SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended January 29, 1995 Commission file number: 1-724
PHILLIPS-VAN HEUSEN CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-1166910
(State of incorporation) (IRS Employer
Identification No.)
1290 Avenue of the Americas
New York, New York 10104
(Address of principal executive offices)
212-541-5200
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, $1.00 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 and (2) has been subject to such filing
requirements for at least 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
The aggregate market value of the voting stock of registrant held by
nonaffiliates of the registrant as of April 17, 1995 was approximately
$408,000,000.
Number of shares of Common Stock outstanding as of April 17, 1995:
26,656,616.
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K
Document in which incorporated
Registrant's 1994 Annual Report to Stockholders Parts I and II
for the Fiscal Year Ended January 29, 1995
Registrant's Proxy Statement Part III
for the Annual Meeting of
Stockholders to be held on June 13, 1995
PART I
Item 1. Business
General Overview
Phillips-Van Heusen Corporation (the "Company") is a vertically
integrated manufacturer, marketer and retailer of men's, women's and
children's apparel and footwear. The Company's products include shirts,
sweaters and shoes and, to a lesser extent, neckwear, furnishings, bottoms,
outerwear and leather and canvas accessories. The Company's principal brand
names include "Van Heusen", the best-selling dress shirt brand in the United
States; "Bass", the leading casual shoe brand in the United States; and
"Geoffrey Beene", the best-selling designer dress shirt label in the United
States. The Company is also a leading manufacturer and distributor of private
label shirts and sweaters.
On January 24, 1995, the Company signed a binding agreement to acquire
the Apparel Group of Crystal Brands, Inc. ("Crystal Brands"). This
transaction was completed on February 17, 1995, and in connection therewith,
the Company acquired ownership of the "Izod", "Gant" and "Salty Dog" brand
names. The Company believes this acquisition will enhance its strategy of
marketing branded products both at wholesale and retail.
On January 24, 1995, the Company also entered into a licensing agreement
to make and market "Jantzen" branded men's sweaters (the number-one selling
sweater in the United States), sport shirts and related bottoms.
Wholesale distribution consists of the marketing and sale of the
Company's products to major department stores, specialty and independent
retailers, chain stores and catalog merchants. The Company's wholesale
customers for branded and designer apparel include May Co., Federated,
JCPenney, Macy's and Younkers. Wholesale customers for its private label
shirts include JCPenney, Mervyn's, Lord & Taylor, Lands' End, Sears and
Target, while wholesale customers for the Company's private label sweaters and
golf apparel include Lands' End, JCPenney, Broadway Stores and Sears. The
Company's customers for footwear include May Co., Dillard's, Macy's and Dayton
Hudson. In fiscal 1994, no one customer accounted for more than 10% of the
Company's sales.
Through its retail operations, the Company sells its products directly to
consumers in 872 Company-owned stores operated in five different formats
located primarily in manufacturers' outlet malls. At the end of fiscal 1994,
these formats were Van Heusen, Geoffrey Beene, Bass, Cape Isle Knitters and
Windsor Shirt. See "Acquisition of the Apparel Group of Crystal Brands" for a
discussion regarding the acquisition of additional stores and the conversion
plan for the Company's Cape Isle Knitters and Windsor Shirt stores.
The Company believes that its growth in recent years has been due in
large part to its strategy of developing multiple channels of distribution for
its merchandise. These channels include an increasing number of Company-owned
outlet stores as well as the Company's wholesale customers. These diverse
channels have enabled the Company to strengthen the competitive position of
its brands and to extend its brands into new product lines. The Company also
believes that the continued enhancement and expanded use of its inventory
management and electronic data interchange systems and refinement of its
promotional and advertising activities has resulted and will continue to
result in further strengthening of its brand images, decreased risks of excess
production and more efficient utilization of its production facilities and
outside suppliers.
According to research conducted by the NPD Consumer Purchase Panel, the
Company's "Van Heusen" shirt brand is the best-selling dress shirt brand in
the United States men's dress shirt market, and the Company's "Geoffrey Beene"
shirt brand is the best-selling men's designer dress shirt in the United
States. Including its branded, designer and private label offerings, the
Company believes its overall share of the United States men's dress shirt
market is the largest of any single company.
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In addition to the Company's success with marketing dress shirts, the
Company in recent years has extended its major brand product offerings to
sportswear. With the acquisition of the "Izod", "Gant" and "Salty Dog"
labels, and the license to manufacture and market "Jantzen" branded sweaters,
sport shirts and bottoms, it is expected that sportswear will continue to
increase as a percentage of the Company's sales.
The Company was incorporated in the State of Delaware in 1976 as the
successor to a business begun in 1881, and, with respect to Bass, a business
begun in 1876. The Company's principal executive offices are located at 1290
Avenue of the Americas, New York, New York 10104; its telephone number is
(212) 541-5200.
Retail Development
The decision to develop and expand its own retail operations, concurrent
with the growth of the manufacturers' outlet retailing industry, has permitted
the Company to position itself as a major value-oriented retailer. The
Company's retail operations have enabled it to increase sales by offering its
products in geographic markets where they were not previously widely
available, selling to consumers who favor value-oriented retailers and selling
products bearing its brand names and designer labels that are not marketed to
its wholesale customers.
Critical to the Company's retailing strategy was the choice of
manufacturers' ("factory") outlet centers as the venue to pursue its retailing
business. Manufacturers' outlet centers, usually located in tourist/vacation
areas or on major highways to these areas, provide a large customer base with
significant disposable income and a positive attitude toward shopping and a
base of business in locations that limit conflict with the Company's wholesale
customers. The development of manufacturers' outlet centers is a key
component to the success of the Company. The success of a new outlet mall is
heavily dependent on its location and the attraction of a well known group of
tenants and, therefore, the Company actively cooperates with developers in the
site and tenant selection processes. The Company believes that as a result of
its strong presence and success in manufacturers' outlet retailing, developers
seek and welcome the Company's input into such processes.
The Company's stores provide the opportunity to liquidate excess and
out-of-date inventory and factory "seconds", thereby substantially reducing
the need to sell such merchandise to discounters or jobbers at severely marked
down prices. The ability to control the sale of such merchandise also
prevents the damage to the image of the Company's brands which can result when
they are sold by discounters with inferior presentation and advertising.
The Company has developed a retail component for each of its branded
products which has enhanced the Company's ability to reach a broad array of
consumers for its products. At the same time, it has allowed the Company to
expand its brands to other compatible products not carried in its regular
wholesale lines. The Company's success in expanding the types of products
available under its brand names has led to an increase in the product lines
available in its store formats and has enabled the Company to offer in its
stores additional products which are not available in the Company's wholesale
product lines. For example, the Company now offers men's and women's
sportswear and accessories in many of its Bass stores, has continued
increasing the number of its stores offering Geoffrey Beene women's wear and
plans to expand on its offering of Bass Kids apparel merchandise in 1995.
The Company's retail formats are managed to allow each to enjoy its own
focus without infringing on the other formats, thereby enabling all formats to
co-exist in one outlet center. Thus, even though Van Heusen, Windsor Shirt
and Geoffrey Beene stores each carry the same type of men's apparel products,
each targets and markets to a different consumer base: Van Heusen - the
American brand, moderate price and moderate fashion consumer; Windsor Shirt -
the better traditional consumer; and Geoffrey Beene - the better fashion
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forward consumer. In addition, all aspects of each retail format - store
design, presentation, sales personnel, packaging, product and price -
reinforce the Company's focus on value-oriented retailing to that particular
store format's target consumer.
The Company's retail stores show a high level of profitability resulting
from low overhead and staffing costs, low rental and common area maintenance
charges, short-term leases enabling exit from poorly performing stores, the
elimination of accounts receivable carrying costs as all sales are for cash or
on third party credit cards, high inventory turnover rates and low fixturing
costs. Stores in each of the Company's formats are typically profitable
within a year of opening. This is in contrast to traditional mall stores
which typically undergo a significant start-up period before becoming
profitable. Immediate cash flow generation is an important advantage of
outlet mall stores over traditional mall stores, as is the ability to build
and open stores in a comparatively short period of time.
Wrinkle-Free Dress Shirts
During fiscal 1994, the Company began marketing wrinkle-free dress shirts
to its wholesale customers and in its own retail stores. While increased
advertising and higher production costs associated with introducing this
product negatively impacted the Company's earnings in 1994, the Company
believes these earnings pressures will be less severe in the future due to
lower overall production costs. The Company believes that a niche market for
non wrinkle-free dress shirts will exist, and, therefore, the Company plans to
continue marketing both wrinkle-free and non wrinkle-free dress shirts for the
foreseeable future.
Acquisition of the Apparel Group of Crystal Brands
On February 17, 1995, the Company acquired the Apparel Group of Crystal
Brands which added "Izod", "Gant" and "Salty Dog" to the Company's roster of
highly regarded brands. The Company plans to market sportswear products under
these labels both at wholesale and retail. "Izod" and "Gant" products are
sold at many better department stores in the United States including Lord and
Taylor, Macy's, Belk's, Dillard's and May Co. In connection with the
acquisition, the Company acquired 88 outlet stores which market apparel under
the various labels acquired from Crystal Brands. The Company plans to convert
substantially all of these stores in fiscal 1995 to stores which will market
apparel under either the "Izod" or "Gant" label, although several of the
acquired stores will either be converted to other store formats which the
Company operates, or will be closed. In addition, the Company plans to
convert substantially all of its Cape Isle Knitters and Windsor Shirt private
label retail stores into stores which will market apparel under the "Izod" and
"Gant" labels, respectively. The Company believes that stores which sell
products under a known brand name offer the Company higher profit margins,
faster inventory turnover and greater opportunity to expand the product
offerings in those stores.
Wholesale Distribution
While much of the Company's focus has been on developing the retail
aspect of its business, it has also placed significant emphasis on
strengthening its wholesale distribution. For example, to provide its
customers with products covering a full range of price points and styles, the
Company has designed new branded and designer dress shirts. The Company
developed the "Editions" sub-brand under the "Van Heusen" label to cover the
price point just above typical private label shirts. The Company also markets
Bass dress shirts which are designed as a traditionally styled American line.
In addition, the Company has strengthened its private label operations by
increasing its design staff, developing additional private label offerings and
focusing on high volume accounts. The Company believes that by expanding its
product offerings, it enables its wholesale customers to market to consumers
brand name, designer and private label dress shirts at various price points.
3
In fiscal 1994, the Company continued to expand usage of its electronic
data interchange system. This quick response system provides a computer link
between the Company and its wholesale customers that enables both the customer
and the Company to track sales, inventory and shipments. Use of the system
also reduces the amount of time it takes a customer to determine its inventory
needs and order replenishment merchandise and for the Company to respond to
the customer's order.
The Company believes that these efforts have helped strengthen its
relationships with its wholesale customers, at the same time as the Company
has enhanced the image and increased the exposure of its products.
Apparel Business
The marketing of the Company's apparel products is currently conducted
principally under the following labels: "Van Heusen", "Geoffrey Beene",
"Bass", "Jantzen", "Izod", "Gant" and "Salty Dog". The Company also markets
various private label apparel products. The Company manufactures dress shirts
and sweaters in the Company's facilities in the United States, Puerto Rico and
the Caribbean Basin. Additional dress shirts and sweaters, and all of the
other sportswear and accessories which the Company markets, are sourced
through contractors throughout the world, but primarily in the Far East.
Van Heusen
"Van Heusen" is the best-selling men's dress shirt brand in the United
States, according to research conducted by the NPD Consumer Purchase Panel.
In addition to the "Van Heusen" label, branded products are marketed under the
sub-brands "417", "Hennessy", "Players", "Over Easy", "Corporate Casual",
"Winter-weights" and "Editions."
"Van Heusen" branded dress and sport shirts are marketed at wholesale in
the moderate to better price range to major department stores and men's
specialty stores nationwide, including May Co., Frederick Atkins, JCPenney,
Younkers and Mervyns.
During fiscal 1994, the Company continued to expand its offering of Van
Heusen "Corporate Casual" dress shirts. These shirts have a more casual
appearance and have a softer feel than regular dress shirts. The trend in the
United States to more casual work attire leads the Company to believe that the
overall demand for casual work attire, or "Friday Wear", will continue to
increase.
In addition, wholesale marketing of Van Heusen apparel includes knit
sport shirts and sweaters, and golf apparel which is marketed under the "Van
Heusen Players" label. Major customers include JCPenney and Broadway Stores.
Van Heusen outlet stores offer a full collection of first quality men's
traditional, classic and contemporary dress furnishings (including dress
shirts, belts, hosiery and neckwear), men's sportswear (including sports
shirts, sweaters and bottoms) and ladies sportswear (including coordinates and
separates) and men's and women's activewear. Other than men's dress shirts,
sport shirts and sweaters, such apparel is not marketed or produced for sale
to the Company's wholesale customers.
The product mix targeted for Van Heusen stores is intended to satisfy the
key apparel needs of men from dress furnishings to casual wear, and of women
for casual wear. Van Heusen stores' merchandising strategy is focused on
achieving a classic and/or updated traditional look in a range of primarily
moderate price points. Target customers represent the broadest spectrum of
the American consumer.
Geoffrey Beene
The Company markets dress shirts under the "Geoffrey Beene" label through
a licensing agreement with that designer. The licensing agreement terminates
4
on December 31, 1996, but has renewal options which allow the Company to
extend the agreement through December 31, 2011. "Geoffrey Beene" dress shirts
are the best-selling men's designer dress shirts in the United States,
according to NPD Consumer Purchase Panel research. Consistent with the
increase in the demand for casual work attire, the Company has also expanded
its marketing of Geoffrey Beene casual dress shirts. Geoffrey Beene shirts
are sold in the upper moderate to better price range to major department
stores and men's specialty stores nationwide, including Frederick Atkins,
Federated, Macy's and May Co. During fiscal 1994, the Company also expanded
on its fiscal 1993 introduction of "Geoffrey Beene" men's sweaters.
Geoffrey Beene stores offer a distinctive collection of men's "Geoffrey
Beene" labelled designer products, including dress and sport shirts, neckwear,
furnishings, outerwear, bottoms and sportswear. As with Van Heusen outlet
stores, the products sold in Geoffrey Beene stores, other than "Geoffrey
Beene" dress shirts, consist of products which are not also sold through the
Company's wholesale distribution channels.
Through their product mix, the Geoffrey Beene stores seek to meet the
full needs of men's wardrobes (excluding suits) from dress furnishings to
casual wear. The merchandising strategy is focused on an upscale, fashion
forward consumer in the upper moderate price range.
During fiscal 1994, the Company increased the number of its stores
offering "Geoffrey Beene" women's wear. Stores offering these products carry
a full line of women's casual apparel bearing the designer's name. The
Company plans to continue expanding the number of stores offering this product
in the future.
Bass
The Company's marketing of apparel under the "Bass" label began in 1992
and has been continuously expanded since that time.
"Bass" casual dress shirts, marketed at wholesale to major department
stores including Federated, Macy's and Frederick Atkins, are sold in the upper
moderate to better price range.
Until July 1992, the Company's Bass outlet stores had marketed only
footwear. Since that time, the Company has introduced apparel and accessories
consistent with the Bass "lifestyle" into many of its Bass stores. As a
further extension of its "Bass" apparel products, the Company introduced a
line of "Bass Kids" apparel merchandise in fiscal 1994. The Company plans to
expand this product offering into more of its stores in fiscal 1995.
Jantzen
On January 24, 1995, the Company entered into a licensing agreement to
make and market "Jantzen" branded men's sweaters, sport shirts (including golf
apparel) and related bottoms. The licensing agreement expires January 31,
2000 but, under certain conditions, the Company may extend the agreement for
an additional five years. "Jantzen" is the best-selling sweater in the United
States according to NPD Consumer Purchase Panel research, and is sold in the
moderate to better price range. Major customers for "Jantzen" branded apparel
are department and specialty stores including Belk's, Mercantile, Steinbach's
and Younkers. The Company believes that the licensing agreement further
strengthens the Company's position as the leading sweater and golf apparel
supplier in the United States.
Izod
"Izod" branded apparel products consist of men's and women's sportswear
(including sweaters) and golf apparel. These products are marketed in the
upper moderate to better price range to major retailers including JCPenney,
May Co., Macy's and Lord and Taylor. In addition, golf apparel is marketed to
golf pro shops and golf resort retail stores.
5
The Company's retail business offering Izod products will feature stores
marketing men's and women's active inspired casual sportswear. Target
customers will generally be brand loyalists who expect quality and fashion at
reasonable prices. Stores in this format are expected to begin operating in
the second half of fiscal 1995.
Gant/Salty Dog
"Gant" branded apparel consists of a collection of men's sportswear,
including woven and knit tops and bottoms. The "Gant" brand represents a true
American classic offering of men's sportswear designed for comfort and relaxed
fit. "Gant" products are marketed in the better price range to major
retailers including Dillards, Belk's, May Co., Macy's and Lord and Taylor.
"Salty Dog", a sub-brand of "Gant", is used to market casual sportswear with a
pre-washed, more casual appearance.
The Company's Gant outlet stores will offer fine quality knit and woven
shirts, sweaters, pants and shorts, outerwear and accessories for men. The
"Gant" line incorporates several quality sportswear "lifestyles". Included
are rugged, spectator-active and Friday casual wear products, all of which
maintain detailed construction and the highest quality fabrics. Stores in
this format are expected to begin operating in the second half of fiscal 1995.
Private Label Apparel
Private label programs offer the retailer the ability to create its own
line of exclusive merchandise and give the retailer control over distribution
of the product. The Company's customers work with the Company's designers to
develop shirts in the styles, sizes and cuts which the customers desire to
sell in their stores with their particular store names or private labels.
Private label programs offer the consumer quality product and offer the
retailer the opportunity to enjoy higher margins. Private label products,
however, do not have the same level of consumer recognition as branded
products and private label manufacturers do not generally provide retailers
with the same services and support as branded manufacturers.
The Company markets at wholesale men's dress shirts under private labels
to major national retail chains, department stores and catalog merchants,
including JCPenney, Mervyns, Lord & Taylor, Lands' End, Sears and Marshalls.
Private label sport shirts are marketed to major retailers including K-Mart,
Wal-Mart, Target, Sears and JCPenney. Private label sweaters and golf apparel
are marketed to traditional department and specialty stores, national retail
chains and catalog merchants, including JCPenney, Broadway Stores, Sears and
Lands' End. The Company also markets shirts to companies in service
industries, including major airlines and food chains. The Company believes it
is one of the largest marketers of private label shirts in the United States.
The Company currently markets private label apparel in two retail store
formats: Windsor Shirt and Cape Isle Knitters. Windsor Shirt stores offer a
full line of men's traditional and fashionable apparel, including dress
shirts, neckwear, bottoms, sportswear, hosiery and accessories. Cape Isle
Knitters stores offer a select line of men's and women's knitwear products,
including sweaters and knit tops, both being complemented with pants and
shorts, and hosiery. Both the Windsor Shirt and Cape Isle Knitters stores
offer merchandise in the moderate to upper moderate price range. See
"Acquisition of the Apparel Group of Crystal Brands" for a discussion of the
Company's plan to convert its Windsor Shirt and Cape Isle Knitters stores.
Competition in the Apparel Industry
The apparel industry is highly competitive due to its fashion
orientation, its mix of large and small producers, the flow of imported
merchandise and the wide diversity of retailing methods. Competition has been
exacerbated by the recent consolidations and closings of major department
store groups. Based on the variety of the apparel marketed by the Company and
6
the various channels of distribution it has developed, the Company believes it
is well-positioned in the industry, although the Company has many diverse
competitors in both manufacturing and retailing.
The Company's apparel wholesale divisions experience competition in
branded, designer and private label products. Some of the larger dress shirt
competitors include: Bidermann Industries ("Arrow" brand); Salant Corporation
("Perry Ellis" and "John Henry" brands); Warnaco ("Hathaway" brand); Smart
Shirt (private label shirt division of Kellwood); Capital Mercury (private
label shirts); and Oxford Industries (private label shirts). Some of the
larger sportswear competitors include: Warnaco ("Chaps" brand); Nautica
Enterprises ("Nautica" brand); and Tommy Hilfiger. For sweaters, the
Company's brands compete for department store floor space with private label
sweaters. While several apparel manufacturers currently operate outlet
stores, management believes that none offers a similar selection of product in
the variety of formats offered by the Company.
Footwear Business
The Company's footwear business consists of the manufacture and marketing
of a full line of traditional men's, women's and children's casual shoes under
the "Bass" brand name in the moderate to better price range. During fiscal
1994, the Company also introduced a line of men's dress shoes. Various
sub-brands are utilized, the most important ones being "Weejun", "Sunjun" and
"Compass." "Bass" is the leading brand of casual shoes in the United States,
according to research conducted by Footwear Market Insights ("FMI"), based on
pairs of shoes sold. FMI's research shows "Bass" branded footwear with a 5.9%
share of the casual shoe market.
Bass' traditional wholesale customers are major department stores and
specialty shoe stores throughout the United States, including Federated, May
Co., Dillard's, Macy's and Dayton Hudson. In 1992, Bass began marketing its
footwear internationally and is now selling footwear to leading retailers in
Europe, Canada, South America and Asia.
All footwear carried in the Bass wholesale line is designed "in-house."
Additional styles which are sold only in the Company's Bass stores are
designed both "in-house" and by third parties. The Company operates
manufacturing facilities in the United States, Puerto Rico and the Dominican
Republic. Additional footwear is sourced through manufacturers primarily
located in the Far East and Brazil.
Company operated Bass stores located in manufacturers' outlet malls
typically carry an assortment of "Bass" shoes, in the moderate to upper
moderate price range, as well as complementary products not sold to wholesale
customers. The Company also operates several "image" stores, located
primarily in large upscale regional malls, typically offering a narrower
assortment of "Bass" shoes than that carried in Bass outlet stores.
Bass' merchandising strategy is focused on achieving an American classic
look which emphasizes classic and traditional footwear design. The stores
emphasize the design interpretation "The Look That Never Wears Out" in
creating an image for its products.
Competition in the Shoe Industry
The shoe industry is characterized by fragmented competition.
Consequently, retailers and consumers have a wide variety of choices regarding
brands, style and price. However, over the years, Bass has maintained its
important position in the traditional casual footwear market. The Company's
primary competitors include Dexter, Rockport, Timberland, Sperry and Sebago.
The Company believes, however, that it manufactures a more extensive line of
footwear for both genders and in a broader price range than any of its
competitors.
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Currently, Bass outlet stores have few direct footwear competitors.
Dexter and, to an even lesser extent, Timberland are the most prominent casual
footwear companies that are competing in the outlet environment. However,
multi-branded outlet footwear retailers, such as U.S. Shoe and Famous
Footwear, compete on price and assortment.
Merchandise Design, Manufacturing and Product Procurement
The apparel and footwear merchandise manufactured by the Company as well
as the vast majority of its sourced products are planned and designed through
the efforts of its various merchandise/product development groups. These
groups consist of designers, product line builders and merchants who consider
consumer taste, fashion, history and the economic environment when creating a
product plan for a particular season. Apparel and footwear product lines are
developed primarily for two major selling seasons, spring and fall. However,
certain of the Company's product lines require more frequent introductions of
new merchandise.
The process from initial design to finished product varies greatly, but
generally spans nine to 12 months prior to each selling season. Raw materials
and production commitments are generally made four to 12 months prior to
production and quantities are finalized at that time. In addition, sales are
monitored regularly at both the retail and wholesale levels and modifications
in production can be made both to increase or reduce availability. The
Company's substantial efforts in the area of quick response to sales trends
(through the expanded use of its electronic data interchange system) maximize
its inventory flexibility and minimize production overruns.
Shirts and sweaters are manufactured in the Company's domestic apparel
manufacturing facilities in Alabama, Arkansas and Puerto Rico. The Company
also operates facilities in Costa Rica, Guatemala and Honduras. Additionally,
the Company contracts for apparel merchandise with vendors principally in the
Far East, Middle East and Caribbean areas which meet its quality and cost
requirements. Footwear is manufactured in the Company's factories located in
Maine, Puerto Rico and the Dominican Republic. In addition, the Company
contracts for footwear merchandise which meet its requirements from overseas
vendors, principally in Brazil and the Far East.
The Company's foreign offices, located principally in Hong Kong, Korea,
Taiwan, Singapore, Brazil and throughout Central America, enable the Company
to monitor the quality of the goods manufactured by, and the delivery
performance of, its suppliers. The Company continually seeks additional
suppliers throughout the world for its sourcing needs and places its orders in
a manner designed to limit the risk that a disruption of production at any one
facility could cause a serious inventory problem. The Company has experienced
no significant production delays or difficulties in importing goods. However,
from time to time the Company has incurred added costs by shipping goods by
air freight in order for it to meet certain delivery commitments to its
customers. The Company's purchases from its suppliers are effected through
individual purchase orders specifying the price and quantity of the items to
be produced. The Company does not have any long-term, formal arrangements
with any of the suppliers which manufacture its products. The Company
believes that it is the largest customer of many of its manufacturing
suppliers and considers its relations with its suppliers to be satisfactory.
No single supplier is critical to the Company's production needs, and the
Company believes that an ample number of alternative suppliers exist should
the Company need to secure additional or replacement production capacity.
The Company purchases raw materials, including shirting fabric, buttons,
thread, labels, yarn, piece goods and leather, from domestic and foreign
sources based on quality, pricing (including quotas and duties) and
availability factors. The Company believes it is one of the largest procurers
of shirting fabric world-wide and purchases the majority of its shirting
fabric from overseas manufacturers, due, in part, to decreased domestic
production. The Company monitors factors affecting textile production and
8
imports and remains flexible in order to exploit advantages in obtaining
materials from different suppliers and different geographic regions. Rawhide
leather for "Bass" footwear is procured mainly from domestic suppliers. The
leather used in "Bass" shoes is a by-product of beef production and its
availability has remained stable over the past several years as a result of
the stability of the beef market. Bass monitors the leather market and makes
purchases on the spot market or through blanket contracts with suppliers as
price trends dictate. No single supplier of raw materials is critical to the
Company's production needs and the Company believes that an ample number of
alternative suppliers exist should the Company need to secure additional or
replacement raw materials.
Advertising and Promotion
The Company has used national advertising to communicate the Company's
marketing message since the 1920's. The Company believes that this effort has
helped create strong brand awareness and a high recognition factor among
American consumers and has contributed to the overall success of the Company.
The Company advertises primarily in national print media including fashion,
entertainment/human interest, business, men's, women's and sports magazines.
Brand awareness is further supplemented by the Company's co-op advertising
program through which the Company and individual retailers combine their
efforts and share the cost of store radio, television and newspaper
advertisements and in-store advertising and promotional events featuring the
Company's branded products.
The Company relies upon local outlet mall developers to promote traffic
for their centers. Outlet center developers employ multiple formats including
signage (highway billboards, off-highway directional signs, on-site signage
and on-site information centers), print advertising (brochures, newspapers and
travel magazines), direct marketing (to tour bus companies and travel agents),
radio and television, and special promotions.
Trademarks
The Company has the exclusive right to use the "Gant", Izod" and "Salty
Dog" names in most countries, the "Van Heusen" name in North, Central and
South America as well as the Philippines, and the exclusive world-wide right
to use "Bass" for footwear. The Company has registered or applied for
registration of numerous other trademarks for use on a variety of items of
apparel and footwear and apparel and footwear-related products and owns many
foreign trademark registrations. It presently has pending a number of
applications for additional trademark registrations. The Company regards its
trademarks and other proprietary rights as valuable assets and believes that
they have significant value in the marketing of its products.
Licensing
The Company has various agreements under which it licenses the use of its
brand names. The Company is licensing the "Van Heusen" name for apparel
products in Canada and in most of the South and Central American countries.
In the United States, the Company currently licenses the use of the "Van
Heusen" name for various products that it does not manufacture or source,
including boy's apparel, sleepwear, eyeglasses, neckwear and other accessories
and is exploring the possibility of licensing the name for use on other
products. The Company licenses the use of the "Bass" name for footwear in
Hong Kong, Japan, Europe and Latin America, and for neckwear in the United
States. The Company licenses the use of the "Gant" name for outerwear and
dress furnishings in the United States. The Company licenses the use of the
"Izod" name for infants, toddlers and childrens clothing, as well as "big and
tall" apparel, in the United States, and for men's and women's sportswear in
Canada. The Company plans to continue expanding its world-wide licensing
efforts under the "Gant", "Izod", "Salty Dog" and other trademarks which were
acquired from Crystal Brands.
9
Retail Stores
As of January 29, 1995, the Company operated 872 stores in five different
formats: Van Heusen, Bass, Geoffrey Beene, Windsor Shirt and Cape Isle
Knitters. The Company's stores are located primarily in manufacturers' outlet
malls, except for the Bass "image" stores. Store layouts and designs differ
among the five retail formats in order to maximize the effectiveness of the
product and pricing strategy directed toward each format's specific target
customer.
In connection with the Crystal Brands acquisition, the Company acquired
88 outlet stores which market apparel under the various labels acquired from
Crystal Brands. The Company plans to convert substantially all of these
stores in fiscal 1995 to stores which will market apparel under either the
"Izod" or "Gant" label, although several of the acquired stores will either be
converted to other store formats which the Company operates, or will be
closed. In addition, the Company plans to convert substantially all of its
Cape Isle Knitters and Windsor Shirt private label retail stores into stores
which will market apparel under the "Izod" and "Gant" labels, respectively.
The Company believes that stores which sell products under a known brand name
offer the Company larger profit margins, faster inventory turnover and greater
opportunity to expand the product offerings in those stores.
Manufacturers' outlet malls are a growing segment of the retail industry,
and the Company is a leading operator of outlet mall stores. Other branded
apparel manufacturers who have entered the outlet mall sector include Ralph
Lauren, Liz Claiborne, Bugle Boy, J. Crew, Jockey, Donna Karan, Sara Lee,
Jones New York, Nautica, Tommy Hilfiger, Calvin Klein and Anne Klein.
The following table sets forth the number of openings and closings of the
Company's retail stores by fiscal year since 1990 and the number of stores
operated at the end of each fiscal year:
Fiscal Fiscal Fiscal Fiscal Fiscal
1994 1993 1992 1991 1990
Store openings:. . . . . . . . . . . . 139 126 116 126 166 (1)
Store closings:. . . . . . . . . . . . 47 51 47 40 40
Total stores operated at year end: . . 872 780 705 636 550
(1) Includes 46 Windsor Shirt stores acquired during fiscal 1990.
The Company plans to continue to expand the number of outlet stores which
it operates. To continue this expansion, the Company must be able to open
multiple stores in new malls, "back-fill" its store formats in a sufficient
number of existing outlet malls and/or develop new store formats. The primary
short-term source of the Company's retail expansion will, in addition to the
stores acquired from Crystal Brands, be the opening of multiple store formats
in new malls. There are currently approximately 22 new malls scheduled to
open in 1995 and the Company intends to feature several store formats in
almost all of them. A large portion of the retail expansion will come from
these new malls and existing mall expansions. In addition, retail expansion
will come from "back-filling", which entails adding one or more of the
Company's store formats to malls in which the Company already operates stores
in one or more other formats. Future growth will also come from the
development of new store formats, such as the Geoffrey Beene stores offering
casual apparel for women which opened late in the summer of 1993. The
addition of these, as well as any other new formats will provide the Company
with the opportunity to increase the number of stores the Company operates in
existing and new malls. Performance of all stores is reviewed on a regular
basis and poorly performing stores are closed when appropriate.
10
The Company maintains a real estate department which works with the store
planning and design department in opening new stores. The real estate
department locates appropriate sites based on information regarding area
demographics, model store size, available lease arrangements and projected
volume and operating returns. In preparation for opening, the store planning
and design department coordinates interior plans with landlords, division
heads, contractors and developers. As construction is completed, a project
manager supervises fixture installation as well as ensures the quality
workmanship demanded by the Company. Field management then begins the
merchandising process. All of these efforts culminate with the opening of
each new store.
The retail distribution strategy has evolved to allow the Company the
opportunity to market directly to consumers while limiting the disruption of
sales to the Company's traditional wholesale customers by locating primarily
in manufacturers' outlet malls in locations such as tourist destination areas.
As a leading outlet retailer, the Company has the ability to secure favorable
lease terms and locations for its stores.
The Company's plans with respect to expansion are frequently reviewed and
revised in light of changing conditions. It is possible that not all of the
plans described above will be completed and that other projects may be added.
Tariffs and Import Restrictions
A substantial portion of the Company's products are manufactured by
contractors located outside the United States. These products are imported
and are subject to United States Customs laws, which impose tariffs as well as
import quota restrictions established by the Department of Commerce. However,
a significant portion of the Company's apparel products are imported from its
Caribbean Basin manufacturing facilities and are therefore eligible for
certain duty-advantaged programs commonly known as "807 Programs." While
importation of goods from certain countries from which the Company obtains
goods may be subject to embargo by United States Customs authorities if
shipments exceed quota limits, the Company closely monitors import quotas and
can, in most cases, shift production to contractors located in countries with
available quotas or to domestic manufacturing facilities. The existence of
import quotas has, therefore, not had a material effect on the Company's
business.
Employees
As of January 29, 1995, the Company employed approximately 10,000 persons
on a full-time basis and approximately 3,800 persons on a part-time basis. Of
the approximately 13,800 persons employed by the Company, 65% are employed in
the apparel business, 32% are employed in the footwear business and 3% are
corporate employees. Approximately 4% of the Company's total employees are
represented for the purpose of collective bargaining by three different
unions. Additional persons, some represented by these three unions, are
employed from time to time based upon the Company's manufacturing schedules
and retailing seasonal needs. The Company believes that its relations with
its employees are satisfactory.
11
Item 2. Properties
The Company maintains its principal executive offices at 1290 Avenue of
the Americas, New York, New York, occupying approximately 80,000 square feet
under a sub-lease which expires on December 30, 1998. The Company also
maintains an administrative facility in Bridgewater, New Jersey, where the
Company occupies a building of approximately 153,000 square feet under a lease
which expires on July 30, 2007. The following tables summarize the other
manufacturing facilities, warehouses and distribution centers, administrative
offices and retail stores of the Company as of January 29, 1995:
Apparel Business
Square Feet of
Floor Space (000's)
Owned Leased Total
Manufacturing Facilities . . . . . . . . . . . . . . 333 277 610
Warehouses and Distribution Centers. . . . . . . . . 1,360 537 1,897
Administrative . . . . . . . . . . . . . . . . . . . 16 52 68
Retail Stores. . . . . . . . . . . . . . . . . . . . 4 1,995 1,999
1,713 2,861 4,574
Footwear Business
Owned Leased Total
Manufacturing Facilities . . . . . . . . . . . . . . 274 115 389
Warehouses and Distribution Centers. . . . . . . . . 127 185 312
Administrative . . . . . . . . . . . . . . . . . . . 20 135 155
Retail Stores. . . . . . . . . . . . . . . . . . . . 9 1,388 1,397
430 1,823 2,253
Leases for these apparel and footwear facilities have expiration dates
through December 2003. Information with respect to minimum annual rental
commitments under leases in which the Company is a lessee is incorporated
herein by reference to the note entitled "Leases" in the Notes to Consolidated
Financial Statements incorporated by reference in Item 8 of this report.
Item 3. Legal Proceedings
The Company is a party to certain litigation which, in the Company's
judgment based in part on the opinion of legal counsel, will not have a
material adverse effect on the Company's financial position.
Item 4. Submission of Matters to a Vote of Security Holders
None.
12
Executive Officers of the Registrant
The following table sets forth certain information concerning the
Company's Executive Officers:
Name Position Age
Bruce J. Klatsky Chairman; President; Chief Executive Officer;
Director 46
Irwin W. Winter Vice President, Finance; Chief Financial Officer;
Director 61
Walter T. Rossi Chairman, PVH Retail Group 52
Allen E. Sirkin Chairman, PVH Wholesale Group 52
Mark Weber Vice President; Group President, The
Sportswear Group 46
Mr. Bruce J. Klatsky has been employed by the Company in various
capacities over the last 23 years, and has been President of the Company since
1987. Mr. Klatsky has served as a director of the Company since 1985 and was
named Chief Executive Officer in June of 1993 and Chairman of the Board of
Directors in June of 1994.
Mr. Irwin W. Winter joined the Company in July 1987 as Vice President,
Finance and Chief Financial Officer. Mr. Winter has served as a director of
the Company since 1987.
Mr. Walter T. Rossi joined the Company in November of 1992 as Chairman,
PVH Retail Group. For more than the last five years prior to joining the
Company, he served as Chairman and CEO of Mervyn's, a division of Dayton
Hudson.
Mr. Allen E. Sirkin has been employed by the Company since 1985. From
1988 to 1990, he was President of The Van Heusen Company and The Designer
Group. He has served as Chairman, The PVH Apparel Group since 1990.
Mr. Mark Weber has been employed by the Company in various capacities
over the last 23 years, has been Vice President of the Company since 1988 and
was recently named Group President, The Sportswear Group.
13
PART II
Item 5. Market for Registrant's Common Stock and Related Security Holder
Matters
Information with respect to the market for the Company's common stock and
related security holder matters which appears under the heading "Selected
Quarterly Financial Data" in the 1994 Annual Report to Stockholders, is
incorporated herein by reference.
Item 6. Selected Financial Data
Selected Financial Data which appears under the heading "Eight Year
Financial Summary" in the 1994 Annual Report to Stockholders, is incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Management's Discussion and Analysis of Financial Condition and Results
of Operations which appears under the heading "Financial Review" in the 1994
Annual Report to Stockholders, is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements, which appear in the 1994 Annual
Report to Stockholders, are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
14
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by Item 10 is incorporated herein by reference
to the section entitled "Election of Directors" of the Company's proxy
statement for the Annual Meeting of Stockholders to be held on June 13, 1995.
Item 11. Executive Compensation
Information with respect to Executive Compensation is incorporated herein
by reference to the sections entitled "Executive Compensation", "Compensation
Committee Report on Executive Compensation" and "Performance Graph" of the
Company's proxy statement for the Annual Meeting of Stockholders to be held on
June 13, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information with respect to the Security Ownership of Certain Beneficial
Owners and Management is incorporated herein by reference to the section
entitled "Security Ownership of Certain Beneficial Owners and Management" of
the Company's proxy statement for the Annual Meeting of Stockholders to be
held on June 13, 1995.
Item 13. Certain Relationships and Related Transactions
Information with respect to Certain Relationships and Related
Transactions is incorporated herein by reference to the sections entitled
"Election of Directors" and "Compensation of Directors" of the Company's proxy
statement for the Annual Meeting of Stockholders to be held on June 13, 1995.
15
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) The following consolidated financial statements are incorporated by
reference in Item 8 of this report:
Consolidated Statements of Income--Years Ended January 29, 1995,
January 30, 1994 and January 31, 1993
Consolidated Balance Sheets--January 29, 1995 and January 30, 1994
Consolidated Statements of Cash Flows--Years Ended January 29, 1995,
January 30, 1994 and January 31, 1993
Consolidated Statements of Changes in Stockholders' Equity--
Years Ended January 29, 1995, January 30, 1994 and January 31, 1993
Notes to Consolidated Financial Statements
(a)(2) See page F-1 for a listing of financial statement schedules submitted
as part of this report.
(a)(3) The following exhibits are included in this report:
Exhibit
Number
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 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).
3.4 Amendment to Certificate of Incorporation (incorporated by
reference to Exhibit 3.4 to the Company's Annual Report on Form
10-K for the fiscal year ended January 30, 1993).
3.5 Amendment to Certificate of Incorporation (incorporated by
reference to Exhibit 3.5 to the Company's Annual Report on Form 10-
K for the fiscal year ended January 30, 1993).
3.6 By-Laws of PVH (incorporated by reference to Exhibit 6 to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 29, 1977).
3.7 Amendment to Section 4 of Article II of the By-Laws of PVH
(incorporated by reference to Exhibit 28.3 to the Company's Report
on Form 8-K filed on September 5, 1987).
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).
16
Exhibit
Number
4.4 Supplemental Rights Agreement and Second Amendment to the Rights
Agreement, dated as of July 30, 1987, between PVH and The Chase
Manhattan Bank, N.A. (incorporated by reference to Exhibit (c)(4)
to the Company's Schedule 13E-4, Issuer Tender Offer Statement,
dated July 31,1987).
4.5 Credit Agreement, dated as of December 16, 1993, among PVH, Bankers
Trust Company, The Chase Manhattan Bank, N.A., Citibank, N.A., The
Bank of New York, Chemical Bank and Philadelphia National Bank, and
Bankers Trust Company, as agent (incorporated by reference to
Exhibit 4.5 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 30, 1994).
4.6 First Amendment, dated as of February 13, 1995, to the Credit
Agreement dated as of December 16, 1993.
4.7 Note Agreement, dated October 1, 1992, among PVH, The Equitable
Life Assurance Society of the United States, Equitable Variable
Life Insurance Company, Unum Life Insurance Company of America,
Nationwide Life Insurance Company, Employers Life Insurance Company
of Wausau and Lutheran Brotherhood (incorporated by reference to
Exhibit 4.21 to the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1993).
4.8 Indenture, dated as of November 1, 1993, between PVH and The Bank
of New York, as Trustee (incorporated by reference to Exhibit 4.01
to the Company's Registration Statement on Form S-3 (Reg. No. 33-
50751) filed on October 26, 1993).
*10.1 1987 Stock Option Plan, including all amendments through March 30,
1993 (incorporated by reference to Exhibit 10.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended January 30,
1994).
*10.2 1973 Employees' Stock Option Plan (incorporated by reference to
Exhibit 1 to the Company's Registration Statement on Form S-8 (Reg.
No. 2-72959) filed on July 15, 1981).
*10.3 Supplement to 1973 Employees' Stock Option Plan (incorporated by
reference to the Company's Prospectus filed pursuant to Rule 424(c)
to the Registration Statement on Form S-8 (Reg. No. 2-72959) filed
on March 31, 1982).
*10.4 Phillips-Van Heusen Corporation Special Severance Benefit Plan
(incorporated by reference to the Company's Report on Form 8-K
filed on January 16, 1987).
*10.5 Phillips-Van Heusen Corporation Capital Accumulation Plan
(incorporated by reference to the Company's Report on Form 8-K
filed on January 16, 1987).
*10.6 Phillips-Van Heusen Corporation Amendment to Capital Accumulation
Plan (incorporated by reference to Exhibit 10(n) to the Company's
Annual Report on Form 10-K for the fiscal year ended February 2,
1987).
*10.7 Form of Agreement amending Phillips-Van Heusen Corporation Capital
Accumulation Plan with respect to individual participants
(incorporated by reference to Exhibit 10(1) to the Company's
Annual Report on Form 10-K for the fiscal year ended January 31,
1988).
17
Exhibit
Number
*10.8 Phillips-Van Heusen Corporation Supplemental Defined Benefit Plan,
dated January 1, 1991, as amended and restated on June 2, 1992
(incorporated by reference to Exhibit 10.10 to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1993).
*10.9 Phillips-Van Heusen Corporation Supplemental Savings Plan, dated as
of January 1, 1991 and amended and restated as of January 1, 1992
(incorporated by reference to Exhibit 10.29 to the Company's Annual
Report on Form 10-K for the fiscal year ended February 2, 1992).
10.10 Asset Sale Agreement, dated January 24, 1995, Among the Company and
Crystal Brands, Inc., Crystal Apparel, Inc., Gant Corporation,
Crystal Sales, Inc., Eagle Shirtmakers, Inc., and Crystal Brands
(Hong Kong) Limited (incorporated by reference to Exhibit 1 to the
Company's Report on Form 8-K dated March 6, 1995).
*10.11 Agreement, dated as of April 28, 1993, between Bruce J. Klatsky,
Lawrence S. Phillips and the Company.
*10.12 Non-Incentive Stock Option Agreement, dated as of April 28, 1993,
between the Company and Bruce J. Klatsky. Non-Incentive Stock
Option Agreement, dated as of December 3, 1993, between the Company
and Bruce J. Klatsky (reload of April 28, 1993 Non-Incentive Stock
Option Agreement).
*10.13 Amendment, dated December 6, 1993, to the Agreement, dated April
28, 1993, between Bruce J. Klatsky, Lawrence S. Phillips and the
Company.
*10.14 Consulting and non-competition agreement, dated February 14, 1995,
between the Company and Lawrence S. Phillips.
*10.15 Form of Restricted Stock Plan, effective as of April 18, 1995.
11. Statement re: Computation of Earnings Per Share.
13. Sections of the 1994 Annual Report to Stockholders for the fiscal
year ended January 29, 1995 which are included in Parts I and II of
this Form 10-K. These sections are Selected Quarterly Financial
Data, Eight Year Financial Summary, Financial Review and the
consolidated financial statements.
21. Subsidiaries of the Company.
23. Consent of Independent Auditors.
27. Financial Data Schedule
(b) Reports filed on Form 8-K filed during the fourth quarter of 1994:
Form 8-K dated January 24, 1995
Item 5. Other Item - The Company enters into a binding agreement to
acquire the Apparel Group of Crystal Brands, Inc. subject to
approval from a Federal Bankruptcy Court.
(c) Exhibits: See (a)(3) above for a listing of the exhibits included as part
of this report.
(d) Financial Statement Schedules: See page F-1 for a listing of the
financial statement schedules submitted as part of this report.
18
(e) The Company agrees to furnish to the Commission upon request a copy of
each agreement with respect to long-term debt where the total amount of
securities authorized thereunder does not exceed 10% of the total
consolidated assets of the Company.
* Management contract or compensatory plan or arrangement required to be
identified pursuant to Item 14(a) of this report.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: Bruce J. Klatsky
Bruce J. Klatsky
Chairman, President, Chief
Executive Officer and Director
Date: April 19, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
Bruce J. Klatsky Chairman, President, Chief Executive April 19, 1995
Bruce J. Klatsky Officer and Director (Principal
Executive Officer)
Irwin W. Winter Vice President, Finance and April 18, 1995
Irwin W. Winter Director (Principal Financial
Officer)
Emanuel Chirico Vice President and Controller April 20, 1995
Emanuel Chirico (Principal Accounting Officer)
Edward H. Cohen Director April 18, 1995
Edward H. Cohen
Estelle Ellis Director April 18, 1995
Estelle Ellis
Joseph B. Fuller Director April 20, 1995
Joseph B. Fuller
Maria Elena Lagomasino Director April 20, 1995
Maria Elena Lagomasino
Harry N.S. Lee Director April 20, 1995
Harry N.S. Lee
Bruce Maggin Director April 20, 1995
Bruce Maggin
Ellis E. Meredith Director April 18, 1995
Ellis E. Meredith
Steven L. Osterweis Director April 18, 1995
Steven L. Osterweis
William S. Scolnick Director April 20, 1995
William S. Scolnick
Peter J. Solomon Director April 20, 1995
Peter J. Solomon
20
FORM 10-K-ITEM 14(a)(2)
PHILLIPS-VAN HEUSEN CORPORATION
INDEX TO FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statement schedule of Phillips-Van
Heusen Corporation and subsidiaries is included herein:
Schedule II - Valuation and Qualifying Accounts. . . . . . . . F-2
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.
F-1
SCHEDULE II
PHILLIPS-VAN HEUSEN CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
Year Ended January 29, 1995
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Period Expense Accounts Deductions of Period
Deducted from asset accounts:
Allowance for doubtful
accounts. . . . . . . . . . . . $2,171,067 $508,862(a) $277,676(b) $1,341,067(c) $1,616,538
(a) Provisions for doubtful accounts.
(b) Recoveries of doubtful accounts previously written off.
(c) Primarily uncollectible accounts charged against the allowance provided
therefor.
F-2
SCHEDULE II - (Continued)
PHILLIPS-VAN HEUSEN CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
Year Ended January 30, 1994
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Period Expense Accounts Deductions of Period
Allowances deducted from
asset accounts:
Allowance for discounts . . . . . $ 19,000 $ - $ - $ 19,000(a)$ -
Allowance for doubtful
accounts. . . . . . . . . . . . 2,311,500 79,228(b) 224,594(c) 444,255(d) 2,171,067
$ 2,330,500 $ 79,228 $224,594 $463,255 $2,171,067
(a) Allowance reversed since no discounts were given to customers in 1993.
(b) Provisions for doubtful accounts.
(c) Recoveries of doubtful accounts previously written off.
(d) Primarily uncollectible accounts charged against the allowance provided
therefor.
F-3
SCHEDULE II - (Continued)
PHILLIPS-VAN HEUSEN CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
Year Ended January 31, 1993
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Period Expense Accounts Deductions of Period
Allowances deducted from
asset accounts:
Allowance for discounts . . . . . $ 7,500 $ 21,245(a) $ - $ 9,745(b) $ 19,000
Allowance for doubtful
accounts. . . . . . . . . . . . 2,269,500 859,385(c) 96,074(d) 913,459(e) 2,311,500
$ 2,277,000 $ 880,630 $ 96,074 $ 923,204 $2,330,500
(a) Provision for discounts, deducted from gross sales.
(b) Cash discounts allowed to customers.
(c) Provisions for doubtful accounts.
(d) Recoveries of doubtful accounts previously written off.
(e) Primarily uncollectible accounts charged against the allowance provided
therefor.
F-4
EXHIBIT 11
PHILLIPS-VAN HEUSEN CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
1994 1993 1992
Primary:
Income before extraordinary loss. . . . . . . . . . . . . . . . . . . . . . . . $ 30,015 $ 43,252 $37,881
Extraordinary loss, net of tax. . . . . . . . . . . . . . . . . . . . . . . . . - (11,394) -
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,015 31,858 37,881
Preferred stock dividend. . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 2,138
Net income, common shares. . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,015 $ 31,858 $35,743
Common shares and common share equivalents:
Weighted average number of shares outstanding. . . . . . . . . . . . . . . . 26,563 26,142 23,766
Shares issuable upon exercise of dilutive common stock options,
net of shares assumed to be repurchased (at the average
period market price) out of proceeds obtained therefrom . . . . . . . . . 591 964 1,487
Total common shares and common share equivalents . . . . . . . . . . . . . . 27,154 27,106 25,253
Income per common share and common share equivalents before
extraordinary loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 1.11 $ 1.60 $ 1.42
Extraordinary loss per common share and common share equivalents. . . . . . . . - (0.42) -
Net income per common share and common share equivalents . . . . . . . . . .$ 1.11 $ 1.18 $ 1.42
Fully diluted:
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,015 $ 31,858 $37,881
Total common shares and common share equivalents (see above). . . . . . . . . . 27,154 27,106 25,253
Additional shares issuable upon:
Conversion of redeemable preferred stock . . . . . . . . . . . . . . . . . . - - 1,314
Exercise of dilutive common stock options, net of shares
assumed to be repurchased (at the greater of average period or
period end market price) . . . . . . . . . . . . . . . . . . . . . . . . . . 4 18 26
Total common shares and common share equivalents assuming
full dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,158 27,124 26,593
Net income per common share and common share equivalents. . . . . . . . .$ 1.11 $ 1.18 $ 1.42
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
The following table lists all of the subsidiaries of the Company and the
jurisdiction of incorporation of each subsidiary. Except as otherwise
indicated, each subsidiary does business under its corporate name indicated in
the table.
Name State or Other Jurisdiction of Incorporation
G. H. Bass Franchises Inc. Delaware
G. H. Bass Caribbean Inc. Delaware
Caribe M&I Ltd. Cayman Islands
GHB (Far East) Limited Hong Kong
Van Heusen Transportation
Corporation Delaware
Tejidos De Coamo, Inc. Delaware
Envoy Pacific Limited Hong Kong
Towell Import & Export Limited Hong Kong
Abese Limited Hong Kong
Confecciones Imperio, S.A. Costa Rica
Camisas Modernas, S.A. Guatemala
G. H. Bass Comercio
Exportacacao Ltda. Brazil
PVH Retail Corp. Delaware
Windsor Shirt Company Pennsylvania
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report on Form
10-K of Phillips-Van Heusen Corporation of our report dated March 14, 1995,
included in the Annual Report to Stockholders of Phillips-Van Heusen
Corporation.
Our audits also included the financial statement schedules of Phillips-Van
Heusen Corporation listed in Item 14(a). These schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth herein.
We also consent to the incorporation by reference in the Registration
Statement (Form S-3 No. 33-50751), Registration Statement (Form S-8 No.
33-59602), Registration Statement (Form S-3 No. 33-46770), Registration
Statement (From S-8 No. 33-59602), Registration Statement (Form S-8 No.
33-38698), Post-Effective amendment No. 1 to the Registration Statement
(Form S-8 No. 33-24057), Post-Effective amendment No. 2 to the Registration
Statement (Form S-8 No. 2-73803), Post-Effective amendment No. 4 to the
Registration Statement (Form S-8 No. 2-72959), Post-Effective amendment No. 6
to the Registration Statement (Form S-8 No. 2-64564), and Post-Effective
amendment No. 13 to the Registration Statement (Form S-8 No. 2-47910), of
Phillips-Van Heusen Corporation and in the related Prospectuses of our report
dated March 14, 1995, with respect to the consolidated financial statements
and schedules of Phillips-Van Heusen Corporation included in this Form 10-K
for the year ended January 29, 1995.
ERNST & YOUNG LLP
New York, New York
April 28, 1995