<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
|X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 1998
-----------------------------------------------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED].
For the transition period from __________ to __________
Commission file number 1-724
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below: PVH Associates Investment Plan For Residents Of
The Commonwealth Of Puerto Rico
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: Phillips-Van Heusen Corporation, 200
Madison Avenue, New York, New York 10016
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the Administrative Committee has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR THE
RESIDENTS OF THE COMMONWEALTH OF
PUERTO RICO
Date: June 28, 1999 By /s/ Pamela N. Hootkin
------------------------------------------
Pamela N. Hootkin, Member of
Administrative Committee
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Financial Statements
Years ended December 31, 1998 and 1997
Contents
Report of Independent Auditors.............................................. F-2
Statements of Net Assets Available for Plan Benefits ....................... F-3
Statements of Changes in Net Assets Available for Plan Benefits ............ F-4
Notes to Financial Statements............................................... F-5
The Plan's investment asset are held in a Master Trust for which a separate
report is filed with the Department of Labor. Accordingly, supplemental
schedules of Asset Held for Investment Purpose and Reportable Transactions of
the Master Trust have not been presented.
F-1
<PAGE>
Report of Independent Auditors
Administrative Committee of the Plan
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates who are Residents
of the Commonwealth of Puerto Rico
We have audited the accompanying statements of net assets available for plan
benefits of the Phillips-Van Heusen Corporation Associates Investment Plan for
Associates who are Residents of the Commonwealth of Puerto Rico as of December
31, 1998 and 1997, and the related statements of changes in net assets available
for plan benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1998 and 1997, and the changes in its net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
June 25, 1998
F-2
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Statements of Net Assets Available for Plan Benefits
December 31
1998 1997
----------------------------
Assets
Investments, at fair value (Notes A and E):
Shares of registered investment companies:
Equity Fund $ 104,902 $ 64,341
Bond Fund 50,524 40,467
Balanced Fund 111,363 80,547
International Fund 17,322 15,706
Common Stock--Employer Company Fund 188,364 340,004
Common Trust Fund * 126,496 124,666
Participant loans receivable 12,792 39,343
----------------------------
Net assets available for plan benefits $ 611,763 $ 705,074
============================
* Consists of the Money Market Fund (Chase Manhattan Bank Domestic Liquidity
Fund).
See notes to financial statements.
F-3
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Statements of Changes in Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
Year ended December 31
1998 1997
-------------------------
<S> <C> <C>
Additions
Contributions:
Employer company, net of forfeitures $ 33,162 $ 34,846
Employees 87,653 117,550
----------------------------
120,815 152,396
Interest and investment income 58,770 18,192
----------------------------
Total additions 179,585 170,588
----------------------------
Deductions
Payments to participants 178,171 100,812
----------------------------
Total deductions 178,171 100,812
----------------------------
Net realized and unrealized (depreciation) appreciation of investments
(94,725) 24,345
----------------------------
Net (decrease) increase (93,311) 94,121
Net assets available for plan benefits at beginning
of year 705,074 610,953
============================
Net assets available for plan benefits at end
of year $ 611,763 $ 705,074
============================
</TABLE>
See notes to financial statements.
F-4
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
(formerly the Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
who are Residents of the Commonwealth of Puerto Rico)
Notes to Financial Statements
December 31, 1998
A. Description of the Plan
On July 1, 1996, the Phillips-Van Heusen Corporation Associates Investment Plan
for Salaried Associates who are Residents of the Commonwealth of Puerto Rico was
merged into the Phillips-Van Heusen Corporation Associates Investment Plan for
Hourly Associates who are Residents of the Commonwealth of Puerto Rico. The name
of the merged plan is the Phillips-Van Heusen Corporation Associates Investment
Plan for Associates who are Residents of the Commonwealth of Puerto Rico (the
"Plan").
The following description of the Plan provides only general information.
Participants should refer to the Plan Document for a more complete description
of the Plan's provisions.
General
The Plan is a defined contribution plan covering salaried clerical and hourly
production associates of Phillips-Van Heusen Corporation (the "Company") who are
residents of the Commonwealth of Puerto Rico, have at least one year of service
(1,000 hours in a year) and are age 21 or older. The Plan is subject to the
reporting and disclosure requirements of the Employee Retirement Income Security
Act of 1974 ("ERISA").
Contributions
Each year, participants may contribute up to 10% of pretax annual compensation,
as defined by the Plan. The Company contributes 50% of the first 6% of base
compensation that a participant contributes to the Plan.
F-5
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
A. Description of the Plan (continued)
Participant Accounts
Each participant's account is credited with the participant's contributions and
allocations of (a) the Company's contributions and (b) Plan earnings. Forfeited
balances of terminated participants' nonvested accounts are used to reduce
future Company contributions. One hundred percent of the Company's contributions
are automatically invested in the common stock of the Company. In accordance
with the provisions of the Plan, participants age 55 or older may direct the
Company contributions into any of the Plan's investment options.
Vesting
Amounts attributable to Company contributions become vested on the participant's
65th birthday or if the participant's employment by the Company terminates by
reason of the participant's death or permanent disability or the participant has
completed five years of service with the Company.
Investment Options
Upon enrollment in the Plan, a participant may direct employee contributions
into any of six investment options. A participant may contribute a maximum of
25% of employee contributions into the Phillips-Van Heusen Corporation Common
Stock Fund.
Participant Loans Receivable
Participants may borrow from the Plan, with certain restrictions, using their
vested account balance as collateral. The minimum loan amount is $1,000 and the
maximum loan amount is the lesser of (i) $50,000 reduced by the participant's
highest outstanding loan balance during the previous 12 months, or (ii) 50% of
the vested value of the participant's account. Interest is fixed for the term of
the loan at the prime rate as of first business day of the month of application
as published in The Wall Street Journal, plus 1%. Loan repayments are made
through payroll deductions which may be specified for a term of 1 to 5 years or
up to 15 years for the purchase of a primary residence.
F-6
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
A. Description of the Plan (continued)
Payment of Benefits
Participants entitled to final distributions generally will receive payment in
the form of a lump-sum amount equal to the value of their vested account.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
B. Significant Accounting Policies
The accounting records of the Plan are maintained on the accrual basis.
Substantially all administrative expenses are paid by the company.
In accordance with the Rules and Regulations of the Department of Labor,
investments are included in the accompanying financial statements at market
value as determined by quoted market prices or at fair value as determined by
Wachovia Bank, N.A. ("Wachovia") for the applicable Wachovia investment funds.
Purchases and sales of securities are reflected on a trade date basis.
All assets of the Plan are held by Wachovia in the Company's Associates
Investment Plan Master Trust (the "AIP Master Trust") and are segregated from
the assets of the Company. The Plan shares in AIP Master Trust interest and
investment income based upon its participants' shares of AIP Master Trust net
assets available for plan benefits. The AIP Master Trust's investments include
an interest contract with an insurance company that has been placed into
conservatorship in 1991. In November 1998, the AIP Master Trust received its
principal in the interest contract plus accrued interest, as defined in the
conservatorship agreement. The Plan does not have a beneficial interest in this
interest contract.
F-7
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
B. Significant Accounting Policies (continued)
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 these estimates.
C. Transactions with Parties-in-Interest
During the years ended December 31, 1998 and 1997, the AIP Master Trust
purchased 56,702 and 41,891 shares, respectively, of the Company's common stock
and received $197,777 and $205,332, respectively, from the Company as payment of
dividends on its common stock. The AIP Master Trust also sold 14,961 and 58,705
shares of the Company's common stock during the years ended December 31, 1998
and 1997, respectively.
In connection with the merger of the Crystal Brands Plan on October 1, 1997,
52,112 shares of the Company's common stock were transferred into the AIP Master
Trust.
F-8
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
D. Changes in the AIP Master Trust Net Assets Held by Fund
Changes in the AIP Master Trust net assets held by fund during the year ended
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
Phillips-Van
Heusen Corp. Money
Common Stock Market Bond Balanced Equity International
Fund Fund Fund Fund Fund Fund
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets at beginning of year .. $ 19,905,879 $ 9,046,544 $ 2,314,921 $ 9,387,001 $ 16,163,805 $ 3,585,363
Interest and investment income ... 226,343 474,862 138,565 1,154,085 1,133,584 329,613
Contributions received:
Employer Company, net of
forfeitures .................. 1,894,714 632 1,355 17,426 31,368 5,185
Employees ...................... 325,015 561,378 320,057 1,226,067 2,101,123 622,425
Net realized and unrealized
appreciation (depreciation) .... (9,106,716) -- 21,757 455,901 3,577,455 (520,450)
Loans to participants, net of
repayments ..................... 594 (3,431) 9,072 35,206 39,529 13,351
Payments to participants ......... (3,113,510) (2,527,309) (497,432) (1,427,011) (2,549,482) (365,871)
Transfers (to) from other
accounts........................ (717,388) 4,418,474 (41,203) 683,068 1,026,645 (566,629)
-----------------------------------------------------------------------------------------------
Net assets at end of year ........ $ 9,414,931 $ 11,971,150 $ 2,267,092 $ 11,531,743 $ 21,524,027 $ 3,102,987
===============================================================================================
Plan's beneficial interest at
end of year .................... $ 188,364 $ 126,496 $ 50,524 $ 111,363 $ 104,902 $ 17,322
===============================================================================================
<CAPTION>
Fixed
Income Loan
Fund Fund Total
------------------------------------------------
<S> <C> <C> <C>
Net assets at beginning of year .. $ 4,575,539 $ 1,371,795 $ 66,350,847
Interest and investment income ... 377,524 -- 3,834,576
Contributions received:
Employer Company, net of
forfeitures .................. -- -- 1,950,680
Employees ...................... -- -- 5,156,065
Net realized and unrealized
appreciation (depreciation) .... -- -- (5,572,053)
Loans to participants, net of
repayments ..................... -- (94,321) --
Payments to participants ......... (150,096) -- (10,630,711)
Transfers (to) from other
accounts ....................... (4,802,967) -- --
--------------------------------------------
Net assets at end of year ........ -- $ 1,277,474 $ 61,089,404
============================================
Plan's beneficial interest at
end of year .................... $ -- $ 12,792 $ 611,763
============================================
</TABLE>
Note: Certain funds above include investments in the Chase Manhattan Bank
Domestic Liquidity Fund.
F-9
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
D. Changes in the AIP Master Trust Net Assets Held by Fund (continued)
Changes in the AIP Master Trust net assets held by fund during the year ended
December 31, 1997 were as follows:
<TABLE>
<CAPTION>
Phillips-Van
Heusen Corp. Money
Common Stock Market Bond Balanced Equity International
Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets at beginning of year ..... $ 19,612,593 $ 6,879,359 $ 1,818,465 $ 5,750,463 $ 9,384,953 $ 2,226,120
Interest and investment income ...... 211,070 551,149 125,621 502,825 330,738 391,072
Contributions received:
Employer Company, net of .......... 1,620,371 (51,060) 73 (2,835) (11,499) 585
forfeitures
Employees ......................... 423,500 670,327 350,969 1,193,105 1,963,385 646,476
Net realized and unrealized
appreciation (depreciation) ....... (299,112) -- 18,814 854,817 2,721,432 (327,047)
Loans to participants, net of
repayments ........................ (77,679) (45,092) 4,773 (42,561) (71,843) (27,416)
Payments to participants ............ (1,962,154) (1,707,477) (255,224) (802,958) (1,332,908) (279,685)
Transfers (to) from other accounts .. (446,731) (226,623) (85,827) 236,828 427,253 95,100
Transfer from AIP of PVH (Crystal
Brands Division) .................. 824,021 2,975,961 337,257 1,697,317 2,752,294 860,158
---------------------------------------------------------------------------------------------
Net assets at end of year ........... $ 19,905,879 $ 9,046,544 $ 2,314,921 $ 9,387,001 $ 16,163,805 $ 3,585,363
=============================================================================================
Plan's beneficial interest at
end of year ....................... $ 340,004 $ 124,666 $ 40,467 $ 80,547 $ 64,341 $ 15,706
=============================================================================================
<CAPTION>
Fixed
Income Loan
Fund Fund Total
---------------------------------------------
<S> <C> <C> <C>
Net assets at beginning of year ..... $ -- $ 969,816 $ 46,641,769
Interest and investment income ...... 106,016 -- 2,218,491
Contributions received:
Employer Company, net of -- -- 1,555,635
forfeitures .....................
Employees ......................... -- -- 5,247,762
Net realized and unrealized
appreciation (depreciation) ....... -- -- 2,968,904
Loans to participants, net of
repayments ....................... -- 259,818 --
Payments to participants ............ -- -- (6,340,406)
Transfers (to) from other accounts .. -- -- --
Transfer from AIP of PVH (Crystal
Brands Division) .................. 4,469,523 142,161 14,058,692
---------------------------------------------
Net assets at end of year ........... $ 4,575,539 $ 1,371,795 $ 66,350,847
=============================================
Plan's beneficial interest at
end of year ....................... $ -- $ 39,343 $ 705,074
=============================================
</TABLE>
Note: Certain funds above include investments in the Chase Manhattan Bank
Domestic Liquidity Fund.
F-10
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
E. Assets of the Plan
Assets of the Plan are included in the assets of the AIP Master Trust held by
the trustees. The assets of the AIP Master Trust are presented in the following
table. Investments that represent 5% or more of the AIP Master Trust's total net
assets are identified by an asterisk.
<TABLE>
<CAPTION>
December 31,
1998 1997
--------------------------------
<S> <C> <C>
Investments at fair value as determined by quoted market
price:
Shares of registered investment companies:
Fidelity Growth & Income Portfolio,
469,513 and 424,247 shares, respectively $ 21,524,027* $ 16,163,805*
Fidelity Intermediate Bond Fund,
220,576 and 227,623 shares, respectively 2,267,092 2,314,921
Fidelity Puritan Fund, 574,442 and 484,360 shares,
respectively 11,531,743* 9,387,001*
Templeton Foreign Fund, 369,842 and 360,337 shares,
respectively 3,102,987* 3,585,363*
Phillips-Van Heusen Corp. Common Stock Fund
1,304,634 and 1,394,679 shares, respectively 9,414,931* 19,905,879*
Investments at estimated fair value:
Common Trust Fund 11,971,150* 9,046,544*
Promissory notes (participant loans) 1,277,474 1,371,795
Non-performing interest contract -- 4,575,539*
--------------------------------
Total net assets $ 61,089,404 $ 66,350,847
================================
Plan's beneficial interest $ 611,763 $ 705,074
================================
</TABLE>
F-11
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
F. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated May 12, 1995, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
G. Differences Between Plan Financial Statements and Form 5500
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31,
1998 1997
------------------------------
<S> <C> <C>
Net assets available for plan benefits as reported on the
financial statements $ 611,763 $ 705,074
Less amounts allocated to withdrawn participants at the end of
the year (9,089) (24,529)
------------------------------
Net assets available for plan benefits as reported on the Form
5500 $ 602,674 $ 680,545
==============================
<CAPTION>
Year ended
December 31,
1998
---------------
<S> <C>
Benefits paid to participants per the financial statements $ 178,171
Add amounts allocated to withdrawn participants
at December 31, 1998 9,089
Less amounts allocated to withdrawn participants
at December 31, 1997 (24,529)
---------------
Benefits paid to participants per the Form 5500 $ 162,731
===============
</TABLE>
Amounts allocated to withdrawn participants on the Form 5500 represent benefit
claims that have been processed and approved for payment prior to year-end but
not yet paid.
F-12
<PAGE>
Phillips-Van Heusen Corporation
Associates Investment Plan for Associates
who are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
H. Year 2000 (Unaudited)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
year 2000 dates. The Plan Sponsor is taking a two phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the year 2000 modifications. The Plan Sponsor anticipates substantially
completing this phase of the project by the end of 1999. Costs associated with
modifying software and equipment are not estimated to be significant and will be
paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they will be year 2000 compliant by the end of 1999. If modification of data
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the year 2000 problem could have a material
impact on the operations of the Plan. Plan management has not developed a
contingency plan, because they are confident that all systems will be year 2000
ready.
F-13
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1 Consent of Independent Auditors
<PAGE>
Exhibit 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Phillips-Van Heusen Corporation Associates Investment
Plan for Associates who are Residents of the Commonwealth of Puerto Rico of our
report dated June 25, 1999, with respect to the financial statements of the
Phillips-Van Heusen Corporation Associates Investment Plan for Associates who
are Residents of the Commonwealth of Puerto Rico included in this Annual Report
(Form 11-K) for the year ended December 31, 1998.
/s/ Ernst & Young LLP
New York, New York
June 25, 1999
