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SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT 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) JUNE 4, 1997
THE LESLIE FAY COMPANY, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 1-9196 13-3197085
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(STATE OR OTHER (COMMISSION FILE NO.) (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION)
1412 BROADWAY
NEW YORK, NEW YORK 10018
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 221-4000
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THE LESLIE FAY COMPANIES, INC.
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(Former Name or Former Address, If Changed Since Last Report)
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<PAGE>
THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
FORM 8-K/A
In the Form 8-K dated June 4, 1997 filed by The Leslie Fay Company,
Inc. (the "Company"), the Company indicated it would file its Pro Forma
Financial Information by amendment. The following financial statement and pro
forma financial information should be inserted as amendments to Item 7.
Financial Statements, Pro Forma Financial Information and Exhibits and the
following notes in Item 5. Other Events are included to assist the reader in
understanding the adjustments made to the financial statements and pro forma
financial information:
ITEM 5. OTHER EVENTS:
Fresh-Start Reporting
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Pursuant to the guidelines provided by SOP 90-7, the Company adopted
fresh-start reporting and reflected the consummation distributions under its
Plan of Reorganization (the "Plan") in the balance sheet as of June 4, 1997 (the
effective date of the consummation of the Plan for accounting purposes). Under
fresh-start reporting, the Company's reorganization value of $25,000,000 was
allocated to its net assets on the basis of the purchase method of accounting.
The significant fresh-start reporting adjustments are summarized as
follows:
1. Cancellation of the old common stock pursuant to the Plan
against the accumulated deficit.
2. Allocation of the fair market value of the identifiable
net assets in excess of the reorganization value (negative
goodwill) in accordance with the purchase method of
accounting. The negative goodwill amount remaining after
reducing non- current assets to zero was recorded as a
deferred credit, "Excess of revalued net assets over
equity" and will be amortized over three (3) years.
The resulting charge of $27,010,000 from all the fresh-start
adjustments, including the write-off of all revalued noncurrent assets (but
excluding the write-off of the old stock for $56,611,000), is presented as
"Revaluation of assets and liabilities pursuant to the adoption of fresh-start
reporting" in the consolidated statement of operations for the twenty-two and
eight weeks ended June 4, 1997.
The fresh-start reporting reorganization value of $25,000,000 was
established as the midpoint of a range ($20,000,000 - $30,000,000) established
by the Company's financial advisors. The calculation of the range was based on a
five-year analysis of the Company's projected operations for the remaining
operating divisions (fiscal years ended 1996 - 2001), which was prepared by
management, and a discounted cash flow methodology was applied to those numbers.
2
<PAGE>
THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
The five-year cash flow projections were based on estimates and
assumptions about circumstances and events that have not yet taken place. Such
estimates and assumptions are inherently subject to significant economic and
competitive uncertainties and contingencies beyond the control of the Company,
including, but not limited to, those with respect to the future course of the
Company's business activity.
Under fresh-start reporting, the final consolidated balance sheet as
of June 4, 1997, will become the opening consolidated balance sheet of the
reorganized Company. Since fresh-start reporting has been reflected in the
accompanying consolidated balance sheet as of June 4, 1997, the consolidated
balance sheet as of that date is not comparable in material respects to any such
balance sheet as of any prior date or for any prior period since the balance
sheet as of June 4, 1997 is that of a reorganized entity.
Dispositions:
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In connection with the consummation of the Plan, the Company sold or
transferred all the assets and liabilities of its Sassco Fashions division on
June 4, 1997 for an estimated exchange value of $240,000,000. This value was the
estimated reorganization value of the Sassco Fashions Division which was
calculated in a manner similar to the Company's reorganization value (see
above). A complete valuation study is currently being performed to establish a
book and tax basis of the new Sassco entity. The resulting gain of $99,810,000,
net of taxes of $3,728,000, recorded from these transactions is reflected as a
Gain from the sale of the Sassco Fashions division in the statement of
operations. Any adjustments from the $240,000,000 valuation will be recorded in
the appropriate subsequent period as a purchase price adjustment to the gain and
will have a corresponding offset to the gain on the debt discharge.
In addition, on May 26, 1997, the Company sold the assets and
liabilities of its Castleberry Division for $600,000. The resulting loss of
$1,337,000 on the sale was previously recorded as reorganization expense in
fiscal 1996 and therefore, was applied against Accrued expenses and other
current liabilities at the time of the sale. Assets and liabilities for the
Castleberry division at May 26, 1997 were $2,218,000 and $(281,000),
respectively.
Unaudited pro forma consolidated statements for the twenty-two weeks
ended June 4, 1997 and for the fiscal years ended December 28, 1996 and December
29, 1995 are presented below and include adjustments to give effect to the sales
and the Plan (see above) as if they occurred as of the beginning of the periods
presented. The pro forma balance sheet as of June 4, 1997 does not reflect the
Castleberry transaction as it was sold on May 26, 1997 and is already reflected
in the historical balance sheet.
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<PAGE>
THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
The unaudited pro forma financial statements have been prepared in
accordance with guidelines established by the Securities and Exchange
Commission. The historical balances were derived from the statement of
operations for the twenty-two weeks ended June 4, 1997, and the fifty-two weeks
ended December 28, 1996 and December 30, 1995. All significant intercompany
transactions have been eliminated. The unaudited pro forma financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Company's Form 10-K for the fiscal year ended December 28, 1996.
The unaudited pro forma adjustments presented in the statements are
as follows:
1. The operating results of the Sassco Fashions division have
been eliminated to give effect to the disposition as of the
beginning of the period presented, including depreciation
expense on its fixed assets, an allocated corporate charge
based on workload by department related to the Sassco Fashions
division and direct interest charges associated with financing
fees on its factoring agreement and fees incurred on letters
of credit issued on its behalf, and reverse the gain recorded
on the sale and transfer of the division.
2. The operating results of the Castleberry division have been
eliminated to give effect to the disposition as of the
beginning of the period presented, including depreciation
expense on its fixed assets and an allocated corporate charge
based on workload by department related to the Castleberry
division.
3. To record the estimated effect of the Plan as if it had been
effective as of the beginning of the period presented. This
included adjustments for the following items:
a) The elimination of the historical depreciation and
amortization for the remaining divisions, including the
amounts in cost of sales, on the beginning-of-period asset
balances and the recording of the amortization credit from the
"Excess of revalued net assets over equity value under
fresh-start reporting" (assuming a three-year amortization
period).
b) The elimination of historical reorganization expense
that will not be incurred subsequent to the Consummation Date.
c) The elimination of the fresh-start revaluation charge
and the reversal of the gain on debt discharge pursuant to the
Plan.
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS:
(b) Pro Forma Financial Information:
The effect of the disposition of Sassco Fashions division and the
consummation of the Plan on the Company's consolidated balance sheet as of June
4, 1997 was as follows:
THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS TO RECORD PLAN
HISTORICAL -------------------------- REORGANIZED
AS OF DISPOSITION DEBT FRESH AS OF
ASSETS JUNE 4, 1997 OF SASSCO DISCHARGE START JUNE 4, 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents ............................... $ 52,043 $ (10,963) $ -- $ -- $ 41,080
Accounts receivable net of allowances for possible losses 64,705 (48,295) -- -- 16,410
Inventories ............................................. 79,382 (60,267) -- -- 19,115
Prepaid expenses and other current assets ............... 2,401 (1,217) -- -- 1,184
--------- --------- --------- --------- ---------
Total Current Assets ........................... 198,531 (120,742) -- -- 77,789
Property, Plant and Equipment, at cost less
accumulated depreciation and amortization .............. 19,394 (14,002) -- (5,392) --
Excess of Purchase Price over Net Assets Acquired ......... 23,326 (16,066) -- (7,260) --
Deferred Charges and Other Assets ......................... 2,646 (1,753) (243) (650) --
--------- --------- --------- --------- ---------
Total Assets ................................... $ 243,897 $(152,563) $ (243) $ (13,302) $ 77,789
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities:
Accounts payable ....................................... $ 19,354 $ (9,947) $ -- $ -- $ 9,407
Accrued expenses and other current liabilities ......... 22,399 (3,917) 8,649 -- 27,131
Income taxes payable ................................... 708 1,491 -- -- 2,199
--------- --------- --------- --------- ---------
Total Current Liabilities ...................... 42,461 (12,373) 8,649 -- 38,737
Excess of Revalued Net Assets Acquired over
Equity under Fresh-Start Reporting ..................... -- -- -- 13,708 13,708
Long Term Debt - Capitalized Lease ........................ 344 -- -- -- 344
Liabilities Subject to Compromise ......................... 337,433 (240,000) (97,433) -- --
--------- --------- --------- --------- ---------
Total Liabilities .............................. 380,238 (252,373) (88,784) 13,708 52,789
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Commitments and Contingencies
Stockholders' Equity
Common Stock ........................................... 20,000 -- 34 (20,000) 34
Preferred Stock ........................................ -- -- -- -- --
Capital in excess of par value ......................... 49,012 -- 24,966 (49,012) 24,966
Accumulated retained earnings (deficit) ................ (192,952) 99,810 63,541 29,601 --
Foreign currency translation adjustment ................ 565 -- -- (565) --
--------- --------- --------- --------- ---------
Subtotal ....................................... (123,375) 99,810 88,541 (39,976) 25,000
Treasury stock ......................................... (12,966) -- -- 12,966 --
--------- --------- --------- --------- ---------
Total Stockholders' Equity ..................... (136,341) 99,810 88,541 (27,010) 25,000
--------- --------- --------- --------- ---------
Total liabilities and Stockholders' Equity ................ $ 243,897 $(152,563) $ (243) $ (13,302) $ 77,789
========= ========= ========= ========= =========
</TABLE>
The accompanying information in item 5. Other Events is an
integral part of this balance sheet
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<PAGE>
THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(UNAUDITED)
The effect of the disposition of Sassco Fashions and Castleberry
divisions and the consummation of the Plan on the Company's consolidated
statements of operations were as follows:
<TABLE>
<CAPTION>
TWENTY-TWO WEEKS ENDED JUNE 4, 1997
PRO FORMA ADJUSTMENTS PRO FORMA
HISTORICAL DISPOSITION SALE OF FRESH-START ADJUSTED
OPERATIONS OF SASSCO CASTLEBERRY REPORTING BALANCE
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Sales ............................................. $ 197,984 $ (136,107) $ (2,808) $ -- $ 59,069
Cost of Sales ......................................... 147,276 (101,573) (2,262) (32) 43,409
----------- ----------- ----------- ----------- -----------
Gross profit ....................................... 50,708 (34,534) (546) 32 15,660
----------- ----------- ----------- ----------- -----------
Operating Expenses:
Selling, warehouse, general and
administrative expenses .......................... 35,880 (24,228) (1,043) (756) 9,853
Amortization of intangibles ........................ 473 (256) -- (2,122) (1,905)
----------- ----------- ----------- ----------- -----------
Total operating expenses .............................. 36,353 (24,484) (1,043) (2,878) 7,948
----------- ----------- ----------- ----------- -----------
Operating income ...................................... 14,355 (10,050) 497 2,910 7,712
Interesting and Financing Costs
(excludes contractual interest) ................... 1,372 (595) -- -- 777
----------- ----------- ----------- ----------- -----------
Income (Loss) before fresh-start revaluation,
reorganization costs, taxes and extraordinary items 12,983 (9,455) 497 2,910 6,935
Reorganization Costs .................................. 3,379 -- 14 (3,393) --
----------- ----------- ----------- ----------- -----------
Income (Loss) before taxes and extraordinary items . 9,604 (9,455) 483 6,303 6,935
Taxes ................................................. 451 (343) -- -- 108
----------- ----------- ----------- ----------- -----------
Net Income (Loss) before extraordinary items ....... 9,153 (9,112) 483 6,303 6,827
Extraordinary Item - Gain on Sale/Transfer of Sassco
Fashions Division .................................. 99,810 (99,810) -- -- --
Revaluation of Assets and Liabilities Pursuant to the
Adoption of Fresh-Start Reporting .................. (27,010) -- -- 27,010 --
Extraordinary Item - Gain on Debt Discharge ........... 63,541 -- -- (63,541) --
----------- ----------- ----------- ----------- -----------
Net Income (Loss) .................................. $ 145,494 $ (108,922) $ 483 $ (30,228) $ 6,827
=========== =========== =========== =========== ===========
Net Income (Loss) per Share of Common Stock* ....... * $ 2.01
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Weighted Average Common Shares Outstanding* ........ * 3,400,000
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</TABLE>
*Earnings per share is not presented for the twenty-two weeks
ended June 4, 1997 on a historical basis because such presentation
would not be meaningful. The old stock was cancelled under the
plan of reorganization and new stock was issued. Earnings per
share on a pro forma basis is calculated on the new stock outstanding.
The accompanying information in Item 5. Other Events
is an integral part of this financial statement.
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<PAGE>
THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
FIFTY-TWO WEEKS ENDED DECEMBER 28, 1996
PRO FORMA ADJUSTMENTS PRO FORMA
HISTORICAL DISPOSITION SALE OF FRESH-START ADJUSTED
OPERATIONS OF SASSCO CASTLEBERRY REPORTING BALANCE
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Sales ............................................... $ 429,676 $ (311,550) $ (8,073) $ -- $ 110,053
Cost of Sales ........................................... 331,372 (238,268) (6,066) (86) 86,952
----------- ----------- ----------- ----------- -----------
Gross profit ......................................... 98,304 (73,282) (2,007) 86 23,101
----------- ----------- ----------- ----------- -----------
Operating Expenses:
Selling, warehouse, general and
administrative expenses ............................ 79,183 (51,891) (2,592) (2,122) 22,578
Amortization of intangibles .......................... 1,156 (610) (24) (5,094) (4,572)
----------- ----------- ----------- ----------- -----------
Total operating expenses ................................ 80,339 (52,501) (2,616) (7,216) 18,006
Operating income ........................................ 17,965 (20,781) 609 7,302 5,095
Interesting and Financing Costs
(excludes contractual interest) ..................... 3,932 (1,634) -- -- 2,298
----------- ----------- ----------- ----------- -----------
Income (Loss) before fresh-start revaluation,
reorganization costs, taxes and extraordinary items . 14,033 (19,14 609 7,302 2,797
Reorganization Costs .................................... 5,144 -- (2,004) (3,140) --
Income (Loss) before taxes and extraordinary items ... 8,889 (19,147) 2,613 10,442 2,797
Taxes ................................................... (839) 969 -- -- 130
----------- ----------- ----------- ----------- -----------
Net Income (Loss) before extraordinary items ......... 9,728 (20,116) 2,613 10,442 2,667
Extraordinary Item - Gain on Sale/Transfer of Sassco
Fashions Division .................................... -- -- -- -- --
Revaluation of Assets and Liabilities Pursuant to the
Adoption of Fresh-Start Reporting .................... -- -- -- -- --
Extraordinary Item - Gain on Debt Discharge ............. -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Income (Loss) .................................... $ 9,728 $ (20,116) $ 2,613 $ 10,442 $ 2,667
=========== =========== =========== =========== ===========
Net Income (Loss) per Share of Common Stock* ......... $ 0.52 $ 0.78
=========== ===========
Weighted Average Common Shares Outstanding* .......... 18,771,836 3,400,000
=========== ===========
</TABLE>
*Earnings per share for the fifty-two weeks
ended December 28, 1996 on a historical basis
is based on the old stock outstanding.
The old stock was canceled under the
plan of reorganization and new stock was issued.
Earnings per share on a pro forma basis is calculated
on the new stock outstanding.
The accompanying information in Item 5. Other Events
is an integral part of this financial statement.
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<PAGE>
THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
FIFTY-TWO WEEKS ENDED DECEMBER 30, 1995
PRO FORMA ADJUSTMENTS PRO FORMA
HISTORICAL DISPOSITION SALE OF FRESH-START ADJUSTED
OPERATIONS OF SASSCO CASTLEBERRY REPORTING BALANCE
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Sales................................................ $ 442,084 $ (279,974) $ (10,649) $ -- $ 151,461
Cost of Sales ........................................... 345,891 (207,161) (7,173) (736) 130,821
----------- ----------- ----------- ----------- -----------
Gross profit ......................................... 96,193 (72,813) (3,476) 736 20,640
----------- ----------- ----------- ----------- -----------
Operating Expenses:
Selling, warehouse, general and
administrative expenses ............................ 93,811 (51,090) (2,957) (3,706) 36,058
Amortization of intangibles .......................... 1,147 (547) (24) (5,148) (4,572)
----------- ----------- ----------- ----------- -----------
Total operating expenses ................................ 94,958 (51,637) (2,981) (8,854) 31,486
Operating income ........................................ 1,235 (21,176) (495) 9,590 (10,846)
Interesting and Financing Costs
(excludes contractual interest) ..................... 3,262 (525) -- -- 2,737
----------- ----------- ----------- ----------- -----------
Income (Loss) before fresh-start revaluation,
reorganization costs, taxes and extraordinary items . (2,027) (20,651) (495) 9,590 (13,583)
Reorganization Costs .................................... 16,575 -- -- (16,575) --
----------- ----------- ----------- ----------- -----------
Income (Loss) before taxes and extraordinary items ... (18,602) (20,651) (495) 26,165 (13,583)
Taxes ................................................... (761) 835 -- -- 74
----------- ----------- ----------- ----------- -----------
Net Income (Loss) before extraordinary items ......... (17,841) (21,486) (495) 26,165 (13,657)
Extraordinary Item - Gain on Sale/Transfer of Sassco
Fashions Division .................................... -- -- -- -- --
Revaluation of Assets and Liabilities Pursuant to the
Adoption of Fresh-Start Reporting .................... -- -- -- -- --
Extraordinary Item - Gain on Debt Discharge ............. -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Income (Loss) .................................... $ (17,841) $ (21,486) $ (495) $ 26,165 $ (13,657)
=========== =========== =========== =========== ===========
Net Income (Loss) per Share of Common Stock* ......... $ (0.95) $ (4.02)
=========== ===========
Weighted Average Common Shares Outstanding* .......... 18,771,836 3,400,000
=========== ===========
</TABLE>
*Earnings per share for the fifty-two weeks
ended December 30, 1995 on a historical basis
is based on the old stock outstanding.
The old stock was canceled under the
plan of reorganization and new stock was issued.
Earnings per share on a pro forma basis is calculated
on the new stock outstanding.
The accompanying information in Item 5. Other Events
is an integral part of this financial statement.
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<PAGE>
THE LESLIE FAY COMPANY, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
The Leslie Fay Company, Inc. has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: September 2, 1997 The Leslie Fay Company, Inc.
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(Company)
By: /s/ Warren T. Wishart
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Warren T. Wishart
Secretary and Chief
Financial Officer
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