SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 31, 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 November 29, 1999: 27,289,869
shares.
<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
INDEX
PART I -- FINANCIAL INFORMATION
Item 1 - Financial Statements
Independent Accountants Review Report................................. 1
Condensed Consolidated Balance Sheets as of October 31, 1999 and
January 31, 1999...................................................... 2
Condensed Consolidated Statements of Income for the
thirteen weeks and thirty-nine weeks ended October 31, 1999
and November 1, 1998.................................................. 3
Condensed Consolidated Statements of Cash Flows for the
thirty-nine weeks ended October 31, 1999 and November 1, 1998......... 4
Notes to Condensed Consolidated Financial Statements.................. 5-7
Item 2 - Management's Discussion and Analysis of Results of Operations
and Financial Condition............................................... 8-12
PART II -- OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K............................. 13-14
Signatures............................................................ 15
Exhibit--Acknowledgment of Independent Accountants.................... 16
Exhibit--Financial Data Schedule...................................... 17
<PAGE>
Independent Accountants Review Report
Stockholders and Board of Directors
Phillips-Van Heusen Corporation
We have reviewed the accompanying condensed consolidated balance sheet of
Phillips-Van Heusen Corporation as of October 31, 1999, and the related
condensed consolidated statements of income for the thirteen and thirty-nine
week periods ended October 31, 1999 and November 1, 1998, and the related
condensed consolidated statements of cash flows for the thirty-nine week
periods ended October 31, 1999 and November 1, 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
November 17, 1999
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<PAGE>
Phillips-Van Heusen Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
UNAUDITED AUDITED
October 31, January 31,
1999 1999
<S> <C> <C>
ASSETS
Current Assets:
Cash, including cash equivalents of $39,715 and $4,399 $ 41,276 $ 10,957
Trade receivables, less allowances of $1,881 and $1,367 119,038 88,038
Inventories 226,989 232,695
Other, including deferred taxes of $10,611 30,064 36,327
Total Current Assets 417,367 368,017
Property, Plant and Equipment 97,703 108,846
Goodwill 84,153 113,344
Other Assets, including deferred taxes of $41,807 and
$52,167 68,702 84,106
$667,925 $674,313
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 20,000
Accounts payable $ 27,594 44,851
Accrued expenses 89,970 67,835
Total Current Liabilities 117,564 132,686
Long-Term Debt 248,769 248,723
Other Liabilities 62,539 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; shares issued 27,289,869 and
27,287,985 27,290 27,288
Additional Capital 117,697 117,683
Retained Earnings 94,066 83,917
Total Stockholders' Equity 239,053 228,888
$667,925 $674,313
</TABLE>
See accompanying notes.
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<PAGE>
Phillips-Van Heusen Corporation
Condensed Consolidated Statements of Operations
Unaudited
<TABLE>
(In thousands, except per share data)
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
October 31, November 1, October 31, November 1,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $368,041 $374,392 $974,530 $976,528
Cost of goods sold 239,239 246,329 633,136 636,894
Gross profit 128,802 128,063 341,394 339,634
Selling, general and administrative expenses 98,126 98,849 295,737 296,573
Year 2000 computer conversion costs 1,995 2,125 6,155 6,375
Income before interest, taxes and
extraordinary item 28,681 27,089 39,502 36,686
Interest expense, net 5,686 7,374 17,867 19,494
Income before taxes and
extraordinary item 22,995 19,715 21,635 17,192
Income tax expense 7,702 5,699 7,394 4,940
Income before extraordinary item 15,293 14,016 14,241 12,252
Extraordinary loss on debt retirement,
net of tax benefit (1,060)
Net income $ 15,293 $ 14,016 $ 14,241 $ 11,192
Basic and diluted net income per share:
Income before extraordinary item $ 0.56 $ 0.51 $ 0.52 $ 0.45
Extraordinary loss (0.04)
Net income per share $ 0.56 $ 0.51 $ 0.52 $ 0.41
See accompanying notes.
</TABLE>
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<PAGE>
Phillips-Van Heusen Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited
<TABLE>
<CAPTION>
(In thousands)
Thirty-Nine Weeks Ended
October 31, November 1,
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES:
Income before extraordinary item $ 14,241 $ 12,252
Adjustments to reconcile net cash provided
(used) by operating activities:
Depreciation and amortization 14,521 19,199
Equity income (810) (864)
Deferred income taxes 6,946 6
Changes in operating assets and liabilities:
Receivables (31,000) (46,228)
Inventories 22,918 (35,977)
Accounts payable and accrued expenses (3,877) (10,182)
Acquisition of inventory associated with
license agreement (17,212)
Other-net 1,834 1,004
Net Cash Provided (Used) By Operating Activities 7,561 (60,790)
INVESTING ACTIVITIES:
Sale of Gant trademark, net of related costs 67,000
Property, plant and equipment acquired (20,165) (15,092)
Net Cash Provided (Used) By Investing Activities 46,835 (15,092)
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 41,600 160,600
Payments on revolving lines of credit (61,600) (176,000)
Exercise of stock options 16 498
Cash dividends (4,093) (4,081)
Net Cash Provided (Used) By Financing Activities (24,077) 75,204
Increase (decrease) In Cash 30,319 (678)
Cash at beginning of period 10,957 11,748
Cash at end of period $ 41,276 $ 11,070
See accompanying notes.
</TABLE>
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<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
GENERAL
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not contain all
disclosures required by generally accepted accounting principles for complete
financial statements. Reference should be made to the audited consolidated
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 interim 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 thirty-nine weeks ended October 31, 1999 and
November 1, 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 thirty-nine weeks ended November 1, 1998 to
present that information on a basis consistent with the thirty-nine weeks
ended October 31, 1999.
INVENTORIES
Inventories are summarized as follows:
October 31, January 31,
1999 1999
Raw materials $ 10,702 $ 8,529
Work in process 13,583 12,834
Finished goods 202,704 211,332
Total $226,989 $232,695
Inventories are stated at the lower of cost or market. Cost for apparel
inventories are determined principally using the last-in, first-out method
(LIFO). Cost for footwear inventories are determined using the first-in,
first-out method (FIFO). Inventories would have been approximately $8,400
higher than reported at October 31, 1999 and January 31, 1999, if the FIFO
method of inventory accounting had been used for all businesses.
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<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.
EXTRAORDINARY LOSS
On April 22, 1998, the Company 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, the Company 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, the Company 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, the Company 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 the Company has a minority interest. Subsequent to February 26, 1999,
the Company has been winding down its Gant operations in order to liquidate
Gant's working capital and close the Gant division. The Company anticipates
completing this process in the fourth quarter of 1999.
On November 3, 1999, the Company announced it had entered into agreements with
Oxford Industries, Inc. to license the Izod Club trademark and sell
substantially all of the related assets of the Company's Izod Club division.
Upon finalization of the agreements, the Company will close its Izod Club
division in the fourth quarter of 1999.
The finalization of the Gant and Izod Club transactions in the fourth quarter
of 1999 is not expected to have a material impact on the Company's financial
statements.
FACILITY CLOSING
During 1997, the Company 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.
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<PAGE>
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 was no net effect on net income.
SEGMENT DATA
The Company 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, the Company evaluated its
operating divisions and product offerings. The Company aggregates 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. The Company'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 Thirty-Nine Weeks Ended
10/31/99 11/1/98 10/31/99 11/1/98
<S> <C> <C> <C> <C>
Net sales-apparel $262,568 $256,252 $677,291 $665,238
Net sales-footwear and
related products 105,473 118,140 297,239 311,290
Total net sales $368,041 $374,392 $974,530 $976,528
Operating income - apparel $ 26,807 $ 25,090 $ 40,177 $ 37,374
Operating income-footwear
and related products 8,189 8,095 16,792 15,813
Total operating income 34,996 33,185 56,969 53,187
Corporate expenses 6,315 6,096 17,467 16,501
Income before interest, taxes
and extraordinary item $ 28,681 $ 27,089 $ 39,502 $ 36,686
Corporate expenses include Year 2000 computer conversion costs of $1,995 and
$6,155 for the thirteen and thirty-nine weeks ended October 31, 1999,
respectively, compared with $2,125 and $6,375 for the thirteen and thirty-nine
weeks ended November 1, 1998, respectively.
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Results of Operations
Thirteen Weeks Ended October 31, 1999 Compared With Thirteen Weeks Ended
November 1, 1998
APPAREL SEGMENT
Net sales of the Company's apparel segment in the third quarter were $262.6
million in 1999 compared with $256.3 million last year, a 2.5% increase.
During 1999, the Company will close two of its apparel divisions: Gant, which
the Company has been winding down since selling the Gant trademark in
February, 1999, and Izod Club, due to entering into a license agreement which
will be consummated in the fourth quarter. Excluding net sales of these
businesses, net sales of the Company's apparel segment in the third quarter
increased to $241.8 million in 1999 compared with $219.1 million last year, a
10.4% increase. This increase resulted principally from strong sales of both
sportswear and dress shirts, with dress shirt sales including the John Henry
and Manhattan brands which the Company began selling late in the current
year's first quarter under a new licensing agreement.
Gross profit on apparel sales was 33.2% in the third quarter compared with
33.5% last year. This decrease relates to lower gross margins related to
winding down the Company's Gant operations in connection with the sale of the
Gant trademark in February 1999.
Selling, general and administrative expenses as a percentage of apparel sales
were 23.0% in the third quarter compared with 23.7% last year. The improved
expense level relates principally to reduced operating expenses relating to
the closing of the Gant division.
FOOTWEAR AND RELATED PRODUCTS SEGMENT
Net sales of the Company's footwear and related products segment in the third
quarter were $105.5 million in 1999 compared with $118.1 million last year, a
decrease of 10.7%. This decrease is due to significantly less promotional
selling of clearance merchandise than occurred in the same period last year.
Gross profit on footwear and related products sales was 39.3% in the third
quarter of 1999 compared with 35.5% last year. As noted above, the current
quarter had significantly less promotional selling of clearance merchandise as
compared with the same period last year.
Selling, general and administrative expenses as a percentage of footwear and
related products sales in the third quarter were 31.6% in 1999 compared with
28.6% in 1998. This increase resulted from the third quarter's sales
decrease, which increased Bass' expenses as a percentage of sales.
-8-
<PAGE>
INTEREST EXPENSE
Interest expense in the third quarter was $5.7 million in 1999 compared with
$7.4 million last year. Interest expense decreased due to improved cash flow,
resulting principally because of the cash proceeds received from the sale of
the Gant trademark and tight management of assets.
INCOME TAXES
The effective income tax rate in the third quarter of 1999 was 33.5% compared
with the 1998 full year rate of 25.8%. The increased rate in the current year
results principally from closing the Company's manufacturing operations in
Puerto Rico in the current year, resulting in a higher percentage of pre-tax
income being subject to U.S. tax.
CORPORATE EXPENSES
Corporate expenses in the third quarter were $6.3 million in 1999 compared
with $6.1 million in 1998. This increase relates to increased information
technology costs.
Thirty-Nine Weeks Ended October 31, 1999 Compared With Thirty-Nine Weeks Ended
November 1, 1998
APPAREL SEGMENT
Net sales of the Company's apparel segment in the first nine months were
$677.3 million in 1999 compared with $665.2 million last year, an increase of
1.8%. Excluding net sales of Gant and Izod Club which are closing in 1999 as
described above, net sales of the Company's apparel segment in the first nine
months were $599.5 million in 1999, an increase of 4.9% from the prior year's
$571.3 million. This increase resulted principally from strong sales of both
sportswear and dress shirts, with dress shirt sales including the John Henry
and Manhattan brands which the Company began selling late in the current
year's first quarter under a new licensing agreement.
Gross profit on apparel sales was 33.4% in the first nine months of 1999
compared with 33.7% last year. This decrease is due to lower gross margins
related to winding down the Company's Gant operations.
Selling, general and administrative expenses as a percentage of apparel sales
in the first nine months were 27.4% in 1999 compared with 28.1% in 1998. The
improved expense level relates principally to reduced operating expenses
relating to the closing of the Gant division.
FOOTWEAR AND RELATED PRODUCTS SEGMENT
Net sales of the Company's footwear and related products segment in the first
nine months were $297.2 million in 1999 compared with $311.3 million last
year, a decrease of 4.5%. This decrease is due to significantly less
promotional selling of clearance merchandise than occurred in the same period
last year.
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<PAGE>
Gross profit on footwear and related products sales was 38.5% in the first
nine months of 1999 compared with 36.9% last year. As noted above, the
current period had significantly less promotional selling of clearance
merchandise than occurred in the same period last year.
Selling, general and administrative expenses as a percentage of footwear and
related products sales in the first nine months were 32.9% in 1999 and 31.8%
in 1998. This increase resulted from the current period's sales decrease,
which increased Bass' expenses as a percentage of sales.
INTEREST EXPENSE
Interest expense in the first nine months was $17.9 million in 1999 compared
with $19.5 million last year. Interest expense decreased due to improved cash
flow, principally because of the cash proceeds received from the sale of the
Gant trademark and tight management of assets.
INCOME TAXES
The effective income tax rate for the first nine months of 1999 was 34.2%
compared with the 1998 full year rate of 25.8%. The increased rate in the
current year results principally from closing the Company's manufacturing
operations in Puerto Rico in the current year, resulting in a higher
percentage of pre-tax income being subject to U.S. tax.
CORPORATE EXPENSES
Corporate expenses in the first nine months were $17.5 million in 1999
compared with $16.5 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. The
Company 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.
The work on end-user computing applications was completed in October 1999.
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<PAGE>
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 have been installed.
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 has been
capitalized, with the remaining cost expensed as incurred. Expenses incurred
through October 31, 1999 were $15 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.
The Company 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 the Company's internal systems or
those of other companies on which it relies, will not have a material adverse
impact on the Company'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 provided by operations in the first nine months was $7.6 million in
1999 as compared with net cash used by operations of $60.8 million in the
prior year. The increase in cash provided by operations is due principally to
tight management of working capital, 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 peak
seasonal needs for the foreseeable future.
* * *
******************************************************************************
* 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 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) 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, all of which can be affected by weather conditions, changes in *
* the economy, fashion trends and other factors; (iii) the Company'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 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).
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).
-13-
<PAGE>
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).
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).
15. Acknowledgement of Independent Accountants
27. Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter ended October 31, 1999.
No reports have been filed on Form 8-K during the quarter covered by this
report.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHILLIPS-VAN HEUSEN CORPORATION
Registrant
December 10, 1999 /s/ Vincent A. Russo
Vincent A. Russo
Vice President and Controller
-15-
<PAGE>
Exhibit 15
November 17, 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 November 17, 1999, August 23, 1999 and May 21, 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 October 31, 1999, August 1, 1999 and May 2, 1999.
Pursuant to Rule 436(c) of the Securities Act of 1933, our reports are not a
part of the registration statements or post-effective amendments prepared or
certified by accountants within the meaning of Section 7 or 11 of the
Securities Act of 1933.
ERNST & YOUNG LLP
New York, New York
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PHILLIPS-VAN HEUSEN CORPORATION FINANCIAL STATEMENTS INCLUDED IN ITS 10-Q REPORT
FOR THE QUARTER ENDED OCTOBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-30-2000
<PERIOD-END> OCT-31-1999
<CASH> $ 41,276
<SECURITIES> 0
<RECEIVABLES> 120,919
<ALLOWANCES> 1,881
<INVENTORY> 226,989
<CURRENT-ASSETS> 417,367
<PP&E> 97,703<F1>
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 667,925
<CURRENT-LIABILITIES> 117,564
<BONDS> 248,769
0
0
<COMMON> 27,290
<OTHER-SE> 211,763
<TOTAL-LIABILITY-AND-EQUITY> 667,925
<SALES> 974,530
<TOTAL-REVENUES> 974,530
<CGS> 633,136
<TOTAL-COSTS> 633,136
<OTHER-EXPENSES> 301,892
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 17,867
<INCOME-PRETAX> 21,635
<INCOME-TAX> 7,394
<INCOME-CONTINUING> 14,241
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,241
<EPS-BASIC> 0.52
<EPS-DILUTED> 0.52
<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>
