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 August 3, 1997
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 August 29, 1997: 27,121,420
shares.<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
INDEX
PART I -- FINANCIAL INFORMATION
Independent Accountants Review Report................................. 1
Condensed Consolidated Balance Sheets as of August 3, 1997 and
February 2, 1997...................................................... 2
Condensed Consolidated Statements of Operations for the thirteen
weeks and twenty-six weeks ended August 3, 1997 and July 28, 1996..... 3
Condensed Consolidated Statements of Cash Flows for the
twenty-six weeks ended August 3, 1997 and July 28, 1996............... 4
Notes to Condensed Consolidated Financial Statements.................. 5-8
Management's Discussion and Analysis of Results of Operations
and Financial Condition............................................... 9-14
PART II -- OTHER INFORMATION
ITEM 4 - Submission of Matters to a Vote of Stockholders.............. 15
ITEM 6 - Exhibits and Reports on Form 8-K............................. 15-18
Signatures............................................................ 19
Exhibit--Acknowledgment of Independent Accountants.................... 20
Exhibit--Financial Data Schedule...................................... 21
<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 August 3, 1997, and the related
condensed consolidated statements of operations for the thirteen and twenty-
six week periods ended August 3, 1997 and July 28, 1996, and the related
condensed consolidated statements of cash flows for the twenty-six week
periods ended August 3, 1997 and July 28, 1996. 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 February 2, 1997, 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 11, 1997, 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 February 2, 1997, 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
August 18, 1997
-1-
<PAGE>
Phillips-Van Heusen Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
UNAUDITED AUDITED
August 3, February 2,
1997 1997
<S> <C> <C>
ASSETS
Current Assets:
Cash, including cash equivalents of $2,950 and $1,861 $ 14,474 $ 11,590
Trade receivables, less allowances of $3,712 and $3,401 82,905 91,806
Inventories 322,166 237,422
Other, including deferred taxes of $13,575 and $4,300 29,478 22,140
Total Current Assets 449,023 362,958
Property, Plant and Equipment 130,208 137,060
Goodwill 118,709 120,324
Other Assets, including deferred taxes of $27,330 and
$16,617 49,113 37,094
$747,053 $657,436
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 77,000 $ 20,000
Accounts payable 41,567 36,355
Accrued expenses 81,469 55,754
Current portion of long-term debt 10,157 10,157
Total Current Liabilities 210,193 122,266
Long-Term Debt, less current portion 209,401 189,398
Other Liabilities 77,908 55,614
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 27,087,868
and 27,045,705 27,088 27,046
Additional Capital 116,517 116,296
Retained Earnings 105,946 146,816
Total Stockholders' Equity 249,551 290,158
$747,053 $657,436
See accompanying notes.
</TABLE>
-2-
<PAGE>
Phillips-Van Heusen Corporation
Condensed Consolidated Statements of Operations
Unaudited
(In thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
August 3, July 28, August 3, July 28,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $313,458 $313,807 $599,383 $587,467
Cost of goods sold 219,270 208,482 406,227 389,045
Gross profit 94,188 105,325 193,156 198,422
Selling, general and administrative expenses 99,551 96,363 200,205 192,721
Facility and store closing and restructuring
and other expenses 41,150 - 41,150 -
Income (loss) before interest and taxes (46,513) 8,962 (48,199) 5,701
Interest expense, net 5,344 5,918 10,276 12,071
Income (loss) before taxes (51,857) 3,044 (58,475) (6,370)
Income tax expense (benefit) (18,572) 918 (20,650) (1,942)
Net income (loss) $(33,285) $ 2,126 $(37,825) $ (4,428)
Net income (loss) per share $ (1.23) $ 0.08 $ (1.40) $ (0.16)
Average shares outstanding 27,074 26,992 27,066 26,988
Cash dividends per share $ 0.0375 $ 0.0375 $ 0.075 $ 0.075
</TABLE>
In the second quarter of 1997, the Company recorded a non-recurring pre-tax
charge of $57 million related to a series of actions the Company will take
to accelerate the execution of its ongoing strategy to build its core
brands. Such amount has been recorded in the statements of operations
for the thirteen-weeks and twenty-six weeks ended August 3, 1997 as follows:
Cost of goods sold $15,850
Facility and store closing and restructuring
and other expenses 41,150
57,000
Income tax benefit (20,200)
$36,800
See accompanying notes.
-3-
<PAGE>
Phillips-Van Heusen Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
(In thousands)
Twenty-Six Weeks Ended
August 3, July 28,
1997 1996
OPERATING ACTIVITIES:
Net loss $(37,825) $ (4,428)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 13,067 15,097
Amortization of contributions from landlords (2,481) (3,212)
Write-off of assets 18,800 -
Deferred income taxes (19,988) -
Equity income in Pyramid Sportswear (700) (625)
Changes in operating assets and liabilities:
Receivables 8,901 26,427
Income tax refund - 16,987
Inventories (84,744) (48,900)
Accounts payable and accrued expenses 30,567 (8,970)
Other-net 9,671 (3,830)
Net Cash Used By Operating Activities (64,732) (11,454)
INVESTING ACTIVITIES:
Property, plant and equipment acquired (6,794) (10,565)
Contributions from landlords 192 974
Other-net - 2,181
Net Cash Used By Investing Activities (6,602) (7,410)
FINANCING ACTIVITIES:
Proceeds from revolving line of credit
and long-term borrowings 77,000 47,414
Payments on revolving line of credit
and long-term borrowings - (29,000)
Exercise of stock options 263 95
Cash dividends (3,045) (3,039)
Net Cash Provided By Financing Activities 74,218 15,470
Increase (decrease) In Cash 2,884 (3,394)
Cash at beginning of period 11,590 17,533
Cash at end of period $ 14,474 $ 14,139
See accompanying notes.
-4-
<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
GENERAL
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the thirteen
and twenty-six weeks ended August 3, 1997 are not necessarily indicative of
the results that may be expected for the year ended February 1, 1998 due, in
part, to seasonal factors. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report to Stockholders for the year ended February 2, 1997.
As part of its ongoing strategic and expense reduction initiatives, the
Company continues to evaluate its operations.
Certain reclassifications have been made to the condensed consolidated
financial statements for the twenty-six weeks ended July 28, 1996 to present
that information on a basis consistent with the twenty-six weeks ended
August 3, 1997.
INVENTORIES
Inventories are summarized as follows:
August 3, February 2,
1997 1997
Raw materials $ 23,455 $ 16,670
Work in process 17,675 13,208
Finished goods 281,036 207,544
Total $322,166 $237,422
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 $13,000 higher than
reported at August 3, 1997 and February 2, 1997, if the FIFO method of
inventory accounting had been used for the entire apparel business.
-5-
<PAGE>
The final 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
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.
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share," which is required to be adopted by the Company
on February 1, 1998. At that time, the Company will be required to change the
method currently used to compute net income per share and restate all prior
periods. Under the new requirements for calculating primary net income per
share, the dilutive effect of stock options will be excluded. Implementation
of the new requirements will not have a material effect on the calculation of
earnings per share.
FACILITY AND STORE CLOSING AND RESTRUCTURING AND OTHER EXPENSES
On July 31, 1997, the Company announced that it would take a series of actions
to accelerate the execution of its ongoing strategy to build its core brands.
Included in these actions are the closing of approximately 150 additional
outlet stores, repositioning the Gant brand in the United States to be
consistent with its highly successful positioning in Europe and Asia, exiting
the sweater manufacturing business and restructuring warehousing and
distribution facilities as well as other logistical and administrative areas
in order to reduce costs and improve efficiencies. As a result, the Company
recorded a non-recurring pre-tax charge of $57,000 ($36,800 after tax or $1.36
per share) in the second quarter of 1997 summarized as follows:
Outlet stores $17,000
Gant brand repositioning 13,500
Exiting the sweater manufacturing business 13,000
Restructuring warehousing and distribution
facilities and other areas 13,500
Total charge, including $15,850 in cost of goods sold 57,000
Less income tax benefit (20,200)
Net charge $36,800
The retail outlet store closings will continue the elimination of the
Company's weakest and worst-trending stores. At the same time, it will
expedite the realignment of the Company's wholesale/retail sales mix and
generate positive cash flow as working capital is reduced. The charge relates
principally to asset write-offs, accruals of lease termination fees and
inventory markdowns (included in cost of goods sold) associated with store
closings.
-6-
<PAGE>
Gant is successfully marketed as an upscale brand in 24 countries throughout
Europe, Canada, the Middle East and Asia. Included in this global network are
47 independent Gant retail stores in 18 countries, with 11 additional stores
scheduled to be opened in Europe this year. The repositioning of the Gant
brand in the United States encompasses new and upgraded products and the
consolidation of the worldwide design and sourcing functions -- all focused on
promoting consistency of product and quality throughout the world. It is a
major step forward in creating "one image" for this global brand. Enhancing
this image will be the Gant Flagship Store on Fifth Avenue in New York City
which is scheduled to open this Fall. The charge relates principally to asset
write-offs (primarily merchandise display fixtures) and inventory markdowns
(included in cost of goods sold) associated with the phase-out of old product
lines.
The Company's sweater manufacturing business is capital intensive and losing
money, and its operations are not a part of the Company's strategy of building
its brands. The charge relates principally to exiting the manufacturing
facility in Barranquitas, Puerto Rico, and includes asset write-offs
(primarily manufacturing equipment), accruals for employee termination and
severance costs and a write-down of inventory values (included in cost of
goods sold) associated with exiting the facility.
The Company's warehousing and distribution facilities are being reconfigured,
including the closing of the Company's Atlanta, Georgia distribution facility,
to reduce costs and maximize efficiencies. Certain other logistical and
administrative areas are also being restructured to streamline costs. The
charge relates principally to the write-off of equipment and accrual of
employee termination and severance costs.
In summary, the $57,000 pre-tax non-recurring charge consists of the
following:
Asset write-offs $18,800
Inventory markdowns and write-downs
(included in cost of goods sold) 15,850
Employee termination and severance
costs for approximately 700 employees 7,200
Lease and other obligations 10,350
Other 4,800
$57,000
-7-
<PAGE>
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 Ended Twenty-Six Weeks Ended
August 3, July 28, August 3, July 28,
1997 1996 1997 1996
Net sales-apparel $227,179 $223,227 $441,605 $423,425
Net sales-footwear 86,279 90,580 157,778 164,042
Total net sales $313,458 $313,807 $599,383 $587,467
Operating income (loss)-apparel* $(44,435) $ 3,491 $(45,815) $ 1,185
Operating income-footwear* 454 8,115 3,263 10,330
Total operating income (loss)* (43,981) 11,606 (42,552) 11,515
Corporate expenses (2,532) (2,644) (5,647) (5,814)
Interest expense, net (5,344) (5,918) (10,276) (12,071)
Income (loss) before taxes $(51,857) $ 3,044 $(58,475) $ (6,370)
* Operating income (loss) for the thirteen and twenty-six weeks ended August
3, 1997, includes a $57,000 non-recurring pre-tax charge, of which $50,765
and $6,235 relate to the Company's apparel and footwear businesses,
respectively.
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
In the second quarter of 1997, the Company recorded a non-recurring pre-tax
charge of $57 million related to a series of actions the Company will take to
accelerate the execution of its ongoing strategy to build its core brands.
See Notes to Condensed Consolidated Financial Statements.
The following statements of operations, segment data and discussion (where
noted) segregate this non-recurring charge from the Company's ongoing
operations.
Statements of Operations (In thousands)
Thirteen Weeks Ended Twenty-Six Weeks Ended
8/3/97 7/28/96 8/3/97 7/28/96
Net sales $313,458 $313,807 $599,383 $587,467
Cost of goods sold (per page 3) 219,270 208,482 406,227 389,045
Non-recurring charge (15,850) - (15,850) -
Gross profit before
non-recurring charge 110,038 105,325 209,006 198,422
SG&A expenses and non-recurring
charge 140,701 96,363 241,355 192,721
Non-recurring charge (41,150) - (41,150) -
Selling, general and
administrative expenses 99,551 96,363 200,205 192,721
Income before interest, taxes
and non-recurring charge 10,487 8,962 8,801 5,701
Interest expense, net 5,344 5,918 10,276 12,071
Income tax expense (benefit) 1,628 918 (450) (1,942)
Income (loss) from ongoing
operations before
non-recurring charge 3,515 2,126 (1,025) (4,428)
Non-recurring charge, net
of tax benefit (36,800) - (36,800) -
Net income (loss) $(33,285) $ 2,126 $(37,825) $ (4,428)
Segment Data (In thousands)
Thirteen Weeks Ended Twenty-Six Weeks Ended
8/3/97 7/28/96 8/3/97 7/28/96
Net sales-apparel $227,179 $223,227 $441,605 $423,425
Net sales-footwear 86,279 90,580 157,778 164,042
Total net sales $313,458 $313,807 $599,383 $587,467
Operating income-apparel $ 6,330 $ 3,491 $ 4,950 $ 1,185
Operating income-footwear 6,689 8,115 9,498 10,330
Total operating income 13,019 11,606 14,448 11,515
Corporate expenses (2,532) (2,644) (5,647) (5,814)
Interest expense, net (5,344) (5,918) (10,276) (12,071)
Income (loss) before taxes
and non-recurring charge $ 5,143 $ 3,044 $ (1,475) $ (6,370)
-9-
<PAGE>
Thirteen Weeks Ended August 3, 1997 Compared With Thirteen Weeks Ended
July 28, 1996
APPAREL
Net sales of the Company's apparel segment in the second quarter increased to
$227.2 million in 1997 compared with $223.2 million last year. Net sales of
the Company's wholesale branded business increased 21% in the current year's
second quarter compared with last year's second quarter, which more than
offset the planned decrease in retail sales resulting from the Company's
strategic initiative to close outlet stores.
Gross margin on apparel sales before the non-recurring charge was 32.7% in the
second quarter of 1997 compared with 31.4% in last year's second quarter. In
the second quarter, virtually all of the Company's branded apparel businesses
showed gross margin improvement in 1997 compared with last year as product
upgrades and brand development began to take hold. These initiatives have
enabled the Company to command higher prices and take fewer markdowns. The
only exception was in sales of golf apparel to pro shops, where significantly
increased competition served to weaken gross margin percentages. The Company
has moved to strengthen its competitive position in this channel with new and
upgraded product and with an aggressive marketing campaign.
Selling, general and administrative expenses, before the non-recurring charge,
as a percentage of apparel sales was 29.9% in the second quarter of both 1997
and 1996. These expense levels are expected to increase as a percentage of
net sales, for the balance of the year, as the Company significantly increases
its advertising expenditures in the second half of this year.
FOOTWEAR
Net sales of the Company's footwear segment in the second quarter were $86.3
million in 1997 and $90.6 million last year, a decrease of 4.7%. The decrease
was due principally to weakness in seasonal merchandise, principally sandals,
in the Company's wholesale branded business.
Gross margin on footwear sales before the non-recurring charge was 41.2% in
the second quarter of 1997 compared with 38.5% in last year's second quarter.
The improvement in gross margin began in the second half of 1996 as the impact
of the Company's product upgrades and brand development began to take hold.
These initiatives have enabled the Company to command higher prices and take
fewer markdowns resulting in increased gross margin in the Company's wholesale
business and in its outlet stores. In addition, the difficulties experienced
by Bass during the first half of last year in restructuring its Puerto Rico
manufacturing operations did not recur, thus adding to margin improvement.
Selling, general and administrative expenses, before the non-recurring charge,
as a percentage of footwear sales in the second quarter was 33.4% in 1997 and
29.5% in 1996. The increase is due primarily to additional brand investment
in design. As in apparel, these expense levels are expected to increase as a
percentage of net sales, for the balance of the year, as the Company
significantly increases its advertising expenditures in the second half of
this year.
-10-
<PAGE>
INTEREST EXPENSE
Interest expense in the second quarter was $5.3 million in 1997 compared with
$5.9 million last year. The decrease reflects lower average debt which
results from lower working capital levels, principally inventory.
INCOME TAXES
Income tax was estimated at a rate of 35.8% in the second quarter of 1997
compared with 30.2% in last year's second quarter. The tax rates reflect the
relationship of U.S. income taxed at normal rates versus tax exempted income
from operations in Puerto Rico.
CORPORATE EXPENSES
Corporate expenses in the second quarter were $2.5 million in 1997 compared
with $2.6 million in 1996.
Twenty-Six Weeks Ended August 3, 1997 Compared With Twenty-Six Weeks Ended
July 28, 1996
APPAREL
Net sales of the Company's apparel segment in the first half were $441.6
million in 1997, an increase of 4.3% from the prior year's $423.4 million.
Net sales of the Company's wholesale branded business increased 22% in the
current year's first half compared with last year's first half, which more
than offset the planned decrease in retail sales resulting from the Company's
strategic initiative to close outlet stores.
Gross margin on apparel sales before the non-recurring charge was 32.8% in the
first half of 1997 compared with 32.4% in last year's first half. In the
first half, virtually all of the Company's branded apparel businesses showed
gross margin improvement in 1997 compared with last year as product upgrades
and brand development began to take hold. These initiatives have enabled the
Company to command higher prices and take fewer markdowns. The only exception
was in sales of golf apparel to pro shops, where significantly increased
competition served to weaken gross margin percentages. The Company has moved
to strengthen its competitive position in this channel with new and upgraded
product and with an aggressive marketing campaign.
Selling, general and administrative expenses, before the non-recurring charge,
as a percentage of apparel sales in the first half was 31.7% in 1997 and 32.1%
in 1996. These expense levels are expected to increase as a percentage of net
sales, for the balance of the year, as the Company significantly increases its
advertising expenditures in the second half of this year.
FOOTWEAR
Net sales of the Company's footwear segment in the first half were $157.8
million in 1997, compared with $164.0 million last year. The reduction in net
sales was due to the planned decrease in retail sales resulting from the
Company's strategic initiative to close outlet stores and to weakness in
seasonal merchandise, principally sandals, at the Company's wholesale branded
business.
-11-
<PAGE>
Gross margin on footwear sales before the non-recurring charge was 40.4% in
the first half of 1997 compared with 37.3% in last year's first half. The
improvement in gross margin began in the second half of 1996 as the impact of
the Company's product upgrades and brand development began to take hold.
These initiatives have enabled the Company to command higher prices and take
fewer markdowns resulting in increased gross margin in the Company's wholesale
business and in its outlet stores. In addition, the difficulties experienced
by Bass during the first half of last year in restructuring its Puerto Rico
manufacturing operations did not recur, thus adding to margin improvement.
Selling, general and administrative expenses, before the non-recurring charge,
as a percentage of footwear sales in the first half was 34.4% in 1997 and
31.0% in 1996. The increase is due principally to additional brand investment
in design. As in apparel, these expense levels are expected to increase as a
percentage of net sales, for the balance of the year, as the Company
significantly increases its advertising expenditures in the second half of
this year.
INTEREST EXPENSE
Interest expense in the first half was $10.3 million in 1997 compared with
$12.1 million last year. The decrease reflects lower average debt which
results from lower working capitals levels, principally inventory.
INCOME TAXES
Income tax was estimated at a rate of 35.3% in 1997 compared with last year's
rate of 30.5%. The tax rates reflect the relationship of U.S. income taxed at
normal rates versus tax exempted income from operations in Puerto Rico.
CORPORATE EXPENSES
Corporate expenses in the first half were $5.6 million in 1997 compared with
$5.8 million in 1996.
FACILITY AND STORE CLOSING AND RESTRUCTURING AND OTHER EXPENSES
On July 31, 1997, the Company announced that it would take a series of actions
to accelerate the execution of its ongoing strategy to build its core brands.
Included in these actions are the closing of approximately 150 additional
outlet stores, repositioning the Gant brand in the United States to be
consistent with its highly successful positioning in Europe and Asia, exiting
the sweater manufacturing business and restructuring warehousing and
distribution facilities as well as other logistical and administrative areas
in order to reduce costs and improve efficiencies. As a result, the Company
recorded a non-recurring pre-tax charge of $57 million ($36.8 million after
tax or $1.36 per share) in the second quarter of 1997.
-12-
<PAGE>
SEASONALITY
The Company's business is seasonal, with higher sales and income during its
third and fourth quarters, which coincide with the Company's two peak retail
selling seasons: the first running from the start of the back to school and
fall selling seasons beginning in August 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 strength of the third 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 combines with
retail seasonality to make 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.
Net cash used by operations in the first half totalled $64.7 million in 1997
and $11.5 million last year. This increase is related to later than usual
shipments in the latter part of 1995 which, in turn, created a significant
increase in collections in the first half of 1996. This pattern did not
repeat itself in 1996 and, as a result, collections in the first half of 1997
were significantly less than in the prior year's first half. Additionally,
inventory growth in last year's first half was moderate compared to more
seasonal trends, while this year's increase reflects more normalized growth.
At the end of the current year's first half, inventory levels were slightly
below last year's first half.
Capital spending in the first half was $6.8 million in 1997 compared with
$10.6 million last year. The Company anticipates overall capital spending
levels for 1997 to be flat compared with 1996 levels.
The Company has a credit agreement which includes a revolving credit facility
under which the Company may, at its option, borrow and repay amounts within
certain limits. The credit agreement also includes a letter of credit
facility. The total amount available to the Company under each of the
revolving credit and the letter of credit facilities is $250 million provided,
however, that the aggregate maximum amount outstanding at any time under both
facilities is $400 million. The Company believes that its borrowing capacity
under these facilities is adequate for its 1997 peak seasonal needs. Although
total debt was $23.1 million less than a year ago ($296.6 million vs. $319.7
million), the ratio of total debt to total capital was about flat (54.3% to
54.4%). This was due principally to the non-recurring charge taken in the
second quarter of the current year. The cash impact of this charge will
result in a net outflow of funds in the current year. This outflow should be
offset next year by the positive cash flow benefits derived from the
restructuring initiatives.
-13-
<PAGE>
* * *
*******************************************************************************
* *
* SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT *
* OF 1995 *
* *
* Forward-looking statements in this Form 10-Q report, including without *
* limitation statements relating to the Company's plans, strategies, *
* objectives, expectations and intentions, are made pursuant to the safe *
* harbor provisions of the Private Securities Litigation Reform Act of 1995. *
* Investors are cautioned that such forward-looking statements involve risks *
* and uncertainties, including without limitation the following: (i) the *
* Company's plans, strategies, objectives, expectations and intentions are *
* subject to change at any time at the discretion of the Company; (ii) the *
* levels of sales of the Company's apparel and footwear products, both to its*
* wholesale customers and in its retail stores, and the extent of discounts *
* and promotional pricing in which the Company is required to engage; (iii) *
* the Company's plans and results of operations will be affected by the *
* Company's ability to manage its growth and inventory; and (iv) other risks *
* and uncertainties indicated from time to time in the Company's filings *
* with the Securities and Exchange Commission. *
* *
******************************************************************************
-14-
<PAGE>
Part II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
The annual stockholders' meeting was held on June 17, 1997. There were
present in person or by proxy, holders of 24,650,080 shares of Common Stock or
91% of all votes eligible for the meeting.
The following directors were elected to serve for a term of one year:
For Vote Withheld
Edward H. Cohen 23,777,415 872,665
Joseph B. Fuller 22,721,256 1,928,824
Joel H. Goldberg 23,761,414 888,666
Marc Grosman 23,640,498 1,009,582
Dennis F. Hightower 23,639,820 1,010,260
Bruce J. Klatsky 23,774,684 875,396
Maria Elena Lagomasino 23,772,047 878,033
Harry N.S. Lee 23,767,440 882,640
Bruce Maggin 23,767,440 882,640
Sylvia M. Rhone 23,776,675 873,405
Peter J. Solomon 23,635,710 1,014,370
Irwin W. Winter 23,777,425 872,655
Ratification of Like-Value Exchange of Certain Director's Stock Options was
approved with a vote of 21,569,237 For and 2,846,414 Against.
The 1997 Stock Option Plan, which replaces the 1987 Stock Option Plan, which
expired pursuant to its term on April 1, 1997, was adopted with a vote of
19,938,481 For and 1,884,482 Against.
Ernst & Young LLP were appointed to serve as the Company's independent
auditors until the next stockholders' meeting. The vote was 24,465,585 For
and 65,830 Against.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
3.1 Certificate of Incorporation (incorporated by reference to Exhibit
5 to the Company's Annual Report on Form 10-K for the fiscal year
ended January 29, 1977).
3.2 Amendment to Certificate of Incorporation, filed June 27, 1984
(incorporated by reference to Exhibit 3B to the Company's Annual
Report on Form 10-K for the fiscal year ended February 3, 1985).
3.3 Certificate of Designation of Series A Cumulative Participating
Preferred Stock, filed June 10, 1986 (incorporated by reference to
Exhibit A of the document filed as Exhibit 3 to the Company's
Quarterly Report as filed on Form 10-Q for the period ended May 4,
1986).
-15-
<PAGE>
3.4 Amendment to Certificate of Incorporation, filed June 2, 1987
(incorporated by reference to Exhibit 3(c) to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1988).
3.5 Amendment to Certificate of Incorporation, filed June 1, 1993
(incorporated by reference to Exhibit 3.5 to the Company's Annual
Report on Form 10-K for the fiscal year ended January 30, 1994).
3.6 Amendment to Certificate of Incorporation, filed June 20, 1996
(incorporated by reference to Exhibit 3.1 to the Company's Report
on Form 10-Q for the period ended July 28, 1996).
3.7 By-Laws of Phillips-Van Heusen Corporation, as amended through
June 18, 1996 (incorporated by reference to Exhibit 3.2 to the
Company's Report on Form 10-Q for the period ended July 28, 1996).
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 Notice of extension of the Rights Agreement, dated June 5, 1996,
from Phillips-Van Heusen Corporation to The Bank of New York
(incorporated by reference to Exhibit 4.13 to the Company's report
on Form 10-Q for the period ended April 28, 1996).
4.6 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).
4.7 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).
4.8 Second Amendment, dated as of July 17, 1995, to the Credit
Agreement dated as of December 16, 1993 (incorporated by reference
to Exhibit 4.7 to the Company's report on Form 10-Q for the period
ending October 29, 1995).
-16-
<PAGE>
4.9 Third Amendment, dated as of September 27, 1995, to the Credit
Agreement dated as of December 16, 1993 (incorporated by reference
to Exhibit 4.8 to the Company's report on Form 10-Q for the period
ending October 29, 1995).
4.10 Fourth Amendment, dated as of September 28, 1995, to the Credit
Agreement dated as of December 16, 1993 (incorporated by reference
to Exhibit 4.9 to the Company's report on Form 10-Q for the period
ending October 29, 1995).
4.11 Fifth Amendment, dated as of April 1, 1996, to the Credit Agreement
dated as of December 16, 1993 (incorporated by reference to Exhibit
4.10 to the Company's Annual Report on Form 10-K for the fiscal
year ended January 28, 1996).
4.12 Sixth Amendment, dated as of July 3, 1997, to the Credit Agreement
dated as of December 16, 1993.
4.13 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).
4.14 First Amendment Agreement, dated as of June 24, 1996, to the Note
Agreement, dated as of October 1, 1992 (incorporated by reference
to Exhibit 4.14 to the Company's report on Form 10-Q for the period
ended July 28, 1996).
4.15 Second Amendment Agreement, dated as of July 15, 1997, to the Note
Agreement, dated as of October 1, 1992.
4.16 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 April 29,
1997 (incorporated by reference to Exhibit 10.1 to the Company's
report on Form 10-Q for the period ended May 4, 1997).
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 Amendment to 1973 Employees' Stock Option Plan, effective as of
April 29, 1997 (incorporated by reference to Exhibit 10.12 to the
Company's report on Form 10-Q for the period ended May 4, 1997).
-17-
<PAGE>
10.5 Phillips-Van Heusen Corporation Special Severance Benefit Plan, as
amended as of April 16, 1996 (incorporated by reference to Exhibit
10.4 to the Company's Annual Report on Form 10-K for the fiscal
year ended January 28, 1996).
10.6 Phillips-Van Heusen Corporation Capital Accumulation Plan
(incorporated by reference to the Company's Report on Form 8-K
filed on January 16, 1987).
10.7 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).
10.8 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).
10.9 Form of Agreement amending Phillips-Van Heusen Corporation Capital
Accumulation Plan with respect to individual participants
(incorporated by reference to Exhibit 10.8 to the Company's report
on Form 10-Q for the period ending October 29, 1995).
10.10 Agreement amending Phillips-Van Heusen Corporation Capital
Accumulation Plan with respect to Bruce J. Klatsky (incorporated by
reference to Exhibit 10.13 to the Company's report on Form 10-Q for
the period ended May 4, 1997).
10.11 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).
10.12 Phillips-Van Heusen Corporation Supplemental Savings Plan,
effective as of January 1, 1991 and amended and restated as of
April 29, 1997 (incorporated by reference to Exhibit 10.10 to the
Company's report on Form 10-Q for the period ended May 4, 1997).
10.13 Non-Incentive Stock Option Agreement, dated as of December 3, 1993,
between the Company and Bruce J. Klatsky (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 Phillips-Van Heusen Corporation 1997 Stock Option Plan, effective
as of April 29, 1997.
15. Acknowledgement of Independent Accountants.
27. Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter ended August 3, 1997.
No reports have been filed on Form 8-K during the quarter covered by this
report.
-18-
<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
September 16, 1997 /s/ Emanuel Chirico
Emanuel Chirico, Controller
Vice President and
Chief Accounting Officer
-19-
<PAGE>
Exhibit 15
August 18, 1997
Stockholders and Board of Directors
Phillips-Van Heusen Corporation
We are aware of the incorporation by reference in
(i) Post-Effective Amendment No. 2 to the Registration Statement (Form
S-8, No. 2-73803), which relates to the Phillips-Van Heusen Corporation
Employee Savings and Retirement Plan,
(ii) Registration Statement (Form S-8, No. 33-50841) and Registration
Statement (Form S-8, No. 33-59602), each of which relate to the
Phillips-Van Heusen Corporation Associates Investment Plan for Residents
of the Commonwealth of Puerto Rico,
(iii) Registration Statement (Form S-8, No. 33-59101), which relates to
the Voluntary Investment Plan of Phillips-Van Heusen Corporation
(Crystal Brands Division),
(iv) Post-Effective Amendment No. 4 to Registration Statement (Form S-8,
No. 2-72959), Post Effective Amendment No. 6 to Registration Statement
(Form S-8, No. 2-64564), and Post Effective Amendment No. 13 to
Registration Statement (Form S-8, No. 2-47910), each of which relate to
the 1973 Employee's Stock Option Plan of Phillips-Van Heusen
Corporation, and
(v) Registration Statement (Form S-8, No. 33-38698), Post-Effective
Amendment No. 1 to Registration Statement (Form S-8, No. 33-24057) and
Registration Statement (Form S-8, No. 33-60793), each of which relate to
the Phillips-Van Heusen Corporation 1987 Stock Option Plan,
of our reports dated August 18, 1997 and May 22, 1997 relating to the
unaudited condensed consolidated interim financial statements of Phillips-Van
Heusen Corporation that are included in its Forms 10-Q for the thirteen week
periods ended August 3, 1997 and May 4, 1997.
Pursuant to Rule 436(c) of the Securities Act of 1933, our reports are 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
-20-
SIXTH AMENDMENT
SIXTH AMENDMENT, dated as of July 3, 1997 (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 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
appropriate alphabetical order:
"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
<PAGE>
obligations), net of interest income theretofore
deducted from earnings in computing Consolidated Net
Income for such period; provided, however, that EBIT
shall be determined without giving effect to the
Borrower's $55,000,000 pre-tax restructuring charge
reflected in its financial statements for the fiscal
quarter ending on or about July 31, 1997, or any
subsequent reversal of all or part of such restructuring
charge.
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.
* * * * *
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<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
By
Title:
CITIBANK, N.A.
By
Title:
THE BANK OF NEW YORK
By
Title:
-3-
<PAGE>
CHEMICAL BANK
By
Title:
THE FIRST NATIONAL BANK OF BOSTON
By
Title:
CIBC, INC.
By
Title:
UNION BANK
By
Title:
-4-
PHILLIPS-VAN HEUSEN CORPORATION
___________________________________
SECOND AMENDMENT AGREEMENT
Dated as of July 15, 1997
to
NOTE AGREEMENTS
Dated as of October 1, 1992
Re: $55,000,000 7.85% Series A Senior Notes
Due November 1, 2002
and
$8,000,000 7.02% Series B Senior Notes
Due November 1, 1999
and
$6,000,000 7.75% Series C Senior Notes
Due November 1, 2002
<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
1290 Avenue of the Americas-11th Floor
New York, New York 10104
SECOND AMENDMENT AGREEMENT
TO
NOTE AGREEMENTS
DATED AS OF OCTOBER 1, 1992
Re: $55,000,000 7.85% Series A Senior Notes
Due November 1, 2002
and
$8,000,000 7.02% Series B Senior Notes
Due November 1, 1999
and
$6,000,000 7.75% Series C Senior Notes
Due November 1, 2002
Dated as of
July 15, 1997
To the Holders as
defined hereinbelow
Ladies and Gentlemen:
Reference is made to the separate Note Agreements each dated
as of October 1, 1992 (the "Outstanding Note Agreements") between
Phillips-Van Heusen Corporation, a Delaware corporation (the
"Company"), and each of the Purchasers named on Schedule I thereto
(the "Purchasers") as amended pursuant to that certain First
Amendment Agreement dated as of June 24, 1996, pursuant to which
the Company issued and sold (i) $55,000,000 original aggregate
principal amount of its 7.85% Series A Senior Notes due November 1,
2002 (the "Series A Notes"), (ii) $8,000,000 original aggregate
principal amount of its 7.02% Series B Senior Notes due November 1,
1999 (the "Series B Notes") and (iii) $6,000,000 original aggregate
principal amount of its 7.75% Series C Senior Notes due November 1,
2002 (the "Series C Notes"). The Purchasers or transferees of such
Purchasers are hereinafter collectively referred to as the
"Holders." The Series A Notes, Series B Notes and Series C Notes
are hereinafter collectively referred to as the "Outstanding
Notes."
The Company and the Holders now desire to amend the
Outstanding Note Agreements in the respects, but only in the
respects, hereinafter set forth.
<PAGE>
Now, therefore, the Company and the Holders, in consideration
of good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged, do hereby agree as follows:
SECTION 1. AMENDMENTS TO THE OUTSTANDING NOTE AGREEMENTS.
Section 1.1. Section 8.1 of the Outstanding Note Agreements
shall be and is hereby amended as follows:
The definition of "Net Income Available for Interest
Charges" is hereby amended to read in its entirety as follows:
"Net Income Available for Interest Charges" for any
period shall mean the sum of (i) Consolidated Net Income during
such period plus (to the extent deducted in determining
Consolidated Net Income for such period), (ii) all provisions for
any Federal, state or other income taxes made by the Company and
its Restricted Subsidiaries during such period, (iii) the one-time
restructuring reserve of $55,000,000 taken in the second quarter of
the fiscal year ended February 1, 1998 and (iv) Interest Charges of
the Company and its Restricted Subsidiaries during such period.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Section 2.1. To induce the Holders to execute and deliver this
Second Amendment Agreement (which representations shall survive the
execution and delivery of this Second Amendment Agreement), the
Company represents and warrants to the Holders, as true and correct
as of the date of execution and delivery of this Second Amendment
Agreement, that
(a) the Company and each Restricted Subsidiary is a
corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of
incorporation;
(b) this Second Amendment Agreement has been duly
authorized, executed and delivered by it and this Second Amendment
Agreement constitutes the legal, valid and binding obligation,
contract and agreement of the Company enforceable against it in
accordance with its terms;
(c) each of the Outstanding Note Agreements and the
Outstanding Notes, as amended by this Second Amendment Agreement,
constitute the legal, valid and binding obligations, contracts and
agreements of the Company enforceable against it in accordance with
their respective terms;
(d) the execution, delivery and performance by the
Company of this Second Amendment Agreement (i) has been duly
-2-
<PAGE>
authorized by all requisite corporate action and, if required,
shareholder action, (ii) does not require the consent or approval
of any governmental or regulatory body or agency, and (iii) will
not (A) violate or cause a default under (1) any provision of law,
statute, rule or regulation or its certificate of incorporation or
bylaws, (2) any order of any court or any rule, regulation or order
of any other agency or government binding upon it, or (3) any
provision of any material indenture, agreement or other instrument
to which it is a party or by which its properties or assets are or
may be bound, or (B) result in a breach or constitute (alone or
with due notice or lapse of time or both) a default under any
indenture, agreement or other instrument referred to in clause
(iii)(A)(3) of this Sec. 2.1(d);
(e) as of the date hereof after giving effect to this
Second Amendment Agreement, no Default or Event of Default has
occurred which is continuing; and
(f) no consents or approvals are necessary from any
other holder of any Indebtedness of the Company to give effect to
this Second Amendment Agreement.
SECTION 3. CONDITIONS PRECEDENT.
Section 3.1. This Second Amendment Agreement shall not become
effective until, and shall become effective when, each and every
one of the following conditions shall have been satisfied:
(a) executed counterparts of this Second Amendment
Agreement, duly executed by the Company and the holders of at least
66-2/3% of the outstanding principal amount of the Outstanding
Notes, shall have been delivered to the Holders;
(b) the representations and warranties of the Company
set forth in Sec. 2 hereof are true and correct as of the date of
execution and delivery of this Second Amendment Agreement; and
(c) the Company shall have paid the reasonable fees and
expenses of Chapman and Cutler, counsel to the Holders, in
connection with the negotiation, preparation, approval, execution
and delivery of this Second Amendment Agreement as required by Sec.
9.4 of the Outstanding Note Agreements.
Upon receipt of all of the foregoing, this Second Amendment
Agreement shall become effective.
SECTION 4. MISCELLANEOUS.
Section 4.1. This Second Amendment Agreement shall be
construed in connection with and as part of each of the Outstanding
Note Agreements, and all terms, conditions and covenants contained
in each of the Outstanding Note Agreements shall be and remain in
full force and effect.
-3-
<PAGE>
Section 4.2. Any and all notices, requests, certificates and
other instruments executed and delivered after the execution and
delivery of this Second Amendment Agreement may refer to the
Outstanding Note Agreements without making specific reference to
this Second Amendment Agreement but nevertheless all such
references shall include this Second Amendment Agreement unless the
context otherwise requires.
Section 4.3. The descriptive headings of the various Sections
or parts of this Second Amendment Agreement are for convenience
only and shall not affect the meaning or construction of any of the
provisions hereof.
Section 4.4. This Second Amendment Agreement shall be governed
by and construed in accordance with New York law.
Section 4.5. This Second Amendment Agreement shall be binding
upon the Company, the Holders and their respective successors and
assigns.
-4-
<PAGE>
The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth, and
this Second Amendment Agreement to each of the Outstanding Note
Agreements may be executed in any number of counterparts, each
executed counterpart constituting an original, but all together
only one agreement.
PHILLIPS-VAN HEUSEN CORPORATION
By
Its
-5-
<PAGE>
The execution by each of the following Holders shall
constitute its acceptance of the Second Amendment Agreement and its
confirmation that it holds the Outstanding Notes set opposite its
name as of the date of its execution and delivery hereof.
Accepted as of July 15, 1997:
OUTSTANDING NOTES
THE EQUITABLE LIFE ASSURANCE SOCIETY $8,571,428.57 Series A Notes
OF THE UNITED STATES $6,857,142.86 Series A Notes
$6,000,000 Series B Notes
$6,000,000 Series C Notes
By________________________________
Its
UNUM LIFE INSURANCE COMPANY OF $17,142,857.15 Series A Notes
AMERICA
By________________________________
Its
NATIONWIDE LIFE INSURANCE $6,857,142.86 Series A Notes
COMPANY
By________________________________
Its
-6-
<PAGE>
EMPLOYERS LIFE INSURANCE COMPANY $1,714,285.71 Series A Notes
OF WAUSAU
By________________________________
Its
LUTHERAN BROTHERHOOD $6,000,000 Series A Notes
By________________________________
Its
-7-
PHILLIPS-VAN HEUSEN CORPORATION
1997 STOCK OPTION PLAN
1. Purpose.
The purposes of the 1997 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.
<PAGE>
2. Effective Date of the Plan.
The Plan became effective on April 29, 1997, subject to
ratification by the stockholders of the Company.
3. Stock Subject to Plan.
2,500,000 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. Subject to
the express provisions of the Plan, the Committee shall have
complete authority, in its 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),
2
<PAGE>
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
individuals, 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
Board both or all of whom shall be "non-employee directors"
within the meaning of Rule 16b-3(b)(3) 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
3
<PAGE>
contemplation of Section 162(m)(4)(C)(i) of the Code. 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 Com-
mittee. A majority of the members of the Committee shall con-
stitute 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.
6. Eligibility.
An Option may be granted only to a key employee of the
Company or a Subsidiary or to a director of the Company or a
Subsidiary who is not an employee of the Company or a Subsidiary.
4
<PAGE>
7. Option Prices.
A. The initial per share option price of any 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 or her, 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. 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
5
<PAGE>
which is an incentive stock option is granted to him or her, 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
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.
10. Exercise of Options.
A. Except as otherwise determined by the Committee at the
time of grant, a Participant may not exercise an Option during
the period commencing on the date of the granting of such Option
to him or her and ending on the day next preceding the third
anniversary of such date. Except as otherwise determined by the
Committee at the time of grant, a Participant may (i) during the
period commencing on the third anniversary of the date of the
granting of an Option to him or her 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,
6
<PAGE>
(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 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 no portion of such payment
may be made by delivering shares of the Common Stock acquired
upon the exercise of an Option if such shares shall not have been
held by the Participant for at least six months; provided,
further, however, that, subject to the requirements of Regulation
T (as in effect from time to time) promulgated under the Exchange
7
<PAGE>
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.
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 or nominated for election by the stockholders 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,
8
<PAGE>
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
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
9
<PAGE>
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.
F. Notwithstanding any other provision of the Plan to the
contrary, including, but not limited to, the provisions of
paragraph D of Section 10, if any Participant shall have effected
a Hardship Withdrawal from a 401(k) Plan maintained by the
Company and/or one or more of the Subsidiaries, then, during the
period of one year commencing on the date of such Hardship
Withdrawal, such Participant may not exercise any Option using
cash. For the purpose of this paragraph F, a "Hardship
Withdrawal" shall mean a distribution to a Participant provided
for in Reg. Section 1.401(k)-1(d)(1)(ii) promulgated under Section
401(k)(2)(B)(i)(IV) of the Code or an analogous provision of the
Puerto Rico Internal Revenue Code of 1994, as amended (the
"Puerto Rico Code") and the regulations promulgated thereunder,
and a "401(k) Plan" shall mean a plan which is a "qualified plan"
within the contemplation of Section 401(a) of the Code or an
analogous provision of the Puerto Rico Code which contains a
"qualified cash or deferred arrangement" within the contemplation
10
<PAGE>
of Section 401(k)(2) of the Code or an analogous provision of the
Puerto Rico Code.
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 or her may be
exercised only by him or her.
12. Termination of Employment.
In the event a Participant leaves the employ, or ceases to
serve as a director, of the Company and the Subsidiaries, whether
voluntarily or otherwise but other than by reason of his or her
death or retirement, each Option theretofore granted to him or
her which shall not have theretofore expired or otherwise been
cancelled shall, to the extent exercisable on the date of such
termination of employment or service and 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 or cessation of service 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 or her which shall not have
theretofore expired or otherwise been cancelled shall, to the
extent not theretofore exercised, terminate forthwith. In the
11
<PAGE>
event a Participant leaves the employ, or ceases to serve as a
director, of the Company and the Subsidiaries by reason of his or
her retirement, each Option theretofore granted to him or her
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 years after the date
of such retirement and the date of termination specified in such
Option. In the event a Participant's employment, or service as a
director, with the Company and the Subsidiaries terminates by
reason of his or her death, each Option theretofore granted to
him or her 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 or her
estate and the date of termination specified in such Option. For
purposes of the foregoing, (a) 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
12
<PAGE>
Participant incapable of performing his or her material duties to
the satisfaction of the Company and/or the Subsidiaries and
(b) the term "retirement" shall mean (i) the termination of a
Participant's employment with the Company and all of the
Subsidiaries (A) other than for cause or by reason of his or her
death and (B) on or after the earlier to occur of (I) the first
day of the calendar month in which his or her 65th birthday shall
occur and (II) the date on which he or she shall have both
attained his or her 55th birthday and completed 10 years of
employment or service as a director with the Company and/or the
Subsidiaries or (ii) the termination of a Participant's service
as a director with the Company and all of the Subsidiaries (A)
other than for cause or by reason of his or her death and (B) on
or after the first day of the calendar month in which his or her
65th birthday shall occur.
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 paragraph B of
Section 9 hereof shall be adjusted by adding to each share the
number of shares which would be distributable thereon if such
13
<PAGE>
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 paragraph B of Section 9 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, 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
14
<PAGE>
an Option and the number or kind of shares referred to in
paragraph B of Section 9 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 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
15
<PAGE>
Participant will, as a condition of the Company's obligation to
issue such shares, be required to give a representation in
writing that he or she is acquiring such shares for his or her
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 or her legal
representatives, legatees or distributees shall be or be deemed
to be the holder 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
16
<PAGE>
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. 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.
18. 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 class of persons
eligible to participate in the Plan, or change the manner of
17
<PAGE>
determining the option prices. 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. The Committee 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, amend any
outstanding Option to reduce the option price, or cancel any
outstanding Option and contemporaneously award a new Option to
the same optionee for substantially the same number of shares at
a lower option price.
19. Expiration and Termination of the Plan.
The Plan shall terminate on April 28, 2007 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.
20. 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
18
<PAGE>
to receive, in addition to any other Option which he or she may
receive pursuant to Section 7 hereof, an annual Option. Except
as otherwise provided in this Section 20, 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 4,000 shares of the
Common Stock.
II. The initial per share option price of each Option
granted to an Outside Director shall under this Section 20 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. The provisions of this Section 20 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.
19
<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 AUGUST 3, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-01-1998
<PERIOD-END> AUG-03-1997
<CASH> $ 14,474
<SECURITIES> 0
<RECEIVABLES> 86,617
<ALLOWANCES> (3,712)
<INVENTORY> 322,166
<CURRENT-ASSETS> 449,023
<PP&E> 130,208<F1>
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 747,053
<CURRENT-LIABILITIES> 210,193
<BONDS> 209,401
0
0
<COMMON> 27,088
<OTHER-SE> 222,463
<TOTAL-LIABILITY-AND-EQUITY> 747,053
<SALES> 599,383
<TOTAL-REVENUES> 599,383
<CGS> 406,227
<TOTAL-COSTS> 406,227
<OTHER-EXPENSES> 241,355
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 10,276
<INCOME-PRETAX> (58,475)
<INCOME-TAX> 20,650
<INCOME-CONTINUING> (37,825)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,825)
<EPS-PRIMARY> (1.40)
<EPS-DILUTED> (1.40)
<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>
