As filed pursuant to Rule 424(b)(5)

Registration No. 333-166190

 

CALCULATION OF REGISTRATION FEE

 

 

 

 

 

PROSPECTUS SUPPLEMENT

(To Prospectus dated April 20, 2010)

 

5,000,000 Shares

 

 

PHILLIPS-VAN HEUSEN CORPORATION

 

Common Stock

 

 

 

 

We are selling 5,000,000 shares of our common stock.

 

Our shares trade on the New York Stock Exchange under the symbol “PVH.” On April 22, 2010, the last sales price of the shares as reported on the New York Stock Exchange was $67.08 per share.

 

Investing in the common stock involves risks that are described in the “Risk Factors” section beginning on page S-22 of this prospectus supplement.

 

 

 

 

 

The underwriters may also purchase up to an additional 750,000 shares from us, at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus supplement to cover overallotments, if any.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.

 

The shares will be ready for delivery on or about April 28, 2010.

 

 

 

 

Joint Book-Running Managers

 

 

 

 

 

Co-Managers

 

RBC Capital Markets

 

 

 

 

 

The date of this prospectus supplement is April 22, 2010.

 

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer or sale is not permitted. You should not assume that the information we have included in this prospectus supplement or the accompanying prospectus is accurate as of any date other than the date of this prospectus supplement or the accompanying prospectus or that any information we have incorporated by reference is accurate as of any date other than the date of the document incorporated by reference. If the information varies between this prospectus supplement and the accompanying prospectus, the information in this prospectus supplement supersedes the information in the accompanying prospectus. Neither this prospectus supplement nor the accompanying prospectus constitutes an offer, or an invitation on our behalf or on behalf of the underwriters, to subscribe for and purchase any of the securities and may not be used for or in connection with an offer or solicitation by anyone, in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.

 

 

 

 

TABLE OF CONTENTS

 

Prospectus Supplement

 

Prospectus

 

 

This prospectus supplement and the accompanying prospectus are part of a registration statement that we filed with the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration process. In this prospectus supplement, we provide you with specific information about the shares of common stock we are selling in this offering and about the offering itself. Both this prospectus supplement and the accompanying prospectus include or incorporate by reference important information about us and other information you should know before investing in the common stock. This prospectus supplement also adds, updates and changes information contained or incorporated by reference in the accompanying prospectus. To the extent that any statement we make in this prospectus supplement is inconsistent with the statements made in the accompanying prospectus, the statements made in the accompanying prospectus are deemed modified or superseded by the statements made in this prospectus supplement. You should read both this prospectus supplement and the accompanying prospectus, as well as the additional information in the documents described below under the heading “Incorporation By Reference,” before investing in the common stock.

 

References to “PVH,” “we,” “our” or “us” refer to Phillips-Van Heusen Corporation and its subsidiaries, including, after the completion of the Tommy Hilfiger acquisition, Tommy Hilfiger, except where the context otherwise requires.

 

References to the brand names Calvin Klein Collection, ck Calvin Klein, Calvin Klein, Van Heusen, IZOD, Eagle, Bass, Geoffrey Beene, ARROW, CHAPS, Sean John, JOE Joseph Abboud, MICHAEL Michael Kors, Michael Kors Collection, Trump, Kenneth Cole New York, Kenneth Cole Reaction, DKNY, Tommy Hilfiger, Nautica, Ike Behar, Jones New York, J. Garcia, Claiborne, Timberland and to other brand names are to registered trademarks owned by us or licensed to us by third parties and are identified by italicizing the brand name.

 

On March 15, 2010, we entered into a definitive agreement to acquire Tommy Hilfiger B.V. and certain affiliated companies. We refer to Tommy Hilfiger B.V. and these affiliated companies, and the businesses of these entities that we are acquiring, as “Tommy Hilfiger.” References to, and discussion of, Tommy Hilfiger in this prospectus supplement specifically exclude the subsidiaries of Tommy Hilfiger B.V. that own the rights to the Karl Lagerfeld trademark and the business conducted by them thereunder, none of which we are acquiring. Tommy Hilfiger is controlled by funds affiliated with Apax Partners L.P. We refer to these funds as “Apax.” The offering of common stock pursuant to this prospectus supplement is not contingent upon the consummation of our acquisition of Tommy Hilfiger, and there can be no assurance that we will complete this acquisition.

 

References to our acquisition of BVH refer to our October 2008 acquisition from The British Van Heusen Company Limited, a former licensee of Van Heusen men’s dresswear and accessories in the United Kingdom and Ireland, and one of its affiliates of certain assets (including inventories) of the licensed business. We refer to The British Van Heusen Company Limited and its affiliate together as “BVH.”

 

References to our acquisition of CMI refer to our January 2008 acquisition of Confezioni Moda Italia S.r.L., which we refer to as “CMI,” from a subsidiary of The Warnaco Group, Inc. (We refer to The Warnaco Group, Inc. and its subsidiaries, separately and together, as “Warnaco.”) CMI is the licensee of the Calvin Klein Collection apparel and accessories businesses under agreements with our Calvin Klein, Inc. subsidiary.

 

References to our acquisition of Superba refer to our January 2007 acquisition of substantially all of the assets of Superba, Inc.

 

References to our acquisition of Arrow refer to our December 2004 acquisition of Cluett Peabody Resources Corporation and Cluett Peabody & Co., Inc., which companies we refer to collectively as “Arrow.”

 

References to our acquisition of Calvin Klein refer to our February 2003 acquisition of Calvin Klein, Inc. and certain affiliated companies, which companies we refer to collectively as “Calvin Klein.”

 

We obtained or created the market and competitive position data used throughout this prospectus supplement and the documents incorporated by reference herein from research, surveys or studies conducted by third parties, information provided by customers and industry or general publications. Industry publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. While we believe that each of these studies and publications and other information is reliable, neither we nor the underwriters have independently verified such data and neither we nor the underwriters make any representation as to the accuracy of such information.

 

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read and copy any materials we file with the SEC at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can obtain information about the operation of the SEC’s public reference room by calling the SEC at 1-800-732-0330. The SEC also maintains a website at http://www.sec.gov that contains information we file electronically with the SEC. You can also obtain information about us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

 

This prospectus supplement does not contain all of the information set forth in the registration statement or in the exhibits and schedules thereto, in accordance with the rules and regulations of the SEC, and we refer you to that omitted information. The statements made in this prospectus supplement pertaining to the content of any contract, agreement or other document that is an exhibit to the registration statement necessarily are summaries of their material provisions and we qualify those statements in their entirety by reference to those exhibits for complete statements of their provisions. The registration statement and its exhibits and schedules are available at the SEC’s public reference room or through its website.

 

 

The SEC allows us to “incorporate by reference” the information we file with it, which means we can disclose important information to you by referring you to those documents. The information we incorporate by reference is an important part of this prospectus supplement, and information we subsequently file with the SEC will automatically update and supersede that information. We incorporate by reference the documents listed below and any filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (File Number 001-07572) (excluding, in each case, information deemed to be furnished and not filed with the SEC) after the date of this prospectus supplement. The documents we incorporate by reference are:

 

 

We will provide without charge to each person to whom a copy of this prospectus supplement has been delivered, upon written or oral request, a copy of any or all of the documents we incorporate by reference in this prospectus supplement, other than any exhibit to any of those documents, unless we have specifically incorporated that exhibit by reference into the information this prospectus supplement incorporates. You may request copies by visiting our website at http://www.pvh.com, or by writing or telephoning us at the following:

 

Phillips-Van Heusen Corporation

200 Madison Avenue

New York, New York 10016

Attention: Secretary

Telephone: (212) 381-3500

 

Forward-looking statements made in this prospectus supplement and the accompanying prospectus, including the information we incorporate by reference, including, without limitation, statements relating to our future revenue, cash flows, plans, strategies, objectives, expectations and intentions, including, without limitation, statements relating to our estimated or anticipated financial performance or results (including the disclosure under the heading “Summary — Recent Developments” of this prospectus supplement and our acquisition of Tommy Hilfiger, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

 

Because these forward-looking statements involve numerous risks and uncertainties, there are important factors that could cause our actual results to differ materially from those in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future events. The events or circumstances reflected in the forward-looking statements might not occur. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “forecasting,” “pro forma,” “guidance,” “estimates” or “anticipates,” or the negative of these words and phrases, or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indicators of whether, or the time at which, such performance or results will be achieved. There is no assurance that the events or circumstances reflected in forward-looking statements will occur or be achieved. Forward-looking statements are necessarily dependent on assumptions, expectations, data or methods that may be incorrect or imprecise and we may not be able to realize them. We caution you that many forward-looking statements presented in the prospectus supplement and the accompanying prospectus are based on our beliefs, expectations and assumptions made by, and information currently available to us. Statements contained and incorporated by reference in this prospectus supplement and the accompanying prospectus that are not historical facts may be forward-looking statements. Such statements relate to our future performance and plans, results of operations, capital expenditures, acquisitions, and operating improvements and costs.

 

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:

 

 

 

We do not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimate regarding revenue or cash flows, whether as a result of the receipt of new information, future events or otherwise.

 

The consideration for the acquisition of Tommy Hilfiger and the sources and uses relating thereto, when presented in United States Dollars, is presented as published by the European Central Bank on April 22, 2010, which, for the avoidance of doubt, is computed as $1.3339 to one Euro. The actual exchange rate on the date of the closing of the acquisition may differ.

 

Tommy Hilfiger’s consolidated financial statements are presented in Euros, which is Tommy Hilfiger’s functional and presentation currency. Foreign currency transactions are translated into the functional currency using an average rate that approximates the actual rate at the date of the transaction. Whenever exchange rates fluctuate significantly, the exchange rates prevailing at the dates of the transactions are used. The exchange rates below are used for Tommy Hilfiger’s special purpose consolidated financial statements for the years ended March 31, 2007 through March 31, 2009 and for the nine months ended December 31, 2008 and December 31, 2009. These exchange rates are provided solely for informational purposes and are presented as published by the European Central Bank.

 

 

 

 

Unless otherwise indicated, our financial information contained in this prospectus supplement has been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applicable at the first day of the relevant financial period. Our fiscal years are based on the 52-53 week period ending on the Sunday closest to February 1 and are designated by the calendar year in which the fiscal year commences. References to our “year” are to our fiscal year, unless the context requires otherwise. Results for 2007, 2008 and 2009 represent the 52 weeks ended February 3, 2008, February 1, 2009, and January 31, 2010, respectively.

 

Unless otherwise indicated, Tommy Hilfiger’s financial information contained in this prospectus supplement has been prepared in accordance with the International Financial Reporting Standards promulgated by the International Accounting Standards Board (“IFRS”) applicable at the first day of the relevant financial period. IFRS differs in certain significant respects from GAAP. For a discussion of certain significant differences between IFRS and GAAP, see “Unaudited Pro Forma Consolidated Financial Information.” Tommy Hilfiger’s fiscal years are based on the 52-53 week period ending on March 31 and are designated by the calendar year in which the fiscal year ends. References to Tommy Hilfiger’s “year” are to Tommy Hilfiger’s fiscal year, unless the context requires otherwise. Results for 2007, 2008 and 2009 represent the 52 weeks ended March 31, 2007, March 31, 2008 and March 31, 2009, respectively.

 

When we use the term “pro forma,” we assume consummation of the acquisition of Tommy Hilfiger, including the issuance of the common stock offered hereby, the entry into a new senior secured credit facility and the borrowings thereunder, the issuance of our senior notes in a public offering, the issuance of our perpetual convertible preferred stock in a private placement and the extinguishment of a portion of our existing debt.

 

The financial measures EBITDA and adjusted EBITDA, as presented in this prospectus supplement, are supplemental measures of performance that are not GAAP or IFRS measures. As presented in this prospectus supplement, EBITDA is defined as net income (loss) before interest expense and interest income, income tax expense, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA, as further adjusted to exclude certain items that we do not consider indicative of ongoing operating performance. See “Summary — Summary Consolidated Historical and Unaudited Pro Forma Consolidated Financial Information.” We present EBITDA and adjusted EBITDA because, when considered in conjunction with related GAAP and IFRS financial measures, we believe they are useful to investors since they (i) provide investors with a financial measure on which management bases financial, operational, compensation and planning decisions, (ii) are measures that will be important with respect to our compliance with the covenants in our new debt facilities into which we anticipate entering in connection with the acquisition and (iii) assist investors and analysts in evaluating our performance, including evaluation across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our operating performance. EBITDA and adjusted EBITDA, however, are not measures of financial performance under GAAP or IFRS, have not been audited and should not be considered alternatives to, or more meaningful than, net income as a measure of operating performance or cash flow as a measure of liquidity. The presentation as set forth herein may also differ from any calculations set forth in our new debt agreements, which have not been finalized. Since EBITDA and adjusted EBITDA are not measures determined in accordance with GAAP or IFRS and thus are susceptible to varying interpretations and calculations, EBITDA and adjusted EBITDA may not be comparable to similarly titled measures used by other companies. EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation from, or as a substitute for analysis of, financial information prepared in accordance with GAAP or IFRS. For instance, EBITDA and adjusted EBITDA do not include:

 

 

 

Some additional limitations are:

 

 

For reconciliations of EBITDA and adjusted EBITDA, see “Summary — Summary Consolidated Historical and Unaudited Pro Forma Financial Information.”

	•	We intend to grow the business in product categories that we believe are currently underdeveloped in Europe, such as pants, outerwear, underwear and accessories, as well as the womenswear collection;
	•	We will seek to increase the Tommy Hilfiger brand’s presence in under-penetrated markets where we believe there is growth potential, such as Italy, France, the United Kingdom, Scandinavia and Central and Eastern Europe, through both our own retail expansion and increased wholesale sales, which will be supported with increased advertising and marketing activities; and
	•	We will continue to increase Tommy Hilfiger’s overall presence in Europe through the expansion of specialty and outlet retail stores.

	•	Expanding the strategic alliance with Macy’s by leveraging our logistics capabilities and “preferred vendor” relationship with Macy’s and adding product categories to the merchandise assortments, increasing and enhancing the locations of “shop-in-shop” stores in high-volume Macy’s stores and featuring Tommy Hilfiger products in Macy’s marketing campaigns;
	•	Continuing to develop the retail businesses by increasing the overall number of stores in the United States and Canada; and
	•	Expanding product offerings by Tommy Hilfiger and its licensees in both the retail and wholesale channels.

	•	Calvin Klein Collection.  The principal growth opportunity for our “halo” brand is to broaden the current distribution through the continued opening of freestanding stores operated throughout the world by our experienced retail partners, as well as through expanded distribution by our wholesale collection business within premier department stores and specialty stores in both the United States and overseas. We acquired CMI, the licensee of the men’s and women’s high-end collection apparel and accessories businesses, in January 2008. We believe this acquisition gives us greater control over the Calvin Klein Collection businesses and, thereby, enhances our ability to maximize the halo benefit provided by this brand.
	•	ck Calvin Klein.  Our “bridge” brand, ck Calvin Klein, provides significant growth opportunities, particularly in Europe and Asia, where apparel and accessories are more traditionally sold in the upper-moderate to upper “bridge” price range. We have entered into several licenses since we acquired Calvin Klein, adding to the pre-existing licensed apparel and accessories lines. Specific growth opportunities include:

	•	Broadening distribution of apparel and accessories through continued expansion in key markets such as Southeast Asia, China and Japan, as well as Europe and the Middle East. ck Calvin Klein apparel and accessories were available in Europe, Asia and Japan, as well as in approximately 60 freestanding ck Calvin Klein stores in Asia-Pacific (excluding Japan), Europe and the Middle East at the end of 2009. We currently expect that additional freestanding ck Calvin Klein stores will be opened by licensees by the end of 2010;
	•	Expansion of the watch and jewelry lines worldwide; and
	•	Introduction of additional ck Calvin Klein fragrances, which have contributed to the growth of the ck Calvin Klein brand globally.

	•	Calvin Klein.  We believe that the Calvin Klein white label “better” brand presents the largest growth opportunity, particularly in the United States, Canada and Mexico. Growth opportunities for this brand include:

	•	Continued expansion of our men’s sportswear business, which was first launched for Fall 2004 in the United States;
	•	Continued development of the licensed lines of men’s and women’s footwear, handbags, women’s sportswear, women’s suits, dresses, women’s swimwear and men’s outerwear;
	•	Introduction and growth of new fragrance offerings and brand extensions, such as the men’s and women’s ckIN2U (Spring 2007), Calvin Klein MAN (Fall 2007), Secret Obsession (Fall 2008) and ckFree (Fall 2009) fragrances;
	•	Introduction and growth of new underwear brand extensions, such as the men’s and women’s Steel (Fall 2007), men’s and women’s Black & White (Spring 2009), and the women’s Seductive Comfort (Fall 2008) lines;
	•	Introduction and growth of new jeanswear extensions, such as the men’s and women’s Body (Fall 2009) lines; and
	•	Pursuit of additional licensing opportunities for new product lines, such as the introduction of a women’s performance line (Spring 2008) and two furniture lines, Calvin Klein Home (January 2009) and The Curator Collection By Calvin Klein Home (Fall 2009).

	•	Continue to grow sportswear.  We have a leading position in the United States in men’s sportswear and have continued to penetrate the sportswear market with additional products and product lines. We have built IZOD into a year-round lifestyle brand from its traditional knit sport shirt origins by adding new product offerings, such as pants, sweaters and outerwear, and new lines of apparel, including golf and jeanswear. As a result, IZOD has become a leader on the main floor of department stores in the United States. In 2007, we expanded our wholesale sportswear offerings through our assumption of the IZOD women’s sportswear collection, which was previously a licensed business. We offered our first collection of men’s Timberland sportswear for Fall 2008, assuming the line from our licensor, The Timberland Company, and since then have grown distribution in department and specialty store doors in the United States from 330 to 1,300 in 2009.
	•	Continue to strengthen the competitive position and image of our current brand portfolio.  We intend for each of our brands to be a leader in its respective market segment, with strong consumer awareness and loyalty. We believe that our brands are successful because we have positioned each one to target distinct consumer demographics and tastes. We will continue to design and market our branded products to complement each other, satisfy lifestyle needs, emphasize product features important to our target consumers and increase consumer loyalty. We will seek to increase our market share in our businesses by expanding our presence through product extensions and increased floor space. We are also committed to investing in our brands through advertising and other means to maintain strong customer recognition of our brands.
	•	Continue to build our brand portfolio through acquisition and licensing opportunities.  While we believe we have an attractive and diverse portfolio of brands with growth potential, we will also continue to explore acquisitions of companies or trademarks and licensing opportunities that we believe are additive to our overall business, such as is the case with the acquisition of Tommy Hilfiger. New license opportunities allow us to fill new product and brand portfolio needs. We take a disciplined approach to acquisitions, seeking brands with broad consumer recognition that we can grow profitably and expand by leveraging our infrastructure and core competencies and, where appropriate, by extending the brand through licensing.

	•	Pursue international growth.  We intend to expand the international distribution of our brands. To date, we have done so principally through licensing. Following the Tommy Hilfiger acquisition, we also intend to do so through exploring opportunities to develop larger European businesses for our heritage brands under the leadership of the Tommy Hilfiger European management team. As of March 31, 2010, we had approximately 50 license agreements covering approximately 150 territories outside of the United States, to use our heritage brands in numerous product categories, including apparel, accessories, footwear, soft home goods and fragrances. We also conduct international business directly. We expanded our wholesale operations in 2007 and again in 2008 to include sales of certain dress furnishings and sportswear products to department and specialty stores throughout Canada and dress shirts in parts of Europe. We believe that our strong brand portfolio and broad product offerings enable us to seek additional growth opportunities in geographic areas where we believe we are underpenetrated, such as Europe and Asia.

*		Reflects the pricing of our offering of 73/8% senior notes due 2020, which occurred on April 23, 2010.

Sources						Uses
($ in millions)
Available cash (1)		$	247			Tommy Hilfiger consideration (7)		$	3,115
New senior secured credit facility (2)			1,900			Repurchase or redemption of existing notes			300
Senior notes offering (3)			600			Integration and other costs (8)			90
Stock issued to Apax and selling shareholders (4)			374			Estimated acquisition fees and   expenses (9)			149
Preferred stock issued (5)			200
Common stock offered hereby (6)			333
Total		$	3,654			Total		$	3,654

(1)		Reflects excess cash to be used to fund the acquisition of Tommy Hilfiger after giving effect to proceeds from the senior notes offering, as well as the other proposed financings to fund the acquisition.
(2)		We will enter into a new senior secured credit facility in aggregate principal amount of $2.35 billion (including an undrawn revolving credit facility with a total commitment of $450 million), consisting of a United States Dollar-denominated facility and a Euro-denominated facility. See “Description of Indebtedness.”
(3)		Reflects the pricing of our offering of 73/8% senior notes due 2020, which occurred on April 23, 2010.
(4)		Pursuant to the Tommy Hilfiger purchase agreement, we will issue €276 million of our common stock directly to Apax and the other selling shareholders of Tommy Hilfiger. Assuming a United States Dollar-Euro exchange rate of $1.3339 to one Euro and in accordance with the formula in the purchase agreement this issuance would constitute approximately 8.4 million shares of our common stock, or approximately 13% of our pro forma outstanding shares.
(5)		We will sell $200 million of Series A preferred stock to LNK and MSD, which is convertible into approximately 4.2 million shares, or approximately 6% of our pro forma outstanding shares.
(6)		Excludes an additional 750,000 shares of common stock to cover over-allotments.
(7)		Consists of €1.924 billion in cash, €276 million in shares of our common stock and the assumption of approximately €100 million of Tommy Hilfiger’s liabilities. Assumes €650 million of the cash consideration is converted at the exchange rate of $1.4057 to one Euro to reflect hedges in place, assuming the acquisition closes during the week of May 3, 2010, and €1,650 million is converted at the exchange rate on April 22, 2010 of $1.3339 to one Euro.
(8)		Includes cash integration costs relating to severance, real estate related costs, IT and equipment, as well as other costs and expenses associated with the acquisition.
(9)		Reflects our estimate of fees and expenses associated with the acquisition, including financing fees, transaction fees and other transaction costs and professional fees.

		2009				2010
First Quarter Earnings Per Share		(Actual)				(Estimated)
GAAP earnings per share		$	0.48			$	0.11
Estimated per share impact of costs related to our acquisition of Tommy Hilfiger that will be incurred regardless of whether the acquisition is consummated (pre-tax costs of $60.0 million, or $37.2 million after taxes of $22.8 million)						$	0.69
Per share impact of restructuring initiatives (pre-tax charges of $4.7 million, or $2.9 million after taxes of $1.8 million)		$	0.05
Earnings per share excluding the impact of above items		$	0.53			$	0.80

		2009				2010
Full Year Earnings Per Share		(Actual)				(Estimated)
GAAP earnings per share		$	3.08			$	2.56 - $2.64
Estimated per share impact of costs related to our acquisition of Tommy Hilfiger that will be incurred regardless of whether the acquisition is consummated (pre-tax costs of $60.0 million, or $37.2 million after taxes of $22.8 million)							$0.69
Per share impact of (i) restructuring initiatives (pre-tax charges of $25.9 million, or $16.1 million after taxes of $9.8 million) and (ii) the net tax benefit of $29.6 million related principally to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions (total net income of $13.5 million after-tax)		$	(0.25	)
Earnings per share excluding the impact of above items		$	2.83			$	3.25 - $3.33

Common stock		5,000,000 shares
Underwriter’s option to purchase additional shares		We have granted the underwriters a 30-day option to purchase up to an additional 750,000 shares of common stock to cover overallotments, if any.
Common stock outstanding after this offering		57,177,726 shares (1)
Use of proceeds		We intend to use the net proceeds of this offering to partially fund the Tommy Hilfiger acquisition, including any related fees and expenses. If we do not complete the Tommy Hilfiger acquisition, we intend to use the proceeds for general corporate purposes and for fees and expenses related to the Tommy Hilfiger transaction that are payable whether or not the acquisition is consummated.
Risk Factors		Investing in our common stock involves substantial risks. You should carefully consider the risk factors set forth under the caption “Risk Factors” and the other information in this prospectus supplement and the documents incorporated by reference prior to making an investment decision.
NYSE Symbol		PVH

(1)		The number of shares of our common stock outstanding immediately after this offering is based on the number of shares of common stock outstanding as of April 22, 2010. This number does not include:

	•	an aggregate of 4,330,061 shares issuable upon exercise of outstanding stock options and upon vesting of restricted stock units and performance shares under our stock option plans, approximately 2,600,000 shares issuable under stock options exercisable, and approximately 50,000 shares of restricted stock which will vest, within 60 days of April 22, 2010;
	•	4,608,992 shares available for future issuance under our 2006 stock incentive plan;
	•	an aggregate of 320,000 shares issuable upon exercise of a warrant initially issued to Mr. Calvin Klein in connection with our acquisition of Calvin Klein;
	•	an aggregate of approximately 8.4 million shares to be issued to former shareholders of Tommy Hilfiger in connection with the closing of the Tommy Hilfiger acquisition, assuming a United States Dollar-Euro exchange rate of $1.3339 to one Euro, based on the last reported sales price of our common stock on the New York Stock Exchange and in accordance with the formula in the purchase agreement (see “Description of the Tommy Hilfiger Acquisition — Purchase Agreement” below); and
	•	an aggregate of 4,189,359 shares issuable upon the conversion of shares of Series A preferred stock to be sold to affiliates of LNK Partners, L.P. and MSD Capital, L.P. pursuant to the terms of their respective securities purchase agreements (see “Description of the Tommy Hilfiger Acquisition — LNK Purchase Agreement” and “Description of the Tommy Hilfiger Acquisition — MSD Purchase Agreement” below).

		Fiscal Year																				Pro Forma
		2005(1)				2006(2)				2007				2008(3)				2009(4)				2009
		($ in thousands, except per share data and ratios)																				(Unaudited)
Income Statement Data:
Total revenue		$	1,908,848			$	2,090,648			$	2,425,175			$	2,491,935			$	2,398,731			$	4,680,832
Cost of goods sold			1,017,793				1,060,784				1,234,188				1,291,267				1,216,128				2,299,430
Gross profit			891,055				1,029,864				1,190,987				1,200,668				1,182,603				2,381,402
Selling, general and administrative expenses			684,209				796,601				882,492				1,028,784				938,791				2,061,318
Gain on sale of investments, net			—				32,043				3,335				1,864				—				—
Income before interest and taxes			206,846				265,306				311,830				173,748				243,812				320,084
Interest expense			34,390				34,272				33,753				33,639				33,524				159,376
Interest income			(5,813	)			(17,399	)			(16,744	)			(6,195	)			(1,295	)			(2,445	)
Income tax expense			66,581				93,204				111,502				54,533				49,673				45,661
Net income		$	111,688			$	155,229			$	183,319			$	91,771			$	161,910			$	117,492
Preferred stock dividends on convertible stock			12,918				—				—				—				—				—
Preferred stock dividends on converted stock			2,051				3,230				—				—				—				—
Inducement payments and offering costs			14,205				10,948				—				—				—				—
Net income available to common stockholders		$	82,514			$	141,051			$	183,319			$	91,771			$	161,910			$	117,492
Net income per common share — basic		$	2.15			$	2.71			$	3.29			$	1.78			$	3.14			$	1.71
Net income per common share — diluted		$	1.85			$	2.64			$	3.21			$	1.76			$	3.08			$	1.68
Balance Sheet Data (end of period):
Cash and cash equivalents		$	267,357			$	366,099			$	269,914			$	328,167			$	480,882			$	386,486
Working capital(5)			439,032				501,837				476,071				515,191				632,002				724,282
Total assets			1,765,048				2,013,345				2,172,394				2,200,184				2,339,679				6,819,516
Total debt			399,525				399,538				399,552				399,567				399,584				2,592,584
Convertible redeemable preferred stock			161,926				—				—				—				—				—
Preferred Stock			—				—				—				—				—				200,000
Stockholders’ equity			610,662				942,157				956,283				998,795				1,168,553				2,008,381
Cash Flow and Other Data:
Depreciation and amortization		$	35,481			$	37,902			$	46,590			$	55,366			$	49,889
EBITDA(6)			242,327				303,208				358,420				229,114				293,701
Adjusted EBITDA(6)			242,327				292,994				358,420				328,441				319,598
Capital expenditures			37,443				46,161				94,749				88,141				23,856
Cash flows provided by operating activities			189,385				251,259				219,335				238,747				214,452
Cash flows used in investing activities			(63,886	)			(154,177	)			(125,599	)			(176,684	)			(62,873	)
Cash flows (used in) provided by financing activities			17,744				1,660				(189,921	)			(3,810	)			1,136
Cash dividends declared per common share			0.15				0.15				0.15				0.15				0.15
Ratio of earnings to fixed charges(7)			3.6	x			4.6	x			4.9	x			2.8	x			3.6	x			1.6	x

(1)		2005 includes an inducement payment of $12,853 and offering costs totaling $1,352 incurred by us in connection with the voluntary conversion by the holders of our Series B convertible preferred stock of a portion of such stock into shares of our common stock and the subsequent sale of such shares by the holders. The inducement payment and offering costs resulted in a reduction of net income available to common stockholders for purposes of calculating diluted net income per common share.
(2)		2006 includes (a) a pre-tax gain of $32,043 associated with the sale by one of our subsidiaries on January 31, 2006 of minority interests in certain entities that operate various licensed Calvin Klein jeans and sportswear businesses in Europe and Asia; (b) pre-tax costs of $10,535 resulting from the departure in February 2006 of our former chief executive officer; (c) pre-tax costs of $11,294 associated with closing our apparel manufacturing facility in Ozark, Alabama in May 2006; and (d) an inducement payment of $10,178 and offering costs totaling $770 incurred by us in connection with the voluntary conversion by the holders of our Series B convertible preferred stock of a portion of such stock into shares of our common stock and the subsequent sale of a portion of such shares by the holders. The inducement payment and offering costs resulted in a reduction of net income available to common stockholders for purposes of calculating diluted net income per common share. 2006 includes 53 weeks of operations.

(3)		2008 includes (a) fixed asset impairment charges of $60,082 for approximately 200 of our retail stores; (b) pre-tax costs of $21,578 associated with our restructuring initiatives announced in the fourth quarter of 2008, including the shutdown of domestic production of machine-made neckwear, a realignment of our global sourcing organization, reductions in warehousing capacity and other initiatives to reduce corporate and administrative expenses; and (c) pre-tax costs of $17,667 associated with the operations and closing of our Geoffrey Beene outlet retail division.
(4)		2009 includes (a) pre-tax costs of $25,897 associated with our restructuring initiatives announced in the fourth quarter of 2008, including the shutdown of domestic production of machine-made neckwear, a realignment of our global sourcing organization, reductions in warehousing capacity, lease termination fees for the majority of our Calvin Klein specialty retail stores and other initiatives to reduce corporate and administrative expenses, and (b) a net tax benefit of $29,619 related principally to the lapse of the statute of limitations with respect to certain previously unrecognized tax positions.
(5)		Working capital is defined as current assets less current liabilities.
(6)		Adjusted EBITDA is defined as EBITDA, as further adjusted to exclude certain restructuring and other items as referenced in footnotes 2 through 4 above. EBITDA and adjusted EBITDA are presented because, when considered in conjunction with related GAAP financial measures, we believe they are useful to investors since they (a) provide investors with a financial measure on which management bases financial, operational, compensation and planning decisions, (b) are measures that will be important with respect to our compliance with the covenants in our new debt facilities into which we anticipate entering in connection with the acquisition and (c) assist investors and analysts in evaluating our performance, including evaluation across reporting periods on a consistent basis, by excluding items that we do not believe are indicative of our core operating performance. EBITDA and adjusted EBITDA, however, are not measures of financial performance under GAAP, have not been audited and should not be considered alternatives to, or equally or more meaningful than, net income as a measure of operating performance or cash flow as a measure of liquidity. Since EBITDA and adjusted EBITDA are not measures determined in accordance with GAAP and thus are susceptible to varying interpretations and calculations, EBITDA and adjusted EBITDA may not be comparable to similarly titled measures used by other companies. EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation from, or as a substitute for analysis of, financial information prepared in accordance with GAAP. Net income in accordance with generally accepted accounting principles is reconciled to EBITDA and adjusted EBITDA as follows (footnotes (1) through (4) above apply to the applicable periods in the following table):

		Fiscal Year
		2005				2006				2007				2008				2009
		($ in thousands)
Net income		$	111,688			$	155,229			$	183,319			$	91,771			$	161,910
Income tax expense			66,581				93,204				111,502				54,533				49,673
Interest expense			34,390				34,272				33,753				33,639				33,524
Interest income			(5,813	)			(17,399	)			(16,744	)			(6,195	)			(1,295	)
Depreciation and amortization			35,481				37,902				46,590				55,366				49,889
EBITDA		$	242,327			$	303,208			$	358,420			$	229,114			$	293,701
Restructuring and other items (Notes 2-4)			—				(10,214	)			—				99,327				25,897
Adjusted EBITDA		$	242,327			$	292,994			$	358,420			$	328,441			$	319,598

(7)		The ratio of earnings to fixed charges is computed by dividing fixed charges into earnings before income taxes plus fixed charges. Fixed charges consist of interest expense and the estimated interest component of rent expense. The pro forma ratio reflects the acquisition of Tommy Hilfiger and the incurrence and repayment of debt in connection therewith.

		Fiscal Year Ended March 31,												Nine Months Ended December 31,
		2007(1)				2008				2009				2008				2009
										(€ in thousands)				(unaudited)				(unaudited)
Income Statement Data:
Revenue		€	1,197,247			€	1,369,377			€	1,612,304			€	1,149,838			€	1,178,937
Cost of goods sold			570,322				558,461				710,913				490,775				521,225
Gross margin			626,925				810,916				901,391				659,063				657,712
Distribution and selling costs			238,955				315,552				362,296				326,474				333,207
Administrative expenses			188,746				236,629				300,308				137,110				145,248
Other expenses			78,014				29,083				14,457				23,291				12,311
Depreciation, amortization and impairment expenses			90,214				59,941				105,497				50,186				75,928
Operating result			30,996				169,711				118,833				122,002				91,018
Finance costs, net			157,270				153,085				80,096				56,810				78,916
Result before tax			(126,274	)			16,626				38,737				65,192				12,102
Income tax			(57,204	)			26,978				14,419				24,264				4,249
Result for period (net income)		€	(69,070	)		€	(10,352	)		€	24,318			€	40,928			€	7,853
Balance Sheet Data (at end of period):
Cash, cash equivalents and bank overdrafts		€	136,627			€	74,752			€	139,845			€	144,520			€	236,559
Working capital(2)			211,866				159,840				202,758				183,932				244,702
Total assets			1,418,846				1,494,735				1,725,423				1,624,960				1,599,522
Total debt			694,267				576,116				625,764				606,734				549,851
Total equity, including shareholder loan			333,191				393,381				473,888				462,544				528,711
Cash Flow and Other Data:
Depreciation, amortization and impairment expenses		€	90,214			€	59,941			€	105,497			€	50,186			€	75,928
EBITDA(3)-(8)			121,210				229,652				224,330				172,188				166,946
Adjusted EBITDA(3)-(8)			222,592				283,132				265,303				195,024				188,388
Capital expenditures			76,952				63,628				103,641				76,294				42,293
Net cash from/(used in) operating activities			69,217				199,207				252,476				226,671				254,583
Net cash from/(used in) investing activities			(580,720	)			(100,148	)			(158,740	)			(126,841	)			(56,576	)
Net cash from/(used in) financing activities			642,835				(141,272	)			(34,924	)			(23,950	)			(97,045	)

(1)		Tommy Hilfiger was acquired by management and Apax in 2006 and, as a consequence, the fiscal year ended March 31, 2007 consists of only 46 weeks and includes significant non-recurring expenses, as discussed below.
(2)		Working capital is defined as current assets less current liabilities.
(3)		Adjusted EBITDA is defined as EBITDA, as further adjusted to exclude certain restructuring and other items as referenced in notes (4)-(8) below. We present EBITDA and adjusted EBITDA because, when considered in conjunction with related IFRS financial measures, we believe they are useful to investors since they (i) provide investors with a financial measure on which Tommy Hilfiger management bases financial, operational, compensation and planning decisions, (ii) are measures that will be important with respect to our compliance with the covenants in our new debt facilities into which we anticipate entering in connection with the acquisition and (iii) assist investors and analysts in evaluating Tommy Hilfiger’s performance, including evaluation across reporting periods on a consistent basis, by excluding items that Tommy Hilfiger does not believe are indicative of its core operating performance. EBITDA and adjusted EBITDA, however, are not measures of financial performance under IFRS, have not been audited and should not be considered alternatives to, or equally or more meaningful than, net income as a measure of operating performance or cash flow as a measure of liquidity. Since EBITDA and adjusted EBITDA are not measures determined in accordance with IFRS and thus are susceptible to varying interpretations and calculations, EBITDA and adjusted EBITDA may not be comparable to similarly titled measures used by other companies. EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation from, or as a substitute for analysis of, financial information prepared in accordance with IFRS.
		Net income in accordance with IFRS is reconciled to EBITDA and adjusted EBITDA as follows (notes (1) and (3) above also apply to the applicable periods in the following table):

														Nine Months Ended
		Fiscal Year Ended March 31,												December 31,
		2007(4)				2008(5)				2009(6)				2008(7)				2009(8)
										(in thousands)				(unaudited)				(unaudited)
Result for period (net income)		€	(69,070	)(9)		€	(10,352	)		€	24,318			€	40,928			€	7,853
Income tax			(57,204	)			26,978				14,419				24,264				4,249
Finance costs, net			157,270				153,085				80,096				56,810				78,916
Depreciation, amortization and impairment expenses			90,214				59,941				105,497				50,186				75,928
EBITDA			121,210				229,652				224,330				172,188				166,946
Karl Lagerfeld(10)			5,298				10,401				7,160				4,704				4,379
Restructuring and other items (notes (4)-(8))			96,084				43,079				33,813				18,132				17,063
Adjusted EBITDA		€	222,592			€	283,132			€	265,303			€	195,024			€	188,388

(4)		2007 includes (a) costs associated with the actions taken after purchase of Tommy Hilfiger by management and Apax: (i) €53,000 of restructuring costs for the United States operations following the management buy-out consisting of severance payments and retention bonuses and closure costs for distribution center and head office leases; (ii) €28,200 fair value adjustments of inventory as prescribed by purchase price accounting guidance; and (iii) €10,033 closure costs of certain divisions in the United States wholesale business; and (b) €4,851 termination costs for certain licenses.
(5)		2008 includes (a) €24,935 employee costs for bonus plans specifically related to a potential change in ownership of Tommy Hilfiger, which plans are not part of Tommy Hilfiger’s normal compensation scheme; (b) 11,082 of costs related to an abandoned refinancing transaction; and (c) €7,061 of expenses related to restructuring and of acquisitions and divestments, primarily for the acquisition by Tommy Hilfiger of its European footwear licensed business.

(6)		2009 includes (a) €12,376 costs for the expected losses on the sublease of retail stores and write down of key money not able to be recovered due to the economic downturn; (b) €10,565 employee costs for bonus plans specifically related to a potential change in ownership of the company, which plans are not part of Tommy Hilfiger’s normal compensation scheme; (c) €8,131 of pre-opening expenses for Tommy Hilfiger’s only global anchor store on Fifth Avenue in New York; and (d) €2,741 of expenses related to the restructuring of Tommy Hilfiger’s Canadian operations and the termination of Tommy Hilfiger’s United States footwear and handbag licensed businesses (including termination fees and certain other fees and costs).
(7)		The nine-month period ended December 31, 2008 includes (a) €11,120 of employee costs for bonus plans specifically related to a potential change in ownership of Tommy Hilfiger, which plans are not part of Tommy Hilfiger’s normal compensation scheme; (b) €5,438 of pre-opening expenses for Tommy Hilfiger’s only global anchor store on Fifth Avenue in New York; and (c) €1,574 of expenses related to the termination of Tommy Hilfiger’s United States footwear and handbag licensed businesses (including termination fees and certain other fees and costs).
(8)		The nine-month period ended December 31, 2009 includes (a) €5,223 pre-opening expenses for Tommy Hilfiger’s only global anchor store on Fifth Avenue in New York; (b) €4,498 of expenses related to the restructuring of Tommy Hilfiger’s Canadian operations; (c) €3,992 of employee costs for bonus plans specifically related to a potential change in ownership of Tommy Hilfiger, which plans are not part of Tommy Hilfiger’s normal compensation scheme; and (d) €3,350 of expenses related to the termination of Tommy Hilfiger’s United States footwear and handbag licensed businesses (including termination fees and certain other fees and costs).
(9)		Excludes €8,943 from discontinued operations related to the sale of the sourcing operation to Li & Fung.
(10)		Excludes the Karl Lagerfeld business owned by Tommy Hilfiger, which we are not acquiring.

 

Before investing in our common stock, you should consider carefully each of the following risks and all of the information about risks included in the documents incorporated by reference, together with the other information contained in this prospectus supplement, the accompanying prospectus and any free writing prospectus prepared by or on behalf of us. If any of the risks actually were to occur, our business, financial condition, results of operations, cash flow and future prospects could be materially and adversely affected. In that case, the trading price of our common stock could decline and you could lose all or part of your investment. If there is any inconsistency between the information set forth in this section, the accompanying prospectus and any documents incorporated by reference, you should rely on the information set forth in this section. Our discussions with respect to the risk factors described below assume the completion of our acquisition of Tommy Hilfiger, except where specifically noted. However, there can be no assurance that the acquisition of Tommy Hilfiger will be consummated under the terms contemplated or at all.

 

Risks Related to Our Business and Our Industry

 

Recent and future economic conditions, including turmoil in the financial and credit markets, may adversely affect our business.

 

Economic conditions may adversely affect our business, our customers and our financing and other contractual arrangements. Recent and future economic developments may lead to a reduction in consumer spending overall, which could have an adverse impact on our revenue and profitability. Such events could also adversely affect the businesses of our wholesale and retail customers, which may, among other things, result in financial difficulties leading to restructurings, bankruptcies, liquidations and other unfavorable events for our customers, and may cause such customers to reduce or discontinue orders of our products. Financial difficulties of customers may also affect the ability of our customers to access credit markets or lead to higher credit risk relating to receivables from customers.

 

Recent or future turmoil in the financial and credit markets could make it more difficult for us to obtain financing or refinance existing debt when the need arises or on terms that would be acceptable to us.

 

A substantial portion of our revenue and gross profit is derived from a small number of large customers and the loss of any of these customers could substantially reduce our revenue.

 

A few of our customers, including Macy’s, J.C. Penney Company, Inc., Kohl’s Corporation and Wal-Mart Stores, Inc., account for significant portions of our revenue. Sales to our five largest customers were 31% of our revenue in 2009, 32% of our revenue in 2008 and 30% of our revenue in 2007. Macy’s, our largest customer, accounted for 12% of our revenue in 2009, 12% of our revenue in 2008 and 10% of our revenue in 2007. In addition, starting in Fall 2008, Tommy Hilfiger commenced a strategic alliance with Macy’s providing for exclusive wholesale distribution in the United States of most men’s, women’s, women’s plus-size and children’s sportswear. The initial term of the agreement with Macy’s ends on January 30, 2011. Macy’s has notified Tommy Hilfiger of its desire to renew the agreement for a second three-year term and the parties are currently in discussion about expanding the scope of the agreement. Discussions are expected to be concluded shortly and an extension executed, although there can be no assurance that this will be the case. For the year ended March 31, 2009, Macy’s represented approximately 56% of Tommy Hilfiger’s North American revenue and 6% of the company’s total revenue. As a result of this strategic alliance, the success of Tommy Hilfiger’s North American wholesale business is substantially dependent on this relationship and on Macy’s ability to maintain and increase sales of Tommy Hilfiger products. Upon the expiration of the initial term of the Macy’s agreement and each subsequent three-year term, Macy’s may be unwilling to renew the Macy’s agreement on favorable terms, or at all. In addition, our and Tommy Hilfiger’s United States wholesale businesses may be affected by any operational or financial difficulties that Macy’s experiences, including any deterioration in Macy’s overall ability to attract customer traffic or in its overall liquidity position.

 

Aside from Tommy Hilfiger’s strategic alliance with Macy’s, we do not have long-term agreements with any of our customers and purchases generally occur on an order-by-order basis. A decision by any of our major customers, whether motivated by marketing strategy, competitive conditions, financial difficulties or

otherwise, to decrease significantly the amount of merchandise purchased from us or our licensing or other partners, or to change their manner of doing business with us or our licensing or other partners, could substantially reduce our revenue and materially adversely affect our profitability. During the past several years, the retail industry has experienced a great deal of consolidation and other ownership changes and we expect such changes to be ongoing. In addition, store closings by our customers decrease the number of stores carrying our apparel products, while the remaining stores may purchase a smaller amount of our products and may reduce the retail floor space designated for our brands. In the future, retailers may further consolidate, undergo restructurings or reorganizations, realign their affiliations or reposition their stores’ target markets. Any of these types of actions could decrease the number of stores that carry our products or increase the ownership concentration within the retail industry. These changes could decrease our opportunities in the market, increase our reliance on a smaller number of large customers and decrease our negotiating strength with our customers. These factors could have a material adverse effect on our financial condition and results of operations.

 

We may not be able to continue to develop and grow our Calvin Klein and Tommy Hilfiger businesses in terms of revenue and profitability.

 

A significant portion of our business strategy involves growing our Calvin Klein business. Our realization of revenue and profitability growth from Calvin Klein will depend largely upon our ability to:

 

 

We cannot assure you that we can successfully execute any of these actions or our growth strategy for the Calvin Klein brands, nor can we assure you that the launch of any Calvin Klein branded products or businesses by us or our licensees or that the continued offering of these lines will achieve the degree of consistent success necessary to generate profits or positive cash flow. Our ability to successfully carry out our growth strategy may be affected by, among other things, our ability to enhance our relationships with existing customers to obtain additional selling space and develop new relationships with apparel retailers, economic and competitive conditions, changes in consumer spending patterns and changes in consumer tastes and style trends. If we fail to continue to develop and grow the Calvin Klein business in terms of revenue and profitability, our financial condition and results of operations may be materially and adversely affected. We will have similar exposure with respect to the Tommy Hilfiger brands and businesses if the Tommy Hilfiger acquisition is completed.

 

The success of Calvin Klein and Tommy Hilfiger depends on the value of our Calvin Klein and Tommy Hilfiger brands, and if the value of either of those brands were to diminish, our business could be adversely affected.

 

Our success depends on our brands and their value. The Calvin Klein name is integral to the existing Calvin Klein business, as well as to our strategies for continuing to grow and expand Calvin Klein. The Calvin Klein brands could be adversely affected if Mr. Klein’s public image or reputation were to be tarnished. We will have similar exposure with respect to the Tommy Hilfiger brands if the Tommy Hilfiger acquisition is completed. Mr. Hilfiger is closely identified with the Tommy Hilfiger brand and any negative perception with respect to Mr. Hilfiger could adversely affect the Tommy Hilfiger brand. In addition, under Mr. Hilfiger’s employment agreement, if his employment is terminated for any reason, his agreement not to compete with Tommy Hilfiger will expire two years after such termination. Although Mr. Hilfiger could not use any Tommy Hilfiger trademark in connection with a competitive business, his association with a competitive business could adversely affect Tommy Hilfiger.

Our level of debt could impair our financial condition.

 

We had approximately $400 million of long term debt, $135 million of outstanding letters of credit and $190 million of additional amounts available for borrowing as of January 31, 2010, prior to giving effect to our acquisition of Tommy Hilfiger. As of January 31, 2010, as adjusted for our acquisition of Tommy Hilfiger, our incurrence of debt under our new senior credit facility and our offering of senior notes (which includes the repurchase of certain of our outstanding senior notes through the tender offers and the repurchase or redemption of all untendered notes), on a pro forma basis, we would have had approximately $2.6 billion of long term debt outstanding (including $1.9 billion under our new senior secured credit facility, $100 million of our secured 73/4% debentures due 2023 and $600 million of our unsecured 73/8% senior notes due 2020,* but excluding approximately $201 million of outstanding letters of credit and $249 million of available undrawn revolving credit facility commitments under our new senior secured credit facility). Our level of debt could have important consequences to investors, including:

 

 

We cannot assure you that we will complete the acquisition of Tommy Hilfiger, or if completed, whether such acquisition will be beneficial to us.

 

On March 15, 2010, we entered into a definitive purchase agreement pursuant to which we agreed to acquire Tommy Hilfiger B.V. Consummation of the acquisition of Tommy Hilfiger is subject to the satisfaction of a number of conditions. We can provide no assurance as to whether we will close the acquisition of Tommy Hilfiger, when the acquisition will close, or if it closes, whether it will be beneficial to us. The closing of this offering of common stock is not contingent upon the consummation of the acquisition of Tommy Hilfiger. If the acquisition is not consummated, we will not have the opportunity to achieve the potential benefits of the acquisition described in this prospectus supplement. If you decide to purchase common stock from us, you should be willing to do so whether or not we complete the acquisition of Tommy Hilfiger. If we do not complete the acquisition, we will have broad discretion over the use of proceeds from this offering. For more information on the terms and conditions of our proposed acquisition of Tommy Hilfiger, see “Description of the Tommy Hilfiger Acquisition.”

 

Our business is exposed to foreign currency exchange rate fluctuations.

 

Certain of our operations and license agreements expose us to fluctuations in foreign currency exchange rates, primarily the rate of exchange of the United States Dollar against the Euro, the Pound, the Yen and the Canadian Dollar. Currently, our principal exposure to changes in exchange rates for the United States Dollar

 

 

* Reflects the pricing of our offering of 73/8% senior notes due 2020, which occurred on April 23, 2010.

results from our licensing businesses. Many of our license agreements require the licensee to report sales to us in the licensee’s local currency but to pay us in United States Dollars based on the exchange rate as of the last day of the contractual selling period. Thus, while we are not exposed to exchange rate gains and losses between the end of the selling period and the date we collect payment, we are exposed to exchange rate changes during and up to the last day of the selling period. As a result, during times of a strengthening United States Dollar, our foreign royalty revenue will be adversely affected. Currently, a secondary exposure to changes in exchange rates for the United States Dollar results from our foreign operations. Our foreign operations currently include sales of our products to customers throughout Canada and parts of Europe. Sales for these foreign operations are both generated and collected in foreign currency, which exposes us to foreign exchange gains and losses between the date of the sale and the date we collect payment. As with our licensing business, the results of these operations will be adversely affected during times of a strengthening United States Dollar.

 

These risks are expected to be increased if we complete our acquisition of Tommy Hilfiger, as Tommy Hilfiger’s business has significant operations outside of the United States. Tommy Hilfiger purchases the majority of the products that it sells in United States Dollars, while its sales and licensing revenues are generally derived from sales in a range of currencies including the Euro, United States Dollar, Canadian Dollar, Japanese Yen and Pound Sterling. As a result, a rise in the exchange rates for United States Dollars generally results in a decrease in Tommy Hilfiger’s gross margin. From time to time, Tommy Hilfiger utilizes foreign currency forward contracts or other derivative instruments to mitigate the cash flow or market value risks associated with foreign currency denominated transactions and we may do the same. However, these hedge contracts may not eliminate all of the risks related to foreign currency translation. The occurrence of any of these factors could decrease the value of revenue Tommy Hilfiger receives from its international operations and have a material adverse impact on its business. As of December 31, 2009, Tommy Hilfiger had outstanding foreign exchange contracts for the purchase of $41 million versus Canadian Dollars and the purchase of $216 million versus Euros.

 

We have licensed businesses in countries that are or have been subject to exchange rate control regulations and have, as a result, experienced difficulties in receiving payments owed to us when due, with amounts left unpaid for extended periods of time. Although the amounts to date have been immaterial to us, as our international businesses grow and if controls are enacted or enforced in additional countries, there can be no assurance that such controls would not have a material and adverse affect on our business, financial condition or results of operations.

 

Our actual operating and financial results in any given period may differ from guidance we provide to the public, including our most recent public guidance that is also reflected in this prospectus supplement.

 

From time to time, in press releases, SEC filings, public conference calls and other contexts, we have provided guidance to the public regarding current business conditions and our expectations for our future financial results, and included in this prospectus supplement is the most recent guidance we have provided elsewhere to the public. We also expect that we will provide guidance periodically in the future. Our guidance is based upon a number of assumptions, expectations and estimates that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In providing our guidance, we also make specific assumptions with respect to our future business decisions, some of which will change. Our actual financial results will therefore vary at times from our guidance due to our inability to meet the assumptions upon which our guidance is based and the impact on our business of the various risks and uncertainties described in these risk factors and in our public filings with the SEC. The variation of our actual results from our guidance may be material. To the extent that our actual financial results do not meet or exceed our guidance, the trading prices of our securities may be materially adversely affected.

 

We primarily use foreign suppliers for our products and raw materials, which poses risks to our business operations.

 

Virtually all of our apparel and footwear products, excluding handmade and handfinished neckwear, are produced by and purchased or procured from independent manufacturers located in countries in Europe, the

Far East, the Indian subcontinent, the Middle East, South America, the Caribbean and Central America. We believe that we are one of the largest users of shirting fabric in the world. Tommy Hilfiger has no manufacturing facilities and is completely reliant on independent manufacturers. Although no single supplier or country is expected to be critical to our production needs, any of the following could materially and adversely affect our ability to produce or deliver our products and, as a result, have a material adverse effect on our business, financial condition and results of operations:

 

 

If our manufacturers fail to use acceptable ethical business practices, our business could suffer.

 

We require our manufacturers to operate in compliance with applicable laws, rules and regulations regarding working conditions, employment practices and environmental compliance. Additionally, we impose upon our business partners operating guidelines that require additional obligations in those areas in order to promote ethical business practices, and our staff and third parties we retain for such purposes periodically visit and monitor the operations of our independent manufacturers to determine compliance. However, we do not control our independent manufacturers or their labor and other business practices. If one of our manufacturers violates labor or other laws or implements labor or other business practices that are generally regarded as unethical in the United States, the shipment of finished products to us could be interrupted, orders could be cancelled, relationships could be terminated and our reputation could be damaged. Any of these events could have a material adverse effect on our revenue and, consequently, our results of operations.

 

Our reliance on independent manufacturers could cause delay and damage customer relationships.

 

We rely upon independent third parties for all of our apparel and footwear products, excluding handmade and handfinished neckwear. We do not have long-term contracts with any of our suppliers. The same is true for Tommy Hilfiger. A manufacturer’s failure to ship products to us in a timely manner or to meet required quality standards could cause us to miss the delivery date requirements of our customers for those products. As a result, customers could cancel their orders, refuse to accept deliveries or demand reduced prices. Any of

these actions taken by our customers could have a material adverse effect on our revenue and, consequently, our results of operations.

 

Tommy Hilfiger is dependent on third parties to source its products and any disruption in the relationship with these parties or in their businesses may materially adversely affect the Tommy Hilfiger business.

 

Tommy Hilfiger uses third parties to source the majority of its products from manufacturers. For the year ended March 31, 2009, Tommy Hilfiger outsourced approximately 85% of its sourcing functions to external buying offices. Tommy Hilfiger is a party to a non-exclusive buying agency agreement with Li & Fung Limited (which we refer to as “Li & Fung”) to carry out most of its sourcing work. Li & Fung is one of the world’s largest buying agencies for apparel and related goods and is Tommy Hilfiger’s largest buying office. Under the terms of the agreement, Tommy Hilfiger is required to use Li & Fung for at least 54% of its global sourcing needs. The buying agency agreement with Li & Fung is terminable by Tommy Hilfiger upon 12 months’ prior notice for any reason, and is terminable by either party (i) upon six months’ prior notice in the event of a material breach by the other party and (ii) immediately upon the occurrence of certain bankruptcy or insolvency events. Tommy Hilfiger also uses other third-party buying offices for a portion of its sourcing and has retained a small in-house sourcing team. Any interruption in the operations of Li & Fung or Tommy Hilfiger’s other buying offices, or the failure of Li & Fung or Tommy Hilfiger’s other buying offices to perform their services for Tommy Hilfiger effectively, could result in material delays, reductions of shipments and increased costs. Furthermore, such events could harm Tommy Hilfiger’s wholesale and retail relationships. Although alternative sourcing companies exist, Tommy Hilfiger may be unable to source its products through other third parties, if at all, on terms commercially acceptable to us and on a timely basis. Any disruption in Tommy Hilfiger’s relationship with its buying offices or their businesses, particularly Li & Fung, could have a material adverse effect on our cash flows, business, financial condition and results of operations.

 

We are dependent on a limited number of distribution facilities. If one becomes inoperable, our business, financial condition and operating results could be negatively impacted.

 

We operate a limited number of distribution facilities. Our ability to meet the needs of our retail customers and of our own retail stores depends on the proper operation of our primary facilities. If any of our primary facilities were to shut down or otherwise become inoperable or inaccessible for any reason, we could have a substantial loss of inventory and/or disruptions of deliveries to our customers and our stores, and/or incur significantly higher costs and longer lead times associated with the distribution of our products during the time it takes to reopen or replace the facility. This could adversely affect our business, financial condition and operating results.

 

A significant portion of our revenue is dependent on royalties and licensing.

 

On a pro forma basis for 2009, approximately $376 million, or 8%, of our revenue was derived from licensing royalties, advertising and other revenue. Royalty, advertising and other revenue from Calvin Klein’s three largest licensing partners accounted for approximately 67% of its royalty, advertising and other revenue in 2009. Royalty, advertising and other revenue from Tommy Hilfiger’s three largest licensing partners accounted for approximately 31% of its royalty, advertising and other revenue in its year ended March 31, 2009. We also derive licensing revenue from our Van Heusen, IZOD, Bass, G.H. Bass & Co. and ARROW brand names, as well as from the sublicensing of Geoffrey Beene. The operating profit associated with our royalty, advertising and other revenue is significant because the operating expenses directly associated with administering and monitoring an individual licensing or similar agreement are minimal. Therefore, the loss of a significant licensing partner, whether due to the termination or expiration of the relationship, the cessation of the licensing partner’s operations or otherwise (including as a result of financial difficulties of the partner), without an equivalent replacement, could materially affect our profitability.

 

While we generally have significant control over our licensing partners’ products and advertising, we rely on our licensing partners for, among other things, operational and financial controls over their businesses. Our licensing partners’ failure to successfully market licensed products or our inability to replace our existing

licensing partners could materially and adversely affect our revenue both directly from reduced royalty and advertising and other revenue received and indirectly from reduced sales of our other products. Risks are also associated with our licensing partners’ ability to obtain capital; execute their business plans, including timely delivery of quality products; manage their labor relations; maintain relationships with their suppliers; manage their credit risk effectively; and maintain relationships with their customers.

 

Our licensing business makes us susceptible to the actions of third parties over whom we have limited control.

 

We rely on our licensing partners to preserve the value of our brands. Although we make every attempt to protect our brands through, among other things, approval rights over design, production quality, packaging, merchandising, distribution, advertising and promotion of our products, we cannot assure you that we can control the use by our licensing partners of each of our licensed brands. The misuse of our brands by a licensing partner could have a material adverse effect on our business, financial condition and results of operations. For example, Calvin Klein in the past has been involved in legal proceedings with Warnaco with respect to certain quality and distribution issues. Warnaco is entitled to control design and advertising related to the sale of underwear, intimate apparel and sleepwear products bearing the Calvin Klein marks, although to date, it continues to work with Calvin Klein’s in-house advertising agency while exercising its rights with respect to design. We cannot assure you that Warnaco will continue to maintain the same standards of design and, if it assumes control, advertising that has been maintained by Calvin Klein, although we believe they are generally obligated to do so.

 

Additionally, some of our licensees, including some of the largest Calvin Klein and Tommy Hilfiger licensees, are not United States entities and may be able to produce or sell goods in places prohibited under United States federal law or regulation. For example, foreign licensees may have rights to produce or sell goods in Iran, North Korea, Cuba, Syria or Sudan, which are prohibited under United States law. Such activity, even if legal for a licensee or other authorized party, could bring our brands into disrepute, resulting in a material adverse effect on our business, financial condition and results of operations.

 

Our retail stores are heavily dependent on the ability and desire of consumers to travel and shop.

 

Our retail stores are located principally in outlet malls, which are typically located in or near vacation destinations or away from large population centers where department stores and other traditional retailers are concentrated. As a result, fuel shortages, increased fuel prices, travel restrictions, travel concerns and other circumstances, including adverse weather conditions, disease epidemics and other health-related concerns, war, terrorist attacks or the perceived threat of war or terrorist attacks, which would lead to decreased travel, could have a material adverse affect on us. In addition, we may be adversely affected by reduced travel due to economic conditions. Other factors which could affect the success of our stores include:

 

 

In 2008 and 2009, certain of our and Tommy Hilfiger’s businesses and those of certain of our and Tommy Hilfiger’s licensees were adversely affected by the curtailment of travel that accompanied the global economic slowdown.

 

We may be unable to protect our trademarks and other intellectual property rights.

 

Our trademarks and other intellectual property rights are important to our success and our competitive position. We are susceptible to others imitating our products and infringing on our intellectual property rights. Since our acquisition of Calvin Klein, we are more susceptible to infringement of our intellectual property rights, as the Calvin Klein brands enjoy significant worldwide consumer recognition, and the generally higher

pricing of Calvin Klein branded products creates additional incentive for counterfeiters and infringers. The acquisition of Tommy Hilfiger would create similar risks with regard to the Tommy Hilfiger brands. Imitation or counterfeiting of our products or infringement of our intellectual property rights could diminish the value of our brands or otherwise adversely affect our revenue. We cannot assure you that the actions we take to establish and protect our trademarks and other intellectual property rights will be adequate to prevent imitation of our products by others or to prevent others from seeking to invalidate our trademarks or block sales of our products as a violation of the trademarks and intellectual property rights of others. In addition, we cannot assure you that others will not assert rights in, or ownership of, trademarks and other intellectual property rights of ours or in marks that are similar to ours or marks that we license and/or market or that we will be able to successfully resolve these types of conflicts to our satisfaction. In some cases, there may be trademark owners who have prior rights to our marks because the laws of certain foreign countries may not protect intellectual property rights to the same extent as do the laws of the United States. In other cases, there may be holders who have prior rights to similar marks. For example, in the past we were involved in proceedings relating to a company’s claim of prior rights to the IZOD mark in Mexico and to another company’s claim of prior rights to the Calvin Klein mark in Chile. We are currently involved in opposition and cancellation proceedings with respect to marks similar to some of our brands, both domestically and internationally.

 

Our success is dependent on the strategies and reputation of our licensors.

 

Our business strategy is to offer our products on a multiple brand, multiple channel and multiple price point basis. This strategy is designed to provide stability should market trends shift. As part of this strategy we license the names and brands of recognized designers and celebrities, including Kenneth Cole, Sean “Diddy” Combs (Sean John), Donald J. Trump, Michael Kors, Joseph Abboud, Donna Karan (DKNY), Ike Behar, Elie Tahari and Robert Graham. In entering into these license agreements, we target our products towards certain market segments based on consumer demographics, design, suggested pricing and channel of distribution in order to minimize competition between our own products and maximize profitability. If any of our licensors determines to “reposition” a brand we license from them, introduce similar products under similar brand names or otherwise change the parameters of design, pricing, distribution, target market or competitive set, we could experience a significant downturn in that brand’s business, adversely affecting our sales and profitability. In addition, as products may be personally associated with these designers and celebrities, our sales of those products could be materially and adversely affected if any of those individual’s images, reputations or popularity were to be negatively impacted.

 

We face intense competition in the apparel industry.

 

Competition is strong in the apparel industry. We compete with numerous domestic and foreign designers, brands, manufacturers and retailers of apparel, accessories and footwear, some of which may be larger, more diversified or have greater resources than we do. In addition, through their use of private label programs, we compete directly with our wholesale customers. We compete within the apparel industry primarily on the basis of:

 

 

The failure to compete effectively or to keep pace with rapidly changing markets could have a material adverse effect on our business, financial condition and results of operations. In addition, if we misjudge the

market for our products, we could be faced with significant excess inventories for some products and missed opportunities for others.

 

The loss of members of our executive management and other key employees could have a material adverse effect on our business.

 

We depend on the services and management experience of our executive officers who have substantial experience and expertise in our business. We also depend on other key employees involved in our licensing, design and advertising operations. Competition for qualified personnel in the apparel industry is intense, and competitors may use aggressive tactics to recruit our key employees. The unexpected loss of services of one or more of these individuals could materially adversely affect us. Additionally, if we complete the acquisition of Tommy Hilfiger, the services of key members of the Tommy Hilfiger management team are expected to be particularly critical to ensure a smooth and timely integration of the business into PVH.

 

Acquisitions may not be successful in achieving intended benefits and synergies.

 

One component of our growth strategy contemplates our making select acquisitions if appropriate opportunities arise. Prior to completing any acquisition, including our proposed acquisition of Tommy Hilfiger, our management team identifies expected synergies, cost savings and growth opportunities. However, these benefits may not be realized due to, among other things:

 

 

We cannot assure you that any acquisition will not have a material adverse impact on our financial condition and results of operations. Our proposed acquisition of Tommy Hilfiger is subject to conditions which may not be satisfied, in which event the transaction may not close. There can be no assurance that we can obtain the financing that we need to complete the deal or that such financing can be obtained on the terms currently contemplated. Our plans and results of operations will be affected by our ability to realize benefits from the acquisition of Tommy Hilfiger, if the acquisition is consummated. If the transaction does not close due to the failure to obtain the financing or satisfy certain other conditions, we have agreed to pay €69.0 million to the selling shareholders of Tommy Hilfiger. Certain additional significant costs will be incurred regardless of whether the acquisition of Tommy Hilfiger is completed.

 

A significant shift in the relative sources of our earnings, adverse decisions of tax authorities or changes in tax treaties, laws, rules or interpretations could have a material adverse effect on our results of operations and cash flow.

 

Following the acquisition of Tommy Hilfiger, we will have direct operations in a number of countries, including the United States, Canada, the Netherlands, Germany, the United Kingdom, Italy, Japan, Hong Kong and China, and the applicable statutory tax rates vary by jurisdiction. As a result, our overall effective tax rate could be materially affected by the relative level of earnings in the various taxing jurisdictions to which our earnings are subject. In addition, the tax laws and regulations in the various countries in which we operate may be subject to change and there may be changes in interpretation and enforcement of tax law. As a result, we may face increases in taxes payable if tax rates increase, or if tax laws, regulations or treaties in the jurisdictions in which we operate are modified by the competent authorities in an adverse manner.

In addition, various national and local taxing authorities periodically examine us and our subsidiaries. The resolution of an examination or audit may result in us making a payment in an amount that differs from the amount for which we may have reserved with respect to any particular tax matter, which could have a material adverse effect on our cash flows, business, financial condition and results of operations for any affected reporting period.

 

We and our subsidiaries, and Tommy Hilfiger and its subsidiaries, are engaged in a number of intercompany transactions. Although we believe that these transactions reflect arm’s length terms and that proper transfer pricing documentation is in place which should be respected for tax purposes, the transfer prices and conditions may be scrutinized by local tax authorities, which could result in additional tax becoming due.

 

If Tommy Hilfiger were unable to fully utilize its deferred tax assets, its profitability could be reduced.

 

Tommy Hilfiger has substantial deferred income tax assets on its balance sheet. This includes tax loss and foreign tax credit carryforwards in the United States and the Netherlands. Our ability to utilize these assets depends on a number of factors, including whether there will be adequate levels of taxable income in future periods to offset the tax loss carryforwards before they expire. Also, United States tax rules impose an annual limit on the amount of certain loss carryovers of Tommy Hilfiger that we can use following the acquisition, and, depending on our taxable income in tax years following the acquisition, such limit may be material. These factors could reduce the value of the deferred tax assets, which could have a material effect on our profitability.

 

The impact of changes in the global credit markets may adversely affect our ability to borrow and could increase our counterparty credit risks, including those under our credit facilities, derivative instruments, contingent obligations and insurance contracts.

 

During 2007, a crisis began in the subprime mortgage sector of the United States economy as a result of credit quality deterioration and rising delinquencies, and that crisis continued throughout 2008 and into 2009 which led to a deterioration of the global credit markets, a closing of the debt markets and widening credit spreads. There can be no assurance that this crisis will not worsen or impact the availability or cost of debt financing to us in the future. There can also be no assurance that we will be able to borrow additional money on terms as favorable as our current debt, on commercially acceptable terms, or at all.

 

As a result of the global credit crisis, certain financial institutions have filed for bankruptcy, have sold some or all of their assets, or may seek to enter into a merger or other transaction with another financial institution. Consequently, some of the counterparties under our credit facilities, derivative instruments, contingent obligations and insurance contracts may be unable to perform their obligations or may breach their obligations to us under our contracts with them, which could include failures of financial institutions to fund required borrowings under our loan agreements and to pay us amounts that may become due under our derivative contracts and other agreements. Also, we may be limited in obtaining funds to pay amounts due to our counterparties under our derivative contracts and to pay amounts that may become due under other agreements. If we were to elect to replace any counterparty for its failure to perform its obligations under such instruments, we would likely incur significant costs to replace the counterparty. Any failure to replace any counterparties under these circumstances may result in additional costs to us or an ineffective instrument.

 

Risks Related to Our Common Stock

 

Our stock price in recent years has been volatile and is likely to continue to be volatile. As a result, the market price of our common stock after this offering may drop below the price you pay, and you may not be able to resell your shares at or above the public offering price.

 

The market price of our common stock has experienced, and may continue to experience, significant volatility from time to time. Such volatility may be affected by various factors and events, such as:

 

 

 

In recent years, the U.S. stock market has experienced extreme price and volume fluctuations, which have sometimes affected the market price of the securities issued by a particular company, which may be unrelated to the operational performance of the company. This type of market effect could impact our common stock price as well.

 

The volatility of our common stock means that it is more likely that our common stock will have traded down substantially at such time as you may look to sell your shares of our common stock. If our share price decreases, the value of your investment could decline substantially.

 

Future sales of our common stock may depress our stock price.

 

Sales of a substantial number of shares of our common stock in the public market or otherwise, by us or by a major stockholder, could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

 

We are selling 5,000,000 shares of our common stock in this offering, which represents approximately 8.7% of our outstanding shares of common stock as of April 22, 2010 after giving effect to this offering (5,750,000 shares or 9.9% if the underwriters’ option to purchase additional shares is exercised in full). Upon the closing of our acquisition of Tommy Hilfiger, we will issue to the former Tommy Hilfiger shareholders an aggregate of approximately 8.4 million shares of our common stock. See “Description of the Tommy Hilfiger Acquisition — Purchase Agreement” below. Concurrently with the closing of the Tommy Hilfiger acquisition, we will also sell in a private placement Series A preferred stock convertible into an aggregate of 4,189,359 shares of common stock to LNK and MSD. See “Description of the Tommy Hilfiger Acquisition — LNK Purchase Agreement” and “Description of the Tommy Hilfiger Acquisition — MSD Purchase Agreement” below. Upon the closing of these issuances, approximately 12.6 million shares of our common stock (consisting of the shares to be issued to the former Tommy Hilfiger shareholders and the shares issuable upon the conversion of the Series A preferred stock to be sold to affiliates of LNK Partners, L.P. and MSD Capital, L.P.) will be subject to registration rights. See “Description of the Tommy Hilfiger Acquisition — Selling Stockholder Agreement”, and “Description of the Tommy Hilfiger Acquisition — LNK Stockholder Agreement” and “Description of the Tommy Hilfiger Acquisition — MSD Stockholder Agreement” below. We cannot assure you that these issuances will not negatively affect the price of our common stock. As a result, you may not be able to resell your shares at or above the public offering price.

 

In addition, we may issue shares of our common stock from time to time as consideration for or to finance future acquisitions and investments. In the event any such acquisition or investment is significant, the number of shares of our common stock, or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be significant. In addition, the sale of substantial amounts of our common stock, or the perception that these sales may occur, could adversely impact our stock price. We may also grant registration rights covering shares of our common stock or other securities we may issue in connection with any such acquisition or investment.

Management will have broad discretion over the use of the net proceeds from this offering and may not apply the net proceeds effectively or in a manner that is consistent with the uses described in this prospectus.

 

Although we intend to use the net proceeds of this offering to fund the acquisition of Tommy Hilfiger, we will have broad discretion in the application of the net proceeds. In addition, if we do not complete the Tommy Hilfiger acquisition, we intend to use the proceeds for general corporate purposes and for fees and expenses related to the acquisition that are payable whether or not the acquisition is consummated. However, our plans may change, and we could use the net proceeds in ways with which stockholders do not agree, or for corporate purposes that may not result in a significant or any return on your investment. In addition, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

 

Provisions in our certificate of incorporation and our by-laws and Delaware General Corporation Law could make it more difficult to acquire us and may reduce the market price of our common stock.

 

Our certificate of incorporation and by-laws contain certain provisions, including provisions requiring supermajority voting (80% of the outstanding voting power) to approve certain business combinations with beneficial owners of 5% or more of our outstanding stock entitled to vote for election of directors, permitting the board of directors to fill vacancies on the board and authorizing the board of directors to issue additional shares of Series A preferred stock without approval of our stockholders. These provisions could also have the effect of deterring changes of control.

 

In addition, Section 203 of the General Corporation Law of the State of Delaware imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our common stock. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors.

 

Purchase Agreement

 

On March 15, 2010, we announced that we had entered into a definitive purchase agreement to acquire Tommy Hilfiger from Apax and the other Tommy Hilfiger shareholders. The consideration for the acquisition consists of €1.924 billion in cash and €276 million in shares of our common stock (which, assuming a United States Dollar-Euro exchange rate of $1.3339 to one Euro and based on the formula in the purchase agreement, would require us to issue approximately 8.4 million shares), as well as our assumption of €100 million in liabilities of Tommy Hilfiger. The purchase price is on a debt-free, cash-free basis, and assumes a normalized level of working capital for Tommy Hilfiger at closing. We expect to close the acquisition of Tommy Hilfiger during our fiscal 2010 second quarter. However, there can be no assurance that we will close the acquisition during such period, or at all.

 

Purchase Price Adjustments; Escrow

 

Adjustments to Cash Consideration:  The purchase agreement provides that the cash portion of the purchase price will be increased by a per day “ticking fee” in the event that, subject to certain specified exceptions, the consummation of our acquisition of Tommy Hilfiger does not occur within 90 days of the signing of the purchase agreement. The applicable per day ticking fee is €170,000 from June 14, 2010 through June 29, 2010, €255,000 from June 30, 2010 through July 29, 2010 and €370,000 from July 30, 2010 through the date immediately preceding the closing. In addition, the cash consideration is subject to upward or downward adjustment based on the working capital and net debt of Tommy Hilfiger as of the closing. If these adjustments result in us having to make additional payments to the shareholders of Tommy Hilfiger, such additional payments will be made in cash. If these adjustments result in the shareholders of Tommy Hilfiger having to make payments to us, any adjustment payments up to €25 million will be made in cash from an escrow account to be established in connection with the closing and any additional adjustment payment will be made in shares of our common stock that were issued to them and placed into escrow at the closing.

 

Adjustments to Stock Consideration:  The stock consideration is subject to a collar pursuant to which the number of shares of our common stock that will be issued to the Tommy Hilfiger shareholders will vary between $39.37-$43.74 per share of common stock, as measured by the average closing price over the 20 trading days immediately preceding closing. The number of shares of common stock to be issued to the Tommy Hilfiger shareholders will not be subject to further adjustment outside this range.

 

Escrow of Cash Consideration and Stock Consideration:  Portions of the cash consideration and stock consideration will be placed into escrow at the closing in order to fund certain potential purchase price adjustments and specified indemnification obligations of the Tommy Hilfiger shareholders.

 

Conditions to Completion of the Acquisition

 

The obligations of the parties to complete the acquisition are each subject to satisfaction of the following conditions:

 

 

The obligations of Tommy Hilfiger, Apax and the other selling shareholders to consummate the acquisition are also subject to satisfaction or waiver of additional conditions, including:

 

 

Our obligation to consummate the acquisition is subject to satisfaction of additional conditions, including:

 

 

Termination of the Purchase Agreement

 

The parties may terminate the purchase agreement by mutual written consent at any time before the completion of the acquisition. In addition, the parties may terminate the purchase agreement at any time before the completion of the acquisition if:

 

 

Effect of Termination; Termination Fee

 

If the purchase agreement is terminated for any reason set forth above in “— Termination of the Purchase Agreement,” except by the mutual consent of the parties or due to a willful and material breach by the Tommy Hilfiger shareholders that is the primary reason for the failure of the closing to occur, we will pay the Tommy Hilfiger shareholders an aggregate termination fee of €69 million. If the closing does not occur by June 13, 2010, we will deposit the full amount of the termination fee into an escrow account established with a third-party escrow agent. In circumstances in which we are required to pay the termination fee, the purchase agreement provides that we will generally have no further liability to Tommy Hilfiger shareholders, except where the failure of the closing to occur is primarily the result of any willful material breach by us of the purchase agreement.

 

Financing Obligations

 

Under the purchase agreement, we must use our reasonable best efforts to arrange and obtain debt financing as soon as reasonably practicable, taking into account the anticipated timing of the closing and our commercial judgment and acting in good faith. Our obligation to undertake the financing is subject to the condition that we will receive net proceeds in an amount that, together with our available cash, is at least sufficient to fund the acquisition and that the terms of the indebtedness are on terms that are substantially consistent with or not substantially less favorable to us, in our good faith commercial judgment, than certain terms that we have agreed to with Apax or on such other terms and conditions as are acceptable to us in our sole discretion. We are not required to draw on such available financing in the event that the weighted average cost of the debt exceeds certain agreed-upon thresholds. In furtherance of obtaining such debt financing, Tommy Hilfiger has agreed to use reasonable best efforts to cooperate with us to the extent necessary, proper or advisable.

We have entered into a forward foreign exchange contract with respect to €1.3 billion of the purchase price to hedge against our exposure to changes in the exchange rate for the Euro. Our obligations under this contract are contingent upon the consummation of our acquisition of Tommy Hilfiger.

 

Representations and Warranties

 

Each of the Tommy Hilfiger shareholders and Tommy Hilfiger has made customary representations and warranties regarding, among other things: capital structure; organizational documents; corporate authority; financial statements; consents and regulatory approvals; absence of undisclosed liabilities; material contracts; absence of certain litigation; compliance with law; insurance; tax matters; labor and employment matters; environmental matters; intellectual property; leases; brokers’ fees and expenses; affiliate transactions; and real property.

 

We have made customary representations and warranties regarding capital structure; organizational documents; corporate authority; consents and regulatory approvals; financial statements and publicly filed documents; absence of certain developments; litigation; compliance with law; permits; taxes; intellectual property; and solvency.

 

Many of the representations and warranties in the purchase agreement are qualified by a “materiality” or “material adverse effect” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct, individually or in the aggregate, would, as the case may be, be material or be reasonably likely to have a material adverse effect). For purposes of the purchase agreement, a “material adverse effect” means any change, event, effect, development, circumstance or occurrence that has a material adverse effect on the financial condition, business or results of operations of Tommy Hilfiger or us, as the case may be, and their and our respective subsidiaries, taken as a whole. However, in determining whether a material adverse effect has occurred or would reasonably be expected to occur with respect to either Tommy Hilfiger or us, as the case may be, the parties will disregard any effects arising from or related to (except, in the case of the events described in clauses (a), (b), (d), (e) or (f), to the extent disproportionately affecting either us or Tommy Hilfiger, as the case may be, relative to other companies in the industries in which we or Tommy Hilfiger, as the case may be, operate, but taking into account for the purposes of determining whether a material adverse effect has occurred only the disproportionate adverse impact): (a) conditions affecting the United States or global economy; (b) political conditions or any other acts of war, sabotage or terrorism; (c) changes in financial, banking or securities markets; (d) changes in United States or international accounting standards; (e) changes in any laws or other binding directives issued by a governmental entity; (f) changes generally applicable to the industry in which Tommy Hilfiger or we, as the case may be, and our respective subsidiaries operate; (g) any failure by Tommy Hilfiger or us, as the case may be, to meet internal or published projections, forecasts or revenue or earnings projections; (h) announcement or completion of the acquisition; (i) any action taken with the other party’s consent; (j) solely with respect to us, any changes in the share price or trading volume of our common stock; and (k) any changes in the credit rating of Tommy Hilfiger or us, as the case may be.

 

Conduct of the Tommy Hilfiger Business Prior to Closing

 

Tommy Hilfiger has undertaken customary covenants in the purchase agreement restricting the conduct of its business between the date of the purchase agreement and the closing. In general, Tommy Hilfiger has agreed to (a) conduct its business in all material respects in the ordinary course consistent with past practice and (b) use commercially reasonable efforts to (i) preserve substantially intact its business organization and to preserve the present commercial relationships of its subsidiaries with significant customers, suppliers and other third parties with whom Tommy Hilfiger has significant business relations and (ii) retain the services of its key employees.

 

In addition, between the date of the purchase agreement and the closing, Tommy Hilfiger has agreed, with respect to itself and its subsidiaries, to limitations on its ability to take certain actions, including with regard to matters such as recapitalizations, dividends, disposition or creation of liens, amendments to organizational documents, incurrence of debt, modifications to employee benefit plans, hiring and termination

of employees, transactions with affiliates, liquidations, dissolutions, mergers and other major corporate transactions, changes in financial accounting methods or practices, material contracts, capital expenditures, entering new lines of business, settlement of litigation and tax elections. These restrictions are subject to certain exceptions.

 

Indemnification

 

The representations, warranties, covenants and other agreements set forth in the purchase agreement (other than those covenants that are to be performed in whole or in part after the closing) do not survive following the closing. As a result, except for our limited indemnification rights with respect to certain tax matters and our full indemnity related to Tommy Hilfiger’s Karl Lagerfeld business, which we will not be acquiring as part of the acquisition, the purchase agreement does not contain indemnification obligations of either party with respect to breaches of such representations, warranties, covenants and other agreements. We currently intend to obtain insurance from third parties with respect to potential breaches or inaccuracies in the representations and warranties relating to Tommy Hilfiger and its selling shareholders as set forth in the purchase agreement. The insurance would be subject to a deductible and a cap and will generally be available for claims made within 18 months of the closing, or longer in certain cases. While there can be no assurance that such policy will be obtained, Tommy Hilfiger’s selling shareholders are obligated, pursuant to the purchase agreement, to cooperate with us in obtaining the policy.

 

Regulatory Covenants; Third Party Consents

 

Each party to the purchase agreement has agreed to use reasonable best efforts to obtain as promptly as practicable all necessary governmental/regulatory approvals, including by (a) making all required filings pursuant to the HSR Act within five business days of the date of the purchase agreement, (b) making all other required filings pursuant to other regulatory laws as promptly as practicable and (c) not extending any waiting period under the HSR Act or entering into any agreement with the United States Federal Trade Commission or United States Department of Justice or any other governmental entity not to consummate the acquisition without the prior written consent of the other parties. All such filings have been made as of the date of this prospectus supplement and the waiting period under the HSR Act has been terminated.

 

Non-Solicitation

 

Under the purchase agreement, the Tommy Hilfiger shareholders may not solicit, encourage, seek, initiate, facilitate or engage in any discussion or negotiations with, or provide any information to or enter into any agreement with, anyone other than us concerning any alternative transaction, and such parties must immediately cease any ongoing discussions or negotiations.

 

Governing Law

 

The purchase agreement is governed by and will be construed in accordance with the laws of the State of Delaware.

 

Selling Stockholder Agreement

 

Upon the consummation of our acquisition of Tommy Hilfiger, we and the Tommy Hilfiger shareholders will enter into a stockholder agreement. Under the terms of the stockholder agreement, Apax will have the right to nominate one director to our board of directors. This right will terminate if, among other things, Apax ceases to beneficially own (net of any short interests) less than a number of shares of our common stock equal to the greater of (i) 50% of the shares of common stock that Apax acquires in the acquisition and (ii) 4% of the then outstanding shares of common stock.

 

Commencing upon the consummation of our acquisition of Tommy Hilfiger, Apax and its controlled affiliates will be subject to customary standstill restrictions limiting or prohibiting, among other things, the acquisition of more of our securities, making or proposing a merger or change of control transaction, soliciting proxies or supporting any other person or group seeking to engage in the foregoing. Under the stockholder

agreement, the standstill period runs until the earlier of (a) the termination of the stockholder agreement pursuant to its terms, (b) a change of control of PVH or (c) three months after (i) Apax irrevocably waives its right to nominate one director, (ii) such right terminates (as described in the last sentence of the immediately preceding paragraph) or (iii) the resignation, removal or death of the Apax director nominee and no replacement has filled such vacancy after Apax has proposed two different replacement designees, both of whom have been rejected by us.

 

In addition, for a period of nine months following the completion of the acquisition, subject to limited exceptions, the Tommy Hilfiger shareholders who are party to the stockholder agreement will be prohibited from offering, selling, pledging or otherwise transferring, or hedging against, the shares of our common stock that they receive in the acquisition. After the nine-month anniversary of the closing, the Tommy Hilfiger shareholders will be permitted to sell 50% of their shares of our common stock that they receive in the acquisition, with the remaining portion available for sale following the 15-month anniversary.

 

The stockholder agreement also provides Apax and certain other Tommy Hilfiger shareholders who will own more than 4% of the total number of outstanding shares of our common stock with certain preemptive rights with respect to future issuances for cash of common stock, or securities convertible into, exercisable or exchangeable for common stock. The Tommy Hilfiger shareholders will receive customary registration rights with respect to the shares of common stock that they receive in the acquisition.

 

LNK Purchase Agreement

 

On March 15, 2010, we entered into a securities purchase agreement with LNK, pursuant to which we agreed to sell to LNK, in a private placement, 4,000 shares of our Series A preferred stock, par value $100 per share, for an aggregate purchase price of $100 million. The Series A preferred stock to be issued to LNK is perpetual preferred stock, with a liquidation preference of $25,000 per share, no coupon and convertible at any time into shares of our common stock, at a per share conversion price of $47.74 (subject to adjustment as described in “— Series A Preferred Stock” below).

 

Under the securities purchase agreement with LNK, the obligation of each of us and LNK to consummate the sale to LNK of the shares of Series A preferred stock is subject to the consummation of our acquisition of Tommy Hilfiger. We also have agreed to (a) cover LNK’s reasonable legal fees and expenses, subject to a cap to be agreed upon, and (b) pay LNK a commitment fee of $1 million and a transaction fee of $4 million, all which are payable at the closing of the sale to LNK of the shares of Series A preferred stock.

 

MSD Purchase Agreement

 

On March 15, 2010, we entered into a securities purchase agreement with MSD, pursuant to which we agreed to sell to MSD, in a private placement, 4,000 shares of our Series A preferred stock, par value $100 per share, for an aggregate purchase price of $100 million. The terms of the MSD purchase agreement are substantially identical to the terms of the securities purchase agreement between us and LNK. The Series A preferred stock to be issued to MSD is perpetual preferred stock, with a liquidation preference of $25,000 per share, no coupon and convertible at any time into shares of our common stock, at a per share conversion price of $47.74 (subject to adjustment as described in “— Series A Preferred Stock” below).

 

Under the terms of the securities purchase agreement with MSD, we have agreed to (a) cover MSD’s reasonable legal fees and expenses, subject to a cap to be agreed upon, and (b) pay MSD a commitment fee of $1 million and a transaction fee of $4 million, all of which are payable at the closing of the sale to MSD of the shares of Series A preferred stock.

 

Series A Preferred Stock

 

The terms, rights, obligations and preferences of our Series A preferred stock are set forth in a Certificate of Designations that will be filed with the Secretary of State of the State of Delaware prior to the closing of the sale of preferred stock to LNK and MSD. The holders of the Series A preferred stock will not be entitled to receive dividends, other than to the extent that dividends are declared and paid on our common stock. In the

event that dividends are declared on the common stock, the preferred stockholders will generally be entitled to receive the amount of cash or assets that they would have received had they converted their shares of Series A preferred stock into shares of our common stock immediately prior to the record day for such dividend.

 

Each share of Series A preferred stock will be immediately convertible, at the option of the holder, into the number of shares of common stock equal to the quotient of (a) the liquidation preference of $25,000 and (b) the conversion price. The conversion price is initially $47.74 (the closing price of our common stock on the business day immediately preceding the date of our execution of the securities purchase agreements with each of LNK and MSD) and is subject to equitable adjustment in the event of our taking certain actions, including stock splits, stock dividends, mergers, consolidations or other capital reorganizations.

 

The Series A preferred stock is not redeemable, in whole or in part, at our option or that of any holder. The holders of the Series A preferred stock are entitled to vote with the holders of our common stock on an as-converted basis. In addition, the affirmative vote of at least 75% of the shares of Series A preferred stock then outstanding is required for us to: (a) amend, alter, repeal, impair or change, in any respect, the rights, preferences, powers, privileges, restrictions, qualifications or limitations of the Series A preferred stock, (b) authorize or agree to authorize any increase in the number of shares of Series A preferred stock or issue any additional shares of Series A preferred stock or (c) amend, alter or repeal any provision of our certificate of incorporation or by-laws that would adversely affect any right, preference, privilege or voting power of the Series A preferred stock or the holders thereof.

 

LNK Stockholder Agreement

 

We will enter into a stockholder agreement with LNK in connection with the closing of the sale to LNK of the 4,000 shares of our Series A preferred stock. Under the terms of the stockholder agreement, LNK will be provided with the right to nominate one director to our board of directors. We have agreed to use commercially reasonable efforts to cause LNK’s nominee to be elected to the Board. LNK’s right to nominate a director will terminate in certain circumstances, including in the event that LNK and its affiliates cease to beneficially own (net of any short interests) less than 80% of the shares of Series A preferred stock (or shares of common stock into which their shares of Series A preferred stock are convertible) that LNK acquired under the securities purchase agreement with them. Until the nomination right is terminated in accordance with the terms of the stockholder agreement, LNK will agree to vote all shares of Series A preferred stock or shares of common stock received upon the conversion of such Series A preferred stock held by it or its affiliates in accordance with the recommendations of our board of directors.

 

From the closing of the sale of Series A preferred stock to LNK until six months following the termination of LNK’s right to nominate a director to our board of directors, LNK and its affiliates will be subject to customary standstill restrictions limiting or prohibiting, among other things, the acquisition of more of our securities, making or proposing a merger or change of control transaction, soliciting proxies or supporting any other person or group seeking to engage in the foregoing.

 

In addition, for a period of nine months following the completion of the sale of Series A preferred stock to LNK, subject to limited exceptions, LNK will be prohibited from offering, selling, pledging or otherwise transferring, or hedging against, the shares of Series A preferred stock received in the sale (or shares of common stock received upon the conversion of such Series A preferred stock). After the nine-month anniversary of the completion of the sale, LNK will be permitted to sell 50% of its shares of Series A preferred stock (or shares of common stock received upon the conversion of such Series A preferred stock), with the remaining portion available for sale following the 15-month anniversary.

 

The stockholder agreement with LNK will also provide LNK with certain customary registration rights (including demand registrations and piggyback rights) with respect to shares of common stock into which the Series A preferred stock purchased by LNK may be converted.

MSD Stockholder Agreement

 

We will enter into a stockholder agreement with MSD in connection with the closing of the sale to MSD of the 4,000 shares of Series A preferred stock. The stockholder agreement with MSD will be substantially similar to the stockholder agreement with LNK, except as described below.

 

MSD does not have the right to nominate a director to our board of directors.

 

Under the terms of the stockholder agreement, for nine months following the completion of the sale of Series A preferred stock to MSD, MSD and its controlled affiliates will be subject to customary standstill restrictions limiting or prohibiting, among other things, the acquisition of more of our securities, making or proposing a merger or change of control transaction, soliciting proxies or supporting any other person or group seeking to engage in the foregoing, although MSD will not be restricted from acquiring up to 9.9% of the total outstanding shares of common stock.

 

In addition, for a period of nine months following the completion of the sale of Series A preferred stock to MSD, subject to limited exceptions, MSD will be prohibited from offering, selling, pledging or otherwise transferring, or hedging against, the shares of Series A preferred stock that MSD received in the sale of Series A preferred stock to MSD (or shares of common stock received upon the conversion of such Series A preferred stock). After the nine-month anniversary of the completion of the sale, MSD will be permitted to sell 50% of its shares of Series A preferred stock (or shares of common stock received upon the conversion of such Series A preferred stock), with the remaining portion available for sale following the 12-month anniversary.

 

The net proceeds of this offering will be approximately $317 million, or $365 million if the underwriters exercise their overallotment option in full, after deducting underwriting discounts and commissions and estimated expenses of the offering. We intend to use the net proceeds from this offering to partially fund our acquisition of Tommy Hilfiger, including any related fees and expenses. If we do not complete the acquisition of Tommy Hilfiger, we intend to use the proceeds for general corporate purposes and for fees and expenses related to the Tommy Hilfiger transaction that are payable whether or not the acquisition is consummated. See “Summary — Tommy Hilfiger Acquisition — Financing for Acquisition” and “Description of the Tommy Hilfiger Acquisition.”

 

Our common stock is listed on the New York Stock Exchange, or the NYSE, under the symbol “PVH.” The following table sets forth on a per share basis the high and low sales prices on the NYSE for our common stock and dividends declared during the periods indicated.

 

 

The last reported sales price of our common stock on April 22, 2010 on the NYSE was $67.08 per share. As of April 22, 2010, there were approximately 716 holders of record of our common stock.

 

We currently have a policy of paying an annual dividend on our common stock of $0.15 per share, payable in four equal installments. The payment of cash dividends in the future will be at the discretion of our board of directors. The declaration of any cash dividends and the amount thereof will depend on a number of factors, including our financial condition, capital requirements, funds from operations, the dividend taxation level, our stock price, future business prospects and such other factors as our board of directors may deem relevant. Additionally, our existing indebtedness places significant restrictions on our ability to pay dividends, and other indebtedness we may incur may contain similar restrictions.

 

The following table sets forth our capitalization as of January 31, 2010 on an actual basis, on an as adjusted basis after giving effect to the issuance of our common stock in this offering and on a pro forma basis as described in “Summary — Tommy Hilfiger Acquisition” and our unaudited pro forma information included in this prospectus supplement. This table assumes that the underwriters will not exercise their option to purchase up to an additional 750,000 shares of our common stock to cover over-allotments, if any. You should also read our consolidated financial statements incorporated by reference in this prospectus supplement.

 

 

 

 

The number of shares of our common stock set forth above is based on the number of shares of common stock outstanding as of January 31, 2010. This number does not include:

 

 

The following unaudited pro forma consolidated financial information of PVH as at and for the fiscal year ended January 31, 2010, gives effect to:

 

 

The following unaudited pro forma consolidated income statement gives effect to these events as if the transaction had occurred on February 2, 2009. The following unaudited pro forma consolidated balance sheet gives effect to these events as if the transaction had occurred on January 31, 2010.

 

The unaudited pro forma consolidated financial information included herein is derived from our historical financial statements and those of Tommy Hilfiger and is based on certain assumptions which we believe to be reasonable, which are described in the section entitled “— Notes to Unaudited Pro Forma Consolidated Financial Information” below. We have not performed a complete and thorough valuation analysis necessary to determine the fair market values of all of the Tommy Hilfiger assets to be acquired and liabilities to be assumed, and accordingly, as described in Note 4(b) below, the unaudited pro forma consolidated financial information includes a preliminary allocation of the purchase price to reflect the fair value of those assets and liabilities.

 

The unaudited pro forma consolidated financial information:

 

 

The unaudited pro forma consolidated financial information has been derived from the following sources:

 

 

 

 

The following unaudited pro forma consolidated financial information should be read in conjunction with:

 

 

Unaudited Pro Forma Consolidated Income Statement
For the Year Ended January 31, 2010