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 May 4, 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 May 30, 1997: 27,065,489
shares.<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
INDEX
PART I -- FINANCIAL INFORMATION
Independent Accountants Review Report................................ 1
Condensed Consolidated Balance Sheets as of May 4, 1997 and
February 2, 1997...................................................... 2
Condensed Consolidated Statements of Operations for the thirteen weeks
ended May 4, 1997 and April 28, 1996.................................. 3
Condensed Consolidated Statements of Cash Flows for the thirteen
weeks ended May 4, 1997 and April 28, 1996............................ 4
Notes to Condensed Consolidated Financial Statements.................. 5-6
Management's Discussion and Analysis of Results of Operations
and Financial Condition............................................... 7-9
PART II -- OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K............................. 10-13
Signatures............................................................ 14
Exhibit--Acknowledgment of Independent Accountants.................... 15
Exhibit--Financial Data Schedule...................................... 16
<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 May 4, 1997, and the related condensed
consolidated statements of operations and cash flows for the thirteen week
periods ended May 4, 1997 and April 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 operations,
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
May 22, 1997
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<PAGE>
Phillips-Van Heusen Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
UNAUDITED AUDITED
May 4, February 2,
1997 1997
<S> <C> <C>
ASSETS
Current Assets:
Cash, including cash equivalents of $6,451 and $1,861 $ 16,220 $ 11,590
Trade receivables, less allowances of $3,607 and $3,401 98,746 91,806
Inventories 267,112 237,422
Other, including deferred taxes of $4,300 22,346 22,140
Total Current Assets 404,424 362,958
Property, Plant and Equipment 134,082 137,060
Goodwill 119,516 120,324
Other Assets, including deferred taxes of $16,617 39,813 37,094
$697,835 $657,436
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 69,000 $ 20,000
Accounts payable 34,811 36,355
Accrued expenses 53,505 55,754
Current portion of long-term debt 10,157 10,157
Total Current Liabilities 167,473 122,266
Long-Term Debt, less current portion 189,399 189,398
Other Liabilities 57,270 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 27,063,489
and 27,045,705 27,063 27,046
Additional Capital 116,384 116,296
Retained Earnings 140,246 146,816
Total Stockholders' Equity 283,693 290,158
$697,835 $657,436
</TABLE>
See accompanying notes.
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<PAGE>
Phillips-Van Heusen Corporation
Condensed Consolidated Statements of Operations
Unaudited
(In thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
May 4, April 28,
1997 1996
<S> <C> <C>
Net sales $285,925 $273,660
Cost of goods sold 186,957 180,563
Gross margin 98,968 93,097
Selling, general and administrative expenses 100,654 96,358
Loss before interest and taxes (1,686) (3,261)
Interest expense, net 4,932 6,153
Loss before taxes (6,618) (9,414)
Income tax benefit 2,078 2,860
Net loss $ (4,540) $ (6,554)
Net loss per share $ (0.17) $ (0.24)
Average shares outstanding 27,058 26,984
Cash dividends per share $ 0.0375 $ 0.0375
See accompanying notes.
</TABLE>
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<PAGE>
Phillips-Van Heusen Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
(In thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
May 4, April 28,
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net Loss $ (4,540) $ (6,554)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 6,982 7,802
Amortization of contributions from landlords (1,382) (1,617)
Equity income in Pyramid Sportswear (350) (313)
Changes in operating assets and liabilities:
Receivables (5,398) 19,437
Inventories (29,690) (23,739)
Accounts payable and accrued expenses (3,869) (15,545)
Other-net (1,332) (1,542)
Net Cash Used By Operating Activities (39,579) (22,071)
INVESTING ACTIVITIES:
Property, plant and equipment acquired (3,354) (3,805)
Other-net 487 (1,724)
Net Cash Used By Investing Activities (2,867) (5,529)
FINANCING ACTIVITIES:
Proceeds from revolving line of credit 49,001 47,577
Payments on revolving line of credit
and long-term borrowings - (10,165)
Exercise of stock options 105 56
Cash dividends (2,030) (2,027)
Net Cash Provided By Financing Activities 47,076 35,441
Increase In Cash 4,630 7,841
Cash at beginning of period 11,590 17,533
Cash at end of period $ 16,220 $ 25,374
See accompanying notes.
</TABLE>
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<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
GENERAL
The accompanying unaudited condensed 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 February 2, 1997.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from the estimates.
The results of operations for the thirteen weeks ended May 4, 1997 and April
28, 1996 are not necessarily indicative of those for a full fiscal year due,
in part, to 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.
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 thirteen weeks ended April 28, 1996 to present
them on a basis consistent with the thirteen weeks ended May 4, 1997.
INVENTORIES
Inventories are summarized as follows:
May 4, February 2,
1997 1997
Raw materials $ 18,847 $ 16,670
Work in process 15,884 13,208
Finished goods 232,381 207,544
Total $267,112 $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 approximately $13,000
higher than reported at May 4, 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 Company.
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, women's and
children's apparel to traditional wholesale accounts 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 traditional wholesale accounts 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
May 4, April 28,
1997 1996
Net sales-apparel $214,425 $200,198
Net sales-footwear 71,500 73,462
Total net sales $285,925 $273,660
Operating loss-apparel $ (1,379) $ (2,306)
Operating income-footwear 2,809 2,215
Total operating income (loss) 1,430 (91)
Corporate expenses (3,116) (3,170)
Interest expense, net (4,932) (6,153)
Loss before taxes $ (6,618) $ (9,414)
-6-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
Thirteen Weeks Ended May 4, 1997 Compared to Thirteen Weeks Ended
April 28, 1996
APPAREL
Net sales of the Company's apparel business in the first quarter were $214.4
million in 1997 and $200.2 million last year, an increase of 7.1%. The sales
improvement results from increases in the Company's wholesale branded
businesses, particularly Dress Shirts and Izod, which more than offset the
planned decrease in retail sales resulting from the Company's ongoing
strategic program of contracting the retail component of its business by
closing its least productive stores.
Gross margin on apparel sales in the first quarter was 32.9% in 1997 compared
with 33.4% in the prior year. The Company's branded businesses had margin
increases continuing the trend which began in the second half of 1996 as the
impact of the Company's strategic initiatives began to take hold. However,
these increases were more than offset by decreases at the Company's sweater
division and its golf pro shops business which experienced less demand for
their products and a resulting weakening in margins.
Selling, general and administrative expenses as a percentage of apparel net
sales in the first quarter decreased to 33.6% this year from 34.5% last year.
However, these expense levels are expected to increase as a percentage of
apparel net sales, in the short-term, as the Company plans to significantly
increase its marketing expenditures in the second half of this year.
FOOTWEAR
Net sales of the Company's footwear business in the first quarter were $71.5
million in 1997 and $73.5 million last year, a decrease of 2.7%. This was
caused by the planned decrease in retail sales resulting from the Company's
ongoing strategic program of contracting the retail component of its business
by closing its least productive stores which more than offset the increase in
the Company's wholesale business.
Gross margin on footwear sales in the first quarter was 39.6% in 1997 compared
with 35.8% in the prior year. The improvement in gross margin, which began in
the second half of 1996 as the impact of the Company's strategic initiatives
began to take hold, continued in the current quarter as evidenced by increased
gross margins 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.
-7-
<PAGE>
Selling, general and administrative expenses as a percentage of footwear net
sales in the first quarter were 35.6% this year compared with 32.7% last year.
While expense levels were essentially flat, the lower volume of sales caused
the percentage relationship to net sales to increase. As in apparel, these
expense levels are expected to increase as a percentage of net sales, in the
short-term, as the Company plans to significantly increase its marketing
expenditures in the second half of this year.
INTEREST EXPENSE
Interest expense in the first quarter was $4.9 million in 1997 compared with
$6.2 million last year. The decrease is directly attributable to lower
average borrowings which resulted from the positive cash flow generated in
1996, which enabled the Company to start 1997 with $81.7 million less debt
than a year ago.
INCOME TAXES
Income taxes were estimated at a rate of 31.4% for the current year compared
with last year's first quarter rate of 30.4%. 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 quarter were $3.1 million in 1997 compared
with $3.2 million last year.
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, and
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 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
year. During the third and fourth quarters, the Company's higher level of
sales tends to reduce its inventory and generate cash from operations.
-8-
<PAGE>
Net cash used by operations in the first quarter totalled $39.6 million in
1997 and $22.1 million last year. This increase is related principally to
later than usual shipments in the latter part of 1995 which, in turn, created
a significant increase in collections in the first quarter of 1996. This
pattern did not repeat itself in 1996 and, as a result, collections in the
first quarter of 1997 were significantly less then in the prior year's
quarter. The Company continues to aggressively manage its net assets,
particularly inventory which decreased $33.4 million or 11.1% at the end of
the current quarter compared with a year ago while sales were increasing 4.5%.
Capital spending in the first quarter was $3.4 million in 1997 as compared
with $3.8 million last year. The Company anticipates a modest increase in
overall capital spending levels for 1997 compared to 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. Total
debt as a percentage of total capital was 48.6% as of May 4, 1997 and 55.9% as
of April 28, 1996. This decrease is due principally to the Company's free
cash flow in 1996 which was used to repay debt resulting in $81.7 million less
debt at year end 1996 compared with year end 1995. This, in turn, results in
the Company having significantly reduced debt levels at the end of the current
year's first quarter compared with a year ago.
* * *
****************************************************************************
*
* 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. *
* *
****************************************************************************
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<PAGE>
Part II - OTHER INFORMATION
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).
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).
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<PAGE>
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).
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 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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<PAGE>
4.13 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).
4.14 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.
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 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).
10.5 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
(incorporated by reference to Exhibit 10.8 to the Company's report
on Form 10-Q for the period ending October 29, 1995).
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).
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<PAGE>
10.10 Phillips-Van Heusen Corporation Supplemental Savings Plan,
effective as of January 1, 1991 and amended and restated as of
April 29, 1997.
10.11 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).
10.12 Amendment to 1973 Employees' Stock Option Plan, effective as of
April 29, 1997.
10.13 Agreement amending Phillips-Van Heusen Corporation Capital
Accumulation Plan with respect to Bruce J. Klatsky.
15. Acknowledgement of Independent Accountants.
27. Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter ended May 4, 1997.
No reports have been filed on Form 8-K during the quarter covered by this
report.
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<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
June 9, 1997 /s/ Emanuel Chirico
Emanuel Chirico, Controller
Vice President and
Chief Accounting Officer
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<PAGE>
Exhibit 15
May 22, 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 report dated May 22, 1997 relating to the unaudited condensed
consolidated interim financial statements of Phillips-Van Heusen Corporation
which are included in its Form 10-Q for the thirteen week period ended
May 4, 1997.
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
-15-
PHILLIPS-VAN HEUSEN CORPORATION
1987 STOCK OPTION PLAN
(Including all amendments
through April 29, 1997)
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.<PAGE>
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, June 13, 1995 and April 29,
1997.
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
April 29, 1997) 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
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<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
Board both or all of whom shall be "disinterested persons" within
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<PAGE>
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.
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<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
"covered employee" within the meaning of Section 162(m)(3) of the
Code, the initial per share option price shall not be less than
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<PAGE>
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
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.
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<PAGE>
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
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
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<PAGE>
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 require-
ments 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.
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
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<PAGE>
"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,
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
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<PAGE>
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.
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
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<PAGE>
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 thereto-
fore 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,
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
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<PAGE>
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.
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
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<PAGE>
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,
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
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<PAGE>
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 Par-
ticipant 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
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<PAGE>
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
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
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<PAGE>
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
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
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<PAGE>
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.
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
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<PAGE>
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.
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
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<PAGE>
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
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.
19
PHILLIPS-VAN HEUSEN CORPORATION
SUPPLEMENTAL SAVINGS PLAN
(Effective as of January 1, 1991)
(As Amended and Restated Effective as of April 29, 1997)
WHEREAS,
1. Phillips-Van Heusen Corporation (the "Company") has
heretofore adopted a non-qualified plan of deferred compensation
in order to restore to the participants therein benefits which
have been lost under the Associates Investment Plan as a result
of the application of the provisions of sections 401(a)(17),
401(k), 401(m) and 415 of the Code and to provide deferred
compensation to those management or highly compensated employees
of the Company and its various Subsidiaries who were eligible to
participate.
2. The Company believes that the Supplemental Savings Plan
(the "Plan") (which was originally adopted as the "Supplemental
Defined Contribution 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.
<PAGE>
3. The Company has amended the Associates Investment Plan
effective as of April 29, 1997 to modify the change in control
provisions thereunder.
4. In conjunction with the amendment of the Associates
Investment Plan referred to in Recital 3, the Company desires to
amend and restate the Plan effective as of April 29, 1997.
5. Certain of the terms used herein which are defined (and
set forth in alphabetical order) in Article IX hereof shall have
the respective meanings ascribed thereto by the provisions of
said Article IX.
NOW, THEREFORE, the Company hereby amends and restates the
Plan effective as of April 29, 1997 so that it shall read
follows:
ARTICLE I
Participation
1.01 Each person who (a) is a management or highly com-
pensated employee of the Company and/or one or more of its Sub-
sidiaries within the meaning of sections 201(2), 301(a)(3) and
401(a)(1) of ERISA, (b) shall have satisfied the eligibility
requirements for the Associates Investment Plan and (c) whose
annual rate of Compensation shall exceed (i) prior to January 1,
1996, $100,000 and (ii) after December 31, 1995, the $150,000
figure set forth in section 401(a)(17) of the Code as adjusted as
provided therein, shall be eligible to become a Participant in
2
<PAGE>
the Plan; provided, however, that any person who shall have been
a Participant in the Plan on December 31, 1995 shall remain
eligible to participate in the Plan on January 1, 1996.
1.02 Subject to the provisions of Section 1.01, the
Committee shall, at any time and from time to time, select the
employees of the Company and its Subsidiaries who are to become
Participants and, as promptly as shall be practicable thereafter,
the Committee shall communicate such determination in writing to
each such Participant.
ARTICLE II
Contributions
2.01 Subject to such conditions as the Committee may at
anytime and from time to time determine, each Participant who
shall desire to make contributions to the Plan with respect to
any calendar year shall file with the Company his or her election
to contribute to the Plan with respect to such calendar year.
2.02 Each Contribution Election with respect to a calendar
year shall be irrevocable, shall not be subject to amendment and
shall be filed with the Company on or prior to the last day of
the preceding calendar year; provided, however, that (a) a
Contribution Election with respect to the period commencing on
the Amendment Date and ending on December 31, 1995 may be filed
with the Company on or prior to June 20, 1995, and (b) if a
person shall first become eligible to participate in the Plan
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<PAGE>
during a calendar year as a result of satisfying the eligibility
requirements for the Associates Investment Plan, such person may
file a Contribution Election with respect to the portion of such
calendar year commencing on the date on which he or she shall
have become eligible to participate in the Plan within thirty
(30) days of such date.
2.03 Each Contribution Election with respect to a calendar
year shall specify the amount which the Participant filing the
same desires to contribute to the Plan with respect to such
calendar year or the method of calculating such amount; provided,
however, that, except as otherwise provided in Section 2.04, no
Participant may contribute to the Plan with respect to any
calendar year an amount which shall exceed the excess of fifteen
percent (15%) of his or her Compensation with respect to such
calendar year over the maximum amount which he or she is entitled
to contribute to the Associates Investment Plan with respect to
the plan year thereof ending contemporaneously with such calendar
year. The Company shall (either directly or through a
Subsidiary) withhold from the Compensation otherwise payable to
such Participant during such calendar year the amounts specified
in, or calculated in accordance with, the Contribution Election
of such Participant as in effect with respect to such calendar
year.
2.04 In the event that, as a result of the application of
the provisions of the Associates Investment Plan designed to
comply with the provisions of sections 401(k)(8)(A) and/or
4
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401(m)(6)(A) of the Code, any amounts are paid to a Participant
from the Associates Investment Plan during a calendar year in
which he or she shall have a Contribution Election in effect,
then, the Company shall (either directly or through a Subsidiary)
withhold from the Compensation otherwise payable to such Partici-
pant an amount equal to the amount so paid to him or her.
2.05 Notwithstanding the provisions of Sections 2.03 and
2.04, if any Participant shall have effected a withdrawal from
the Associates Investment Plan on account of a "hardship with-
drawal" within the contemplation of Reg. Sec. 1.401(k)-1(d)(2)(i)
promulgated under the provisions of section 401(k) of the Code,
then, during the period of one year commencing on the date of
such withdrawal, neither the Company nor any of its Subsidiaries
shall withhold any amounts from the Compensation otherwise
payable to such Participant for the purposes of the Plan.
ARTICLE III
Accounts
3.01 The Company shall establish and maintain on its books
a separate Phantom Stock Elective Contribution Account with
respect to each Participant who shall have become such prior to
the Amendment Date. The credit balance therein at the opening of
business on the Amendment Date shall be equal to the number of
Phantom Shares credited to his or her Elective Contribution
Account under the Plan as in effect immediately prior to the
Amendment Date.
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3.02 The Company shall establish and maintain on its books
a separate Cash Elective Contribution Account with respect to
each Participant and, as of the Valuation Date occurring in each
calendar month, shall credit to such Account an amount equal to
the sum of (a) the aggregate Regular Contributions of such
Participant with respect to such calendar month and (b) the
Replacement Contributions of such Participant with respect to
such calendar month.
3.03 The Company shall establish and maintain on its books
a separate Phantom Stock Matching Contribution Account with
respect to each Participant and, as of the Valuation Date
occurring in each calendar month, shall credit to such Account
the number of Phantom Shares derived by dividing (a) the sum of
(i) fifty percent (50%) of the aggregate Basic Regular
Contributions of such Participant with respect to such calendar
month and (ii) the Forfeited Matching Contributions of such
Participant with respect to such calendar month by (b) the Fair
Market Value of a share of the Common Stock on such Valuation
Date; provided, however, that, if such Participant shall have
theretofore attained his or her 55th birthday and shall have
filed an election hereunder to have the Company's Matching
Contributions credited to his or her Cash Matching Contribution
Account instead of to his or her Phantom Stock Matching
Contribution Account, no such credit to such Participant's
Phantom Stock Matching Contribution Account shall be made.
3.04 The Company shall establish and maintain on its books
6
<PAGE>
a separate Cash Matching Contribution Account with respect to
each Participant who shall have attained his or her 55th birthday
and shall have filed an election hereunder to have the Company's
Matching Contributions credited to his or her Cash Matching
Contribution Account instead of to his or her Phantom Stock
Matching Contribution Account and, as of the Valuation Date
occurring in each calendar month, shall credit to such Account an
amount equal to the sum of (a) fifty percent (50%) of the
aggregate Basic Regular Contribution of such Participant with
respect to such calendar month and (b) the Forfeited Matching
Contributions of such Participant with respect to such calendar
month; provided, however, that, unless the Committee shall
otherwise determine, no Participant who is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934,
as amended, may file an election under the provisions of this
Section other than during a period beginning on the third (3rd)
business day following the date of the release by the Company for
publication of its quarterly or annual summary statements of
sales and earnings and ending on the twelfth (12th) business day
following such date.
3.05 If any Participant who shall have a Phantom Stock
Elective Contribution Account shall so elect prior to any
Valuation Date, the Company shall, as of such Valuation Date,
charge to such Phantom Stock Elective Contribution Account the
number of Phantom Shares specified in, or calculated in
accordance with, the provisions of such election and credit to
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<PAGE>
such Participant's Cash Elective Contribution Account an amount
equal to the product of (a) such number of Phantom Shares and (b)
the Fair Market Value of a share of the Common Stock on such
Valuation Date; provided, however, that, unless the Committee
shall otherwise determine, no Participant who is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934,
as amended, may file an election under the provisions of this
Section other than during a period beginning on the third (3rd)
business day following the date of the release by the Company for
publication of its quarterly or annual summary statements of
sales and earnings and ending on the twelfth (12th) business day
following such date.
3.06 If any Participant who shall have a Phantom Stock
Matching Contribution Account and who shall have attained his or
her 55th birthday shall so elect prior to any Valuation Date, the
Company shall, as of such Valuation Date, charge to such Phantom
Stock Matching Contribution Account the number of Phantom Shares
specified in, or calculated in accordance with, the provisions of
such election and credit to such Participant's Cash Matching
Contribution Account an amount equal to the product of (a) such
number of Phantom Shares and (b) the Fair Market Value of a share
of the Common Stock on such Valuation Date; provided, however,
that, unless the Committee shall otherwise determine, no
Participant who is subject to the provisions of Section 16 of the
Securities Exchange Act of 1934, as amended, may file an election
under the provisions of this Section other than during a period
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beginning on the third (3rd) business day following the date of
the release by the Company for publication of its quarterly or
annual summary statements of sales and earnings and ending on the
twelfth (12th) business day following such date.
3.07 The Company shall, as of each Valuation Date, credit
to each Cash Elective Contribution Account and to each Cash
Matching Contribution Account an amount equal to interest on the
balance therein as of the preceding Valuation Date at a rate per
annum equal to the Plan Interest Rate in effect with respect to
the calendar year in which such first mentioned Valuation Date
shall occur.
ARTICLE IV
Dividends
4.01 In the event that a dividend shall be declared upon
the Common Stock payable in shares of the Common Stock, or in the
event that the Common Stock shall be changed into a different
number of shares of stock of the Company through reorganization
or stock split-up, the Company shall, on the date fixed for
determining the stockholders of the Company entitled to receive
such stock dividend or to participate in such stock split-up,
credit to each Stock Account the number of Phantom Shares which
the Participant for whom such Stock Account was created would
have received as a result of such stock dividend or stock split-
up if such Participant were a stockholder of record on such
record date with respect to a number of shares of the Common
9
<PAGE>
Stock equal to the number of Phantom Shares theretofore credited
to such Stock Account and if such stock dividend or stock split-
up were payable with respect to whole and fractional shares of
the Common Stock.
4.02 In the event that a dividend shall be declared upon
the Common Stock payable other than in shares of the Common
Stock, the Company shall, on the last Valuation Date occurring in
each calendar year, credit to each Stock Account the number of
Phantom Shares derived by dividing (a) the product of (i) the
average number of Phantom Shares constituting the credit balance
in such Stock Account during such calendar year (calculated
without giving effect to the application of the provisions of
Section 4.01, if such provisions shall have become applicable
during such calendar year) and (ii) the aggregate dividends paid
with respect to a share of the Common Stock during such calendar
year (determined, if any event referred to in Section 4.01 shall
have occurred during such calendar year, as if such event had not
occurred) by (b) the Fair Market Value of a share of the Common
Stock on such last Valuation Date; provided, however, that, if
any Participant shall have made the election referred to in
Section 3.05 and/or Section 3.06 as of a Valuation Date occurring
in such calendar year prior to the last such Valuation Date, and
if such election shall have referred to all of the Phantom Shares
held in such Account, then, as of such last Valuation Date, the
credit hereinbefore in this Section 4.02 referred to shall not be
10
<PAGE>
made and, instead, the Company shall as of such last Valuation
Date, credit to such Participant's Cash Elective Contribution
Account and/or Cash Matching Contribution Account, as the case
may be, an amount equal to the product of (i) the average number
of Phantom Shares constituting the credit balance in such Stock
Account during such calendar year (calculated without giving
effect to the application of the provisions of Section 4.01, if
such provisions shall have become applicable during such calendar
year) and (ii) the aggregate dividends paid with respect to a
share of the Common Stock during such calendar year (determined,
if any event referred to in Section 4.01 shall have occurred
during such calendar year, as if such event had not occurred).
ARTICLE V
Termination of Participation; Benefits
5.01 Nothing contained herein shall require the Company or
any of its Subsidiaries to continue any Participant in its em-
ploy, or require any Participant to continue in the employ of the
Company or of any Subsidiary or require the Company or any Sub-
sidiary to rehire any Participant.
5.02 If the employment of any Participant by the Company
and all of its Subsidiaries shall terminate for any reason what-
ever, his or her participation under the Plan shall terminate on
the Valuation Date occurring in the calendar month in which the
date of such termination shall occur. (For the purposes hereof,
if the Subsidiary by which a Participant is employed shall cease
to be a Subsidiary, and if such Participant shall not thereupon
11
<PAGE>
become an employee of the Company or another Subsidiary, his or
her employment by the Company and its Subsidiaries shall be
deemed to have terminated.)
5.03 The Company shall, as of and on or as promptly as
shall be practicable after a Former Participant's Payment Date,
pay to such Former Participant (or, in the event of his or her
death, to the executors or administrators of his or her estate)
an amount, without any interest or earnings thereon from and
after his or her Payment Date, equal to the sum of
(a) an amount equal to the sum of (i) the product of
(A) the number of Phantom Shares constituting the credit
balance in his or her Phantom Stock Elective Contribution
Account as of his or her Payment Date and (B) the Fair
Market Value of a share of the Common Stock on his or her
Payment Date and (ii) if his or her Payment Date shall not
be the last business day of a calendar year, the aggregate
amount of the cash dividends he or she would have received
during the calendar year in which his or her Payment Date
shall occur if, on each day in such calendar year through
and including such Payment Date he or she were the record
owner of a number of shares of the Common Stock equal to the
average number of Phantom Shares constituting the credit
balance in such Account during the portion of such calendar
year ending on his or her Payment Date (calculated without
giving effect to the provisions of Section 4.01, if such
provisions shall have become applicable during such calendar
12
<PAGE>
year),
and
(b) an amount equal to the credit balance in his or
her Cash Elective Contribution Account as of his or her
Payment Date,
and
(c) an amount equal to his or her Vested Percentage of
the sum of (i) the product of (A) the number of Phantom
Shares constituting the credit balance in his or her Phantom
Stock Matching Contribution Account as of his or her Payment
Date and (B) the Fair Market Value of a share of the Common
Stock on his or her Payment Date and (ii) if his or her
Payment Date shall not be the last business day of a
calendar year, the aggregate amount of the cash dividends he
or she would have received during the calendar year in which
his or her Payment Date shall occur if, on each day in such
calendar year through and including such Payment Date he or
she were the record owner of a number of shares of the
Common Stock equal to the average number of Phantom Shares
credited to such Account during the portion of such calendar
year ending on his or her Payment Date (calculated without
giving effect to the provisions of Section 4.01, if such
provisions shall have become applicable during such calendar
year), and
(d) an amount equal to his or her Vested Percentage of
the credit balance in his or her Cash Matching Contribution
Account as of his or her Payment Date.
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<PAGE>
ARTICLE VI
General
6.01 The sole interest of each Participant and Former
Participant under the Plan shall be to receive the benefits
provided herein as and when the same shall become due and payable
in accordance with the terms hereof and neither any Participant
nor any Former Participant nor any person claiming under or
through him or her shall have any right, title or interest in or
to any of the assets of the Company. All benefits hereunder
shall be paid solely from the general assets of the Company, the
Company shall not maintain any separate fund to provide any
benefits hereunder and each Participant and Former Participant
(or the executors or administrators of his or her estate) shall
be solely an unsecured creditor of the Company with respect
thereto.
6.02 Notwithstanding any provisions of the Plan to the
contrary, the Company may, if the Committee in its sole and
absolute discretion shall determine, offset any amounts to be
paid to a Former Participant (or, in the event of his or her
death, to the executors or administrators of his or her estate)
under the Plan against any amounts which such Former Participant
may owe to the Company and/or any one of more of its
Subsidiaries.
6.03 Except as required by applicable law, no benefit under
the Plan shall be subject in any manner to alienation, sale,
14
<PAGE>
transfer, assignment, pledge or encumbrance, and any attempt to
do so shall be void; nor, except as otherwise provided in Section
6.02, shall any such benefit be in any manner liable for or sub-
ject to the debts, contracts, liabilities, engagements or torts
of any Participant or Former Participant.
6.04 All payments made by the Company under the Plan to any
Former Participant (or, in the event of his or her death, to the
executors or administrators of his or her estate) 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, and, in the case of payments to the executors or
administrators of the estate of a deceased Former Participant,
the delivery to the Company of such tax waivers, letters
testamentary and other documents as the Committee may reasonably
request.
ARTICLE VII
Administration
7.01 No Committee member at any time acting hereunder who
is a Participant shall, acting in his or her capacity as such,
have any voice in any decision of the Committee made uniquely
with respect to such Committee member or his or her benefits
hereunder.
7.02 In the event of any disagreement among the Committee
members at any time acting hereunder and authorized to act with
15
<PAGE>
respect to any matter, the decision of a majority of said
Committee members authorized to act upon such matter shall be
controlling and shall be binding and conclusive upon all persons,
including, without in any manner limiting the generality of the
foregoing, the other Committee member or Committee members, the
Company and its Subsidiaries, all persons at any time in the
employ of the Company or any of its Subsidiaries and the
Participants and Former Participants and upon the respective
successors, assigns, executors, administrators, heirs, next-of-
kin and distributees of all of the foregoing.
7.03 Subject to the provisions of Section 7.01, each
additional and each successor Committee member at any time acting
hereunder shall have all of the rights and powers (including dis-
cretionary rights and powers) and all of the privileges and im-
munities hereby conferred upon the initial Committee members
hereunder and all of the duties and obligations so imposed upon
the initial Committee members hereunder.
7.04 No Committee member at any time acting hereunder shall
be required to give any bond or other security for the faithful
performance of his or her duties as such Committee member.
7.05 The Committee may retain legal counsel and actuarial
counsel selected by it. Any Committee member may himself or
herself act in any such capacity, and any such legal counsel and
actuarial counsel may be persons acting in a similar capacity for
the Company and/or one or more of its Subsidiaries and may be
16
<PAGE>
employees of the Company and/or one or more of its Subsidiaries.
The opinion of any such legal counsel or actuarial counsel shall
be full and complete authority and protection in respect of any
action taken, suffered or omitted by the Committee in good faith
and in accordance with such opinion.
7.06 In addition to all rights to allocate and delegate
responsibilities, obligations or duties specifically granted to
the Committee by the provisions hereof, it is specifically under-
stood that the Committee is hereby granted, and shall always
have, to the fullest extent allowed by law, by a written instru-
ment executed by all of the members of the Committee and revoc-
able by any one or more of them, the power to allocate any and
all specific responsibilities, obligations or duties among them-
selves and to delegate to any other person, firm or corporation
the responsibility to carry out any of their responsibilities
hereunder and, to the extent of any such allocation or dele-
gation, the person or persons effecting such allocation or dele-
gation shall have no responsibility for any acts or omissions of
the other person, firm or corporation to whom such responsibil-
ities, obligations or duties have been allocated or delegated.
7.07 The Company and the Committee shall each keep such
records, and shall each seasonably give notice to the other of
such information, as shall be proper, necessary or desirable in
order to effectuate the purposes of the Plan, including, without
in any manner limiting the generality of the foregoing, records
and information with respect to the benefits granted to Partici-
17
<PAGE>
pants, dates of employment and determinations made hereunder.
Neither the Company nor the Committee shall be required to
duplicate any records kept by the other. To the extent that the
Company and/or the Committee shall prescribe forms for use by the
Participants and Former Participants in communicating with the
Company or the Committee, as the case may be, and/or shall estab-
lish periods during which communications may be received or elec-
tions made, the Company and the Committee shall respectively be
protected in disregarding any notice or communication for which
a form shall have been so proscribed and which shall not be
received on such form and/or any notice, communication or
election for the receipt of which a period shall so have been
established and which shall not be received during such period,
and the Company and the Committee shall also respectively be
protected in accepting any notice or communication which shall
not be made on the proper form and/or in accepting any notice,
communication or election which shall not be received during the
proper period, and their doing so shall not be deemed to create
any precedent with respect thereto. The Company and the
Committee shall respectively also be protected in acting upon any
notice or other communication purporting to be signed by any
person and reasonably believed to be genuine and accurate.
7.08 All determinations hereunder made by the Company or
the Committee shall be made in the sole and absolute discretion
of the Company or of the Committee, as the case may be.
7.09 In the event that any disputed matter shall arise
18
<PAGE>
hereunder, including, without in any manner limiting the general-
ity of the foregoing, any matter relating to the eligibility of
any person to participate under the Plan, the participation of
any person under the Plan, the amounts payable to any person
under the Plan and the applicability and interpretation of the
provisions of the Plan, the decision of the Committee upon such
matter shall be binding and conclusive upon all persons, includ-
ing, without in any manner limiting the generality of the fore-
going, the Company, all of its Subsidiaries, all persons at any
time in the employ of the Company and/or one or more of its Sub-
sidiaries, and upon the respective successors, assigns, execu-
tors, administrators, heirs, next-of-kin and distributees of the
foregoing.
7.10 The Company shall not have any responsibility or
liability whatever hereunder except to make any payment required
under the provisions hereof, and no director or officer of the
Company who is not a Committee member shall have any respon-
sibility or liability whatever hereunder and no director or
officer of the Company who is a Committee member shall have any
responsibility or liability hereunder other than by reason of
being a Committee member.
ARTICLE VIII
Claims Procedure
8.01 If a Participant or Former Participant (or, in the
event of his or her death, the executors or administrators of his
19
<PAGE>
or her estate) (the "Claimant") believes that he or she has not
received all the benefits to which he or she is entitled under
the Plan or has otherwise been damaged by any action or decision
regarding his or her participation in the Plan or the benefits
payable to him or her under the Plan, he or she may file a claim
notice with the Claims Officer. The claim notice must be
typewritten and signed and shall specify in reasonable detail his
or her objections and the reasons therefor.
8.02 If the Claims Officer shall deny a claim in whole or
in part, the Claimant shall be given written notice of this
decision within ninety (90) days after the claim is filed. In
the event that special circumstances require more time, this
ninety (90) day period may be extended by up to an additional
ninety (90) days. In such a case, the special circumstances
shall be explained to the Claimant and the Claims Officer shall
indicate the date by which he or she expects to render a final
decision. The notice that the claim has been denied in whole or
in part will inform the Claimant of the specific reason or
reasons for the denial, will contain specific references to the
pertinent Plan provisions on which the denial is based, will
describe any additional material or information necessary for the
Claimant to perfect the claim and will inform the Claimant of the
steps he or she must take if he or she wishes to submit the claim
for review.
8.03 If a claim is denied and the Claimant disagrees with
the decision of the Claims Officer, the Claimant may appeal that
20
<PAGE>
decision to the Committee by filing with the Committee a written
request for review. Such request must be filed with the
Committee within sixty (60) days after receipt by the Claimant of
written notification of the denial of his or her claim by the
Claims Officer, must be typewritten and signed and must state the
reasons underlying the appeal. Upon appeal the Claimant may
review pertinent documents, may submit issues and comments in
writing, may request a hearing before the Committee and may be
represented, if he or she wishes, at his or her own expense, by
legal counsel or other authorized representative. The Committee
will ordinarily render a written decision within sixty (60) days
after receipt of a request for review. If special circumstances
require more time (for example, if a hearing is requested), this
sixty (60) day period may be extended by up to an additional
sixty (60) days, in which case the Claimant will be so notified
before the expiration of the original sixty (60) day period. The
Committee's decision on review will include specific reasons for
their decision as well as specific references to the pertinent
Plan provisions on which the decision is based.
ARTICLE IX
Definitions
9.01 The term "Account", as used with respect to a Par-
ticipant or Former Participant, shall mean each of his or her
Cash Elective Contribution Account, his or her Phantom Stock
Elective Contribution Account, his or her Cash Matching
21
<PAGE>
Contribution Account and his or her Phantom Stock Matching
Contribution Account.
9.02 The term "Amendment Date" shall mean April 29, 1997.
9.03 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.
9.04 The term "Associates Investment Plan" shall mean the
Phillips-Van Heusen Corporation Associates Investment Plan as in
effect at the time with respect to which such term is used.
9.05 The term "Basic Regular Contribution", as used with
respect to a Participant and with respect to a calendar year,
shall mean the portion of the Regular Contribution of such
Participant with respect to such calendar year which does not
exceed the excess of six percent (6%) of his or her Compensation
with respect to such calendar year over the maximum amount which
he or she is entitled to contribute to the Associates Investment
Plan with respect to the Plan Year thereof ending
contemporaneously with such calendar year.
9.06 The term "Board" shall mean the board of directors of
the Company or any committee designated by said board of
directors to have its authority with respect to the Plan.
9.07 The term "business day" shall mean a day which is not
a Saturday, Sunday or legal holiday in the State of New York.
22
<PAGE>
9.08 The term "Cash Elective Contribution Account", as used
with respect to a Participant or Former Participant, shall mean
the separate account which the Company is required to establish
and maintain with respect to such Participant or Former
Participant in accordance with the provisions of Section 3.02.
9.09 The term "Cash Matching Contribution Account", as used
with respect to a Participant or Former Participant, shall mean
the separate account which the Company is required to establish
and maintain with respect to such Participant in accordance with
the provisions of Section 3.04 and/or 3.06.
9.10 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, 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
23
<PAGE>
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.
9.11 The term "Claims Officer" shall mean the Vice
President-Human Resources of the Company or, if the Claimant
shall be the Vice President-Human Resources of the Company, the
Chief Financial Officer of the Company.
9.12 The term "Code" shall mean the Internal Revenue Code
of 1986 as in effect at the time with respect to which such term
is used.
9.13 The term "Committee" shall mean the Compensation
Committee of the Board which is charged with the administration
of the Plan.
9.14 The term "Common Stock", as used with respect to any
date, shall mean the shares of the common stock, $1.00 par value,
of the Company authorized on the Amendment Date and any shares of
24
<PAGE>
stock which may, at any time prior to the date on which such term
is used, be issued in exchange for and/or upon a change of such
shares of Common Stock or any other shares, whether in sub-
division or combination thereof, or otherwise, but not any shares
of stock which may be issued as a dividend or stock-split on or
with respect to said shares of Common Stock or any other such
shares.
9.15 The term "Compensation", as used with respect to a
Participant and with respect to a calendar year, shall mean the
regular cash compensation paid by the Company and its Subsid-
iaries to such Participant during such calendar year, including
commissions, overtime compensation, bonus payments, vacation pay,
holiday pay and other paid leave but exclusive of moving
expenses, deferred compensation, benefit plan pay, imputed
compensation, workers' compensation and severance pay and
determined without giving effect to any contributions made to the
Associates Investment Plan by or on behalf of such Participant
during such calendar year or to a plan within the meaning of
section 125 of the Code.
9.16 The term "Contribution Election", as used with respect
to a Participant and with respect to any time, shall mean such
Participant's authorization referred to in Section 2.01 as in
effect at the time with respect to which such term is used.
9.17 The term "ERISA" shall mean the Employee Retirement
Income Security Act of 1974 as in effect at the time with respect
25
<PAGE>
to which such term is used.
9.18 The term "Fair Market Value", as used with respect to
a share of the Common Stock and with respect to any date, shall
mean the closing sale price of a share of the Common Stock as
published by the national securities exchange on which the shares
of the Common Stock are traded on such date or, if there is no
sale of the Common Stock on such date, the average of the bid and
asked prices on such exchange at the close of trading on such
date or, if the shares of the Common Stock are not listed on a
national securities exchange on such date, the average of the bid
and asked prices in the over-the-counter market on such date or,
if the Common Stock is not traded on a national securities ex-
change or in the over-the-counter market, the fair market value
of a share of the Common Stock on such date as shall be deter-
mined in good faith by the Committee.
9.19 The term "Forfeited Matching Contribution", as used
with respect to a Participant and with respect to a calendar
month, shall mean any amounts which are forfeited by such
Participant during such calendar month under the Associates
Investment Plan other than any such amounts which are forfeited
as an incident to the termination of his participation
thereunder.
9.20 The term "Former Participant" shall mean a person
whose participation under the Plan shall have terminated in
accordance with the provisions of Section 5.02.
26
<PAGE>
9.21 The term "Participant" shall mean a person who shall
have become a Participant under the Plan in accordance with the
provisions of Section 1.02 and whose participation shall not have
terminated in accordance with the provisions of Section 5.02.
9.22 The term "Payment Date", as used with respect to a
Former Participant, shall mean his or her Termination Date;
provided, however, that, if such Former Participant shall be a
"covered employee" of the Company within the meaning of section
162(m)(3) of the Code with respect to the taxable year of the
Company in which his or her Termination Date shall occur, then,
such Former Participant's Payment Date shall be the first
Valuation Date occurring in the succeeding taxable year of the
Company.
9.23 The term "Permanent Disability", as used with respect
to a Participant or Former Participant, shall mean a state of
physical or mental incapacity of such Participant or Former Par-
ticipant such that, in the opinion of the Committee, based upon a
medical certificate from a physician or physicians satisfactory
to the Committee, such Participant or Former Participant, by
reason of injury, illness or disease, is unable to fulfill the
requirements of his or her position with the Company and its
Subsidiaries and such disability will be permanent and continuous
during the remainder of his or her life.
9.24 The term "Person" shall mean any individual,
partnership, firm, trust, corporation or other similar entity,
27
<PAGE>
and 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".
9.25 The term "Phantom Share" shall mean a credit to a
Stock Account of a Participant or Former Participant which is
equal in value to one share of the Common Stock.
9.26 The term "Phantom Stock Elective Contribution
Account", as used with respect to a Participant or Former
Participant, shall mean the separate account which the Company is
required to establish and maintain with respect to such
Participant or Former Participant in accordance with the
provisions of Section 3.01.
9.27 The term "Phantom Stock Matching Contribution
Account", as used with respect to a Participant or Former
Participant, shall mean the separate account which the Company is
required to establish and maintain with respect to such
Participant or Former Participant in accordance with the
provisions of Section 3.03.
9.28 The term "Plan Interest Rate", as used with respect to
a calendar year, shall mean a rate per annum equal to the yield
to maturity on a 10 Year Treasury Note on the first business day
of such calendar year; provided, however, that for the period
beginning on July 1, 1995 and ending on December 31, 1995, the
28
<PAGE>
term "Plan Interest Rate" shall mean a rate per annum equal to
the yield to maturity on a 10 Year Treasury Note on the first
business day of July, 1995.
9.29 The term "Regular Contribution", as used with respect
to a Participant and with respect to a calendar month, shall mean
an amount withheld from the Compensation of such Participant with
respect to such calendar month for the purposes of the Plan in
accordance with the provisions of Section 2.03.
9.30 The term "Replacement Contribution", as used with
respect to a Participant and with respect to a calendar month,
shall mean an amount withheld from the Compensation of such
Participant with respect to such calendar month for the purposes
of the Plan in accordance with the provisions of Section 2.04.
9.31 The term "Stock Account" shall mean each of a Phantom
Stock Elective Contribution Account and a Phantom Stock Matching
Contribution Account.
9.32 The term "Subsidiary" shall mean a corporation
included in an unbroken chain of corporations beginning with the
Company if, at the time with respect to which such term is used,
each of the corporations in such unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other
corporations in such unbroken chain.
9.33 The term "Termination Date", as used with respect to a
29
<PAGE>
Former Participant, shall mean the date on which his or her
participation under the Plan shall terminate in accordance with
the provisions of Section 5.02.
9.34 The term "Valuation Date" shall mean each of (a) the
Amendment Date and (b) the last business day of each calendar
month thereafter.
9.35 The term "Vested Percentage", as used with respect to
a Former Participant and with respect to any date, (a) shall mean
one hundred percent (100%) if he or she shall have attained his
or her sixty-fifth (65th) birthday on or prior to such date while
in the employ of the Company and/or any of its Subsidiaries or if
his or her employment by the Company and all of its Subsidiaries
shall have terminated on or prior to such date by reason of his
or her death or Permanent Disability or after he or she shall
have a Vested Percentage of one hundred percent (100%) under the
Associates Investment Plan and (b) shall mean zero percent (0%)
if his or her employment by the Company and its Subsidiaries
shall have terminated on or prior to such date under any other
circumstances, provided, however, that, from and after the
occurrence of a Change in Control, each Participant's Vested
Percentage shall be one hundred percent (100%).
30
<PAGE>
ARTICLE X
Amendment; Termination
10.01 The Company may, at any time and from time to time,
pursuant to a resolution of the Board, amend the terms and pro-
visions of the Plan and may, at any time, similarly terminate the
Plan; provided, however, that no such amendment or termination
shall adversely affect the credit balance in any Account on the
date of such amendment or reduce the Vested Percentage of any
Participant or impair the Company's obligation to make payment or
distribution of amounts theretofore earned under the Plan.
ARTICLE XI
Construction
11.01 The Plan shall be construed and regulated in
accordance with the laws of the State of New York.
11.02 To the extent that the context shall permit, any
masculine pronoun used herein shall be construed to include also
the similar feminine pronoun, any feminine pronoun used herein
shall be construed to include also the similar masculine pronoun,
any singular word so used shall be construed to include also the
similar plural word and any plural word so used shall be con-
strued to include also the similar singular word.
11.03 Any reference herein to any date or day shall, except
31
<PAGE>
as otherwise specifically provided herein, be deemed to be a
reference to the close of business on such date or day.
PHILLIPS-VAN HEUSEN CORPORATION
By
32
PHILLIPS-VAN HEUSEN CORPORATION
1973 EMPLOYEES' STOCK OPTION PLAN
(As Amended and Restated To and Including October 1, 1981)
Amendment
The Phillips-Van Heusen Corporation 1973 Stock Option Plan
(the "Plan") is hereby amended, effective as of April 29, 1997,
as follows:
FIRST: Section 18 of the Plan is hereby amended so that it
shall read in its entirety as follows:
18. Change in Control.
Notwithstanding any provision of Section 9 hereof to
the contrary, in the event that a Change in Control shall
occur, then, each Option theretofore granted to any
Participant which shall not have expired or otherwise been
cancelled or become unexercisable shall become immediately
exercisable in full. For the purposes of this Section 18, a
"Change in Control" shall be deemed to occur upon (i) the
election of one or more individuals to the Board which
election results in one-third of the 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; (ii) 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; (iii) 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 (iv) 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 Section 18, (a) 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, (b) the term "Person" shall mean any individual,
partnership, firm, trust, corporation or other similar
entity, and (c) 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".
In the event that a Change of Control shall occur,
then, from and after the time of such event, neither the
provisions of this Section 18 nor any of the rights of any
Participant thereunder shall be modified or amended in any
way.
SECOND: Except as hereby expressly amended, the Plan shall
remain in full force and effect.<PAGE>
Phillips-Van Heusen Letterhead
[Date]
Dear Mr. Klatsky:
We refer to that certain agreement (your "CAP Agreement"),
dated , as amended by letter dated , 1995,
between you and us which provides you with a target monthly
benefit of $16,666.67 under our so-called "Capital Accumulation
Plan". This letter, when accepted by you, will constitute an
amendment of your CAP Agreement to the extent set forth herein:
1. Part E of Article THIRD of your CAP Agreement (the
definition of "Change in Control") is hereby amended by adding
the following to the end thereof:
In addition to the foregoing and not in limitation thereof,
a Change in Control with respect to Bruce Klatsky shall also
mean (a) the failure of the Board of Directors of the
Company duly to continue Mr. Klatsky as Chief Executive
Officer and Chairman of the Board at all times prior to his
retirement as an employee, (b) the appointment by the Board
of an officer or the hiring by the Board of an employee with
authority equal or superior to the authority of Mr. Klatsky
at any time prior to his retirement as an employee or (c)
the failure of the Company to compensate Mr. Klatsky at a
rate of at least $750,000 per year and maintain the other
terms and conditions of his employment by the Company on no
less than substantially the same basis as enjoyed by Mr.
Klatsky in connection with his employment by the Company as
of April 28, 1993.
2. Except as hereby expressly amended and modified, the
provisions of your CAP Agreement shall remain in full force and
effect.<PAGE>
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:
<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 THREE MONTHS ENDED MAY 4, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-01-1998
<PERIOD-END> MAY-04-1997
<CASH> $ 16,220
<SECURITIES> 0
<RECEIVABLES> 102,353
<ALLOWANCES> (3,607)
<INVENTORY> 267,112
<CURRENT-ASSETS> 404,424
<PP&E> 134,082<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 697,835
<CURRENT-LIABILITIES> 167,473
<BONDS> 189,399
0
0
<COMMON> 27,063
<OTHER-SE> 256,630
<TOTAL-LIABILITY-AND-EQUITY> 697,835
<SALES> 285,925
<TOTAL-REVENUES> 285,925
<CGS> 186,957
<TOTAL-COSTS> 186,957
<OTHER-EXPENSES> 100,654
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 4,932
<INCOME-PRETAX> (6,618)
<INCOME-TAX> 2,078
<INCOME-CONTINUING> (4,540)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,540)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
<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>
