SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 8-K/A
__________________
AMENDMENT NO. 1 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 26, 1996
HARTMARX CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 1-8501 36-3217140
(State or other (Commission (I.R.S. Employer
jurisdiction of file number) Identification No.)
incorporation or
organization)
101 NORTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: 312-372-6300
The undersigned Registrant hereby amends the following items
of its Current Report on Form 8-K filed December 10, 1996, as set
forth in the pages attached hereto:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) and (b) Financial Statements of Business Acquired and Pro
Forma Financial Information.
In accordance with Item 7 of the Registrant's Current Report
on Form 8-K filed December 10, 1996, the Registrant appends to
the Form 8-K the following financial statements and pro forma
information:
A. For Plaid Clothing Group, Inc.:
Financial Statements of Business Acquired
The following report and audited statements pertaining to
Plaid Clothing Group, Inc. ("Plaid") are attached hereto as
Appendix A:
1. (a) Report of independent public accountants dated
January 22, 1997;
(b) Statement of Assets Purchased and Liabilities
Assumed of the Product Lines Acquired from the
Plaid Clothing Group, Inc. as of November 25,
1996;
(c) Statements of Revenues and Direct Costs and
Expenses of the Product Lines Acquired from the
Plaid Clothing Group, Inc. for the period ended
November 25, 1996 and for each of the two years in
the period ended December 31, 1995;
(d) Notes to Financial Statements of the Product Lines
Acquired from the Plaid Clothing Group, Inc.
B. For Hartmarx Corporation:
Pro Forma Financial Information
The following unaudited pro forma financial information of
Hartmarx Corporation are attached hereto as Appendix B:
1. (a) Unaudited pro forma statement of earnings for the
twelve months ended November 30, 1995 and for the
nine months ended August 31, 1996.
(b) Unaudited pro forma balance sheet at August 31,
1996;
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, in
the City of Chicago, State of Illinois.
Dated: February 10, 1997
HARTMARX CORPORATION
By: /s/ GLENN R. MORGAN
________________________
Glenn R. Morgan
Executive Vice President,
Chief Financial Officer
APPENDIX A
STATEMENTS OF ASSETS PURCHASED AND
LIABILITIES ASSUMED AND
REVENUES AND DIRECT COSTS AND
EXPENSES OF THE PRODUCT LINES ACQUIRED
FROM THE PLAID CLOTHING GROUP, INC.
NOVEMBER 25, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Plaid Clothing Company, Inc.
(formerly HMX/PBP Company) a wholly-owned subsidiary of
Hartmarx Corporation
We have audited the accompanying Statement of Assets
Purchased and Liabilities Assumed of the Product Lines
Acquired from the Plaid Clothing Group, Inc. as of November
25, 1996 and the related Statements of Revenues and Direct
Costs and Expenses of the Product Lines Acquired from the
Plaid Clothing Group, Inc. for the period ended November 25,
1996 and each of the two years in the period ended December
31, 1995. These statements are the responsibility of Plaid
Clothing Company, Inc. management. Our responsibility is to
express an opinion on the statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
statements. An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall presentation
of the statements. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the statements audited by us present fairly,
in all material respects, the assets purchased and
liabilities assumed of the product lines acquired from the
Plaid Clothing Group, Inc. at November 25, 1996 and the
results of their operations for the period ended November
25, 1996 and each of the two years in the period ended
December 31, 1995, in conformity with generally accepted
accounting principles.
PRICE WATERHOUSE LLP
Chicago, Illinois
January 22, 1997
STATEMENT OF ASSETS PURCHASED AND LIABILITIES ASSUMED OF THE
PRODUCT LINES ACQUIRED FROM THE PLAID CLOTHING GROUP, INC.
NOVEMBER 25, 1996
(Dollars in Thousands)
Cash $ 54
Accounts receivable, net 17,568
Inventories 26,234
Prepaid expenses 797
_________
Current assets 44,653
Property, plant and equipment 2,231
_________
Total assets 46,884
_________
Accounts payable 3,641
Accrued expenses 3,459
_________
Current liabilities 7,100
_________
Net assets purchased $39,784
=========
(See accompanying notes)
STATEMENTS OF REVENUES AND DIRECT COSTS AND EXPENSES OF THE
PRODUCT LINES AQCUIRED FROM THE PLAID CLOTHING GROUP, INC.
NOVEMBER 25, 1996
(Dollars in Thousands)
Period January 1
to November 25, Year Ended December 31,
1996 1995 1994
_________________ _______ ______
Revenues $102,939 $145,489 $172,202
Cost of sales 92,397 132,451 135,635
________ ________ ________
Gross profit 10,542 13,038 36,567
________ ________ ________
Expenses:
Advertising 1,655 2,255 4,256
Selling and promotion 4,709 7,917 10,368
Shipping and warehousing 1,762 3,763 4,859
General and administrative 6,429 10,982 8,997
______ ________ ________
Total operating expenses 14,555 24,917 28,480
_______ ________ ________
$ (4,013) $(11,879) $ 8,087
========= ======== ========
(See accompanying notes)
NOTES TO FINANCIAL STATEMENTS OF THE PRODUCT LINES ACQUIRED FROM
THE PLAID CLOTHING GROUP, INC.
NOVEMBER 25, 1996
(Dollars in Thousands)
1. BASIS OF PRESENTATION
The accompanying statements present the assets
purchased and liabilities assumed as of November 25,
1996 and the related revenues and direct costs and
expenses of the product lines acquired from the Plaid
Clothing Group, Inc. (PCG), a debtor-in-possession, by
Plaid Clothing Company, Inc. (formerly HMX/PBP Company)
a wholly-owned subsidiary of Hartmarx Corporation
pursuant to an asset purchase agreement (Agreement)
dated November 5, 1996, as amended. It was not
considered meaningful to present complete historical
financial statements of PCG as the revenue producing
activity of PCG has not remained comparable for the
above noted periods, due to PCG s significant
downsizing and restructuring, which has included the
sale or discontinuation of businesses, product lines,
production and administrative facilities. In addition,
PCG s aggregate expenses included significant amounts
related to its bankruptcy and only a small portion of
PCG s total liabilities was assumed as part of the
Agreement, relating exclusively to the ongoing license
rights and brands acquired.
Consideration for the assets purchased consisted of a
cash payment of $27.1 million, assumption of $7.1
million of accounts payable and other scheduled
liabilities, a future royalty payment of 2% of the
first year sales of certain product categories acquired
in the transaction, less $.5 million, and certain other
payments described in the Agreement.
PCG's unsecured creditors will also receive the
proceeds resulting from the potential to exercise a
five year warrant to purchase 400,000 shares of
Hartmarx Corporation common stock, exerciseable at
$5.50 per share, and the sale of the underlying shares,
pursuant to a formula to be determined by the PCG
Creditors Committee.
The acquired assets included license rights to
manufacture and market men's tailored suits, sportcoats
and slacks under the Burberrys, Claiborne and Evan-
Picone brands, as well as ownership of the Palm Beach,
Brannoch and other trade names (the Product Lines
Acquired). The inventory and receivables associated
with the above described brands and trade names were
also purchased along with production, warehouse and
distribution facilities.
The assets purchased and liabilities assumed and the
related revenues and direct costs and expenses of the
Product Lines Acquired as presented in the accompanying
Statement of Assets Purchased and Liabilities Assumed
and Statements of Revenues and Direct Costs and
Expenses of the Product Lines Acquired from the Plaid
Clothing Group, Inc. as of November 25, 1996 reflect
PCG's historical book balances, adjusted downward to
net realizable value where appropriate. These product
lines had not been operated as a separate business
entity and have no legal existence. Accordingly,
neither debt, interest expense nor income tax
allocations have been made to the accompanying
statements as such allocations are not meaningful in
the circumstances. Because the Product Lines Acquired
have no legal existence and had not been operated as a
separate business entity, and because neither debt,
interest expense nor income tax allocations have been
made in the accompanying statements, information
related to operating, investing and financing cash
flows is not available and therefore is not included in
the accompanying financial statements or notes thereto.
The accompanying statements include the net revenues,
cost of goods sold (including license fees), direct
advertising and selling expenses that relate directly
to the Product Lines Acquired. Other expense items are
allocated based on estimates and assumptions as if the
Product Lines Acquired had been operated on a stand-
alone basis during the periods presented. Costs and
expenses have been included in the Statements of
Revenues and Direct Costs and Expenses as follows:
* Advertising - Direct to product line.
* Selling and Promotion - Substantially direct
to product line; certain costs not solely
dedicated to a specific product line
allocated based on sales.
* Shipping and Warehousing - Allocated based on
units shipped by product line.
* General and Administrative, including
accounting and finance, credit, data
processing and general management - Allocated
based on sales except for bad debt expense
which is direct to product line.
Those expenses allocated based on sales were
calculated by applying the proportion of sales of
the Product Lines Acquired to PCG s total sales
for the applicable period.
Management of Plaid Clothing Company, Inc.
believes the above allocations to be reasonable in
the circumstances, based upon the actual PCG
organizational structure in effect during the
periods; however, such allocations should not be
assumed to be indicative of what the results of
operations of the Product Lines Acquired would
have been had it been a separate, stand-alone
entity during the periods covered, or of future
results of operations.
PCG reorganization and restructuring costs have
not been included in the accompanying Statements
of Revenues and Direct Costs and Expenses.
Reorganization and restructuring costs included
professional fees and expenses directly related to
PCG s bankruptcy, lease rejection costs, write-off
of deferred debt issuance costs, and costs and
losses incurred associated with businesses and
product lines sold or liquidated. These
reorganization and restructuring costs have not
been allocated as such costs are not associated
with the Product Lines Acquired.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION - Revenues from the sale of
products have been recognized upon shipment to the
customer. An accrual for anticipated customer
returns is recorded based upon historical
experience.
ACCOUNTS RECEIVABLE - Principal customers
represent retail specialty and department stores
throughout the United States. Receivables are
generally due within 30 or 60 days; extended
seasonal payment terms may be given to certain
customers pursuant to industry practices.
INVENTORIES - Inventories are stated at the lower
of cost (on the last-in, first-out (LIFO) and
first-in, first-out (FIFO) methods) or market (see
note 4).
PROPERTY, PLANT AND EQUIPMENT - Property, plant
and equipment are carried at cost. Depreciation
has been computed using the straight-line method
over the estimated useful lives of the assets
which range from 3 to 10 years for machinery and
equipment to 31.5 years for buildings and
improvements.
FINANCIAL INSTRUMENTS - The carrying value of
accounts receivable and current liabilities
approximates their fair value.
VALUE OF ESTIMATES - The preparation of the
accompanying financial statements requires
management to make estimates and assumptions that
affect the reported amounts of assets and
liabilities and disclosure of contingent assets
and liabilities at the date of the financial
statements and the reported amounts of revenues
and expenses during the reporting period. Actual
results could differ from those estimates.
3. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
November 25, 1996
_________________
Gross accounts receivable $20,250
Less allowances:
Doubtful accounts and sales allowances 2,682
_______
$17,568
=======
4. INVENTORIES
The major components of inventories are as follows:
November 25, 1996
_________________
Raw materials $ 3,944
Work-in-process 4,390
Finished goods 17,900
________
$26,234
========
The above components are shown net of lower of cost or
market reserves totaling $2,832 at November 25, 1996.
Inventories totaling $22,043 were stated at the lower
of LIFO cost or market method at November 25, 1996.
The remainder of the net inventories are valued at
lower of cost or market on a FIFO basis. At November
25, 1996, the value of LIFO inventories approximated
their FIFO costs.
5. PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment are as
follows:
November 25, 1996
_________________
Buildings and improvements $ 421
Machinery and equipment 5,540
_______
5,961
Less accumulated depreciation (3,730)
________
$2,231
=======
Depreciation expense was $1,098, $2,220 and $1,963 for
the period ended November 25, 1996 and the years ended
December 31, 1995 and 1994, respectively.
6. ACCRUED EXPENSES
Accrued expenses consist of the following:
November 25, 1996
_________________
Employee related costs $2,792
Commissions 266
Royalties 221
Other 180
______
Total $3,459
======
7. SIGNIFICANT CUSTOMERS
The accompanying financial statements reflect 1996
revenues to three customers, each representing in
excess of 10% of the total net sales; aggregate sales
to these three customers were $17,113, $16,454, and
$11,415, respectively.
APPENDIX B
HARTMARX CORPORATION
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
AND NARRATIVE DISCLOSURE
(REFLECTING THE ASSETS PURCHASED AND
LIABILITIES ASSUMED AND THE REVENUES AND DIRECT COSTS AND
EXPENSES OF THE PRODUCT LINES ACQUIRED
FROM THE PLAID CLOTHING GROUP, INC.)
INTRODUCTORY NOTE
The following unaudited pro forma consolidated
financial statements reflect the financial position and
results of operations related to the assets purchased and
liabilities assumed ("Acquisition") and the revenues and
direct costs and expenses of the product lines acquired from
the Plaid Clothing Group, Inc. ("PCG") by a wholly-owned
subsidiary of Hartmarx Corporation, which occurred on
November 26, 1996. The Acquisition will be accounted for
using the purchase method of accounting and, accordingly,
the purchase price has been allocated to the assets
purchased and the liabilities assumed or anticipated based
on fair values at the acquisition date. The excess of fair
value of the assets less liabilities assumed and anticipated
over the purchase price will be amortized on a straight line
basis over five years. The aggregate purchase cost and its
preliminary allocation to the assets and liabilities are as
follows (in millions):
Preliminary allocation of purchase cost:
Assets acquired less liabilities assumed of PCG
as of November 25, 1996 $39.8
Adjustments to inventory and property, plant
and equipment acquired (1.8)
Anticipated additional liabilities and
negative goodwill (10.9)
_____
Total purchase cost $27.1
=====
The unaudited pro forma adjustments are based upon
available information and upon certain assumptions that
Hartmarx believes are reasonable. The final purchase price
allocation may differ from that shown above, although
subsequent changes, if any, are not expected to be material.
The unaudited pro forma financial data do not purport
to be indicative of Hartmarx' financial position or results
of operations that would actually have been obtained had the
transaction been completed as of the date or for the periods
presented, or to project Hartmarx' financial position or
results of operations at any future date or for any future
period.
The unaudited pro forma statements of earnings for the
twelve months ended November 30, 1995 and for the nine
months ended August 31, 1996 include adjustments for
depreciation, amortization of negative goodwill and interest
expense based upon the allocated cost of the acquisition and
its related financing. Pro forma adjustments have not been
made to reflect either manufacturing cost savings which
management believes can be realized upon the combination of
Hartmarx' manufacturing operations and that of Plaid, or
reduced general and administrative expenditures which can be
realized from the planned integration of administrative
functions.
The pro forma unaudited balance sheet as of August 31,
1996 reflects the acquisition and the financing of such
acquisition as if these events occurred as of August 31,
1996. The $27.1 million paid for the Acquisition was
financed from the Company's Credit Facility and is reflected
as such in the pro forma unaudited balance sheet.
HARTMARX CORPORATION
PRO FORMA UNAUDITED CONDENSED STATEMENT OF EARNINGS
TWELVE MONTHS ENDED NOVEMBER 30, 1995
(In Millions)
Pro Forma Pro
Historical Plaid(a) Adjustments Forma
Net sales $595.3 $145.5 - $740.8
Licensing and other income 6.4 - - 6.4
---------- ----------- ---------- ----------
601.7 145.5 - 747.2
---------- ----------- ---------- ----------
Cost of goods sold 447.4 132.5 (2.2)(b) 577.7
Selling, general and
administrative expenses 132.8 24.9 (1.0)(c) 156.7
---------- ----------- ---------- ----------
580.2 157.4 (3.2) 734.4
---------- ----------- ---------- ----------
Earnings (loss) before
interest and taxes 21.5 (11.9) 3.2 12.8
Interest expense 19.9 - 2.3(d) 22.2
---------- ----------- ---------- ----------
Earnings (loss) before taxes 1.6 ($11.9) 0.9 (9.4)
===========
Tax benefit 19.8 -(e) 19.8
---------- ---------- ----------
Net earnings $21.4 $0.9 $10.4
========== ========== ==========
Earnings per share $0.66 $0.32
========== ==========
Average shares outstanding 32.631 32.631
========== ==========
HARTMARX CORPORATION
NOTES TO PRO FORMA UNAUDITED
CONDENSED STATEMENT OF EARNINGS
TWELVE MONTHS ENDED NOVEMBER 30, 1995
(a) Represents the revenues and direct costs and expenses of the
Product Lines Acquired from PCG for the twelve months ended
December 31, 1995, as included in Appendix A to this Form 8-K/A.
(b) Decreased depreciation charge from historical amount based upon the
estimated fair values of property.
(c) Amortization of negative goodwill to reflect amortization over a 5
year period of estimated excess fair value over net book value of
assets acquired.
(d) Estimated incremental interest expense arising from additional bank
borrowings of approximately $27 million to finance the acquisition
of the assets purchased, assuming an acquisition date of December
1, 1994 and the Company's fiscal 1995 weighted average interest
cost of 8.5% per its Credit Facility.
(e) Reflects tax benefit related to the pre-tax loss from the Product
Lines Acquired and tax provision on pro forma pre-tax adjustments
offset entirely by adjustment of the tax valuation allowance equal
to the tax benefit and provision noted previously.
<TABLE>
<CAPTION>
HARTMARX CORPORATION
PRO FORMA UNAUDITED CONDENSED STATEMENT OF EARNINGS
NINE MONTHS ENDED AUGUST 31, 1996
Pro Forma Pro
Historical Plaid(a) Adjustments Forma
<S> <C> <C> <C> <C>
Net sales $450.0 $84.9 - $534.9
Licensing and other income 3.2 - 3.2
---------- ---------- ---------- ---------
453.2 84.9 538.1
---------- ---------- ---------- ---------
Cost of goods sold 345.3 78.1 (1.0)(b) 422.4
Selling, general and
administrative expenses 95.6 11.8 (0.7)(c) 106.7
---------- ---------- ---------- ---------
440.9 89.9 (1.7) 529.1
---------- ---------- ---------- ---------
Earnings (loss) before
interest taxes 12.3 (5.0) 1.7 9.0
Interest expense 12.6 - 1.5(d) 14.1
---------- ---------- ---------- ---------
Earnings (loss) before taxes (0.3) ($5.0) 0.2 (5.1)
==========
Tax benefit 0.1 1.8(e) 1.9
---------- ---------- ---------
Net earnings (loss) ($0.2) $2.0 ($3.2)
========== ========== =========
Net loss per share ($0.01) ($0.10)
========== =========
Average shares outstanding 32.965 32.965
========== =========
</TABLE>
HARTMARX CORPORATION
NOTES TO PRO FORMA UNAUDITED
CONDENSED STATEMENT OF EARNINGS
NINE MONTHS ENDED AUGUST 31, 1996
(a) Represents the revenues and direct costs and expenses of the
Product Lines Acquired from PCG for the nine months ended September
30, 1996, prepared on a basis consistent with the statement of
revenues and direct costs and expenses included in Appendix A to
this Form 8-K/A.
(b) Decreased depreciation charge from historical amount based upon the
estimated fair values of property.
(c) Amortization of negative goodwill to reflect amortization over a 5
year period of estimated excess fair value over net book value of
assets acquired.
(d) Estimated incremental interest expense arising from additional bank
borrowings of approximately $27 million to finance the acquisition
of the assets purchased, assuming an acquisition date of December
1, 1995 and the Company's fiscal 1996 weighted average interest
cost of 7.4% per its Credit Facility.
(e) Estimated consolidated tax benefit is assumed to be at 38%.
Adjustment for estimated effective income tax rate as calculated in
accordance with SFAS 109 applied to the pro forma loss before
taxes.
<TABLE>
<CAPTION>
HARTMARX CORPORATION
PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
AUGUST 31, 1996
(In Millions)
Pro Forma Pro
Historical Plaid(a) Adjustments Forma
ASSETS:
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $1.6 $0.1 - $1.7
Accounts receivable, net 126.6 17.6 - 144.2
Inventories 133.2 26.2 0.4 (b ) 159.8
Prepaid expenses and other current 9.8 0.8 - 10.6
assets
---------- ---------- ---------- ---------
Total current assets 271.2 44.7 0.4 316.3
Property, plant and equipment, net 43.7 2.2 (2.2) (b ) 43.7
Deferred income taxes 31.1 - 31.1
Other assets 23.9 - 23.9
---------- ---------- ---------- ---------
$369.9 $46.9 ($1.8) $415.0
========== ========== ========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term $20.1 - - $20.1
debt
Accounts payable and accrued 64.0 7.1 10.9 (c ) 82.0
expenses
---------- ---------- ---------- ---------
Total current liabilities 84.1 7.1 10.9 102.1
Long term debt 148.5 - 27.1 (d ) 175.6
Shareholders' equity 137.3 - - 137.3
Net assets of Plaid - 39.8 (39.8) (e ) -
---------- ---------- ---------- ---------
$369.9 $46.9 ($1.8) $415.0
========== ========== ========== =========
</TABLE>
HARTMARX CORPORATION
NOTES TO PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
AUGUST 31, 1996
(a) Reflects Statement of Assets Purchased and Liabilities Assumed as
of November 25, 1996 included in Appendix A to this Form 8-K/A.
(b) Adjustment of inventories and property, plant and equipment based
upon purchase accounting.
(c) Adjustment to record additional anticipated liabilities, to reflect
employee termination costs associated with administrative workforce
reduction, manufacturing shutdown and other consolidation costs,
along with the $4.9 million excess of estimated fair market value
over cost of the net assets acquired.
(d) Borrowings under the Credit Facility assumed to finance the
acquisition of Plaid.
(e) Elimination of net assets of Plaid.
