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SECURITIES AND EXCHANGE COMMISSION Exhibit Index
Washington, D.C. 20549 is on Page 54
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 25, 1993 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ............ to................
Commission File Number 0-9831
LIZ CLAIBORNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2842791
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1441 Broadway, New York, New York 10018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-354-4900
Securities registered pursuant to Section 12(b) of the Act:
Title of class Name of each exchange on which registered
Common Stock, par value $1 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]
Based upon the closing sale price on the New York Stock Exchange composite
tape on March 1, 1994, the aggregate market value of the registrant's Common Stock, par
value $1 per share, held by non-affiliates of the registrant on such date was
approximately $1,684,727,949.
Number of shares of the registrant's Common Stock, par value $1 per share,
outstanding as of March 1, 1994: 78,850,487 shares.
Documents Incorporated by Reference:
Registrant's Proxy Statement relating to its Annual Meeting of Stockholders to
be held on May 12, 1994 - Part III.
/TABLE
PART I
Item 1. Business.
Overview
Liz Claiborne, Inc. designs, contracts for the manufacture of, and
markets an extensive range of women's and men's apparel and related products,
including accessories, shoes and jewelry. The Company believes that it is the
largest "better" women's sportswear and dress company in the United States.
Generally, the Company's sportswear products are conceived and marketed as
"designer" items but are priced in the "better" apparel range. Women's
sportswear is offered under the Company's various trademarks, including LIZ
CLAIBORNE, LIZ, COLLECTION, LIZSPORT, LIZWEAR, ELISABETH, LIZ & CO. and its
triangular logo mark. The Company offers a higher priced "bridge" line of
women's sportswear and dresses under the Company's DANA BUCHMAN label as well
as collections of men's sportswear and furnishings under the CLAIBORNE
trademark. In 1992, as part of a strategy to enter the lower-priced
"contemporary" and "moderate" women's apparel markets, the Company acquired
THE VILLAGER, CRAZY HORSE and RUSS trademarks. The Company offers women's
fragrance collections under the LIZ CLAIBORNE, REALITIES and VIVID trademarks
and men's fragrance collections under the CLAIBORNE FOR MEN trademark. The
Company also operates 56 retail specialty stores offering collections of
casual women's sportswear under the Company's FIRST ISSUE trademark, as well
as 19 LIZ CLAIBORNE retail specialty shops and four ELISABETH retail specialty
shops. During 1993, the Company further expanded its international
distribution into a number of new markets.
At March 1, 1994, the Company's order book reflected unfilled
customer orders for approximately $450 million of merchandise, as compared to
approximately $507 million at March 1, 1993. Order book data at any given
date is materially affected by the timing of recording orders and of
shipments. Accordingly, order book data should not be taken as indicative of
eventual actual shipments or net sales, or as providing meaningful period-to-
period comparisons.
As used herein, the term the "Company" refers to Liz Claiborne,
Inc., a Delaware corporation, together with its consolidated subsidiaries, and
its predecessor New York corporation (incorporated in 1976).
Narrative Description of Business
All of the Company's products are designed by in-house staffs.
Apparel division personnel meet regularly with representatives of the
Company's Accessories, Shoe and Jewelry Divisions and the Company's various
licensees to ensure that Liz Claiborne items are coordinated with one another.
Substantially all items in each sportswear collection are sold as
"separates" rather than as ensembles, such as suits. However, each collection
is structured, through the use of related styles, color schemes and fabrics,
to enable the consumer to assemble outfits consisting of separate items which
are designed to be worn together. By offering similar or related styles,
color schemes and fabrics over an extended period, the Company intends to
provide the consumer with a wardrobe which can be coordinated with other
Company items from season to season.
- 2 -
The following is a comparison of net sales by product/division for each of the five fiscal years
ended December 25, 1993.
(Dollars in Millions)
1993 1992 1991 1990 1989
Sportswear-Misses . . . . . . . . . . . . $ 878.0 $ 947.7 $ 903.7 $ 782.4 $ 682.7
Sportswear-Petites . . . . . . . . . . . 253.5 268.5 250.7 216.6 164.8
Total Women's Sportswear. . . . . . 1,131.5 1,216.2 1,154.4 999.0 847.5
Accessories . . . . . . . . . . . . . . . 172.4 144.9 129.9 159.4 167.5
Elisabeth . . . . . . . . . . . . . . . . 143.5 161.0 130.5 53.4 10.9*
Dresses and Suits . . . . . . . . . . . . 130.0 171.3 180.3 164.4 143.4
Outlet Stores . . . . . . . . . . . . . . 122.4 113.9 84.7 62.1 39.1
Retail Specialty Stores . . . . . . . . . 114.4 92.9 77.4 58.7 32.9
Liz & Co. . . . . . . . . . . . . . . . . 91.9 96.4 75.9 58.8 8.5*
Dana Buchman. . . . . . . . . . . . . . . 90.2 73.5 28.9 16.8 15.3
Cosmetics . . . . . . . . . . . . . . . . 88.4 72.7 75.0 73.6 60.2
Men's Sportswear and Furnishings. . . . . 80.7 94.0 124.6 122.3 123.8
Russ Group. . . . . . . . . . . . . . . . 78.7 21.2* ---- ---- ----
Shoes . . . . . . . . . . . . . . . . . . 55.5 46.4 39.9 13.2* ----
Jewelry . . . . . . . . . . . . . . . . . 25.0 18.3 6.2 8.6* ----
Licensing . . . . . . . . . . . . . . . . 3.0 2.9 2.4 3.5 3.7
2,327.6 2,325.6 2,110.1 1,793.8 1,452.8
Intercompany Sales Elimination. . . . . . (123.3) (131.3) (102.9) (64.9) (42.1)
Net Sales . . . . . . . . . . . . . $2,204.3 $2,194.3 $2,007.2 $1,728.9 $1,410.7
Net Sales by Geographic Areas
Domestic . . . . . . . . . . . . . . . . $2,091.0 $2,092.5 $1,923.6 $1,672.5 $1,377.7
International . . . . . . . . . . . . . . 113.3 101.8 83.6 56.4 33.0
Net Sales . . . . . . . . . . . . . $2,204.3 $2,194.3 $2,007.2 $1,728.9 $1,410.7
* Partial Year Sales - 3 -
/TABLE
The LIZ CLAIBORNE Women's Sportswear Group, consisting of the
Company's COLLECTION, LIZSPORT and LIZWEAR Divisions, offers customers an
extensive range of casual to career "better" sportswear products, in both the
"misses" and petite size ranges. COLLECTION is polished and professional with
desk-to-dinner versatility, and is designed in groups of coordinated separates
with broad mix-and-match options. LIZSPORT focuses on casual classics -
stylish but not trendy, and is designed for less formal workplaces and for
leisure. LIZWEAR features denim and other casual basics with current fashion
coordinates.
The Dress Division markets career, day-into-evening and social
occasion dresses as well as suits under the LIZ CLAIBORNE trademark in both
the "misses" and petite size ranges. In the first quarter of 1993, the
Company's Suit Division was consolidated into the Dress Division.
The Menswear Division offers its customers a broad selection of
related separates as well as furnishings consisting of dress shirts and
neckwear under the CLAIBORNE trademark.
The DANA BUCHMAN Division offers collections of women's bridge
sportswear and dresses in "misses" and petite sizes under the Company's DANA
BUCHMAN trademark. Products are targeted to sell at prices higher than the
Company's other women's sportswear lines, but below those of most "designer"
lines. During the first quarter of 1994, this Division began shipping its
first collection of large sizes.
The ELISABETH Division offers collections of women's sportswear
and dresses for the large-sized woman under the Company's ELISABETH
trademark. It also offers collections of dresses and large-sized apparel in
petite proportions.
The LIZ & CO. Division offers sportswear collections of casual
women's knitwear under the Company's LIZ & CO. trademark. During 1993, this
Division expanded its offerings to include lines of woven sportswear; these
new lines were discontinued during the first quarter of 1994. During the
first quarter of 1994, this Division began shipping its first collection in
petite sizes.
During 1993, each of the above Divisions presented four to six
seasonal collections.
As part of its component dressing concept, the Company offers its
customers handbags and small leather goods as well as fashion accessories --
scarves, belts, tights, bodywear, socks, hats and hair accessories --
primarily under the LIZ CLAIBORNE trademark. Accessories products coordinate
with and supplement the Company's various women's apparel, shoe and jewelry
collections.
The Jewelry Division offers collections of fashion jewelry to
complement the Company's women's apparel and accessories lines.
The Cosmetics Division offers women's fragrance and bath products
under the LIZ CLAIBORNE, REALITIES and VIVID trademarks and men's fragrance
and grooming accessories under the CLAIBORNE FOR MEN trademark. This Division
commenced shipment of its new VIVID line in July 1993.
- 4 -
The Company's retail specialty store business currently operates
56 FIRST ISSUE stores throughout the United States. The Company is currently
planning approximately 20 additional FIRST ISSUE stores for 1994. FIRST ISSUE
stores carry collections of women's casual sportswear, accessories and jewelry
bearing the various FIRST ISSUE trademarks, with prices generally lower than
those of the LIZ CLAIBORNE sportswear lines. FIRST ISSUE merchandise, like
LIZ CLAIBORNE sportswear, is designed and presented in concept groups of
related separates and also includes basic items. New groups are presented
approximately every two weeks. Stores average approximately 3,300 square
feet.
The Shoe Division offers its customers dress and casual shoes
which coordinate with its women's LIZ CLAIBORNE apparel collections and
accessories. This Division's shoe offerings include fashion (career and
casual) shoes and leather and canvas sport shoes. During 1993, this Division
discontinued its lines of athletic sneakers.
In May 1992, as part of a strategy to enter the moderate areas of
department and specialty stores as well as chain department stores, the
Company purchased THE VILLAGER, CRAZY HORSE and RUSS trademarks. The Company
has established separate women's apparel divisions for each of these
trademarks. The VILLAGER Division offers career and weekend wear in misses,
petites and large sizes, sold through national and regional chain department
stores; the CRAZY HORSE Division offers casual and contemporary sportswear,
sold through the contemporary areas of department stores as well as to
specialty stores; the RUSS Division offers updated career and casual
sportswear classics in misses, petites and large sizes sold through the
moderate areas of department stores as well as to chain department stores.
These Divisions shipped their first collections of products designed under the
Company's ownership commencing June 1993. These Divisions represent the
Company's entry into a new market; such entry is accompanied by the risks
inherent in any new business. The lower-priced apparel business requires
methods of operations and marketing strategies different from those employed
in the Company's other businesses. As this business is generally a lower
margin business, the Company must achieve significant cost efficiencies, in
part by using sources of supply different from the Company's current sources.
In addition, the buyers and/or store customers for these Divisions are
different from the Company's traditional buyers and customers. The Company's
competition in this field includes firms with which the Company has not
historically competed.
Sales and Marketing
The Company's wholesale sales are made primarily to department and
specialty store customers throughout the United States. Retail sales are also
made through the Company's FIRST ISSUE, LIZ CLAIBORNE and ELISABETH retail
stores and through outlet stores as well as to international customers,
direct-mail catalogue companies, military exchanges and other outlets. During
1993, the Company's international distribution was expanded to additional
markets; at year end, LIZ CLAIBORNE products were being sold in over 40
markets outside of the United States. In addition, product offerings in the
United Kingdom, Canada and other countries were further expanded. The Company
expects to continue expansion to additional markets, primarily in Western
Europe, Asia and Latin America.
- 5 -
The Company currently operates a total of 23 prototype and
presentational specialty stores which carry exclusively Company products, in
malls throughout the United States: 19 LIZ CLAIBORNE stores and four
ELISABETH large-size apparel stores. One of the LIZ CLAIBORNE stores is
devoted to LIZ CLAIBORNE shoes and accessories. The apparel stores are of
three different types: an approximately 8,000 - 12,000 square foot store
under the name LIZ CLAIBORNE, carrying the full line of LIZ CLAIBORNE women's
apparel, accessories, jewelry, shoes, sunglasses, hosiery and fragrances; an
approximately 6,000 square foot store aimed at career dressing under the name
LIZ CLAIBORNE, carrying exclusively the Company's LIZ CLAIBORNE COLLECTION and
LIZSPORT sportswear, career dresses, shoes, accessories, jewelry, hosiery and
fragrances; and an approximately 4,000 square foot store under the name
ELISABETH, carrying exclusively large-size sportswear and dresses under the
ELISABETH label. These stores enable the Company to closely track sales and
other product data, obtain market information and experiment with new
products, visual presentation and new ideas for enhancing customer service.
This information is used to help the Company's retail store customers and to
more quickly respond to consumer preferences. A number of LIZ CLAIBORNE
stores and shops operate in international markets pursuant to retail licenses
granted by the Company. During 1993, additional LIZ CLAIBORNE stores and
shops opened in the Far East and in 1994 a store was opened in the Middle
East. During 1994, the Company plans to grant additional store licenses
covering new markets.
In a number of international markets, the Company operates leased
or licensed departments or concessions at leading specialty stores, enabling
the Company to better control its image and obtain direct consumer feedback.
Leased departments have developed into the Company's primary method of doing
business in Western Europe.
Approximately 85% of 1993 sales were made to the Company's 100
largest customers. Except for Dillard's Department Stores, Inc., which
accounted for approximately 11% of 1993 and 1992 sales, no single customer
accounted for more than 5% of 1993 sales. However, certain of the Company's
customers are under common ownership; when considered together as a group
under common ownership, sales to the 14 department store customers which were
owned at year-end 1993 by The May Department Stores Company accounted for
approximately 18% of 1993 and 1992 sales, and sales to the three department
store customers which were owned at year-end 1993 by R. H. Macy & Co., Inc.
accounted for approximately 8% of 1993 sales and 10% of 1992 sales. R. H.
Macy & Co., Inc. and its department store subsidiaries filed for protection
under the Federal bankruptcy laws in 1992 and are currently operating under
such laws; See Note 8 of Notes to Consolidated Financial Statements. Sales to
the eight department store customers which were owned at year-end 1993 by
Federated Stores, Inc. accounted for approximately 8% of 1993 and 1992 sales.
Many major department store groups have centralized buying decisions;
accordingly, any material change in the Company's relationship with any such
group could have a material adverse effect on the Company's operations. The
Company expects that its 100 largest customers will continue to account for a
great majority of its sales.
- 6 -
Sales to the Company's department and specialty store customers
are made primarily through the Company's New York City showrooms. The Company
also has arrangements in certain apparel marts and with certain agents and
distributors to market specific Company products.
Orders from the Company's apparel and accessories customers
generally precede the related shipping periods by several months. The Company
has implemented and continues to expand a reorder business in several
divisions to enable customers to reorder certain items for quick delivery.
See "Manufacturing". The Company's largest customers discuss with the Company
retail trends and their plans regarding their anticipated levels of total
purchases of Company products for future seasons. These discussions are
intended to assist the Company in planning the production and timely delivery
of its products. The Company continually monitors retail sales in order to
assess directly consumer response to its products.
The Company maintains cooperative advertising programs under which
it will generally share the costs of its customers' advertising and
promotional expenditures, up to a stated percentage of a customer's purchases.
The Company incurred costs under these cooperative advertising programs of
approximately $47 million in respect of 1993 sales. In addition to
cooperative advertising, the Company spent approximately $12 million in 1993
on institutional advertising including the Company's national advertising
campaign covering all LIZ CLAIBORNE products and the Company's advertising
campaigns for its various fragrances.
The Company currently operates 58 outlet stores in "outlet
centers" comprised primarily of manufacturer-operated stores. These stores
generally offer surplus and prior seasons' merchandise; certain stores offer
only irregular merchandise. The Company anticipates opening additional outlet
stores during 1994.
Manufacturing
The Company does not own any product manufacturing facilities; all
of its products are manufactured in accordance with its specifications through
arrangements with independent suppliers.
A very substantial portion of the Company's sales is represented
by products produced abroad, primarily in the Far East. The Company does not
itself own quota and therefore must obtain quota from its suppliers and
vendors. During 1993, the Company's apparel and apparel related products were
manufactured by over 700 suppliers, of which approximately 260 were domestic
suppliers, and the balance of which were located in over 50 different
countries, mainly in China, Hong Kong, South Korea, the Philippines and
Taiwan. The Company continually seeks additional suppliers throughout the
world for its sourcing needs. The Company's largest supplier of finished
products manufactured less than 4% of the Company's purchases of finished
products during 1993. Approximately 22% of the Company's 1993 purchases of
finished products were manufactured by its ten largest suppliers, as compared
to 24% of 1992 purchases. The Company's purchases from its suppliers are
effected through individual purchase orders specifying the price and quantity
of the items to be produced. Generally, the Company does not have any
long-term, formal arrangements with any of the suppliers which manufacture its
products. The Company believes that it is the largest customer of many of its
manufacturing suppliers and considers its relations with such suppliers to be
satisfactory.
- 7 -
The Company obtains fabrics, trimmings and other materials used in
its apparel and accessories products in bulk from various suppliers. During
1993, the fabric used in Company apparel products was purchased from
approximately 700 suppliers, approximately 430 of which were located abroad,
primarily in Hong Kong, South Korea, Italy and Japan. Approximately 29% of
the Company's expenditures for fabrics during 1993 were accounted for by its
five largest fabric suppliers, as compared to 27% of 1992 purchases, with no
single fabric supplier accounting for more than 9% of 1993 fabric
expenditures. Generally, the Company does not have any long-term, formal
arrangements with any of its current suppliers of raw materials. The Company
has a joint venture which supplies certain domestically dyed and finished
fabrics. To date, the Company has experienced little difficulty in satisfying
its raw material requirements and considers its sources of supply adequate.
The Company operates under substantial time constraints in
producing each of its collections. See "Sales and Marketing". In order to
deliver, in a timely manner, merchandise which reflects current tastes, the
Company attempts to schedule a substantial portion of its materials and
manufacturing commitments relatively late in the production cycle, thereby
favoring suppliers able to make quick adjustments in response to changing
production needs. However, in order to secure necessary materials and
manufacturing facilities, the Company must make substantial advance
commitments, often as much as seven months prior to the receipt of firm orders
from customers for the items to be produced. Many of these early commitments
are made subject to changes in respect of colors, assortments, sizes and/or
delivery dates. The Company is currently planning its product commitments
conservatively against 1993 and 1992 levels. If the Company should misjudge
its ability to sell its products, it could be faced with substantial
outstanding fabric and/or manufacturing commitments, resulting in excess
merchandise inventories. The Company was left with significant excess
merchandise inventory positions during 1993 and into 1994 due to the Company's
increased 1993 commitments compared to 1992 and the decreased demand for
certain of the Company's apparel at retail.
Members of the Company's production administration staff monitor
production at the facilities which manufacture Company products in order to
assure compliance with the Company's specifications and the timely delivery of
finished items. Domestic suppliers' operations are monitored by staff members
based at the Company's New Jersey facilities; with respect to foreign
suppliers' operations, these tasks are performed by Company personnel based at
the Company's 20 international offices as well as by independent agents in
several countries. During 1994, the Company plans to move technical personnel
into, and where appropriate, open offices in, additional countries to
supervise production and quality assurance.
The Company's arrangements with foreign suppliers are subject to
the risks of doing business abroad, including currency fluctuations and reval-
uations, restrictions on the transfer of funds and, in certain parts of the
world, political instability. The Company's operations have not been
materially affected by any of such factors to date. However, due to the large
portion of the Company's products which are produced abroad, any substantial
disruption of its relationships with its foreign suppliers could adversely
affect the Company's operations.
- 8 -
Import and Import Restrictions
Virtually all of the Company's merchandise imported into the
United States is subject to United States duties. In addition, bilateral
agreements between the major exporting countries and the United States impose
quotas that limit the amount of certain categories of merchandise that may be
imported into the United States. The majority of such agreements contain
"consultation" clauses which allow the United States, under certain
circumstances, to impose unilateral restrictions on the importation of certain
categories of merchandise that are not subject to specified limits under the
terms of an agreement. These bilateral agreements have been negotiated under
the framework of the Multi Fiber Arrangement ("MFA"), which has been in effect
since 1974. The United States has recently concluded international
negotiations known as the "Uruguay Round" in which a variety of trade matters
were under review. Based on these negotiations, the participants have elected
to begin a ten-year phase-out of the MFA (possibly beginning as early as July
1, 1995) which will integrate the textile and wearing apparel sections into
the General Agreement on Tariffs and Trade ("GATT"). However, the entire
Uruguay Round negotiation is subject to legislative approval which will likely
be debated in Congress this year. If the aforesaid changes to the MFA are
implemented, this will likely result in a modification of current patterns of
international trade with respect to apparel and texiles. In addition, there
are various United States initiatives pending concerning the trading status of
certain countries, which, if enacted, would likely increase the cost of doing
business in such countries. (See "Item 7. -- Management's Discussion and
Analysis of Financial Condition and Results of Operations".)
In addition, each of the countries in which the Company's products
are sold have laws and regulations regarding import restrictions and quotas.
Because the United States and other countries in which the Company's products
are manufactured and sold may, from time to time, impose new quotas, duties,
tariffs, surcharges or other import controls or restrictions, or adjust
presently prevailing quota allocations or duty or tariff rates or levels, the
Company maintains a program of intensive monitoring of import and
quota-related developments. The Company seeks continually to minimize its
potential exposure to import and quota-related risks through, among other
measures, allocation of production to merchandise categories that are not
subject to quota pressures, adjustments in product design and fabrication,
shifts of production among countries and manufacturers, and otherwise, as well
as through geographical diversification of its sources of supply.
In light of the very substantial portion of the Company's products
which are manufactured by foreign suppliers, the enactment of new legislation
or the administration of current international trade regulations, or executive
action affecting textile agreements, could adversely affect the Company's
operations.
- 9 -
Trademarks
The Company utilizes a variety of trademarks on its products, in-
cluding LIZ CLAIBORNE, LIZ, CLAIBORNE, LIZWEAR, LIZSPORT, LIZ CLAIBORNE
COLLECTION, its triangular logomark, DANA BUCHMAN, FIRST ISSUE, ELISABETH, LIZ
& CO., REALITIES, CRAZY HORSE, RUSS, THE VILLAGER, and VIVID. The Company has
registered or applied for registration of a multitude of trademarks for use on
apparel and apparel-related products, including accessories, cosmetics, shoes
and jewelry in the United States as well as a great many foreign territories.
The Company also has a number of design patents. The Company regards its
trademarks and other proprietary rights as valuable assets and believes that
they have significant value in the marketing of its products. The Company
vigorously protects its trademarks and other intellectual property rights
against infringement.
Licensing
The Company has five license agreements pursuant to which third
party licensees produce merchandise under the Company's trademarks in
accordance with designs furnished or approved by the Company. The present
terms of these agreements (exclusive of renewal terms) expire at various dates
through 1999. Current licenses cover women's dress hosiery; women's and men's
sunglasses and readers; women's and men's ophthalmic frames for prescription
eyewear; and home furnishing products (added in 1994, with first collections
expected to be offered in 1995). Each of the licenses provides for the
payment to the Company of a percentage of the licensee's net sales of the
licensed products against a guaranteed minimum royalty which generally
increases over the term of the agreement.
Competition
The apparel and related product markets are highly competitive,
both within the United States and abroad.
The Company believes that an ability to effectively anticipate,
gauge and respond to changing consumer demands and tastes relatively far in
advance as well as an ability to operate within substantial production and
delivery constraints (see "Manufacturing") are necessary to compete
successfully in this field. Consumer and customer acceptance and support,
which depend upon styling, quality (both in material and production), pricing
and product identity, are also important aspects of competition. The Company
believes that its continued success will depend upon its ability to remain
competitive in these areas.
The Company believes that, based on sales, it is among the largest
apparel companies operating in the United States. Although the Company is
unaware of any comprehensive trade statistics, it believes, based on its
knowledge of the market and available trade information, that measured by
sales, it is the largest United States producer of women's "better"
sportswear, as well as the largest United States producer of "better" dresses.
Employees
At December 25, 1993, the Company had more than 7,900 full-time
employees, as compared with approximately 7,400 full-time employees at
December 26, 1992, virtually all of such increase related to expansion of the
Company's retail and outlet operations.
- -10-
As a member of a manufacturers' association, the Company is bound
by collective bargaining agreements with affiliates of the International
Ladies' Garment Workers' Union ("ILGWU") covering, at December 25, 1993,
approximately 2,400 of the Company's full-time United States and Canadian
apparel, cosmetics and shoe employees. These collective bargaining agreements
expire on various dates through May 1994. The Company is currently
renegotiating its contract with the ILGWU in the United States. The Company
is also bound by a collective bargaining agreement with a unit of the
Amalgamated Clothing and Textile Workers of America covering, at December 25,
1993, approximately 180 of the Company's full-time Accessories Division
employees; this agreement expires in September 1994.
The Company considers its relations with its employees to be
satisfactory and has not experienced any interruption of operations due to
labor disputes.
Item 2. Properties.
The Company's showrooms, sales, merchandising and design staffs,
as well as its executive offices, are located at 1441 Broadway, New York, New
York, where the Company leases approximately 294,000 square feet under a
master lease which expires at the end of 2001 and contains certain renewal
options and rights of first refusal for additional space. The Company
currently leases office space at two other buildings in New York City covering
approximately 92,000 and 24,000 square feet (with terms expiring in 1996 and
2003, respectively).
The Company owns its approximately 453,000 square foot principal
New Jersey warehouse and distribution facility located at One Claiborne
Avenue, North Bergen, New Jersey. This facility also houses the Company's
production and certain other administrative personnel. The Company has
commenced building an approximately 300,000 square foot office facility at
this location which is expected to be completed in 1994. The Company
presently leases approximately 1,600,000 square feet in 12 other New Jersey
warehouse facilities, the current terms of which expire through 2008. The
Company also owns an approximately 313,000 square foot warehouse and
distribution facility located on approximately 80 acres in Mt. Pocono,
Pennsylvania. The Company's approximately 270,000 square foot facility in
Augusta, Georgia (located on a 98-acre site), has been leased to a joint
venture comprised of a wholly-owned subsidiary of the Company and an unrelated
third party. This facility is used as a dyeing and finishing operation. In
1993, the Company purchased an approximately 290,000 square foot warehouse and
distribution facility located on a 124 acre site in Montgomery, Alabama. The
Company has options to purchase an additional 80 acres. The Company is the
lessee of the Georgia and Alabama facilities pursuant to industrial
development financing. The Company also leases showroom, warehouse and office
space in various other domestic and international locations.
The Company leases space for its 79 retail specialty stores
(aggregating approximately 355,000 square feet in various malls) and for its
58 outlet stores (aggregating approximately 486,000 square feet).
The Company believes that its existing facilities are well
maintained, in good operating condition and, upon occupancy of additional
warehouse space and office space, will be adequate for its present level of
operations. See Note 8 of Notes to Consolidated Financial Statements.
- 11 -
Item 3. Legal Proceedings.
The Company is a party to several pending legal proceedings and
claims, including an action styled Fishbaum v. Chazen et al. brought in the
United States District Court for the Eastern District of New York in August
1993. The complaint also names as defendants the Company's Chairman, Vice
Chairman and former Vice Chairman. Plaintiff seeks compensatory damages on
behalf of a class of purchasers of the Company's Common Stock during the
period commencing March 30, 1993 through and including July 16, 1993.
Plaintiff alleges that the defendants violated the federal securities laws by,
among other things, making misrepresentations or omissions of material facts
which artificially inflated the market price of the Common Stock during the
class period. In October 1993, the Company moved to dismiss the complaint.
The Company is also a party to an action styled Ressler et al. vs. Liz
Claiborne, Inc. et al., brought in the United States District Court for the
Eastern District of New York in March 1994. This complaint names as
defendants the Company's Chairman, Vice Chairman and President, former Vice
Chairman, Chief Financial Officer, an outside director and other current
and/or former members of senior management. The Ressler Complaint makes
allegations similar to the Fishbaum Complaint, but seeks damages on behalf of
a class of purchasers of the Company's Common Stock for the period commencing
September 21, 1992 through and including July 16, 1993. The Company believes
that these litigations are without merit and intends to vigorously defend
these actions. Although the outcome of any such litigation or claim cannot be
determined with certainty, management is of the opinion that the final outcome
should not have a material adverse effect on the Company's results of
operations or financial position.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.
Executive Officers of the Registrant.
Information as to the executive officers of the Company is set forth below:
Name Age Position(s)
Jerome A. Chazen 67 Chairman of the Board
Harvey L. Falk 59 Vice Chairman of the Board and President
Linda Larsen German 42 Senior Vice President - President, Women's
Sportswear Group
Jack Listanowsky 46 Executive Vice President - Manufacturing
and
Operations
Samuel M. Miller 56 Senior Vice President - Finance, Chief
Financial and Accounting Officer
Hank Sinkel 48 Senior Vice President - President,
Corporate
Sales Group - U.S.
- 12 -
Executive officers serve at the discretion of the Board of
Directors.
Mr. Chazen has served in various senior executive positions and as
a Director of the Company since 1977. In 1985, he was elected Co-Chairman of
the Board of the Company, and became Vice Chairman of the Board in 1987. In
1989, Mr. Chazen became Chairman of the Board. Mr. Chazen also serves on the
board of directors of Taubman Centers, Inc., an owner and operator of regional
shopping centers.
Mr. Falk, a certified public accountant, joined the Company in
1982 as Senior Vice President - Finance (Chief Financial and Accounting
Officer), and has served as a Director of the Company since 1983. Mr. Falk
was elected Executive Vice President - Finance in 1985, and became Executive
Vice President -Operations and Corporate Planning in 1987. In 1989, Mr. Falk
became Vice Chairman of the Board and President.
Ms. German joined the Company in 1979 as a sportswear account
executive and served in various management positions thereafter. In 1988, she
was appointed Vice President - President, Elisabeth Division and in December
1993, she was elected Senior Vice President - President, Women's Sportswear
Group.
Mr. Listanowsky joined the Company in 1981 as a Sweater
Merchandiser and served in various management positions thereafter. In 1988,
he was promoted to Senior Vice President - Operations. In 1989, he was
elected Executive Vice President - Manufacturing and Operations.
Mr. Miller, a certified public accountant, joined the Company in
1988 as Senior Vice President - Finance (Chief Financial and Accounting
Officer) after more than sixteen years in various senior financial positions
within the apparel industry.
Mr. Sinkel joined the Company in 1983 as Vice President - Sales,
Dress Division. In 1988, he was elected Senior Vice President - Misses
Sportswear, Sales and in 1992, he was elected Senior Vice President -
President, Misses and Petites Sportswear. Mr. Sinkel was elected Senior Vice
President - President, Corporate Sales Group - U.S. in December 1993.
- 13 -
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The Company's Common Stock trades on the New York Stock Exchange ("NYSE")
under the symbol LIZ. The table below sets forth the high and low closing sales prices of
the Common Stock for the periods indicated.
Calendar Period High Low
1993:
1st Quarter 42 3/8 32 3/4
2nd Quarter 37 1/4 30
3rd Quarter 31 1/2 19 3/4
4th Quarter 24 1/4 18 1/8
1992:
1st Quarter 46 1/2 38 1/4
2nd Quarter 39 3/4 32 3/4
3rd Quarter 39 7/8 33 1/8
4th Quarter 43 1/2 36 1/4
On March 15, 1994, the closing sale price of the Common Stock was $22 3/4 and
the approximate number of record holders of Common Stock was 14,915.
The Company has paid regular quarterly cash dividends since May 1984.
Quarterly dividends for the last two fiscal years were paid as follows:
Calendar Period Dividends Paid per Common Share
1993:
1st Quarter $.10
2nd Quarter $.1125
3rd Quarter $.1125
4th Quarter $.1125
1992:
1st Quarter $.0875
2nd Quarter $.10
3rd Quarter $.10
4th Quarter $.10
The Company plans to continue paying quarterly cash dividends on its Common
Stock. The amount of any such dividend will depend on the Company's earnings, financial
position, capital requirements and other relevant factors.
In 1989, the Board of Directors first authorized the repurchase, as market and
business conditions warranted, of the Company's Common Stock for cash in open market
purchases and privately negotiated transactions. From time to time thereafter, the Board
has authorized additional repurchases. Through February 28, 1994, the Company had
expended approximately $348 million of the $350 million authorized under its stock
repurchase program, purchasing an aggregate of 11,623,000 shares.
- 14 -
Item 6. Selected Financial Data.
The following table sets forth certain information regarding the Company's
operating results and financial position and is qualified in its entirety by the
consolidated financial statements and notes thereto which appear elsewhere herein:
(All dollar amounts in thousands except per common share data)
1993 1992 1991 1990 1989
Net sales $2,204,297 $2,194,330 $2,007,177 $1,728,868 $1,410.677
Gross profit 750,916 830,116 799,675 698,033 568,941
Net income 126,924* 218,824 222,748 205,800 164,591
Working capital 750,001 832,789 763,851 608,718 537,107
Total assets 1,236,338 1,256,308 1,170,645 984,505 848,523
Long-term debt
excluding
current portion 1,334 1,434 1,615 15,131 15,643
Stockholders'
equity 978,291 997,775 909,599 713,149 611,662
Earnings per
common share 1.56* 2.61 2.61 2.37 1.87
Book value at
year-end 12.41 12.05 10.67 8.39 6.94
Dividends paid
per common share .44 .39 .33 .24 .19
Weighted average
common shares
outstanding 81,509,120 83,965,342 85,457,204 86,783,880 87,907,023
* Includes cumulative effect of a change in the method of accounting for income
taxes of $1,643 or $.02 per common share.
- 15 -
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Results of Operations
The following table sets forth items in the Consolidated Statements of Income as a percent of
net sales and the percentage change of those items as compared to the prior year.
Percent of Net Year to Year
Sales Percentage Change
Fiscal Years 1993 1992 1991 1993 vs. 1992 vs.
1992 1991
NET SALES 100.0% 100.0% 100.0% 0.5% 9.3%
Cost of goods sold 65.9 62.2 60.2 6.5 13.0
GROSS PROFIT 34.1 37.8 39.8 (9.5) 3.8
Selling, general and
administrative expenses 25.8 23.1 23.4 12.0 7.7
OPERATING INCOME 8.3 14.7 16.4 (43.4) (1.8)
Investment and other
income-net .7 .9 1.1 (16.5) (12.6)
INCOME BEFORE PROVISION
FOR INCOME TAXES AND
CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING
PRINCIPLE 9.0 15.6 17.5 (41.9) (2.5)
Provision for income taxes 3.3 5.6 6.4 (40.3) (3.8)
INCOME BEFORE CUMULATIVE
EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE 5.7 10.0 11.1 (42.7) (1.8)
Cumulative effect of a
change in the method
of accounting for
income taxes 0.1 -- -- -- --
NET INCOME 5.8% 10.0% 11.1% (42.0) (1.8)
- 16 -
Results of Operations
continued
The Company's net sales for 1993 were $2.20 billion, compared to $2.19 billion
in 1992 and $2.01 billion in 1991. The 1993 net sales results primarily reflected the
inclusion of full year results of the RUSS, THE VILLAGER and CRAZY HORSE Divisions
(collectively, the "Russ Divisions") acquired in May 1992, higher unit volume within the
Accessories and DANA BUCHMAN Divisions, as well as the introduction of the Company's third
women's fragrance, VIVID, offset by decreases across the Company's remaining wholesale
apparel operations. These decreases, primarily in the Misses and Petite sportswear group,
reflect substantially lower average unit selling prices, as the Company was required to
liquidate significant excess inventory positions and also continued to lower initial
selling prices. The 1993 results also reflect the delay of certain shipments of Spring
season merchandise into 1994.
The 1992 increase in net sales resulted in large part from higher unit sales
volume within the Company's wholesale apparel operations. The Company's Misses and Petite
sportswear posted significant gains as did the DANA BUCHMAN, ELISABETH and LIZ & CO.
Divisions. Also contributing to the sales increase were the addition of the Russ
Divisions, the continued expansion of the Company's outlet stores and increased demand for
the Company's Accessories and Jewelry Divisions' product offerings as well as the first-
year sales of the Suit Division. These increases were partially offset by decreased
volume within the Menswear and Dress Divisions as well as slightly lower average initial
selling prices which were reduced in order to maintain consumer value and market share.
Gross profit expressed as a percentage of net sales was 34.1% in 1993,
compared to 37.8% in 1992 and 39.8% in 1991. The 1993 decline reflects margin erosion
across substantially all the wholesale apparel divisions, principally due to a lower
proportion of regular price sales within the Misses and Petite sportswear group and the
Dress Division. Also contributing to the margin decreases were higher markdowns within
the Outlet and Retail Divisions, contributing to operating losses in these divisions, as
well as the higher proportion of net sales represented by the Russ Divisions, which are
lower margin businesses. The decrease in gross margin was partially offset by the higher
proportion of net sales represented by, and higher margins within, the Accessories and
Cosmetics Divisions, which sales normally carry a higher gross margin than the Company's
other businesses. The 1992 decrease in gross profit percentage reflected lower margins
across the wholesale apparel divisions due to a lower proportion of regular price sales,
primarily within the Dress and Menswear Divisions. Also contributing to the lower gross
profit percentage were lower sales and gross margins within the Cosmetics Division, due to
changes in the business mix, as well as the inclusion of the sales of the Russ Divisions.
Legislation which would further restrict the importation and/or increase the
cost of textiles and apparel produced abroad has periodically been introduced in Congress.
Although it is unclear whether any new legislation will be proposed and enacted into law,
it appears likely, particularly in light of the current administration, that various new
legislative or executive initiatives will be proposed. These initiatives may include a
reevaluation of the trading status of certain countries, including Most Favored Nation
("MFN") treatment for the People's Republic of China ("PRC"), which, if enacted, would
increase the cost of products purchased from suppliers in such countries. The PRC's MFN
treatment was renewed in July 1993 for an additional year. In light of the very
substantial portion of the Company's products which are manufactured by foreign suppliers,
the enactment of new legislation or the administration of current international trade
regulations, or executive action affecting international textile agreements, could
adversely affect the Company's operations.
- 17 -
Results of Operations
continued
Selling, general and administrative expenses increased by $60.7 million in
1993 over 1992 and by $36.5 million in 1992 over 1991. These expenses represented 25.8%
of net sales in 1993 as compared to 23.1% in 1992 and 23.4% in 1991. The 1993 dollar
increase in expenses resulted primarily from the inclusion and expansion of the operations
of the Russ Divisions, the continued expansion of the Company's retail, outlet and
international operations and increased costs associated with the introduction of the new
VIVID fragrance. The 1992 dollar increase in expenses resulted primarily from additional
employee related costs associated with the continued expansion of the Company's outlet and
retail operations, the start up of the Company's Russ and Suit Divisions, and the
expansion of the DANA BUCHMAN, ELISABETH and Shoe Divisions as well as international
operations.
Investment and other income-net decreased on a year-to-year basis by $3.2
million in 1993 and $2.8 million in 1992. These decreases were due to a decrease in the
Company's portfolio of cash equivalents and marketable securities reflecting in part the
Company's stock repurchase program and higher excess inventories carried in the second
half of the year as well as declining interest rates realized on the Company's investment
portfolio. The 1992 decrease was partially offset by a reduction in interest expense due
to the retirement of long-term debt.
As a result of the factors described above, the Company's income before
provision for income taxes and cumulative effect of a change in accounting principle
expressed as a percentage of net sales was 9.0% in 1993, compared to 15.6% in 1992 and
17.5% in 1991. The provision for income taxes was 3.3% in 1993, 5.6% in 1992 and 6.4% in
1991, reflecting the changes in pre-tax income and in 1993 federal statutory rates, as
well as a declining effective tax rate attributable to a larger proportion of tax
advantaged investment income in 1993 and 1992 compared to 1991.
The Company adopted the Financial Accounting Standards Board Statement No. 109
"Accounting for Income Taxes" and changed its method of accounting for income taxes as of
the beginning of fiscal year 1993. The cumulative effect on prior years of this
accounting change is reflected in the consolidated statements of income as a one-time
increase in net income of $1.6 million, or $.02 per common share. The effects of this
change are discussed in the accompanying notes to the consolidated financial statements.
Net income expressed as a percentage of net sales was 5.8% in 1993, compared
with 10.0% in 1992 and 11.1% in 1991. The 1993 and 1992 decreases were due primarily to
lower operating margins and lower investment and other income-net, offset in part by a
lower provision for income taxes.
The earnings per common share computations reflect a lower number of
outstanding shares on a period-to-period basis as a result of the Company's stock
repurchase program.
As previously announced, the Company expects that its results of operations
will continue to be negatively impacted by the overall weakness in demand for women's
apparel at retail at least through the first half of 1994.
- 18 -
Financial Position, Capital Resources and Liquidity
The Company's financial position remained strong throughout 1993. At year
end, cash, cash equivalents and marketable securities were $309.3 million, compared to
$425.6 million at the end of fiscal 1992 and $471.5 million at the end of fiscal 1991.
Working capital decreased to $750.0 million at 1993 year end, compared to $832.8 million
at 1992 year end and $763.9 million at 1991 year end. The increase in 1993 year-end
inventory levels over the prior year end reflect incremental inventories resulting from
the expansion of the Russ Divisions, the expansion of an in-stock program in several
divisions as well as higher than normal excess wholesale apparel inventories.
As of February 28, 1994, the Company had expended approximately $348 million
of the $350 million authorized under its stock repurchase program, purchasing an aggregate
of 11,623,000 shares.
The Company's anticipated capital expenditures for 1994 currently approximate
$90 million. These expenditures consist primarily of certain building and equipment
expenses, including expansion of and improvements to the Company's North Bergen, New
Jersey office facility, as well as distribution facilities in Pennsylvania and Alabama,
leasehold improvements of new stores for the Company's Retail Divisions, and the upgrading
of data processing systems. These expenditures will be financed through available capital
and future earnings. Increased working capital needs will be met by current funds. Bank
lines of credit, which are available to finance import transactions and direct borrowings,
were decreased by the Company from $340 million at December 26, 1992 to $295 million
subsequent to December 25, 1993 to reduce excess lines. The Company expects to be able to
further adjust these lines as required.
Inflation
The moderate rate of inflation over the past few years has not had a
significant impact on the Company's sales and profitability.
Item 8. Financial Statements and Supplementary Data.
Information called for by this Item 8 is included following the "Index to
Consolidated Financial Statement Schedules" appearing at the end of this Annual Report on
Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.
None.
- 19 -
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information with respect to Executive Officers of the Company is set forth in
Part I of this Annual Report on Form 10-K.
Information with respect to Directors of the Company which is called for by this
Item 10 is incorporated by reference to the information set forth under the heading
"Election of Directors" in the Company's Proxy Statement relating to its 1994 Annual
Meeting of Stockholders to be filed pursuant to Regulation 14A (the "Company's 1994 Proxy
Statement").
Item 11. Executive Compensation.
Information called for by this Item 11 is incorporated by reference to the
information set forth under the heading "Executive Compensation" in the Company's 1994
Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information called for by this Item 12 is incorporated by reference to the
information set forth under the headings "Security Ownership of Certain Beneficial Owners"
and "Security Ownership of Management" in the Company's 1994 Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
Information called for by this Item 13 is incorporated by reference to the
information set forth under the headings "Election of Directors" and "Certain
Relationships and Related Transactions" in the Company's 1994 Proxy Statement.
- 20 -
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1. Financial Statements.
PAGE REFERENCE
1993 FORM 10-K
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2
FINANCIAL STATEMENTS
Consolidated Balance Sheets of
December 25, 1993 and December 26, 1992 F-3
Consolidated Statements of Income for the
Three Fiscal Years Ended December 25, 1993 F-4
Consolidated Statements of Stockholders' Equity
for the Three Fiscal Years Ended December 25, 1993 F-5
Consolidated Statements of Cash Flows for the
Three Fiscal Years Ended December 25, 1993 F-6
Notes to Consolidated Financial Statements F-7 to F-19
UNAUDITED QUARTERLY RESULTS F-20
2. Financial Statement Schedules.
SUPPLEMENTAL SCHEDULE
I -- Marketable Securities - Other Investments F-21 to F-26
NOTE: Schedules other than those referred to above and parent company
condensed financial statements have been omitted as inapplicable
or not required under the instructions contained in Regulation S-X
or the information is included elsewhere in the financial
statements or the notes thereto.
- 21 -
3. Exhibits.
Exhibit
No. Description
3(a) - Restated Certificate of Incorporation of Registrant (incorporated
herein by reference from Exhibit 3(a) to Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 26, 1993.
3(b) - By-laws of Registrant, as amended (incorporated herein by
reference from Exhibit 3(b) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 26, 1992 [the "1992
Annual Report"]).
4(a) - Specimen certificate for Registrant's Common Stock, par value
$1.00 per share (incorporated herein by reference from Exhibit
4(a) to the 1992 Annual Report).
4(b) - Rights Agreement, dated December 7, 1988, as amended, between
Registrant and First Chicago Trust Company of New York, as Rights
Agent (successor to The Chase Manhattan Bank, N.A.) (incorporated
herein by reference from Exhibit 4(d) to Registrant's Report on
Form 8-A dated January 29, 1991.
4(b)(i) - Amendment to Rights Agreement, dated March 1990, between
Registrant and First Chicago Trust Company of New York, as Rights
Agent (successor to The Chase Manhattan Bank, N.A.) (incorporated
herein by reference from Exhibit 4(d)(i) to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 30, 1989).
4(b)(ii) - Amendment to Rights Agreement, dated as of January 24, 1992,
between Registrant and First Chicago Trust Company of New York, as
Rights Agent (incorporated herein by reference from Exhibit
4(b)(ii) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1991 [the "1991 Annual Report"]).
10(a) - Reference is made to Exhibits 4(b) - 4(b)(ii) filed hereunder,
which are incorporated herein by this reference.
10(b)+ - Liz Claiborne, Inc. 1981 Stock Option Plan (incorporated herein by
reference from Exhibit 10(p) of Registrant's Registration
Statement on Form S-1, Registration No. 2-71806, in the form it
was declared effective).
10(b)(i)+ - Amendment to the 1981 Stock Option Plan (incorporated herein by
reference from Exhibit 10(b)(i) to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1988 [the
"1988 Annual Report"]).
+ Compensation plan or arrangement required to be noted as provided
in Item 14(a)(3).
- 22 -
Exhibit
No. Description
10(c)+ - Amended form of Option Agreement under Liz Claiborne, Inc. 1981
Stock Option Plan (incorporated herein by reference from Exhibit
10(q) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 26, 1981).
10(d)+ - Liz Claiborne, Inc. 1984 Stock Option Plan (incorporated herein by
reference from Exhibit 10(hh) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1983 [the "1983
Annual Report"]).
10(d)(i)+ - Amendment to the 1984 Stock Option Plan (incorporated herein by
reference from Exhibit 10(d)(i) to the 1988 Annual Report).
10(e)+ - Form of Option Agreement under Liz Claiborne, Inc. 1984 Stock
Option Plan (the "1984 Option Plan") (incorporated herein by
reference from Exhibit 10(nn) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 29, 1984).
10(e)(i)+ - Amended Form of Option Agreement under the 1984 Option Plan
(incorporated herein by reference from Exhibit 10(e)(i) to the
1992 Annual Report).
10(f)+ - Liz Claiborne Savings Plan (the "Savings Plan"), as amended and
restated (incorporated herein by reference from Exhibit 10(f) to
the 1989 Annual Report), and related Trust Agreement (incorporated
herein by reference from Exhibit 10(f) to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 27, 1986).
10(g)+ - Amendment Nos. 1 and 2 to the Savings Plan (incorporated herein by
reference from Exhibit 10(g) to the 1992 Annual Report).
10(g)(i)+* - Amendment Nos. 3 and 4 to the Savings Plan.
10(h)+ - Amended and Restated Liz Claiborne Profit-Sharing Retirement Plan
(the "Profit-Sharing Plan") (incorporated herein by reference from
Exhibit 10(h) to the 1992 Annual Report).
10(i) - Trust Agreement related to the Profit-Sharing Plan (incorporated
herein by reference from Exhibit 10(jj) to the 1983 Annual
Report).
* Filed herewith.
+ Compensation plan or arrangement required to be noted as provided
in Item 14(a)(3).
- 23 -
Exhibit
No. Description
10(i)(i)+* - Amendment Nos. 1 and 2 to the Profit-Sharing Plan.
10(j) - Collective Bargaining Agreement, dated June 1, 1991, between New
York Shirt and Sportswear Association, Inc. (of which Registrant
is a member) and International Ladies' Garment Workers' Union,
Amalgamated Ladies' Garment Cutters' Union, Local 10, I.L.G.W.U.
and Blouse, Skirt and Sportswear Workers' Union, Local 23-25,
I.L.G.W.U (incorporated herein by reference from Exhibit 10(j) to
the 1992 Annual Report).
10(k) - Collective Bargaining Agreement, dated September 1, 1991, between
the Joint Board of Shirt, Leisurewear, Robe, Glove and Rainwear
Workers Union of Amalgamated Clothing Workers of America and Liz
Claiborne Accessories (incorporated herein by reference from
Exhibit 10(k) to the 1991 Annual Report).
10(l) - Executive Liability and Indemnification Policy No. 81035379D, with
Chubb Group of Insurance Companies (the "Insurance Policy")
(incorporated herein by reference from Exhibit 10(l) to the 1992
Annual Report).
10(l)(i)* - Summary of Extension of the Insurance Policy.
10(m)+* - Description of 1993 Salaried Employee Incentive Bonus Plan.
10(n) - Lease, dated as of January 1, 1990 for premises located at 1441
Broadway, New York, New York between Liz Claiborne, Inc. and
Lechar Realty Corp. (incorporated herein by reference from Exhibit
10(n) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990).
10(o)+ - Liz Claiborne, Inc. Outside Directors' 1991 Stock Ownership Plan
(the "Directors Plan") (incorporated herein by reference from
Exhibit 10(o) to the 1991 Annual Report).
10(o)(i)+* - Amendment No. 1 to the Directors Plan.
10(p)+ - Liz Claiborne, Inc. 1992 Stock Incentive Plan (the "1992 Plan")
(incorporated herein by reference from Exhibit 10(p) to the 1991
Annual Report).
* Filed herewith.
+ Compensation plan or arrangement required to be noted as provided
in Item 14(a)(3).
- 24 -
Exhibit
No. Description
10(p)(i)+* - Amendment No. 1 to the 1992 Plan.
10(q)+ - Form of Option Agreement under the 1992 Plan for premium- priced
options (incorporated herein by reference from Exhibit 10(q) to
the 1992 Annual Report).
10(r)+ - Form of Option Agreement under the 1992 Plan (incorporated herein
by reference from Exhibit 10(r) to the 1992 Annual Report).
10(s)+ - Description of unfunded deferred compensation arrangement for
Jerome A. Chazen (incorporated herein by reference from Exhibit
10(s) to the 1992 Annual Report).
10(t)+* - Description of Supplemental Life Insurance Plans.
10(u)+ - Description of unfunded death/disability benefits for certain
executives (incorporated herein by reference from Exhibit 10(u) to
the 1992 Annual Report).
10(v)+* - Description of the Liz Claiborne 162(m) Cash Bonus Plan.
10(w)+* - Description of the Liz Claiborne Supplemental Executive Retirement
Plan.
22* - List of Registrant's Subsidiaries.
24* - Consent of Independent Public Accountants.
28* - Undertakings.
(b) Reports on Form 8-K.
Not applicable.
* Filed herewith.
+ Compensation plan or arrangement required to be noted as provided
in Item 14(a)(3).
- 25 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K
to be signed on its behalf by the undersigned, thereunto duly authorized, on March
23, 1994.
LIZ CLAIBORNE, INC.
By /s/Samuel M. Miller
Samuel M. Miller,
Senior Vice President-Finance/
Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities indicated, on March 23, 1994.
Signature Title
/s/Jerome A. Chazen Chairman of the Board, Principal Executive
Jerome A. Chazen Officer and Director
/s/Harvey L. Falk Vice Chairman of the Board, President and
Harvey L. Falk Director
/s/Lee Abraham
Lee Abraham Director
/s/Leonard Boxer
Leonard Boxer Director
/s/Ann M. Fudge
Ann M. Fudge Director
/s/J. James Gordon
J. James Gordon Director
/s/Sherwin Kamin
Sherwin Kamin Director
/s/Kay Koplovitz
Kay Koplovitz Director
/s/Louis Lowenstein
Louis Lowenstein Director
- 26 -
INDEX
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Page
Number
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2
FINANCIAL STATEMENTS
Consolidated Balance Sheets as of
December 25, 1993 and December 26, 1992 F-3
Consolidated Statements of Income for the
Three Fiscal Years Ended December 25, 1993 F-4
Consolidated Statements of Stockholders' Equity
for the Three Fiscal Years Ended December 25, 1993 F-5
Consolidated Statements of Cash Flows
for the Three Fiscal Years Ended December 25, 1993 F-6
Notes to Consolidated Financial Statements F-7 to F-19
UNAUDITED QUARTERLY RESULTS F-20
SUPPLEMENTAL SCHEDULE:
I -- Marketable Securities - Other Investments F-21 - F-26
NOTE: Schedules other than those referred to above and parent
company condensed financial statements have been omitted as
inapplicable or not required under the instructions
contained in Regulation S-X or the information is included
elsewhere in the financial statements or the notes thereto.
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Liz Claiborne, Inc.:
We have audited the accompanying consolidated balance sheets of Liz Claiborne, Inc.
(a Delaware corporation) and subsidiaries as of December 25, 1993 and December 26,
1992, and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three fiscal years in the period ended December 25, 1993.
These financial statements and the schedule referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Liz Claiborne, Inc. and subsidiaries as
of December 25, 1993 and December 26, 1992, and the results of their operations and
their cash flows for each of the three fiscal years in the period ended December 25,
1993 in conformity with generally accepted accounting principles.
As explained in Notes 1 and 6 to the consolidated financial statements, effective
December 27, 1992, the Company changed its method of accounting for income taxes.
Our audits were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule listed in the index of financial
statements is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This schedule
has been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic financial
statements taken as a whole.
New York, New York
February 11, 1994
F-2
CONSOLIDATED BALANCE SHEETS
Liz Claiborne, Inc. and Subsidiaries
All amounts in thousands except share data December 25, 1993 December 26, 1992
Assets
Current Assets:
Cash and cash equivalents $ 104,720 $ 130,721
Marketable securities 204,571 294,892
Accounts receivable - trade 174,435 200,183
Inventories 436,593 385,879
Deferred income tax benefits 15,065 13,907
Other current assets 69,055 55,384
Total current assets 1,004,439 1,080,966
Property and Equipment - net 202,068 145,695
Other Assets 29,831 29,647
$1,236,338 $1,256,308
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 141,126 $ 138,738
Accrued expenses 97,765 87,330
Income taxes payable 15,547 22,109
Total current liabilities 254,438 248,177
Long-Term Debt 1,334 1,434
Deferred Income Taxes 2,275 8,922
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $.01 par value, authorized shares-
50,000,000, issued shares-none -- --
Common stock, $1 par value, authorized shares -
250,000,000, issued shares - 88,218,617 88,219 88,219
Capital in excess of par value 56,699 55,528
Retained earnings 1,123,413 1,034,280
Cumulative translation adjustment (1,279) (1,410)
1,267,052 1,176,617
Common stock in treasury, at cost - 9,371,217 shares in 1993 and
5,436,864 shares in 1992 (288,761) (178,842)
Total stockholders' equity 978,291 997,775
$1,236,338 $1,256,308
The accompanying notes to consolidated financial statements are an integral part of these statements.
/TABLE
CONSOLIDATED STATEMENTS OF INCOME
Liz Claiborne, Inc. and Subsidiaries Fiscal Years Ended
All dollar amounts in thousands except per common share dataDecember 25,December 26, December 28,
1993 1992 1991
Net Sales $2,204,297 $2,194,330 $2,007,177
Cost of goods sold 1,453,381 1,364,214 1,207,502
Gross Profit 750,916 830,116 799,675
Selling, general and administrative expenses 568,286 507,541 471,060
Operating Income 182,630 322,575 328,615
Investment and other income - net 16,151 19,349 22,133
Income Before Provision for Income Taxes and Cumulative
Effect of a Change in Accounting Principle 198,781 341,924 350,748
Provision for income taxes 73,500 123,100 128,000
Income Before Cumulative Effect of a Change in
Accounting Principle 125,281 218,824 222,748
Cumulative effect of a change in the method
of accounting for income taxes 1,643 -- --
Net Income $ 126,924 $ 218,824 $ 222,748
Earnings per Common Share:
Income Before Cumulative Effect of a
Change in Accounting Principle $ 1.54 $ 2.61 $ 2.61
Cumulative effect of a change in the method
of accounting for income taxes .02 -- --
Net Income per Common Share $ 1.56 $ 2.61 $ 2.61
Dividends Paid per Common Share $ .44 $ .39 $ .33
The accompanying notes to consolidated financial statements are an integral part of these statements.
/TABLE
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
Liz Claiborne, Inc. and Subsidiaries
Common Stock Capital in Cumulative Common
Number of Excess of Retained Translation Stock in
All dollar amounts in thousands Shares Amount Par Value Earnings Adjustment Treasury Total
Balance, December 29, 1990 88,218,617 $88,219 $43,913 $ 664,211 $ $ (83,194) $713,149
-- -- -- 222,748 -- -- 222,748
Exercise of stock options and
related tax benefits -- -- 6,580 (5,157) -- 21,544 22,967
Cash dividends paid -- -- -- (27,799) -- -- (27,799)
Purchase of 557,500 shares --
of common stock -- -- -- -- -- (21,466) (21,466)
Balance, December 28, 1991 88,218,617 88,219 50,493 854,003 -- (83,116) 909,599
Net income -- -- -- 218,824 -- -- 218,824
Exercise of stock options and
related tax benefits -- -- 5,035 (6,033) -- 19,312 18,314
Cash dividends paid -- -- -- (32,514) -- -- (32,514)
Translation adjustment -- -- -- -- (1,410) -- (1,410)
Purchase of 3,133,837 shares
of common stock -- -- -- -- -- (115,038) (115,038)
Balance, December 26, 1992 88,218,617 88,219 55,528 1,034,280 (1,410) (178,842) 997,775
Net income -- -- -- 126,924 -- -- 126,924
options and
related tax benefits -- -- 1,171 (2,134) -- 6,687 5,724
Cash dividends paid -- -- -- (35,657) -- -- (35,657)
Translation adjustment -- -- -- -- 131 -- 131
Purchase of 4,179,800 shares
of common stock -- -- -- -- -- (116,606) (116,606)
Balance, December 25, 1993 88,218,617 $88,219 $56,699 $1,123,413 $ (1,279) $(288,761) $978,291
The accompanying notes to consolidated financial statements are an integral part of these statements.
/TABLE
CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Years Ended
Liz Claiborne, Inc. and Subsidiaries
December 25, December 26, December 28,
All dollar amounts in thousands 1993 1992 1991
Cash flows from operating activities:
Net income $126,924 $218,824 $222,748
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 32,278 28,500 26,963
Non-current deferred income taxes (4,759) (3,120) 1,666
Cumulative effect of a change in accounting for income taxes (1,643) -- --
Tax benefit on exercise of stock options 1,171 4,805 6,462
Change in current assets and liabilities:
Decrease (increase) in accounts receivable - trade 25,748 (54,273) (45,714)
(Increase) in inventories (50,714) (63,887) (56,265)
(Increase) decrease in deferred income tax benefits (1,403) (3,592) 181
(Increase) decrease in other current assets (13,671) 2,391 (14,838)
Increase (decrease) in accounts payable 2,388 (1,413) 21,756
Increase (decrease) in accrued expenses 10,435 5,519 (14,237)
(Decrease) in income taxes payable (6,562) (1,459) (6,138)
Net cash provided by operating activities 120,192 132,295 142,584
Cash flows from investing activities:
Purchases of investment instruments (375,748) (468,569) (207,278)
Disposals of investment instruments 466,069 456,012 213,037
Purchases of property and equipment (91,407) (34,749) (55,985)
Purchase of trademarks (1,817) (7,588) --
Other - net 4,336 (138) (604)
Net cash provided by/(used in) investing activities 1,433 (55,032) (50,830)
Cash flows from financing activities:
Repayment of long-term debt (100) (181) (13,516)
Proceeds from exercise of common stock options 4,553 13,509 16,505
Dividends paid (35,657) (32,514) (27,799)
Purchase of common stock (116,606) (115,038) (21,466)
Net cash used in financing activities (147,810) (134,224) (46,276)
Effect of exchange rate changes on cash 184 (1,513) --
Net change in cash and cash equivalents (26,001) (58,474) 45,478
Cash and cash equivalents at beginning of year 130,721 189,195 143,717
Cash and cash equivalents at end of year $104,720 $130,721 $189,195
The accompanying notes to consolidated financial statements are an integral part of these statements.
/TABLE
NOTE 1
Significant accounting policies
Principles of consolidation
The consolidated financial statements include the accounts of Liz Claiborne, Inc. and its wholly-owned
subsidiaries (the "Company"). All intercompany balances and transactions have been eliminated in consolidation.
The Company is primarily engaged in the design and marketing of a broad range of apparel, accessories, shoes and
fragrances.
Cash equivalents
All highly liquid investments with a remaining maturity of three months or less at the date of acquisition are
classified as cash equivalents.
Marketable securities
Investments are stated at cost, which approximates market value. Gains and losses on investment transactions are
recognized when realized based on settlement dates. Dividends on preferred stock are recorded in income based on
payment dates. Interest is recognized when earned.
Inventories
Inventories are stated primarily at the lower of cost (first-in, first-out) or market.
Property and equipment - net
Property and equipment is stated at cost less accumulated depreciation and amortization. Buildings and building
improvements are depreciated using the straight-line method over their estimated useful lives of twenty years.
Machinery and equipment and furniture and fixtures are depreciated using the straight-line method over their
estimated useful lives of five to seven years. Leasehold improvements are amortized over the shorter of the lease
term or the estimated useful lives of the assets.
Foreign currency translation
Assets and liabilities of non-U.S. subsidiaries have been translated at year-end exchange rates. Revenues and
expenses have been translated at average rates of exchange in effect during the year. Resulting translation
adjustments have been recorded as a separate component of stockholders' equity. Gains and losses on intercompany
investments in foreign subsidiaries of a long-term nature are also included in this component of stockholders'
equity. Transaction gains and losses included in income were not significant in fiscal 1993, 1992 and 1991.
Foreign exchange contracts
The Corporation enters into foreign exchange contracts to hedge transactions denominated in foreign currencies and
to hedge expected payment of intercompany transactions with its non-U.S. subsidiaries. Gains and losses on
contracts which hedge specific foreign currency denominated commitments are recognized in the period in which the
transaction is completed. As of December 25, 1993, the Company had contracts maturing in 1994 to purchase at
contracted forward rates 839,945,750 Spanish pesetas and 6,003,490 Dutch guilders and to sell 30,000,000 Canadian
dollars and 6,800,000 British sterling. The aggregate U.S. dollar value of all foreign exchange contracts is
approximately $42,000,000 at year end 1993, as compared with approximately $22,000,000 at year end 1992.
Revenue recognition
Revenue within wholesale operations is recognized at the time merchandise is shipped from the Company's
distribution centers. Retail and outlet store revenues are recognized at the time of sale.
Change in accounting principles - income taxes
The Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for
Income Taxes" as of the beginning of fiscal 1993. The effect of this accounting change in fiscal 1993 was an
increase in net income of $1,643,000, or $.02 per common share (see Note 6).
Earnings per common share
Earnings per common share have been computed using the weighted average number of shares outstanding during each
period. The inclusion of shares subject to unexercised stock options would not have a material dilutive effect.
Fiscal year
The Company's fiscal year ends on the last Saturday in December. The 1993, 1992 and 1991 fiscal years each
reflect a 52-week period. In 1994, the Company will change its fiscal year to end on the Saturday closest to
December 31.
Prior years' reclassification
Certain items previously reported in specific captions in the accompanying financial statements have been
reclassified to conform with the current year's classifications.
NOTE 2
Acquisition
In May 1992, the Company acquired from Russ Togs, Inc. certain trademarks (including "Russ", "The Villager" and
"Crazy Horse"), presold and other inventories and other assets for approximately $31.5 million, and the assumption
of certain leases and other obligations. The full cost of the trademarks will be incurred over a period not to
exceed seven years and will be amortized over a 25-year period. The Company has commenced operations of women's
sportswear businesses under these labels. Pro forma results of operations have not been presented as the effect
would not be significant.
NOTE 3
Marketable securities
(Dollars in thousands)
Marketable securities include: December 25, December 26,
1993 1992
Tax exempt notes and bonds . . . . . . . . . . . . . . . . . . . . . . . . $185,751 $265,481
U.S. & foreign government securities . . . . . . . . . . . . . . . . . . . 10,619 14,147
Collateralized mortgage obligations. . . . . . . . . . . . . . . . . . . . 8,201 --
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 15,264
$204,571 $294,892
The above investments do not include cash equivalents of $92,282,000 in 1993 and $117,366,000 in 1992. The cash
equivalents consisted primarily of municipal securities in 1993 and 1992.
In May 1993, the Financial Accounting Standards Board issued SFAS No. 115 "Accounting for Certain Investments in
Debt and Equity Securities," effective for fiscal years beginning after December 15, 1993. Under the new rules,
debt securities that the Company has both the intent and ability to hold to maturity are carried at amortized
cost. Debt securities that the Company does not have the intent and ability to hold to maturity are classified
either as "available-for-sale" or as "trading" and are carried at fair value. Unrealized gains and losses on
securities classified as available-for-sale are carried as a separate component of stockholders' equity.
Unrealized gains and losses on securities classified as trading are reported in earnings. Management has
determined that the effect of adopting SFAS No. 115 at the beginning of the 1994 fiscal year will not be material.
NOTE 4
Inventories
(Dollars in thousands)
December 25, December 26,
Inventories are summarized as follows: 1993 1992
Raw materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,560 $45,142
Work in process. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,006 16,316
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356,027 324,421
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $436,593 $385,879
NOTE 5
Property and equipment
(Dollars in thousands)
December 25, December 26,
Property and equipment consists of the following: 1993 1992
Land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 67,049 $ 58,947
Machinery and equipment. . . . . . . . . . . . . . . . . . . . . . . . . 99,644 75,081
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . 39,489 34,643
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . 99,802 85,784
Construction in progress. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 38,491 4,293
344,475 258,748
Less-accumulated depreciation and amortization . . . . . . . . . . . . .. 142,407 113,053
$202,068 $145,695
NOTE 6
Income taxes
The Company adopted SFAS No. 109 "Accounting for Income Taxes" as of the beginning of fiscal 1993 (see Note 1).
SFAS No. 109 requires a change from the deferred method to the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of
temporary differences between financial statement and taxable income by applying statutory tax rates applicable to
future years. Under SFAS No. 109, the effect of a change in tax rates on deferred taxes is recognized in income
in the period that includes the enactment date of the change. Under the deferred method, deferred taxes were
recognized using the tax rate applicable to the year of the calculation and were not adjusted for subsequent
changes in tax rates.
The provisions for income taxes are as follows: Fiscal Years Ended
(Dollars in thousands)
December 25, December 26, December 28,
1993 1992 1991
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . $ 63,273 $105,485 $101,587
Foreign . . . . . . . . . . . . . . . . . . . . . . . 4,139 4,527 6,566
State and local . . . . . . . . . . . . . . . . . . . 12,250 19,800 18,000
79,662 129,812 126,153
Deferred - net . . . . . . . . . . . . . . . . . . . . . . (6,162) (6,712) 1,847
$ 73,500 $123,100 $128,000
Liz Claiborne, Inc. and its U.S. subsidiaries file a consolidated federal income tax return. Deferred income tax
benefits and deferred income taxes represent the tax effects of revenues and expenses which are recognized for tax
purposes in different periods from those used for financial statement purposes. The net deferred tax provision
(benefit) primarily reflects the capitalization of certain overhead expenses in inventory for income tax purposes,
the effects of different depreciation rates used for financial statement and tax purposes and taxes provided on
unremitted earnings of foreign subsidiaries. The current income tax provisions have not been reduced by
$1,171,000 in 1993, $4,805,000 in 1992 and $6,462,000 in 1991, of tax benefits arising from the exercise of
nonqualified stock options. These amounts have been credited to capital in excess of par value.
The effective income tax rate differs from the statutory federal income tax rate as follows:
Fiscal Years Ended
December 25, December 26, December 28,
1993 1992 1991
Federal tax provision at statutory rate . . . . . . . . . 35.0% 34.0% 34.0%
State and local income taxes, net of Federal benefit . . . 4.0 3.8 3.4
Other-net .. . . . . . . . . . . . . . . . . . . . . . . . (2.0) (1.8) (.9)
37.0% 36.0% 36.5%
The components of net deferred taxes arising from temporary differences as of December 25, 1993 and the beginning
of fiscal 1993 were as follows:
(Dollars in thousands)
December 25, 1993 December 27, 1992
Deferred Deferred Deferred Deferred
Tax Asset Tax Liability Tax AssetTax Liability
Inventory valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 13,140$ -- $ 12,236$ --
Unremitted earnings from
foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
12,617 -- 12,531
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
(5,701) -- (3,254)
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,925
(4,641) 1,426 (2,243)
$ 15,065 $ 2,275 $ 13,662 $ 7,034
Management believes that the deferred tax benefits will be fully realized through reversals of deferred tax
liabilities and future taxable income.
NOTE 7
Long-term debt
During 1989, the Company obtained $2,000,000 in financing from the Pennsylvania Industrial Development Authority
in connection with the purchase of its Mount Pocono, Pennsylvania distribution facility. The loan bears interest
at six percent per annum, is payable in monthly installments over fifteen years and is collateralized by the land
and building. Maturities range from $101,000 to $128,000 annually over the next five years. The current portion
of long-term debt is included in accounts payable.
NOTE 8
Commitments, contingencies
and other matters
The Company leases office, showroom, warehouse/distribution and retail space, transportation equipment, computers
and other equipment under various noncancellable operating lease agreements which expire through January 2009.
Rental expense for 1993, 1992 and 1991 was approximately $56,664,000, $46,591,000 and $38,777,000, respectively.
At December 25, 1993, the minimum aggregate rental commitments were as follows:
(Dollars in thousands) (Dollars in thousands)
Fiscal Year Operating Leases Fiscal Year Operating Leases
1994 . . . . . . . . . . . . . . . . . . . .$43,851 1997 . . . . . . . . . . . . . . . . . . $ 35,730
1995 . . . . . . . . . . . . . . . . . . . . 38,933 1998 . . . . . . . . . . . . . . . . . . . 34,300
1996 . . . . . . . . . . . . . . . . . . . . 37,261 Thereafter . . . . . . . . . . . . . . . .134,381
Certain rental commitments have renewal options extending through the year 2023. Some of these renewals are
subject to adjustments in future periods. Many of the leases call for additional charges, some of which are based
upon various escalations and, in the case of outlet and retail leases, the gross sales of the individual stores
above base levels.
At December 25, 1993, the Company had entered into commitments for the purchase of raw materials and for the
production of finished goods totaling approximately $600,553,000.
In the normal course of business, the Company extends credit, on open account, to its retail store customers,
after a credit analysis based on a number of financial and other criteria. In recent years, a number of corporate
groups which include certain of the Company's largest department store customers have been involved in highly
leveraged financial transactions and certain of these customers have filed for protection under Chapter 11 of the
Federal Bankruptcy Code. In 1993, two corporate groups of department store customers accounted for 18% and 11%,
respectively, of net sales. In 1992, three corporate groups of department store customers accounted for 18%, 11%
and 10%, respectively, of net sales. In 1991, three corporate groups of department store customers accounted for
16%, 10% and 10%, respectively, of net sales. The Company does not believe that this concentration of sales and
credit risks represents a material risk of loss with respect to its financial position as of December 25, 1993.
The Company is a party to several pending legal proceedings and claims. Although the outcome of such items cannot
be determined with certainty, management is of the opinion that the final outcome should not have a material
adverse effect on the Company's results of operations or financial position.
NOTE 9
Lines of credit
As of December 25, 1993, the Company had bank lines of credit aggregating $440,000,000 which were available to
cover letters of credit issued by the banks and direct borrowings. The Company has not used these facilities for
direct borrowings.
At December 25, 1993 and December 26, 1992, the Company had outstanding letters of credit of $184,294,000 and
$224,709,000, respectively.
NOTE 10
Stock plans
In April 1981, February 1984 and March 1992, the Company adopted plans under which nonqualified options to acquire
shares of common stock may be granted to officers, other key employees and directors selected by the plans'
administrative committee. Payment by option holders upon exercise of an option may be made in cash or, with the
consent of the committee, by delivering previously acquired shares of Company common stock. Stock appreciation
rights may be granted in connection with all or any part of any option granted under the plans, and may also be
granted without a grant of a stock option. The grantee of a stock appreciation right has the right, with the
consent of the committee, to receive either in cash or in shares of common stock, an amount equal to the
appreciation in the fair market value of the covered shares from the date of grant to the date of exercise.
Options and rights are exercisable over a period of time designated by the committee (but not prior to one year
from the date of grant) and are subject to such other terms and conditions as the committee determines. Vesting
schedules will be accelerated upon merger of the Company or the happening of certain other events. Options and
rights may not be transferred during the lifetime of a holder.
Awards under the 1992 plan may also be made in the form of incentive stock options, dividend equivalent rights,
restricted stock, unrestricted stock and performance shares. To date, no stock appreciation rights, incentive
stock options, dividend equivalent rights, restricted stock, unrestricted stock or performance shares have been
granted under the plans. Exercise prices for awards under the plans are determined by the committee; to date, all
stock options have been granted at an exercise price not less than the fair market value of the underlying shares
on the date of grant.
Not more than 4,000,000 shares of common stock may be issued in respect of options and stock appreciation rights
granted under the 1984 plan. The 1992 plan provides initially for the issuance of up to 2,500,000 shares of
common stock with respect to options, stock appreciation rights and other awards granted under the plan, and
provides that the Board of Directors may increase such number by an amount equal to 1% of the common stock
outstanding as of January 1, 1994 and each January 1st thereafter. At December 25, 1993, there were available for
future grant 2,622 shares under the 1984 plan and 512,000 shares under the 1992 plan. The 1984 plan expires in
1994 and the 1992 plan expires in 2002. The 1981 plan expired in April 1991; all awards made under the 1981 plan
prior to such date remain in effect in accordance with the terms of the 1981 plan.
Since January 1990, the Company has delivered treasury shares upon the exercise of stock options. The difference
between the cost of the treasury shares, on a first-in, first-out basis, and the exercise price of the options has
been reflected in retained earnings.
Changes in common shares under option for the three fiscal years in the period ended December 25, 1993 are
summarized as follows:
1993 1992 1991
Price Range Price Range Price Range
Shares per Share Shares per Share Shares per Share
Beginning of year3,698,417$15.13-$58.50 2,470,469 $15.00-$49.50 2,713,595 $15.00-$35.00
Granted 1,125,575 19.00- 42.38 2,088,425 33.88- 58.50 724,175 28.50- 49.50
Exercised (244,196) 15.13- 40.00 (682,530) 15.00- 40.00 (839,191) 15.00- 32.25
Cancelled (851,547) 15.50- 58.50 (177,947) 15.50- 49.00 (128,110) 15.50- 29.25
End of year 3,728,249 $19.00-$58.50 3,698,417 $15.13-$58.50 2,470,469$15.00-$49.50
Exercisable at
end of year 892,529 $22.00-$49.50 679,152 $15.13-$49.50 733,264$15.00-$35.00
Included in the options granted in 1992 were options for 1,250,000 shares granted to certain of the Company's
senior officers at a price of $58.50 per share, representing 150% of the market price at the date of grant. At
December 25, 1993, 700,000 of these options were outstanding; they will become exercisable on October 21, 1998 and
expire on October 21, 2000, subject to certain exceptions.
In November 1991, the Company adopted an outside directors' stock ownership plan under which non-employee
directors automatically receive, as part of their annual retainer, shares of common stock with a value of $10,000
on each January 1. The shares so issued are nontransferable for a period of three years following the grant date,
subject to certain exceptions. In 1993, 1,200 shares of common stock were issued under this plan. Not more than
one twentieth of one percent (0.05%) of the shares of common stock outstanding from time to time may be issued
under the plan, which will expire in 2002.
NOTE 11
Profit-sharing retirement,
savings and deferred compensation plans
The Company adopted a noncontributory, defined contribution profit-sharing retirement plan in January 1983. The
plan covers all eligible U.S. employees who are 21 years of age with one or more years of service and who are not
covered by collective bargaining agreements. The plan pays benefits based on an employee's vested account
balance. Employees generally qualify to receive benefits upon reaching the age of 65 or completing 20 years of
service. Early retirees generally qualify provided they have reached the age of 60 and have completed six years
of service. Otherwise, benefits may be paid 18 months after termination of employment. Vesting begins at 20%
after two years of service, and from the 3rd through 6th years, vesting increases by 20% each year until full
vesting occurs. Each year, profit-sharing contributions, if any, are determined by the Board of Directors. The
Company's 1993, 1992 and 1991 plan contribution expenses, which are included in selling, general and
administrative expenses, were $7,510,000, $6,108,000 and $4,909,000, respectively.
The Company adopted a 401(k) savings plan effective January 1985. The plan covers all eligible U.S. employees who
are 21 years of age with one or more years of service and who are not covered by collective bargaining agreements.
The plan pays benefits based on an employee's vested account balance. Participants may contribute from 1% to 15%
of their salary on a before - tax basis. Such contributions are fully and immediately vested. Vesting of the
Company's matching contribution (50% of the first 5% contributed by the employee) begins at 20% after two years of
service, and from the 3rd through 6th years, vesting increases by 20% each year until full vesting occurs. The
Company's 1993, 1992 and 1991 plan contribution expenses, which are included in selling, general and
administrative expenses, were $2,352,000, $1,944,000, and $1,561,000, respectively.
The Company has established an unfunded deferred compensation arrangement for a senior executive which will accrue
for up to four years at the rate of $375,000 per year commencing on January 1, 1993. The accrued amount, plus
interest, will be payable upon retirement.
The Company has adopted a supplemental retirement plan for executives whose benefits under the profit-sharing
retirement plan and the savings plan are constrained by the operation of certain Internal Revenue Code
limitations. The supplemental plan provides a benefit equal to the difference between the contribution that would
be made for an executive under the two tax-qualified plans absent such limitations and the actual contribution
under those plans. Supplemental benefits accrued vest on the same schedule applicable under the tax-qualified
plans. The supplemental plan is not funded. Eligible executives employed on August 5, 1993 were credited with a
retroactive supplemental plan benefit for the prior years in which the legal limitations had affected their tax-
qualified plan benefits. The Company's 1993 plan expense, which is included in selling, general and
administrative expenses, was $773,000.
The Financial Accounting Standards Board has issued SFAS No. 112 "Employers' Accounting for Postemployment
Benefits" which is effective for fiscal years beginning after December 15, 1993 and will require the Company to
change its method of accounting for postemployment benefits. Management has determined that such effect will not
be material.
NOTE 12
Stockholder rights plan
The Company has adopted a Stockholder Rights Plan under which one preferred stock purchase right is attached to
each share of common stock outstanding. Pursuant to the Rights Agreement covering the Stockholder Rights Plan,
the rights become exercisable ten days, subject to extension, after a party or group acquires or makes a tender
offer for 20% or more of the Company's common stock. Each right entitles its holder, under certain circumstances,
to buy 1/100 share of a newly created Series A Junior Participating Preferred Stock for $85. If 20% of the
Company's common stock is acquired by a party or group, each right not owned by a 20%-or-more stockholder will
entitle the holder to purchase Company common stock having a market value of twice the exercise price of the
right. In addition, if the Company is involved in a merger or certain other business combinations in which it is
not the surviving corporation, each right not owned by a 20%-or-more stockholder will entitle the holder to
purchase common stock of the surviving corporation having a market value of twice the exercise price of the right.
The rights, which expire on December 21, 1998 and do not have voting rights, may be redeemed by the Company at
$.01 per right prior to their becoming exercisable.
NOTE 13
Consolidated statements of cash flows supplementary disclosures
During fiscal 1993, 1992 and 1991, the Company made income tax payments of $84,689,000, $127,230,000 and
$128,735,000, respectively. During fiscal 1993, 1992 and 1991, the Company made interest payments of $170,000,
$109,000 and $803,000, respectively. In 1993, 1992 and 1991, the Company reclassified $100,000, $95,000 and
$94,000, respectively, from long-term debt to current liabilities. Non-cash investing and financing activities
which are not included in the cash flow statement for 1993 and 1992 include a direct financing lease receivable
with a disposition of property and equipment of $4,348,000 and $10,550,000, respectively.
NOTE 14
Supplementary profit and loss information
Advertising costs included in selling, general and administrative expenses for fiscal year 1993, 1992, and 1991
were $58,554,000, $51,571,000 and $47,071,000 respectively. Depreciation and amortization included in selling,
general and administrative expenses for fiscal year 1993, 1992 and 1991 were $32,278,000, $28,500,000 and
$29,963,000, respectively. No other expense item required for supplementary profit and loss information exceeded
1% of net sales.
NOTE 15
Accrued expenses
Accrued expenses at December 25, 1993 and December 26, 1992 consisted of the following:
(Dollars in thousands)
December 25, December 26,
1993
1992
Payroll and bonuses..................................................................... $20,588
$21,835
Taxes, other than taxes on
income.........................................................................................
6,080 5,402
Employee benefits........................................................................ 17,615
13,592
Advertising ................................................................................... 15,442
16,015
Other.............................................................................................
38,040 30,486
$97,765 $87,330
Unaudited Quarterly Results
Unaudited quarterly financial information for 1993 and 1992 is set forth in the table below:
March June September December
All dollar amounts in thousands
except per common share data 1993 1992 1993 1992 1993 1992 1993 1992
Net sales $531,347 $556,909$506,915 $472,616 $621,894$618,329 $544,141$546,476
Gross profit 191,781 217,255 180,131 181,758 209,281 229,217 169,723 201,886
Net income 42,681* 62,840 31,094 39,505 38,258 64,521 14,891 51,958
Earnings per common share $ .52* $ .74 $ .38 $ .47 $ .47 $ .77 $ .19$ .63
Dividends paid per common share $ .10 $ .09 $ .11 $ .10 $ .11 $ .10 $ .11$ .10
* Includes cumulative effect of a change in the method of accounting for income taxes of $1,643 or $.02 per common share.
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
Schedule I - Marketable Securities -- Other Investments
As of December 25, 1993
Number of Market
(All Dollar Amounts in Thousands) Shares or Value
Principal at Dec. 25, Carrying
Name of Issuer and Title of Issue Amount Cost 1993 Value
- ------------------------------------------------------------------ --------- --------- ---------- ---------
COLLATERALIZED MORTGAGE OBLIGATIONS:
Federal Home Loan Investment Float - 5 Yr. 1,964 $1,877 $1,846 $1,877
Federal Home Loan Investment Float - 7 Yr. 874 938 927 938
FNMA Investment Float - 7 Yr. 2,435 2,614 2,557 2,614
FNMA Investment Float - 7 Yr. 812 861 852 861
Federal Home Loan Investment Float - 7 Yr. 1,909 1,911 1,909 1,911
--------- --------- ---------- ---------
7,994 8,201 8,091 8,201
--------- --------- ---------- ---------
GLOBAL BOND FUNDS:
Payden & Rygel Global Bond Fund 5,000 5,237 5,237 5,237
Van Eck World Income Fund 5,000 5,382 5,382 5,382
--------- --------- ---------- ---------
10,000 10,619 10,619 10,619
--------- --------- ---------- ---------
TAX EXEMPT NOTES AND BONDS:
Alaska General Obligation, North Slope Borough 1,000 1,100 1,166 1,100
Alexandria, Louisiana Utility Revenue 1,000 1,143 1,160 1,143
Baxter County, Arkansas Hospital Revenue 1,000 1,365 1,394 1,365
Broward County, Florida General Obligation 2,000 2,135 2,215 2,135
Chicago Heights, Illinois General Obligation 1,255 1,424 1,446 1,424
Chicago, Illinois General Obligation 2,500 2,964 3,106 2,964
Collin County, Texas Community College 1,000 1,048 1,092 1,048
Columbus, Georgia Medical Center Hospital Authority 1,255 1,383 1,448 1,383
Cook County, Illinois General Obligation 1,000 1,099 1,130 1,099
District of Columbia General Obligation 1,000 1,088 1,111 1,088
Dorchester County, South Carolina School District 1,000 1,091 1,135 1,091
Florida State Board of Education Administration - Series B 2,750 3,043 3,054 3,043
Florida State Board of Education Capital General Obligation 1,000 1,092 1,122 1,092
Fort Worth, Texas General Obligation 1,220 1,283 1,334 1,283
Harris County, Texas Flood Control 1,600 1,739 1,805 1,739
Hazel Crest, Illinois Hospital Facility 1,000 1,209 1,238 1,209
Hillsborough County, Florida Capital Improvement 1,000 1,119 1,151 1,119
Illinois Health Facility Authority - Univ. of Chicago 2,715 3,169 3,244 3,169
Illinois State Sales Tax Revenue - Series E 1,000 1,153 1,161 1,153
Indiana Municipal Power Agency Revenue 7,500 8,246 8,408 8,246
Indiana State Office Building Commercial Revenue 2,000 2,361 2,414 2,361
Jackson, Mississippi Sewer Revenue 2,620 3,060 3,108 3,060
Jacksonville, Florida Electric Authority 3,045 3,424 3,470 3,424
Jefferson County, Kentucky Capital Project 1,000 1,107 1,160 1,107
Kentucky Development Authority - Sisters 1,025 1,149 1,172 1,149
Kentucky Development Authority - St. Joseph 3,330 4,186 4,279 4,186
Kentucky State Turnpike Authority 1,200 1,336 1,393 1,336
Kentucky State Turnpike Authority Toll Road 5,500 6,416 6,483 6,416
Lancaster, Pennsylvania Sewer Authority 1,300 1,391 1,430 1,391
Louisiana Public Facility Authority - Daughters 2,665 3,113 3,159 3,113
Louisiana State Correctional Facility 1,000 1,090 1,123 1,090
Louisiana State General Obligation 1,000 1,076 1,127 1,076
Louisiana State Recovery Disaster Sales Tax 2,840 3,158 3,193 3,158
Maricopa County, Arizona School District 1,300 1,431 1,500 1,431
M.A.R.T.A. Georgia Sales Tax Revenue 1,000 1,082 1,141 1,082
Maryland State General Obligation 1,000 1,116 1,133 1,116
Mercer County, New Jersey Waste Revenue 6,290 7,194 7,326 7,194
Metropolitan Nashville/Davidson, Tennessee Water/Sewer 1,500 1,601 1,672 1,601
Mobile, Alabama Water and Sewer Revenue 1,000 1,115 1,173 1,115
Mountain Village, Colorado Metropolitan District 1,750 1,995 2,011 1,995
Municipal Energy Agency Power Supply - Nebraska 1,000 1,124 1,148 1,124
New Jersey State General Obligation 1,000 1,045 1,067 1,045
New Orleans, Louisiana International Airport 3,790 4,509 4,639 4,509
New York State Dormitory Authority Revenue - NYU 2,040 2,283 2,317 2,283
New York State Medical Facility - Mt. Sinai 5,000 5,767 5,847 5,767
New York State Power Authority Revenue - Series T 5,800 6,492 6,565 6,492
North Carolina East Municipal Power Agency 6,860 7,921 8,152 7,921
North Carolina Medical Care Community - Medicorp 1,500 1,712 1,740 1,712
Ohio State General Obligation 1,000 1,113 1,124 1,113
Ohio State Water Development Authority Revenue 1,050 1,168 1,178 1,168
Orleans, Louisiana - Levee District Revenue 1,000 1,093 1,115 1,093
Payden and Rygel Tax Exempt Fund 14,555 15,050 15,238 15,050
Philadephia, Pennsylvania General Obligation 2,200 2,492 2,524 2,492
Philadephia, Pennsylvania Water and Sewer Revenue 2,500 2,807 2,830 2,807
Piedmont, South Carolina Municipal Power Agency Authority 3,600 4,021 4,227 4,021
Pittsburgh, Pennsylvania General Obligation 1,585 1,716 1,773 1,716
San Antonio, Texas Electric and Gas Revenue 1,000 1,076 1,120 1,076
San Antonio, Texas Sewer Revenue 1,000 1,095 1,120 1,095
Seattle, Washington Metropolitan Municipal Revenue 1,000 1,086 1,144 1,086
Seattle, Washington Municipal Sewer Revenue 1,030 1,119 1,167 1,119
Snohomish County, Washington Utility District 1,000 1,109 1,132 1,109
South Carolina State Capital Improvement 4,595 4,875 4,921 4,875
South Dakota State - McKennan Hospital 1,650 1,812 1,902 1,812
Texas A&M University Revenue 1,000 1,135 1,144 1,135
Travis County, Texas Health Facility 4,386 5,063 5,155 5,063
Triborough Bridge and Tunnel - New York 5,370 5,888 5,997 5,888
University of Minnesota Revenue - Series A 1,500 1,681 1,706 1,681
Van Kampen Merritt 3,100 3,098 3,109 3,098
Washington State General Obligation 2,250 2,485 2,542 2,485
Washington State Public Power 2,120 2,674 2,913 2,674
Washoe County, Nevada School District 2,000 2,315 2,364 2,315
Wisconsin State Transportation Revenue - Series A 1,360 1,561 1,584 1,561
Wisconsin State General Obligation 1,000 1,072 1,109 1,072
--------- --------- ---------- ---------
166,001 185,751 190,000 185,751
--------- --------- ---------- ---------
Total Investments $183,995 $204,571 $208,710 $204,571
========= ========= ========== =========
LIZ CLAIBORNE, INC. AND SUBSIDIARIES
Schedule I - Marketable Securities -- Other Investments
As of December 26, 1992 Number of Market
Shares or Value
Principal at Dec. 26, Carrying
Name of Issuer and Title of Issue Amount Cost 1992 Value
- ------------------------------------------------------------------ --------- --------- ---------- ---------
(All Dollar Amounts in Thousands)
UNITED STATES GOVERNMENT OBLIGATIONS:
U.S. Treasury Notes 13,932 $14,147 $14,331 $14,147
--------- --------- ---------- ---------
13,932 14,147 14,331 14,147
--------- --------- ---------- ---------
COMMERCIAL PAPER:
Morgan Guaranty - New York 5,000 $5,263 5,309 5,263
Republic National Bank 5,000 5,000 5,035 5,000
Union Bank of Switzerland 5,000 5,001 5,030 5,001
--------- --------- ---------- ---------
15,000 15,264 15,374 15,264
--------- --------- ---------- ---------
TAX EXEMPT NOTES AND BONDS:
Alaska General Obligation, North Slope Borough 1,000 1,238 1,249 $1,238
Anchorage, Alaska Sisters Hospital 3,850 4,539 4,549 $4,539
Collin County, Texas Community College 1,000 1,083 1,110 1,083
Dallas County, Texas General Obligation 1,900 2,143 2,167 2,143
Denver, Colorado Special Obligation 1,000 1,084 1,146 1,084
District of Columbia General Obligation 2,000 2,305 2,319 2,305
Dover, Delaware Electric Revenue 5,300 6,258 6,299 6,258
Dupage County, Illinois Water and Sewer 2,500 2,827 2,847 2,827
Fairfax County, Virginia General Obligation 3,000 3,269 3,325 3,269
Florida State Board of Education 2,000 2,236 2,254 2,236
Fort Worth, Texas General Obligation 1,220 1,353 1,378 1,353
Grant County, Washington Electric Revenue 1,000 1,198 1,212 1,198
Gwinnett County, Georgia Hospital Authority 1,000 1,082 1,122 1,082
Harris County, Texas Flood Control 1,600 1,844 1,861 1,844
Harris County, Texas Toll Road 1,100 1,239 1,285 1,239
Henderson County, Texas Hospital Authority 1,000 1,125 1,160 1,125
Houston, Texas General Obligation 1,000 1,081 1,107 1,081
Illinois Education Facility Authority 4,925 5,280 5,550 5,280
Illinois Health Facility Authority - Franciscan 3,450 4,023 4,068 4,023
Illinois Health Facility Authority - Memorial 2,595 3,060 3,075 3,060
Illinois State General Obligation 1,000 1,128 1,163 1,128
Illinois State Sales Tax Revenue - Series A 1,000 1,143 1,149 1,143
Indiana State Toll Finance Authority 2,010 2,391 2,403 2,391
Indiana University Student Fee Revenue 3,625 4,155 4,275 4,155
Intermountain Power Agency, Utah - Series A 1,200 1,318 1,396 1,318
Intermountain Power Agency, Utah - Series B 5,865 6,476 6,805 6,476
Jefferson County, Kentucky Capital Projects 1,000 1,185 1,195 1,185
Kentucky State Turnpike Authority Economic Development 10,000 11,483 11,717 11,483
Lake County, Illinois Public Building Revenue 1,300 1,412 1,423 1,412
Louisiana State General Obligation 1,500 1,563 1,581 1,563
Lower Colorado River Revenue 5,000 5,504 5,832 5,504
Maricopa County, Arizonia School District 2,000 2,304 2,373 2,304
M.A.R.T.A. Georgia Sales Tax Revenue 3,450 3,903 4,032 3,903
Maryland Consolidated Transportation 1,000 1,003 1,024 1,003
Massachusetts Municipal Wholesale Electric Company 9,855 11,849 12,252 11,849
Massachusetts State Health and Education - Boston University 9,750 11,323 11,414 11,323
Massachusetts State Health and Education - Holy Cross 3,200 3,550 3,609 3,550
Memphis, Tennessee Electric System Revenue 5,000 5,771 5,824 5,771
Meridian Metropolitan District, Colorado 2,000 2,264 2,287 2,264
Metropolitan Fair and Exposition Authority, Illinois 7,500 8,789 8,852 8,789
Metropolitan Minnesota - Minneapolis/St. Paul 1,000 1,003 1,034 1,003
Metropolitan Nashville/Davidson, Tennessee Water/Sewer 3,150 3,549 3,624 3,549
Metropolitan Transportation Authority, New York - General Ob. 7,500 9,094 9,127 9,094
Montgomery County, Pennsylvania Education and Welfare 3,750 4,445 4,452 4,445
New Jersey Health Care Facility Authority Revenue 3,450 3,963 4,036 3,963
New Jersey Turnpike Revenue 10,000 10,300 10,656 10,300
New Mexico State Tax Authority 2,060 2,115 2,172 2,115
New York State Medical Facility - Mt. Sinai 2,000 2,369 2,375 2,369
North Carolina Electric Revenue 1,000 1,030 1,083 1,030
North Carolina Municipal Power Revenue 4,040 4,509 4,707 4,509
North Little Rock, Arkansas Electric Revenue 2,300 2,681 2,773 2,681
Omaha, Nebraska Public Power District 1,000 1,123 1,166 1,123
Oregon State Housing and Community Services 1,000 1,000 1,018 1,000
Orlando, Florida Water and Electric 1,280 1,460 1,497 1,460
Osceola County, Florida School General Obligation 1,000 1,077 1,109 1,077
Pennsylvania State General Obligation 1,000 1,112 1,117 1,112
Philadephia, Pennsylvania Hospital Authority 1,500 1,719 1,758 1,719
Piedmont, South Carolina Municipal Power Agency Authority 1,100 1,296 1,344 1,296
Pima County, Arizona School District - Tucson 1,000 1,151 1,165 1,151
Pittsburgh, Pennsylvania General Obligation 2,500 2,810 2,882 2,810
Providence, Rhode Island General Obligation 1,000 1,068 1,089 1,068
Rhode Island State Public Building Authority - Series B 1,000 1,060 1,098 1,060
San Antonio, Texas Electric and Gas 3,500 4,014 4,138 4,014
Shelby County, Tennessee Health and Housing 9,900 11,252 11,299 11,252
Snohomish County, Washington Public Utility 2,700 3,092 3,150 3,092
South Carolina State Public Service - Santee 5,500 6,577 6,613 6,577
South Minnesota Municipal Power Agency Revenue 1,500 1,579 1,609 1,579
Texas A&M University FD Revenue 1,000 1,135 1,150 1,135
Texas Public Building Authority - Series A 1,000 1,152 1,188 1,152
Texas State Veterans General Obligation 5,000 5,526 5,593 5,526
Tomball, Texas Hospital Authority Revenue 4,500 4,924 5,031 4,924
Triborough Bridge and Tunnel - New York 5,000 5,872 5,889 5,872
University of Texas Fund Revenue 5,865 6,563 6,817 6,563
Volusia County, Florida School District General Obligation 1,000 1,099 1,117 1,099
Washington Electric 6,450 7,103 7,525 7,103
Washington/Maryland Suburban Sanitary District 2,000 2,314 2,324 2,314
Washington State General Obligation 1,200 1,291 1,337 1,291
Washington State Public Power 2,120 3,018 3,061 3,018
Wisconsin State General Obligation 2,000 2,255 2,293 2,255
--------- --------- ---------- ---------
233,560 265,481 271,105 265,481
--------- --------- ---------- ---------
Total Investments $262,492 $294,892 $300,810 $294,892
========= ========= ========== =========
March 24, 1994
VIA FEDERAL EXPRESS
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Liz Claiborne, Inc.
File No. 0-983l
Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of l934, as amended (the "l934 Act"), we are filing
electronically on behalf of Liz Claiborne, Inc., a Delaware Corporation (the "Registrant"), a copy of
Registrant's Annual Report on Form 10-K for the fiscal year ending December 25, l993 (the "Report on Form 10-K")
including the exhibits thereto. A manually executed copy is on file with the Registrant.
The applicable filing fee of $250.00 was sent by wire transfer earlier this week.
Please note that the financial statements contained in the 10-K reflect a change in accounting principles in that
the Company adopted the provisions of Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" as of the beginning of fiscal 1993.
By copy of this letter, we are, concurrently herewith, also transmitting for filing with The New York Stock
Exchange, two copies of the Report on Form 10-K, one of which is manually-executed, including the exhibits
thereto.
Very truly yours,
Roberta Schuhalter Karp
Vice President - General Counsel
RSK:jc/Encls.
cc: New York Stock Exchange
(via Federal Express)
Samuel M. Miller
Exhibit
No. Description Page
3(a) - Restated Certificate of Incorporation of Registrant
(incorporated herein by reference from Exhibit 3(a)
to Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 26, 1993.
3(b) - By-laws of Registrant, as amended (incorporated herein
by reference from Exhibit 3(b) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 26, 1992 [the "1992 Annual Report"]).
4(a) - Specimen certificate for Registrant's Common Stock, par
value $1.00 per share (incorporated herein by reference
from Exhibit 4(a) to the 1992 Annual Report).
4(b) - Rights Agreement, dated December 7, 1988, as amended,
between Registrant and First Chicago Trust Company of
New York, as Rights Agent (successor to The Chase
Manhattan Bank, N.A.) (incorporated herein by reference
from Exhibit 4(d) to Registrant's Report on Form 8-A
dated January 29, 1991.
4(b)(i) - Amendment to Rights Agreement, dated March 1990,
between Registrant and First Chicago Trust Company of
New York, as Rights Agent (successor to The Chase
Manhattan Bank, N.A.) (incorporated herein by reference
from Exhibit 4(d)(i) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 30, 1989).
4(b)(ii) - Amendment to Rights Agreement, dated as of January 24,
1992, between Registrant and First Chicago Trust
Company of New York, as Rights Agent (incorporated
herein by reference from Exhibit 4(b)(ii) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 28, 1991 [the "1991 Annual Report"]).
10(a) - Reference is made to Exhibits 4(b) - 4(b)(ii) filed
hereunder, which are incorporated herein by this
reference.
10(b)+ - Liz Claiborne, Inc. 1981 Stock Option Plan (incorporated
herein by reference from Exhibit 10(p) of Registrant's
Registration Statement on Form S-1, Registration No.
2-71806, in the form it was declared effective).
10(b)(i)+ - Amendment to the 1981 Stock Option Plan (incorporated
herein by reference from Exhibit 10(b)(i) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1988 [the "1988 Annual Report"]).
+ Compensation plan or arrangement required to be noted as provided
in Item 14(a)(3).
- 54 -
Exhibit
No. Description Page
10(c)+ - Amended form of Option Agreement under Liz Claiborne,
Inc. 1981 Stock Option Plan (incorporated herein by
reference from Exhibit 10(q) to Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 26, 1981).
10(d)+ - Liz Claiborne, Inc. 1984 Stock Option Plan (incorp-
orated herein by reference from Exhibit 10(hh) to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1983 [the "1983 Annual
Report"]).
10(d)(i)+ - Amendment to the 1984 Stock Option Plan (incorporated
herein by reference from Exhibit 10(d)(i) to the 1988
Annual Report).
10(e)+ - Form of Option Agreement under Liz Claiborne, Inc.
1984 Stock Option Plan (the "1984 Option Plan")
(incorporated herein by reference from Exhibit 10(nn)
to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1984).
10(e)(i)+ - Amended Form of Option Agreement under the 1984
Option Plan (incorporated herein by reference from
Exhibit 10(e)(i) to the 1992 Annual Report).
10(f)+ - Liz Claiborne Savings Plan (the "Savings Plan"), as
amended and restated (incorporated herein by reference
from Exhibit 10(f) to the 1989 Annual Report), and
related Trust Agreement (incorporated herein by
reference from Exhibit 10(f) to Registrant's Annual
Report on Form 10-K for the fiscal year ended December
27, 1986).
10(g)+ - Amendment Nos. 1 and 2 to the Savings Plan (incorp-
orated herein by reference from Exhibit 10(g) to the
1992 Annual Report).
10(g)(i)+* - Amendment Nos. 3 and 4 to the Savings Plan. 58
10(h)+ - Amended and Restated Liz Claiborne Profit-Sharing
Retirement Plan (the "Profit-Sharing Plan") (incorp-
orated herein by reference from Exhibit 10(h) to the
1992 Annual Report).
10(i) - Trust Agreement related to the Profit-Sharing Plan
(incorporated herein by reference from Exhibit 10(jj)
to the 1983 Annual Report).
* Filed herewith.
+ Compensation plan or arrangement required to be noted as provided
in Item 14(a)(3).
- 55 -
Exhibit
No. Description Page
10(i)(i)+* - Amendment Nos. 1 and 2 to the Profit-Sharing Plan. 61
10(j) - Collective Bargaining Agreement, dated June 1, 1991,
between New York Shirt and Sportswear Association,
Inc. (of which Registrant is a member) and Inter-
national Ladies' Garment Workers' Union, Amalgamated
Ladies' Garment Cutters' Union, Local 10, I.L.G.W.U.
and Blouse, Skirt and Sportswear Workers' Union,
Local 23-25, I.L.G.W.U (incorporated herein by refer-
ence from Exhibit 10(j) to the 1992 Annual Report).
10(k) - Collective Bargaining Agreement, dated September 1,
1991, between the Joint Board of Shirt, Leisurewear,
Robe, Glove and Rainwear Workers Union of Amalgamated
Clothing Workers of America and Liz Claiborne
Accessories (incorporated herein by reference from
Exhibit 10(k) to the 1991 Annual Report).
10(l) - Executive Liability and Indemnification Policy No.
81035379D, with Chubb Group of Insurance Companies
(the "Insurance Policy") (incorporated herein by
reference from Exhibit 10(l) to the 1992 Annual
Report).
10(l)(i)* - Summary of Extension of the Insurance Policy. 64
10(m)+* - Description of 1993 Salaried Employee Incentive 65
Bonus Plan.
10(n) - Lease, dated as of January 1, 1990 for premises
located at 1441 Broadway, New York, New York between
Liz Claiborne, Inc. and Lechar Realty Corp.
(incorporated herein by reference from Exhibit 10(n)
to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 29, 1990).
10(o)+ - Liz Claiborne, Inc. Outside Directors' 1991 Stock
Ownership Plan (the "Directors Plan") (incorporated
herein by reference from Exhibit 10(o) to the 1991
Annual Report).
10(o)(i)+* - Amendment No. 1 to the Directors Plan. 66
10(p)+ - Liz Claiborne, Inc. 1992 Stock Incentive Plan (the
"1992 Plan") (incorporated herein by reference from
Exhibit 10(p) to the 1991 Annual Report).
* Filed herewith.
+ Compensation plan or arrangement required to be noted as provided
in Item 14(a)(3).
- 56 -
Exhibit
No. Description Page
10(p)(i)+* - Amendment No. 1 to the 1992 Plan. 67
10(q)+ - Form of Option Agreement under the 1992 Plan for
premium-priced options (incorporated herein by
reference from Exhibit 10(q) to the 1992 Annual
Report).
10(r)+ - Form of Option Agreement under the 1992 Plan
(incorporated herein by reference from Exhibit
10(r) to the 1992 Annual Report).
10(s)+ - Description of unfunded deferred compensation
arrangement for Jerome A. Chazen (incorporated
herein by reference from Exhibit 10(s) to the
1992 Annual Report).
10(t)+* - Description of Supplemental Life Insurance Plans. 68
10(u)+ - Description of unfunded death/disability benefits
for certain executives (incorporated herein by
reference from Exhibit 10(u) to the 1992 Annual
Report).
10(v)+* - Description of the Liz Claiborne 162(m) Cash 69
Bonus Plan.
10(w)+* - Description of the Liz Claiborne Supplemental 70
Executive Retirement Plan.
22* - List of Registrant's Subsidiaries. 71
24* - Consent of Independent Public Accountants. 72
28* - Undertakings. 73
(b) Reports on Form 8-K.
Not applicable.
* Filed herewith.
+ Compensation plan or arrangement required to be noted as provided
in Item 14(a)(3).