SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
|X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED].
For the fiscal year ended December 31, 1995
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from __________ to __________
Commission file number 1-724
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below: Phillips-Van Heusen Corporation Associates
Investment Plan For Hourly Associates Who Are Residents Of The Commonwealth Of
Puerto Rico and Phillips-Van Heusen Corporation Associates Investment Plan For
Salaried Associates Who Are Residents Of The Commonwealth Of Puerto Rico
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: Phillips-Van Heusen Corporation, 1290
Avenue of the Americas, New York, New York 10104
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLANS FOR
RESIDENTS OF THE COMMONWEALTH OF
PUERTO RICO
Dated: June 28, 1996 By /s/ PAMELA N. HOOTKIN
---------------------
Pamela N. Hootkin, Member of
Administrative Committee
Financial Statements
and Supplemental Schedules
Phillips-Van Heusen Corporation
Associates Investment Plan for
Hourly Associates Who Are Residents
of the Commonwealth of Puerto Rico
Years ended December 31, 1995 and 1994
with Report of Independent Auditors
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Financial Statements and Supplemental Schedules
Years ended December 31, 1995 and 1994
Contents
Report of Independent Auditors........................................... 1
Statement of Net Assets Available for Plan Benefits...................... 3
Statement of Changes in Net Assets Available for Plan Benefits........... 4
Notes to Financial Statements ........................................... 5
Schedule of AIP Master Trust Assets Held for Investment.................. 14
Reportable Transactions.................................................. 15
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Auditors
Administrative Committee of the Plan
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
New York, New York
We have audited the accompanying statement of net assets available for plan
benefits of the Phillips-Van Heusen Corporation Associates Investment Plan for
Hourly Associates Who Are Residents of the Commonwealth of Puerto Rico as of
December 31, 1995 and 1994, and the related statement of changes in net assets
available for plan benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1995 and 1994, and the changes in its net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
1
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental Schedule of
AIP Master Trust Assets Held for Investment as of December 31, 1995 and
Reportable Transactions for the year then ended are presented for purposes of
complying with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The supplemental
schedules have been subjected to the auditing procedures applied in our audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Ernst & Young LLP
New York, New York
June 21, 1996
2
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Statement of Net Assets Available for Plan Benefits
December 31,
1995 1994
---------------------
Assets
Investments, at fair value (Notes A and F):
Shares of registered investment companies:
Equity Fund $ 12,125 $ --
Bond Fund 10,580 --
Balanced Fund 16,700 --
International Fund 3,431 --
Common Stock--Employer Company 178,151 178,981
Common trust fund* 80,573 44,002
Participant loans receivable 1,200 --
---------------------
Total investments 302,760 222,983
Receivables:
Employer's contribution -- 4,738
Participants' contributions -- 8,615
---------------------
Total receivables -- 13,353
Liabilities -- --
---------------------
Net assets available for plan benefits $302,760 $236,336
=====================
* Consists of the Money Market Fund in 1995 and the General Investment Fund
and Stock Index Fund in 1994.
See notes to financial statements.
3
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31,
1995 1994
-----------------------
Additions
Net transfers from PVH Associates Investment Plan for
Salaried Associates Who Are Residents of the
Commonwealth of Puerto Rico $ 39,233 $ --
Contributions:
Employer Company, net of forfeitures 45,115 53,986
Participants 93,422 131,193
----------------------
138,537 185,179
Interest and investment income 18,186 3,740
-----------------------
195,956 188,919
Deductions
Net transfers to PVH Associates Investment Plan for
Salaried Associates Who Are Residents of the
Commonwealth of Puerto Rico
-- 297
Payments to participants 36,800 47,681
-----------------------
36,800 47,978
Net realized and unrealized depreciation of
investments (Note F) (92,732) (154,591)
-----------------------
Net increase/(decrease) 66,424 (13,650)
Net assets available for plan benefits at beginning
of year
236,336 249,986
-----------------------
Net assets available for plan benefits at end of year $ 302,760 $ 236,336
=======================
See notes to financial statements.
4
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements
December 31, 1995
A. Description of the Plan
The following description of the Phillips-Van Heusen Corporation (the "Company")
Associates Investment Plan for Hourly Associates Who Are Residents of the
Commonwealth of Puerto Rico (the "Plan") provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
Plan Amendments
On July 1, 1995, the Plan was amended to include new investment elections and to
dissolve the Stock Index Fund into the remaining funds. The amendment also
increased the participant contribution percentage limit and added a loan
feature.
General
The Plan is a defined contribution plan covering hourly paid production
associates of the Company who are residents of the Commonwealth of Puerto Rico,
have at least one year of service (1,000 hours in a year) and are age twenty-one
or older. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
Contributions
Each year, participants may contribute up to 15% of pretax annual compensation,
as defined by the Plan. The Company contributes 50% of the first 6% of base
compensation that a participant contributes to the Plan.
Participant Accounts
Each participant's account is credited with the participant's contributions and
allocations of (a) the Company's contributions and (b) Plan earnings. Forfeited
balances of terminated participants' nonvested accounts are used to reduce
future Company contributions. One hundred percent of the Company contributions
are automatically invested in the common stock of the Company. Participants age
fifty-five or older may direct the Company contribution into any of the Plan's
investment options.
5
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
A. Description of the Plan (continued)
Vesting
Amounts attributable to Company contributions become vested on the participant's
sixty-fifth birthday or if the participant's employment by the Company
terminates by reason of the participant's death or permanent disability or the
participant has completed five years of service with the Company.
Investment Options
Upon enrollment in the Plan, a participant may direct employee contributions in
5% increments into any of the six investment options. A participant may
contribute a maximum of 25% of employee contributions into the Phillips-Van
Heusen Corporation Common Stock Fund.
Phillips-Van Heusen Corporation Common Stock Fund - Funds are invested by
the trustee in common shares of the Company. Common shares of the Company
are purchased by the trustee in the open market.
Money Market Fund - Funds are invested by the trustee in short-term
obligations and money market instruments.
Equity Fund - Funds are invested in shares of a registered investment
company that invests primarily in common stocks. (Fidelity Growth & Income
Portfolio)
Bond Fund - Funds are invested in shares of a registered investment
company that invests in corporate bonds and U.S. government securities.
(Fidelity Intermediate Bond Fund)
Balanced Fund - Funds are invested in shares of a registered investment
company that invests in common stocks, preferred stocks, and bonds.
(Fidelity Puritan Fund)
International Fund - Funds are invested in shares of a registered
investment company that invests in common stocks and bonds of companies
and governments outside the United States. (Templeton Foreign Fund)
6
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
A. Description of the Plan (continued)
Participant Loans Receivable
Effective July 1, 1995, participants may borrow from the Plan, with certain
restrictions, using their vested account balance as collateral. The minimum loan
amount is $1,000 and the maximum loan amount is the lesser of (i) $50,000
reduced by the participant's highest outstanding loan balance during the
previous twelve months or (ii) 50% of the vested value of the participant's
account. Interest is fixed for the term of the loan at the prime rate as of the
first business day of the month of application as published in the Wall Street
Journal, plus 1%. Loan repayments are made through payroll deductions which may
be specified for a term of 1 to 5 years or up to 15 years for the purchase of a
primary residence.
Payment of Benefits
Participants entitled to final distributions generally will receive payment in
the form of a lump sum amount equal to the value of their vested account.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
B. Significant Accounting Policies
The accounting records of the Plan are maintained on the accrual basis.
In accordance with the Rules and Regulations of the Department of Labor,
investments are included at market value as determined by quoted market prices
or at fair value as determined by Chase Manhattan Bank for the applicable Chase
investment funds in the accompanying financial statements. Purchases and sales
of securities are reflected on a trade date basis. Substantially all
administrative expenses are paid by the Company.
7
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
B. Significant Accounting Policies (continued)
All assets of the Plan are held by the trustee, Chase Manhattan Bank, in the
Company's Associates Investment Plan Master Trust ("AIP Master Trust") and are
segregated from the assets of the Company. The Plan shares in AIP Master Trust
interest and investment income based upon its participants' shares of AIP Master
Trust net assets available for plan benefits.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from the estimates.
C. Transactions with Parties-in-Interest
During the years ended December 31, 1995 and 1994, the AIP Master Trust
purchased 226,108 and 183,321 shares, respectively, of the Company's common
stock and received $298,851 and $229,091, respectively, from the Company as
payment of dividends on its common stock. The AIP Master Trust also sold 443,656
and 66,935 shares of the Company's common stock during the years ended December
31, 1995 and 1994, respectively.
8
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
D. Changes in AIP Master Trust Net Assets by Fund
Changes in the AIP Master Trust net assets held by fund during the year ended
December 31, 1995 were as follows:
Phillips-Van
Heusen Corp. Money Stock
Common Stock Market Index Bond Balanced Equity
Fund Fund* Fund Fund Fund Fund
----------------------------------------------------------------------------------------
Net assets at beginning of year $ 24,889,276 $ 7,181,636 $ 7,603,808
Interest and investment income 258,386 509,408 116,968 $ 41,927 $ 97,653 $ 152,964
Contributions received:
Employer Company, net of forfeitures 2,349,930 180,822 244,807 (259) 857 (108)
Employees 2,311,251 956,599 537,338 235,349 583,942 834,762
Net realized and unrealized
(depreciation)/appreciation (8,305,792) -- 1,408,254 18,787 152,961 520,515
Loans to participants, net of repayments (284,434) (139,857) -- (28,241) (62,562) (180,625)
Payments to participants (3,407,543) (1,587,240) (645,205) (6,938) (66,120) (46,311)
Transfers (to) from other accounts (3,185,862) 1,396,904 (9,265,970) 1,397,364 3,596,209 4,839,217
----------------------------------------------------------------------------------------
Net assets at end of year $ 14,625,212 $ 8,498,272 $ 0 $ 1,657,989 $ 4,302,940 $ 6,120,414
========================================================================================
Plan's beneficial interest at 12/31/95 $ 178,151 $ 80,573 $ 0 $ 10,580 $ 16,700 $ 12,125
========================================================================================
Net assets at beginning of year International Loan
Fund Fund
Interest and investment income ---------------------------
Contributions received:
Employer Company, net of forfeitures
Employees $ 46,381
Net realized and unrealized
(depreciation)/appreciation (324)
Loans to participants, net of repayments 274,684
Payments to participants
Transfers (to) from other accounts (34,528)
(21,769) $ 717,488
Net assets at end of year (45,754)
1,222,138
---------------------------
Plan's beneficial interest at 12/31/95 $ 1,440,828 $ 717,488
===========================
$ 3,431 $ 1,200
===========================
* Formerly named the General Investment Fund.
Note: Certain funds above include investments in Chase Manhattan Bank Domestic
Liquidity Funds.
9
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
D. Changes in AIP Master Trust Net Assets by Fund (continued)
Changes in the AIP Master Trust net assets held in the stock, investment and
index funds during the year ended December 31, 1994 were as follows:
Phillips-
Van Heusen General Stock
Corp. Common Investment Index
Stock Fund Fund Fund
---------------------------------------
Net assets--beginning of year $ 56,372,946 $ 6,898,939 $ 6,838,298
Interest and investment income 244,703 298,900 204,310
Contributions received:
Employer Company, net of forfeitures 1,585,769 272,080 329,308
Employees 4,041,108 946,037 883,455
Net realized and unrealized appreciation (34,277,461) -- (87,946)
Payments to participants (3,636,527) (768,847) (470,352)
Transfers from (to) other accounts 558,738 (465,473) (93,265)
--------------------------------------
Net assets--end of year $ 24,889,276 $ 7,181,636 $ 7,603,808
======================================
Plan's beneficial interest at 12/31/94 $ 178,981 $ 8,828 $ 35,174
======================================
E. Income Tax Status
The Puerto Rico Treasury Department has ruled that the Plan qualifies under
Section 165(e) of the Puerto Rico Income Tax Act of 1954 ("PRITA") and therefore
its related trust is tax-exempt under Section 165(a) of the PRITA. The Plan's
most recent determination letter is dated June 5, 1995. The Administrative
Committee of the Plan is not aware of any course of action or series of events
that have occurred that might adversely affect the qualified status of the Plan.
10
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
F. Assets of the Plan
Assets of the Plan are included in the assets of the AIP Master Trust held by
The Chase Manhattan Bank, N.A. The assets of the AIP Master Trust are presented
in the following table. Investments that represent 5% or more of the Master
Trust's total net assets are identified by an asterisk.
December 31,
1995 1994
--------------------------
Investments at Fair Value as Determined
by Quoted Market Price-
Shares of registered investment companies:
Fidelity Growth & Income Portfolio,
226,232 shares* $ 6,119,575 $ --
Fidelity Intermediate Bond Fund,
159,268 shares 1,657,981 --
Fidelity Puritan Fund, 252,964 shares* 4,302,912 --
Templeton Foreign Fund, 156,952 shares 1,440,819 --
Phillips-Van Heusen Corp. Common Stock,
1,401,647 and 1,619,195 shares, respectively* 13,841,264 24,692,724
Investments at Estimated Fair Value-
Common trust fund* 9,283,104 14,903,103
Promissory notes (participant loans) 717,488 --
Accrued income:
Common Stock Employer Company -- 60,102
Common trust fund -- 18,791
--------------------------
Total net assets $37,363,143 $39,674,720
==========================
Plan's beneficial interest $ 302,760 $ 222,983
==========================
11
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
F. Assets of the Plan (continued)
During 1995 and 1994, the AIP Master Trust's investments depreciated in fair
value by $6,239,803, net, and $34,365,407, as follows:
Net Appreciation
(Depreciation) in
Fair Value During
Year Ended December 31,
1995 1994
-----------------------------
Fair Value of Assets Determined by Quoted
Market Price:
Phillips-Van Heusen Corp. Common Stock $ (8,305,792) $(34,277,461)
Fidelity Growth & Income Portfolio 520,515 --
Fidelity Intermediate Bond Fund 18,787 --
Fidelity Puritan Fund 152,961 --
Templeton Foreign Fund (34,528) --
Fair Value Estimated by Trustee:
Common trust fund 1,408,254 (87,946)
-----------------------------
Net depreciation in fair value $ (6,239,803) $(34,365,407)
=============================
Plan's beneficial interest $ (92,732) $ (154,591)
=============================
G. Differences Between Plan Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31,
1995
------------
Net assets available for plan benefits per the financial statements $ 302,760
Amounts allocated to withdrawn participants at December 31, 1995 (14,901)
------------
Net assets available for plan benefits per the Form 5500 $ 287,859
============
12
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
G. Differences Between Plan Financial Statements and Form 5500 (continued)
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31,
1995
------------
Benefits paid to participants per the financial statements $ 36,800
Add: Amounts allocated to withdrawn participants at December 31, 1995 14,901
Less: Amounts allocated to withdrawn participants at December 31, 1994 (8,903)
-------------
Benefits paid to participants per the Form 5500 $ 42,798
=============
Amounts allocated to withdrawn participants on the Form 5500 represent benefit
claims that have been processed and approved for payment prior to year-end but
not yet paid.
13
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
AIP Master Trust Assets Held for Investment
December 31, 1995
Market
Cost Value
--------------------------
Fidelity Growth & Income Portfolio $ 5,659,975 $ 6,119,575
Fidelity Intermediate Bond Fund 1,639,092 1,657,981
Fidelity Puritan Fund 4,205,644 4,302,912
Templeton Foreign Fund 1,516,431 1,440,819
Chase Manhattan Bank--Domestic Liquidity Fund 9,283,104 9,283,104
Phillips-Van Heusen Corporation Common
Stock--1,401,647 shares*
17,565,607 13,841,264
Promissory Notes 717,488 717,488
--------------------------
$40,587,341 $37,363,143
==========================
* Party-in-interest investment (Note C).
14
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Who Are Residents of the Commonwealth of Puerto Rico
Reportable Transactions
Year ended December 31, 1995
Purchase Selling Cost of
Party Involved Description Price Price Asset Sold
- ------------------------------------------------------------------------------------------------------------------------------------
Category (i) - Individual Transactions in Excess of 5% of Plan Assets:
Chase Manhattan Bank, N.A. CMB - S&P 500 Index Fund $ 9,097,274 $ 6,037,061
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ 9,097,274
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ 9,128,548 $ 9,128,548
Chase Manhattan Bank, N.A. Fidelity Growth & Income Portfolio $ 3,700,000
Chase Manhattan Bank, N.A. Fidelity Puritan Fund $ 2,700,000
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets:
Chase Manhattan Bank, N.A. CMB - S&P 500 Index Fund $ 200,472 $ 9,168,420 $ 6,095,288
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ 21,444,628 $ 19,826,360 $ 19,826,360
Chase Manhattan Bank, N.A. Fidelity Growth & Income Portfolio $ 5,696,130 $ 97,070 $ 36,156
Chase Manhattan Bank, N.A. Fidelity Puritan Fund $ 4,234,866 $ 84,915 $ 29,233
Chase Manhattan Bank, N.A. Phillips-Van Heusen Corp. Common Stock $ 3,376,204 $ 5,921,871 $ 5,308,840
Net Gain Number of
Party Involved Description or (Loss) Transactions
- -----------------------------------------------------------------------------------------------------------------
Category (i) - Individual Transactions in Excess of 5% of Plan Assets:
Chase Manhattan Bank, N.A. CMB - S&P 500 Index Fund $ 3,060,212 1
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund 1
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ - 1
Chase Manhattan Bank, N.A. Fidelity Growth & Income Portfolio 1
Chase Manhattan Bank, N.A. Fidelity Puritan Fund 1
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets:
Chase Manhattan Bank, N.A. CMB - S&P 500 Index Fund $ 3,073,132 12
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ - 362
Chase Manhattan Bank, N.A. Fidelity Growth & Income Portfolio $ 60,914 23
Chase Manhattan Bank, N.A. Fidelity Puritan Fund $ 55,692 22
Chase Manhattan Bank, N.A. Phillips-Van Heusen Corp. Common Stock $ 613,031 100
There were no category (ii) or (iv) reportable transactions for the year ended
December 31, 1995.
15
Financial Statements
and Supplemental Schedules
Phillips-Van Heusen Corporation
Associates Investment Plan for
Salaried Associates Who Are Residents
of the Commonwealth of Puerto Rico
Years ended December 31, 1995 and 1994
with Report of Independent Auditors
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Financial Statements and Supplemental Schedules
Years ended December 31, 1995 and 1994
Contents
Report of Independent Auditors......................................... 1
Statement of Net Assets Available for Plan Benefits.................... 3
Statement of Changes in Net Assets Available for Plan Benefits......... 4
Notes to Financial Statements.......................................... 5
Schedule of AIP Master Trust Assets Held for Investment................ 14
Reportable Transactions................................................ 15
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Auditors
Administrative Committee of the Plan
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
New York, New York
We have audited the accompanying statement of net assets available for plan
benefits of the Phillips-Van Heusen Corporation Associates Investment Plan for
Salaried Associates Who Are Residents of the Commonwealth of Puerto Rico as of
December 31, 1995 and 1994, and the related statements of changes in net assets
available for plan benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1995 and 1994, and the changes in its net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
1
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental Schedule of
AIP Master Trust Assets Held for Investment as of December 31, 1995 and
Reportable Transactions for the year then ended, are presented for purposes of
complying with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic audited financial statements. The supplemental
schedules have been subjected to the auditing procedures applied in our audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Ernst & Young LLP
New York, New York
June 21, 1996
2
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Statement of Net Assets Available for Plan Benefits
December 31,
1995 1994
---------------------
Assets
Investments, at fair value (Notes A and F):
Shares of registered investment companies:
Equity Fund $ 18,156 $ --
Bond Fund 5,250 --
Balanced Fund 28,685 --
International Fund 6,723 --
Common Stock--Employer Company 59,472 86,322
Common trust fund* 36,257 49,074
Participant loans receivable 5,700 --
---------------------
Total investments 160,243 135,396
Receivables:
Employer's contribution -- 2,937
Participants' contributions -- 5,365
---------------------
Total receivables -- 8,302
Liabilities -- --
---------------------
Net assets available for plan benefits $160,243 $143,698
=====================
* Consists of the Money Market Fund in 1995 and the General Investment Fund
and Stock Index Fund in 1994.
See notes to financial statements.
3
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31,
1995 1994
-----------------------
Additions
Net transfer from the PVH Associates Investment
Plan for Hourly Associates Who Are Residents of
the Commonwealth of Puerto Rico
$ -- $ 297
Contributions:
Employer Company, net of forfeitures 25,498 33,462
Participants 52,800 81,431
-----------------------
78,298 114,893
Interest and investment income 3,938 1,795
-----------------------
82,236 116,985
Deductions
Payments to participants 6,379 21,561
Net transfer to the PVH Associates Investment
Plan for Hourly Associates Who Are Residents of
the Commonwealth of Puerto Rico
39,233 --
-----------------------
45,612 21,561
Net realized and unrealized depreciation of
investments (Note F) (20,079) (70,804)
-----------------------
Net increase 16,545 24,620
Net assets available for plan benefits at
beginning of year 143,698 119,078
-----------------------
Net assets available for plan benefits at
end of year $ 160,243 $ 143,698
=======================
See notes to financial statements.
4
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements
December 31, 1995
A. Description of the Plan
The following description of the Phillips-Van Heusen Corporation (the "Company")
Associates Investment Plan for Salaried Associates Who Are Residents of the
Commonwealth of Puerto Rico (the "Plan") provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
Plan Amendments
On July 1, 1995, the Plan was amended to include new investment elections and to
dissolve the Stock Index Fund into the remaining funds. The amendment also
increased the participant contribution percentage limit and added a loan
feature.
General
The Plan is a defined contribution plan covering salaried paid clerical
associates of the Company who are residents of the Commonwealth of Puerto Rico,
have at least one year of service (1,000 hours in a year) and are age twenty-one
or older. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
Contributions
Each year, participants may contribute up to 15% of pretax annual compensation,
as defined by the Plan. The Company contributes 50% of the first 6% of base
compensation that a participant contributes to the Plan.
Participant Accounts
Each participant's account is credited with the participant's contributions and
allocations of (a) the Company's contributions and (b) Plan earnings. Forfeited
balances of terminated participants' nonvested accounts are used to reduce
future Company contributions. One hundred percent of the Company contributions
are automatically invested in the common stock of the Company. Participants age
fifty-five or older may direct the Company contribution into any of the Plan's
investment options.
5
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
A. Description of the Plan (continued)
Vesting
Amounts attributable to Company contributions become vested on the participant's
sixty-fifth birthday or if the participant's employment by the Company
terminates by reason of the participant's death or permanent disability or the
participant has completed five years of service with the Company.
Investment Options
Upon enrollment in the Plan, a participant may direct employee contributions in
5% increments into any of the six investment options. A participant may
contribute a maximum of 25% of employee contributions into the Phillips-Van
Heusen Corporation Common Stock Fund.
Phillips-Van Heusen Corporation Common Stock Fund - Funds are invested by
the trustee in common shares of the Company. Common shares of the Company
are purchased by the trustee in the open market.
Money Market Fund - Funds are invested by the trustee in short-term
obligations and money market instruments.
Equity Fund - Funds are invested in shares of a registered investment
company that invests primarily in common stocks. (Fidelity Growth & Income
Portfolio)
Bond Fund - Funds are invested in shares of a registered investment
company that invests in corporate bonds and U.S. government securities.
(Fidelity Intermediate Bond Fund)
Balanced Fund - Funds are invested in shares of a registered investment
company that invests in common stocks, preferred stocks, and bonds.
(Fidelity Puritan Fund)
International Fund - Funds are invested in shares of a registered
investment company that invests in common stocks and bonds of companies
and governments outside the United States. (Templeton Foreign Fund)
6
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
A. Description of the Plan (continued)
Participant Loans Receivable
Effective July 1, 1995, participants may borrow from the Plan, with certain
restrictions, using their vested account balance as collateral. The minimum loan
amount is $1,000 and the maximum loan amount is the lesser of (i) $50,000
reduced by the participant's highest outstanding loan balance during the
previous twelve months or (ii) 50% of the vested value of the participant's
account. Interest is fixed for the term of the loan at the prime rate as of the
first business day of the month of application as published in the Wall Street
Journal, plus 1%. Loan repayments are made through payroll deductions which may
be specified for a term of 1 to 5 years or up to 15 years for the purchase of a
primary residence.
Payment of Benefits
Participants entitled to final distributions generally will receive payment in
the form of a lump sum amount equal to the value of their vested account.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
B. Significant Accounting Policies
The accounting records of the Plan are maintained on the accrual basis.
In accordance with the Rules and Regulations of the Department of Labor,
investments are included at market value as determined by quoted market prices
or at fair value as determined by Chase Manhattan Bank for the applicable Chase
investment funds in the accompanying financial statements. Purchases and sales
of securities are reflected on a trade date basis. Substantially all
administrative expenses are paid by the Company.
7
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
B. Significant Accounting Policies (continued)
All assets of the Plan are held by the trustee, Chase Manhattan Bank, in the
Company's Associates Investment Plan Master Trust ("AIP Master Trust") and are
segregated from the assets of the Company. The Plan shares in AIP Master Trust
interest and investment income based upon its participants' shares of AIP Master
Trust net assets available for plan benefits.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from the estimates.
C. Transactions with Parties-in-Interest
During the years ended December 31, 1995 and 1994, the AIP Master Trust
purchased 226,108 and 183,321 shares, respectively, of the Company's common
stock and received $298,851 and $229,091, respectively, from the Company as
payment of dividends on its common stock. The AIP Master Trust also sold 443,656
and 66,935 shares of the Company's common stock during the years ended December
31, 1995 and 1994, respectively.
8
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
D. Changes in AIP Master Trust Net Assets by Fund
Changes in the AIP Master Trust net assets held by fund during the year ended
December 31, 1995 were as follows:
Phillips-Van
Heusen Corp. Money Stock
Common Stock Market Index Bond Balanced
Fund Fund* Fund Fund Fund
--------------------------------------------------------------------------------
Net assets at beginning of year $ 24,889,276 $ 7,181,636 $ 7,603,808
Interest and investment income 258,386 509,408 116,968 $ 41,927 $ 97,653
Contributions received:
Employer Company, net of forfeitures 2,349,930 180,822 244,807 (259) 857
Employees 2,311,251 956,599 537,338 235,349 583,942
Net realized and unrealized
(depreciation)/appreciation (8,305,792) - 1,408,254 18,787 152,961
Loans to participants, net of repayments (284,434) (139,857) - (28,241) (62,562)
Payments to participants (3,407,543) (1,587,240) (645,205) (6,938) (66,120)
Transfers (to) from other accounts (3,185,862) 1,396,904 (9,265,970) 1,397,364 3,596,209
--------------------------------------------------------------------------------
Net assets at end of year $ 14,625,212 $ 8,498,272 $ 0 $ 1,657,989 $ 4,302,940
================================================================================
Plan's beneficial interest at 12/31/95 $ 59,472 $ 36,257 $ 0 $ 5,250 $ 28,685
================================================================================
Equity International Loan
Fund Fund Fund
-----------------------------------------------
Net assets at beginning of year
Interest and investment income $ 152,964 $ 46,381
Contributions received:
Employer Company, net of forfeitures (108) (324)
Employees 834,762 274,684
Net realized and unrealized
(depreciation)/appreciation 520,515 (34,528)
Loans to participants, net of repayments (180,625) (21,769) $ 717,488
Payments to participants (46,311) (45,754)
Transfers (to) from other accounts 4,839,217 1,222,138
-----------------------------------------------
Net assets at end of year $ 6,120,414 $ 1,440,828 $ 717,488
===============================================
Plan's beneficial interest at 12/31/95 $ 18,156 $ 6,723 $ 5,700
===============================================
* Formerly named the General Investment Fund.
Note: Certain funds above include investments in Chase Manhattan Bank Domestic
Liquidity Funds.
9
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
D. Changes in AIP Master Trust Net Assets by Fund (continued)
Changes in the AIP Master Trust net assets held in the stock, investment and
index funds during the year ended December 31, 1994 were as follows:
Phillips-
Van Heusen General Stock
Corp. Common Investment Index
Stock Fund Fund Fund
-------------------------------------------
Net assets--beginning of year $ 56,372,946 $ 6,898,939 $ 6,838,298
Interest and investment income 244,703 298,900 204,310
Contributions received:
Employer Company, net of forfeitures 1,585,769 272,080 329,308
Employees 4,041,108 946,037 883,455
Net realized and unrealized appreciation (34,277,461) -- (87,946)
Payments to participants (3,636,527) (768,847) (470,352)
Transfers from (to) other accounts 558,738 (465,473) (93,265)
-------------------------------------------
Net assets--end of year $ 24,889,276 $ 7,181,636 $ 7,603,808
===========================================
Plan's beneficial interest at 12/31/94 $ 86,322 $ 13,660 $ 35,414
===========================================
E. Income Tax Status
The Puerto Rico Treasury Department has ruled that the Plan qualifies under
Section 165(e) of the Puerto Rico Income Tax Act of 1954 ("PRITA") and therefore
its related trust is tax-exempt under Section 165(a) of the PRITA. The Plan's
most recent determination letter is dated June 5, 1995. The Administrative
Committee of the Plan is not aware of any course of action or series of events
that have occurred that might adversely affect the qualified status of the Plan.
10
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
F. Assets of the Plan
Assets of the Plan are included in the assets of the AIP Master Trust held by
The Chase Manhattan Bank, N.A. The assets of the AIP Master Trust are presented
in the following table. Investments that represent 5% or more of the Master
Trust's total net assets are identified by an asterisk.
December 31,
1995 1994
------------------------
Investments at Fair Value as Determined
by Quoted Market Price-
Shares of registered investment companies:
Fidelity Growth & Income Portfolio,
226,232 shares* $ 6,119,575 $ --
Fidelity Intermediate Bond Fund,
159,268 shares 1,657,981 --
Fidelity Puritan Fund, 252,964 shares* 4,302,912 --
Templeton Foreign Fund, 156,952 shares 1,440,819 --
Phillips-Van Heusen Corp. Common Stock,
1,401,647 and 1,619,195 shares, respectively* 13,841,264 24,692,724
Investments at Estimated Fair Value-
Common trust fund* 9,283,104 14,903,103
Promissory notes (participant loans) 717,488 --
Accrued income:
Common Stock Employer Company -- 60,102
Common trust fund -- 18,791
------------------------
Total net asssets $37,363,143 $39,674,720
========================
Plan's beneficial interest $ 160,243 $ 135,396
========================
11
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
F. Assets of the Plan (continued)
During 1995 and 1994, the AIP Master Trust's investments depreciated in fair
value by $6,239,803, net, and $34,365,407, as follows:
Net Appreciation
(Depreciation) in
Fair Value During
Year Ended December 31,
1995 1994
-----------------------------
Fair Value of Assets Determined by Quoted
Market Price:
Phillips-Van Heusen Corp. Common Stock $ (8,305,792) $(34,277,461)
Fidelity Growth & Income Portfolio 520,515 --
Fidelity Intermediate Bond Fund 18,787 --
Fidelity Puritan Fund 152,961 --
Templeton Foreign Fund (34,528) --
Fair Value Estimated by Trustee:
Common trust fund 1,408,254 (87,946)
-----------------------------
Net depreciation in fair value $ (6,239,803) $(34,365,407)
=============================
Plan's beneficial interest $ (20,079) $ (70,804)
=============================
G. Differences Between Plan Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31,
1995
------------
Net assets available for plan benefits per the financial statements $ 160,243
Amounts allocated to withdrawn participants at December 31, 1995 (4,881)
------------
Net assets available for plan benefits per the Form 5500 $ 155,362
============
12
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Notes to Financial Statements (continued)
G. Differences Between Plan Financial Statements and Form 5500 (continued)
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31,
1995
------------
Benefits paid to participants per the financial statements $ 6,379
Add: Amounts allocated to withdrawn participants at December 31, 1995 4,881
Less: Amounts allocated to withdrawn participants at December 31, 1994 (3,999)
------------
Benefits paid to participants per the Form 5500 $ 7,261
============
Amounts allocated to withdrawn participants on the Form 5500 represent benefit
claims that have been processed and approved for payment prior to year-end but
not yet paid.
13
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
AIP Master Trust Assets Held for Investment
December 31, 1995
Market
Cost Value
--------------------------
Fidelity Growth & Income Portfolio $ 5,659,975 $ 6,119,575
Fidelity Intermediate Bond Fund 1,639,092 1,657,981
Fidelity Puritan Fund 4,205,644 4,302,912
Templeton Foreign Fund 1,516,431 1,440,819
Chase Manhattan Bank--Domestic Liquidity Fund 9,283,104 9,283,104
Phillips-Van Heusen Corporation Common
Stock--1,401,647 shares*
17,565,607 13,841,264
Promissory Notes 717,488 717,488
--------------------------
$40,587,341 $37,363,143
==========================
* Party-in-interest investment (Note C).
14
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Who Are Residents of the Commonwealth of Puerto Rico
Reportable Transactions
Year ended December 31, 1995
Purchase Selling Cost of
Party Involved Description Price Price Asset Sold
- --------------------------------------------------------------------------------------------------------------------------------
Category (i) - Individual Transactions in Excess of 5% of Plan Assets:
Chase Manhattan Bank, N.A. CMB - S&P 500 Index Fund $ 9,097,274 $ 6,037,061
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ 9,097,274
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ 9,128,548 $ 9,128,548
Chase Manhattan Bank, N.A. Fidelity Growth & Income Portfolio $ 3,700,000
Chase Manhattan Bank, N.A. Fidelity Puritan Fund $ 2,700,000
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets:
Chase Manhattan Bank, N.A. CMB - S&P 500 Index Fund $ 200,472 $ 9,168,420 $ 6,095,288
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ 21,444,628 $ 19,826,360 $ 19,826,360
Chase Manhattan Bank, N.A. Fidelity Growth & Income Portfolio $ 5,696,130 $ 97,070 $ 36,156
Chase Manhattan Bank, N.A. Fidelity Puritan Fund $ 4,234,866 $ 84,915 $ 29,233
Chase Manhattan Bank, N.A. Phillips-Van Heusen Corp. Common Stock $ 3,376,204 $ 5,921,871 $ 5,308,840
Net Gain Number of
Party Involved Description or (Loss) Transactions
- ---------------------------------------------------------------------------------------------------------------------
Category (i) - Individual Transactions in Excess of 5% of Plan Assets:
Chase Manhattan Bank, N.A. CMB - S&P 500 Index Fund $ 3,060,212 1
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund 1
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ - 1
Chase Manhattan Bank, N.A. Fidelity Growth & Income Portfolio 1
Chase Manhattan Bank, N.A. Fidelity Puritan Fund 1
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets:
Chase Manhattan Bank, N.A. CMB - S&P 500 Index Fund $ 3,073,132 12
Chase Manhattan Bank, N.A. CMB - Domestic Liquidity Fund $ - 362
Chase Manhattan Bank, N.A. Fidelity Growth & Income Portfolio $ 60,914 23
Chase Manhattan Bank, N.A. Fidelity Puritan Fund $ 55,692 22
Chase Manhattan Bank, N.A. Phillips-Van Heusen Corp. Common Stock $ 613,031 100
There were no category (ii) or (iv) reportable transactions for the year ended
December 31, 1995.
15
[LETTERHEAD OF ERNST & YOUNG LLP]
Consent of Independent Accountants
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Associates Investment Plan for Salaried Associates Who
Are Residents of the Commonwealth of Puerto Rico and the Associates Investment
Plan for Hourly Associates Who Are Residents of the Commonwealth of Puerto Rico,
of the Phillips-Van Heusen Corporation, of our reports dated June 21, 1996, with
respect to the financial statements and supplemental schedules of the above
mentioned plans included in this Annual Report (Form 11K) for the year ended
December 31, 1995.
/s/ Ernst & Young LLP
June 21, 1996
New York, New York
