Financial Statements

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

_____________

FORM 11-K

ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One):

ý  ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.


For the fiscal year ended    December 31, 2007   

OR

o  TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.


For the transition period from __________ to __________

Commission file number    1-724         

A.  Full title of the plan and the address of the plan, if different from that of the issuer named below:  PVH Associates Investment Plan for Hourly Associates and PVH Associates Investment Plan for Salaried Associates

B.  Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Phillips-Van Heusen Corporation, 200 Madison Avenue, New York, New York 10016





 SIGNATURES

The Plan.  Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLANS



Date:  June 26, 2008

By:     /s/  Pamela N. Hootkin

 

Pamela N. Hootkin


Member of Administrative Committee




Financial Statements


Years ended December 31, 2007 and 2006


Contents


Phillips-Van Heusen Corporation

Associates Investment Plan For Hourly Associates


Page


Report of Independent Registered Public Accounting Firm

F-1

Financial Statements

Statements of Net Assets Available for Benefits

F-2

Statements of Changes in Net Assets Available for Benefits

F-3

Notes to Financial Statements

F-4

Supplemental Schedule

Schedule H, Line 4i--Schedule of Investments Held at Year End

F-12



Phillips-Van Heusen Corporation

Associates Investment Plan For Salaried Associates

Page


Report of Independent Registered Public Accounting Firm

F-13

Financial Statements

Statements of Net Assets Available for Benefits

F-14

Statements of Changes in Net Assets Available for Benefits

F-15

Notes to Financial Statements

F-16

Supplemental Schedule

Schedule H, Line 4i--Schedule of Investments Held at Year End

F-24







Report of Independent Registered Public Accounting Firm


Administrative Committee of the Plan

Phillips-Van Heusen Corporation

Associates Investment Plan for Hourly Associates


We have audited the accompanying statement of net assets available for benefits of the Phillips-Van Heusen Corporation Associates Investment Plan for Hourly Associates as of December 31, 2007 and 2006, and the related statement of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes ex­amining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2007 and 2006, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States.


Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole.  The accompanying supplemental schedule of investments held at year end at fair value as of December 31, 2007, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  This supplemental schedule is the responsibility of the Plan’s management.  The supplemental schedule has been subjected to the auditing procedures applied in our audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.






June 23, 2008








F-1



PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

For the Years Ended December 31, 2007 and 2006



 

2007

2006

 



Assets



 



Investments, at fair value:



Investment in Phillips-Van Heusen

 

 

Corporation Associates Investment

 

 

Plans Master Trust

$ 9,527,896 

$ 9,391,798 

Participant loans receivable

373,212 

320,613 

Receivable from securities sold

66,867

   -

Contributions receivable

        30,186 

         21,327

Total assets

   9,998,161 

    9,733,738 

 



Liabilities



Benefits payable

8,303

   -      

Miscellaneous payables

          3,686 

             524 

Total liabilities

        11,989 

             524 

 



Net assets available for benefits at fair value

$ 9,986,172 

$9,733,214 


Adjustment to contract value from fair

 

 

value for interest in common/collective

 

 

trust relating to fully benefit-responsive

 

 

investment contracts

        44,534 

        21,098 

 



Net assets available for benefits

$10,030,706 

$ 9,754,312 




The accompanying notes are an integral

part of these financial statements


F-2



PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

STATEMENT OF CHANGES IN NET
ASSETS AVAILABLE FOR BENEFITS

For the Years Ended December 31, 2007 and 2006


 

2007

2006

 

 

 

Additions

 

 

 

 

 

Contributions:

 

 

Employer, net of forfeitures

$     469,460  

$    348,764  

Employees

1,006,754  

788,476  

Rollovers

122,668

-      

Interest and investment income

-       

188,052  

Loan interest

24,127  

29,127  

Master trust investment income

402,723  

1,444,075  

    Transfer from Phillips-Van Heusen Associates



Investment Plan for Salaried Associates

       294,514  

       12,183  

 



Total additions

    2,320,246  

  2,810,677  

 



Deductions



 



Payments to participants

946,852  

3,344,988  

Transfer to Phillips-Van Heusen Associates



Investment Plan for Salaried Associates

       537,353  

       31,259  

 



Total deductions

1,484,205  

3,376,247  

 



Net realized and unrealized (depreciation) appreciation



of investments

     (559,647

    326,405  

 



Net increase (decrease) in net assets available for benefits

276,394  

(239,165) 

 



Net assets available for benefits at beginning of year

   9,754,312  

  9,993,477  

 



Net assets available for benefits at end of year

$10,030,706  

$9,754,312  



The accompanying notes are an integral

part of these financial statements


F-3



PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2007 and 2006




1.

Description of the Plan


The following description of the Phillips-Van Heusen Corporation (the “Company”) Associates Investment Plan for Hourly Associates (the “Plan”) provides only general information.  Participants should refer to the Plan Document for a more complete description of the Plan’s provisions.


Change in Trustee and Recordkeeper


Effective November 3, 2006, the Plan’s Trustee changed from Wells Fargo Bank to Nationwide Trust Company, and the Plan’s “Recordkeeper” changed from Wells Fargo Retirement Plan Solutions to The 401(k) Company.  Effective May 14, 2007, the Plan’s Trustee changed from Nationwide Trust Company to The Charles Schwab Trust Company (the “Trustee”).


Master Trust


The Phillips-Van Heusen Corporation Associates Investment Plans Master Trust (the “Master Trust”) was established for the investment of the Phillips-Van Heusen Stock Fund (the “PVH Stock Fund”).  Effective with the change in Recordkeeper and Trustee on November 3, 2006, all of the investments of the Company’s Associates Investment Plan for Hourly Employees and the Associates Investment Plan for Salaried Employees were combined into the new Master Trust held by the Nationwide Trust Company.


General


The Plan is a defined contribution plan covering hourly production, warehouse, distribution and U.S. retail field employees of the Company, who are at least age 21 or older, have completed at least three consecutive months of service and are regularly scheduled to work at least 20 hours per week. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).  






F-4



PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS




Contributions


Participants may contribute up to 25% of pre-tax annual compensation, limited to $15,500 and $15,000 per annum in 2007 and 2006 respectively.  In addition, pursuant to EGTRRA of 2001, all participants who have attained the age of 50 before the close of the plan year are eligible to make “catch-up” contributions up to $5,000 for each plan year.  The Company matches 100% of the first 2% of eligible compensation that a participant contributed to the Plan plus 25% of the next 4% of eligible compensation contributed by the participant.


Participant Accounts


Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings.  Forfeited balances of terminated participants’ nonvested accounts are used to reduce future Company contributions.


Vesting


Amounts attributable to employee contributions and the allocated earnings thereon are immediately vested.  Participants become 25%, 50%, 75% and 100% vested in Company contributions and the allocated earnings thereon after two, three, four and five years of service, respectively.  Upon death, permanent disability or reaching age 65, participants or their beneficiaries become 100% vested in Company contributions.


Investment Options


Upon enrollment in the Plan, a participant may direct employee or Company contributions into any one of four pre-mixed asset allocation models or any of 10 individual investment options.  A participant may contribute a maximum of 25% of employee contributions into the PVH Stock Fund.









F-5



PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS




Participant Loans Receivable


Participants may borrow from the Plan, with certain restrictions, using their vested account balance as collateral.  The minimum loan amount is $1,000 and the maximum loan amount is the lesser of (i) $50,000 reduced by the participant’s highest outstanding loan balance during the previous 12 months, or (ii) 50% of the vested value of the participant’s account. Interest is fixed for the term of the loan at the prime rate plus 1%.  Loan repayments are made through payroll deductions which may be specified for a term of 1 to 5 years or up to 15 years for the purchase of a primary residence.  


At December 31, 2007, total outstanding participant loans outstanding totaled $373,212, with maturity dates through 2012 at interest rates ranging from 5% to 9.25%.


Forfeitures


Contributions made on behalf of non-vested or partially vested employees who have terminated are retained by the Plan and are used to reduce the Company’s future matching contributions.  In 2007, forfeitures of $23,885 were used by the Plan to reduce the Company’s matching contributions.


Payment of Benefits


Participants electing final distributions will receive payment in the form of a lump sum amount equal to the value of their vested account unless the participant notifies the Company of their intent to receive all or a portion of their balance attributable to the PVH Stock Fund paid in the form of shares of the Company’s Common Stock.


Plan Termination


Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.  In the event of Plan termination, participants will become 100% vested in their accounts.





F-6


PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS




2.

Significant Accounting Policies


The accounting records of the Plan are maintained on the accrual basis.


Substantially all administrative expenses are paid by the Company.


In accordance with the Rules and Regulations of the Department of Labor, investments are included in the accompanying financial statements at market value as determined by quoted market prices or at fair value as determined by the trustee.  Purchases and sales of securities are reflected on a trade date basis.


All assets of the Plan are held by the Trustee in the Master Trust and are segregated from the assets of the Company.  The Plan shares in the Master Trust interest and investment income based upon its participants’ shares of the Master Trust net assets available for benefits.


The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

In December 2005, the Financial Accounting Standards Board (FASB) issued FASB Staff Position AAG INV-1 and SOP 94-4-1, “Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans” (FSP).  This FSP requires investments in benefit-responsive investment contracts be presented at fair value.  However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.  The Plan invests in investment contracts though a common/collective trust.  As required by the FSP, the Statement of Net Assets Available for Benefits presents the fair value of the investments in the common/collective trust as well as the adjustment of the investment in the common/collective trust from fair value to contract value relating to the investment contracts.  The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.  





F-7


PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS




In September, 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157 (SFAS 157), “Fair Value Measurements.”  SFAS 157 defines fair value, establishes a framework for measuring fair value and requires additional disclosures about fair value measurements.  It applies to fair value measurements already required or permitted by existing standards.  SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the impact that the adoption of SFAS 157 will have on the Plan’s financial statements.  


3.

Transactions with Parties-in-Interest


During the years ended December 31, 2007 and 2006, the Master Trust purchased 50,218 and 53,146 shares, respectively, of the Company’s common stock and received $127,428 and $138,106, respectively, from the Company as payment of dividends on its common stock. The AIP Master Trust also sold 74,684 and 152,495 shares of the Company’s common stock during the years ended December 31, 2007 and 2006, respectively.


4.

Assets of the Plan


Investments that represent 5% or more of the fair value of the Plan’s net assets at the end of the plan year are as follows:


 

2007

2006

 

 

 

Investment in Phillips-Van Heusen

 

 

Corporation Associates Investment

 

 

Plans Master Trust

$9,527,896  

$9,391,798   

 

 

 













F-8



PHILLIPS-VAN HEUSEN CORPORATION
ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS




During 2006**, the Plan’s investments (including investments purchased, sold, as well as held during the year) appreciated in fair value as determined by quoted market prices as follows:


Net Realized and Unrealized

Appreciation in Fair Value of Investments


 

2006**

 

 

Common stock—PVH Stock Fund

$      -       

Shares of registered investment companies

  326,405  

 

$326,405  


** Represents appreciation for the period January 1, 2006 through November 2, 2006 of investments not in the Master Trust.  See below for Master Trust information.  


5.

Interest in the Master Trust


Effective November 3, 2006, the plan’s investments, with the exception of participant loans, are held in a Master Trust with the assets of the Associates Investment Plan for Salaried Associates.  The assets of the Master Trust are held by The Charles Schwab Trust Company.  The plan participates in the Master Trust for the investment of the pooled assets of various funds.  Each participating plan has an undivided interest in the Master Trust.  Income and assets of the Master Trust are allocated to the Plan based on participant balances.  The assets of the Master Trust at December 31, 2007 and 2006, reported at fair value, consist of the following:









F-9



PHILLIPS-VAN HEUSEN CORPORATION PENSION PLAN

ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS


 

2007

2006

 



Cash

$       137,527

$         27,724

Receivable from investments sold


86,852

Payable for investments purchased


(86,852)

Other payable


(9,619)

Investments, at market value:



Common Collective Trust

24,215,772

22,338,688

Mutual Funds

104,842,735

86,595,356

Common Stock

30,654,803

42,951,591

Money Market Funds

           47,170

      1,195,213

 



Total Master Trust investments

$159,898,007

$153,098,953

 



Plan’s beneficial interest

$    9,527,896

$    9,391,798

 



Plan’s percentage interest

                    6% 

                   6%  

 

 

 



Net investment (loss) income for the Master Trust through December 31, 2007 and 2006 is as follows:


 

2007

2006

 

 

 

Net (depreciation) appreciation in fair value of investments determined by quoted market prices:

 

 

Common Stock

$(11,023,289)

$16,261,622

Mutual Funds and Common Collective Trust

        469,377

     (883,605)

 



 

(10,553,912)

15,378,017

 



Interest and dividend income

     8,858,571

    3,941,060

 



Total Master Trust investment (loss) income

$  (1,695,341)

$19,319,077



F-10



PHILLIPS-VAN HEUSEN CORPORATION PENSION PLAN

ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS




6.

Income Tax Status


The Plan has received a determination letter from the Internal Revenue Service dated September 2, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the “Code”) and, therefore, the related trust is exempt from taxation.  Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification.  The plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.

7.

Reconciliation of Financial Statements to Form 5500



The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500 at December 31, 2007 and 2006:


 

2007

 

2006

 

 

 

Net assets available for benefits per the financial statements

$10,030,706

 

$ 9,754,312

Less adjustment from fair value to contract value


 


  for fully benefit-responsive investment contracts

        44,534

 

         21,098

Net assets available for benefits per the Form 5500

$ 9,986,172

 

$ 9,733,214


















F-11



























SUPPLEMENTAL SCHEDULE






EIN: 13-1166910

Plan No: 012


PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR HOURLY ASSOCIATES


SCHEDULE H, LINE 4i--SCHEDULE OF INVESTMENTS AT YEAR END

AT FAIR VALUE


For the Year Ended December 31, 2007


Identity of Holder

Description of Investment

Current Value

 

 

 

The Charles Schwab Trust Co.

Cash

$           87,057

The Charles Schwab Trust Co.

Federated Capital Reserve;


 

3,286.480 shares

3,287

The Charles Schwab Trust Co.

SEI Stable Asset Fund;


 

1,771,387.910 shares

1,726,854

The Charles Schwab Trust Co.

State Street S&P 500 Index;


 

16,618.222 shares

660,026

The Charles Schwab Trust Co.

Lazard Emerging Markets;


 

851.988 shares

20,593

The Charles Schwab Trust Co.

American Beacon Large Cap Value;


 

37,450.691 shares

838,521

The Charles Schwab Trust Co.

Bond Fund of America;


 

60,642.033 shares

791,985

The Charles Schwab Trust Co.

Dodge & Cox Balanced Fund;


 

11,048.857 shares

894,957

The Charles Schwab Trust Co.

Growth Fund of America;


 

23,658.445 shares

798,709

The Charles Schwab Trust Co.

Hartford HLS Small Cap Growth;


 

5,190.121 shares

96,848

The Charles Schwab Trust Co.

Phoenix Real Estate Securities;


 

1,833.980 shares

52,910

The Charles Schwab Trust Co.

Thornburg International Value;


 

25,101.885 shares

850,703

The Charles Schwab Trust Co.

Wells Fargo Small Cap Value;


 

19,360.480 shares

569,585

The Charles Schwab Trust Co.

Phillip-Van Heusen Corp. Common Stock;


 

57,945.211 shares

       2,135,861

 

 


Total investments held by

 


The Charles Schwab Trust Co.

 

$      9,527,896


F-12




Report of Independent Registered Public Accounting Firm


Administrative Committee of the Plan

Phillips-Van Heusen Corporation

Associates Investment Plan for Salaried Associates


We have audited the accompanying statements of net assets available for benefits of the Phillips-Van Heusen Corporation Associates Investment Plan for Salaried Associates as of December 31, 2007 and 2006, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2007 and 2006 and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States.


Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole.  The accompanying supplemental schedule of investments held at year end at fair value as of December 31, 2007 is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the financial statements and, in our opinion is fairly stated in all material respects in relation to the financial statements taken as a whole.




June 23, 2008





F-13




PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS


December 31, 2007 and 2006


 

2007

 

2006

 




Assets




   Investments, at fair value:




     Investment in Phillips-Van Heusen

 

 

 

         Corporation Associates Investment Plans

 

 

 

         Master Trust

$150,370,111

 

$143,707,155

   Participant loans receivable

2,533,372


1,773,210

   Receivable from securities sold

89,596


-       

   Contributions receivable

30,004


443,086

                           Total assets

153,023,083


145,923,451

 




  Liabilities




       Due to broker

133,324


-       

       Benefits payable

158,975


9,277

                           Total liabilities

292,299


9,277

 




Net assets available for benefits at fair value

152,730,784


145,914,174


      Adjustment to contract value from fair




        value for interest in common/collective




        trust relating to fully benefit-responsive




        investment contracts           

        394,550


         220,145

 




Net assets available for benefits

$153,125,334

 

$146,134,319








The accompanying notes are an integral

part of these financial statements


F-14



PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


STATEMENTS OF CHANGES IN NET
ASSETS AVAILABLE FOR BENEFITS


For the Years Ended December 31, 2007 and 2006


 

2007

 

2006

 

 

 

 

Additions




 




   Contributions:




   Employer, net of forfeitures

$  3,995,988


$  3,288,623

   Employees

10,447,772


8,723,948

   Rollovers

1,188,138      


273,473

   Interest and investment income

-       


2,130,908

   Transfer from Phillips-Van Heusen Associates




        Investment Plan for Hourly Associates

537,353


31,259

   Loan interest

162,205


129,242

   Master trust investment income

8,269,517


18,116,245

 




         

Total additions

24,600,973


32,693,698

 




Deductions




 




   Payments to participants

7,321,179


10,377,037

   Transfer to Phillips-Van Heusen Associates




         Investment Plan for Hourly Associates

294,514


12,183

 




Total deductions

7,615,693


10,389,220

 




Net realized and unrealized (depreciation)




  appreciation of  investments

(9,994,265)


6,287,070

 




Net increase in net assets available for benefits

6,991,015


28,591,548

 




Net assets available for benefits at beginning of year

146,134,319


117,542,771

 




Net assets available for benefits at end of year

$153,125,334


$146,134,319


The accompanying notes are an integral

part of these financial statements


F-15



PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


NOTES TO FINANCIAL STATEMENTS


For the Years Ended December 31, 2007 and 2006




1.

Description of the Plan


The following description of the Phillips-Van Heusen Corporation (the “Company”) Associates Investment Plan for Salaried Associates (the “Plan”) provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan’s provisions.


Change in Trustee and Recordkeeper


Effective November 3, 2006, the Plan’s Trustee changed from Wells Fargo Bank to Nationwide Trust Company, and the Plan’s “Recordkeeper” changed from Wells Fargo Retirement Plan Solutions to The 401(k) Company.  Effective May 14, 2007, the Plan’s Trustee changed from Nationwide Trust Company to The Charles Schwab Trust Company (the “Trustee”).


Master Trust


The Phillips-Van Heusen Corporation Associates Investment Plans Master Trust (the “Master Trust”) was established for the investment of the Phillips-Van Heusen Stock Fund (the “PVH Stock Fund”).  Effective with the change in Recordkeeper and Trustee on November 3, 2006, all of the investments of the Company’s Associates Investment Plan for Hourly Employees and the Associates Investment Plan for Salaried Employees were combined into the new Master Trust held by the Nationwide Trust Company.


General


The Plan is a defined contribution plan covering salaried or clerical employees of the Company who are at least age 21 or older, have completed at least three consecutive months of service and are regularly scheduled to work at least 20 hours per week.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).  




F-16



PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


NOTES TO FINANCIAL STATEMENTS




Contributions


Participants may contribute up to 25% of pre-tax annual compensation, limited to $15,500 and $15,000 per annum in 2007 and 2006, respectively.  In addition, pursuant to EGTRRA of 2001, all participants who have attained the age of 50 before the close of the plan year are eligible to make “catch-up” contributions up to $5,000 for each plan year.  The Company matches 100% of the first 2% of eligible compensation that a participant contributed to the Plan plus 25% of the next 4% of eligible compensation contributed by the participant.  


Participant Accounts


Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings.  Forfeited balances of terminated participants’ nonvested accounts are used to reduce future Company contributions.


Vesting


Amounts attributed to employee contributions and the allocated earnings thereon are immediately vested.  Participants become 25%, 50%, 75% and 100% vested in Company contributions and the allocated earnings thereon after two, three, four and five years of service, respectively.  Upon death, permanent disability, or reaching age 65, participants or their beneficiaries become 100% vested in Company contributions.


Investment Options


Upon enrollment in the Plan, a participant may direct employee or Company contributions into any one of four pre-mixed asset allocation models or any of 10 individual investment options.  A participant may contribute a maximum of 25% of employee contributions into the PVH Stock Fund.









F-17




PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


NOTES TO FINANCIAL STATEMENTS




Participant Loans Receivable


Participants may borrow from the Plan, with certain restrictions, using their vested account balance as collateral. The minimum loan amount is $1,000 and the maximum loan amount is the lesser of (i) $50,000 reduced by the participant’s highest outstanding loan balance during the previous 12 months, or (ii) 50% of the vested value of the participant’s account. Interest is fixed for the term of the loan at the prime rate plus 1%. Loan repayments are made through payroll deductions, which may be specified for a term of 1 to 5 years or up to 15 years for the purchase of a primary residence.

At December 31, 2007, participant loans outstanding totaled $2,533,372, with maturity dates through 2022 at interest rates ranging from 5% to 10.5%.



Forfeitures


Contributions made on behalf of non-vested or partially vested employees who have terminated are retained by the Plan and are used to reduce the Company’s future matching contributions.  In 2007, forfeitures of $101,173 were used by the Plan to reduce the Company’s matching contributions.


Payment of Benefits


Participants electing final distributions will receive payment in the form of a lump sum amount equal to the value of their vested account unless the participant notifies the Company of their intent to receive all or a portion of their balance attributable to the PVH Stock Fund paid in the form of shares of the Company’s Common Stock.


Plan Termination


Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.



F-18



PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


NOTES TO FINANCIAL STATEMENTS



2.

Significant Accounting Policies


The accounting records of the Plan are maintained on the accrual basis.


Substantially all administrative expenses are paid by the Company.  


In accordance with the Rules and Regulations of the Department of Labor, investments are included in the accompanying financial statements at market value as determined by quoted market price or at fair value as determined by the trustee.  Purchase and sales of securities are reflected on a trade date basis.


All assets of the Plan are held by the Trustee and are segregated from the assets of the Company.  The Master Trust holds the investments in The PVH Stock Fund.  The Plan shares in the Master Trust interest and investment income based upon its participants’ shares of the Master Trust net assets available for benefits.


The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

In December 2005, the Financial Accounting Standards Board (FASB) issued FASB Staff Position AAG INV-1 and SOP 94-4-1, “Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans” (FSP).  This FSP requires investments in benefit-responsive investment contracts be presented at fair value.  However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.  The Plan invests in investment contracts though a common/collective trust.  As required by the FSP, the Statement of Net Assets Available for Benefits presents the fair value of the investments in the common/collective trust as well as the adjustment of the investment in the common/collective trust from fair value to contract value relating to the investment contracts.  The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.  




F-19




PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


NOTES TO FINANCIAL STATEMENTS




In September, 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157 (SFAS 157), “Fair Value Measurements.”  SFAS 157 defines fair value, establishes a framework for measuring fair value and requires additional disclosures about fair value measurements.  It applies to fair value measurements already required or permitted by existing standards.  SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the impact that the adoption of SFAS 157 will have on the Plan’s financial statements.  


Reclassifications

Certain amounts from the 2007 financial statements have been reclassified in order to conform to the current year presentation.


3.

Transactions with Parties-in-Interest


During the years ended December 31, 2007 and 2006, the Master Trust purchased 50,218 and 53,146 shares, respectively, of the Company’s common stock and received $127,428 and $138,106, respectively, from the Company as payment of dividends on its common stock. The AIP Master Trust also sold 74,684 and 152,495 shares of the Company’s common stock during the years ended December 31, 2007 and 2006, respectively.


4.

Assets of the Plan


Investments that represent 5% or more of the fair value of the Plan’s net assets at the end of the plan year are as follows:



 

2007

2006

 

 

 

Investment in Phillips-Van Heusen

 

 

Corporation Associates Investment

 

 

Plans Master Trust

 150,370,111  

 143,707,155  

 

 

 






F-20




 PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


NOTES TO FINANCIAL STATEMENTS




During 2006, the Plan’s investments (including investments purchased, sold, as well as held during the year) appreciated in fair value as determined by quoted market prices as follows:


Net Realized and Unrealized

Appreciation in Fair Value of Investments


 

2006**

 

 

Common stock—PVH Stock Fund

$           -   

Shares of registered investment

 

  companies

  6,287,070

 

$6,287,070



** Represents appreciation for the period January 1, 2006 through November 2, 2006 of investments not in the Master Trust.  See below for Master Trust information.  



5.

Interest in the Master Trust


Effective November 3, 2006, the plan’s investments, with the exception of participant loans, are held in a Master Trust with the assets of the Associates Investment Plan for Hourly Associates.  The assets of the Master Trust are held by The Charles Schwab Trust Company.  The plan participates in the Master Trust for the investment of the pooled assets of various funds.  Each participating plan has an undivided interest in the Master Trust.  Income and assets of the Master Trust are allocated to the Plan based on participant balances.  The assets of the Master Trust at December 31, 2007 and 2006 consist of the following reported at fair value:









F-21



PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


NOTES TO FINANCIAL STATEMENTS



 

 

 

2007

2006

 



Cash

$       137,527

$          27,724

Receivable from investments sold


86,852

Payable for investments purchased


(86,852)

Other payable


(9,619)

Investments, at market value:



Common Collective Trust

24,215,772

22,338,688

Mutual Funds

104,842,735

86,595,356

Common Stock

30,654,803

42,951,591

Money Market Funds

           47,170

      1,195,213

 



Total Master Trust investments

$159,898,007

$153,098,953

 



Plan’s beneficial interest

$150,370,111

$143,707,155

 



Plan’s percentage interest

               94%

               94%

 

 

 



Net investment (loss) income for the Master Trust through December 31, 2007 and 2006 is as follows:


 

2007

2006

 

 

 

Net (depreciation) appreciation in fair value of

 

 

   investments determined by quoted market prices:

 

 

Common Stock

$(11,023,289)

$16,261,622

Mutual Funds and Common Collective Trust

        469,377

     (883,605)

 



 

(10,553,912)

15,378,017

 



Interest and dividend income

     8,858,571

    3,941,060

 



Total Master Trust investment (loss) income

$  (1,695,341)

$19,319,077

 

 

 

 

 

 



F-22



PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


NOTES TO FINANCIAL STATEMENTS




6.

Income Tax Status


The Plan has received a determination letter from the Internal Revenue Service dated September 2, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the “Code”) and, therefore, the related trust is exempt from taxation.  Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification.  The plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.


7.

Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500 at December 31, 2007 and 2006:


 

 

2007

 

2006

Net assets available for benefits per the financial

 

 

 

   statements

 

$153,125,334

 

$146,134,319

Less adjustment from fair value to contract value for

 

        394,550

 

        220,145

  fully benefit-responsive investment contracts

 


 


Net assets available for benefits per the Form 5500

 

$152,730,784

 

$145,914,174


















F-23



























SUPPLEMENTAL SCHEDULE






EIN: 13-1166910

Plan No: 007


PHILLIPS-VAN HEUSEN CORPORATION

ASSOCIATES INVESTMENT PLAN FOR SALARIED ASSOCIATES


SCHEDULE H, LINE 4i--SCHEDULE OF INVESTMENTS HELD AT YEAR END

AT FAIR VALUE


For the Year Ended December 31, 2007


Identity of Holder

Description of Investment

Current Value

 

 

 

The Charles Schwab Trust Co.

Cash

$         50,469

The Charles Schwab Trust Co.

Federated Capital Reserves

 

 

43,882.490 shares

43,883

The Charles Schwab Trust Co.

American Beacon US Govt MM;

 

 

1.000 shares

1

The Charles Schwab Trust Co.

SEI Stable Asset Fund;

 

 

15,693,497.900 shares

15,298,948

The Charles Schwab Trust Co.

State Street S&P 500 Index:

 

 

164,411.805 shares

6,529,944

The Charles Schwab Trust Co.

American Beacon Large Cap Value;

 

 

778,964.672 shares

17,441,019

The Charles Schwab Trust Co.

Bond Fund of America;

 

 

941,768.072 shares

12,299,491

The Charles Schwab Trust Co.

Dodge & Cox Balanced Fund;

 

 

179,208.037 shares

14,515,851

The Charles Schwab Trust Co.

Growth Fund of America;

 

 

502,049.344 shares

16,949,186

The Charles Schwab Trust Co.

Hartford HLS Small Cap Growth;

 

 

153,227.174 shares

2,859,219

The Charles Schwab Trust Co.

Lazard Funds Emerging Markets;

 

 

47,524.799 shares

1,148,674

The Charles Schwab Trust Co.

Phoenix Real Estate Securities;

 

 

61,084.301 shares

1,762,282

The Charles Schwab Trust Co.

Thornburg International Value;

 

 

624,164.447 shares

21,152,933

The Charles Schwab Trust Co.

Wells Fargo Small Cap Value;

 

 

401,062.824 shares

11,799,268

The Charles Schwab Trust Co.

Phillip-Van Heusen Corp. Common Stock;

 

 

773,709.789 shares

    28,518,943

 

 

 

Total investments held by

 

 

The Charles Schwab Trust Co.

 

$150,370,111


F-24



EXHIBIT INDEX



Exhibit No.

 

 

 

23.1

Consent of Independent Auditors (Associates Investment Plan for Hourly Associates)

 

 

23.2

Consent of Independent Auditors (Associates Investment Plan for Salaried Associates)