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
May 5, 1997
Date of Report (Date of earliest event reported)
Empire of Carolina, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-7909 13-2999480
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5150 Linton Boulevard, 5th Floor, Delray Beach, Florida 33484
(Address of principal executive offices) (Zip Code)
(561) 498-4000
(Registrant's telephone number)
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ITEM 5. OTHER EVENTS.
On May 5, 1997, the Registrant issued the press release attached hereto
as Exhibit 99, which press release is hereby incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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Exhibit
Number Description
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99 Press Release, dated May 5, 1997.
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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.
EMPIRE OF CAROLINA, INC.
By /s/ Lawrence Geller
Name: Lawrence Geller
Title: Vice President and
General Counsel
Date: May 5, 1997
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EXHIBIT INDEX
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Exhibit
Number Description
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99 Press Release, dated May 5, 1997.
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EXHIBIT 99
FOR IMMEDIATE RELEASE
EMPIRE OF CAROLINA COMMENTS ON PROPOSED INVESTMENT
Delray Beach, FL, May 5, 1997 -- Empire of Carolina, Inc. (AMEX: EMP)
today announced that it has signed a letter of intent with an investor group to
invest up to $15 million for newly issued convertible preferred stock of Empire.
As an interim measure, the investor group will fund a $5 million bridge loan
which should provide the Company sufficient flexibility to operate normally
during the period prior to the funding of the preferred stock. When both of
these financings have been completed, the Company believes it will have
sufficient capital to meet its lenders' requirements and to fund its operations.
Steven Geller, Chairman and Chief Executive Officer, commented, "With
the bridge loan and preferred stock investments, we believe that Empire will
have the capital to meet its production and sales plans for 1997. With these
funds, we are optimistic that Empire's turnaround can continue to go forward,
and that we will be in a position to meet our goals of delivering our products
on a timely basis and of achieving positive operating earnings for the full year
ending December 31, 1997." Mr. Geller also announced that the Company's Tarboro
facility, which suffered significant manufacturing problems in 1996, showed a
positive manufacturing variance in March, the first positive monthly variance in
over two years.
He continued, "We currently anticipate a positive variance again in
April and we are optimistic that for the six months ending June 30, 1997, we
will be able to report no cumulative negative manufacturing variance." For the
full year ended December 31, 1996, Empire incurred a negative manufacturing
variance of approximately $19 million.
Mr. Geller further noted: "Demand for the Company's products continues
to grow, as evidenced by the increase in sales over last year and recent retail
sales." As reported, Empire's sales in the first quarter were up 15.8% over the
first quarter of 1996.
Pursuant to the terms of the letter of intent, the newly issued
convertible preferred stock will have voting rights with respect to all matters
and be convertible into common stock at $1.25 per share. In addition, the
investor group will receive up to 7.5 million warrants to purchase common stock
at $1.375 per share. Also in connection with the transaction, the Company's
outstanding $15 million convertible debentures will be exchanged for newly
issued non-voting preferred stock convertible into common stock at $2.00 per
share. No dividends will accrue on any of the newly issued preferred stock.
The potential transaction is subject to certain conditions. The Company
can give no assurance that the transaction will be consummated, or, if
consummated, that it will be on the terms and conditions described above. In the
event that this transaction is not consummated,
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there is no assurance that the Company will obtain, by May 31, 1997, the $6
million required by the amendments to its senior loan agreement or that cash
generated from operations will be sufficient to fund the Company's continued
operations.
This press release contains various forward-looking statements and
information that are based on management's beliefs as well as assumptions made
by and information currently available to management. Such statements are
subject to various risks and uncertainties which could cause actual results to
vary materially from those stated. Should one or more of these risks or
uncertainties materialize or should underlying assumptions prove incorrect
actual results may vary materially from those anticipated, estimated, expected
or projected. Such risks and uncertainties include the Company's ability to
close the proposed transaction, the Company's ability to manage inventory
production and costs, to meet potential increases or decreases in demand,
potential adverse customer impact due to delivery delays including effects on
existing and future orders, competitive practices in the toy and decorative
holiday products industries, changing consumer preferences and risks associated
with consumer acceptance of new product introductions, potential increases in
raw material prices, potential delays or production problems associated with
foreign sourcing of production and the impact of pricing policies including
providing discounts and allowances. Certain of these as well as other risks and
uncertainties are described in more detail in the Company's Registration
Statement on Form S-1 filed under the Securities Act of 1933, Registration No.
333-4440. The Company undertakes no obligation to update any such factors or to
publicly announce the result of any revisions to any of the forward-looking
statements contained herein to reflect future events or developments.
Empire of Carolina, Inc. designs, develops, manufactures and markets a
broad range of basic plastic children's toys. It's Holiday Products Division
produces and markets decorative seasonal items including Christmas, Halloween
and Easter illuminated products. The Company's full line of basic toys includes
the Big Wheel(R) line of ride-on toys, Grand Champions(R) collectible horses,
Buddy L(R) cars and trucks, and Power Driver(R) ride-ons.
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