UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
COMMISSION FILE NUMBER 1-11226
TOMMY HILFIGER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BRITISH VIRGIN ISLANDS NOT APPLICABLE
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
6/F, PRECIOUS INDUSTRIAL CENTRE,
18 CHEUNG YUE STREET, CHEUNG SHA WAN, KOWLOON, HONG KONG
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
852-2745-7798
(REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL RE-
PORTS 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 THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS),
AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90
DAYS.
YES X NO_____
ORDINARY SHARES, $0.01 PAR VALUE PER SHARE, OUTSTANDING AS OF SEPTEM-
BER 30, 1996: 37,048,679<PAGE>
TOMMY HILFIGER CORPORATION
INDEX TO FORM 10-Q
September 30, 1996
PART I - FINANCIAL INFORMATION Page
Item 1 Financial Statements
Condensed Consolidated Balance Sheets as of September 30,
1996 and March 31, 1996..................................... 3
Condensed Consolidated Statements of Operations for the
six months ended September 30, 1996 and 1995 and the
three months ended September 30, 1996 and 1995.............. 4
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1995..................... 5
Condensed Consolidated Statement of Changes in Shareholders'
Equity for the six months ended September 30, 1996 and the
year ended March 31, 1996................................... 6
Notes to Condensed Consolidated Financial Statements.......... 7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 8
PART II - OTHER INFORMATION
Item 1 Legal Proceedings............................................. 12
Item 4 Submission of Matters to a Vote of Security Holders........... 12
Item 6 Exhibits and Reports on Form 8-K.............................. 13
Signatures............................................................ 14
2<PAGE>
<TABLE>
<CAPTION>
PART I
ITEM 1 - FINANCIAL STATEMENTS
TOMMY HILFIGER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED) AS OF SEPTEMBER 30, AS OF MARCH 31,
1996 1996
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents....................................................... $ 97,333 $127,743
Accounts receivable............................................................. 79,925 68,402
Inventories..................................................................... 103,288 81,428
Other current assets............................................................ 15,181 13,484
-------- --------
Total current assets.......................................................... 295,727 291,057
Property and equipment, at cost, less accumulated
depreciation and amortization................................................... 98,125 57,845
Other assets......................................................................... 7,298 9,720
-------- --------
Total Assets.................................................................. $401,150 $358,622
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings........................................................... $ 8,979 $ 13,755
Accounts payable................................................................ 7,074 9,454
Accrued expenses and other current liabilities.................................. 38,513 29,409
-------- --------
Total current liabilities................................................. 54,566 52,618
Other liabilities.................................................................... 2,237 2,877
Long-term debt....................................................................... 1,651 1,789
Shareholders' equity
Preference Shares, $0.01 par value-shares authorized 5,000,000;
none issued................................................................... -- --
Ordinary Shares, $0.01 par value-shares authorized 50,000,000;
issued and outstanding 37,048,679 and 36,879,924, respectively................ 370 369
Capital in excess of par value.................................................. 159,976 155,294
Retained earnings............................................................... 182,301 145,633
Cumulative translation adjustment............................................... 49 42
-------- --------
Total shareholders' equity................................................ 342,696 301,338
-------- --------
Commitments and contingencies
Total Liabilities and Shareholders' Equity................................ $401,150 $358,622
======== ========
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
3<PAGE>
<TABLE>
<CAPTION>
TOMMY HILFIGER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED) FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net revenue........................................................ $303,036 $221,487 $178,907 $131,965
Cost of goods sold................................................. 157,986 121,239 91,976 71,793
-------- -------- -------- --------
Gross profit....................................................... 145,050 100,248 86,931 60,172
Selling, general and administrative expenses....................... 92,184 62,510 51,796 33,181
-------- -------- -------- --------
Income from operations............................................. 52,866 37,738 35,135 26,991
Interest expense................................................... 544 631 341 432
Interest income.................................................... 2,984 2,732 1,396 1,385
-------- -------- -------- --------
Income before income taxes......................................... 55,306 39,839 36,190 27,944
Provision for income taxes......................................... 18,638 13,846 12,100 9,740
-------- -------- -------- --------
Net income......................................................... $ 36,668 $ 25,993 $ 24,090 $ 18,204
======== ======== ======== ========
Earnings per share:
Earnings per share and share equivalents........................... $ .97 $ .70 $ .63 $ .49
======== ======== ======== ========
Weighted average shares and share equivalents outstanding.......... 37,742 36,951 37,984 37,165
======== ======== ======== ========
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
4<PAGE>
<TABLE>
<CAPTION>
TOMMY HILFIGER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED) FOR THE SIX MONTHS ENDED
SEPTEMBER 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities
Net income................................................................................ $36,668 $25,993
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and amortization......................................................... 9,189 6,459
Deferred income taxes................................................................. -- (366)
Stock compensation expense............................................................ -- 60
Changes in operating assets and liabilities
(Increase) decrease in assets
Accounts receivable............................................................... (11,523) (14,956)
Inventories....................................................................... (21,860) (31,324)
Other assets...................................................................... 437 (2,961)
Increase (decrease) in liabilities
Accounts payable.................................................................. (2,410) 12,604
Accrued expenses and other liabilities............................................ 8,494 7,427
------- -------
Net cash provided by operating activities............................................. 18,995 2,936
------- -------
Cash flows from investing activities
Purchases of property and equipment....................................................... (49,181) (13,248)
Purchases of investments.................................................................. -- (92,084)
Maturities and sales of investments....................................................... -- 50,214
------- -------
Net cash used in investing activities................................................. (49,181) (55,118)
------- -------
Cash flows from financing activities
Proceeds from the exercise of employee stock options...................................... 1,786 3,248
Tax benefit from exercise of stock options................................................ 2,897 2,488
Short-term bank borrowings................................................................ (4,776) 17,031
Payments on long-term debt................................................................ (138) (138)
Other..................................................................................... 7 2
------- -------
Net cash (used in) provided by financing activities................................... (224) 22,631
------- -------
Net decrease in cash.................................................................. (30,410) (29,551)
Cash and cash equivalents, beginning of period.............................................. 127,743 35,817
------- -------
Cash and cash equivalents, end of period.................................................... $97,333 $ 6,266
======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
5<PAGE>
<TABLE>
<CAPTION>
TOMMY HILFIGER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
CAPITAL IN
EXCESS UNEARNED CUMULATIVE TOTAL
ORDINARY OF PAR RETAINED STOCK TRANSLATION SHAREHOLDERS'
SHARES VALUE EARNINGS COMPENSATION ADJUSTMENT EQUITY
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1995 $352 $124,859 $84,133 ($350) $30 $209,024
Net income.................................... 61,500 61,500
Exercise of employee stock options............ 17 13,010 13,027
Tax benefits from exercise of stock
options.................................... 17,715 17,715
Amortization of unearned stock
compensation............................... (290) 350 60
Translation adjustment........................ 12 12
---- -------- ------- ----- --- --------
BALANCE, MARCH 31, 1996 369 155,294 145,633 -- 42 301,338
Net income.................................... 36,668 36,668
Exercise of employee stock options............ 1 1,785 1,786
Tax benefits from exercise of stock
options.................................... 2,897 2,897
Translation adjustment........................ 7 7
---- -------- ------- ----- --- --------
BALANCE, SEPTEMBER 30, 1996 (UNAUDITED) $370 $159,976 $182,301 $ -- $49 $342,696
==== ======== ======= ===== === ========
See Accompanying Notes to Condensed Consolidated Financial Statements
</TABLE>
6<PAGE>
TOMMY HILFIGER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated
financial statements have been prepared by Tommy Hilfiger
Corporation (the "Registrant") in a manner consistent with that
used in the preparation of the consolidated financial
statements included in the Registrant's 1996 Annual Report as
filed with the Securities and Exchange Commission on Form 10-K
(the "Form 10-K"). Certain items contained in these statements
are based on estimates. In the opinion of management, the
accompanying financial statements reflect all adjustments,
consisting of only normal and recurring adjustments, necessary
for a fair presentation of the financial position and results
of operations and cash flows for the periods presented. All
significant intercompany accounts and transactions have been
eliminated.
Operating results for the six month period ended September
30, 1996 are not necessarily indicative of the results that may
be expected for the fiscal year ended March 31, 1997. These
unaudited financial statements should be read in conjunction
with the financial statements included in the Form 10-K.
The financial statements as of and for the six month and
the three month periods ended September 30, 1996 and 1995 are
unaudited. The Condensed Consolidated Balance Sheet as of
March 31, 1996, as presented, has been prepared from the
Consolidated Balance Sheet as of March 31, 1996 included in the
Registrant's Form 10-K.
NOTE 2 - INVENTORIES
Inventories are summarized as follows:
<TABLE>
September 30, 1996 March 31, 1996
<S> <C> <C>
Finished Goods....... $101,774,000 $80,210,000
Raw Materials........ 1,514,000 1,218,000
------------ -----------
$103,288,000 $81,428,000
============ ===========
</TABLE>
NOTE 3 - SHORT-TERM BORROWINGS
In July 1996, the Registrant entered into an amended and
restated credit agreement (the "Credit Agreement") effective
April 1, 1996. The Credit Agreement provides for direct
borrowings, bankers acceptances and letters of credit of
amounts ranging from $100,000,000 in fiscal 1997 to
$150,000,000 in fiscal 1999. Available borrowings under the
Credit Agreement are subject to the timed increase of
availability under the Credit Agreement and are based upon
eligible accounts receivable, inventory and open letters of
credit. Borrowings under the Credit Agreement are
collateralized by substantially all the assets of the
Registrant's U.S. operations and accrue interest at varying
interest rates.
7<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The following table sets forth, for the periods indicated, the percentage
relationship to net revenue of certain items in the Registrant's Condensed
Consolidated Statements of Operations:
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net revenue...................................................................... 100.0% 100.0% 100.0% 100.0%
Cost of goods sold............................................................... 52.1 54.7 51.4 54.4
---- ---- ---- ----
Gross profit..................................................................... 47.9 45.3 48.6 45.6
Selling, general and administrative expenses..................................... 30.4 28.2 29.0 25.1
---- ---- ---- ----
Income from operations........................................................... 17.5 17.1 19.6 20.5
Interest expense................................................................. .2 .3 .2 .3
Interest income.................................................................. 1.0 1.2 .8 1.0
---- ---- ---- ----
Income before income taxes....................................................... 18.3 18.0 20.2 21.2
Provision for income taxes....................................................... 6.2 6.3 6.7 7.4
---- ---- ---- ----
Net income....................................................................... 12.1 11.7 13.5 13.8
==== ==== ==== ====
</TABLE>
Six months ended September 30, 1996
compared to six months ended September 30, 1995
The Registrant's net revenue has increased $81,549,000, or
36.8%, to $303,036,000 during the six months ended September
30, 1996 from $221,487,000 during the six months ended
September 30, 1995. This improvement is principally due to
volume increases in each of the Registrant's operating
divisions.
Wholesale net revenue has increased to $222,878,000 in the
first six months of fiscal 1997 from $180,193,000 in the
corresponding period of fiscal 1996, an improvement of
$42,685,000 or 23.7%. This increase includes an increase in
menswear wholesale sales of 22.5% to $190,300,000 in the first
six months of fiscal 1997 from $155,301,000 in the
corresponding period of fiscal 1996 and an increase in boyswear
wholesale sales of 30.9% to $32,578,000 in the first six months
of fiscal 1997 from $24,892,000 in the corresponding period of
fiscal 1996. These increases are primarily due to the opening
of new in-store shops and fixtured areas, as well as the
expansion of certain existing shops. In addition, the
Registrant has introduced its New Generation shops which are
substantially larger, and feature more distinctive fixtures and
lifestyle image panels, than the standard in-store shops. The
number of mens's in-store shops has increased to 977, including
21 New Generation shops, at September 30, 1996 from 799 at
September 30, 1995, while the number of boyswear fixtured areas
has increased to 952 at September 30, 1996 from 783 as of
September 30, 1995. Increased sales to existing and new
customers and new store locations also resulted in increased
wholesale revenue. During the fall season of fiscal 1996, the
Registrant introduced boys' sizes four through seven which also
contributed to the increased boyswear sales.
Net revenue in the Registrant's retail division increased
90.5% to $67,966,000 in the first six months of fiscal 1997
from $35,685,000 in the corresponding period of fiscal 1996.
The increase in the number of stores as well as an increase in
sales at existing stores contributed to the increased revenue.
The total number of retail stores open as of September 30, 1996
and 1995 were 52 and 38, respectively.
Net revenue from royalties and buying agency commissions
increased 117.4% to $12,192,000 during the six months ended
September 30, 1996 from $5,609,000 during the six months ended
September 30, 1995. This increase reflects the incremental
revenue associated with newly licensed products and a general
increase in sales of existing licensed products and buying
agency services.
Gross profit has improved to 47.9% of net revenue in
the first six months of fiscal 1997 from 45.3% of net revenue
in the first six months of fiscal 1996. This increase is
attributable to the relative increase in retail operations
and royalties and buying agency
8<PAGE>
commissions, all of which produce higher margins than wholesale
operations and an increase in wholesale margin which was primarily
the result of the change in product mix.
As a percentage of net revenue, selling, general and
administrative expenses have increased to 30.4% in the first
six months of fiscal 1997 from 28.2% in the corresponding
period of fiscal 1996. This increased percentage is due to an
increase in marketing and advertising expense to promote and
enhance the brand name and the image of the Registrants
products. Selling, general and administrative expenses
increased to $92,184,000 in the first six months of fiscal 1997
from $62,510,000 in the corresponding period of fiscal 1996.
This increase is principally due to increased volume related
expenses to support the higher revenue and the increased
marketing and advertising expense mentioned above. In
addition, depreciation and amortization has increased due to
the greater number of in-store shops, fixtured areas and retail
stores.
The provision for taxes decreased to 33.7% of income
before taxes in the six months ended September 30, 1996 from
34.8% in the six months ended September 30, 1995. The decrease
was primarily attributable to the relative level of earnings in
the various taxing jurisdictions to which the Registrant's
earnings are subject.
Three months ended September 30, 1996
compared to three months ended September 30, 1995
Net revenue increased to $178,907,000 in the second quarter
of fiscal 1997 from $131,965,000 in the second quarter of fiscal
1996, an improvement of $46,942,000, or 35.6%. This increase
is primarily due to volume increases in each of the
Registrant's operating divisions.
Menswear wholesale sales increased 21.4% to $108,407,000
in the second quarter of fiscal 1997 from $89,265,000 in the
corresponding quarter of fiscal 1996. Boyswear wholesale sales
increased 26.0% to $20,526,000 in the second quarter of fiscal
1997 from $16,285,000 in the corresponding quarter of fiscal
1996. Wholesale sales have increased due to the continued
expansion of the in-store shop program which saw the number of
men's in-store shops increase to 977, including 21 New
Generation shops, at September 30, 1996 from 799 at September
30, 1995, and the number of boyswear fixtured areas increase to
952 at September 30, 1996 from 783 at September 30, 1995. In
addition to installations of new shops, the Registrant has
expanded certain shops which were previously open. Increased
sales to existing and new customers and new store locations
also contributed to the wholesale revenue increase.
Net revenue in the Registrant's retail division increased
86.7% to $43,123,000 during the second quarter of fiscal 1997
from $23,096,000 in the second quarter of fiscal 1996. The
increase in the number of stores as well as an increase in
sales at existing stores contributed to the improved revenue.
A total of 52 stores were open as of September 30, 1996
compared to 38 stores as of September 30, 1995.
Revenue from royalties and buying agency commissions
increased 106.4% to $6,851,000 in the second quarter of fiscal
1997 from $3,319,000 in the corresponding quarter of fiscal
1996. This increase reflects the incremental revenue
associated with newly licensed products and a general increase
in sales of existing licensed products and buying agency
services.
Gross profit as a percentage of net revenue increased to
48.6% in the second quarter of fiscal 1997 from 45.6% in the
second quarter of fiscal 1996. The increase is attributable to
the relative increase in retail operations and royalties and
buying agency commissions, all of which produce higher margins
than wholesale operations, and an increase in margin of the
Registrant's wholesale operations caused primarily by the
change in the mix of products sold.
As a percentage of net revenue, selling, general and
administrative expenses increased to 29.0% in the second
quarter of fiscal 1997 from 25.1% in the corresponding period
of fiscal 1996. Selling, general and administrative expenses
have increased as a percentage of net revenue due primarily to
increased marketing and advertising expense to promote the
brand. Selling, general and administrative expenses increased
to $51,796,000 in the second quarter of fiscal 1997 from
$33,181,000 in the corresponding period of fiscal 1996. This
increase is principally due to increased volume related
expenses to support the higher revenue and the increased
marketing and advertising expense mentioned above. In
addition, depreciation and amortization has increased due to
the greater number of in-store shops, fixtured areas and retail
stores.
The provision for income taxes decreased to 33.4% of
income before taxes in the second quarter of fiscal 1997 from
34.9% in the corresponding period of fiscal 1996. The decrease
was primarily attributable to the relative level of earnings in
the various taxing jurisdictions to which the Registrant's
earnings are subject.
9<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Registrant's primary funding requirements are to
finance working capital and the continued growth of its
business. Primarily, this includes the purchase of inventory
in anticipation of increased sales of the wholesale and retail
divisions as well as capital expenditures related to the
expansion of the menswear in-store shop and boyswear fixtured
area programs and additional retail stores. The Registrant's
primary sources of liquidity are cash on hand, cash from
operations and available credit.
As of September 30, 1996, the Registrant had approximately
$97,333,000 of cash and cash equivalents, a decrease of
$30,410,000 from the year-end balance of approximately
$127,743,000. The principal reason for this decrease was the
Registrant's purchase of the property which houses its
executive offices along with its primary sales, marketing and
licensing offices and its main sales and licensees' showrooms
for approximately $25,875,000.
Net cash from operating activities during the first six
months of fiscal 1997 was $18,995,000. This amount is
primarily made up of cash generated from net earnings offset,
in part, by an increase in working capital. The increase in
working capital is principally due to a higher inventory level
which increased 26.8% to $103,288,000 at September 30, 1996
from $81,428,000 at March 31, 1996. Higher inventory levels at
September 30, 1996 were attributable to a planned build-up of
inventory in anticipation of the holiday season of fiscal 1997
and increased retail division inventory due to the greater
number of stores, as well as an increase in its core inventory
to meet the demands of its replenishment business. Also
contributing to the increased working capital is an increase of
$11,523,000 in accounts receivable. This increase is a result
of the timing of the Registrant's revenue which is higher in
the second fiscal quarter. A detailed analysis of the changes
in cash and cash equivalents is presented in the Condensed
Consolidated Statements of Cash Flows.
Capital expenditures were $49,181,000 for the six months
ended September 30, 1996, compared with $13,248,000 for the six
months ended September 30, 1995. The increase in capital
expenditures is primarily related to the purchase of the
property mentioned above as well as the expansion of the
Registrant's in-store shop and fixtured area programs. The
Registrant has continued to install new in-store shops and
fixtured areas, including several New Generation shops, as well
as expand certain in-store shops and fixtured areas which were
previously open. The Registrant installed 191 menswear in-
store shops and boyswear fixtured areas during the six months
ended September 30, 1996 and 438 menswear in-store shops and
boyswear fixtured areas during the corresponding period in
fiscal 1996.
In July 1996, the Registrant entered into an amended and
restated revolving credit agreement (the "Credit Agreement")
effective April 1, 1996. The Credit Agreement, which expires
in June 1999, provides for direct borrowings, bankers
acceptances and letters of credit of amounts ranging from
$100,000,000 in fiscal 1997 to $150,000,000 in fiscal 1999.
Available borrowings under the Credit Agreement are subject to
the timed increase of availability under the Credit Agreement
and are based upon eligible accounts receivable, inventory and
open letters of credit. As of September 30, 1996, $100,000,000
was available for utilization under the Credit Agreement, of
which $67,234,000 had been used to open letters of credit.
Obligations under the Credit Agreement are collateralized by
substantially all the assets of the Registrant's U.S.
operations. Direct borrowings under the Credit Agreement,
which were limited to $60,000,000 as of September 30, 1996,
accrue interest at varying interest rates.
At September 30, 1996, total short-term borrowings of
$8,979,000 consisted of open letters of credit for inventory
purchased of $8,704,000 and the current portion of mortgage
debt payable of $275,000. Additionally, at September 30, 1996,
Tommy Hilfiger U.S.A., Inc. ("TH USA"), a wholly owned
subsidiary of the Registrant, was contingently liable for
unexpired bank letters of credit of $58,530,000 related to
commitments of TH USA to suppliers for the purchase of
inventories.
10<PAGE>
The Credit Agreement contains various covenants and, among
other matters, includes certain restrictions upon capital
expenditures, investments, indebtedness, loans and advances and
transactions with related parties. In addition, the Credit
Agreement prohibits certain of the Registrant's operating
subsidiaries which are borrowers or guarantors under the Credit
Agreement from paying any dividends. Such dividend
restrictions are not expected to have an adverse impact on the
Registrant. The Credit Agreement also requires the maintenance
of minimum tangible net worth and interest coverage ratios.
The Registrant was in compliance with all covenants under the
Credit Agreement as of, and for the period ended, September 30,
1996.
The Registrant intends to fund its cash requirements for
fiscal 1997 and future years from available cash balances,
internally generated funds and borrowings available under the
Credit Agreement. The Registrant believes that these resources
will be sufficient to fund its cash requirements for such
periods.
11<PAGE>
PART II
ITEM 1 - LEGAL PROCEEDINGS
The Registrant is party to an arbitration proceeding,
brought before the American Arbitration Association by Ashear
Bros. Co., Inc. ("Ashear"), relating the alleged wrongful
termination by the Registrant of a licensing agreement with
Ashear for handkerchiefs, scarves, mufflers, gloves and
umbrellas. The proceeding was instituted in November 1995 and
initially sought an unspecified amount of damages for lost
profits. In July 1996, Ashear amended the arbitration
proceedings to claim damages of $35,000,000. The Registrant
believes that Ashear's allegations are without merit and
intends to vigorously defend against this proceeding. Although
the outcome of any such proceeding cannot be determined with
certainty, the Registrant believes that the final outcome of
this proceeding should not have a material adverse effect on
the Registrant's results of operations or financial position.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 1, 1996, the Registrant held its Annual
Meeting of Shareholders at Little Dix Resort located in Virgin
Gorda, British Virgin Islands.
The following matters were voted upon at the meeting:
(i) the election of three directors to the Board of
Directors of the Registrant for a term to expire at the
1999 Annual Meeting of Shareholders;
(ii) a proposal to amend the Registrant's Stock Option
Plans to increase by 500,000 the number of Ordinary
Shares, par value $.01 per share, of the Registrant
authorized for issuance under the Stock Option Plans of
the Registrant and its subsidiaries; and
(iii) a proposal to ratify the selection of Price
Waterhouse LLP as the Registrant's auditors for the fiscal
year ending March 31, 1997.
With respect to the election of the directors, the
following votes were cast:
<TABLE>
<CAPTION>
Nominee For Withheld Authority
<S> <C> <C>
Silas K.F. Chou 33,932,920 402,070
Thomas J. Hilfiger 33,962,346 372,644
Joseph M. Adamko 34,038,106 296,884
</TABLE>
With respect to the amendment to the Registrant's Stock
Option Plans, a total of 25,496,086 votes were cast in favor of
the proposal, 8,660,373 votes were cast against and 83,086
votes abstained. There were 95,445 broker non-votes with
respect to this proposal.
With respect to the approval of Price Waterhouse LLP as
auditors, a total of 34,260,034 votes were cast in favor of the
proposal, 9,929 votes were cast against and 65,027 votes
abstained.
There were a total of 37,048,679 shares entitled to vote,
in person or by proxy, at the meeting. A total of 2,713,689
shares did not vote.
12<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Computation of Net Income Per Ordinary Share
27. Financial Data Schedule
(b) Reports on Form 8-K
The Registrant did not file any Current Reports on
Form 8-K during the three months ended September 30, 1996.
13<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:
Tommy Hilfiger Corporation
Date: November 6, 1996 By: /s/ Joel J. Horowitz
Joel J. Horowitz
Chief Executive Officer
and President
Tommy Hilfiger Corporation
Date: November 6, 1996 By: /s/ Steven A. Sorrillo
Steven A. Sorrillo
Principal Accounting Officer
Tommy Hilfiger Corporation
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EXHIBIT INDEX
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Exhibit Page
Number Description Number
<S> <C> <C>
11. Computation of Net Income Per Ordinary Share.
27. Financial Data Schedule
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<CAPTION>
EXHIBIT 11
TOMMY HILFIGER CORPORATION
COMPUTATION OF NET INCOME PER ORDINARY SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SIX MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
FINANCIAL STATEMENT PRESENTATION
PRIMARY
Average shares outstanding 37,038 35,415 37,038 35,539
Net effect of dilutive stock options based on the treasury
stock method using average market price 704 1,536 946 1,626
------- ------- ------- -------
Total 37,742 36,951 37,984 37,165
======= ======= ======= =======
Net Income $36,668 $25,993 $24,090 $18,204
======= ======= ======= =======
Per share amount $ .97 $ .70 $ .63 $ .49
======= ======= ======= =======
FULLY DILUTED
Average shares outstanding 37,038 35,415 37,038 35,539
Net effect of dilutive stock options based on the treasury
stock method using ending market price 1,010 1,686 1,068 1,659
------- ------- ------- -------
Total 38,048 37,101 38,106 37,198
======= ======= ======= =======
Net Income $36,668 $25,993 $24,090 $18,204
======= ======= ======= =======
Per share amount $ .96 $ .70 $ .63 $ .49
======= ======= ======= =======
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Tommy
Hilfiger Corporation Condensed Consolidated Balance Sheet as of September 30,
1996 and Condensed Consolidated Statement of Operations for the six months then
ended 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> MAR-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 97,333
<SECURITIES> 0
<RECEIVABLES> 79,925
<ALLOWANCES> 0
<INVENTORY> 103,288
<CURRENT-ASSETS> 295,727
<PP&E> 98,125
<DEPRECIATION> 0
<TOTAL-ASSETS> 401,150
<CURRENT-LIABILITIES> 54,566
<BONDS> 1,651
0
0
<COMMON> 370
<OTHER-SE> 342,326
<TOTAL-LIABILITY-AND-EQUITY> 401,150
<SALES> 0
<TOTAL-REVENUES> 303,036
<CGS> 0
<TOTAL-COSTS> 157,986
<OTHER-EXPENSES> 89,744
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 55,306
<INCOME-TAX> 18,638
<INCOME-CONTINUING> 36,668
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,668
<EPS-PRIMARY> .97
<EPS-DILUTED> 0
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