UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of report (Date of earliest event reported): July 25, 2000
Commission File Number: 333-58059
Cluett American Corp.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-2397044
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
48 West 38th Street New York, NY 10018
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number, Including Area Code 212-984-8900
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Cluett American Corp. and Subsidiaries
TABLE OF CONTENTS
<TABLE>
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Item 2. Acquisition or Disposition of Assets 3
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired: Not Applicable
(b) Pro Forma Financial Information: The following unaudited pro
forma financial information included on pages PF-1 to PF-7 are
filed as part of this current report
Introduction PF-1
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of April 1, 2000 PF-2
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended PF-3
December 31, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended PF-4
December 31, 1998
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended
December 31, 1997 PF-5
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months
ended April 1, 2000 PF-6
Notes to Pro Forma Condensed Consolidated Financial Statements PF-7
(c) Exhibits:
</TABLE>
<PAGE>
ITEM 2. ACQUISTION OR DISPOSITION OF ASSETS
On June 13, 2000 Phillips-Van Heusen Corporation, a Delaware corporation
("PVH"), and Cluett American Corp. (the "Company") announced an agreement (the
"Agreement") for PVH to license the Arrow brand for men's and boy's dress shirts
and sportswear in the United States. In addition, PVH and the Company agreed in
principle for PVH to acquire the stock of Cluett Designer Group, Inc., a
Delaware corporation and licensee for Kenneth Cole dress shirts ("CDG"). The
closing of these transactions was subject to certain limited conditions and
governmental approvals. In conjunction with the Agreement, the Company decided
to discontinue the manufacturing and distribution operations of the Shirt Group
segment.
On July 24, 2000, the transactions contemplated by the Agreement, including the
Purchase and Sale Agreement among Cluett, Peabody & Co., Inc., a Delaware
corporation ("CP"), Cluett, Peabody Canada, Inc., a Canadian corporation ("CP
Canada"), Arrow Factory Stores Inc., a Delaware corporation ("AFS"), Cluett
Designer Group, Inc., a Delaware corporation ("CDG"), Consumer Direct
Corporation, a Delaware corporation ("CDC"), Cluett, Peabody Holding Corp., a
Delaware corporation ("Holding"), and PVH, (the "Purchase and Sale Agreement")
and the Share Purchase Agreement among CP, CDG, Bidermann Tailored Clothing
Inc., a Delaware corporation ("BTC"), and PVH (the "Share Purchase Agreement")
were closed. Each of the parties to the Purchase and Sale Agreement and the
Share Purchase Agreement other than PVH and CDG is, and prior to the closing CDG
was, a wholly-owned subsidiary of the Company.
Pursuant to the Purchase and Sale Agreement, (i) all of the outstanding shares
of capital stock of C.A.T. Industrial S.A. de C.V., ("C.A.T") a corporation
organized under the laws of Honduras, were sold to PVH by CP, AFS, CDG, CDC and
Holding, (ii) PVH purchased all of CP's and AFS's right, title and interest in
and to certain of the other assets (principally inventory) of CP and AFS used
primarily by CP and AFS in their Arrow label and private label men's and boy's
dress and sport shirts business and their Arrow factory outlet operations in the
United States and (iii) PVH purchased all of CP Canada's right, title and
interest in and to Arrow label dress and sport shirt inventory used in CP
Canada's United States "Career Apparel" business. Pursuant to the Share Purchase
Agreement, all of the outstanding shares of capital stock of CDG were sold by CP
and BTC to PVH.
The aggregate purchase price paid by PVH pursuant to the Purchase and Sale
Agreement and the Share Purchase Agreement for the stock and assets referred to
above was approximately $46.9 million in cash plus the assumption of $2.1
million of debt related to C.A.T., calculated as set forth in, and subject to
adjustment pursuant to, Article 3 of each of the Purchase and Sale Agreement and
the Share Purchase Agreement. Cluett American has irrevocably and
unconditionally guaranteed the payment of any amount payable by CP or BTC to PVH
under each Agreement which is not paid by CP or BTC when due, including pursuant
to the purchase price adjustment and indemnification provisions of the
Agreements.
Pursuant to the Purchase and Sale Agreement, the Trademark License Agreement,
dated July 24, 2000, by and between Cluett Peabody Resources Corporation, a
Delaware corporation and a wholly-owned subsidiary of the Company ("CPR"), CP
and PVH was executed and delivered. Pursuant to the Trademark License Agreement,
CP granted to PVH an exclusive license to use trademarks related to CP's "Arrow"
clothing line in the United States and its territories and possessions in
connection with its manufacture, advertising, marketing, promotion,
distribution, offer to sell and sale of men's and boys' dress shirts, sports
shirts (including knit, woven and all forms of fleece), pants, shorts and
sweaters in certain specified channels of trade, including the Internet. CP also
granted to PVH the right to operate websites that use URLs that incorporate the
licensed trademarks. The Trademark License Agreement requires PVH to pay a $5.0
million minimum guaranteed annual royalty fee to CP, subject to increases based
on the achievement by PVH of certain sales targets. The initial term of the
license expires on June 30, 2007; however, PVH has the option to renew the
Trademark License Agreement for two additional five year terms, provided it
meets certain conditions.
3
<PAGE>
The Company used the proceeds from the Purchase and Sale Agreement, the Share
Purchase Agreement and the Trademark License Agreement (collectively referred to
as the "Transactions") to repay outstanding borrowings under its Senior Credit
Facility and CP Canada's Credit Facility.
The Company expects to complete the disposition of the remaining net assets of
the Shirt Group segment's manufacturing and distribution operations by December
31, 2000 and accordingly, will reflect the Shirt Group segment's manufacturing
and distribution operations as discontinued in the Company's financial
statements.
4
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated balance sheet of the
Company as of April 1, 2000 gives effect to (i) the Transactions and (ii) the
Company's decision to discontinue the Shirt Group segment's manufacturing and
distribution operations as if the Transactions and decision had occurred on
April 1, 2000.
The following unaudited pro forma condensed statements of operations of the
Company for the three years ended December 31, 1999, 1998 and 1997 and the three
months ended April 1, 2000, give effect to (i) the Transactions and (ii) the
Company's decision to discontinue the Shirt Group segment's manufacturing and
distribution operations as if the Transactions and decision had occurred as of
the beginning of each period presented.
The pro forma financial information should be read in conjunction with the
historical consolidated financial statements of the Company and the related
notes thereto appearing in the Company's Annual Report on Form 10-K for the
years ended December 31, 1999, 1998 and 1997 and quarterly report on Form 10-Q
for the three months ended April 1, 2000 previously filed with the Securities
and Exchange Commission. The pro forma financial information is not necessarily
indicative of the results of operations or financial position that would have
been reported had such transactions occurred at the dates specified, nor is it
necessarily indicative of the Company's future results of operations or
financial position.
PF - 1
<PAGE>
Unaudited Pro Forma Condensed Consolidated Balance Sheets
(In Thousands)
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ACTUAL PRO FORMA PRO FORMA
APRIL 1, 2000 ADJUSTMENTS (1) APRIL 1, 2000
Assets
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.................................... $ 3,491 (26) $ 3,465
Accounts receivable, net..................................... 53,003 1,963 (2) 54,966
Inventories, net ............................................ 84,528 (52,048) 32,480
Prepaid expenses and other current assets.................... 3,953 (6) 3,947
Net assets held for sale..................................... -- 29,724 (3) 29,724
--------------------------------------------------------
Total current assets............................................ 144,975 (20,393) 124,582
--------------------------------------------------------
Property, plant and equipment, net.............................. 46,469 (18,080) (4) 28,389
Pension assets.................................................. 32,812 -- 32,812
Deferred financing fees......................................... 10,795 -- 10,795
Goodwill, net 4,622 (4,622) --
Other noncurrent assets......................................... 1,910 (5) 1,905
--------------------------------------------------------
Total assets.................................................... $241,583 $ (43,100) $198,483
========================================================
Liabilities and stockholder's deficit
Current liabilities:
Accounts payable and accrued expenses........................ $ 45,004 10,377 (5) $ 55,381
Accrued interest payable..................................... 7,240 -- 7,240
Short-term debt and current portion of long-term debt........ 23,346 (805) (6) 22,541
Income taxes payable......................................... 2,010 -- 2,010
----------------------------------------------------------
Total current liabilities....................................... 77,600 9,572 87,172
Long-term debt and capital lease obligations.................... 258,886 (51,400) (6) 207,486
Dividends payable............................................... 2,550 -- 2,550
Other non-current liabilities................................... 149 -- 149
Senior Exchangeable Preferred Stock Due 2010, cumulative, $.01
par value: authorized 4,950,000, issued and outstanding
599,145 shares (liquidation preference of $59,915)............ 58,329 -- 58,329
Stockholder's deficit:
Common stock, $1 par value: authorized, issued and
outstanding 1,000 shares.................................. 1 -- 1
Additional paid-in capital................................... 133,188 -- 133,188
Accumulated deficit.......................................... (288,771) (1,272) (7) (290,043)
Other comprehensive loss..................................... (349) -- (349)
--------------------------------------------------------
Total stockholder's deficit..................................... (155,931) (1,272) (157,203)
--------------------------------------------------------
Total liabilities and stockholder's deficit..................... $ 241,583 $ (43,100) $ 198,483
========================================================
</TABLE>
See accompanying notes.
PF - 2
<PAGE>
Unaudited Condensed Consolidated Statements of Operations
(In Thousands)
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<S> <C> <C> <C> <C>
ADJUSTED YEAR PRO FORMA PRO FORMA
ENDED ADJUSTMENTS YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 (8) 1999
---------------- ---------------- ------ --------------
Net sales...................................... $174,763 5,000 (9) $179,763
Cost of goods sold............................. 109,646 109,646
---------------- ---------------- ------ --------------
Gross profit................................... 65,117 5,000 70,117
Selling, general and administrative expenses... 33,007 -- 33,007
Restructuring and impairment charges........... 1,108 -- 1,108
---------------- ---------------- ------ --------------
Operating income............................... 31,002 5,000 36,002
Interest expense, net.......................... 25,700 (2,549) (10) 23,151
Other expense, net............................. 184 -- 184
---------------- ---------------- ------ --------------
Income from continuing operations before
bankruptcy reorganization credits and
provision for income taxes.................. 5,118 7,549 12,667
Bankruptcy reorganization credits.............. (573) -- (573)
---------------- ---------------- ------ --------------
Income from continuing operations before 5,691 7,549 13,240
provision for income taxes
Provision for income taxes..................... 1,051 -- 1,051
Income from continuing operations 4,640 7,549 12,189
Discontinued operations:
Income (loss) from operations of discontinued
segment..................................... (21,753) 17,582 (4,171)
---------------- ---------------- ------ --------------
Net income (loss).............................. $(17,113) $25,131 $8,018
================ ================ ====== ==============
</TABLE>
See accompanying notes.
PF - 3
<PAGE>
Unaudited Condensed Consolidated Statements of Operations
(In Thousands)
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<S> <C> <C> <C> <C>
ADJUSTED YEAR PRO FORMA PRO FORMA
ENDED ADJUSTMENTS YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 (8) 1998
---------------- ---------------- ------ --------------
Net sales...................................... $171,548 5,000 (9) $176,548
Cost of goods sold............................. 112,781 112,781
---------------- ---------------- ------ --------------
Gross profit................................... 58,767 5,000 63,767
Selling, general and administrative expenses... 31,493 -- 31,493
Restructuring and impairment charges........... 1,022 -- 1,022
---------------- ---------------- ------ --------------
Operating income............................... 26,252 5,000 31,252
Interest expense, net.......................... 19,279 (1,269) (10) 18,010
Other expense, net............................. 2,131 -- 2,131
---------------- ---------------- ------ --------------
Income (loss) from continuing operations
before bankruptcy reorganization credits
and provision for income taxes.............. 4,842 6,269 11,111
Bankruptcy reorganization...................... 37,528 -- 37,528
---------------- ---------------- ------ --------------
Income from continuing operations before (32,686) 6,269 (26,417)
provision for income taxes
Provision for income taxes..................... 868 -- 868
Income (loss)from continuing operations (33,554) 6,269 (27,285)
Discontinued operations:
Income (loss) from operations of
discontinued segment........................ (3,280) 2,223 (1,057)
---------------- ---------------- ------ --------------
Net income (loss).............................. $ (36,834) $8,492 $(28,342)
================ ================ ====== ==============
</TABLE>
PF - 4
<PAGE>
Unaudited Condensed Consolidated Statements of Operations
(In Thousands)
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<S> <C> <C> <C> <C>
ADJUSTED YEAR PRO FORMA PRO FORMA
ENDED ADJUSTMENTS YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 (8) 1997
---------------- ---------------- ----- ---------------
Net sales...................................... $158,997 5,000 (9) $163,997
Cost of goods sold............................. 103,101 103,101
---------------- ---------------- ----- ---------------
Gross profit................................... 55,896 5,000 60,896
Selling, general and administrative expenses... 27,655 -- 27,655
Restructuring and impairment charges........... 1,206 -- 1,206
---------------- ---------------- ----- ---------------
Operating income............................... 27,035 5,000 32,035
Interest expense, net.......................... 15,233 15,233
Other income, net.............................. (2,743) -- (2,743)
---------------- ---------------- ----- ---------------
Income from continuing operations before
bankruptcy reorganization credits and
provision for income taxes.................. 14,545 5,000 19,545
Bankruptcy reorganization credits.............. (2,833) -- (2,833)
---------------- ---------------- ----- ---------------
Income from continuing operations before 17,378 5,000 22,378
provision for income taxes
Provision for income taxes..................... 1,326 -- 1,326
Income from continuing operations.............. 16,052 5,000 21,052
Discontinued operations:
Income (Loss) from operations of
discontinued segment........................ 1,145 (3,430) (2,285)
---------------- ---------------- ----- ---------------
Net income .................................... $17,197 $1,570 $18,767
================ ================ ===== ===============
</TABLE>
PF - 5
<PAGE>
Unaudited Condensed Consolidated Statements of Operations
(In Thousands)
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<S> <C> <C> <C> <C>
ADJUSTED THREE PRO FORMA PRO FORMA
MONTHS ADJUSTMENTS THREE MONTHS
ENDED ENDED
APRIL 1, 2000 (8) APRIL 1, 2000
---------------- ---------------- ------ ---------------
Net sales...................................... $40,532 5,000 (9) $45,532
Cost of goods sold............................. 25,563 -- 25,563
---------------- ---------------- ------ ---------------
Gross profit................................... 14,969 5,000 19,969
Selling, general and administrative expenses... 9,177 -- 9,177
---------------- ---------------- ------ ---------------
Operating income............................... 5,792 5,000 10,792
Interest expense, net.......................... 7,017 (699) (10) 6,318
Other expense, net............................. 33 -- 33
---------------- ---------------- ------ ---------------
Loss (income) from continuing operations
before provision for income taxes........... (1,258) 5,699 4,441
Provision for income taxes..................... 194 -- 194
---------------- ---------------- ------ ---------------
Income from continuing operations ............ (1,452) 5,699 4,247
Discontinued operations:
Income (loss) from operations of
discontinued segment........................ (5,274) 5,379 105
---------------- ---------------- ------ ---------------
Net income (loss).............................. $(6,726) $11,078 $ 4,352
================ ================ ====== ===============
</TABLE>
See accompanying notes.
PF - 6
<PAGE>
Notes to Pro Forma Condensed Consolidated Financial Statements
(1) Except as noted in notes (2) through (7) below, this adjustment reflects
the net assets disposed pursuant to the Transactions.
(2) To record $1,994 in escrow receivable pursuant to the Transactions offset
against $31 in assets disposed.
(3) To record the remaining net assets of the Company's Shirt Group
manufacturing and distribution operations as held for sale pursuant to the
Company's June 13, 2000 decision to discontinue such operations. Net assets
held for sale consist of the following:
Inventory, net $ 12,188
Property , plant and equipment, net 17,536
---------
$ 29,724
(4) Includes $544 in assets disposed and $17,536 in assets of the Company's
Shirt Group manufacturing and distribution operations as held for sale
pursuant to the Company's June 13, 2000 decision to discontinue such
operations.
(5) Includes $186 in liabilities assumed by PVH and restructuring and other
costs pursuant to the Transactions. These restructuring and other costs
include compensation and severance of $3,914, professional fees of $3,500,
lease termination costs of $723, and other costs of $2,426. Such costs are
not considered in the pro forma condensed statements of operations.
(6) Includes $2.1million in debt assumed in conjunction with the Transactions
and assumes the proceeds from the Transactions were used to repay
outstanding borrowings under the Company's Senior Credit Facility and CP
Canada's Credit Facility.
(7) Reflects the estimated loss from the Transactions after taking into
consideration restructuring and other charges as noted in note (5) above.
Such loss is not considered in the pro forma condensed statements of
operations.
(8) Reflects the Company's historical results as restated pursuant the
Company's June 13, 2000 decision to discontinue the Shirt Group segment's
manufacturing and distribution operations.
(9) Reflects license fee revenue recognized pursuant to the Transactions.
(10) Reflects a reduction of interest expense as a result of the repayment of
the outstanding borrowings under the Company's Senior Credit Facility and
CP Canada Credit Facility.
PF - 7
<PAGE>
(c) Exhibits:
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
--------------------------------------------------------------------------------
*2.1 Purchase and Sale Agreement among Cluett, Peabody & Co., Inc., Cluett,
Peabody Canada, Inc., Arrow Factory Stores Inc., Cluett Designer Group Inc.,
Consumer Direct Corporation, Cluett, Peabody Holdings Corp. and Phillips-Van
Heusen Corporation, dated as June 12,2000.
*2.2 Share Purchase agreement among Cluett, Peabody & Co., Inc., Cluett Designer
Group Inc., Bidermann Tailored Clothing Inc. and Phillips-Van Heusen, dated as
of June 28, 2000.
* All exhibits were previously filed as part of the Current Report on Form
8-K filed with the SEC on July 25, 2000.
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 thereunto duly authorized.
CLUETT AMERICAN CORP.
(Registrant)
August 8, 2000 /s/ Bryan P. Marsal
---------------------------------
Bryan P. Marsal
Director, President and Chief
Executive Officer
August 8, 2000 /s/ W. Todd Walter
---------------------------------
W. Todd Walter
Vice President and Chief
Financial Officer
