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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 1998
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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): August 5, 1998
GENESIS DIRECT, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
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<S> <C>
0-24173 22-3449666
(Commission File Number) (I.R.S. Employer Identification No.)
100 PLAZA DRIVE, SECAUCUS, NJ 07094
(Address of Principal Executive Offices) (Zip Code)
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(201) 867-2800
(Registrant's Telephone Number, Including Area Code)
With a copy to:
Ira A. Greenstein, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104
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ITEM 5. OTHER EVENTS.
On August 5, 1998, Genesis Direct Forty-Three, LLC, a Delaware limited
liability company and a wholly owned subsidiary of the Registrant ("Buyer"),
Carol Wright Gifts, Inc., a Delaware corporation ("Carol Wright"), and Cox
Target Media, Inc., a Delaware corporation, entered into an Asset Purchase
Agreement (the "Acquisition Agreement"), providing for the acquisition by Buyer
of substantially all of the assets of Carol Wright and the assumption by Buyer
of certain of the liabilities of Carol Wright. Under the terms of the
Acquisition Agreement, Buyer has agreed to pay to Carol Wright an aggregate
purchase price consisting of 2,700,000 shares of the Registrant's Common Stock,
which is subject to adjustment depending on the closing price of the
Registrant's Common Stock on the trading day immediately preceding the closing
date of the acquisition, and $100,000 in cash. The acquisition will be
accounted for under the purchase method of accounting, and is subject to certain
conditions, including the expiration or early termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
--------
1.1 Press Release issued by the Registrant dated August 5, 1998.
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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.
GENESIS DIRECT, INC.
Date: August 20, 1998 By: /s/ WARREN STRUHL
-----------------------------------
Warren Struhl
Chairman of the Board of Directors,
President and Chief Executive Officer
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EXHIBIT 1.1
Contact: Ronald Benanto
Chief Financial Officer
(201) 867-2800
Christine DiSanto/
Caroline Babbitt/
Amanda Mullin
Morgen-Walke Associates
(212) 850-5600
For Immediate Release
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Media: Stacy Berns/Jeff Siegel
Morgan-Walke Associates
(212) 850-5600
*GENESIS DIRECT ANNOUNCES FIRST QUARTER RESULTS*
*SIGNS DEFINITIVE AGREEMENT TO ACQUIRE CAROL WRIGHT
GIFTS AND CATALOG BUSINESSES*
*ACQUIRES FAN AND FUN SPORTS CATALOG*
Secaucus, New Jersey, August 5, 1998 - Genesis Direct, Inc. (Nasdaq:GEND)
today announced financial results for the first quarter ended June 27, 1998, and
the acquisition of two direct marketing businesses.
Net sales for the first quarter more than doubled to $33.9 million compared
to $14.0 million in the first quarter of last year. The net loss in the first
quarter, excluding an extraordinary loss related to the early extinguishment of
debentures resulting from the Company's May initial public offering, was $18.7
million, compared to a net loss of $9.3 million in the same period of last year.
The basic net loss per share in the first quarter excluding the extraordinary
charge was $0.92 per share compared to a basic net loss per share of $1.07 in
the first quarter of last year. The supplemental diluted net loss per share
excluding the extraordinary charge was $0.73 compared to a net loss of $1.06 per
share a year ago. Supplemental diluted net loss per share figures reflect in
the diluted weighted average number of shares the conversion of outstanding
convertible securities on an if converted basis from the date of issuance.
COX ENTERPRISES; CAROL WRIGHT GIFTS & CATALOG
Genesis Direct also announced it has acquired the Carol Wright Gifts unit
of Cox Enterprises, Inc. and anticipates that this may lead to other strategic
relationships with the privately held Atlanta-based media and communications
company. Cox has diversified operations and investments in the U.S. and
international newspapers, television and radio stations, cable systems,
programming, telecommunications and the Internet, which could
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potentially provide new outlets for Genesis Direct's multiple brands that
primarily feature sports, gift, and collectible items. Carol Wright Gifts, which
includes the Applecreek catalog, markets via direct mail a variety of products,
many of which are part of Genesis Direct's core merchandise offerings. Carol
Wright has an extensive database approaching nine million customers. Sales for
the fiscal year ended December 31, 1997 were approximately $118 million, and
sales are expected to exceed $140 million in fiscal 1998. Total consideration
for the transaction is expected to be 2.7 million shares of Genesis Direct
common stock, subject to certain regulatory approvals and the price of Genesis
Direct common stock at the time of closing, which is expected to occur in early
September.
Warren Struhl, President and Chief Executive Officer of Genesis Direct,
commented, "The Carol Wright purchase is the most significant acquisition we
have made to date in terms of revenue, database and ongoing strategic
opportunities. The acquired businesses not only have untapped marketing
potential, but we are confident that we can enhance the merchandise offerings,
add critical value to our combined database of over 20 million names and take
advantage of new media opportunities including Cox's substantial Internet
exposure."
David Easterly, President and Chief Executive Officer of Cox Enterprises,
further commented, "We are very excited to have entered into this relationship
with Genesis Direct. Through 25 Cox-operated Internet sites, as well as through
our other media channels, including television, radio and newspapers, we can
give Genesis Direct more exposure than ever before to on-line commerce as well
as to opportunities through our Cox Interactive division."
FAN AND FUN SPORTS CATALOG
The Company also noted that it purchased the German-based Fan and Fun
sports catalog, which expands Genesis Direct's global sports businesses, for
approximately $800,000 in cash.
Mr. Struhl, further commented, "Clearly, the popularity of American sports
is rapidly expanding on a global basis, particularly throughout Europe. The
addition of Fan and Fun's extensive database of approximately 150,000 names will
bolster our international presence and enhance our USA Pro Sports Direct brand,
which was successfully introduced to the British, French and German markets
earlier this year. This purchase, although small, is significant to Genesis
Direct, as it will further solidify our leading position overseas as a direct
marketer of American sports products, and will augment the strong international
demand on our web site stores through NBA.Com, NHL.Com, and MLB.Com."
"We are pleased with Genesis Direct's accomplishments so far this year,
which include a solid first quarter performance and the successful completion of
three strategic acquisitions, including Biobottoms in April 1998. These
acquisitions represent full-year revenue potential of approximately $160
million, which leaves us confident that we can achieve our goals for the year."
Mr. Struhl concluded, "Looking ahead, we expect to continue to improve the
productivity of our existing brands, and believe there are still many
opportunities to complete additional
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acquisitions and launch new brands. As the non-store shopping industry continues
its rapid expansion, we are confident that the infrastructure we have developed
will enable us to capitalize on the future growth of these channels.
Importantly, we are seeing more opportunities in on-line commerce than ever
before, and are very excited about the potential to further develop our highly
cost effective Internet business."
Genesis Direct is a leading database-driven specialty retailer in the
rapidly growing universe of non-store shopping. With a current portfolio of 33
Company-owned brands, the Company offers products directly to consumers in
targeted niche markets primarily through a variety of distinctive information-
rich catalogs, as well as Internet websites and electronic media, including
television and radio.
This press release may contain statements that are forward-looking within
the meaning of applicable federal securities laws and are based on Genesis
Direct's current expectations and assumptions, which are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from those anticipated. Factors that could cause actual results to differ from
those anticipated are detailed in Genesis Direct's filings with the Securities
and Exchange Commission.
(Tables to Follow)
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GENESIS DIRECT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------
June 27, 1998 June 28, 1997
---------------------- --------------------
<S> <C> <C>
Net Sales $ 33,884 $ 14,047
Cost of goods sold 23,205 9,077
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Gross profit 10,679 4,970
Selling, general and administrative expenses 28,403 13,300
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Operating loss (17,724) (8,330)
Interest expense - net 1,016 984
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Net loss before extraordinary item (18,740) (9,314)
Extraordinary item/1/ (5,235) --
----------- ----------
Net loss $ (23,975) $ (9,314)
=========== ==========
Basic net loss per share:
Loss before extraordinary item $ (0.92) $ (1.07)
Extraordinary item (0.26) --
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Net loss $ (1.18) $ (1.07)
=========== ==========
Weighted average shares - basic 20,380,147 8,719,011
Supplemental diluted loss per share/2/
Loss before extraordinary item $ (0.73) $ (1.06)
Extraordinary item (0.20) --
----------- ----------
Net loss $ (0.93) $ (1.06)
=========== ==========
Weighted average shares - fully diluted 25,679,913 8,749,895
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/1/ Represents one time charge incurred on early extinguishment of debt paid
off by proceeds raised in the Company's May 7, 1998 Initial Public Offering.
/2/ A supplemental diluted net loss per share is included to present results on
a basis comparable to the Company's per share information subsequent to its
recently concluded Initial Public Offering. Therefore, the diluted net loss per
share reflects in the supplemental diluted weighted average number of shares the
conversion of outstanding convertible securities on an if converted basis from
the date of issuance. The dilutive impact of outstanding stock options during
the periods presented is also included. The Series A Preferred Stock was
converted to common stock immediately prior to the Company's Initial Public
Offering and under the terms of the convertible securities, all accrued
dividends have been forgiven.
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GENESIS DIRECT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
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<CAPTION>
(unaudited)
June 27, 1998 March 28, 1998
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 61,230 $ 2,722
Accounts receivable 7,970 5,594
Merchandise inventory, net 30,145 27,350
Other current assets 14,546 12,157
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Total current assets 113,891 47,823
Property, equipment and leasehold improvements, net 31,305 25,639
Other assets 70,586 65,364
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Total assets $215,782 $138,826
======== ========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY (DEFICIENCY)
Total current liabilities $ 48,540 $ 60,505
Notes payable and long-term debt, less current portion 9,397 41,154
Other liabilities 3,116 2,717
Series A Preferred Stock --- 96,739
Total common stockholders' equity (deficiency) 154,729 (62,289)
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Total liabilities and common stockholders' equity $215,782 $138,826
======== ========
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