Other/
(in thousands) Apparel Non-Apparel Retail Elim. Total
------------------------------- ---------- ----------- --------- --------- ----------
Revenue from external customers $ 428,345 $ 61,072 $ 116,338 $ 1,920 $ 607,675
Intercompany sales 44,981 5,574 -- (50,555) --
---------- ----------- --------- --------- ----------
473,326 66,646 116,338 (48,635) 607,675
Segment operating profit (loss) $ 49,954 $ 548 $ 18,628 $(20,453) $ 48,677
========== =========== ========= ========= ==========
</TABLE>
The reconciling item to adjust segment operating profit to consolidated pre-tax
income for the six month periods consists of net other income of $2.3 million
and net interest expense of $7.8 million for 2000, and net other expense of $0.6
million and net interest income of $2.3 million for 1999. The reconciling item
to adjust segment operating profit to consolidated pre-tax income for the second
quarter consists of net interest expense of $3.8 million for 2000, and net other
expense of $0.3 million and net interest income of $1.3 million for 1999.
11
<PAGE>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
13. DRESS LICENSE
In February 2000, the Company consummated an agreement with Leslie Fay Company,
Inc. to license the Company's Liz Claiborne Dresses and Elisabeth Dresses
labels. The licensing agreement was effective as of the date of the agreement
and has not interrupted the flow of merchandise. Not included in the agreement
are dresses sold as part of the Liz Claiborne Collection, Lizsport, Lizwear, Liz
& Co. and Elisabeth sportswear lines. The initial term of the license agreement
runs through February 28, 2005, with an option to renew on the part of the
licensee, for two additional 5-year terms, if certain sales thresholds are met.
14. SUBSEQUENT EVENT
On July 26, 2000, the Company consummated the purchase of the majority of the
assets of the Monet Group ("Monet"). Monet is a leading marketer of branded
fashion jewelry sold through department stores, popular-priced merchandisers and
internationally under the Monet, Monet Pearl, Monet Signature, Monet2, Trifari
and Marvella brands. The total purchase price of assets was approximately $39.5
million. The excess purchase price over the fair market value of the underlying
net assets is being determined and will be allocated to goodwill and property
based on preliminary estimates of fair values, and will be subject to
adjustment. Goodwill will be amortized on a straight-line basis over 20 years.
Monet is expected to generate annual sales of approximately $75 million in
fiscal 2000. Unaudited pro forma information related to this acquisition is not
included, as the impact of this transaction is not material to the consolidated
results of the Company.
12
<PAGE>
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company operates the following business segments: Wholesale Apparel,
Wholesale Non-Apparel and Retail. All data and discussion with respect to our
specific segments included within this "Management's Discussion and Analysis" is
presented before applicable intercompany eliminations. Please refer to Note 12
of Notes to Condensed Consolidated Financial Statements (Unaudited).
Second quarter ended July 1, 2000 compared to second quarter ended July 3, 1999
Net sales for the second quarter of 2000 were $661.7 million, an increase of
$54.0 million, or 8.9%, over net sales of $607.7 million for the second quarter
of 1999. This increase reflected a 9.0% increase in our Wholesale Apparel
segment to $516.1 million, an increase of 0.2% in Wholesale Non-Apparel to $66.8
million, and an increase in Retail of 4.4% to $121.5 million.
The increase in net sales of Wholesale Apparel primarily reflected the inclusion
of sales of our LUCKY BRAND DUNGAREES business acquired on June 8, 1999, and our
LAUNDRY business acquired on November 2, 1999 (together, our "recently acquired
businesses", which accounted for $30.5 million of our second quarter 2000 total
net sales increase), significant growth in our Special Markets business due to
higher unit volume and higher net average unit selling prices, as well as the
March 2000 launch of our Crazy Horse Men's apparel line. The increase also
reflected sales increases in our Casual, ELISABETH and DKNY(R) JEANS and DKNY(R)
ACTIVE businesses, due in each case to higher unit volume partially offset by
lower net average unit selling prices reflecting higher markdowns, and initial
sales of our licensed Kenneth Cole business. These gains were partially offset
by sales decreases resulting from the licensing of our dress business in
February 2000, and sales declines in our DANA BUCHMAN and Men's businesses
reflecting in each case higher unit volume offset by lower net average unit
selling prices reflecting higher markdowns, and in our Career business,
reflecting lower unit volume partially offset by higher net average unit selling
prices.
The increase in our Wholesale Non-Apparel segment was due to significant net
sales increases in our Cosmetics business, due to higher unit volume partially
offset by lower net average unit selling prices. Our Cosmetics business sales
increase principally reflected continued strong sales of our licensed CANDIE'S
and owned CURVE fragrances. These gains were partially offset by declines in our
handbag and fashion accessories businesses, due primarily to lower unit volume.
The increase in net sales of our Retail segment reflected increased Outlet store
sales resulting primarily from 29 additional stores on a period-to-period basis
(we ended the second quarter with 150 Outlet stores), partially offset by a high
single-digit comparable store sales decrease. Our Specialty Retail store sales
increased slightly, with a significant increase due to the inclusion of the
sales of 14 LUCKY BRAND DUNGAREES stores, which continue to generate substantial
comparable store sales increases, being offset by a mid single-digit decline in
comparable store sales in the balance of our Specialty Retail stores (we ended
the second quarter with 101 Specialty Retail stores). The deterioration in
comparable store sales in our Outlet and Specialty Retail stores reflect the
continuing difficult retail environment and such stores' heavy reliance on
better-priced women's apparel.
13
<PAGE>
Gross profit dollars increased $30.7 million, or 13.0%, in 2000 over 1999. Gross
profit as a percent of sales increased to 40.5% in 2000 from 39.0% in 1999. This
increase in gross profit rate in the quarter, reflected lower initial unit costs
as a result of continued consolidation, configuration and certification of our
supplier base, combined with improved matching of our production orders with our
customer orders at the SKU level through the use of our new systems and revamped
business processes implemented in late 1999. These processes also enabled us to
better manage our inventories and improve margins on the sale of excess
inventories in the second quarter. Our gross profit rate also benefited from
improved margins in our Retail segment as well as contributions from our
recently acquired businesses and our SIGRID OLSEN business, which generally run
at relatively higher gross margin rates than the Company average. These
increases were partially offset by higher markdowns across our better-priced
apparel businesses, and lower margins and increased penetration of our Special
Markets business, which runs at a lower gross profit rate than the Company
average.
Selling, general and administrative expenses ("SG&A") increased $26.5 million,
or 14.1%, in 2000 over 1999, and expressed as a percent of sales increased to
32.5% in 2000 from 31.0% in 1999. These results principally reflect relatively
higher SG&A rates in our recently acquired businesses and our SIGRID OLSEN
business, the planned dilution from the start-up costs of our new Kenneth Cole
and CITY DKNY(R) licenses, the planned increase in distribution costs resulting
from the start-up of our new automated facility constructed in Mt. Pocono, PA,
and an increase in our depreciation and amortization expense related to our
significant investments over the past several years in the technological
upgrading of our distribution facilities and information systems. These factors
were partially offset by increased penetration of our Special Markets business,
which is supported by relatively lower SG&A levels. The dollar level of our SG&A
was lower than planned, reflecting the acceleration of our expense management
and cost reduction programs during the quarter.
As a result of the factors described above, operating income increased $4.3
million, or 8.8%, to $53.0 million, and operating income as a percent of sales
remained flat to last year at 8.0%. Segment operating income in our Wholesale
Apparel segment increased $1.9 million to $51.8 million (10.0% of sales) in 2000
compared to $49.9 million (10.6% of sales) in 1999. Segment operating income in
our Wholesale Non-Apparel segment increased $1.3 million to $1.8 million (2.7%
of sales) in 2000 compared to $0.5 million (0.8% of sales) in 1999. Segment
operating income in our Retail segment increased $2.5 million to $21.1 million
(17.4% of sales) in 2000 compared to $18.6 million (16.0% of sales) in 1999.
Net other income in 2000 was $0.0 million compared to other expense of $0.3
million in 1999. This year's other income includes net non-operating income
partially offset by minority interest expense.
Net interest expense in 2000 was $3.8 million compared to interest income of
$1.3 million in 1999. This $5.1 million change reflects higher net interest
costs incurred to finance our strategic initiatives including our recently
acquired businesses, the repurchase of common stock, capital expenditures
primarily related to the technological upgrading of our distribution facilities
and information systems, and in-store merchandise shops, as well as an equity
investment in Kenneth Cole Productions, Inc.
Our second quarter effective income tax rate declined from 36.5% in 1999 to
36.0% in 2000. The 36.0% level reflects our current estimate of our full year
effective income tax rate.
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Net income decreased $0.1 million in 2000 to $31.5 million, and declined as a
percent of net sales to 4.8% in 2000 from 5.2% in 1999, due to the factors
described above. Diluted earnings per common share increased 16.0% to $0.58 in
2000 from $0.50 in 1999, reflecting a 14.0% decline in the number of average
outstanding common shares and share equivalents in 2000, as a result of our
ongoing stock repurchase program. Our average diluted shares outstanding
declined by 8.9 million in the second quarter of 2000 on a period-to-period
basis, to 54.5 million. We purchased 1.977 million shares during the second
quarter of 2000 for $81.7 million. Since the end of the second quarter we have
purchased an additional 0.1 million shares for $5.0 million. As of August 11,
2000, we have $160.8 million remaining in our buyback authorization.
Six months ended July 1, 2000 compared to six months ended July 3, 1999
Net sales for the six months of 2000 were $1,471.1 million, an increase of
$162.7 million, or 12.4%, over net sales of $1,308.4 million for the six months
of 1999. This increase reflected a 11.2% increase in our Wholesale Apparel
segment to $1,184.0 million, an increase of 10.0% in Wholesale Non-Apparel to
$153.7 million, and an increase in Retail of 6.1% to $218.2 million.
The increase in net sales of Wholesale Apparel primarily reflected significant
growth in our Special Markets business due to higher unit volume and higher net
average unit selling prices, the inclusion of sales of our recently acquired
businesses (which accounted for $68.0 million of our 2000 first half total net
sales increase), as well as the March 2000 launch of our Crazy Horse Men's
apparel line. The sales level also reflected increases in our DKNY(R) JEANS and
DKNY(R) ACTIVE and ELISABETH businesses, due in each case to higher unit volume
partially offset by lower net average unit selling prices reflecting higher
markdowns, and in our SIGRID OLSEN and Casual businesses, reflecting in each
case higher net average unit selling prices partially offset by lower unit
volume. These gains were partially offset by sales decreases resulting from the
licensing of our dress business in February 2000, and sales declines in our DANA
BUCHMAN and Career businesses reflecting in each case lower unit volume and
lower net average unit selling prices reflecting higher markdowns.
The increase in our Wholesale Non-Apparel segment was due to significant net
sales increases in our Cosmetics business, which is benefiting from continued
strong sales of our licensed CANDIE'S and owned CURVE fragrances. These gains
were partially offset by a decline in our fashion accessories businesses, due
primarily to lower net average unit selling prices.
The increase in net sales of our Retail segment reflected increased Outlet store
sales, primarily due to 29 additional stores on a period-to-period basis
partially offset by a mid single-digit comparable store sales decrease. Our
Specialty Retail Store sales increased slightly, with a significant increase due
to the inclusion of the sales of 14 LUCKY BRAND DUNGAREES stores, offset by a
low single- digit decline in comparable store sales in the balance of our
Specialty Retail stores. The decline in comparable store sales in our Outlet and
Specialty Retail stores reflect the aforementioned difficult retail environment
and such stores' heavy reliance on better-priced women's apparel.
Gross profit dollars increased $71.0 million, or 14.2%, in 2000 over 1999. Gross
profit as a percent of sales increased to 38.8% in 2000 from 38.2% in 1999. This
increase in gross profit rate reflected the aforementioned improvement in
initial unit costs and improved margins on the sale of excess inventories. Our
gross profit rate also benefited from improved margins in our Retail segment as
well as contributions from our recently acquired businesses and our SIGRID OLSEN
business, which generally run at relatively higher gross margin rates than the
Company average. As mentioned above for the second quarter, these increases were
partially offset by higher markdowns across our better-priced apparel businesses
and increased penetration of our Special Markets business, which runs at a lower
gross profit rate than the Company average.
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SG&A increased $62.1 million, or 16.3%, in 2000 over 1999, and expressed as a
percent of sales increased to 30.1% in 2000 from 29.1% in 1999. These results
principally reflect relatively higher SG&A rates in our recently acquired
businesses, the planned dilution from the start-up costs of our new Kenneth Cole
and CITY DKNY(R) licenses, the planned increase in distribution costs resulting
from the start-up of our new automated facility constructed in Mt. Pocono, PA,
and an increase in our depreciation and amortization expense as a result of the
factors mentioned above. These factors were partially offset by increased
penetration of our Special Markets business, which is supported by relatively
lower SG&A levels. The dollar level of our SG&A was lower than planned
reflecting the acceleration of our expense management and cost reduction
programs during the second quarter.
As a result of the factors described above, operating income increased $8.9
million, or 7.5%, to $127.3 million, and operating income as a percent of sales
decreased to 8.7%, compared to 9.1% in 1999. Segment operating income in our
Wholesale Apparel segment increased $3.5 million to $121.4 million (10.3% of
sales) in 2000 compared to $117.9 million (11.1% of sales) in 1999. Segment
operating income in our Wholesale Non-Apparel segment increased $1.1 million to
$7.3 million (4.8% of sales) in 2000 compared to $6.2 million (4.4% of sales) in
1999. Segment operating income in our Retail segment increased $4.7 million to
$23.0 million (10.5% of sales) in 2000 compared to $18.3 million (8.9% of sales)
in 1999.
Net other income for the six months of 2000 was $2.3 million compared to other
expense of $0.6 million in 1999. This year's other income includes a special
investment gain of $3.0 million related to our sale of marketable equity
securities, net of associated expenses, partially offset by minority interest
and other non-operating expenses.
Net interest expense for the six months of 2000 was $7.8 million compared to
interest income of $2.3 million in 1999. This $10.1 million change reflects
higher net interest costs incurred to finance our strategic initiatives
including our recently acquired businesses, the repurchase of common stock,
capital expenditures primarily related to the technological upgrading of our
distribution facilities and information systems, and in-store merchandise shops,
as well as an equity investment in Kenneth Cole Productions, Inc.
Our effective income tax rate for the six months of 2000 declined from 36.5% in
1999 to 36.0% in 2000. The 36.0% level reflects our current estimate of our full
year effective income tax rate.
Net income increased $1.7 million in 2000 to $77.9 million, and declined as a
percent of net sales to 5.3% in 2000 from 5.8% in 1999, due to the factors
described above. Diluted earnings per common share, excluding the $3.0 million
special investment gain, increased 15.0% to $1.38 in 2000 from $1.20 in 1999,
reflecting higher net income and a 13.9% decline in the number of average
outstanding common shares and share equivalents in 2000. Diluted earnings per
common share, including the $3.0 million special investment gain, were $1.42 in
2000. Our average diluted shares outstanding declined by 8.9 million for the six
months of 2000 on a period-to-period basis, to 54.9 million, as a result of our
ongoing stock repurchase program. We purchased 3.905 million shares during the
six months of 2000 for $153.2 million.
The Company has previously announced that notwithstanding the challenging
macroeconomic and retail environment facing the apparel industry, we remain
optimistic that, with our diversified portfolio, we can generate a very high
single-digit sales increase in the second half of the year giving us a low
double-digit sales increase for the full year, as well as meet the upper end of
our 10% to 15% EPS growth target for the year. See Item 5, Statement Regarding
Forward-Looking Disclosure.
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FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY
We ended the second quarter of 2000 with $37.6 million in cash and marketable
securities, compared to $80.7 million at the end of the 1999 second quarter, and
$219.6 million of debt compared to no debt outstanding at the end of the second
quarter of 1999. This $101.3 million change in our cash and debt position,
reflecting a use of cash over the last twelve months, is primarily attributable
to our expenditure of $54.4 million for purchase price payments in connection
with the acquisitions of LAUNDRY and LUCKY BRAND DUNGAREES, net of cash
acquired, $397.7 million for the repurchase of common stock, $94.6 million for
capital expenditures primarily related to the technological upgrading of our
distribution facilities and information systems, and in-store merchandise shops,
as well as $29.0 million for an equity investment in Kenneth Cole Productions,
Inc. Our borrowings peaked at $320.8 million during the quarter.
Net cash provided by operating activities for the six months of 2000 was $84.3
million, compared to $73.3 million in 1999. This $11.0 million improvement in
cash flow reflected improved working capital; specifically, year over year
increases in the amount of cash generated by the change in accounts payable
levels partially offset by a slight reduction in cash generated by the change in
accounts receivable and inventory levels.
Inventory increased $3.8 million, or 1.0%, at the 2000 second quarter end
compared to 1999. Excluding the inventories of our recently acquired businesses,
inventories in the balance of our business declined by $6.5 million or 1.6%.
These inventory levels reflect the continuing inventory management initiatives
implemented at the end of 1998, which focus on improving productivity in our
replenishment and essential programs and increasing our ratio of sales to our
inventory ownership levels. As a result of these efforts, we also improved our
average inventory turnover rate by 17.4% in the 2000 second quarter, to 4.5
times from 3.8 times during the second quarter of 1999.
Our accounts receivable ended the quarter at $327.9 million, up 9.6% over last
year. This increase in accounts receivable primarily reflected the significant
volume growth in our Special Markets business, and the assumption of the
accounts receivable of our recently acquired businesses, which accounted for
approximately 21% of the increase.
Net cash used in investing activities was $53.1 million in 2000, compared to
$109.1 million in 1999. The 2000 net cash used primarily reflected capital
expenditures of $32.0 million, additional payments related to the purchase of
our LUCKY BRAND DUNGAREES business and net purchases of investments of $4.6
million, compared to the 1999 acquisition costs of our 84.5% interest in SIGRID
OLSEN, our 85% interest in LUCKY BRAND DUNGAREES and capital expenditures of
$35.4 million partially offset by disposals of investments of $65.2 million.
Net cash used by financing activities was $39.8 million in 2000, compared to net
cash used of $48.1 million in 1999. This $8.3 million year over year improvement
in cash flow reflected net borrowings of $103.5 million for the six months of
2000 compared to none in 1999, and an increase in net proceeds from the exercise
of stock options of $12.7 million, partially offset by an increase of $110.7
million expended for stock repurchases.
Our anticipated capital expenditures for the full year 2000 approximate $70
million, of which $32.0 million has been expended through July 1, 2000. These
expenditures consist primarily of the continued technological upgrading and
expansion of our management information systems and distribution facilities
(including certain building and equipment expenditures), leasehold improvements
at our New York offices and the opening of an additional 18 Specialty Retail
stores and 16 Outlet stores. In addition, we anticipate spending approximately
$20 million on in-store merchandise shops for the full year of 2000. Capital
expenditures, in-store shops and working capital cash needs will be financed
with net cash provided by operating activities and our revolving credit and
trade letter of credit facilities.
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In December 1999, the Company received $600 million of financing commitments
under a bank revolving credit facility to finance our liquidity needs. This bank
facility, which has received credit ratings of BBB from Standard & Poors and
Baa2 from Moody's Investor Services, may be either drawn upon or used as a
liquidity facility to support the issuance of A2/P2 rated commercial paper. At
July 1, 2000, we had $219.6 million outstanding under our commercial paper
program. In addition, we have in place $435 million of letter of credit
facilities primarily to support our merchandise purchasing requirements. At July
1, 2000, we had $300.5 million outstanding under these letter of credit
facilities. We anticipate that the commercial paper program and bank and letter
of credit facilities will be sufficient to fund our future liquidity
requirements and that we will be able to adjust the amounts available under
these facilities if necessary.
CERTAIN INTEREST RATE AND FOREIGN CURRENCY RISKS
We finance our capital needs through available cash and marketable securities,
operating cash flow, letter of credit and bank revolving credit facilities and
commercial paper issuances. Our floating rate bank revolving credit facility and
commercial paper program expose us to market risk for changes in interest rates.
We mitigate the risks associated with changes in foreign currency rates through
foreign exchange forward contracts to hedge transactions denominated in foreign
currencies for periods of less than one year and to hedge expected payment of
intercompany transactions with our 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In January 1999, two actions were filed in California naming as defendants more
than a dozen United States-based apparel companies that source garments from
Saipan (Commonwealth of the Northern Mariana Islands) and a large number of
Saipan-based garment factories. The actions assert that the Saipan factories
engage in unlawful practices relating to the recruitment and employment of
foreign workers and that the apparel companies, by virtue of their alleged
relationships with the factories, have violated various federal and state laws.
One action, filed in California Superior Court in San Francisco by a union and
three public interest groups, alleges unfair competition and false advertising
(the "State Court Action"). The State Court Action seeks equitable relief,
unspecified amounts for restitution and disgorgement of profits, interest and an
award of attorney's fees. The second, initially filed in Federal Court for the
Central District of California and subsequently transferred, first to the
District of Hawaii and then ordered transferred to Saipan, is brought on behalf
of a purported class consisting of the Saipan factory workers (the "Federal
Court Action"). The Federal Court Action alleges claims under the civil RICO
statute and the Alien Tort Claims Act, premised on supposed violations of the
federal anti-peonage and indentured servitude statutes, as well as other
violations of Saipan and international law, and seeks equitable relief and
unspecified damages, including treble and punitive damages, interest and an
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award of attorney's fees. A third action, brought in Federal Court in Saipan
solely against the garment factory defendants on behalf of a putative class of
their workers, alleges violations of federal and Saipanese wage and employment
laws. The Company sources products in Saipan but was not named as a defendant in
the actions. The Company, and certain other apparel companies not named as
defendants, were advised in writing, however, that they would be added as
parties if a consensual resolution of the complaint was not reached. The Company
has since reached an agreement to settle all claims that were or could have been
asserted in the Federal or State Court actions. To date, several other apparel
companies have also agreed to settle these claims. The agreement concluded by
the Company is subject to Federal Court approval. Under the terms of the
agreement, if the settlement does not receive final Federal Court approval, the
Company will be entitled to a refund of the entire settlement amount except for
funds of up to $10,000 spent on costs of notice to the settlement class. As part
of the settlement, the Company has since been named as a defendant, along with
certain other apparel companies, in a State Court action in California styled
Union of Needletrades Industrial and Textile Employees, et al. v. Brylane, L.P.,
et al., pending in the San Francisco County Superior Court, and in a Federal
Court action styled Doe I, et al. v. Brylane, L.P. et al., currently pending in
the United States District Court for the District of Hawaii, that mirror
portions of the larger State and Federal Court actions but do not include RICO
and certain of the other claims alleged in those actions. The newly filed
actions against the Company will remain inactive unless settlement is not
finally approved by the Federal Court. Because the litigation is at a
preliminary stage, with no merits discovery having taken place, if the
settlement is not finally approved by the Federal Court, we cannot at this
juncture determine the likelihood of a favorable or unfavorable outcome, or the
magnitude of the latter if it were to occur. Although the outcome of any such
litigation cannot be determined with certainty, management is of the opinion
that the final outcome should not have a material adverse effect on the
Company's financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's 2000 Annual Meeting of Stockholders held on May 11, 2000, the
stockholders of the Company (i) approved the Liz Claiborne, Inc. 2000 Stock
Incentive Plan (the number of affirmative votes cast was 32,238,481, the number
of negative votes cast was 12,127,495, and the number of abstentions was
174,967), (ii) ratified the appointment of Arthur Andersen LLP as independent
public accountants of the Company for the fiscal year ending December 30, 2000
(the number of affirmative votes cast was 49,465,540, the number of negative
votes cast was 41,515, and the number of abstentions was 120,252), and (iii)
elected the following nominees to the Company's Board of Directors, to serve
until the 2003 annual meeting of stockholders and until their respective
successors are duly elected and qualified.
Votes
Nominee For Withheld
---------------------- ---------- -----------
Bernard W. Aronson 48,872,204 755,283
Nancy J. Karch 48,865,057 762,250
Paul E. Tierney, Jr. 48,871,272 756,035
There were no broker non-votes with respect to any matter acted upon at the
meeting.
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Item 5. Statement Regarding Forward-Looking Disclosure
Statements contained herein and in future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases, and in oral
statements made by or with the approval of authorized personnel that relate to
the Company's future performance, including, without limitation, statements with
respect to the Company's anticipated results of operations or level of business
for 2000 or any other future period, are 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. Such statements are based on current expectations
only, and are subject to certain risks, uncertainties and assumptions, referred
to below, including but not limited to economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices, and are indicated by words or phrases such as "plan",
"anticipate", "estimate", "project", "management expects", "the Company
believes", "we remain optimistic that we can" or "currently envisions" and
similar words or phrases. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected.
These factors include, among others, changes in regional, national, and global
micro and macro-economic conditions; risks associated with changes in the
competitive marketplace, including the levels of consumer confidence and
spending (which may be impacted by, among other things, higher interest rates),
and the financial condition of the apparel industry and the retail industry,
retailer or consumer acceptance of the Company's products as a result of fashion
trends or otherwise and the introduction of new products or pricing changes by
the Company's competitors; risks associated with the Company's dependence on
sales to a limited number of large department store customers, including risks
related to customer requirements for vendor margin support, and those related to
extending credit to customers; uncertainties relating to the Company's ability
to successfully implement its growth strategies, integrate acquisitions, or
successfully launch new products and lines; risks associated with the possible
inability of the Company's unaffiliated manufacturers to manufacture and deliver
products in a timely manner, to meet quality standards or to comply with the
Company's policies regarding labor practices; and risks associated with changes
in social, political, economic and other conditions affecting foreign operations
and sourcing.
With respect to foreign sourcing, the Company notes that 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 Normal Trade Relations ("NTR") 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 NTR treatment was renewed in July 2000
for an additional year. Also pending in the Senate is approval of permanent NTR
treatment, which should be acted upon in the third quarter of 2000. 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.
Reference is also made to the other economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices as are set forth in our 1999 Annual Report on Form 10-K,
including, without limitation, those set forth under the heading
"Business-Competition; Certain Risks". The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10 Liz Claiborne, Inc. 2000 Stock incentive Plan
27 Financial Data Schedule as of July 1, 2000.
(b) The Company did not file any reports on Form 8-K in the quarter.
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SIGNATURES
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.
DATE: August 15, 2000
LIZ CLAIBORNE, INC.
By: /s/ Michael Scarpa By: /s/ Elaine H. Goodell
------------------ ---------------------
MICHAEL SCARPA ELAINE H. GOODELL
Vice President - Chief Financial Vice President - Corporate
Officer Controller and Chief Accounting
(Principal financial officer) Officer
(Principal accounting officer)
22
