SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
ý ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 2005
OR
o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________ to __________
Commission file number 1-724
A. Full title of the plan and the address of the plan, if different from that of the issuer named below: PVH Associates Investment Plan for Hourly Associates and PVH Associates Investment Plan for Salaried Associates
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Phillips-Van Heusen Corporation, 200 Madison Avenue, New York, New York 10016
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLANS
Date: June 28, 2006
By
/s/ Pamela N. Hootkin
Pamela N. Hootkin, Member of
Administrative Committee
Financial Statements
Years ended December 31, 2005 and 2004
Contents
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
Report of Independent Registered Public Accounting Firm
F-2
Statements of Net Assets Available for Benefits
F-3
Statements of Changes in Net Assets Available for Benefits
F-4
Notes to Financial Statements
F-5
Supplemental Schedule
F-11
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
Report of Independent Registered Public Accounting Firm
F-13
Statements of Net Assets Available for Benefits
F-14
Statements of Changes in Net Assets Available for Benefits
F-15
Notes to Financial Statements
F-16
Supplemental Schedule
F-22
F-1
[Letterhead of Spielman Koenigsberg & Parker, LLP]
Report of Independent Registered Public Accounting Firm
Administrative Committee of the Plan
Phillips-Van Heusen Corporation
Associates Investment Plan for Hourly Associates
We have audited the accompanying statement of net assets available for benefits of the Phillips-Van Heusen Corporation Associates Investment Plan for Hourly Associates as of December 31, 2005, and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Phillips-Van Heusen Corporation Associates Investments Plan for Hourly Associates as of and for the year ended December 31, 2004 were audited by other auditors whose report dated May 31, 2005 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with the auditing standards of the Public Company Accounting Oversights Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2005, and the changes in its net assets available for benefits for the year then ended, in conformity with accounting principles generally accepted in the United States.
Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2005, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/S/ SPIELMAN KOENIGSBERG & PARKER, LLP
June 19, 2006
F-2
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
For the Years Ended December 31, 2005 and 2004
2005 | 2004 | ||
Assets | |||
Investments, at fair value: | |||
Investments held by Wells Fargo N.A.: | |||
Stable Return Fund | $ 1,454,661 | $ - | |
Mutual Funds | 5,139,766 | ||
Investment in Phillips-Van Heusen Corporation Associates Investment Plans Master Trust | 2,844,336 | ||
Investments held by State Street Bank: | |||
Stable Value Funds | 1,283,428 | ||
Mutual Funds | 4,434,194 | ||
Investment in Phillips-Van Heusen Corporation Associates Investment Plans Master Trust | 2,480,733 | ||
Participant loans receivable | 511,489 | 324,232 | |
Contributions receivable | 43,225 | 42,286 | |
Net assets available for benefits | $ 9,993,477 | $ 8,564,873 |
The accompanying notes are an integral
part of these financial statements.
F-3
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES
STATEMENT OF CHANGES IN NET
ASSETS AVAILABLE FOR BENEFITS
For the Years Ended December 31, 2005 and 2004
2005 | 2004 | ||
Additions | |||
Contributions: | |||
Employer, net of forfeitures | $ 391,674 | $ 364,146 | |
Employees | 840,453 | 773,914 | |
Rollovers | 31,754 | ||
Interest and investment income | 189,579 | 188,945 | |
Loan repayments including interest | 22,130 | 16,263 | |
Total additions | 1,443,836 | 1,375,022 | |
Deductions | |||
Payments to participants | 685,187 | 1,520,257 | |
Transfer out | 55,057 | ||
Total deductions | 685,187 | 1,575,314 | |
Net realized and unrealized appreciation of investments | 669,955 | 1,142,469 | |
Net increase in net assets available for benefits | 1,428,604 | 942,177 | |
Net assets available for benefits at beginning of year | 8,564,873 | 7,622,696 | |
Net assets available for benefits at end of year | $9,993,477 | $8,564,873 |
The accompanying notes are an integral
part of these financial statements.
F-4
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 2005 and 2004
1.
Description of the Plan
The following description of the Phillips-Van Heusen Corporation (the “Company”) Associates Investment Plan for Hourly Associates (the “Plan”) provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan’s provisions.
The Plan was amended effective January 1, 2002 in order to comply with changes permitted or required by the Economic Growth and Tax Relief Reconciliation Act of 2001 and to modify certain administrative provisions. Following the issuance of a favorable determination letter by the Internal Revenue Service (IRS), the Plan was amended again on September 24, 2003 to comply with IRS requests pertaining to its continuous tax-qualified status.
Change in Trustee and Recordkeeper
Effective January 1, 2004, the Plan’s Trustee changed from UMB Bank (the “Predecessor Trustee”) to State Street Bank (the “Trustee” or “Successor Trustee”). On January 1, 2005, Wells Fargo acquired Strong Retirement Plan Services and as a result, Wells Fargo Retirement Solutions became the “Recordkeeper” and Wells Fargo Bank became the “Trustee”.
Master Trust
The Phillips-Van Heusen Corporation Associates Investment Plans Master Trust (the “Master Trust”) was established for the investment of the Phillips-Van Heusen Stock Fund (the “PVH Stock Fund”). The Plan is one of three plans participating in the Master Trust.
General
The Plan is a defined contribution plan covering hourly production, warehouse, distribution, leased employees and U.S. retail field employees of the Company, who are at least age 21 or older, have completed at least three consecutive months of service and are regularly scheduled to work at least 20 hours per week. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
F-5
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
Contributions
Participants may contribute up to 25% of pre-tax annual compensation, limited to $14,000 and $13,000 per annum in 2005 and 2004, respectively. In addition, pursuant to EGTRRA of 2001, all participants who have attained the age of 50 before the close of the plan year are eligible to make “catch-up” contributions up to $4,000 for the plan year ended December 31, 2005. The Company matches 100% of the first 2% of eligible compensation that a participant contributed to the Plan plus 25% of the next 4% of eligible compensation contributed by the participant.
Participant Accounts
Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings. Forfeited balances of terminated participants’ nonvested accounts are used to reduce future Company contributions.
Vesting
Amounts attributable to employee contributions and the allocated earnings thereon are immediately vested. Participants become 25%, 50%, 75% and 100% vested in Company contributions after two, three, four and five years of service, respectively. Upon death, permanent disability or reaching age 65, participants or their beneficiaries become 100% vested in Company contributions.
Investment Options
Upon enrollment in the Plan, a participant may direct employee contributions into any of ten investment options. A participant may contribute a maximum of 25% of employee contributions into the PVH Stock Fund.
The Company contributions are invested in any fund offered by the Plan as elected by the participant. However, existing balances contributed to the PVH Stock Fund as of March 31, 1999 were required to remain in the fund until participants reach the age of 55 or older. Effective December 30, 2004, all restrictions on Company Match invested in the PVH Stock Fund were removed and participants are allowed to transfer all Company Match monies to other investment options in the Plan.
F-6
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
Participant Loans Receivable
Participants may borrow from the Plan, with certain restrictions, using their vested account balance as collateral. The minimum loan amount is $1,000 and the maximum loan amount is the lesser of (i) $50,000 reduced by the participant’s highest outstanding loan balance during the previous 12 months, or (ii) 50% of the vested value of the participant’s account. Interest is fixed for the term of the loan at the prime rate plus 1%. Loan repayments are made through payroll deductions which may be specified for a term of 1 to 5 years or up to 15 years for the purchase of a primary residence.
Forfeitures
Contributions made on behalf of non-vested or partially vested employees who have terminated are retained by the Plan and are used to reduce the Company’s future matching contributions.
Payment of Benefits
Participants electing final distributions will receive payment in the form of a lump sum amount equal to the value of their vested account unless the participant notifies the Company of their intent to receive all or a portion of their balance attributable to the PVH Stock Fund paid in the form of shares of the Company’s Common Stock.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
F-7
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
2.
Significant Accounting Policies
The accounting records of the Plan are maintained on the accrual basis.
Substantially all administrative expenses are paid by the Company.
In accordance with the Rules and Regulations of the Department of Labor, investments are included in the accompanying financial statements at market value as determined by quoted market prices or at fair value as determined by the trustee. Purchases and sales of securities are reflected on a trade date basis.
All assets of the Plan are held by the Trustee and are segregated from the assets of the Company. The Master Trust holds the investments in the PVH Stock Fund. The Plan shares in the Master Trust interest and investment income based upon its participants’ shares of the Master Trust net assets available for benefits.
The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
3.
Transactions with Parties-in-Interest
During the years ended December 31, 2005 and 2004, the Master Trust purchased 47,988 and 15,616 shares, respectively, of the Company’s common stock and received $153,906 and $168,641, respectively, from the Company as payment of dividends on its common stock. The AIP Master Trust also sold 160,053 and 64,342 shares of the Company’s common stock during the years ended December 31, 2005 and 2004, respectively.
4.
Investments
During 2005 and 2004, the Plan’s investments (including investments purchased, sold, as well as held during the year) appreciated in fair value as determined by quoted market prices as follows:
F-8
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
Net Realized and Unrealized
Appreciation in Fair Value of Investments
2005 | 2004 | ||
Common stock – PVH Stock Fund | $ 499,455 | $ 860,690 | |
Shares of registered investment companies | 170,500 | 281,779 | |
$ 669,955 | $ 1,142,469 |
Investments that represent 5% or more of the fair value of the Plan’s net assets at the end of the plan year are as follows:
2005 | 2004 | ||
Investment in Phillips-Van Heusen Corporation Associates Investment Plans Master Trust | $ 2,844,336 | $ 2,480,733 | |
Barclays Global Equity Index | * | 898,194 | |
Dodge & Cox Balanced | 1,283,331 | 1,121,353 | |
Dreyfus Appreciation | 1,207,303 | 1,084,372 | |
Strong Advisor Bond | * | 566,455 | |
Wells Fargo Stable Return Fund (S) | 1,454,661 | 1,283,428 | |
Strong Advisor Small Cap Value | * | 433,318 | |
Wells Fargo Advantage Small Cap Value Fund (Z) | 600,404 | * | |
Wells Fargo Advantage Total Return Bond (Adm) | 628,267 | * | |
Wells Fargo S&P 500 Index Fund (G) | 988,751 | * | |
Shares of registered companies representing less than 5% | 431,710 | 330,503 |
* Investment not offered at the end of the plan year.
F-9
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
5.
Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated September 2, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the “Code”) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.
F-10
SUPPLEMENTAL SCHEDULE
F-11
EIN: 13-1166910
Plan No: 012
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES
SCHEDULE H, LINE 4i--SCHEDULE OF ASSETS (HELD AT END OF YEAR)
For the Year Ended December 31, 2005
Identity of Issue, Borrower, | Description of Investment, | Current Value |
Wells Fargo Bank, N.A. | Wells Fargo Advantage Small Cap Value Fund (Z);19,900.6879 shares | $ 600,404 |
Wells Fargo Bank, N.A. | Dodge & Cox Balanced; 15,777.3711 shares | 1,283,331 |
Wells Fargo Bank, N.A. | Dodge & Cox Income; 2,278.2267 shares | 28,569 |
Wells Fargo Bank, N.A. | Oakmark International I; 15,718.4378 shares | 353,979 |
Wells Fargo Bank, N.A. | Wells Fargo Advantage Total Return Bond Fund (Adm); 51,709.2102 shares | 628,267 |
Wells Fargo Bank, N.A. | Wells Fargo S&P 500 Index Fund (G); 25,184.6879 shares | 988,751 |
Wells Fargo Bank, N.A. | Wells Fargo Stable Return Fund (S); 37,885.2243 shares | 1,454,661 |
Wells Fargo Bank, N.A. | Dreyfus Appreciation; 30,372.3971 shares | 1,207,303 |
Wells Fargo Bank, N.A. | Calamos Growth (A); 892.8834 shares | 49,162 |
Wells Fargo Bank, N.A. | Investment in Phillips-Van Heusen Corporation Associates Investment Plans Master Trust; 1,272,007.4021 units | 2,844,336 |
Wells Fargo Bank, N.A. | Loan Fund; 511,489 units maturity dates through 2019, interest rates: 5% to 10.5% | 511,489 |
Total investments held | $ 9,950,252 |
F-12
[Letterhead of Spielman Koenigsberg & Parker, LLP]
Report of Independent Registered Public Accounting Firm
Administrative Committee of the Plan
Phillips-Van Heusen Corporation
Associates Investment Plan for Salaried Associates
We have audited the accompanying statements of net assets available for benefits of the Phillips-Van Heusen Corporation Associates Investment Plan for Salaried Associates as of December 31, 2005, and the related statements of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Phillips-Van Heusen Corporation Associates Investments Plan for Salaried Associates as of and for the year ended December 31, 2004 were audited by other auditors whose report dated May 31, 2005 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversights Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2005, and the changes in its net assets available for benefits for the year then ended, in conformity with accounting principles generally accepted in the United States.
Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2005, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the financial statements and, in our opinion is fairly stated in all material respects in relation to the financial statements taken as a whole.
/S/ SPIELMAN KOENIGSBERG & PARKER, LLP
June 19, 2006
F-13
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2005 and 2004
2005 | 2004 | ||
Assets | |||
Investments, at fair value: | |||
Investments held by Wells Fargo Bank: | |||
Stable Return Fund | $ 12,052,826 | $ - | |
Mutual Funds | 73,542,816 | ||
Investment in Phillips-Van Heusen Corporation Associates Investment Plans Master Trust | 29,777,423 | ||
Investments held by State Street Bank: |
| ||
Stable Value Funds | 10,331,420 | ||
Mutual Funds | 62,079,054 | ||
Investment in Phillips-Van Heusen Corporation Associates Investment Plans Master Trust | 28,041,243 | ||
Participant loans receivable | 1,789,881 | 1,542,866 | |
Contributions receivable | 379,825 | 321,907 | |
Net assets available for benefits | $ 117,542,771 | $ 102,316,490 |
The accompanying notes are an integral
part of these financial statements.
F-14
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Years Ended December 31, 2005 and 2004
2005 | 2004 | ||
Additions | |||
Contributions: | |||
Employer, net of forfeitures | $ 3,035,467 | $ 2,705,468 | |
Employees | 7,837,210 | 6,988,960 | |
Rollovers | 397,583 | 1,581,526 | |
Interest and investment income | 3,167,018 | 2,507,519 | |
Transfers in |
| 54,924 | |
Other income |
| 25,570 | |
Loan repayments including interest | 98,438 | 83,392 | |
Total additions | 14,535,716 | 13,947,359 | |
Deductions | |||
Payments to participants | 6,846,759 | 8,478,070 | |
Total deductions | 6,846,759 | 8,478,070 | |
Net realized and unrealized appreciation of investments | 7,537,324 | 13,758,774 | |
Net increase in net assets available for benefits | 15,226,281 | 19,228,063 | |
Net assets available for benefits at beginning of year | 102,316,490 | 83,088,427 | |
Net assets available for benefits at end of year | $ 117,542,771 | $ 102,316,490 |
The accompanying notes are an integral
part of these financial statements.
F-15
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 2005 and 2004
1.
Description of the Plan
The following description of the Phillips-Van Heusen Corporation (the “Company”) Associates Investment Plan for Salaried Associates (the “Plan”) provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan’s provisions.
The Plan was amended effective January 1, 2002 in order to comply with changes permitted or required by the Economic Growth and Tax Relief Reconciliation Act of 2001 and to modify certain administrative provisions. Following the issuance of a favorable determination letter by the Internal Revenue Service (IRS), the Plan was amended again on September 24, 2003 to comply with IRS requests pertaining to its continuing tax-qualified status.
Change in Trustee and Recordkeeper
Effective January 1, 2004, the Plan’s Trustee changed from UMB Bank (the “Predecessor Trustee”) to State Street Bank (the “Trustee” or “Successor Trustee”). On January 1, 2005, Wells Fargo acquired Strong Retirement Plan Services and as a result, Wells Fargo Retirement Solutions became the “Recordkeeper” and Wells Fargo Bank became the “Trustee”.
Master Trust
The Phillips-Van Heusen Corporation Associates Investment Plans Master Trust (the “Master Trust”) was established for the investment of the Phillips-Van Heusen Stock Fund (the “PVH Stock Fund”). The Plan is one of three plans participating in the Master Trust.
General
The Plan is a defined contribution plan covering salaried or clerical employees of the Company who are at least age 21 or older, have completed at least three consecutive months of service and are regularly scheduled to work at least 20 hours per week. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
F-16
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
Contributions
Participants may contribute up to 25% of pre-tax annual compensation, limited to $14,000 and $13,000 per annum in 2005 and 2004, respectively. In addition, pursuant to EGTRRA of 2001, all participants who have attained the age of 50 before the close of the plan year are eligible to make “catch-up” contributions up to $4,000 for the plan year ended December 31, 2005. The Company matches 100% of the first 2% of eligible compensation that a participant contributed to the Plan plus 25% of the next 4% of eligible compensation contributed by the participant.
Participant Accounts
Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings. Forfeited balances of terminated participants’ nonvested accounts are used to reduce future Company contributions.
Vesting
Amounts attributed to employee contributions and the allocated earnings thereon are immediately vested. Participants become 25%, 50%, 75% and 100% vested in Company contributions and the allocated earnings thereon after two, three, four and five years of service, respectively. Upon death, permanent disability, or reaching age 65, participants or their beneficiaries become 100% vested in Company contributions.
Investment Options
Upon enrollment in the Plan, a participant may direct employee contributions into any of ten investment options. A participant may contribute a maximum of 25% of employee contributions into the PVH Stock Fund.
The Company contributions are invested in any fund offered by the Plan as elected by the participant. However, existing balances contributed to the PVH Stock Fund as of March 31, 1999 were required to remain in the fund until participants reach the age of 55 or older. Effective December 30, 2004, all restrictions on Company Match invested in the PVH Stock Fund were removed and participants are allowed to transfer all Company Match monies to other investment options in the Plan.
F-17
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
Participant Loans Receivable
Participants may borrow from the Plan, with certain restrictions, using their vested account balance as collateral. The minimum loan amount is $1,000 and the maximum loan amount is the lesser of (i) $50,000 reduced by the participant’s highest outstanding loan balance during the previous 12 months, or (ii) 50% of the vested value of the participant’s account. Interest is fixed for the term of the loan at the prime rate plus 1%. Loan repayments are made through payroll deductions, which may be specified for a term of 1 to 5 years or up to 15 years for the purchase of a primary residence.
Forfeitures
Contributions made on behalf of non-vested or partially vested employees who have terminated are retained by the Plan and are used to reduce the Company’s future matching contributions.
Payment of Benefits
Participants electing final distributions will receive payment in the form of a lump sum amount equal to the value of their vested account unless the participant notifies the Company of their intent to receive all or a portion of their balance attributable to the PVH Stock Fund paid in the form of shares of the Company’s Common Stock.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
2.
Significant Accounting Policies
The accounting records of the Plan are maintained on the accrual basis.
Substantially all administrative expenses are paid by the Company.
F-18
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
In accordance with the Rules and Regulations of the Department of Labor, investments are included in the accompanying financial statements at market value as determined by quoted market price or at fair value as determined by the trustee. Purchase and sales of securities are reflected on a trade date basis.
All assets of the Plan are held by the Trustee and are segregated from the assets of the Company. The Master Trust holds the investments in The PVH Stock Fund. The Plan shares in the Master Trust interest and investment income based upon its participants’ shares of the Master Trust net assets available for benefits.
The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
3.
Transactions with Parties-in-Interest
During the years ended December 31, 2005 and 2004, the Master Trust purchased 47,988 and 15,616 shares, respectively, of the Company’s common stock and received $153,906 and $168,641, respectively, from the Company as payment of dividends on its common stock. The AIP Master Trust also sold 160,053 and 64,342 shares of the Company’s common stock during the years ended December 31, 2005 and 2004, respectively.
4.
Investments
During 2005 and 2004, the Plan’s investments (including investments purchased, sold, as well as held during the year) appreciated in fair value as determined by quoted market prices as follows:
F-19
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
Net Realized and Unrealized
Appreciation in Fair Value of Investments
2005 | 2004 | ||
Common stock – PVH Stock Fund | $ 5,293,289 | $ 9,639,765 | |
Shares of registered investment companies | 2,244,035 | 4,119,009 | |
$ 7,537,324 | $ 13,758,774 |
Investments that represent 5% or more of the fair value of the Plan’s net assets at the end of the plan year are as follows:
2005 | 2004 | ||
Investment in Phillips-Van Heusen Corporation Associates Investment Plans Master Trust | $ 29,777,423 | $ 28,041,243 | |
Barclays Global Equity Index | * | 7,568,399 | |
Dodge & Cox Balanced | 18,753,093 | 16,216,647 | |
Dreyfus Appreciation | 16,995,799 | 16,729,719 | |
Oakmark International | 7,723,406 | 5,472,485 | |
Strong Advisor Small Cap Value | * | 8,303,214 | |
Strong Advisor Bond | * | 5,431,252 | |
Wells Fargo Stable Return Fund (S) | 12,052,826 | 10,331,420 | |
Wells Fargo Advantage Small Cap Value Fund (Z) | 12,188,812 |
| * |
Wells Fargo Advantage Total Return Bond (Adm) | 5,900,260 | * | |
Wells Fargo S&P 500 Index Fund (G) | 8,624,725 | * | |
Shares of registered companies representing less than 5% | 3,356,721 |
| 2,357,338 |
* Investment not offered at the end of the plan year.
F-20
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
5.
Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated September 2, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the “Code”) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.
F-21
SUPPLEMENTAL SCHEDULE
F-22
EIN: 13-1166910
Plan No: 007
PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES
SCHEDULE H, LINE 4i--SCHEDULE OF ASSETS (HELD AT END OF YEAR)
For the Year Ended December 31, 2005
Identity of Issue, Borrower, | Description of Investment, | Current Value |
Wells Fargo Bank, N.A. | Wells Fargo Advantage Small Cap Value Fund (Z); 404,004.3640 shares |
$ 12,188,812 |
Wells Fargo Bank, N.A. | Dodge & Cox Balanced; 230,551.9204 shares | 18,753,093 |
Wells Fargo Bank, N.A. | Dodge & Cox Income; 57,770.5816 shares | 724,443 |
Wells Fargo Bank, N.A. | Oakmark International I; 342,957.6464 shares | 7,723,406 |
Wells Fargo Bank, N.A. | Wells Fargo Advantage Total Return Bond Fund (Adm); 485,618.1393 shares |
5,900,260 |
Wells Fargo Bank, N.A. | Wells Fargo S&P 500 Index Fund (G); 219,682.2445 shares |
8,624,725 |
Wells Fargo Bank, N.A. | Wells Fargo Stable Return Fund (S); 313,903.9754 shares | 12,052,826 |
Wells Fargo Bank, N.A. | Dreyfus Appreciation; 427,567.2752 shares | 16,995,799 |
Wells Fargo Bank, N.A. | Calamos Growth (A); 47,807.4493 Shares | 2,632,278 |
Wells Fargo Bank, N.A. | Investment in Phillips-Van Heusen Corporation Associates Investment Plans Master Trust; 13,316,677.8819 units | 29,777,423 |
Wells Fargo Bank, N.A. | Loan Fund; 1,789,881.07 units maturity dates through 2020, interest rates: 5% to 10.5% |
1,789,881 |
| ||
Total investments held by Wells Fargo Bank, N.A. |
$ 117,162,946 | |
F-23
EXHIBIT INDEX
Exhibit No.
23.1
Consent of Independent Auditors (Associates Investment Plan for
Hourly Associates)
23.2
Consent of Independent Auditors (Associates Investment Plan for
Salaried Associates)