Filed pursuant to Rule 424(b)(5)

Registration Statement Nos. 333-166190

 

CALCULATION OF REGISTRATION FEE

 

 

 

PROSPECTUS SUPPLEMENT

(To Prospectus dated April 20, 2010)

 

$600,000,000

 

 

PHILLIPS-VAN HEUSEN CORPORATION

 

     7.375% Senior Notes due 2020

 

This is an offering by Phillips-Van Heusen Corporation of an aggregate $600,000,000 of 7.375% senior notes due 2020, which we refer to as the “notes.” We will pay interest on the notes on May 15 and November 15 of each year, beginning on November 15, 2010. The notes will mature on May 15, 2020.

 

We may redeem some or all of the notes on or after May 15, 2015 at the redemption prices set forth in this prospectus supplement. We may redeem some or all of the notes at any time prior to May 15, 2015 by paying a “make-whole” premium. In addition, we may also redeem up to 35% of the notes prior to May 15, 2013 with the net proceeds of certain equity offerings. Upon the occurrence of a change of control, holders of the notes may require us to repurchase the notes at a price equal to 101% of their principal amount plus accrued interest to the date of repurchase. There is no sinking fund for the notes.

 

The notes will be our unsecured unsubordinated obligations and will rank equally with all of our other existing and future senior unsecured indebtedness and will rank senior in right of payment to any of our existing or future obligations that are by their terms expressly subordinated or junior in right of payment to the notes. The notes will not be guaranteed by any of our subsidiaries on the closing date and may not be guaranteed by any of our subsidiaries for their tenor. As a result, the notes will be structurally subordinated to all existing and future obligations, including trade payables, of our subsidiaries. The notes will be effectively junior to all of our existing and future secured obligations to the extent of the value of the assets securing such obligations.

 

The proceeds of this offering will be used, in part, to fund our acquisition of Tommy Hilfiger B.V. and certain affiliated companies, and the closing of this offering will occur concurrently with, and is conditioned upon, the closing of the acquisition.

 

Investing in the notes involves risks. See “Risk Factors” beginning on page S-23 of this prospectus supplement.

 

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

 

Interest on the notes will accrue from May 6, 2010.

 

Barclays Capital Inc., on behalf of the underwriters, expects to deliver the notes to purchasers in book entry form only through The Depositary Trust Company for the accounts of its participants, including Euroclear Bank S.A./N.V., as operator of the Euroclear system, and Clearstream Banking, société anonyme, against payment therefrom in immediately available funds on or about May 6, 2010.

 

 

Joint Bookrunners and Global Coordinators

 

 

 

 

 

Joint Bookrunners

 

 

 

 

Co-Managers

 

 

 

The date of this prospectus supplement is April 23, 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 notes 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 notes. 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 notes.

 

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 the notes pursuant to this prospectus supplement is contingent upon the consummation of our acquisition of Tommy Hilfiger.

 

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 Section 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 $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 notes offered hereby, the entry into a new senior secured credit facility and the borrowings thereunder, the issuance of our common stock in a public offering and 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 core 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 Consolidated Financial Information.”

 

SUMMARY

	•	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.

Sources						Uses
($ in millions)
Available cash (1)		$	247			Tommy Hilfiger consideration (6)		$	3,115
New senior secured credit facility (2)			1,900			Repurchase or redemption of existing notes			300
Notes offered hereby			600			Integration and other costs (7)			90
Stock issued to Apax and selling						Estimated acquisition fees and expenses (8)			149
shareholders (3)			374
Preferred stock issued (4)			200
Common stock offering (5)			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 this offering of notes, 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 Other Indebtedness.”
(3)		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.
(4)		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.
(5)		Excludes an additional 750,000 shares of common stock to cover over-allotments.
(6)		Consists of €1.924 billion in cash and €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.
(7)		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.
(8)		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

Issuer		Phillips-Van Heusen Corporation.
Securities Offered		$600,000,000 aggregate principal amount of senior notes due 2020.
Maturity Date		May 15, 2020.
Interest Rate		Interest on the notes will accrue at the rate of 7.375% per annum, payable semi-annually in arrears.
Interest Payment Dates		We will pay interest on the notes semi-annually on May 15 and November 15 of each year, commencing on November 15, 2010.
Optional Redemption		We may redeem any of the notes prior to May 15, 2015 by paying a redemption price equal to 100% of the principal amount of the notes to be redeemed plus the Applicable Premium (as defined below), plus accrued and unpaid interest, if any, to but not including the redemption date. On or after May 15, 2015, we may redeem any of the notes at an initial redemption price of 103.688% of their principal amount, plus accrued and unpaid interest, if any, to but not including the redemption date. The redemption price will decline each year after 2015 and will be 100% of their principal amount, plus accrued and unpaid interest, if any, to but not including the redemption date, beginning on May 15, 2018.
		In addition, before May 15, 2013, we may redeem up to 35% of the aggregate principal amount of the notes with the proceeds of one or more of certain equity offerings at a redemption price of 107.375% of their principal amount plus accrued and unpaid interest, if any, to but not including the redemption date. See “Description of the Notes — Optional Redemption.”
Ranking		The notes will be our unsecured unsubordinated obligations and will rank equally with all of our other existing and future senior unsecured indebtedness and will rank senior in right of payment to any of our existing or future obligations that are by their terms expressly subordinated or junior in right of payment to the notes. The notes will not be guaranteed by any of our subsidiaries on the closing date and may not be guaranteed by any of our subsidiaries for their tenor. As a result, the notes will be structurally subordinated to all existing and future obligations, including trade payables, of our subsidiaries. The notes will be effectively junior to all of our existing and future secured obligations to the extent of the value of the assets securing such obligations.
		As of January 31, 2010, as adjusted for our new senior secured credit facility, this offering and our offering of common stock and sale of perpetual convertible preferred stock and the use of proceeds therefrom, we would have had approximately $2.6 billion of outstanding indebtedness (excluding approximately $201 million of outstanding letters of credit, $5 million in guarantees and $22 million in capital lease obligations), including $2.0 billion of secured indebtedness (excluding $249 million of available under our undrawn revolving credit facility under our new senior secured

		credit facility) and including the notes offered hereby. See “Description of the Notes — Ranking.”
Change of Control		Upon the occurrence of certain change of control events, each holder may require us to repurchase all or a portion of the notes at a purchase price of 101% of their principal amount plus accrued and unpaid interest, if any, to but not including the date of purchase. See “Description of the Notes — Change of Control.”
Covenants		The indenture governing the notes will contain covenants that limit, among other things, the Company’s ability to:
		•   incur or guarantee additional indebtedness;
		•   (a) pay dividends or make distributions on the Company’s capital stock, (b) purchase, redeem or otherwise acquire or retire for value, the Company’s capital stock or any capital stock of a restricted subsidiary of the Company held by an affiliate of the Company (other than a restricted subsidiary of the Company), (c) purchase, repurchase, redeem, defease or otherwise acquire or retire for value prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, the Company’s subordinated indebtedness and (d) make certain investments (other than permitted investments);
		•   create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any of its restricted subsidiaries to (a) pay dividends or make distributions on its capital stock to the Company or a restricted subsidiary of the Company, (b) pay any indebtedness owed to the Company, (c) make any loans or advances to the Company or (d) transfer any of its property or assets to the Company;
		•   sell or otherwise dispose of certain assets, including capital stock of the Company’s restricted subsidiaries;
		•   enter into transactions with affiliates;
		•   create certain liens;
		•   enter into sale and leaseback transactions;
		•   consolidate or merge or convey, transfer, lease or otherwise dispose of all or substantially all of the Company’s assets; and
		•   permit any subsidiary guarantor to consolidate or merge or convey, transfer, lease or otherwise dispose of all or substantially all of such subsidiary guarantor’s assets.
		In addition, we will be obligated to offer to repurchase the notes at a price of 100% of their principal amount plus accrued and unpaid interest, if any, in connection with certain asset dispositions.
		These restrictions and prohibitions are subject to a number of important qualifications and exceptions. See “Description of the Notes — Certain Covenants.”
Form of Notes		The notes will be issued initially in the form of a global note which will represent the aggregate principal amount of notes being offered under this prospectus supplement and the accompanying

		prospectus and will be in fully registered form without coupons. The notes will be deposited with the custodian for the book-entry depositary.
No Prior Market		The notes will be new securities for which there is currently no market. Although the underwriters have informed us that they intend to make a market in the notes, they are not obligated to do so and they may discontinue market making activities at any time without notice. We cannot assure you that a liquid market for the notes will develop or be maintained.
Governing Law		The indenture and the notes will be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to applicable principles of conflicts of laws to the extent that the application of the law of another jurisdiction would be required thereby.
Trustee		U.S. Bank National Association.
Use of Proceeds		We intend to use the net proceeds of this offering (together with cash on hand, borrowings under our new senior secured credit facility and proceeds from the sales of our common and preferred stock) to fund our acquisition of Tommy Hilfiger, repurchase or redeem our 71/4% senior notes due 2011 and our 81/8% senior notes due 2013 and pay related fees and expenses.
Condition to the Offering		Closing of this offering will occur concurrently with, and is conditioned upon, the closing of our acquisition of Tommy Hilfiger. See “Description of the Tommy Hilfiger Acquisition.”
Risk Factors		Investing in the notes 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.

		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 common 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. We present EBITDA and adjusted EBITDA 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 GAAP is reconciled to EBITDA and adjusted EBITDA as follows (notes (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												Nine Months
		Ended March 31,												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, 4)			121,210				229,652				224,330				172,188				166,946
Adjusted EBITDA(3, 4)			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. EBITDA and adjusted EBITDA are presented because, when considered in conjunction with related IFRS financial measures, we believe they are useful to investors since they (a) provide investors with a financial measure on which Tommy Hilfiger 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 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):

		Fiscal Year Ended March 31,												Nine Months Ended 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 (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 actions taken after the purchase of Tommy Hilfiger by management and Apax: (i) €53,000 of restructuring costs for the United States operations consisting of severance payments 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) €7,062 of expenses related to restructuring, acquisitions and divestments, primarily for the acquisition by Tommy Hilfiger of its European footwear licensed business.

(6)		2009 includes (a) €12,376 of 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 of 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 Tommy Hilfiger’s termination of its 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 our 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 of 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 our 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 the notes, 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, we may be unable to pay interest on, or the principal of, our debt securities, the trading price of the notes 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. Given that this offering is conditioned upon the consummation of our acquisition of Tommy Hilfiger, our discussions with respect to the risk factors described below assume the completion of the Tommy Hilfiger acquisition, except where specifically noted.

 

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 after 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 after 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 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 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 after 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 our 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 creates 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, 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 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:

 

 

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 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 Delaware General Corporation Law 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.

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.

 

Risks Related to Our Indebtedness and the Notes

 

Our level of debt could impair our financial condition and prevent us from fulfilling our obligations with respect to the notes offered hereby.

 

As of January 31, 2010, as adjusted for this offering and the use of the net proceeds therefrom (which includes the repurchase of certain of our outstanding senior notes through the tender offers and the repurchase or redemption of all untendered notes), our acquisition of Tommy Hilfiger and our incurrence of debt under our new senior secured credit facility, 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 7.750% debentures due 2023 and $600 million of the notes offered hereby, 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:

 

 

 

Servicing our debt, including the notes, will require a significant amount of cash and we may be unable to generate sufficient cash flow due to many factors, some of which are beyond our control.

 

Our ability to make payments with respect to our obligations under the notes and our other outstanding debt depends on our future operating performance. Our performance will be affected by our ability to operate and expand profitably our business and by prevailing economic conditions and financial, competitive, business and other factors, many of which are beyond our control.

 

Our business may not generate sufficient cash flow from operations, we may not realize our currently anticipated revenues, cost savings and operating performance and we may not have sufficient future borrowings available to us to pay our debt. Our ability to meet our obligations under our indebtedness, including payment of principal and interest on the notes, depends on the earnings and cash flows of our subsidiaries and the ability of our subsidiaries to pay dividends or advance or repay funds to us. If we are unable to meet our debt service obligations or fund our other liquidity needs, we could be forced to reduce or delay capital expenditures, forego other business opportunities, sell material assets or operations, restructure or refinance our debt, obtain additional capital or renegotiate, replace or terminate arrangements. Some of these transactions could occur at times and on terms that are less advantageous or disadvantageous to us or may not be available to us at all, which could cause us to default on our obligations and impair our liquidity. Because a significant portion of our assets is pledged as security to the lenders under our new senior secured credit facility, we may not be able to restructure or refinance our debt on satisfactory terms, if at all.

 

Despite our substantial indebtedness, we may still be able to incur substantially more debt, which would increase the risks described above.

 

As of January 31, 2010, as adjusted for the use of the net proceeds of this offering and the net proceeds herefrom (which includes the repurchase of certain of our outstanding senior notes through the tender offers and the redemption of all of our untendered notes due 2011 and 2013), and our incurrence of our new senior secured credit facility in connection with our acquisition of Tommy Hilfiger, we would have the ability to incur an additional $450 million of debt under our committed revolving credit facility prior to deducting amounts outstanding for letters of credit that will be part of our new senior secured credit facility, but unused immediately following the consummation of our acquisition of Tommy Hilfiger. In addition, although our new senior secured credit facility and the indenture that will govern the notes offered hereby will contain restrictions on our ability to incur additional debt, these restrictions are subject to a number of qualifications and exceptions, and additional debt incurred in compliance with these restrictions could be substantial. If new debt is added to the debt that we have immediately following our acquisition of Tommy Hilfiger, the risks associated with our indebtedness that we now face would intensify.

 

Covenant restrictions under our new senior secured credit facility and our indentures will impose significant operating and financial restrictions on us and may limit our ability to operate our business and to make payments on the notes.

 

Our new senior secured credit facility, the indenture that will govern the notes and the agreements and instruments governing our other outstanding debt contain covenants that restrict our ability to finance future

operations or capital needs, to take advantage of other business opportunities that may be in our interest or to satisfy our obligations under the notes. These covenants restrict our ability to, among other things:

 

 

In addition, our new senior secured credit facility requires us to maintain certain financial covenants, including maximum leverage, minimum interest coverage and maximum capital expenditures. Events beyond our control, including changes in general business and economic conditions, may affect our ability to meet these requirements. A breach of any of these covenants, or our inability to comply with the financial ratios, would result in a default under our new senior secured credit facility. If an event of default occurs and is continuing under our new senior secured credit facility, the lenders could elect to declare all amounts outstanding under the new senior secured credit facility, together with accrued interest, to be immediately due and payable which would result in acceleration of our other debt, including the notes. If we were unable to repay any such borrowings when due, the new senior secured credit facility lenders could proceed against their collateral, which also secures some of our other indebtedness. Under that circumstance, we may not have sufficient funds to pay the notes.

 

Also, under the indenture governing our 73/4% debentures due 2023, if we pay any dividend on our capital stock or we acquire our capital stock, in either case resulting in our inability to meet a specified financial test, then (subject to certain exceptions) the holders of such debentures would have a right to have their debentures redeemed. If this were to occur, we may not have sufficient funds to satisfy this obligation. See “Description of Other Indebtedness — 73/4% Debentures Due 2023.”

 

The notes will not be secured or guaranteed and will be effectively subordinated to our secured obligations and structurally subordinated to all obligations of our subsidiaries.

 

The notes will be unsecured, unsubordinated obligations solely of Phillips-Van Heusen Corporation and will not be guaranteed by any of our subsidiaries on the closing date and may not be guaranteed by any of our subsidiaries for their tenor. Therefore, the notes will be effectively junior to all of Phillips-Van Heusen Corporation’s existing and future secured obligations, to the extent of the value of the assets securing such obligations, including trade payables, of our subsidiaries. As of January 31, 2010, as adjusted for our new senior credit facilities, this offering and our offering of common stock and sale of Series A preferred stock and the use of proceeds therefrom, we would have had approximately $2.6 billion of outstanding indebtedness (excluding approximately $201 million of outstanding letters of credit), including $2.0 billion of secured indebtedness (excluding $249 million of available undrawn revolving credit facility commitments under our new senior secured credit facility and approximately $201 million of outstanding letters of credit) and including the notes offered hereby. See “Description of the Notes — Ranking.”

 

In addition, our obligation to make contingent purchase price payments to Mr. Calvin Klein is secured by a lien on all of the equity interests in our Calvin Klein subsidiaries and all of the assets of our Calvin Klein subsidiaries. Our Calvin Klein subsidiaries have also guaranteed our obligation to make contingent purchase price payments to Mr. Klein.

 

As such, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding involving us or a subsidiary, the assets of the affected entity could not be used to pay you until after:

 

 

 

Holders of the notes will participate ratably in our remaining assets with all holders of our other unsecured, unsubordinated debt that is deemed to be of the same class as the notes, and potentially with all of our other general creditors, based upon the respective amounts owed to each holder or creditor. If any of the foregoing events were to occur, we cannot assure you that there will be sufficient assets to pay amounts due on the notes. As a result, holders of notes may receive less, ratably, than holders of secured debt.

 

We may not be able to repurchase the notes upon a change of control.

 

Upon the occurrence of a change of control, we will be required to make an offer to you in cash to repurchase all or any part of your notes at 101% of their principal amount, plus accrued and unpaid interest to but not including the date of purchase. If a change of control occurs, we may not have sufficient funds at that time to pay the purchase price for all required repurchases of the notes. In addition, our ability to effect a redemption of the notes upon a change of control may be impaired by the effect of various provisions in agreements governing our existing or future debt obligations. The occurrence of a change of control will result in an event of default under our new senior secured credit facility and permit the lenders to accelerate the maturity of all of the obligations under the new senior secured credit facility and to pursue their rights and remedies, including foreclosure of their liens upon our and our subsidiaries’ assets. A change of control would further result in an event of default under the agreements governing our secured contingent payment obligations to Mr. Klein.

 

In the event that a change of control occurs at a time when we are prohibited from repurchasing the notes, we could seek the consent of the new senior secured credit facility lenders and the other holders of our debt to repurchase the notes or could attempt to refinance those borrowings. If we do not obtain their consent or refinance the borrowings, we will remain prohibited from repurchasing the notes, which would constitute an event of default under the indenture governing the notes. In addition, we may not have the financial resources necessary to repurchase the notes upon a change of control, particularly if that change of control triggers a similar repurchase requirement for, or results in the acceleration of, any of our other debt. Any debt agreements we enter into in the future may contain similar provisions. Certain transactions that constitute a change of control under our existing and future debt instruments may not constitute a change of control under the indenture governing the notes.

 

Your right to require us to redeem the notes is limited.

 

The holders of the notes have limited rights to require us to purchase or redeem the notes in the event of a takeover, recapitalization or similar restructuring, including an issuer recapitalization or similar transaction with management. The change of control provisions of the indenture governing the notes may not afford protection to the holders of the notes if such transactions were to occur, including a transaction initiated by us, if the transaction does not result in a change of control or otherwise result in an event of default under the indenture. See “Description of the Notes — Change of Control.”

 

You may not be able to resell the notes because there is no established market for them and one may not develop.

 

The notes will be registered under the Securities Act, but will constitute a new issue of securities with no established trading market and there can be no assurance as to:

 

 

We do not intend to apply for listing of the notes on any securities exchange or for quotation through an automated quotation system. If a trading market were to develop, the notes might trade at higher or lower prices than their principal amount or purchase price, depending on many factors, including prevailing interest

rates, the market for similar debentures, our financial performance and the interest of securities dealers in making a market in the notes.

 

We understand that the underwriters presently intend to make a market in the notes. However, they are not obligated to do so, and any market-making activity with respect to the notes may be discontinued at any time without notice. In addition, any market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act, and may be limited. There can be no assurance that an active market will exist for the notes or that any trading market that does develop will be liquid.

 

Historically, the market for non-investment grade debt has been subject to disruptions that have caused volatility in prices. It is possible that the market for the notes will be subject to disruptions. Any such disruptions may have a negative effect on you, as a holder of the notes, regardless of our prospects and financial performance.

 

If the notes receive an investment grade rating, many of the covenants in the indenture governing the notes will be suspended, thereby reducing some of the protections for noteholders in the indenture.

 

If at any time the notes receive an investment grade rating from both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., subject to certain additional conditions, many of the covenants in the indenture governing the notes applicable to us and our subsidiaries, including the limitations on indebtedness and restricted payments, will be suspended, and in lieu of these covenants we will be subject to a covenant that limits the amount of secured indebtedness that we may incur. While these covenants will be reinstated if we fail to maintain investment grade ratings on the notes or in the event of a continuing default or event of default thereunder, during the suspension period, noteholders will not have the protection of these covenants and we will have greater flexibility under the indenture governing the notes to, among other things, incur indebtedness and make restricted payments.

 

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.

 

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 transaction during our fiscal 2010 second quarter simultaneously with the closing of this offering.

 

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, subject to certain exceptions, 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 them 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.

 

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 them 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 $587 million, after deducting underwriting discounts and commissions and estimated expenses of the offering. We intend to use the net proceeds of this offering (together with cash on hand, borrowings under our new senior secured credit facility and proceeds from the issuance of shares of our common stock and shares of Series A preferred stock) to fund the acquisition of Tommy Hilfiger, repurchase or redeem our 71/4% senior notes due 2011 and our 81/8% senior notes due 2013 and pay related fees and expenses. See “Summary — Tommy Hilfiger Acquisition — Financing for Acquisition,” “Description of the Tommy Hilfiger Acquisition” and “Summary — Tender Offers and Consent Solicitations.”

 

The following table sets forth our capitalization as of January 31, 2010 on an actual and pro forma basis, as described in “Summary — Tommy Hilfiger Acquisition — Sources and Uses” and our unaudited pro forma consolidated financial information included in this prospectus supplement. You should also read the financial statements incorporated by reference in this prospectus supplement.

 

 

 

 

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