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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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): January 16, 1997
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Sealy Corporation
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-8738 36-3284147
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
520 Pike Street Seattle, Washington 98101
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (206) 625-1233
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(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 3 Pages
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ITEM 5. OTHER EVENTS
(a) Effective January 16, 1997, Sealy Corporation, a Delaware
corporation (the "Company") sold its wholly-owned subsidiary, Woodstuff
Manufacturing, Inc., which manufactures and markets wooden furniture under the
brand name "Samuel Lawrence." A press release announcing this sale was issued by
the Company on January 21, 1997 and is filed as Exhibit 99.1 to this Report.
(b) On January 24, 1997, the Company announced certain financial
results for the Company's fiscal year ended December 1, 1996, and commenced a
solicitation of the holders (the "Noteholders") of the Company's 9 1/2% Senior
Subordinated Notes due 2003 (the "Notes"), to obtain the consent of the
Noteholders to certain amendments to the indenture governing the Notes. A press
release announcing the aforementioned financial results and the commencement of
the solicitation of the Noteholders was issued by the Company on January 24,
1997 and is filed as Exhibit 99.2 to this Report.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
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Exhibit No.
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99.1 Press Release of the Company dated
January 21, 1997
99.2 Press Release of the Company dated
January 24, 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.
SEALY CORPORATION
By: /s/ Thomas M. Forman
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Thomas M. Forman
Vice President and General Counsel
Date: January 27, 1997
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Page 3 of 3 Pages
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EXHIBIT 99.1
[SEALY LOGO]
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SEALY, INC.
1228 Euclid Avenue - 10th Floor - Cleveland, Ohio 44115-1886 - 216/522-1310 -
Fax 216/522-1366 or 216/522-0602
FOR IMMEDIATE RELEASE FOR INFORMATION, CONTACT:
Ronald Stoll at Sealy, Inc.
216/522-1310, ext. 2690
SEALY FOCUSES ON BEDDING BUSINESS;
DIVESTS SOLID WOOD FURNITURE SUBSIDIARY
CLEVELAND, OHIO, JANUARY 21, 1997 -- Sealy Corporation today announced that it
has successfully closed on the sale of Woodstuff Manufacturing, Inc., a wholly
owned subsidiary that manufactures and markets solid wood bedroom furniture
under the "Samuel Lawrence" brand name. The Phoenix-based operation has been
acquired by an investor group including Goldner Hawn Johnson & Morrison, an
investment banking firm in Minneapolis, and several Samuel Lawrence executives.
The transaction closed on January 16, 1997. Sam Fees continues as president of
Samuel Lawrence and has assumed the additional title of chief executive officer
of that company.
The divestiture produced cash proceeds to Sealy of $35 million before
transaction costs, but will result in a one-time book charge to net income of
approximately $18 million due primarily to the write-off of goodwill, and to
taxes arising from the tax gain. Other terms of the transaction were not
disclosed. Sealy expects to announce its 1996 year-end results later this week.
Ronald L. Jones, president and chief executive officer of Sealy, said that
Samuel Lawrence had been Sealy's only non-bedding operation. "Samuel Lawrence is
a growing and profitable operation and deserves a management which is
appropriately dedicated to competing in the wood furniture marketplace. This
divestiture was a strategic move designed to further focus Sealy on our core
business," he explained.
(more)
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SEALY DIVESTS SOLID WOOD FURNITURE SUBSIDIARY / P.2
Sealy Corporation is the largest manufacturer of bedding in North
America. Through its subsidiaries, Sealy operates in the United States, Canada,
Puerto Rico and Mexico, and has licensees worldwide. The company produces and
sells a complete line of mattresses, including those under the Sealy, Sealy
Posturepedic and Stearns & Foster brand names.
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EXHIBIT 99.2
[SEALY LOGO]
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SEALY, INC.
1228 Euclid Avenue - 10th Floor - Cleveland, Ohio 44115-1886 - 216/522-1310 -
Fax 216/522-1366 or 216/522-0602
FOR IMMEDIATE RELEASE FOR INFORMATION, CONTACT:
Ronald Stolle at Sealy, Inc.
216/522-1310, ext. 2690
SEALY ISSUES CONSENT SOLICITATION AND REPORTS 1996 RESULTS
NOTEHOLDER CONSENT SOUGHT FOR EQUITY DIVIDEND PAYMENT & BANK REFINANCING
CLEVELAND, OHIO, JANUARY 24, 1997 - Sealy Corporation, the largest manufacturer
of bedding in North America, is soliciting the consent of registered holders (as
of the close of business on January 3, 1997) of its 9-1/2% Senior Subordinated
Notes due 2003 to a proposed waiver and amendments to those Notes and related
Indenture (dated May 7, 1993) between the Company and Mellon Bank, F.S.B., as
successor trustee.
The consent of registered holders of a majority of the Notes, in aggregate
principal amount, is being requested to effect the proposed waiver and
amendments, which would:
- - Waive the restriction on the proposed payment of a special dividend
(subject to Board approval) of up to $100 million to qualifying equity
security holders of the Company.
- - Clarify provisions in the Indenture regarding the structure of certain
permitted debt, without changing the amount or priority of such debt (the
"Clarifying Amendment").
- - Increase the applicable interest rate on the Notes from 9-1/2% to 9-3/4%
per annum, with a provision for a subsequent reduction to 9-1/2% if
certain financial tests are met.
Sealy will make a $10 cash consent payment to registered holders for each
$1,000 in principal amount of Notes for which a timely consent is received and
not revoked prior to expiration of the solicitation. The solicitation is set to
expire at 5:00 p.m. (Eastern Standard Time) on Friday, February 7, 1997.
(more)
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SEALY SOLICITS NOTEHOLDER CONSENT AND REPORTS 1996 RESULTS - - PG. 2
Noteholders who do not consent to the proposed waiver and amendments will
be ineligible to receive the cash consent payment even though the waiver and
amendments, if approved, will be binding on them. The cash consent payment and
the waiver and amendments (other than the Clarifying Amendment) are contingent
upon the Company entering into a new senior secured bank financing facility
(with terms acceptable to Sealy), prior to June 30, 1997, to provide for up to
$275 million in revolving credit borrowings.
Proceeds of the new credit facility (which the Company expects to have
finalized by the end of February) will be used to refinance the Company's
outstanding indebtedness under its current secured credit facility, to fund the
proposed dividend payment and for general corporate purposes, including working
capital requirements. There can be no assurance as to the success of the
solicitation, or as to the success, timing or terms of any new credit facility.
In 1993, an investor group led by the Zell/Chilmark Fund purchased a 93.6%
equity interest in Sealy. Ronald L. Jones, Sealy's president and chief executive
officer, said, "Sealy's capital structure and its equity value have both
improved since that time. With this in mind, Sealy management believes this may
be an appropriate time to provide a return to our equity investors. Our
strategic goals of generating strong cash flow and reducing debt are unchanged."
Sealy will remain a well-capitalized company and Zell/Chilmark will
continue to be a significant investor following the transaction, which is
still subject to final Board approval.
Requests for Consent Solicitation Documents should be directed to MacKenzie
Partners, Inc., Information Agent for the solicitation, at 800/322-2885 or
212/929-5500 where collect calls will be accepted. Noteholder requests for
information regarding the terms should be directed to NationsBanc Capital
Markets, Inc., the Solicitation Agent at 800/310-9413. Consent Solicitation
forms are to be forwarded to the Depositary, Mellon Bank, F.S.B., for tallying
at 1660 W. 2nd Street, Suite 920, Cleveland, Ohio 44113.
THIS ANNOUNCEMENT is FOR INFORMATIONAL PURPOSES ONLY. THE CONSENT
SOLICITATION IS BEING CONDUCTED ONLY PURSUANT TO THE OFFICIAL CONSENT
SOLICITATION STATEMENT AND RELATED DOCUMENTS.
(more)
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SEALY SOLICITS NOTEHOLDER CONSENT AND REPORTS 1996 RESULTS -- PG. 3
1996 RESULTS INCLUDE SALES INCREASE OF 6.7%, BUT SHOW NET LOSS DUE TO
DIVESTITURE
In conjunction with the noteholder consent solicitation, Sealy Corporation
also reported financial highlights of its 1996 fiscal year. Net sales reached
$697.6 million for the twelve months ended December 1, 1996, an increase of 6.7
percent over the $653.9 million reported in 1995.
For 1996, the Company recorded Adjusted EBITDA of $96.7 million, an
increase of 13.8 percent over 1995. Adjusted EBITDA reflects adjustments to
EBITDA for charges from the January 16, 1997, divestiture of Woodstuff
Manufacturing, Inc., a wholly owned wood bedroom furniture subsidiary doing
business as Samuel Lawrence, and for a non-cash compensation program, all as
more fully set forth in the footnotes to the Selected Consolidated Financial
and Other Data table which is included herewith.
The Company's ability to generate significant cash flow in 1996 enabled it
to lower its average debt levels and reduce interest expense throughout the
year.
As previously announced, 1996 results were impacted by a charge to net
income of $17.6 million due primarily to the write-off of goodwill, and to taxes
arising from the divestiture of Samuel Lawrence. Sealy recorded a net loss for
the year of $506,000.
"Nineteen ninety-six was a good year for Sealy overall and should not be
diminished by the accounting treatment for the sale of Samuel Lawrence," Jones
said. "We strengthened our position of market leadership in bedding as sales
growth outpaced the industry through both increased unit volume and broader
distribution. In terms of product innovation, the Company introduced a
luxurious, top-of-the-line Stearns & Foster(R) 'anniversary' bed and an upscale
Sealy Posturepedic Crown Jewel(R) brand line, as well as a number of product
upgrades and line extensions. Additionally, we sharpened our focus on dealer
relationships."
The Company also continued its international expansion during 1996 with the
successful start-up of its Mexican manufacturing and marketing operation in
Toluca, near Mexico City.
Capital expenditures in 1996 were $12.0 million versus $11.8 million in
1995. Jones said that capital expenditures were largely related to the Mexican
start-up and to investments in the development of new management information
systems to improve efficiencies, reduce costs and enhance customer service.
(more)
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SEALY SOLICITS NOTEHOLDER CONSENT AND REPORTS 1996 RESULTS -- PG. 4
Sealy Corporation is the largest manufacturer of bedding in North
America. Through its subsidiaries, Sealy operates in the United States, Canada,
Puerto Rico and Mexico, and has licensees worldwide. The Company produces and
sells a complete line of mattresses and box springs, including those under the
Sealy(R), Sealy Posturepedic(R), Sealy Posturepedic Crown Jewel(R) and
Stearns & Foster(R) brand names.
###
NOTE: Forward-looking statements in this release are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. Such risks and uncertainties
include, but are not limited to, general business and economic conditions,
successful implementation of overseas expansion, competitive factors, pricing,
and fluctuation in demand. Please refer to the Company's Securities and Exchange
Commission filings for further information.
ALSO NOTE: Selected Consolidated Financial and Other Data for l996 and l995
follow.
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SEALY CORPORATION
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
FOR THE YEARS ENDED DECEMBER 1, 1996 AND NOVEMBER 30, 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
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FOR THE YEAR ENDED FOR THE YEAR ENDED
INCOME STATEMENT DATA: DECEMBER 1, 1996 NOVEMBER 30,1995
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Net sales $ 697,638 $ 653,942
Costs and expenses 656,324 624,160
Performance Share Plan expense 4,779 (13,260)
Loss on sale of Samuel Lawrence 11,762 0
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Income before income tax 24,773 43,042
Provision for income tax 25,279 23,572
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Net (loss)/income (506) 19,470
OTHER DATA:
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Depreciation and amortization of
intangibles $ 26,631 $ 24,200
EBITDA (a) 80,201 98,260
Adjusted EBITDA (a) 96,742 85,000
Capital expenditures 12,045 11,804
Interest expense, net 28,797 31,018
Ratio of EBITDA to interest expense, net 2.8 3.2
Ratio of adjusted EBITDA
to interest expense, net 3.4 2.7
Ratio of total debt to EBITDA 3.6 2.9
Ratio of total debt to adjusted EBITDA 3.0 3.4
BALANCE SHEET DATA: As OF DECEMBER 1, 1996 As OF NOVEMBER 30, 1995
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Total assets $ 740,592 $ 776,181
Long-term obligations 269,507 269,449
Total debt 288,127 286,937
Stockholders' equity 292,998 330,881
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<FN>
(a) EBITDA is calculated by adding interest expense, net, income taxes and
depreciation and amortization of intangibles to net income/(loss). EBITDA is
presented because it is a widely accepted financial indicator of a company's
ability to service and incur debt. EBITDA does not represent net income or cash
flows from operations as those terms are defined by generally accepted
accounting principles ("GAAP") and does not necessarily indicate whether cash
flows will be sufficient to fund cash needs. Adjusted EBITDA is calculated by
adding Performance Share Plan expense and Loss on sale of Samuel Lawrence to
EBITDA. Neither EBITDA nor Adjusted EBITDA necessarily coincides with the
definitions contained in the Indenture governing the Notes.
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