SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 1, 1999
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.)
200 Madison Avenue New York, New York 10016
(Address of principal executive offices)
Registrant's telephone number (212) 381-3500
Indicate by check mark whether registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
The number of outstanding shares of common stock, par value $1.00 per
share, of Phillips-Van Heusen Corporation as of August 17, 1999: 27,287,985
shares.
<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
INDEX
PART I -- FINANCIAL INFORMATION
Independent Accountants Review Report................................. 1
Condensed Consolidated Balance Sheets as of August 1, 1999 and
January 31, 1999...................................................... 2
Condensed Consolidated Statements of Operations for the thirteen
weeks and twenty-six weeks ended August 1, 1999 and August 2, 1998.... 3
Condensed Consolidated Statements of Cash Flows for the
twenty-six weeks ended August 1, 1999 and August 2, 1998.............. 4
Notes to Condensed Consolidated Financial Statements.................. 5-7
Management's Discussion and Analysis of Results of Operations
and Financial Condition............................................... 7-11
PART II -- OTHER INFORMATION
ITEM 4 - Submission of Matters to a Vote of Stockholders.............. 12
ITEM 6 - Exhibits and Reports on Form 8-K............................. 12-15
Signatures............................................................ 16
Exhibit--Acknowledgment of Independent Accountants.................... 17
Exhibit--Financial Data Schedule...................................... 18
<PAGE>
Independent Accountants Review Report
Stockholders and Board of Directors
Phillips-Van Heusen Corporation
We have reviewed the accompanying condensed consolidated balance sheet of
Phillips-Van Heusen Corporation as of August 1, 1999, and the related
condensed consolidated statements of operations for the thirteen and twenty-
six week periods ended August 1, 1999 and August 2, 1998, and the related
condensed consolidated statements of cash flows for the twenty-six week
periods ended August 1, 1999 and August 2, 1998. These financial statements
are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Phillips-Van Heusen Corporation
as of January 31, 1999, 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 9, 1999, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of January 31, 1999, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
ERNST & YOUNG LLP
New York, New York
August 18, 1999
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Phillips-Van Heusen Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
UNAUDITED AUDITED
August 1, January 31,
1999 1999
<S> <C> <C>
ASSETS
Current Assets:
Cash, including cash equivalents of $23,474 and $4,399 $ 27,769 $ 10,957
Trade receivables, less allowances of $1,605 and $1,367 87,646 88,038
Inventories 248,293 232,695
Other, including deferred taxes of $10,611 28,544 36,327
Total Current Assets 392,252 368,017
Property, Plant and Equipment 90,158 108,846
Goodwill 84,729 113,344
Other Assets, including deferred taxes of $49,467 and
$52,167 81,301 84,106
$648,440 $674,313
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 20,000
Accounts payable $ 25,988 44,851
Accrued expenses 86,419 67,835
Total Current Liabilities 112,407 132,686
Long-Term Debt 248,754 248,723
Other Liabilities 62,512 64,016
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; 27,287,985 shares issued 27,288 27,288
Additional Capital 117,683 117,683
Retained Earnings 79,796 83,917
Total Stockholders' Equity 224,767 228,888
$648,440 $674,313
</TABLE>
See accompanying notes.
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Phillips-Van Heusen Corporation
Condensed Consolidated Statements of Operations
Unaudited
(In thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
August 1, August 2, August 1, August 2,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $316,790 $306,371 $606,489 $602,136
Cost of goods sold 205,006 197,308 393,897 390,565
Gross profit 111,784 109,063 212,592 211,571
Selling, general and administrative expenses 98,227 95,770 197,611 197,724
Year 2000 computer conversion costs 2,710 2,250 4,160 4,250
Income before interest, taxes and
extraordinary item 10,847 11,043 10,821 9,597
Interest expense, net 6,038 6,654 12,181 12,120
Income (loss) before taxes and extraordinary item 4,809 4,389 (1,360) (2,523)
Income tax expense (benefit) 1,236 1,669 (308) (759)
Income (loss) before extraordinary item 3,573 2,720 (1,052) (1,764)
Extraordinary loss on debt retirement,
net of tax benefit (1,060)
Net income (loss) $ 3,573 $ 2,720 $ (1,052) $ (2,824)
Basic and diluted net income (loss) per share:
Income (loss) before extraordinary item $ 0.13 $ 0.10 $ (0.04) $ (0.06)
Extraordinary loss (0.04)
Net income (loss) per share $ 0.13 $ 0.10 $ (0.04) $ (0.10)
</TABLE>
See accompanying notes.
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Phillips-Van Heusen Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
(In thousands)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
August 1, August 2,
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES:
Loss before extraordinary item $ (1,052) $ (1,764)
Adjustments to reconcile net cash
used by operating activities:
Depreciation and amortization 9,729 13,474
Equity income (540) (520)
Deferred income taxes (714) 6
Changes in operating assets and liabilities:
Receivables 392 3,632
Inventories 1,614 (53,248)
Accounts payable and accrued expenses (12,096) (11,118)
Other-net (1,757) (5,125)
Net Cash Used By Operating Activities (4,424) (54,663)
INVESTING ACTIVITIES:
Sale of Gant trademark, net of related costs 67,000
Acquisition of assets associated with new
license agreement (17,212)
Property, plant and equipment acquired (5,484) (7,952)
Net Cash Provided (Used) By Investing Activities 44,304 (7,952)
FINANCING ACTIVITIES:
Net proceeds from issuance of 9.5% senior
subordinated notes 145,104
Repayment of 7.75% senior notes (49,286)
Extraordinary loss on debt retirement (1,631)
Proceeds from revolving lines of credit 41,600 120,600
Payments on revolving lines of credit (61,600) (156,500)
Exercise of stock options 215
Cash dividends (3,068) (3,059)
Net Cash Provided (Used) By Financing Activities (23,068) 55,443
Increase (decrease) In Cash 16,812 (7,172)
Cash at beginning of period 10,957 11,748
Cash at end of period $ 27,769 $ 4,576
See accompanying notes.
</TABLE>
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PHILLIPS-VAN HEUSEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
GENERAL
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not contain all
disclosures required by generally accepted accounting principles for complete
financial statements. Reference should be made to the annual financial
statements, including the footnotes thereto, included in the Company's Annual
Report to Stockholders for the year ended January 31, 1999.
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 twenty-six weeks ended August 1, 1999 and
August 2, 1998 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.
Certain reclassifications have been made to the condensed consolidated
financial statements for the twenty-six weeks ended August 2, 1998 to present
that information on a basis consistent with the twenty-six weeks ended August
1, 1999.
INVENTORIES
Inventories are summarized as follows:
August 1, January 31,
1999 1999
Raw materials $ 12,404 $ 8,529
Work in process 14,776 12,834
Finished goods 221,113 211,332
Total $248,293 $232,695
Inventories are stated at the lower of cost or market. Cost for apparel
inventories, excluding certain sportswear inventories, is determined using the
last-in, first-out method (LIFO). Cost for footwear and certain sportswear
inventories is determined using the first-in, first-out method (FIFO).
Inventories would have been approximately $8,400 higher than reported at
August 1, 1999 and January 31, 1999, if the FIFO method of inventory
accounting had been used for all apparel.
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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.
EXTRAORDINARY LOSS
On April 22, 1998, PVH issued $150,000 of 9.5% senior subordinated notes due
May 1, 2008 and used the net proceeds to retire its intermediate term 7.75%
senior notes and to repay a portion of the borrowings under its prior
revolving credit facility. On the same day, PVH refinanced its revolving
credit facility by entering into a new $325,000 senior secured credit
facility. In connection therewith, the Company paid a yield maintenance
premium of $1,446 and wrote off certain debt issue costs of $185. These items
have been classified as an extraordinary loss, net of tax benefit of $571, in
the first quarter of 1998.
ACQUISITION AND DISPOSITION OF BUSINESSES
On March 12, 1999, PVH entered into a license agreement to market dress shirts
under the John Henry and Manhattan brands. In connection therewith, the
Company acquired $17,212 of inventory from the licensor.
On February 26, 1999, PVH sold the Gant trademark and certain related assets
associated with the Company's Gant operations for $71,000 in cash to Pyramid
Sportswear AB ("Pyramid"), which was the brand's international licensee.
Pyramid is a wholly-owned subsidiary of Pyramid Partners AB, in which PVH has
a minority interest. PVH has realized no gain or loss in connection with this
transaction, after writing off certain assets associated with its Gant
operations, including goodwill.
FACILITY CLOSING
During 1997, PVH recorded pre-tax charges of $132,700, related principally to
a series of actions the Company has taken to accelerate the execution of its
ongoing strategies to build its brands. One of the actions contemplated in
that plan was the closing of a designated footwear facility. In the current
year's second quarter, the Company announced the closing of its footwear
manufacturing and warehousing operations in the Caribbean. As a result of
this closure, the footwear facility originally designated for closure is now
operationally required, and so the Company will not close this facility. The
cost of closing the Caribbean facilities of approximately $5,000 approximates
the cost to close the footwear facility designated in the Company's original
plan. As such, there is no net effect on net income.
SEGMENT DATA
PVH manages and analyzes its operating results by its two vertically
integrated business segments: (i) Apparel and (ii) Footwear and Related
Products. In identifying its reportable segments, PVH evaluated its operating
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divisions and product offerings. PVH aggregated the results of its apparel
divisions into the Apparel segment. This segment derives revenues from
marketing dresswear, sportswear and accessories, principally under the brand
names Van Heusen, Izod, Izod Club, Geoffrey Beene, John Henry, Manhattan,
DKNY, and until February 26, 1999, Gant. PVH's footwear business has been
identified as the Footwear and Related Products segment. This segment derives
revenues from marketing casual footwear, apparel and accessories under the
Bass brand name. Sales for both segments occur principally in the United
States.
<TABLE>
<CAPTION>
(In thousands) Segment Data
Thirteen Weeks Ended Twenty-Six Weeks Ended
8/1/99 8/2/98 8/1/99 8/2/98
<S> <C> <C> <C> <C>
Net sales-apparel $212,665 $203,597 $414,723 $408,986
Net sales-footwear and
related products 104,125 102,774 191,766 193,150
Total net sales $316,790 $306,371 $606,489 $602,136
Operating income - apparel $ 9,607 $ 9,058 $ 13,370 $ 12,284
Operating income-footwear
and related products 7,412 7,137 8,603 7,718
Total operating income 17,019 16,195 21,973 20,002
Corporate expenses 6,172 5,152 11,152 10,405
Income before interest, taxes
and extraordinary item $ 10,847 $ 11,043 $ 10,821 $ 9,597
</TABLE>
Corporate expenses include Year 2000 computer conversion costs of $2,710 and
$4,160 for the thirteen and twenty-six weeks ended August 1, 1999,
respectively, compared with $2,250 and $4,250 for the thirteen and twenty-six
weeks ended August 2, 1998, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Results of Operations
Thirteen Weeks Ended August 1, 1999 Compared With Thirteen Weeks Ended
August 2, 1998
APPAREL SEGMENT
Net sales of the Company's apparel segment in the second quarter increased to
$212.7 million in 1999 compared with $203.6 million last year, a 4.5%
increase. The increase resulted principally from sales of John Henry and
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<PAGE>
Manhattan branded dress shirts, which the Company began selling late in the
current year's first quarter under a new licensing agreement.
Gross profit on apparel sales was 33.6% in the current quarter compared with
34.0% last year. This decrease relates to lower gross margins related to
winding down the Company's Gant operations in connection with the sale of Gant
in February, 1999.
Selling, general and administrative expenses as a percentage of apparel sales
were 29.1% in the current quarter compared with 29.5% last year. The improved
expense level relates principally to reduced operating expenses relating to
the sale of Gant.
FOOTWEAR AND RELATED PRODUCTS SEGMENT
Net sales of the Company's footwear and related products segment in the second
quarter were $104.1 million in 1999 compared with $102.8 million last year, an
increase of 1.3%.
Gross profit on footwear and related products sales was 38.6% in the second
quarter of 1999 compared with 38.5% last year.
Selling, general and administrative expenses as a percentage of footwear and
related products sales in the second quarter were 31.5% in 1999 compared with
31.6% in 1998.
INTEREST EXPENSE
Interest expense in the second quarter was $6.0 million in 1999 compared with
$6.7 million last year. Interest expense decreased as borrowing levels were
reduced, principally because of the cash proceeds received from the sale of
Gant and tight management of assets.
CORPORATE EXPENSES
Excluding Year 2000 computer conversion costs, corporate expenses in the
second quarter were $3.5 million in 1999 compared with $2.9 million in 1998.
This increase relates to increased information technology costs.
Twenty-Six Weeks Ended August 1, 1999 Compared With Twenty-Six Weeks Ended
August 2, 1998
APPAREL SEGMENT
Net sales of the Company's apparel segment in the first half were $414.7
million in 1999, an increase of 1.4% from the prior year's $409.0 million.
The increase resulted principally from sales of John Henry and Manhattan
branded dress shirts, which the Company began selling late in the current
year's first quarter under a new licensing agreement.
Gross profit on apparel sales was 33.5% in the first half of 1999 compared
with 33.8% last year. This decrease is due to lower gross margins related to
winding down the Company's Gant operations.
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<PAGE>
Selling, general and administrative expenses as a percentage of apparel sales
in the first half were 30.3% in 1999 compared with 30.8% in 1998. The
improved expense level relates principally to reduced operating expenses
relating to the sale of Gant.
FOOTWEAR AND RELATED PRODUCTS SEGMENT
Net sales of the Company's footwear and related products segment in the first
half were $191.8 million in 1999 compared with $193.2 million last year. This
decrease was expected as last year's first quarter included higher levels of
promotional selling at Bass resulting from the liquidation of excess
inventory. Partially offsetting the first quarter sales decrease was the 1.3%
sales increase in the current year's second quarter.
Gross profit on footwear and related products sales was 38.1% in the first
half of 1999 compared with 37.7% last year. The improvement is principally
because last year's higher levels of promotional selling in the first quarter
did not recur.
Selling, general and administrative expenses as a percentage of footwear and
related products sales in the first half were 33.6% in 1999 and 33.7% in 1998.
INTEREST EXPENSE
Interest expense in the first half was $12.2 million in 1999 compared with
$12.1 million last year. The current year's second quarter decrease was
offset by an unfavorable interest expense comparison in the current year's
first quarter. The first quarter increase resulted from the refinancings the
Company completed late in the first quarter of 1998 which, in addition to
extending the maturities of long-term debt, also increased overall borrowing
costs.
CORPORATE EXPENSES
Excluding Year 2000 computer conversion costs, corporate expenses in the first
half were $7.0 million in 1999 compared with $6.2 million in 1998. This
increase relates to increased information technology costs.
YEAR 2000
The Year 2000 (Y2K) issue is the result of computer programs using two digits
rather than four to define the applicable year. Such computer systems will be
unable to interpret dates beyond the year 1999, which could cause a system
failure or other computer errors, leading to disruptions in operations. PVH
has initiated a comprehensive Y2K Project to address this issue and is
utilizing both internal and external resources to complete it.
The Company completed an assessment of Y2K requirements for the systems
supported by its Information Technology Department which included contacting
its software suppliers. The impacted systems, including those that are part
of the Company's data processing infrastructure, are now Y2K compliant as a
result of modification or replacement. The Company completed remediation,
testing and rollout of all of its mainstream business systems in June, 1999.
Only end-user computing applications require any further work. Of these, none
are expected to have a significant impact on any vital business processes.
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The Company has communicated with suppliers, equipment vendors, service
providers and customers to determine the extent to which it is vulnerable to
the failure of these parties to remedy any Y2K issues. Most of these parties
have stated that they intend to be Y2K compliant by 2000. In conjunction with
this, the Company has developed contingency plans for its major suppliers and
merchandise carriers, where feasible, to mitigate Y2K risks. The Company's
electronic commerce systems, used by many of its major customers, are Y2K
compliant and are being installed in accordance with each customer's schedule.
The total cost of the Y2K Project is estimated to be $20 million and is being
funded through operating cash flows. Of the total Project cost, approximately
$3 million is attributable to the purchase of new software, which will be
capitalized, with the remaining cost expensed as incurred. Expenses incurred
through August 1, 1999 were $13 million. Future expenses for the Y2K project
include testing with customers and suppliers, as well as additional
contingency planning and testing, and includes consulting fees and other
administrative costs.
PVH presently believes that the Y2K issue will not pose significant
operational problems for its computer systems. However, no assurance can be
given that this issue, as it relates to PVH's internal systems or those of
other companies on which it relies, will not have a material adverse impact on
PVH's operations.
SEASONALITY
The Company's business is seasonal, with higher sales and income during its
third and fourth quarters, which coincide with the Company's two peak retail
selling seasons: the first running from the start of the back to school and
Fall selling seasons beginning in August and continuing through September; the
second being the Christmas selling season beginning with the weekend following
Thanksgiving and continuing through the week after Christmas.
Also contributing to the strength of the third quarter is the high volume of
Fall shipments to wholesale customers which are generally more profitable than
Spring shipments. The slower Spring selling season at wholesale combines with
retail seasonality to make the first quarter particularly weak.
LIQUIDITY AND CAPITAL RESOURCES
The seasonal nature of the Company's business typically requires the use of
cash to fund a build-up in the Company's inventory in the first half of each
fiscal year. During the third and fourth quarters, the Company's higher level
of sales tends to reduce its inventory and generate cash from operations.
Net cash used by operations in the first half was $4.4 million in 1999 and
$54.7 million last year. The reduction in cash used by operations is due
principally to tight management of assets, particularly significantly lower
inventory levels.
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<PAGE>
The Company has a $325 million credit agreement which includes a revolving
credit facility under which the Company may, at its option, borrow and repay
amounts within certain limits. The agreement also includes a letter of credit
facility with a sub-limit of $250 million, provided, however, that the
aggregate maximum amount outstanding under both the revolving credit facility
and the letter of credit facility is $325 million. The Company believes that
its borrowing capacity under these facilities is adequate for its 1999 peak
seasonal needs.
* * *
******************************************************************************
* 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 PVH'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 are inherently subject to risks and uncertainties, many of *
* which cannot be predicted with accuracy, and some of which might not be *
* anticipated, including, without limitation, the following: (i) PVH'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 PVH'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, all of *
* which can be affected by weather conditions, changes in the economy, *
* fashion trends and other factors; (iii) PVH's plans and results of *
* operations will be affected by the Company's ability to manage its *
* growth and inventory; (iv) the timing and effectiveness of programs *
* dealing with the Year 2000 issue; and (v) other risks and uncertainties *
* indicated from time to time in PVH's filings with the Securities and *
* Exchange Commission. *
******************************************************************************
* * *
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Part II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
The annual stockholders' meeting was held on June 17, 1999. There were
present in person or by proxy, holders of 25,112,780 shares of Common Stock,
or 92.0% of all votes eligible for the meeting.
The following directors were elected to serve for a term of one year:
For Vote Withheld
Edward H. Cohen 24,760,191 352,589
Joseph B. Fuller 24,760,560 352,220
Joel H. Goldberg 24,762,141 350,639
Marc Grosman 24,768,661 344,119
Dennis F. Hightower 24,768,660 344,120
Bruce J. Klatsky 24,758,770 354,010
Maria Elena Lagomasino 24,766,660 346,120
Harry N.S. Lee 24,763,582 349,198
Bruce Maggin 24,762,791 349,989
Sylvia M. Rhone 20,020,478 5,092,302
Peter J. Solomon 24,715,856 396,924
Mark Weber 24,752,078 360,702
The proposal for Ernst & Young LLP to serve as the Company's independent
auditors until the next stockholders' meeting was ratified. The vote was
24,957,321 For and 86,164 Against.
The result of the vote on the proposal of a stockholder to request the Board
of Directors to consider the discontinuance of all bonuses, options, rights,
stock appreciation rights, etc., after termination of any existing programs,
for top management was defeated and not adopted. The vote was 939,545 For and
21,381,045 Against.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
3.1 Certificate of Incorporation (incorporated by reference to Exhibit
5 to the Company's Annual Report on Form 10-K for the fiscal year
ended January 29, 1977).
3.2 Amendment to Certificate of Incorporation, filed June 27, 1984
(incorporated by reference to Exhibit 3B to the Company's Annual
Report on Form 10-K for the fiscal year ended February 3, 1985).
3.3 Certificate of Designation of Series A Cumulative Participating
Preferred Stock, filed June 10, 1986 (incorporated by reference to
Exhibit A of the document filed as Exhibit 3 to the Company's
Quarterly Report as filed on Form 10-Q for the period ended May 4,
1986).
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).
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3.5 Amendment to Certificate of Incorporation, filed June 1, 1993
(incorporated by reference to Exhibit 3.5 to the Company's Annual
Report on Form 10-K for the fiscal year ended January 30, 1994).
3.6 Amendment to Certificate of Incorporation, filed June 20, 1996
(incorporated by reference to Exhibit 3.1 to the Company's Report
on Form 10-Q for the period ended July 28, 1996).
3.7 By-Laws of Phillips-Van Heusen Corporation, as amended through
June 18, 1996 (incorporated by reference to Exhibit 3.2 to the
Company's Report on Form 10-Q for the period ended July 28, 1996).
4.1 Specimen of Common Stock certificate (incorporated by reference to
Exhibit 4 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1981).
4.2 Preferred Stock Purchase Rights Agreement (the "Rights Agreement"),
dated June 10, 1986 between PVH and The Chase Manhattan Bank, N.A.
(incorporated by reference to Exhibit 3 to the Company's Quarterly
Report as filed on Form 10-Q for the period ended May 4, 1986).
4.3 Amendment to the Rights Agreement, dated March 31, 1987 between PVH
and The Chase Manhattan Bank, N.A. (incorporated by reference to
Exhibit 4(c) to the Company's Annual Report on Form 10-K for the
year ended February 2, 1987).
4.4 Supplemental Rights Agreement and Second Amendment to the Rights
Agreement, dated as of July 30, 1987, between PVH and The Chase
Manhattan Bank, N.A. (incorporated by reference to Exhibit (c)(4)
to the Company's Schedule 13E-4, Issuer Tender Offer Statement,
dated July 31, 1987).
4.5 Notice of extension of the Rights Agreement, dated June 5, 1996,
from Phillips-Van Heusen Corporation to The Bank of New York
(incorporated by reference to Exhibit 4.13 to the Company's report
on Form 10-Q for the period ended April 28, 1996).
4.6 Credit Agreement, dated as of April 22, 1998, among PVH, the group
of lenders party hereto, The Chase Manhattan Bank, as
Administrative Agent and Collateral Agent, and Citicorp USA, Inc.,
as Documentation Agent (incorporated by reference to Exhibit 4.6 to
the Company's report on Form 10-Q for the period ended May 3,
1998).
4.7 Amendment No. 1, dated as of November 17, 1998, to the Credit
Agreement, dated as of April 22, 1998, among PVH, the group of
lenders party hereto, The Chase Manhattan Bank, as Administrative
Agent and Collateral Agent, and Citicorp USA, Inc., as
Documentation Agent (incorporated by reference to Exhibit 4.7 to
the Company's report on Form 10-K for the period ended January 31,
1999).
-13-
<PAGE>
4.8 Consent, Waiver and Amendment No. 2, dated as of February 23, 1999,
to the Credit Agreement, dated as of April 22, 1998, among PVH, the
group of lenders party hereto, The Chase Manhattan Bank, as
Administrative Agent and Collateral Agent, and Citicorp USA, Inc.,
as Documentation Agent (incorporated by reference to Exhibit 4.8 to
the Company's report on Form 10-K for the period ended January 31,
1999).
4.9 Indenture, dated as of April 22, 1998, with PVH as issuer and Union
Bank of California, N.A., as Trustee (incorporated by reference to
Exhibit 4.7 to the Company's report on Form 10-Q for the period
ended May 3, 1998).
4.10 Indenture, dated as of November 1, 1993, between PVH and The Bank
of New York, as Trustee (incorporated by reference to Exhibit 4.01
to the Company's Registration Statement on Form S-3 (Reg. No. 33-
50751) filed on October 26, 1993).
*10.1 1987 Stock Option Plan, including all amendments through April 29,
1997 (incorporated by reference to Exhibit 10.1 to the Company's
report on Form 10-Q for the period ended May 4, 1997).
*10.2 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).
*10.3 Phillips-Van Heusen Corporation Capital Accumulation Plan
(incorporated by reference to the Company's Report on Form 8-K
filed on January 16, 1987).
*10.4 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).
*10.5 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).
*10.6 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).
*10.7 Agreement amending Phillips-Van Heusen Corporation Capital
Accumulation Plan with respect to Bruce J. Klatsky (incorporated by
reference to Exhibit 10.13 to the Company's report on Form 10-Q for
the period ended May 4, 1997).
-14-
<PAGE>
*10.8 Phillips-Van Heusen Corporation Supplemental Defined Benefit Plan,
dated January 1, 1991, as amended and restated on June 2, 1992
(incorporated by reference to Exhibit 10.10 to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1993).
*10.9 Phillips-Van Heusen Corporation Supplemental Savings Plan,
effective as of January 1, 1991 and amended and restated as of
April 29, 1997 (incorporated by reference to Exhibit 10.10 to the
Company's report on Form 10-Q for the period ended May 4, 1997).
*10.10 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).
*10.11 Phillips-Van Heusen Corporation 1997 Stock Option Plan, effective
as of April 29, 1997 (incorporated by reference to Exhibit 10.14 to
the Company's report on Form 10-Q for the period ending August 3,
1997).
*10.12 Phillips-Van Heusen Corporation Senior Management Bonus Program for
fiscal year 1998 (incorporated by reference to Exhibit 10.15 to the
Company's report on Form 10-Q for the period ending August 2,
1998).
*10.13 Phillips-Van Heusen Corporation Senior Management Bonus Program for
fiscal year 1999.
15. Acknowledgement of Independent Accountants
27. Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter ended August 1, 1999.
No reports have been filed on Form 8-K during the quarter covered by this
report.
* Management contract or compensatory plan or agreement required to be
identified pursuant to Item 14(a) of this report.
-15-
<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
August 23, 1999 /s/ Vincent A. Russo
Vincent A. Russo
Vice President and Controller
-16-
<PAGE>
Exhibit 15
August 23, 1999
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) 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,
(v) Registration Statement (Form S-8, No. 333-29765) which relates to
the Phillips-Van Heusen Corporation 1997 Stock Option Plan.
of our reports dated August 18, 1999 and May 19, 1999 relating to the
unaudited condensed consolidated interim financial statements of Phillips-Van
Heusen Corporation that are included in its Forms 10-Q for the thirteen week
periods ended August 1, 1999 and May 2, 1999.
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
-17-
PHILLIPS-VAN HEUSEN CORPORATION
1999 BONUS PROGRAM
The Compensation Committee of the Board of Directors of Phillips-Van Heusen
Corporation (the "Company") has adopted a bonus program for the 1999 fiscal
year under which the executive officers may receive a bonus based on (a) for
executives with corporate responsibility, earnings targets for the Company
as a whole and (b) for executives responsible for a division or divisions,
earnings targets for such division(s).
The payment of bonuses requires earnings to meet or exceed an established
target earnings threshold. Bonus payments are based on a percentage of a
participant's base salary, and the percentage increases on a graduating
scale (subject to a maximum cap) if and to the extent earnings exceed the
threshold. The percentage of base salary that a participant can earn as a
bonus differs among the participants.
The amount of a participant's bonus payment, if any, for the 1999 fiscal year
will be determined by the end of the first quarter of the 2000 fiscal year.
Payment of such bonus generally will be subject to a vesting period, ending
the last day of the 2000 fiscal year, although the Chairman of the Company
has the discretion to authorize earlier vesting (and payment). Payment of
such bonus will be made on the first day of the 2001 fiscal year, together
with interest accruing from the first day of the second quarter of the 2000
fiscal year, subject to the Chairman's authority to authorize earlier payment.
In the event of the death or disability of a participant during the 1999 fiscal
year, the participant or his estate will receive the bonus, if any, which
would otherwise have been payable to the participant for the fiscal year,
pro rated to reflect the portion of the fiscal year worked by the
participant. In order to remain eligible to receive a bonus, a participant
must be employed by the Company on the last day of the vesting period or
must have died, become disabled, retired under the Company's retirement
plan or have been discharged without cause during the 1999 fiscal year.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PHILLIPS-VAN HEUSEN CORPORATION FINANCIAL STATEMENTS INCLUDED IN ITS 10-Q REPORT
FOR THE QUARTER ENDED AUGUST 1, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-30-2000
<PERIOD-END> AUG-01-1999
<CASH> $ 27,769
<SECURITIES> 0
<RECEIVABLES> 89,251
<ALLOWANCES> 1,605
<INVENTORY> 248,293
<CURRENT-ASSETS> 392,252
<PP&E> 84,729<F1>
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 648,440
<CURRENT-LIABILITIES> 112,407
<BONDS> 248,754
0
0
<COMMON> 27,288
<OTHER-SE> 197,479
<TOTAL-LIABILITY-AND-EQUITY> 648,440
<SALES> 606,489
<TOTAL-REVENUES> 606,489
<CGS> 393,897
<TOTAL-COSTS> 393,897
<OTHER-EXPENSES> 201,771
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 12,181
<INCOME-PRETAX> (1,360)
<INCOME-TAX> (308)
<INCOME-CONTINUING> (1,052)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,052)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
<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>
