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) OCTOBER 23, 1998
GARGOYLES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 0-21355 91-1247269
(STATE OF INCORPORATION) (COMMISSION (IRS EMPLOYER
FILE NUMBER) IDENTIFICATION NO.)
5866 South 194th Street
KENT, WASHINGTON 98032
(253) 796-2752
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ITEM 5. OTHER EVENTS
On October 23, 1998, Gargoyles, Inc. (OTC) reported that it had reached an
agreement in principal for a recapitalization of the Company with a New York
investment bank which specializes in transactions with middle market companies
with growth prospects. The proposed transaction contemplates the sale by the
Company of equity and subordinated debt securities and the restructure and
refinancing of the Company's current senior credit facility. While the terms of
the securities to be issued remain subject to negotiation, it is anticipated
that holders of the Company's presently outstanding common stock will hold less
than 20% of the Company's equity, on a fully diluted basis, after the
transaction is completed.
"We are very pleased with the prospects of this transaction" said Robert Wolfe,
the Company's Chairman and Chief Financial Officer of Trillium Corporation, the
Company's largest shareholder. "It will provide the Company with the capital to
complete its restructure and to assure the Company's success."
The Company began a restructure earlier this year under the guidance of Company
CEO and CFO, Leo Rosenberger, who joined the Company February first. "The
Company has made significant progress over the past few months. We have
refocused our brands, restructured our sales force, renegotiated contracts to
dramatically reduce our contingent liabilities, closed unprofitable operations,
reduced expenses, improved the quality of our products and restructured our
operations," said Rosenberger. "The transaction will provide the Company with
the funds to launch our programs for 1999 and helps to assure our future and our
success in 1999 and beyond."
The transaction will be completed with the continued cooperation of the
Company's current lender and is expected to close in early 1999. Closing of the
transaction is conditioned on a number of factors including completion of review
of the Company's business and operations, finalizing placement of the
securities, and the parties' agreement on the terms of definitive documentation.
Gargoyles, Inc., headquartered in Kent, Washington, is a designer and
distributor of a broad range of sunglasses and eyewear products. The Company
also has operations in New York State.
This press release contains forward-looking statements concerning the proposed
restructuring and recapitalization transaction and the Company's expectations
with respect to future operations and its cash requirements and its ability to
fulfill them. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not limited to,
<PAGE>
factors and uncertainties described in this press release and those involving
the ability to place certain of the securities to be issued in the
recapitalization, the completion of the due diligence review of the Company's
affairs, the ability to negotiate definitive agreements concerning the proposed
transaction, business cycles and developments involving consumer products in
general and the sunglass industry in particular, the need for continued
cooperation of the Company's vendors and its lenders, and other factors,
including those described in the Company's filings with the Securities and
Exchange Commission. The Company undertakes no obligation to update
forward-looking statements to reflect changes in circumstances or changes in the
views, estimates or opinions of management that occur after the statements are
made. Because of the inherent uncertainty of forward-looking statements and
because circumstances or management's views, estimates and opinions may change,
investors are cautioned not to place undue reliance on forward-looking
statements.
The securities to be issued in the proposed transaction have not been and will
not be registered under the Securities Act of 1933 or the securities laws of any
state, and may not be offered or sold unless an exemption from registration is
available.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
99.1 Press Release of Registrant dated October 23, 1998.
SIGNATURES
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.
Date: November 5, 1998
GARGOYLES, INC.
By: /s/ LEO ROSENBERGER
-------------------
Leo Rosenberger
Chief Executive Officer,
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit Description
99.1 Press Release of Registrant dated October 23, 1998.
<PAGE>
EXHIBIT 99.1
GARGOYLES REPORTS PROPOSED RECAPITALIZATION
Kent, Washington: October 23, 1998 -- Gargoyles, Inc. (OTC: GOYL) today reported
that it has reached an agreement in principal for a recapitalization of the
Company with a New York investment bank which specializes in transactions with
middle market companies with growth prospects. The proposed transaction
contemplates the sale by the Company of equity and subordinated debt securities
and the restructure and refinancing of the Company's current senior credit
facility. While the terms of the securities to be issued remain subject to
negotiation, it is anticipated that holders of the Company's presently
outstanding common stock will hold less than 20% of the Company's equity, on a
fully diluted basis, after the transaction is completed.
"We are very pleased with the prospects of this transaction" said Robert Wolfe,
the Company's Chairman and Chief Financial Officer of Trillium Corporation, the
Company's largest shareholder. "It will provide the Company with the capital to
complete its restructure and to assure the Company's success."
The Company began a restructure earlier this year under the guidance of Company
CEO and CFO, Leo Rosenberger, who joined the Company February first. "The
Company has made significant progress over the past few months. We have
refocused our brands, restructured our sales force, renegotiated contracts to
dramatically reduce our contingent liabilities, closed unprofitable operations,
reduced expenses, improved the quality of our products and restructured our
operations," said Rosenberger. "The transaction will provide the Company with
the funds to launch our programs for 1999 and helps to assure our future and our
success in 1999 and beyond."
The transaction will be completed with the continued cooperation of the
Company's current lender and is expected to close in early 1999. Closing of the
transaction is conditioned on a number of factors including completion of review
of the Company's business and operations, finalizing placement of the
securities, and the parties' agreement on the terms of definitive documentation.
Gargoyles, Inc., headquartered in Kent, Washington, is a designer and
distributor of a broad range of sunglasses and eyewear products. The Company
also has operations in New York State.
This press release contains forward-looking statements concerning the proposed
restructuring and recapitalization transaction and the Company's expectations
with respect to future operations and its cash requirements and its ability to
fulfill them. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not limited to,
factors and uncertainties described in this press release and those involving
the ability to place certain of the securities to be issued in the
recapitalization, the completion of the due diligence review of the Company's
affairs, the ability to negotiate definitive agreements concerning the proposed
transaction, business cycles and developments involving consumer products in
general and the sunglass industry in particular, the need for continued
cooperation of the Company's vendors and its lenders, and other factors,
including those described in the Company's filings with the Securities and
Exchange Commission. The Company undertakes no obligation to update
forward-looking statements to reflect changes in circumstances or changes in the
views, estimates or opinions of management that occur after the statements are
made. Because of the inherent uncertainty of forward-looking statements and
because circumstances or management's views, estimates and opinions may change,
investors are cautioned not to place undue reliance on forward-looking
statements.
The securities to be issued in the proposed transaction have not been and will
not be registered under the Securities Act of 1933 or the securities laws of any
state, and may not be offered or sold unless an exemption from registration is
available.
Contact: Leo Rosenberger, CEO and CFO (800) 426-6396 Ext. 3405 or Cynthia L.
Pope, VP and General Counsel (800) 426-6396 Ext. 3404.
