Exhibit 99.1
FROM: Phillips-Van Heusen Corporation
200 Madison Avenue
New York NY 10016
Rubenstein Associates, Inc.
Public Relations - Tel.: 212 843 8000
Contact: Scott Tagliarino/Marcia Horowitz
For Calvin Klein Inc.: Don Nathan/Jim Badenhausen (212) 484-7782
For Apax Partners: Todd Fogarty (212) 521-4854
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PHILLIPS-VAN HEUSEN TO ACQUIRE CALVIN KLEIN, INC.
Combines Powerful Global Brand with Strong Infrastructure
and Financial Resources Necessary to Fuel Growth
PVH Will Develop Growth Opportunities with New Lifestyle Offerings,
Retail and Global Expansion and Increased Marketing Support
NEW YORK, December 17, 2002 - Phillips-Van Heusen Corporation (NYSE: PVH) today
announced that it entered into a definitive agreement to acquire Calvin Klein,
Inc. (CKI), one of the world's leading lifestyle brands, in a transaction
approaching $700 million.
The value of the transaction includes $400 million in cash, approximately $30
million in PVH stock as well as warrants and an ongoing financial incentive for
Mr. Klein based on future sales of the Calvin Klein brand. Apax Partners, a
leading private equity firm, partnered with PVH and will provide a major part of
the financing for the transaction, which is subject to normal regulatory review
and is expected to close within 60 days.
Under the terms of the agreement, CKI's existing design and marketing
organization will continue as a separate and distinct operating unit. Mr. Klein
will retain a significant financial interest in the combined entity's success
and be involved in key strategic issues, including growth opportunities, overall
design direction, brand positioning and marketing strategy. CKI President Tom
Murry will continue as President and Chief Operating Officer of the
organization.
-more-
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"Calvin Klein is one of the most powerful lifestyle brands in the world and has
tremendous untapped growth potential that we look forward to working with Calvin
to realize," said Bruce Klatsky, Chairman and Chief Executive Officer of PVH.
"We have tremendous respect for what Calvin, Barry Schwartz and their team have
built and are strongly committed to preserving the integrity of the brand as
well as its exclusive distribution."
Mr. Klein said, "This combination is all about growing our brand and business
over the long term in multiple markets and consumer segments. Phillips-Van
Heusen understands and appreciates the unique values and integrity of the brand
and has the infrastructure and financial capabilities to expand the business
beyond what we can achieve as a private company. Over the past several years, we
have assembled design, merchandising and marketing teams at CKI to ensure that
our brand philosophy is consistently reflected in all aspects of our business.
With those teams in place, I look forward to working with the people of
Phillips-Van Heusen, who have a unique position in and understanding of our core
business, and are committed to helping us successfully realize the great
potential of our brand."
POWERFUL GROWTH OPPORTUNITIES
Mr. Klatsky described the deal as a "transforming transaction" that will have a
major impact on accelerating PVH's top line growth, profit margins and earnings.
The acquisition combines the extraordinary brand presence of Calvin Klein with
the infrastructure of PVH, acknowledged as one of the best-managed companies in
its industry.
Key opportunities to grow the Calvin Klein business include the launch of better
men's and women's sportswear and accessories lines; global expansion through a
strategic plan together with its licensing partners; global expansion through
Calvin Klein retail stores, and taking advantage of additional growth
opportunities in Europe and Asia. Phillips-Van Heusen expects to launch the new
collection of men's and women's better sportswear within the next 24 months. In
addition, the company will support growth of the brand by increasing marketing
support beyond the $250 million a year in consumer marketing currently spent on
the Calvin Klein brand by its licensees and the company, Mr. Klatsky said.
The company said that that it expects the acquisition to make a major
contribution to its growth in earnings per share. The acquisition is anticipated
to be somewhat dilutive in 2003 and to make a positive contribution to annual
earnings by 2004. During 2003, due to normal integration and transition costs,
operating earnings per share are expected to be in a range of $1.00 to $1.05.
Earnings per share for fiscal 2004 and beyond are expected to grow at an annual
rate of 15-20 percent.
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-more-
"Acquiring Calvin Klein is the realization of our long-standing strategy of
taking world-class brands with great growth potential that we can layer onto our
existing infrastructure and expanding them dramatically in ways that fit with
the brand's positioning," Mr. Klatsky said. "This is a tremendous opportunity
for our company, and we believe that Calvin Klein will thrive as a part of PVH
because of our track record of successfully growing and supporting leading
brands with a strong, efficient infrastructure."
Apax Partners will provide financing for the transaction in the form of a $250
million equity investment in PVH convertible preferred stock, as well as a $125
million, two-year secured note. The preferred stock carries an eight-percent
dividend payable in kind or in cash at the company's option and a $14 conversion
price into PVH common stock.
Mr. Klatsky said, "We chose to partner with Apax because of their expertise and
track record in the consumer products and retail sectors. They have proven to be
highly creative and supportive throughout this process."
David Landau, General Partner of Apax, said, "PVH has an outstanding management
team. We are excited to back their acquisition of this powerful brand, which we
believe offers significant growth opportunities worldwide."
Phillips-Van Heusen Corporation is the largest shirt company in the world and
one of the leading apparel and footwear companies. Its well-known brands include
Van Heusen, IZOD, G.H. Bass, as well as licensing agreements with Geoffrey
Beene, ck Calvin Klein, Arrow, DKNY and Kenneth Cole.
Calvin Klein, Inc. is one of the leading design and marketing companies in the
world. The Company consists of a highly successful collection business and an
extensive network of licensing partners that together generate over $3 billion
in annual retail sales worldwide. The Company's brands include the Calvin Klein
Collection, cK and cK Calvin Klein Jeans. Products designed under these
lifestyles include apparel, accessories, shoes, underwear, sleepwear, hosiery,
socks, swimwear, eyewear, watches, coats, and fragrance, as well as products for
the home.
Apax Partners is one of the world's leading international private equity
investment groups, managing and advising more than $11 billion worldwide. With
over 30 years of direct investing experience, Apax focuses on the following
industry sectors: retail/consumer products, information technology,
telecommunications, healthcare, media and financial services.
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Advisors to the transaction include for Phillips-Van Heusen, the Blackstone
Group, Lehman Brothers, JP Morgan Chase, and Katten Muchin Zavis Rosenman; for
Calvin Klein, Violy, Byorum & Partners Holding Company LLC, and for Calvin
Klein, Inc., Grubman, Indursky & Schindler, P.C., Paul, Weiss, Rifkind, Wharton
& Garrison.
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THE COMPANY WILL WEBCAST A CONFERENCE CALL TO REVIEW THE CALVIN KLEIN
TRANSACTION ON TUESDAY, DECEMBER 17, 2002 AT 4:30 P.M. EST.] PLEASE LOG
ON EITHER TO OUR WEB SITE AT WWW.PVH.COM AND GO TO THE INVESTOR INFO
PAGE OR TO CCBN'S WEBSITE AT WWW.COMPANYBOARDROOM.COM TO LISTEN TO THE
LIVE WEBCAST OF THE CONFERENCE CALL. THE WEBCAST WILL BE AVAILABLE FOR
REPLAY FOR 30 DAYS AFTER IT IS HELD, COMMENCING APPROXIMATELY TWO HOURS
AFTER THE LIVE BROADCAST ENDS. PLEASE LOG ON TO WWW.PVH.COM OR
WWW.COMPANYBOARDROOM.COM AS DESCRIBED ABOVE TO LISTEN TO THE REPLAY. IN
ADDITION, AN AUDIO REPLAY OF THE CONFERENCE CALL IS AVAILABLE FOR 48
HOURS STARTING ONE HOUR AFTER IT IS HELD. THE REPLAY OF THE CONFERENCE
CALL CAN BE ACCESSED BY CALLING 1-800-428-6051 AND USING PASSCODE:
272543. THE CONFERENCE CALL AND WEBCAST CONSIST OF COPYRIGHTED MATERIAL.
THEY MAY NOT BE RE-RECORDED, REPRODUCED, RETRANSMITTED, REBROADCAST OR
OTHERWISE USED WITHOUT THE COMPANY'S EXPRESS WRITTEN PERMISSION. YOUR
PARTICIPATION REPRESENTS YOUR CONSENT TO THESE TERMS AND CONDITIONS,
WHICH ARE GOVERNED BY NEW YORK LAW.
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: Forward-looking statements in this press release and made during the
conference call / webcast, including, without limitation, statements relating to
the Company's plans, strategies, objectives, expectations and intentions, are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that such forward-looking statements
are inherently subject to risks and uncertainties, many of which cannot be
predicted with accuracy, and some of which might not be anticipated, including,
without limitation, the following: (i) the Company's plans, strategies,
objectives, expectations and intentions are subject to change at any time at the
discretion of the Company; (ii) the levels of sales of the Company's apparel and
footwear products, both to its wholesale customers and in its retail stores, and
the extent of discounts and promotional pricing in which the Company is required
to engage, all of which can be affected by weather conditions, changes in the
economy, fuel prices, reductions in travel, fashion trends and other factors;
(iii) the Company's plans and results of operations will be affected by the
Company's ability to manage its growth and inventory; (iv) the Company's
operations and results could be affected by quota restrictions (which, among
other things, could limit the Company's ability to produce products in
cost-effective countries that have the labor and technical expertise needed),
the availability and cost of raw materials (particularly petroleum-based
synthetic fabrics, which are currently in high demand), the Company's ability to
adjust timely to changes in trade regulations and the migration and development
of manufacturers (which can affect where the Company's products can best be
produced), and civil conflict or war and political and labor instability in the
countries where the Company's products are or are planned to be produced; and
(v) acquisitions and issues arising with acquisitions and proposed transactions,
and (vi) other risks and uncertainties indicated from time to time in the
Company's filings with the Securities and Exchange Commission.
The Company does not undertake any obligation to update publicly any
forward-looking statement, including, without limitation, any estimate regarding
revenues or earnings, whether as a result of the receipt of new information,
future events or otherwise.
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