<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 12, 1998
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FRUIT OF THE LOOM, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-8941 36-3361804
- --------------------------- ----------- ---------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
5000 SEARS TOWER
233 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
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(Address of Principal Executive Offices, including Zip Code)
Registrant's telephone number, including area code (312) 876-1724
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FRUIT OF THE LOOM, INC.
ITEM 5. OTHER EVENTS
On February 12, 1998, the Registrant issued a news release announcing, among
other information, Condensed Consolidated Statement of Operations for the Three
Months Ended December 31, 1997. The amended news release attached hereto as
Exhibit 99.1 revises the Condensed Consolidted Statement of Operations for the
Three Months Ended December 31, 1997 to correct certain numbers and to conform
the presentation to the numbers for the Year Ended December 31, 1997 which
remain unchanged from the February 12, 1998 news release. The information
contained in the news release attached as Exhibit 99.1 is incorporated herein
by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 News Release of Registrant dated February 12, 1998, as
amended.
2
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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.
FRUIT OF THE LOOM, INC.
By: /s/ Larry K. Switzer
------------------------------------
Larry K. Switzer
Senior Executive Vice President
and Chief Financial Officer
Dated: February 23, 1998
3
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EXHIBIT INDEX
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Sequentially
Exhibit # Item Numbered Pages
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99.1 Amended News Release 9
4
<PAGE> 1
EXHIBIT 99.1
(AMENDED)
FRUIT OF THE LOOM, INC.
5000 Sears Tower
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
FRUIT OF THE LOOM, INC. REPORTS OPERATING RESULTS AND CHARGES
FOR FOURTH QUARTER
Chicago, IL, February 12, 1998--- Fruit of the Loom, Inc. (NYSE-FTL), one of
the world's leading marketers and manufacturers of basic family apparel today
reported sales of $428,500,000 for its fourth fiscal quarter ended December 31,
1997 compared to $581,000,000 for the same period a year ago. Fourth quarter
earnings were impacted by provisions for costs related to the closing and
disposal of a number of domestic manufacturing and distribution facilities,
impairment of manufacturing equipment and other assets and certain European
manufacturing and distribution facilities, and other costs associated with the
company's worldwide restructuring of manufacturing and distribution operations.
The company also took a $22,000,000 charge relating to a compensation agreement
at its Pro Player subsidiary. These and other special charges totaled
$372,200,000 million after tax ($441,700,000 pretax). Annualized after tax cost
savings resulting from these charges are expected to approximate $70,000,000 to
$100,000,000. After these charges, the Company reported a net loss of
$404,900,000, or $5.57 per share, for the fourth quarter of 1997 compared with
restated net earnings of $24,700,000, or $.32 per share, for the fourth quarter
of 1996.
For the year ended December 31, 1997, the company reported sales of
$2,139,900,000 compared to $2,447,400,000 for the year ended December 31, 1996.
The net loss for 1997 was $487,600,000 compared with restated net earnings of
$146,600,000 for 1996. Loss per share of $6.55 in 1997 compares to restated
earnings per share of $1.90 in 1996.
As previously announced, as a result of a court judgment in August 1997,
relating to the company's long-standing LMP litigation, the company took a
charge in 1997 of $102,200,000 which is classified as discontinued operations.
Additionally, during the third quarter of 1997, the company increased its
accrual by $32,000,000 relating to its' guarantee of Acme Boot Company debt.
During the fourth quarter of 1997, the company changed its method of
determining the cost of inventories from the last-in, first out (LIFO) method
to the first-in, first out (FIFO) method as it experienced reduced costs from
offshore assembly operations. As a result, the cost of inventories on a LIFO
basis at December 31, 1997 was approximately equal to their replacement cost.
Accordingly, the company believes that the FIFO method will result in a better
measurement of operating results. All 1996 full year and fourth quarter results
have been restated to reflect the retroactive application of this accounting
change as required by generally accepted accounting principles. Net income as
previously reported for the quarter and year ended December 31, 1996 were
reduced by $18,400,000 and $4,600,000, respectively. Restated earnings per
share as previously reported for the quarter and year ended December 31, 1996
were reduced by $.24 and $.06, respectively. The accounting
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(AMENDED)
change increased the net loss for the 1997 fourth quarter by $40,000,000, or
$.55 per share, and increased the net loss for the full year 1997 by
$27,800,000, or $.37 per share.
William Farley, Chairman, Chief Executive Officer and acting President and
Chief Operating Officer said, "Today's announcement concludes a very
disappointing year for us. Price discounting and a high level of promotional
activity were widespread in both our retail and wholesale businesses during the
year. Additionally, retail sales of basic apparel during the quarter were soft
resulting in reduced shipments. More recently, promotional activity has
quieted while pre-bookings for spring and summer are encouraging. We
anticipate an improved pricing environment as the year progresses and have
implemented a price increase on men's underwear effective in April."
"The Company is now positioned to realize considerable cost savings as a result
of moving labor-intensive sewing operations offshore. We incurred a number of
charges relating to this migration, which we took at year-end, and are pleased
that the process is now complete. Coupled with continuing cost reduction
programs throughout the company, we should improve the company's profitability
in 1998 and going forward," Mr. Farley said.
"Given our strong management team, brand strengths and marketing support,
low-cost manufacturing and broad distribution, we feel strongly that the
company can affect a strong recovery in 1998. Inventories are expected to
decline while capital spending will continue to be restrained. These factors
should help to improve cash flow and, along with better operating performance,
result in improved shareholder returns," Farley said.
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 the 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 conclude the movement of 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 30,000
people in over 60 locations worldwide. Brand names include FRUIT OF THE
LOOM(R), BVD(R), GITANO(R), BEST(TM), CUMBERLAND BAY(TM) 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.
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(AMENDED)
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------------------ -------------------------------
1997 1996 1997 1996
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 428,500 $ 581,000 $ 2,139,900 $ 2,447,400
Cost of sales 632,700 425,700 1,871,400 1,724,500
------------ ---------- ------------ ------------
Gross earnings (loss) (204,200) 155,300 268,500 722,900
Selling, general
and administrative expenses 217,100 97,600 524,800 378,000
Goodwill amortization 11,300 6,600 31,400 26,700
------------ ---------- ------------ ------------
Operating earnings (loss) (432,600) 51,100 (287,700) 318,200
Interest expense (22,200) (23,800) (84,700) (103,600)
Other expense - net (36,900) (33,100) (79,300) (36,400)
------------ ---------- ------------ ------------
Earnings (loss) before
income tax expense (benefit) (491,700) (5,800) (451,700) 178,200
Income tax expense (benefit) (87,800) (30,500) (66,300) 31,600
------------ ---------- ------------ ------------
Earnings (loss) from
continuing operations (403,900) 24,700 (385,400) 146,600
Discontinued operations:
Loss on LMP litigation (1,000) - (102,200) -
------------ ---------- ------------ ------------
Net earnings (loss) $ (404,900) $ 24,700 $ (487,600) $ 146,600
============ ========== ============ ============
Earnings (loss) per common share
Basic from:
Continuing operations $ (5.56) $ 0.32 $ (5.18) $ 1.92
Discontinued operations (0.01) - (1.37) -
------------ ---------- ------------ ------------
Net earnings (loss) $ (5.57) $ 0.32 $ (6.55) $ 1.92
============ ========== ============ ============
Diluted from:
Continuing operations $ 0.32 $ 1.90
Discontinued operations (No Dilution) - (No Dilution) -
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Net earnings (loss) $ 0.32 $ 1.90
========== ============
Average common shares outstanding
Basic 72,700 76,900 74,400 76,400
============ ========== ============ ============
Diluted 73,100 78,000 75,100 77,100
============ ========== ============ ============
</TABLE>
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(AMENDED)
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands of dollars)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
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<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents (including restricted cash) $ 16,100 $ 18,700
Notes and accounts receivable
(less allowance for possible losses
of $11,900 and $20,600, respectively) 98,100 167,300
Inventories
Finished goods 570,400 428,600
Work in process 212,300 188,500
Materials and supplies 64,800 47,400
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847,500 664,500
Other 53,900 38,100
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Total current assets 1,015,600 888,600
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Property, Plant and Equipment - Net 514,400 899,900
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Other Assets
Goodwill (less accumulated amortization of
$311,400 and $284,500, respectively) 712,900 744,300
Other 240,200 60,600
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Total other assets 953,100 804,900
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$ 2,483,100 $ 2,593,400
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 28,200 $ 18,200
Trade accounts payable 234,100 111,900
Other accounts payable and accrued expenses 262,900 196,600
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Total current liabilities 525,200 326,700
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Noncurrent Liabilities
Long-term debt 1,192,800 867,400
Other 343,000 305,500
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Total noncurrent liabilities 1,535,800 1,172,900
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Common Stockholders' Equity 422,100 1,093,800
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$ 2,483,100 $ 2,593,400
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</TABLE>
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(AMENDED)
FRUIT OF THE LOOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands of dollars)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (487,600) $ 146,600
Adjustments to reconcile net earnings (loss)
to net cash used for operating activities:
Depreciation and amortization 154,200 155,700
Deferred income tax expense (benefit) (64,600) 23,200
Decrease in working capital 94,500 198,000
Other - net 208,600 (9,800)
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Net cash provided by
(used for) operating activities (94,900) 513,700
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (55,400) (44,500)
Proceeds from sale of Hosiery Division - 73,800
Other - net (33,900) 2,000
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Net cash provided by
(used for) investing activities (89,300) 31,300
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 97,800 63,000
Proceeds under line-of-credit agreements 1,245,800 488,500
Payments under line-of-credit agreements (981,900) (979,600)
Principal payments on long-term debt and capital leases (17,600) (125,500)
Common stock issued 11,100 17,400
Common stock repurchased (173,600) (16,600)
---------- ----------
Net cash provided by
(used for) financing activities 181,600 (552,800)
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Net decrease in Cash and cash equivalents
(including restricted cash) (2,600) (7,800)
Cash and cash equivalents (including restricted cash)
at beginning of period 18,700 26,500
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Cash and cash equivalents (including restricted cash)
at end of period $ 16,100 $ 18,700
========== ==========
</TABLE>
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