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):
JULY 24, 1995
OAK HILL SPORTSWEAR CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 0-5613 13-2625545
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation File Number) Identification No.)
or organization)
1411 BROADWAY, NEW YORK, NY 10018
(Address of principal executive offices) (zip code)
(212) 789-8900
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Exhibit Index appears on Page 5
Total Number of Pages: 10
<PAGE>
Page 2
ITEM 2. Pursuant to an Asset Purchase Agreement between Oak Hill
Sportswear Corporation, a New York corporation (the "Company"),
and Donnkenny Apparel, Inc. ("Donnkenny"), dated as of May 23,
1995, as amended (the "Asset Purchase Agreement"), the Company
completed, on July 24, 1995, the sale (the "Sale") of the
business and certain assets of the Company's Sportswear
Division. The Sale occurred as of June 30, 1995, subject to the
approval of the Company's shareholders. Such shareholder
approval was obtained on July 24, 1995. The assets sold
included the inventory, certain fixed assets, security deposits,
trade names and trademarks, contracts and good will of the
Company's Sportswear Division.
The purchase price paid by Donnkenny was $14,615,983 in cash
and the assumption of certain liabilities. The Company retained
other liabilities relating to the Sportswear Division.
$1,000,000 of the cash purchase price was placed in a one year
escrow to provide security for the Company's indemnification
obligations and its warranty of certain inventory under the
Asset Purchase Agreement. The purchase price was based on
an estimate of the net book value of the transferred tangible
assets plus $2,000,000, and it is subject to a post-closing
adjustment if the actual net book value is different from the
estimated net book value. Donnkenny, a manufacturer and marketer
of apparel, is an unaffiliated third party and the transaction was
consummated on an arms length basis. Upon the consummation of
the Sale, Arthur L. Asch and Michael A. Asch, the Chairman and
Chief Financial Officer of the Company, respectively, became
employees of Donnkenny. They also are continuing in their
positions with the Company at a substantially reduced salary.
After the Sale, the Company retains its Harmal Division, which
manufactures women's accessories. The Company has not yet
decided its future direction, which will depend, in part, upon
the proceeds that it realizes from the Sale, after payment of the
retained liabilities and the expenses incurred in connection
therewith, and from certain of its other corporate assets.
<PAGE>
Page 3
ITEM 7. (b) PRO FORMA FINANCIAL INFORMATION.
Pro Forma Unaudited Consolidated Balance Sheet as of March
31, 1995 and Pro Forma Unaudited Consolidated Statement of
Operations for the year ended December 31, 1994 and the
three months ended March 31, 1995 are incorporated by
reference to "Pro Forma Consolidated Balance Sheet of the
Company (Unaudited)" and "Oak Hill Sportswear Corporation
Pro Forma Consolidated Statements of Operations
(Unaudited)" in the Company's Definitive Proxy Statement
dated June 28, 1995 (the "Proxy Statement").
(c) EXHIBITS
2(a) Asset Purchase Agreement between Oak Hill Sportswear
Corporation and Donnkenny Apparel, Inc., dated as of
May 23, 1995 (incorporated by reference to Annex A to
the Proxy Statement).
2(b) Amendment No. 1 to Asset Purchase Agreement between
Oak Hill Sportswear Corporation and Donnkenny
Apparel, Inc., dated as of June 26, 1995
(incorporated by reference to Annex A to the Proxy
Statement).
99 Pro Forma Unaudited Consolidated Balance Sheet as of
March 31, 1995 and Pro Forma Unaudited Consolidated
Statement of Operations for the year ended December
31, 1994 and the three months ended March 31, 1995.
<PAGE>
Page 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Dated: August 7, 1995
OAK HILL SPORTSWEAR CORPORATION
By: /S/ Michael A. Asch
----------------------------
Name: Michael A. Asch
Title: Vice President and
Chief Financial Officer
<PAGE>
Page 5
EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
----------- ------------------------------------------ ----------
2(a) Asset Purchase Agreement between Oak Hill *
Sportswear Corporation and Donnkenny
Apparel, Inc., dated as of May 23, 1995.
2(b) Amendment No. 1 to Asset Purchase Agreement *
between Oak Hill Sportswear Corporation and
Donnkenny Apparel, Inc., dated as of
June 26, 1995.
99 Pro Forma Unaudited Consolidated Balance 6
Sheet as of March 31, 1995 and Pro Forma
Unaudited Consolidated Statement of
Operations for the year ended December 31,
1994 and the three months ended March 31,
1995.
_________________________
* Incorporated by reference to Annex A to Definitive Proxy Statement
dated June 28, 1995.
Page 6
EXHIBIT
Pro Forma Unaudited Consolidated Balance Sheet
as of March 31, 1995 and
Pro Forma Unaudited Consolidated Statement of
Operations for the year
ended December 31, 1994 and
the three months ended March 31, 1995
<PAGE>
Page 7
PRO FORMA CONSOLIDATED BALANCE SHEET OF THE COMPANY
(UNAUDITED)
The following unaudited pro forma consolidated balance sheet as of March 31,
1995 gives effect to the proposed sale of certain net assets of the Company's
Sportswear Division to Donnkenny as if such sale had been consummated on March
31, 1995. This pro forma consolidated balance sheet should be read in
conjunction with the historical consolidated financial statements and notes
thereto, the pro forma adjustments and the Asset Purchase Agreement included
elsewhere in this Proxy Statement. The following statement is not necessarily
indicative of the financial position that actually would have been achieved if
the proposed sale had taken place on March 31, 1995 (in thousands except for
share data).
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments Continuing
Consolidated Debit Credit Operations
----------- ----------------------- -----------
<S> <C> <C> <C> <C>
Assets
Current Assets
Cash $ 234 (a)$10,355 (a)$ 27 $ 1,200
(a) 250
(a) 750
(b) 8,362
Accounts receivable - net 12,072 12,072
Inventories 10,810 (a) 8,338 2,472
Other current assets 646 (a) 80 281
(a) 285
Assets held for sale (c) 1,033 1,033
------- ------- ------- -------
Total current assets 23,762 11,388 18,092 17,058
Property, plant and equipment - net 2,652 (a) 283 1,336
(c) 1,033
Goodwill - net 1,429 (a) 1,143 286
Other assets 311 (a) 22 19
(a) 270
------- ------- ------- -------
$28,154 $11,388 $20,843 $18,699
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments Continuing
Consolidated Debit Credit Operations
----------- ----------------------- -----------
<S> <C> <C> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Notes payable $9,144 (b)$ 8,362 $782
Current portion of long-term debt 154 154
Accounts payable
& accrued expenses 5,143 (a) 27 5,116
Accrued income taxes 330 330
------- ------- -------
Total current liabilities 14,771 8,389 6,382
Long-term debt 1,546 1,546
Commitments
Stockholders' equity
Preferred stock, $1.00 par value, authorized
1,000,000 shares; -0- shares issued
Common stock, $.02 par value, authorized
12,000,000 shares; 4,869,828
shares issued 97 97
Capital in excess of par value 27,363 27,363
Retained earnings 1,385 (a) 1,066 319
Common stock held in treasury, at cost
(2,812,252 shares) (17,008) (17,008)
------- ------- ------- -------
Total stockholders' equity 11,837 1,066 10,771
------- ------- ------- -------
$28,154 $9,455 $18,699
======= ======= ======= =======
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet.
<PAGE>
Page 8
OAK HILL SPORTSWEAR CORPORATION
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
A description of the pro forma adjustments follows:
(a) Reflects the proposed sale of certain net assets of the Company's
Sportswear Division to Donnkenny and the costs and expenses associated
with the Proposed Transaction. See the Asset Purchase Agreement included
elsewhere in this Proxy Statement.
Net Consideration Expected to be Received $10,355
Net Assets (Liabilities) to be Sold (Assumed):
Cash held for sublease deposit $ 27
Inventories 8,338
Other current assets 80
Property, plant and equipment, net 283
Other assets 22
Accrued expenses - sublease deposit (27)
------
(8,723)
Costs and Expenses Related to the Proposed Sale:
Elimination of goodwill related to the
Sportswear Division $1,143
Elimination of deferred financing costs
(see Note (b))
Current 285
Long-term 270
Fees paid to Donnkenny (see "Service Agreement;
Consulting Agreement") 250
Transaction costs 750
------
(2,698)
-------
Loss on Proposed Transaction $(1,066)
=======
The net consideration expected to be received was estimated in
accordance with the terms described in "Consideration" above, as if the
Proposed Transaction had been consummated on March 31, 1995. Such estimate
includes a reserve for the estimated amount to be paid to Donnkenny under
the indemnification provision contained in the Asset Purchase Agreement (see
"Warranty of Inventory; Indemmification; Escrow Agreement" above), based on
March 31, 1995 inventory balances and historical experience. The purchase
price may be adjusted if the inventory sold by the Company to Donnkenny and
the gross margins achieved on the sale of such inventory by Donnkenny differ
from the amounts estimated.
To the extent the Proposed Transaction results in a taxable
net gain to the Company, the Company will not incur any tax liability on the
sale because of its current net operating losses and prior year operating
loss carryforwards (see "Federal Income Tax Consequences of the Proposed
Transaction" above).
(b) Adjustments to record the use of proceeds from the Proposed Transaction to
reduce bank debt (see "Credit and Security Agreements of the Company; Use
of Proceeds" above).
(c) As the Company will no longer be in the business of the Sportswear Division
following the consummation of the Proposed Transaction (see "Noncompetition
and Nondisclosure Provisions" above), the Company plans to sell certain
assets and real estate located in Mississippi which had been used in such
business and which are not being sold or leased to Donnkenny pursuant to
the Asset Purchase Agreement (see "Assets to Be Sold" above). The Company
recently sold similar properties in the same area at a price in excess of
its net book value and does not expect to incur a material loss, if any, on
the sale of the remaining assets.
<PAGE>
Page 9
OAK HILL SPORTSWEAR CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
The following unaudited pro forma consolidated statements of
operations gives effect to the proposed sale of certain net assets of the
Company's Sportswear Division to Donnkenny as if the sale had been consummated
at the beginning of each period presented. These pro forma consolidated
statements of operations should be read in conjunction with the historical
consolidated financial statements and notes thereto, the pro forma adjustments
and the Asset Purchase Agreement included elsewhere in this Proxy Statement.
The following statements are not necessarily indicative of the results of
operations that actually would have been achieved if the proposed sale had
taken place on the dates indicated or which may be obtained in the future
(in thousands except for per share data).
<TABLE>
<CAPTION>
---------------------------------------------------------
Three Months Ended March 31, 1995 (Unaudited)
---------------------------------------------------------
Pro Forma
Historical Pro Forma Adjustments Continuing
Consolidated Debit Credit Operations
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales and other revenues $16,835 (a)$15,217 (b) $34 $1,652
------- ------- ------ ------
Costs and expenses:
Cost of Sales 13,953 (a) 12,596 1,357
Selling, general and administrative
expenses 3,521 (a) 3,068 453
------- ------- ------- ------
17,474 15,664 1,810
------- ------- ------- ------
Operating (loss) (639) 15,217 15,698 (158)
Interest expense - net 409 (c) 409
------- ------- ------- ------
(Loss) before provision (benefit) for taxes
(1,048) 15,217 16,107 (158)
Provision (benefit) for taxes
------- ------- ------- ------
Net (loss) ($1,048) $15,217 $16,107 ($158)
======= ======= ======= ======
Per share data:
Primary and fully diluted ($0.51) ($0.08)
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------
Year Ended December 31, 1994 (Unaudited)
---------------------------------------------------------
Pro Forma
Historical Pro Forma Adjustments Continuing
Consolidated Debit Credit Operations
------------ --------- ------------ ----------
<S> <C> <C> <C> <C>
Net sales and other revenues $84,153 (a)$75,394 (b) $125 $8,884
------- ------- ------- ------
Costs and expenses:
Cost of Sales 67,096 (a) 60,112 6,984
Selling, general and administrative
expenses 14,948 (a) 13,108 1,840
------- ------- ------- ------
82,044 73,220 8,824
------- ------- ------- ------
Operating income 2,109 75,394 73,345 60
Interest expense - net 1,850 (c) 1,850
------- ------- ------- ------
Income before provision for taxes
259 75,394 75,195 60
Provision for taxes
30 30
------- ------- ------- ------
Net income $229 $75,394 $75,195 $30
======= ======= ======= ======
Per share data:
Primary and fully diluted $0.11 $0.01
======= ======
</TABLE>
See Notes to Pro Forma Consolidated Statements of Operations.
<PAGE>
Page 10
OAK HILL SPORTSWEAR CORPORATION
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
A description of pro forma adjustments follows:
(a) Eliminates the historical results of operations of the Company's
Sportswear Division and the related Manufacturing Division.
(b) Represents the rental income, net of related expenses, from the lease of
certain warehouses to Donnkenny (see "Assets to Be Sold" above) and
revenues from the consulting agreement (see "Service Agreement; Consulting
Agreement" above), net of related expenses.
(c) If the Proposed Transaction had been consummated at the beginning of the
period presented, the proceeds from the sale would have been sufficient to
eliminate the debt on the Company's balance sheet at that date. Accordingly,
this adjustment eliminates the historical interest expense incurred in
connection with that debt. No interest or investment earnings have been
imputed on excess cash generated by the transaction. The Company estimates
that such cash would have approximated $2,500,000 and $1,100,000 at January
1, 1994 and January 1, 1995, respectively, if the Proposed Transaction had
been consummated on those dates. In addition, no interest or investment
earnings have been imputed on excess cash generated from the collection of
receivables, net of payment of liabilities, during those periods.
