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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 11, 1999
THE NORTH FACE, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware
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(State or other jurisdiction of incorporation)
0-28596 94-3204082
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(Commission File No.) (IRS Employer Identification Number)
407 Merrill Avenue
Carbondale, Colorado 81623
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(Address of Principal Executive Offices)
(970) 704-2300
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(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events
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On March 11, 1999, The North Face, Inc. issued a press release announcing
the evaluation of the accounting treatment of certain transactions by the audit
committee of the Board of Directors.
On March 12, 1999, The North Face, Inc. issued a press release announcing
that in connection with the audit of its financial statements for the year ended
December 31, 1998, Deloitte & Touche informed the audit committee of the Board
of Directors that it had questions regarding certain transactions.
On March 31, 1999, The North Face, Inc. issued a press release announcing
the completion of the investigation of the accounting treatment of certain
transactions by the audit committee of the Board of Directors.
(a) Exhibits:
99.1 Press Release dated March 11, 1999
99.2 Press Release dated March 12, 1999
99.3 Press Release dated March 31, 1999
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE NORTH FACE, INC.
Dated: April 1, 1999 By: /s/ James G. Fifield
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James G. Fifield
President and Chief Executive Officer
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INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press Release dated March 11, 1999.
99.2 Press Release dated March 12, 1999.
99.3 Press Release dated March 31, 1999.
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Exhibit 99.1
THE NORTH FACE, INC. TO REVIEW PRIOR RESULTS
CARBONDALE, COLORADO (March 11, 1999) - The North Face, Inc. (Nasdaq: TNFI)
announced today that the Audit Committee of the Company's Board of Directors is
evaluating the accounting treatment of certain transactions recorded during the
fourth quarter of 1997 and the first quarter of 1998. This evaluation is likely
to result in the restatement of previously announced year ended December 31,
1997 and first quarter 1998 financial statements. The Audit Committee is in the
process of engaging independent accountants to work with the Company's outside
counsel to assist in this evaluation. This process will result in postponement
of the completion of the Company's year-end 1998 audit. The Company stated that
the Transaction Agreement that was announced on February 27, 1999 remains in
effect.
Quote for reference ticker symbols: TNFI
The North Face, Inc. designs and distributes technically sophisticated
outerwear, snowsports apparel, functional sportswear, tents, sleeping bags,
backpacks, daypacks, accessories and rugged footwear under The North Face name.
Through its subsidiaries, La Sportiva s.r.L. and La Sportiva USA, the Company
designs, manufactures and distributes rock climbing shoes, mountaineering boots
and other rugged footwear under the La Sportiva name. The Company sells its
products primarily to select specialty retailers throughout the United States,
Europe and Canada.
CONTACT: John Batelli, Director, Investor Relations of The North Face, Inc.,
510-618-3631; or Chris Danne of Morgen-Walke Associates, 415-296-7383.
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Exhibit 99.2
THE NORTH FACE TO RESTATE 1997 AND INTERIM
1998 FINANCIAL STATEMENTS
CARBONDALE, COLORADO (March 12, 1999) - The North Face, Inc. (Nasdaq: TNFI)
announced today that in connection with the audit of the Company's financial
statements for the year ended December 31, 1998, Deloitte & Touche informed the
audit committee it has certain questions about previously recorded barter
transactions which were made by the Company in December 1997 and January 1998
aggregating $7.6 million in revenue (fourth quarter 1997 amount: $5.2 million in
revenue; first quarter 1998 amount: $2.4 million in revenue) and also about the
Company's repurchase of certain inventory relating to these transactions in
February 1999. Additionally, Deloitte & Touche has asked the audit committee to
investigate the appropriateness of recognizing revenue on a $2.5 million
licensing transaction in the fourth quarter of 1998. Deloitte & Touche also
indicated that they were reviewing whether the Company's July 1998 investment in
La Sportiva s.r.L. (approximately $6.3 million) should have been consolidated
and has asked the audit committee to investigate this transaction. Deloitte &
Touche has requested that the audit committee investigate whether there are any
other transactions entered into by the Company that warrant further inquiry.
As previously publicly noted, the audit committee of the Company is
conducting an independent investigation into these matters and is in the process
of engaging an independent accounting firm to assist in the investigation.
Management has determined that, upon completion of the investigation, it will
restate the 1997 financial statements and 1998 interim financial statements.
Determination of the extent of the restatement is expected within 2 weeks.
Based upon information currently available to the Company and recognizing
that these matters are subject to further review and have not been conclusively
resolved, the Company believes the resolution of these matters will not affect
its compliance with applicable Nasdaq continued listing requirements.
Quote for reference ticker symbols: TNFI
The North Face, Inc. designs and distributes technically sophisticated
outerwear, snowsports apparel, functional sportswear, tents, sleeping bags,
backpacks, daypacks, accessories and rugged footwear under The North Face name.
Through its subsidiaries, La Sportiva s.r.L. and La Sportiva USA, the Company
designs, manufactures and distributes rock climbing shoes, mountaineering boots
and other rugged footwear under the La Sportiva name. The Company sells its
products primarily to select specialty retailers throughout the United States,
Europe and Canada.
CONTACT: John Batelli, Director, Investor Relations of The North Face, Inc.,
510-618-3631; or Chris Danne of Morgen-Walke Associates, 415-296-7383, for The
North Face, Inc.
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Exhibit 99.3
THE NORTH FACE, INC. COMPLETES
INVESTIGATION BY AUDIT COMMITTEE
CARBONDALE, COLORADO (March 31, 1999) - The North Face, Inc. (Nasdaq: TNFI)
announced today that its Board of Directors has received an oral summary of the
conclusions of the audit committee of the Board of Directors relating to the
audit committee's investigation of the accounting treatment of certain
transactions. The Company currently anticipates that the aggregate restatement
to the financial statements will be a reduction in revenue of approximately $5.1
million for 1997, and approximately $16.2 million for 1998, and a reduction in
net income of approximately $3 million, or 26 cents per share, for 1997, and
approximately $4 million, or 32 cents per share, for 1998.
The North Face previously announced on March 12, 1999, that its audit
committee was conducting an investigation as to the accounting treatment of
certain transactions in 1997 and 1998 and whether there were any other
transactions entered into by the Company that require further inquiry.
The Company also stated today that it will not file its annual report on
Form 10-K on or before March 31, 1999 and has filed for a fifteen-day extension.
The Company's external auditors, Deloitte & Touche LLP, are in the process of
completing their audit procedures. The Company intends to file its annual report
on Form 10-K on or before April 15, 1999.
The Company believes that these restatements to its 1997 and 1998 financial
statements will not affect its compliance with applicable Nasdaq continued
listing requirements.
Quote for reference ticker symbols: TNFI
The North Face, Inc. designs and distributes technically sophisticated
outerwear, snowsports apparel, functional sportswear, tents, sleeping bags,
backpacks, daypacks, accessories and rugged footwear under The North Face name.
Through its subsidiary, La Sportiva USA, and its affiliate, La Sportiva S.r.L,
the Company designs, manufactures and distributes rock climbing shoes,
mountaineering boots and other rugged footwear under the La Sportiva name. The
Company sells its products primarily to select specialty retailers throughout
the United States, Europe and Canada.
Statements included in this press release which are not historical in
nature, are intended to be, and are hereby identified as, "forward-looking
statements" for purposes of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended by Public Law 104-67. Specifically,
the statements relating to the anticipated amount of the aggregate restatement
to the Company's 1997 and 1998 financial statements and the Company's intent to
file its Form 10-K are forward-looking statements. The Company cautions readers
that actual results or events may differ from those indicated in the forward-
looking statements as a result of the audit procedures of Deloitte & Touche.
CONTACT: John Batelli, Director, Investor Relations of The North Face, Inc.,
510-618-3631.
