<PAGE> 1
UNITED STATES
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): OCTOBER 22, 1997
----------------
FRUIT OF THE LOOM, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-8941 36-3361804
----------------------------- ------ -------------------
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.
</TABLE>
5000 SEARS TOWER, 233 SOUTH WACKER DRIVE, CHICAGO, ILLINOIS 60606
- ----------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (312) 876-1724
--------------
<PAGE> 2
ITEM 5. OTHER EVENTS.
On October 22, 1997 the Registrant issued the press release attached as Exhibit
99.1 announcing its earnings for the quarter ended September 30, 1997. The
information contained in this press release is incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press Release of Registrant dated October 22, 1997
2
<PAGE> 3
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.
Fruit of the Loom, Inc.
Dated: October 28, 1997 By: /s/ LARRY K. SWITZER
--------------------------------
Larry K. Switzer
Senior Executive Vice President
and Chief Financial Officer
3
<PAGE> 4
Exhibit Index
Exhibit # Item
------------- ------------------
99.1 Press Release
<PAGE> 1
EXHIBIT 99.1
FRUIT OF THE LOOM, INC.
5000 Sears Towers
Chicago, Illinois 60606 312/876-1724
News Release FOR IMMEDIATE RELEASE
Contact: Mark A. Steinkrauss
Vice President, Corporate Relations
Fruit of the Loom, Inc.
Tel: 312/993-1889/Fax: 312/993-1773
E-mail: [email protected]
Home Page: www.fruit.com
FRUIT OF THE LOOM ANNOUNCES
RESULTS FOR THIRD QUARTER; TAKES CHARGES TO OPERATIONS
Chicago, IL, October 22, 1997 --- Fruit of the Loom, Inc. (NYSE-FTL), one of
the world's leading marketers and manufacturers of basic family apparel today
reported sales for its third fiscal quarter of 1997 of $569,700,000 compared to
$628,000,000 in the same period a year ago. The company incurred a net loss
for the third quarter of 1997 of $139,300,000 compared to net earnings of
$47,800,000 for the same period last year. The third quarter of 1997 includes
a net loss of $101,200,000 ($1.38 per share) related to discontinued operations
for a litigation judgment. Loss per share of $1.90 for the third quarter of
1997 compares to earnings per share of $.63 for the same period of 1996. Sales
in the third quarter of 1996 included $28,600,000 of hosiery sales. The
company sold its hosiery business to Renfro Corporation in November, 1996.
During the quarter the company increased its reserve relating to the company's
guarantees of debt incurred or created by Acme Boot Company under Acme Boot's
credit facilities from $35,000,000 to $67,000,000. This charge is reflected on
the other expense line of the company's consolidated statement of operations.
In August, 1997 the Court of Appeal of the State of California upheld a 1994
judgment of $96,000,000 against Universal Manufacturing Corporation and its
corporate successor, MagneTek, Inc. Plaintiffs were LMP Corporation et al. In
1986, Universal Manufacturing Corporation, then a wholly-owned subsidiary of
Fruit of the Loom, Inc., was sold to MagneTek, Inc. Fruit of the Loom agreed to
indemnify MagneTek with regard to pending litigation. In accordance with an
agreement between Fruit of the Loom, Inc. and the plaintiffs, the company paid
$28,600,000 to the plaintiffs on August 18, 1997. Under the agreement, Fruit
of the Loom will be required, should further appeals fail, to pay an additional
$71,400,000 plus interest dating from August 1, 1997. Accordingly, the company
has taken a charge of $101,200,000 in its third fiscal quarter. Fruit of the
Loom disagrees with the decision by the Court of Appeal and plans to appeal the
decision to the California Supreme Court.
For the nine months ended September 30, 1997 the company reported sales of
$1,711,400,000 compared to $1,866,400,000 for the same period a year ago. The
company incurred a net loss for the first nine months of 1997 of $94,900,000
compared to net earnings of $108,100,000 for the same period last year. Loss
per share of $1.27 for the first nine months of 1997 compared with earnings per
share of $1.42 for the same period of 1996.
<PAGE> 2
A spokesman said that in addition to the $133,200,000 of nonrecurring charges
relating to Acme Boot Company and Universal Manufacturing Corp., the company
also absorbed $21,600,000 of costs due to reduced work weeks or shutdowns at a
number of manufacturing facilities. These actions were necessary to balance
inventories in the wake of less than anticipated demand.
Richard C. Lappin, President and Chief Operating Officer, said "We decided to
speed up the movement of our labor intensive sewing operations to offshore
facilities to secure cost savings. While this action will serve the company
well in the long term it has resulted in some disruptions and added costs in
the second half of this fiscal year. Facility launch and start up issues at
some offshore facilities resulted in delayed shipments of some products such as
fleece sweatshirts, which in turn resulted in lower sales for the quarter. We
should have these concerns behind us as we conclude the year".
Larry K. Switzer, Senior Executive Vice President and Chief Financial Officer,
said "The company anticipates taking additional charges in the fourth quarter
having to do with both operating and nonoperating areas. The charges would
include costs such as those associated with the consolidation of sewing
operations as well as warehouse and distribution operations." He added, "with
these charges behind us, the company expects to be well positioned to record
improved operating results in 1998 and beyond".
Except for historical information contained herein, information set forth in
this news release may contain forward looking statements that involve certain
risks and uncertainties that could cause actual results to differ materially
from those in forward looking statements. Potential risks and uncertainties
include such factors as the financial strength of the retail industry,
particularly in the mass merchant channel, the level of consumer spending for
apparel, the amount of sales of the company's activewear screenprint products,
the competitive pricing environment within the basic apparel segment of the
apparel industry, the ability of the company to successfully move
labor-intensive segments of the manufacturing process offshore and the success
of new product introductions and planned advertising, marketing and promotional
campaigns. Investors are also directed to consider other risks and
uncertainties discussed in documents filed by the company with the Securities
and Exchange Commission.
Fruit of the Loom, Inc. is a marketing oriented, international basic apparel
company, emphasizing branded products for consumers ranging from infants to
senior citizens. The company manufactures and markets men's and boys'
underwear, women's and girls' underwear, printable activewear, outerwear,
casualwear, sportswear and childrenswear. Fruit of the Loom employs 31,000
people in over 60 locations worldwide. Brand names include FRUIT OF THE
LOOM(R), BVD(R), GITANO(R), BESTTM, CUMBERLAND BAYTM and SCREEN STARS(R).
Licensed brands include MUNSINGWEAR(R), and WILSON(R). Licensed apparel
bearing the logos or insignia of the major sports leagues and their teams and
certain popular players in the leagues, and the logos of most major colleges
and universities, are marketed under the PRO PLAYER(R) and FANS GEAR(R) brands.
- MORE -
-2-
<PAGE> 3
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ -------------------------------
1997 1996 1997 1996
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Net Sales $ 569,700 $ 628,000 $ 1,711,400 $ 1,866,400
Cost of sales 427,600 427,400 1,257,500 1,320,000
------------- ------------- ------------- ---------------
Gross earnings 142,100 200,600 453,900 546,400
Selling, general
and administrative expenses 116,800 99,700 307,700 280,400
Goodwill amortization 6,700 6,700 20,100 20,100
------------- ------------- ------------- ---------------
Operating earnings 18,600 94,200 126,100 245,900
Interest expense (22,500) (25,400) (62,500) (79,800)
Other expense - net (36,400) (400) (42,400) (3,300)
------------- ------------- ------------- ---------------
Earnings (loss) before
income tax expense (benefit) (40,300) 68,400 21,200 162,800
Income tax expense (benefit) (2,200) 20,600 14,900 54,700
------------- ------------- ------------- ---------------
Earnings (loss) from
continuing operations (38,100) 47,800 6,300 108,100
Discontinued operations:
Loss on LMP litigation (101,200) - (101,200) -
------------- ------------- ------------- ---------------
Net earnings (loss) $ (139,300) $ 47,800 $ (94,900) $ 108,100
============= ============ ============= ===============
Earnings (loss) per common share from:
Continuing operations $ (0.52) $ 0.63 $ 0.08 $ 1.42
Discontinued operations (1.38) - (1.35) -
------------- ------------- ------------- ---------------
Net earnings (loss) $ (1.90) $ 0.63 $ (1.27) $ 1.42
============= ============ ============= ===============
Average common shares outstanding 73,200 76,400 74,900 76,200
============= ============ ============= ===============
</TABLE>
-MORE-
-3-
<PAGE> 4
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands of dollars)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash equivalents (including restricted cash) $ 18,200 $ 18,700
Notes and accounts receivable
(less allowance for possible losses
of $19,500 and $20,600, respectively) 262,600 167,300
Inventories
Finished goods 492,800 396,800
Work in process 197,300 176,700
Materials and supplies 60,900 44,500
------------- -------------
751,000 618,000
Other 43,900 38,100
------------- -------------
Total current assets 1,075,700 842,100
------------- -------------
Property, Plant and Equipment 1,546,200 1,541,000
Less accumulated depreciation 719,000 641,100
------------- -------------
Net property, plant and equipment 827,200 899,900
------------- -------------
Other Assets
Goodwill (less accumulated amortization of
$304,600 and $284,500, respectively) 724,200 744,300
Other 83,700 60,700
------------- -------------
Total other assets 807,900 805,000
------------- -------------
$ 2,710,800 $ 2,547,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturiites of long-term debt $ 33,200 $ 18,200
Trade accounts payable 135,400 111,900
Other accounts payable and accrued expenses 294,500 196,600
------------- -------------
Total current liabilities 463,100 326,700
------------- -------------
Noncurrent Liabilities
Long-term debt 1,118,400 867,400
Deferred income taxes 18,900 16,900
Other 285,800 271,200
------------- -------------
Total noncurrent liabilities 1,423,100 1,155,500
------------- -------------
Common Stockholders' Equity 824,600 1,064,800
------------- -------------
$ 2,710,800 $ 2,547,000
============= =============
</TABLE>
-MORE-
-4-
<PAGE> 5
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In thousands of dollars)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------------------
1997 1996
---------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ (94,900) $ 108,100
Adjustments to reconcile net earnings
to net cash used for operating activities:
Depreciation and amortization 116,500 113,900
Deferred income tax expense 1,900 27,000
Increase in working capital (193,400) (121,400)
Loss on LMP litigation - net of $28,600 paid 72,600 -
Other - net (6,200) (3,500)
------------- -------------
Net cash used for operating activities (103,500) 124,100
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (41,800) (27,100)
Other - net (800) (2,200)
------------- -------------
Net cash used for investing activities (42,600) (29,300)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 98,300 63,000
Proceeds under line-of-credit agreements 975,000 308,500
Payments under line-of-credit agreements (785,800) (483,100)
Principal payments of long-term debt and capital leases (11,800) (19,000)
Common stock issued 11,100 11,300
Common stock repurchased (141,200) -
------------- -------------
Net cash provided by financing activities 145,600 (119,300)
------------- -------------
Net increase (decrease) in Cash and cash equivalents
(including restricted cash) (500) (24,500)
Cash and cash equivalents (including restricted cash)
at beginning of period 18,700 26,500
------------- -------------
Cash and cash equivalents (including restricted cash)
at end of period $ 18,200 $ 2,000
============= =============
</TABLE>
-END-
-5-
