SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 29, 1995
OR
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 1-724
PHILLIPS-VAN HEUSEN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-1166910
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1290 Avenue of the Americas New York, New York 10104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (212) 541-5200
Indicate by check mark whether 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 registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
The number of outstanding shares of common stock, par value $1.00 per
share, of Phillips-Van Heusen Corporation as of November 28, 1995: 26,791,801
shares.<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
INDEX
PART I -- FINANCIAL INFORMATION
Independent Accountants Review Report.................................. 1
Consolidated Balance Sheets as of October 29, 1995 and
January 29, 1995...................................................... 2
Consolidated Statements of Income for the thirteen weeks and
thirty-nine weeks ended October 29, 1995 and October 30, 1994.......... 3
Consolidated Statements of Cash Flows for the thirty-nine weeks
ended October 29, 1995 and October 30, 1994........................... 4
Notes to Consolidated Financial Statements............................ 5-7
Management's Discussion and Analysis of Results of Operations
and Financial Condition............................................... 8-11
PART II -- OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K............................. 12-14
Signatures............................................................ 15
Exhibit--Acknowledgment of Independent Accountants.................... 16
Exhibit--Financial Data Schedule...................................... 17
<PAGE>
Independent Accountants Review Report
Stockholders and Board of Directors
Phillips-Van Heusen Corporation
We have reviewed the accompanying condensed consolidated balance sheet of
Phillips-Van Heusen Corporation as of October 29, 1995, and the related
condensed consolidated statements of income and cash flows for the 13 and 39
week periods ended October 29, 1995 and October 30, 1994. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Phillips-Van Heusen Corporation
as of January 29, 1995, and the related consolidated statements of income,
stockholders' equity, and cash flows for the year then ended (not presented
herein) and in our report dated March 14, 1995, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of January 29, 1995, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
ERNST & YOUNG LLP
New York, New York
November 14, 1995
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Phillips-Van Heusen Corporation
Consolidated Balance Sheets
(In thousands, except per share data)
<TABLE>
<CAPTION>
UNAUDITED AUDITED
October 29, January 29,
1995 1995
<S> <C> <C>
ASSETS
Current Assets:
Cash, including cash equivalents of $11,446 and $68,586 $ 22,311 $ 80,473
Trade receivables, less allowances of $4,951 and $1,617 148,086 77,527
Inventories 357,212 255,244
Other, including deferred taxes of $9,754 and $7,108 18,808 16,426
Total Current Assets 546,417 429,670
Property, Plant and Equipment 135,996 136,297
Goodwill 137,205 17,733
Other Assets, including deferred taxes of $9,502
at January 29, 1995 14,798 12,584
$834,416 $596,284
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $118,417 $ 0
Accounts payable 50,384 38,759
Accrued expenses 94,888 75,014
Current portion of long-term debt 280 260
Total Current Liabilities 263,969 114,033
Long-Term Debt, less current portion 239,403 169,679
Other Liabilities, including deferred taxes of $2,795
at October 29, 1995 62,202 37,112
Stockholders' Equity:
Preferred Stock, par value $100 per share; 150,000
shares authorized, no shares outstanding
Common Stock, par value $1 per share; 100,000,000 shares
authorized; shares issued 26,781,801 and 26,610,310 26,782 26,610
Additional Capital 113,856 112,801
Retained Earnings 128,204 136,049
Total Stockholders' Equity 268,842 275,460
$834,416 $596,284
See accompanying notes.
</TABLE>
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Phillips-Van Heusen Corporation
Consolidated Statements of Income
Unaudited
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Thirty-Nine Weeks
Ended Ended
October 29, October 30, October 29, October 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $448,007 $379,406 $1,080,487 $902,074
Cost of goods sold 308,952 256,019 724,431 604,764
Gross profit 139,055 123,387 356,056 297,310
Selling, general and administrative expenses 116,749 93,582 322,209 257,412
Plant, store closing and restructuring
expenses 25,000 - 25,000 -
(Loss) income before interest and taxes (2,694) 29,805 8,847 39,898
Interest expense, net 6,559 3,377 17,281 10,061
(Loss) income before taxes (9,253) 26,428 (8,434) 29,837
Income tax (benefit) expense (4,879) 8,578 (4,594) 9,783
Net (loss) income $ (4,374) $ 17,850 $ (3,840) $ 20,054
Net (loss) income per share $ (0.16) $ 0.66 $ (0.14) $ 0.74
Cash dividends per share $ 0.0375 $ 0.0375 $ 0.1125 $ 0.1125
See accompanying notes.
</TABLE>
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Phillips-Van Heusen Corporation
Consolidated Statements of Cash Flows
Unaudited
(In thousands)
Thirty-Nine Weeks Ended
October 29, October 30,
1995 1994
OPERATING ACTIVITIES:
Net (loss) income $ (3,840) $ 20,054
Adjustments to reconcile net (loss) income to net
cash used by operating activities:
Depreciation and amortization 22,498 17,273
Write-off of fixed assets 11,000
Other-net (3,480) (3,135)
Changes in operating assets and liabilities:
Receivables (50,618) (41,150)
Inventories (65,688) (20,501)
Accounts payable and accrued expenses (23,072) 22,692
Other-net (150) (3,036)
Net Cash Used By Operating Activities (113,350) (7,803)
INVESTING ACTIVITIES:
Acquisition of the Apparel Group of Crystal Brands (114,503) -
Plant and equipment acquired (25,029) (37,233)
Contributions from landlords 6,930 10,561
Other-net 2,411 1,908
Net Cash Used By Investing Activities (130,191) (24,764)
FINANCING ACTIVITIES:
Proceeds from revolving line of credit and long-
term borrowings 204,737 -
Payments on revolving line of credit and long-
term borrowings (16,580) (245)
Exercise of stock options 1,227 996
Payment of dividends (4,005) (3,983)
Net Cash Provided (Used) By Financing Activities 185,379 (3,232)
DECREASE IN CASH (58,162) (35,799)
Cash at beginning of period 80,473 68,070
Cash at end of period $ 22,311 $ 32,271
Note: Net loss for the thirty-nine weeks ended October 29, 1995 includes a
$25,000 pre-tax charge for plant, store closing and restructuring expenses.
See accompanying notes.
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Phillips-Van Heusen Corporation
Notes To Consolidated Financial Statements
Unaudited
(In thousands, except per share amounts)
GENERAL
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not contain all
disclosures required by generally accepted accounting principles for complete
financial statements. Reference should be made to the annual financial
statements, including the footnotes thereto, included in the Company's Annual
Report to Stockholders for the year ended January 29, 1995.
The results of operations for the thirteen and thirty-nine weeks ended October
29, 1995 and October 30, 1994 are not necessarily indicative of those for a
full fiscal year because of seasonal factors. The data contained in these
financial statements are unaudited and are subject to year-end adjustments;
however, in the opinion of management, all known adjustments (which consist
only of normal recurring accruals) have been made to present fairly the
consolidated operating results for the unaudited periods.
Certain reclassifications have been made to the segment information for the
thirteen and thirty-nine weeks ended October 30, 1994 to present that
information on a basis consistent with the thirteen and thirty-nine weeks
ended October 29, 1995.
INVENTORIES
Inventories are summarized as follows:
October 29, January 29,
1995 1995
Raw materials $ 8,988 $ 19,849
Work in process 17,186 17,026
Finished goods 331,038 218,369
Total $357,212 $255,244
Inventories are stated at the lower of cost or market. Cost for the apparel
business is determined principally using the last-in first-out method (LIFO),
except for certain sportswear inventories which are determined using the
first-in first-out method (FIFO). Cost for the footwear business is
determined using FIFO. Inventories would have been $15,960 and $12,700 higher
than reported at October 29, 1995 and January 29, 1995, respectively, if the
FIFO method of inventory accounting had been used for the entire apparel
business.
The determination of cost of sales and inventories under the LIFO method can
only be made at the end of each fiscal year based on inventory cost and
quantities on hand. Interim LIFO determinations are based on management's
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estimates of expected year-end inventory levels and costs. Such estimates are
subject to revision at the end of each quarter. Since estimates of future
inventory levels and costs are subject to external factors, interim financial
results are subject to year-end LIFO inventory adjustments.
SEGMENT DATA
The Company operates in two industry segments: (i) apparel - the manufacture,
procurement for sale and marketing of a broad range of men's and women's
apparel to wholesale customers as well as through Company-owned retail stores,
and (ii) footwear - the manufacture, procurement for sale and marketing of a
broad range of men's, women's and children's shoes to wholesale customers as
well as through Company-owned retail stores.
Operating income represents net sales less operating expenses. Excluded from
operating results of the segments are interest expense, net, corporate
expenses and income taxes.
Thirteen Weeks Thirty-Nine Weeks
Ended Ended
October 29, October 30, October 29, October 30,
1995 1994 1995 1994
Net sales-apparel $343,625 $271,524 $ 804,560 $621,762
Net sales-footwear 104,382 107,882 275,927 280,312
Total net sales $448,007 $379,406 $1,080,487 $902,074
Operating (loss) income-apparel* $ (2,624) $ 19,971 $ 2,379 $ 22,067
Operating income-footwear* 4,704 13,086 16,496 25,440
Total operating income* 2,080 33,057 18,875 47,507
Corporate expenses (4,774) (3,252) (10,028) (7,609)
Interest expense, net (6,559) (3,377) (17,281) (10,061)
(Loss) income before taxes $ (9,253) $ 26,428 $ (8,434) $ 29,837
* Operating income for the thirteen and thirty-nine weeks ended October 29,
1995 includes a $25,000 pre-tax charge, of which $23,000 and $2,000 relate
to the Company's apparel and footwear businesses, respectively. These
charges relate to plant, store closing and restructuring expenses as
described in the accompanying footnote.
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<PAGE>
ACQUISITION
On February 17, 1995, the Company completed the acquisition of the Apparel
Group of Crystal Brands, Inc. for $114,503 in cash, net of cash acquired, and
subject to certain adjustments. This acquisition was accounted for as a
purchase. The acquired operations are included in the Company's consolidated
financial statements since February 17, 1995.
In connection with the acquisition, the Company acquired assets with a fair
value estimated to be $190,427 (including $121,164 of excess of cost over net
assets acquired) and assumed liabilities estimated to be $75,924. The Company
has not yet determined either the final value of the assets acquired and
liabilities assumed or the allocation of these assets and liabilities within
the Company's consolidated balance sheet. Accordingly, adjustments to the
Company's consolidated balance sheet at October 29, 1995 may be required.
If the acquisition had occurred on the first day of fiscal 1994 instead of on
February 17, 1995, the Company's proforma consolidated results of operations
would have been:
Thirty-Nine Weeks Ended
October 29, October 30,
1995 1994
Net sales $1,086,618 $1,073,021
Net (loss) income $ (3,903) $ 20,388
Net (loss) income per share $ (0.15) $ 0.75
PLANT, STORE CLOSING AND RESTRUCTURING EXPENSES
On September 13, 1995, the Company adopted and began to implement a plan
designed to reduce costs and realign the product distribution mix primarily
within the Company's apparel business. Significant components of the plan
include the closure of three domestic apparel manufacturing facilities before
year-end and the closing of approximately 200 less profitable retail outlet
stores. As a result, the Company has recorded a pre-tax charge of $25,000 in
the third quarter of 1995. Approximately $11,000 of this charge relates to
the write-off of fixed assets located in such factories and retail outlet
stores. The remaining $14,000 relates to termination benefits for
approximately twelve hundred employees impacted by this restructuring. The
Company believes these changes will improve future profitability through lower
operating costs and improved margins. As part of its ongoing expense and cost
reduction initiatives, the Company will continue to evaluate its operating
structure.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
Thirteen Weeks Ended October 29, 1995 Compared to Thirteen Weeks Ended
October 30, 1994
APPAREL
Net sales of the Company's apparel segment in the third quarter were $343.6
million in 1995 and $271.5 million last year, an increase of approximately
26.6%. The acquisition of the Apparel Group of Crystal Brands, Inc. (Gant and
Izod) on February 17, 1995, primarily accounted for this increase.
Gross profit on apparel sales was 30.0% in the third quarter of 1995 compared
to 30.4% in last year's third quarter. Increased promotional selling was
mostly offset by higher margins from the newly acquired Izod and Gant
businesses. In addition, the third quarter LIFO charge was $2.0 million in
1995 compared to $1.0 million last year.
Selling, general and administrative expenses as a percent of apparel sales in
the third quarter were 24.0% in 1995 and 23.1% in 1994. The increased
percentage relates principally to the inability to fully leverage in-store
expenses during this period of retail weakness.
FOOTWEAR
Net sales of the Company's footwear segment were $104.4 million in the third
quarter of 1995 and $107.9 million last year, a decrease of approximately
3.2%.
Gross profit on footwear sales was 34.6% in the third quarter of 1995 compared
to 37.8% in last year's third quarter. The current quarter contained
increased promotional selling, resulting in large part from an exceptionally
weak back to school selling season.
Selling, general and administrative expenses as a percent of footwear sales in
the third quarter were 28.2% in 1995 and 25.6% in 1994. The increased
percentage relates principally to the inability to fully leverage in-store
expenses during this extended period of retail weakness.
INTEREST EXPENSE
Net interest expense was $6.6 million in the third quarter of 1995 compared
with $3.4 million last year. This increase resulted from the cash purchase of
the Apparel Group of Crystal Brands, Inc.
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<PAGE>
INCOME TAXES
The Company's 1995 estimated tax rate reflects the substantially greater
weight of its tax exempt operations in Puerto Rico due to the depressed level
of overall income, further reduced by the $25 million plant, store closing and
restructuring expense.
CORPORATE EXPENSES
Corporate expenses were $4.8 million in the third quarter of 1995 compared to
$3.3 million in 1994. A general increase in corporate expenses included an
increase in professional fees related to certain brand research and marketing
projects.
Thirty-Nine Weeks Ended October 29, 1995 Compared to Thirty-Nine Weeks Ended
October 30, 1994
APPAREL
Net sales of the Company's apparel segment were $804.6 million during the
first nine months of 1995, an increase of 29.4% from the prior year's $621.8
million. The acquisition of the Apparel Group of Crystal Brands, Inc. on
February 17, 1995, primarily accounted for this increase.
Gross profit on apparel sales was 31.5% in the first nine months of 1995
compared to 31.0% in last year's first nine months. The increased percentage
relates principally to higher margins on products sold under the newly
acquired Izod and Gant businesses. In addition, the current year includes a
LIFO charge of $3.3 million compared with a charge of $3.2 million in the
prior year.
Selling, general and administrative expenses as a percent of apparel sales in
the first three quarters were 28.4% in 1995 and 27.4% in 1994. The increased
percentage relates principally to the inability to fully leverage in-store
expenses during this extended period of retail weakness.
FOOTWEAR
Net sales of the Company's footwear segment were $275.9 million compared to
the prior year's $280.3 million, a decrease of approximately 1.6%.
Gross profit on footwear sales was 37.2% in the first nine months of 1995
compared to 37.4% last year. The prior year's first half was impacted by
significant clearance markdowns to clear slower moving merchandise from
inventory. The Company began the current year with a much improved inventory
mix, which in turn reduced clearance markdowns in the first half. Offsetting
this positive trend were promotional markdowns in the Company's retail stores
in the third quarter due to an exceptionally weak back to school selling
season.
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<PAGE>
Selling, general and administrative expenses as a percent of footwear sales in
the first nine months were 30.5% in 1995 and 28.3% in 1994. The increased
percentage relates principally to the inability to fully leverage in-store
expenses during this extended period of retail weakness.
INTEREST EXPENSE
Net interest expense was $17.3 million in the first nine months of 1995
compared with $10.1 million last year. This increase resulted from the cash
purchase of the Apparel Group of Crystal Brands, Inc.
INCOME TAXES
The Company's 1995 estimated tax rate reflects the substantially greater
weight of its tax exempt operations in Puerto Rico due to the depressed level
of overall income, further reduced by the $25 million plant, store closing and
restructuring expense.
CORPORATE EXPENSES
Corporate expenses were $10.0 million in the first nine months of 1995
compared to $7.6 million in 1994. A general increase in corporate expenses
included an increase in professional fees related to certain brand research
and marketing projects. In addition, the prior year included a credit to the
Company's unfunded supplemental savings plan liability.
SEASONALITY
The Company's business is seasonal, with higher sales and income during its
third and fourth fiscal quarters, which coincide with the Company's two peak
retail selling seasons: the first running from the start of the summer
vacation period in late May and continuing through September; the second being
the Christmas selling season beginning with the weekend following Thanksgiving
and continuing through the week after Christmas.
Also contributing to the relative strength of the third fiscal quarter is the
high volume of fall shipments to wholesale customers which are generally more
profitable than spring shipments. The slower spring selling season at
wholesale combined with retail seasonality makes the first fiscal quarter
particularly weak.
LIQUIDITY AND CAPITAL RESOURCES
The seasonal nature of the Company's business typically requires the use of
cash to fund a build-up in the Company's inventory in the first half of each
fiscal year. During the third and fourth quarters, the Company's higher level
of sales tends to reduce its inventory and generate cash from operations.
While this seasonal pattern has continued in 1995, various factors have caused
a significant use of cash in the first three quarters of 1995.
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Cash used by operations in the first nine months totalled $113.4 million in
1995 compared with $7.8 million last year. Integration costs resulting from
the acquisition of the Apparel Group of Crystal Brands, Inc. and an inventory
build-up for a planned increase in fourth quarter sales, also resulting from
the acquisition, were the primary reasons for the increase. In addition, a
reduced level of earnings, resulting in large part from a $25.0 million pre-
tax charge for plant, store closing and restructuring expenses in the third
quarter of 1995, contributed to this increase.
The Company has a revolving credit agreement under which the Company may, at
its option, borrow and repay amounts (including letters of credit) up to a
maximum of $400 million. The Company believes that its borrowing capacity
under this facility is adequate for the coming year. At the end of the third
quarter, the Company estimated that $70 million of the outstanding cash
borrowings under this facility are non-current. The acquisition of the
Apparel Group of Crystal Brands, Inc. for cash was funded from the Company's
cash reserves and from borrowings under this facility. The resulting increase
in long-term debt has increased the Company's long-term debt (net of invested
cash) as a percentage of total capital to 45.9% at the end of the current
quarter compared with 34.8% at the end of last year's third quarter.
PLANT, STORE CLOSING AND RESTRUCTURING EXPENSES
On September 13, 1995, the Company adopted and began to implement a plan
designed to reduce costs and realign the product distribution mix primarily
within the Company's apparel business. Significant components of the plan
include the closure of three domestic apparel manufacturing facilities before
year-end and the closing of approximately 200 less profitable retail outlet
stores. As a result, the Company has recorded a pre-tax charge of $25 million
in the third quarter of 1995. Approximately $11 million of this charge
relates to the write-off of fixed assets located in such factories and retail
outlet stores. The remaining $14 million relates to termination benefits for
approximately twelve hundred employees impacted by this restructuring. The
Company believes these changes will improve future profitability through lower
operating costs and improved margins. As part of its ongoing expense and cost
reduction initiatives, the Company will continue to evaluate its operating
structure.
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ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
4.1 Specimen of Common Stock certificate (incorporated by reference to
Exhibit 4 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1981).
4.2 Preferred Stock Purchase Rights Agreement (the "Rights Agreement"),
dated June 10, 1986 between PVH and The Chase Manhattan Bank, N.A.
(incorporated by reference to Exhibit 3 to the Company's Quarterly
Report as filed on Form 10-Q for the period ended May 4, 1986).
4.3 Amendment to the Rights Agreement, dated March 31, 1987 between PVH
and The Chase Manhattan Bank, N.A. (incorporated by reference to
Exhibit 4(c) to the Company's Annual Report on Form 10-K for the
year ended February 2, 1987).
4.4 Supplemental Rights Agreement and Second Amendment to the Rights
Agreement, dated as of July 30, 1987, between PVH and The Chase
Manhattan Bank, N.A. (incorporated by reference to Exhibit (c)(4)
to the Company's Schedule 13E-4, Issuer Tender Offer Statement,
dated July 31,1987).
4.5 Credit Agreement, dated as of December 16, 1993, among PVH, Bankers
Trust Company, The Chase Manhattan Bank, N.A., Citibank, N.A., The
Bank of New York, Chemical Bank and Philadelphia National Bank, and
Bankers Trust Company, as agent (incorporated by reference to
Exhibit 4.5 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 30, 1994).
4.6 First Amendment, dated as of February 13, 1995, to the Credit
Agreement dated as of December 16, 1993 (incorporated by reference
to Exhibit 4.6 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 29, 1995).
4.7 Second Amendment, dated as of July 17, 1995, to the Credit
Agreement dated as of December 16, 1993.
4.8 Third Amendment, dated as of September 27, 1995, to the Credit
Agreement dated as of December 16, 1993.
4.9 Fourth Amendment, dated as of September 28, 1995, to the Credit
Agreement dated as of December 16, 1993.
4.10 Note Agreement, dated October 1, 1992, among PVH, The Equitable
Life Assurance Society of the United States, Equitable Variable
Life Insurance Company, Unum Life Insurance Company of America,
Nationwide Life Insurance Company, Employers Life Insurance Company
of Wausau and Lutheran Brotherhood (incorporated by reference to
Exhibit 4.21 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1993).
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4.11 Indenture, dated as of November 1, 1993, between PVH and The Bank
of New York, as Trustee (incorporated by reference to Exhibit 4.01
to the Company's Registration Statement on Form S-3 (Reg. No. 33-
50751) filed on October 26, 1993).
*10.1 1987 Stock Option Plan, including all amendments through June 13,
1995.
*10.2 1973 Employees' Stock Option Plan (incorporated by reference to
Exhibit 1 to the Company's Registration Statement on Form S-8 (Reg.
No. 2-72959) filed on July 15, 1981).
*10.3 Supplement to 1973 Employees' Stock Option Plan (incorporated by
reference to the Company's Prospectus filed pursuant to Rule 424(c)
to the Registration Statement on Form S-8 (Reg. No. 2-72959) filed
on March 31, 1982).
*10.4 Phillips-Van Heusen Corporation Special Severance Benefit Plan, as
amended and restated as of June 13, 1995.
*10.5 Phillips-Van Heusen Corporation Capital Accumulation Plan
(incorporated by reference to the Company's Report on Form 8-K
filed on January 16, 1987).
*10.6 Phillips-Van Heusen Corporation Amendment to Capital Accumulation
Plan (incorporated by reference to Exhibit 10(n) to the Company's
Annual Report on Form 10-K for the fiscal year ended February 2,
1987).
*10.7 Form of Agreement amending Phillips-Van Heusen Corporation Capital
Accumulation Plan with respect to individual participants
(incorporated by reference to Exhibit 10(1) to the Company's
Annual Report on Form 10-K for the fiscal year ended January 31,
1988).
*10.8 Form of Agreement amending Phillips-Van Heusen Corporation Capital
Accumulation Plan with respect to individual participants.
*10.9 Phillips-Van Heusen Corporation Supplemental Defined Benefit Plan,
dated January 1, 1991, as amended and restated on June 2, 1992
(incorporated by reference to Exhibit 10.10 to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1993).
*10.10 Phillips-Van Heusen Corporation Supplemental Savings Plan, dated as
of January 1, 1991 and amended and restated as of January 1, 1992
(incorporated by reference to Exhibit 10.29 to the Company's Annual
Report on Form 10-K for the fiscal year ended February 2, 1992).
10.11 Asset Sale Agreement, dated January 24, 1995, Among the Company and
Crystal Brands, Inc., Crystal Apparel, Inc., Gant Corporation,
Crystal Sales, Inc., Eagle Shirtmakers, Inc., and Crystal Brands
(Hong Kong) Limited (incorporated by reference to Exhibit 1 to the
Company's Report on Form 8-K dated March 6, 1995).
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*10.12 Agreement, dated as of April 28, 1993, between Bruce J. Klatsky,
Lawrence S. Phillips and the Company (incorporated by reference to
Exhibit 10.11 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 29, 1995).
*10.13 Non-Incentive Stock Option Agreement, dated as of April 28, 1993,
between the Company and Bruce J. Klatsky. Non-Incentive Stock
Option Agreement, dated as of December 3, 1993, between the Company
and Bruce J. Klatsky (reload of April 28, 1993 Non-Incentive Stock
Option Agreement) (incorporated by reference to Exhibit 10.12 to
the Company's Annual Report on Form 10-K for the fiscal year ended
January 29, 1995).
*10.14 Amendment, dated December 6, 1993, to the Agreement, dated April
28, 1993, between Bruce J. Klatsky, Lawrence S. Phillips and the
Company (incorporated by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 29, 1995).
*10.15 Consulting and non-competition agreement, dated February 14, 1995,
between the Company and Lawrence S. Phillips (incorporated by
reference to Exhibit 10.14 to the Company's Annual Report on Form
10-K for the fiscal year ended January 29, 1995).
*10.16 Performance Restricted Stock Plan, effective as of April 18, 1995
(incorporated by reference to Exhibit 10.15 to the Company's Annual
Report on Form 10-K for the fiscal year ended January 29, 1995).
15. Acknowledgement of Independent Accountants.
27. Financial Data Schedule.
* Management contract or compensatory plan or arrangement required to be
identified pursuant to Item 14(a) of this report.
(b) Reports on Form 8-K
No reports have been filed on Form 8-K during the quarter covered by this
report.
-14-
<PAGE>
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.
PHILLIPS-VAN HEUSEN CORPORATION
Registrant
December 11, 1995 /s/ Emanuel Chirico
Emanuel Chirico, Controller
Vice President and
Chief Accounting Officer
-15-
<PAGE>
Exhibit 15
November 14, 1995
Stockholders and Board of Directors
Phillips-Van Heusen Corporation
We are aware of the incorporation by reference in the Registration Statement
(Form S-8, No. 33-59101), Registration Statement (Form S-8, No. 33-59602),
Registration Statement (Form S-8, No. 33-38698), Post-Effective amendment No.
1 to the Registration Statement (Form S-8, No. 33-24057), Post-Effective
amendment No. 2 to the Registration Statement (Form S-8, No. 2-73803), Post-
Effective amendment No. 4 to the Registration Statement (Form S-8, No. 2-
72959), Post-Effective amendment No. 6 to the Registration Statement (Form S-
8, No. 2-64564), and Post-Effective amendment No. 13 to the Registration
Statement (Form S-8, No. 2-47910), of Phillips-Van Heusen Corporation of our
report dated November 14, 1995 relating to the unaudited condensed
consolidated interim financial statements of Phillips-Van Heusen Corporation
which are included in its Form 10-Q for the three month period ended October
29, 1995.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a
part of the registration statements or post-effective amendments prepared or
certified by accountants within the meaning of Section 7 or 11 of the
Securities Act of 1933.
ERNST & YOUNG LLP
New York, New York
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PHILLIPS-VAN HEUSEN CORPORATION FINANCIAL STATEMENTS INCLUDED IN ITS 10-Q
REPORT FOR THE QUARTER ENDED OCTOBER 29, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1996
<PERIOD-END> OCT-29-1995
<CASH> 22,311
<SECURITIES> 0
<RECEIVABLES> 153,037
<ALLOWANCES> 4,951
<INVENTORY> 357,212
<CURRENT-ASSETS> 546,417
<PP&E> 135,996<F1>
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 834,416
<CURRENT-LIABILITIES> 263,969
<BONDS> 239,403
<COMMON> 26,782
0
0
<OTHER-SE> 242,060
<TOTAL-LIABILITY-AND-EQUITY> 834,416
<SALES> 1,080,487
<TOTAL-REVENUES> 1,080,487
<CGS> 724,431
<TOTAL-COSTS> 724,431
<OTHER-EXPENSES> 347,209
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 17,281
<INCOME-PRETAX> (8,434)
<INCOME-TAX> (4,594)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,840)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
<FN>
<F1>Property, plant and equipment is presented net of accumulated
depreciation.
<F2>Provision for doubtful accounts is included in other costs and
expenses.
</FN>
</TABLE>
SECOND AMENDMENT
SECOND AMENDMENT, dated as of July 17, 1995 (this
"Amendment"), among PHILLIPS-VAN HEUSEN CORPORATION (the
"Borrower"), the financial institutions party to the Credit
Agreement referred to below (the "Banks"), and BANKERS TRUST
COMPANY, as agent (in such capacity, the "Agent") for the
Banks. All capitalized terms used herein and not otherwise
defined shall have the meanings specified in the Credit
Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and the Agent are
parties to a Credit Agreement, dated as of December 16, 1993
(as modified, supplemented or amended prior to the date
hereof, the "Credit Agreement");
WHEREAS, the Borrower is negotiating with Pyramid
Sportswear AB (the "Company"), the Gant licensee in Europe,
Japan and other countries outside the United States, to make
an equity investment of up to $10 million for up to a 25%
interest in the Company (or its controlling entity, Pyramid
Partners AB);
WHEREAS, such equity investment is presently
prohibited by Section 8.03 of the Credit Agreement, and the
Borrower has requested that the Banks agree to amend the
Credit Agreement to permit such investment;
WHEREAS, subject to the terms and conditions
hereof, the Banks have agreed to amend the Credit Agreement
as set forth herein to permit such investment;
NOW, THEREFORE, in consideration of the mutual
premises contained herein and other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. Section 8.03 of the Credit Agreement is hereby
amended by (a) deleting the word "and" appearing at the end
of clause (viii) thereof and (b) deleting clause (ix) thereof
and inserting in lieu thereof the following clauses (ix) and
(x):
"(ix) the Borrower and/or its Subsidiaries may
make an equity investment of up to $10,000,000 for up to
a 25% interest in Pyramid Sportswear AB (or its
controlling entity,Pyramid Partners AB); and
<PAGE>
(x) Investments not otherwise permitted by the
foregoing clauses (i) through (ix) above, provided that
the aggregate outstanding amount of Investments made
pursuant to this clause (x) shall not exceed $5,000,000
at any time."
2. This Amendment shall become effective on the
date (the "Amendment Effective Date") on which the Borrower
and the Required Banks shall have executed and delivered a
counterpart of this Amendment.
3. Except as expressly amended hereby, the terms
and conditions of the Credit Agreement shall remain unchanged
and in full force and effect.
4. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together
constitute one and the same instrument.
5. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this
Amendment as of the date first above written.
PHILLIPS-VAN HEUSEN CORPORATION
By
Title:
BANKERS TRUST COMPANY,
Individually, and as Agent
By
Title:
-2-
<PAGE>
THE CHASE MANHATTAN BANK, N.A.
By
Title:
CITIBANK, N.A.
By
Title:
THE BANK OF NEW YORK
By
Title:
CHEMICAL BANK
By
Title:
THE FIRST NATIONAL BANK OF BOSTON
By
Title:
CIBC, INC.
By
Title:
-3-
<PAGE>
UNION BANK
By
Title:
-4-
THIRD AMENDMENT
THIRD AMENDMENT, dated as of September 27, 1995
(this "Amendment"), among PHILLIPS-VAN HEUSEN CORPORATION
(the "Borrower"), the financial institutions party to the
Credit Agreement referred to below (the "Banks"), and BANKERS
TRUST COMPANY, as agent (in such capacity, the "Agent") for
the Banks. All capitalized terms used herein and not
otherwise defined shall have the meanings specified in the
Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and the Agent are
parties to a Credit Agreement, dated as of December 16, 1993
(as modified, supplemented or amended prior to the date
hereof, the "Credit Agreement");
WHEREAS, subject to the terms and conditions
hereof, the Banks and the Borrower have agreed to amend the
Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual
premises contained herein and other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. The Credit Agreement is hereby amended by (a)
deleting Section 8.05 thereof in its entirety and (b)
inserting in lieu thereof the following new Section 8.05:
"8.05 Interest Coverage Ratio. The Borrower
will not permit the ratio of (i) EBIT to (ii) Interest
Charges for any period of four consecutive fiscal
quarters of the Borrower (taken as one accounting
period) ending during any fiscal year set forth below to
be less than the ratio set forth opposite such fiscal
year below:
Fiscal Year Ending
on or about Ratio
January 31, 1996 1.8:1.0
January 31, 1997 1.8:1.0
January 31, 1998 2.0:1.0
January 31, 1999
and thereafter 2.6:1.0"
<PAGE>
2. Section 10 of the Credit Agreement is hereby
amended by (a) deleting the definition of "EBIT" in its
entirety and (b) inserting the following new definition in
lieu thereof:
"EBIT" shall mean, for any period, the sum of (i)
Consolidated Net Income of the Borrower for such period,
(ii) provisions for taxes based on income or profits to
the extent such income or profits were included in
computing Consolidated Net Income and (iii) consolidated
interest expense (including amortization of original
issue discount and non-cash interest payments or
accruals and the interest component of capitalized lease
obligations), net of interest income theretofore de-
ducted from earnings in computing Consolidated Net
Income for such period; provided, however, that EBIT
shall be determined without giving effect to the
Borrower's $23,000,000 restructuring charge announced on
September 14, 1995.
3. This Amendment shall become effective on the
date (the "Amendment Effective Date") on which the Borrower
and the Required Banks shall have executed and delivered a
counterpart of this Amendment.
4. Except as expressly amended hereby, the terms
and conditions of the Credit Agreement shall remain unchanged
and in full force and effect.
5. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall
together constitute one and the same instrument.
6. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this
Amendment as of the date first above written.
PHILLIPS-VAN HEUSEN CORPORATION
By
Title:
BANKERS TRUST COMPANY,
Individually, and as Agent
By
Title:
THE CHASE MANHATTAN BANK, N.A.
By
Title:
CITIBANK, N.A.
By
Title:
THE BANK OF NEW YORK
By
Title:
CHEMICAL BANK
By
Title:
-3-
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By
Title:
CIBC, INC.
By
Title:
UNION BANK
By
Title:
-4-
FOURTH AMENDMENT
FOURTH AMENDMENT, dated as of September 28, 1995
(this "Amendment"), among PHILLIPS-VAN HEUSEN CORPORATION
(the "Borrower"), the financial institutions party to the
Credit Agreement referred to below (the "Banks"), and BANKERS
TRUST COMPANY, as agent (in such capacity, the "Agent") for
the Banks. All capitalized terms used herein and not
otherwise defined shall have the meanings specified in the
Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and the Agent are
parties to a Credit Agreement, dated as of December 16, 1993
(as modified, supplemented or amended prior to the date
hereof, the "Credit Agreement");
WHEREAS, subject to the terms and conditions
hereof, the Banks and the Borrower have agreed to amend the
Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual
premises contained herein and other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. Section 1.01(a) of the Credit Agreement is
hereby amended by (a) deleting the last sentence thereof and
(b) inserting in lieu thereof the following new sentence:
"Notwithstanding the foregoing, (1) the sum of (x)
the aggregate outstanding principal amount of all
Revolving Loans outstanding at any time, plus (y) the
aggregate outstanding principal amount of all
Competitive Bid Loans outstanding at such time, shall
not exceed the Total Revolving Commitment, and (2) the
sum of (x) the aggregate outstanding principal amount of
all Revolving Loans outstanding at any time, plus (y)
the aggregate outstanding principal amount of all
Competitive Bid Loans outstanding at such time plus (z)
the Letter of Credit Outstandings at such time, shall
not exceed $400,000,000."
<PAGE>
2. Section 1.01(b) of the Credit Agreement is
hereby amended by (a) deleting the proviso contained in the
first sentence thereof and (b) inserting in lieu thereof the
following new proviso:
"provided that after giving effect to any Competitive
Bid Borrowing and the use of the proceeds thereof, the
aggregate outstanding principal amount of Competitive
Bid Loans will not exceed any of the following: (x)
$50,000,000, (y) when combined with the aggregate
outstanding principal amount of all Revolving Loans then
outstanding, the Total Revolving Commitment at such time
or (z) when combined with the aggregate outstanding
principal amount of all Revolving Loans then outstanding
and the Letter of Credit Outstandings at such time,
$400,000,000."
3. Section 2.01(b) of the Credit Agreement is
hereby amended by (a) deleting clause (i) thereof in its
entirety and (b) inserting in lieu thereof the following new
clause (i):
"(i) no Letter of Credit shall be issued the Stated
Amount of which, when added to the Letter of Credit
Outstandings at such time, would exceed either (1) the
Total Letter of Credit Commitment as in effect at such
time or (2) when further added to the aggregate
outstanding principal amount of all Revolving Loans and
Competitive Bid Loans at such time, $400,000,000;".
4. Sections 3.01(a), (b) and (c) of the Credit
Agreement are hereby amended to read in their entirety as
follows:
"(a) The Borrower agrees to pay the Agent a
Commitment commission ("Commitment Commission") for the
account of each Bank for the period from and including
the Effective Date to and including the Maturity Date
or, if earlier, the date upon which the Total Revolving
Commitment has been terminated, computed at a rate for
each day equal to 1/4 of 1% per annum on the daily
average Revolving Commitment of such Bank. Such
Commitment Commission shall be due and payable in
arrears on the last Business Day of each January, April,
July and October and on the date upon which the Total
Revolving Commitment is terminated.
-2-
<PAGE>
(b) The Borrower agrees to pay to the Agent a
Letter of Credit Facility Fee (the "Letter of Credit
Facility Fee") for the account of each Bank for the
period from and including the Effective Date to and
including the Maturity Date (or such earlier date as the
Total Letter of Credit Commitment shall have been
terminated) computed at a rate equal to 1/16 of 1% per
annum on the lesser of (i) such Bank's Letter of Credit
Percentage of $150,000,000 and (ii) such Bank's Letter
of Credit Commitment. The Letter of Credit Facility Fee
shall be due and payable in arrears on the last Business
Day of each January, April, July and October and on the
date upon which the Total Letter of Credit Commitment is
terminated.
(c) The Borrower agrees to pay to the Agent for
the account of the Banks pro rata on the basis of their
respective Letter of Credit Percentages, (i) a fee in
respect of each Standby Letter of Credit (the "Standby
Letter of Credit Fee") for the period from and including
the later of the Effective Date or the date of issuance
thereof to and including the termination date thereof
computed at a per annum rate for each day equal to the
Applicable Letter of Credit Percentage in effect from
time to time on the Stated Amount of such Standby Letter
of Credit and (ii) a fee in respect of each Trade Letter
of Credit (the "Trade Letter of Credit Fee," and
together with the Standby Letter of Credit Fee, the
"Letter of Credit Fees") for the period from and
including the later of the Effective Date or the date of
issuance thereof to and including the termination date
thereof computed at a per annum rate for each day equal
to 3/16 of 1% on the Stated Amount of such Trade Letter
of Credit, provided that for each day on which the
Letter of Credit Outstandings exceed $150,000,000, the
Borrower shall pay an additional Letter of Credit Fee of
1/16 of 1% per annum on such excess. Such Letter of
Credit Fees shall be due and payable quarterly in
arrears on the 10th Business Day of each February, May,
August and November of each year for the three-month
period (or portion thereof) ending on and including the
25th day of the immediately preceding month (i.e.,
January, April, July and October) and on the date upon
which the Total Letter of Credit Commitment is
terminated."
5. Section 4.02(a) of the Credit Agreement is
hereby amended to read in its entirety as follows:
-3-
<PAGE>
"(a) If on any date the sum of the outstanding
principal amount of Revolving Loans and Competitive Bid
Loans (all the foregoing, collectively, the "Aggregate
Loan Outstandings") exceeds the Total Revolving
Commitment as then in effect, the Borrower shall repay
on such date the principal of Revolving Loans, in an
amount equal to such excess. In addition, if on any
date the sum of the Aggregate Loan Outstandings plus the
Letter of Credit Outstandings exceeds $400,000,000, the
Borrower shall repay on such date the principal of
Revolving Loans, in an amount equal to such excess. If,
after giving effect to the prepayment of all outstanding
Revolving Loans as set forth in either of the preceding
sentences, the remaining Aggregate Loan Outstandings
exceed the Total Revolving Commitment or the sum of the
Aggregate Loan Outstandings plus the Letter of Credit
Outstandings exceeds $400,000,000, as the case may be,
the Borrower shall repay on such date the principal of
Competitive Bid loans in an aggregate amount equal to
such excess, provided that no Competitive Bid Loan shall
be prepaid pursuant to this sentence unless the Bank
that made same consents to such prepayment."
6. Section 10 of the Credit Agreement, and the
definition of "Standby Letter of Credit" contained therein,
is hereby amended by (a) deleting clause (i) of the proviso
contained therein, and (b) inserting in lieu thereof the
following new clause (i):
"(i) a letter of credit shall not be a Standby Letter of
Credit if at the time of issuance of such letter of
credit the Stated Amount of such letter of credit, when
added to the Standby Letter of Credit Outstandings,
would exceed either (x) $8,000,000, or (y) when added to
the Trade Letter of Credit Outstandings at such time,
the Total Letter of Credit Commitment, or (z) when added
to the Trade Letter of Credit Outstandings at such time
and the Aggregate Loan Outstandings at such time,
$400,000,000 (the request by the Borrower for a Standby
Letter of Credit to constitute a representation and
warranty by the Borrower that such limits would not be
exceeded after giving effect to the issuance of such
Standby Letter of Credit),".
7. Section 10 of the Credit Agreement, and the
definition of "Trade Letter of Credit" contained therein, is
hereby amended by (a) deleting clause (i) of the proviso
contained therein, and (b) inserting in lieu thereof the
following new clause (i):
-4-
<PAGE>
"(i) a letter of credit shall not be a Trade Letter of
Credit if at the time of the issuance of such letter of
credit the Stated Amount of such letter of credit, when
added to (x) the Trade Letter of Credit Outstandings at
such time and (y) the Standby Letter of Credit Out-
standings at such time, would exceed either (1) the
Total Letter of Credit Commitment at such time or (2)
when further added to the Aggregate Loan Outstandings at
such time, $400,000,000 (the request by the Borrower for
a Trade Letter of Credit to constitute a representation
and warranty by the Borrower that such limits would not
be exceeded after giving effect to the issuance of such
Trade Letter of Credit),".
8. Section 10 of the Credit Agreement is hereby
further amended by (a) deleting the definitions of
"Applicable CD Rate Margin," "Applicable Commitment
Commission Percentage," "Applicable Eurodollar Margin,"
"Available Total Revolving Commitment," "Commitment," "Total
Commitment" and "Unutilized Revolving Commitment," in their
entirety, and (b) inserting the following new definitions in
appropriate alphabetical order:
"Applicable CD Rate Margin" shall mean, at any time
when the Credit Rating is at any level set forth below,
a percentage equal to the number of basis points set
forth below opposite such Credit Rating (with 100 basis
points equalling 1.0%):
Applicable CD
Credit Rating Rate Margin
A-/A3 27.5
BBB+/Baa1 32.5
BBB/Baa2 37.5
BBB-/Baa3 47.5
BB+/Ba1 or lower 62.5
"Applicable Eurodollar Margin" shall mean, at any
time when the Credit Rating of the Borrower is at any
level set forth below, a percentage equal to the number
of basis points set forth below opposite such Credit
Rating (with 100 basis points equalling 1.0%):
-5-
<PAGE>
Applicable
Eurodollar
Credit Rating Margin
A-/A3 15
BBB+/Baa1 20
BBB/Baa2 25
BBB-/Baa3 35
BB+/Ba1 or lower 50
"Applicable Letter of Credit Percentage" shall
mean, at any time when the Credit Rating is at any level
set forth below, a percentage equal to the number of
basis points set forth below opposite such Credit Rating
(with 100 basis points equalling 1.0%):
Applicable Letter of
Credit Rating Credit Percentage
A-/A3 40
BBB+/Baa1 45
BBB/Baa2 50
BBB-/Baa3 60
BB+/Ba1 or lower 75
"Commitment" shall mean, for each Bank, at any
time, the sum of such Bank's Revolving Commitment and such
Bank's Letter of Credit Commitment; provided that pursuant to
the terms of this Agreement, no Bank shall be required to
make Revolving Loans and participate in Letters of Credit in
an aggregate amount in excess of the amount set forth
opposite the name of such Bank on Schedule I hereto under the
heading "Commitment."
"Total Commitment" shall mean, at any time, the
lesser of (i) the sum of the Commitments of each of the
Banks at such time and (ii) $400,000,000."
9. On and after the Fourth Amendment Effective
Date, Schedule I to the Credit Agreement shall be amended by
deleting such Schedule in its entirety and inserting in lieu
thereof a new Schedule I in the form of Schedule I hereto.
-6-
<PAGE>
10. This Amendment shall become effective on the
date (the "Fourth Amendment Effective Date") on which the
Borrower and the Required Banks shall have executed and
delivered a counterpart of this Amendment.
11. Except as expressly amended hereby, the terms
and conditions of the Credit Agreement shall remain unchanged
and in full force and effect.
12. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall
together constitute one and the same instrument.
13. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this
Amendment as of the date first above written.
PHILLIPS-VAN HEUSEN CORPORATION
By
Title:
BANKERS TRUST COMPANY,
Individually, and as Agent
By
Title:
THE CHASE MANHATTAN BANK, N.A.
By
Title:
CITIBANK, N.A.
By
Title:
-7-
<PAGE>
THE BANK OF NEW YORK
By
Title:
CHEMICAL BANK
By
Title:
THE FIRST NATIONAL BANK OF BOSTON
By
Title:
CIBC, INC.
By
Title:
UNION BANK
By
Title:
-8-
<PAGE>
SCHEDULE I
COMMITMENTS
Revolving Letter of Credit
Bank Commitment Commitment Commitment
BANKERS TRUST COMPANY $ 37,500,000 $ 37,500,000 $60,000,000
THE BANK OF NEW YORK $ 31,250,000 $ 31,250,000 $50,000,000
THE CHASE MANHATTAN
BANK, N.A. $ 31,250,000 $ 31,250,000 $50,000,000
CHEMICAL BANK $ 31,250,000 $ 31,250,000 $50,000,000
CITIBANK, N.A. $ 31,250,000 $ 31,250,000 $50,000,000
THE FIRST NATIONAL BANK
OF BOSTON $ 31,250,000 $ 31,250,000 $50,000,000
UNION BANK $ 31,250,000 $ 31,250,000 $50,000,000
CIBC, INC. $ 25,000,000 $ 25,000,000 $ 40,000,000
Total $250,000,000* $250,000,000* $400,000,000*
______________
* Although the sum of the Total Revolving Commitment and the Total
Letter of Credit Commitment equals $500,000,000, the Credit
Agreement limits aggregate outstanding exposure to $400,000,000 and
contains provisions ensuring that no Bank will have outstanding
Revolving Loans plus participations in outstanding Letters of
Credit in an aggregate amount in excess of its Commitment as
provided in the third column above.
-9-
PHILLIPS-VAN HEUSEN CORPORATION
1987 STOCK OPTION PLAN
(Including all amendments
through June 13, 1995)
1. Purpose.
The purposes of the 1987 Stock Option Plan (the "Plan") are
to induce certain individuals to remain in the employ, or to
continue to serve as directors, of Phillips-Van Heusen
Corporation (the "Company") and its present and future subsidiary
corporations (each a "Subsidiary"), as defined in Section 424(f)
of the Internal Revenue Code of 1986, as amended (the "Code"), to
attract new individuals to enter into such employment and service
and to encourage such individuals to secure or increase on
reasonable terms their stock ownership in the Company. The Board
of Directors of the Company (the "Board") believes that the
granting of stock options (the "Options") under the Plan will
promote continuity of management and increased incentive and
personal interest in the welfare of the Company by those who are
or may become primarily responsible for shaping and carrying out
the long range plans of the Company and securing its continued
growth and financial success. Options granted hereunder are
intended to be either (a) "incentive stock options" (which term,
when used herein, shall have the meaning ascribed thereto by the
provisions of Section 422(b) of the Code) or (b) options which
are not incentive stock options ("non-incentive stock options")
or (c) a combination thereof, as determined by the Committee (the
"Committee") referred to in Section 5 hereof at the time of the
grant thereof.
2. Effective Date of the Plan.
The Plan became effective on April 2, 1987. The Plan was
amended and restated effective as of January 3, 1991, and amended
further as of April 4, 1991, February 4, 1993, March 30, 1993,
September 9, 1993, April 18, 1995 and June 13, 1995.
3. Stock Subject to Plan.
3,150,000 (which number reflects all changes in the
capitalization of the Company and amendments to the Plan through
June 13, 1995) of the authorized but unissued shares of the
common stock, $1.00 par value, of the Company (the "Common
Stock") are hereby reserved for issue upon the exercise of
Options granted under the Plan; provided, however, that the
number of shares so reserved may from time to time be reduced to
the extent that a corresponding number of issued and outstanding
shares of the Common Stock are purchased by the Company and set
aside for issue upon the exercise of Options. If any Options
expire or terminate for any reason without having been exercised
in full, the unpurchased shares subject thereto shall again be
available for the purposes of the Plan.
4. Administration.
The Plan shall be administered by the Committee referred to
in Section 5 hereof. Subject to the express provisions of the
Plan, the Committee shall have complete authority, in its
2
<PAGE>
discretion, to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the
terms and provisions of the respective option agreements or
certificates (which need not be identical), to determine the
individuals (each a "Participant") to whom and the times and the
prices at which Options shall be granted, the periods during
which each Option shall be exercisable, the number of shares of
the Common Stock to be subject to each Option and whether such
Option shall be an incentive stock option or a non-incentive
stock option and to make all other determinations necessary or
advisable for the administration of the Plan. In making such
determinations, the Committee may take into account the nature of
the services rendered by the respective employees, their present
and potential contributions to the success of the Company and the
Subsidiaries and such other factors as the Committee in its
discretion shall deem relevant. The Committee's determination on
the matters referred to in this Section 4 shall be conclusive.
Any dispute or disagreement which may arise under or as a result
of or with respect to any Option shall be determined by the
Committee, in its sole discretion, and any interpretations by the
Committee of the terms of any Option shall be final, binding and
conclusive.
5. Committee.
The Committee shall consist of two or more members of the
3
<PAGE>
Board both or all of whom shall be "disinterested persons" within
the meaning of Rule 16b-3(c)(i) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and both
or all of whom shall be "outside directors" within the
contemplation of Section 162(m)(4)(C)(i) of the Code. The
President of the Company shall also be a member of the Committee,
ex-officio, whether or not he is otherwise eligible to be a
member of the Committee. The Committee shall be appointed
annually by the Board, which may at any time and from time to
time remove any members of the Committee, with or without cause,
appoint additional members to the Committee and fill vacancies,
however caused, in the Committee. A majority of the members of
the Committee shall constitute a quorum. All determinations of
the Committee shall be made by a majority of its members present
at a meeting duly called and held except that the Committee may
delegate to any one of its members the authority of the Committee
with respect to the grant of Options to persons who shall not be
officers and/or directors of the Company and who are not, and in
the judgment of the Committee may not be reasonably expected to
become, a "covered employee" within the meaning of Section
162(m)(3) of the Code. Any decision or determination of the
Committee reduced to writing and signed by all of the members of
the Committee (or by the member of the Committee to whom
authority has been delegated) shall be fully as effective as if
it had been made at a meeting duly called and held.
4
<PAGE>
6. Eligibility.
An Option may be granted only to a key employee of the
Company or a Subsidiary. A director of the Company or a
Subsidiary who is not an employee of the Company or a Subsidiary
shall be eligible to receive an Option, but only as provided in
Section 21 hereof.
7. Option Prices.
A. The initial per share option price of any Option which
is an incentive stock option shall be the price determined by the
Committee, but not less than the fair market value of a share of
the Common Stock on the date of grant; provided, however, that,
in the case of a Participant who owns more than 10% of the total
combined voting power of the Common Stock at the time an Option
which is an incentive stock option is granted to him, the initial
per share option price shall not be less than 110% of the fair
market value of a share of the Common Stock on the date of grant.
B. The initial per share option price of any Option which
is a non-incentive stock option shall not be less than 85% of the
fair market value of a share of the Common Stock on the date of
the grant; provided, however, that, in the case of a non-
incentive stock option granted to a person who is, or in the
judgment of the Committee may reasonably be expected to become, a
5
<PAGE>
"covered employee" within the meaning of Section 162(m)(3) of the
Code, the initial per share option price shall not be less than
the fair market value of a share of the Common Stock on the date
of grant.
C. For all purposes of the Plan, the fair market value of a
share of the Common Stock on any date shall be equal to (i) the
closing sale price of the Common Stock on the New York Stock
Exchange on the business day preceding such date or (ii) if there
is no sale of the Common Stock on such Exchange on such business
day, the average of the bid and asked prices on such Exchange at
the close of the market on such business day.
8. Option Term.
Participants shall be granted Options for such term as the
Committee shall determine, not in excess of ten years from the
date of the granting thereof; provided, however, that, in the
case of a Participant who owns more than 10% of the total
combined voting power of the Common Stock at the time an Option
which is an incentive stock option is granted to him, the term
with respect to such Option shall not be in excess of five years
from the date of the granting thereof.
9. Limitations on Amount of Options Granted.
A. The aggregate fair market value of the shares of the
6
<PAGE>
Common Stock for which any Participant may be granted incentive
stock options which are exercisable for the first time in any
calendar year (whether under the terms of the Plan or any other
stock option plan of the Company) shall not exceed $100,000.
B. No Participant shall, during any fiscal year of the
Company, be granted Options to purchase more than 100,000 shares
of the Common Stock (or, in the case of the fiscal year of the
Company ending in January, 1994, 250,000 shares of the Common
Stock).
10. Exercise of Options.
A. A Participant may not exercise an Option during the
period commencing on the date of the granting of such Option to
him and ending on the day next preceding the third anniversary of
such date. A Participant may (i) during the period commencing on
the third anniversary of the date of the granting of an Option to
him and ending on the day next preceding the fourth anniversary
of such date, exercise such Option with respect to one-third of
the shares granted thereby, (ii) during the period commencing on
such fourth anniversary and ending on the day next preceding the
fifth anniversary of the date of the granting of such Option,
exercise such Option with respect to two-thirds of the shares
granted thereby, and (iii) during the period commencing on such
7
<PAGE>
fifth anniversary, exercise such Option with respect to all of
the shares granted thereby.
B. Except as hereinbefore otherwise set forth, an Option
may be exercised either in whole at any time or in part from time
to time.
C. An Option may be exercised only by a written notice of
intent to exercise such Option with respect to a specific number
of shares of the Common Stock and payment to the Company of the
amount of the option price for the number of shares of the Common
Stock so specified; provided, however, that, if the Committee
shall in its sole discretion so determine at the time of the
grant of any Option, all or any portion of such payment may be
made in kind by the delivery of shares of the Common Stock having
a fair market value equal to the portion of the option price so
paid; provided, further, however, that, subject to the
requirements of Regulation T (as in effect from time to time)
promulgated under the Exchange Act, the Committee may implement
procedures to allow a broker chosen by a Participant to make
payment of all or any portion of the option price payable upon
the exercise of an Option and receive, on behalf of such
Participant, all or any portion of the shares of the Common Stock
issuable upon such exercise.
8
<PAGE>
D. The Board may, in its discretion, permit any Option to
be exercised, in whole or in part, prior to the time when it
would otherwise be exercisable.
E. I. Notwithstanding the provisions of paragraph A of
this Section 10, in the event that a Change in Control shall
occur, then, each Option theretofore granted to any Participant
which shall not have theretofore expired or otherwise been
cancelled or become unexercisable shall become immediately
exercisable in full. For the purposes of this paragraph E, a
"Change in Control" shall be deemed to occur upon (a) the
election of one or more individuals to the Board which election
results in one-third of the directors of the Company consisting
of individuals who have not been directors of the Company for at
least two years, unless such individuals have been elected as
directors by three-fourths of the directors of the Company who
have been directors of the Company for at least two years, (b)
the sale by the Company of all or substantially all of its assets
to any Person, the consolidation of the Company with any Person,
the merger of the Company with any Person as a result of which
merger the Company is not the surviving entity as a publicly held
corporation, (c) the sale or transfer of shares of the Company by
the Company and/or any one or more of its stockholders, in one or
more transactions, related or unrelated, to one or more Persons
under circumstances whereby any Person and its Affiliates shall
own, after such sales and transfers, at least one-fourth, but
9
<PAGE>
less than one-half, of the shares of the Company having voting
power for the election of directors, unless such sale or transfer
has been approved in advance by three-fourths of the directors of
the Company who have been directors of the Company for at least
two years, or (d) the sale or transfer of shares of the Company
by the Company and/or any one or more of its stockholders, in one
or more transactions, related or unrelated, to one or more
Persons under circumstances whereby any Person and its Affiliates
shall own, after such sales and transfers, at least one-half of
the shares of the Company having voting power for the election of
directors. For the purposes of this division I, (1) the term
"Affiliate" shall mean any Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled
by, or is under common control with, any other Person, (2) the
term "Person" shall mean any individual, partnership, firm,
trust, corporation or other similar entity and (3) when two or
more Persons act as a partnership, limited partnership, syndicate
or other group for the purpose of acquiring, holding or disposing
of securities of the Company, such partnership, limited
partnership, syndicate or group shall be deemed a "Person".
II. In the event that a Change of Control shall occur,
then, from and after the time of such event, neither the
provisions of this paragraph E nor any of the rights of any
Participant thereunder shall be modified or amended in any way.
10
<PAGE>
III. The provisions of this Section 10E shall only apply to
Options granted under the Plan on or subsequent to June 13, 1995.
Options granted prior to such date shall be governed by the
provisions of the Plan as in effect on the date of the grant
thereof.
11. Transferability.
No Option shall be assignable or transferable except by will
and/or by the laws of descent and distribution and, during the
life of any Participant, each Option granted to him may be
exercised only by him.
12. Termination of Employment.
In the event a Participant leaves the employ of the Company
and the Subsidiaries, whether voluntarily or otherwise but other
than by reason of his death or retirement, each Option
theretofore granted to him which shall not have theretofore
expired or otherwise been cancelled shall, to the extent not
theretofore exercised, terminate upon the earlier to occur of the
expiration of 30 days after the date of such Participant's
termination of employment and the date of termination specified
in such Option. Notwithstanding the foregoing, if a Participant
is terminated for cause (as defined herein), each Option
theretofore granted to him which shall not have theretofore
expired or otherwise been cancelled shall, to the extent not
theretofore exercised,
11
<PAGE>
terminate forthwith. For purposes of the foregoing, the term
"cause" shall mean: (i) the commission by the Participant of any
act or omission that would constitute a crime under federal,
state or equivalent foreign law, (ii) the commission by the
Participant of any act of moral turpitude, (iii) fraud,
dishonesty or other acts or omissions that result in a breach of
any fiduciary or other material duty to the Company and/or the
Subsidiaries, or (iv) continued alcohol or other substance abuse
that renders the Participant incapable of performing his material
duties to the satisfaction of the Company and/or the
Subsidiaries. In the event a Participant leaves the employ of
the Company and the Subsidiaries by reason of his retirement,
each Option theretofore granted to him which shall not have
theretofore expired or otherwise been cancelled shall become
immediately exercisable in full and shall, to the extent not
theretofore exercised, terminate upon the earlier to occur of the
expiration of three months after the date of such retirement and
the date of termination specified in such Option. In the event a
Participant's employment with the Company and the Subsidiaries
terminates by reason of his death, each Option theretofore
granted to him which shall not have theretofore expired or
otherwise been cancelled shall become immediately exercisable in
full and shall, to the extent not theretofore exercised,
terminate upon the earlier to occur of the expiration of three
months after the date of the qualification of a representative of
his estate and the date of termination specified in such Option.
12
<PAGE>
13. Adjustment of Number of Shares.
In the event that a dividend shall be declared upon the
Common Stock payable in shares of the Common Stock, the number of
shares of the Common Stock then subject to any Option and the
number of shares of the Common Stock reserved for issuance in
accordance with the provisions of the Plan but not yet covered by
an Option and the number of shares set forth in Section 9B hereof
shall be adjusted by adding to each share the number of shares
which would be distributable thereon if such shares had been
outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend. In the event that the
outstanding shares of the Common Stock shall be changed into or
exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up,
combination of shares, sale of assets, merger or consolidation in
which the Company is the surviving corporation, then, there shall
be substituted for each share of the Common Stock then subject to
any Option and for each share of the Common Stock reserved for
issuance in accordance with the provisions of the Plan but not
yet covered by an Option and for each share of the Common Stock
referred to in Section 9B hereof, the number and kind of shares
of stock or other securities into which each outstanding share of
the Common Stock shall be so changed or for which each such share
shall be exchanged. In the event that there shall be any change,
13
<PAGE>
other than as specified in this Section 13, in the number or kind
of outstanding shares of the Common Stock, or of any stock or
other securities into which the Common Stock shall have been
changed, or for which it shall have been exchanged, then, if the
Committee shall, in its sole discretion, determine that such
change equitably requires an adjustment in the number or kind of
shares then subject to any Option and the number or kind of
shares reserved for issuance in accordance with the provisions of
the Plan but not yet covered by an Option and the number or kind
of shares referred to in Section 9B hereof, such adjustment shall
be made by the Committee and shall be effective and binding for
all purposes of the Plan and of each stock option agreement or
certificate entered into in accordance with the provisions of the
Plan. In the case of any substitution or adjustment in
accordance with the provisions of this Section 13, the option
price in each stock option agreement or certificate for each
share covered thereby prior to such substitution or adjustment
shall be the option price for all shares of stock or other
securities which shall have been substituted for such share or to
which such share shall have been adjusted in accordance with the
provisions of this Section 13. No adjustment or substitution
provided for in this Section 13 shall require the Company to sell
a fractional share under any stock option agreement or
certificate. In the event of the dissolution or liquidation of
the Company, or a merger, reorganization or consolidation in
which the Company is not the surviving corporation, then, except
14
<PAGE>
as otherwise provided in the second sentence of this Section 13,
each Option, to the extent not theretofore exercised, shall
terminate forthwith.
14. Purchase for Investment, Withholding and Waivers.
Unless the shares to be issued upon the exercise of an
Option by a Participant shall be registered prior to the issuance
thereof under the Securities Act of 1933, as amended, such
Participant will, as a condition of the Company's obligation to
issue such shares, be required to give a representation in
writing that he is acquiring such shares for his own account as
an investment and not with a view to, or for sale in connection
with, the distribution of any thereof. In the event of the death
of a Participant, a condition of exercising any Option shall be
the delivery to the Company of such tax waivers and other
documents as the Committee shall determine. In the case of each
non-incentive stock option, a condition of exercising the same
shall be the entry by the person exercising the same into such
arrangements with the Company with respect to withholding as the
Committee may determine.
15. No Stockholder Status.
Neither any Participant nor his legal representatives,
legatees or distributees shall be or be deemed to be the holder
15
<PAGE>
of any share of the Common Stock covered by an Option unless and
until a certificate for such share has been issued. Upon payment
of the purchase price thereof, a share issued upon exercise of an
Option shall be fully paid and non-assessable.
16. No Restrictions on Corporate Acts.
Neither the existence of the Plan nor any Option shall in
any way affect the right or power of the Company or its
stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the
Common Stock or the rights thereof, or dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding
whether of a similar character or otherwise.
17. Declining Market Price.
In the event the fair market value of the Common Stock
declines below the option price set forth in any Option, the
Committee may, at any time, adjust, reduce, cancel and re-grant
any unexercised Option or take any similar action it deems to be
for the benefit of the Participant in light of the declining fair
market value of the Common Stock; provided, however, that none of
16
<PAGE>
the foregoing actions may be taken without the prior approval of
the Board.
18. No Employment Right.
Neither the existence of the Plan nor the grant of any
Option shall require the Company or any Subsidiary to continue
any Participant in the employ of the Company or such Subsidiary.
19. Termination and Amendment of the Plan.
The Board may at any time terminate the Plan or make such
modifications of the Plan as it shall deem advisable; provided,
however, that the Board may not without further approval of the
holders of a majority of the shares of the Common Stock present
in person or by proxy at any special or annual meeting of the
stockholders, increase the number of shares as to which Options
may be granted under the Plan (as adjusted in accordance with the
provisions of Section 13 hereof), or change the manner of
determining the option prices, or extend the period during which
an Option may be granted or exercised. Except as otherwise
provided in Section 13 hereof, no termination or amendment of the
Plan may, without the consent of the Participant to whom any
Option shall theretofore have been granted, adversely affect the
rights of such Participant under such Option.
17
<PAGE>
20. Expiration and Termination of the Plan.
The Plan shall terminate on April 1, 1997 or at such earlier
time as the Board may determine. Options may be granted under
the Plan at any time and from time to time prior to its
termination. Any Option outstanding under the Plan at the time
of the termination of the Plan shall remain in effect until such
Option shall have been exercised or shall have expired in
accordance with its terms.
21. Options for Outside Directors.
A. A director of the Company who is not an employee of the
Company or a Subsidiary (an "Outside Director") shall be eligible
to receive an Option. Except as otherwise provided in this
Section 21, each such Option shall be subject to all of the terms
and conditions of the Plan.
B. I. At the first meeting of the Board immediately
following each Annual Meeting of the Stockholders of the Company,
each Outside Director shall be granted an Option, which shall be
a non-incentive stock option, to purchase the number (calculated
to the nearest 100 shares) of shares of the Common Stock derived
by dividing $50,000 by the fair market value (as defined in
Section 7C hereof) of a share of the Common Stock on the date of
grant.
18
<PAGE>
II. The initial per share option price of each Option
granted to an Outside Director shall be equal to the fair market
value of a share of the Common Stock on the date of grant.
III. The term of each Option granted to an Outside Director
shall be ten years from the date of the granting thereof.
IV. All or any portion of the payment required upon the
exercise of an Option granted to an Outside Director may be made
in kind by the delivery of shares of the Common Stock having a
fair market value equal to the portion of the option price so
paid.
C. I. The provisions of Section 12 hereof shall not be
applicable to any Option granted to an Outside Director.
II. In the event an Outside Director ceases to be an
Outside Director prior to his 65th birthday, whether voluntarily
or otherwise but other than by reason of his death, each Option
theretofore granted to him which shall not have theretofore
expired or otherwise been cancelled shall, to the extent not
theretofore exercised, terminate forthwith.
III. In the event an Outside Director ceases to be an
Outside Director after his 65th birthday other than by reason of
his death, each Option theretofore granted to him which shall not
have theretofore expired or otherwise been cancelled shall become
immediately exercisable in full and shall, to the extent not
19
<PAGE>
theretofore exercised, terminate upon the earlier to occur of the
expiration of three months after the date on which he shall cease
to be an Outside Director and the date of termination specified
in such Option.
IV. In the event of the death of an Outside Director, each
Option theretofore granted to him which shall not have
theretofore expired or otherwise been cancelled shall become
immediately exercisable in full and shall, to the extent not
theretofore exercised, terminate upon the earlier to occur of the
expiration of three months after the date of the qualification of
a representative of his estate and the date of termination
specified in such Option.
D. The provisions of this Section 21 may not be amended
except by the vote of a majority of the members of the Board and
by the vote of a majority of the members of the Board who are not
Outside Directors and the provisions of this Section 21 shall not
be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security
Act of 1974 or the regulations or rules thereunder.
20
LHR/61650-52474 10063985
6/02/95
PHILLIPS-VAN HEUSEN CORPORATION
SPECIAL SEVERANCE BENEFIT PLAN
Amended and Restated as of June 13, 1995
1. PURPOSE.
The Plan is intended to induce the Participants to remain in
the employ of the Company, notwithstanding any possible concern
on their behalf as to the security of their employment with the
Company in the event of a Change in Control, and to provide
special benefits in recognition of the valuable services
heretofore rendered by the Participants to the Company and in
consideration of the Participants' remaining in the employ of the
Company pursuant to a written contract or the terms of the Plan.
2. DEFINITIONS.
Affiliate - Any person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is
under common control with, any other Person.
Board - The Board of Directors of PVH.
Change in Control - A Change in Control shall be deemed to
occur upon (i) the election of one of more individuals to the
Board which election results in one-third of the directors of PVH
consisting of individuals who have not been directors of PVH for
at least two years, unless such individuals have been elected as
directors or nominated for election as directors by three-
<PAGE>
fourths of the directors of PVH who have been directors of PVH
for at least two years; (ii) the sale by PVH of all or
substantially all of its assets to any Person, the consolidation
of PVH with any Person, the merger of PVH with any Person as a
result of which merger PVH is not the surviving entity as a
publicly held corporation; (iii) the sale or transfer of shares
of PVH by PVH and/or any one or more of its stockholders, in one
or more transactions, related or unrelated, to one or more
Persons under circumstances whereby any Person and its Affiliates
shall own, after such sales and transfers, at least one-fourth,
but less than one-half, of the shares of PVH having voting power
for the election of directors, unless such sale or transfer has
been approved in advance by three-fourths of the directors of PVH
who have been directors of PVH for at least two years; or (iv)
the sale or transfer of shares of PVH by PVH and/or any one or
more of its stockholders, in one or more transactions, related or
unrelated, to one or more Persons under circumstances whereby any
Person and its Affiliates shall own, after such sales and
transfers, at least one-half of the shares of PVH having voting
power for the election of directors. Nothing contained in this
definition shall limit or restrict the right of any director who
is a Participant from participating in any discussions or voting
on any matter referred to in this definition at any meeting of
the Board.
Code - The Internal Revenue Code of 1986 as in effect at the
time with respect to which such term is used.
2
<PAGE>
Company - PVH and all of the Subsidiaries.
Discharge for Cause - Discharge for Cause shall be deemed to
occur only upon a good faith determination by the Board that the
termination of the employment by the Company of a Participant is
necessary by reason of (i) the commission by such Participant of
any act which, if successfully prosecuted by the appropriate
authorities, would constitute a felony under state or federal
law; (ii) such Participant's embezzlement or intentional
misappropriation of any property of the Company; or (iii) such
Participant's having divulged, furnished or made accessible to
anyone other than the Company, its directors, officers,
employees, auditors and legal advisors, otherwise than in the
regular course of the business of the Company, any confidential
knowledge or information relating to the customers, employees,
operations, financial condition, revenues or projections of the
Company, other than information in the public domain which has
not been improperly disclosed by such Participant. Such
determination by the Board may be made only after reasonable
written notice to such Participant from a member of the Board
setting forth details of the allegations which may constitute
Discharge for Cause and after an opportunity for such
Participant, together with his counsel, to be heard by the Board.
3
<PAGE>
Effective Marginal Tax Rate - The percentage equal to (i)
the product of 1.03 and the highest tax rate set forth in section
1(a) of the Code (currently 39.6%), plus (ii) the highest
combined marginal state and local income tax rate to which the
Participant with respect to whom such term is used shall be
subject with respect to compensation income, minus (iii) the
product of the tax rate set forth in clause (i) above and the tax
rate set forth in clause (ii) above, plus (iv) the highest tax
rate set forth in section 3111(b)(6) of the Code (currently
1.45%), plus (v) the highest tax rate set forth in section
4999(a) of the Code (currently 20%).
Parachute Indemnity Amount - The amount determined with
respect to a Participant as follows:
(i) There shall first be determined, after giving
effect to the payment of such Participant's Primary Benefit
but not to such Participant's Secondary Benefit, the
aggregate of such Participant's "excess parachute" payments
within the contemplation of section 280G(b)(1) of the Code.
(ii) There shall then be determined the amount of the
aggregate taxes imposed upon such "excess parachute
payments" by the provisions of section 4999(a) of the Code.
4
<PAGE>
(iii) The amount determined in accordance with the
provisions of clause (ii) shall then be multiplied by the
fraction the numerator of which shall be one and the
denominator of which shall be one minus such Participant's
Effective Marginal Tax Rate with respect to the calendar
year in which his employment by the Company shall terminate
and such product shall be such Participant's Parachute
Indemnity Amount.
Participant - Each person designated by the Compensation
Committee of the Board who shall be an officer of PVH, an officer
of any of the Subsidiaries or any other key employee of the
Company. Any Participant who shall be a Participant at the time
of a Change in Control shall remain a Participant until the
earlier to occur of the expiration of two years following a
Change in Control or the termination of such Participant's
employment with the Company.
Person - An individual, partnership, firm, trust,
corporation or other similar entity. When two or more Persons
act as a partnership, limited partnership, syndicate or other
group for the purpose of acquiring, holding or disposing of
securities of PVH, such partnership, limited partnership,
syndicate or group shall be deemed a "Person" for the purposes of
the Plan.
5
<PAGE>
Plan - The Phillips-Van Heusen Corporation Special Severance
Benefit Plan.
Primary Benefit - Shall have the meaning accorded thereto in
Section 5.
PVH - Phillips-Van Heusen Corporation, a Delaware
corporation.
Secondary Benefit - Shall have the meaning accorded thereto
in Section 5.
Subsidiary - Any Person of which a majority of the capital
stock having voting power for the election of directors or other
governing board is owned by PVH and/or one or more of the
Subsidiaries.
Any term used in the Plan in the masculine gender shall
include the feminine gender.
3. EMPLOYMENT COMMITMENT.
An employee of the Company shall not be designated as a
Participant unless (a) such employee enters into an agreement
with PVH or a Subsidiary that he will remain in the service of
PVH or such Subsidiary for a period, subject to the terms of the
Plan, of at least one year from the date of such agreement or (b)
such employee is a party to a written contract of employment with
PVH
6
<PAGE>
or a Subsidiary for a term extending at least one year from the
date he is designated as a Participant. Such agreement may
provide that the employee shall serve at the pleasure of PVH or
such Subsidiary, and at such compensation as PVH or such
Subsidiary shall reasonably determine from time to time, but not
less than his compensation as in effect on the date of such
agreement. Such agreement may also provide that it does not
confer upon the employee any right to continue in the employ of
PVH or such Subsidiary and that it does not interfere in any way
with the right of PVH or such Subsidiary to terminate the
employment of the employee at any time.
4. RIGHT TO TERMINATE EMPLOYMENT.
Notwithstanding the provisions of any agreement to the
contrary, including without limitation an agreement required
pursuant to Section 3, in the event of a Change in Control, each
Participant shall have the right to terminate voluntarily his
employment with the Company, with or without reason, within two
years after the occurrence of such Change in Control by giving
written notice of termination to PVH.
5. SPECIAL SEVERANCE BENEFITS.
Upon the voluntary termination of employment with the
Company by any Participant within two years after the occurrence
of a Change in Control, or upon the involuntary termination of
employment with the Company of any Participant for any reason
other than death or Discharge for Cause within two years after
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the occurrence of a Change in Control, PVH, or the consolidated,
surviving or transferee Person in the event of a consolidation,
merger or sale of assets, shall pay to such Participant, in a
lump sum immediately subsequent to the date of such termination,
in addition to any compensation otherwise owed to such
Participant at the time of such termination (under any contract,
other plan or otherwise), (a) an amount (the "Primary Benefit")
equal to the product of (i) three and (ii) the average annual
cash compensation, including salary and bonuses, paid to and/or
accrued with respect to such Participant during the two-year
period preceding the date of such termination, or such portion of
said period as such Participant shall have been employed by the
Company, and (b) an amount (the "Secondary Benefit) equal to such
Participant's Parachute Indemnity Amount; provided, however, that
at the time of the designation of any employee of the Company as
a Participant, the Compensation Committee may, in its sole and
absolute discretion, by written notice to such Participant,
reduce the Primary Benefit with respect to such Participant and
thereafter from time to time the Compensation Committee may, in
its sole and absolute discretion, by written notice to such
Participant, increase the Primary Benefit, but in no event to an
amount greater than the Primary Benefit provided for in this
Section; provided, further, that at the time an employee of the
Company shall be designated as a Participant, the Compensation
Committee may, in its sole and absolute discretion, by written
notice to such Participant, provide that, if such Participant
8
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shall have been an employee of the Company for less than two
years preceding the date of his termination, the Primary Benefit
with respect to such Participant shall be the product of (I)
three and (II) such amount as such Participant would have
received had he served the Company for at least two years, using
such assumptions as to total cash compensation that would have
been paid to and/or accrued with respect to such Participant
during such two years as the Compensation Committee may provide,
or such lesser amount as the Compensation Committee may
determine. Upon the voluntary termination of employment with the
Company by any Participant within two years after the occurrence
of a Change in Control, or upon the involuntary termination of
employment with the Company of any Participant for any reason
other than death or Discharge for Cause within two years after
the occurrence of a Change in Control, PVH, or the consolidated,
surviving or transferee Person in the event of a consolidation,
merger or sale of assets, shall also provide, for the period of
three years commencing on such termination of employment,
medical, dental, life and disability insurance coverage for such
Participant and the members of his family which is not less
favorable to such Participant than the group medical, dental,
life and disability insurance coverage carried by the Company for
such Participant and the members of his family either immediately
prior to such termination of employment or on the occurrence of
such Change in Control, whichever is greater; provided, however,
that the obligations set forth in this sentence shall terminate
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to the extent such Participant obtains comparable medical,
dental, life and disability insurance coverage from any other
employer during such three-year period, but such Participant
shall not have any obligation to seek or accept employment during
such three-year period, whether or not any such employment would
provide comparable medical, dental, life and disability insurance
coverage. All payments made under the Plan to any Participant
shall be subject to withholding and to such other deductions as
shall at the time of such payment be required under any income
tax or other law, whether of the United States or any other
jurisdiction.
6. ADMINISTRATION.
The Plan shall be administered by the Compensation Committee
appointed by the Board, which Committee shall consist of three or
more individuals who shall serve at the pleasure of the Board.
Subject to the provisions of the Plan, the Compensation Committee
shall have the authority to interpret the Plan and to prescribe,
amend and rescind rules and regulations relating to it. Any
determination by the Compensation Committee in carrying out,
administering or construing the Plan (including without
limitation the designation of an individual as a Participant)
made prior to a Change in Control shall be final and binding for
all purposes upon PVH and all other interested Persons and their
heirs, successors and personal representatives. The Board may
from time to time appoint members of the Compensation Committee
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in substitution for or in addition to members previously
appointed and may fill vacancies, however caused, in the
Compensation Committee. The Board shall elect one of the
Compensation Committee's members as its Chairman and the
Compensation Committee shall hold its meetings at such times and
places as it shall deem advisable. A majority of the members of
the Compensation Committee shall constitute a quorum. All action
by the Compensation Committee shall be taken by a majority of its
members present at a meeting. Any action may be taken by a
written instrument signed by a majority of the members of the
Compensation Committee and action so taken shall be fully
effective as if it had been taken by a vote of a majority of the
members at a meeting duly called and held. The Board may appoint
a Secretary for the Compensation Committee (who, if no other
designation shall be made, shall be the Secretary of PVH) and the
Compensation Committee shall keep minutes of its meetings and
shall make rules and regulations for the conduct of its business
as it shall deem advisable.
7. COSTS OF ENFORCEMENT.
In the event that, subsequent to a Change in Control, any
Participant incurs any costs or expenses, including attorneys
fees, in the enforcement of his rights under the Plan, then,
unless PVH, or the consolidated, surviving or transferee Person
in the event of a consolidation, merger or sale of assets, is
wholly successful in defending against the enforcement of such
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rights, PVH, or such consolidated, surviving or transferee
Person, shall promptly pay to such Participant all such costs and
expenses.
8. AMENDMENT OR TERMINATION.
The Board may amend or terminate the Plan in whole or in
part at any time upon notice to all of the Participants;
provided, however, that, subsequent to a Change in Control or
during the period of 90 days prior to a Change in Control, no
such amendment which could adversely affect the rights of any
Participant nor any termination shall become effective until the
expiration of two years following a Change in Control.
9. NOTICES.
Any notice or other communication pursuant to the Plan
intended for a Participant shall be deemed given when personally
delivered to such Participant or sent to such Participant by
registered or certified mail, return receipt requested, at such
Participant's address as it appears on the records of the
Company, or at such other address as such Participant shall have
specified by notice to PVH in the manner herein provided. Any
notice or other communication pursuant to the Plan intended for
PVH shall be deemed given when personally delivered to the
Secretary of PVH or sent to PVH by registered or certified mail,
return receipt requested, attention of its Secretary, at 1290
Avenue of the Americas, New York, New York 10104, or at such
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other address as PVH shall have specified by notice to the
Participants in the manner herein provided.
10. GOVERNING LAW.
The Plan shall be governed by the laws of the State of New
York.
13
Phillips-Van Heusen Letterhead
Dear :
We refer to that certain agreement, dated , by and
between you and us which provides you with a target monthly
benefit of $ under our so-called "Capital Accumulation
Plan". This letter, when accepted by you, will constitute an
amendment of such agreement to the extent set forth herein:
1. Part A of Article THIRD of said agreement is hereby
amended to read as follows:
A. The term "Acceleration Event" shall mean a Change
in Control.
2. Part D of Article THIRD of said agreement (the
definition of a "Change in Chief Executive Officer") is hereby
deleted.
3. Part E of Article THIRD of said agreement (the
definition of "Change in Control") is hereby amended by deleting
the proviso at the end thereof.
4. Part M of Article THIRD of said agreement (the
definition of "Phillips Family") is hereby deleted.
5. Except as hereby expressly amended and modified, the
provisions of said agreement shall remain in full force and
effect.
If the foregoing is acceptable to you, please sign and
return to us the enclosed copy of this letter.
Very truly yours,
PHILLIPS-VAN HEUSEN CORPORATION
By:
ACCEPTED AND AGREED TO:
