<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_______________ to __________
Commission File Number: 023214
------------------
SAMSONITE CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3511556
- ----------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 East 45th Avenue, Denver, CO 80239
- ----------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(303) 373-2000
-----------------------------------------
(Registrant's telephone number, including area code
----------------------------------
(Former name, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
X Yes _______ No
-------
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
X Yes ______ No
-------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 16,004,450 shares of common
stock, par value $0.01 per share, as of September 6, 1996.
- --------------------------------------------------------------------------------
<PAGE>
FORM 10-Q
---------
CONTENTS
--------
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I- FINANCIAL INFORMATION
---------------------
Unaudited Consolidated Balance Sheets as of July 31, 1996
and January 31, 1996................................................. 1
Unaudited Consolidated Statements of Operations for the three
months
ended July 31, 1996 and 1995......................................... 3
Unaudited Consolidated Statements of Operations for the six months
ended July 31, 1996 and 1995......................................... 4
Unaudited Consolidated Statement of Stockholders' Equity for the six
months
ended July 31, 1996.................................................. 5
Unaudited Consolidated Statements of Cash Flows for the six months
ended July 31, 1996 and 1995......................................... 6
Unaudited Notes to Consolidated Financial Statements................. 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................ 14
PART II - OTHER INFORMATION
-----------------
Item 1: Legal Proceedings ........................................... 22
Item 2: Changes in Securities ....................................... 22
Item 3: Defaults upon Senior Securities ............................. 22
Item 4: Submission of Matters to a Vote of Security Holders ......... 22
Item 5: Other Information ........................................... 23
Item 6: Exhibits and Reports on Form 8-K ............................ 23
Signature............................................................ 24
Index to Exhibits ................................................... 25
</TABLE>
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
as of July 31, 1996 and January 31, 1996
(in thousands)
<TABLE>
<CAPTION>
July 31, January 31,
1996 1996
-------- ----------
<S> <C> <C>
Assets:
- -------
Current assets:
Cash and cash equivalents.............................................. $ 9,367 15,179
Trade receivables, net of allowance for doubtful accounts
of $8,211 and $8,152................................................ 88,358 73,513
Notes and other receivables............................................ 17,419 17,711
Inventories (Note 2)................................................... 129,173 115,736
Deferred income tax assets............................................. 36,689 38,760
Prepaid expenses and other current assets.............................. 16,354 15,990
Assets held for sale................................................... 9,315 9,455
------- --------
Total current assets................................................ 306,675 286,344
Property, plant and equipment - net (Note 3).............................. 136,854 140,912
Intangible assets, less accumulated amortization of $198,623 and
$171,278 (Note 4)...................................................... 132,093 159,492
Other assets and long-term receivables, net of allowance
for doubtful accounts of $10,094 and $10,104........................... 33,373 34,695
------- --------
$608,995 621,443
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 1996 AND JANUARY 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
(CONTINUED)
<TABLE>
<CAPTION>
July 31, January 31,
1996 1996
------------ ------------
<S> <C> <C>
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Short-term debt (Note 5)............................................. $ 21,133 23,487
Current installments of long-term obligations (Note 5)............... 20,492 16,306
Accounts payable..................................................... 41,325 33,520
Other accrued liabilities............................................ 101,908 113,512
------- -------
Total current liabilities......................................... 184,858 186,825
Long-term obligations, less current installments (Note 5).............. 295,255 294,653
Deferred income tax liabilities........................................ 33,475 33,038
Other noncurrent liabilities........................................... 85,843 79,672
Minority interests..................................................... 3,289 2,139
------- -------
Total liabilities................................................. 602,720 596,327
------- -------
Stockholders' equity (Notes 7, 8 and 9):
Preferred stock ($.01 par value; 2,000,000 shares authorized;
no shares issued)................................................. -- --
Common stock ($.01 par value; 60,000,000 shares authorized;
16,004,450 and 15,889,450 shares issued and outstanding).......... 160 159
Additional paid-in capital........................................... 264,088 261,842
Accumulated deficit.................................................. (241,532) (224,547)
Foreign currency translation equity adjustment....................... (5,460) (2,338)
Unearned compensation - restricted stock............................. (981) --
Note receivable...................................................... (10,000) (10,000)
-------- --------
Total stockholders' equity........................................ 6,275 25,116
------- -------
Commitments and contingencies (Note 1C)
$608,995 621,443
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JULY 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended July 31,
---------------------------
1996 1995
----------------- ------------
<S> <C> <C>
Net sales (Note 1F)...................................................... $179,440 167,670
Cost of goods sold (Note 3)............................................. 110,748 103,503
------- -------
Gross profit.......................................................... 68,692 64,167
Selling, general and administrative expenses (Note 3)................... 57,986 52,073
Amortization of intangible assets (Note 4).............................. 11,407 16,138
------- -------
Operating income (loss)............................................... (701) (4,044)
Other income (expense):
Interest income....................................................... 257 3,098
Interest expense and amortization of debt issue costs
and premium....................................................... (8,924) (10,301)
Other - net (Note 6).................................................. 4,740 5,332
------- --------
Loss before income taxes, minority interest and extraordinary item.... (4,628) (5,915)
Income tax expense....................................................... (1,403) (3,474)
Minority interest in earnings of subsidiaries............................ (152) (60)
------- --------
Loss before extraordinary item........................................ (6,183) (9,449)
Extraordinary loss, net of income tax benefit of $5,589 (Note 5)......... -- (8,042)
------- --------
Net loss.............................................................. $(6,183) (17,491)
======== ========
Loss per share:
Loss before extraordinary item........................................ $ (.39) (.59)
Extraordinary item.................................................... -- (.51)
-------- --------
Net loss.............................................................. $ (.39) (1.10)
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Six Months Ended July 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Net sales (Note 1F)...................................................... $349,307 325,423
Cost of goods sold (Note 3).............................................. 211,950 197,291
------- -------
Gross profit......................................................... 137,357 128,132
Selling, general and administrative expenses (Note 3).................... 111,391 102,534
Amortization of intangible assets (Note 4)............................... 27,405 31,900
------- -------
Operating income (loss).............................................. (1,439) ( 6,302)
Other income (expense):
Interest income...................................................... 799 3,670
Interest expense and amortization of debt issue costs and............ (18,034) (19,924)
premium............................................................
Other - net (Note 6)................................................. 6,532 3,315
Loss before income taxes, minority interest and extraordinary item... (12,142) (19,241)
Income tax expense....................................................... (4,400) (3,368)
Minority interest in earnings of subsidiaries............................ (443) (197)
-------- ---------
Loss before extraordinary item....................................... (16,985) (22,806)
Extraordinary loss, net of income tax benefit of $5,589 (Note 5)......... -- (8,042)
Net loss............................................................. $(16,985) (30,848)
======== =========
Loss per share:
Loss before extraordinary item....................................... $(1.07) (1.45)
Extraordinary item................................................... -- (.52)
------ --------
Net loss............................................................. $(1.07) (1.97)
======= ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JULY 31, 1996
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOREIGN
CURRENCY UNEARNED
ADDITIONAL TRANSLATION COMPENSATION-
PREFERRED COMMON PAID-IN ACCUMULATED EQUITY RESTRICTED NOTE
STOCK STOCK CAPITAL DEFICIT ADJUSTMENT STOCK RECEIVABLE
--------- ------ ---------- ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1996 $ -- 159 261,842 (224,547) (2,338) -- (10,000)
Issuance of 55,000 shares of common stock -- -- 1,004 -- -- -- --
to an officer for cash (Note 9)
Issuance of 60,000 shares of restricted -- 1 1,094 -- -- (1,095) --
common stock to an officer
(Note 9)
Amortization of restricted stock award to -- -- -- -- -- 114 --
compensation expense
Compensation expense accrual for stock -- -- 148 -- -- -- --
bonus awards (Note 9)
Foreign currency translation adjustment -- -- -- -- (3,122) -- --
Net loss -- -- -- (16,985) -- -- --
------ --- ------- --------- ------ ----- --------
Balance, July 31, 1996 $ -- 160 264,088 (241,532) (5,460) (981) (10,000)
====== === ======= ========= ======= ===== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended July 31,
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
Cash flows provided (used) by operating activities:
Net loss.................................................... $(16,985) (30,848)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities:
Loss from extinguishment of debt.......................... -- 8,042
Loss (gain) on disposition of fixed assets................ (12) (2)
Depreciation and amortization of property,
plant and equipment..................................... 10,651 10,464
Amortization of intangible assets......................... 27,405 31,900
Amortization of debt issue costs and premium.............. 967 (138)
Provision for doubtful accounts........................... 469 543
Amortization of stock awards.............................. 262 --
Changes in operating assets and liabilities:
Trade and other receivables............................. (14,916) (11,346)
Inventories............................................. (13,437) (19,436)
Prepaid expenses and other current assets............... (224) 3,358
Accounts payable........................................ 7,805 (2,434)
Accrued liabilities..................................... (11,604) (8,715)
Other - net............................................. 3,214 ( 633)
-------- -------
Net cash provided (used) by operating activities............. $ (6,405) (19,245)
-------- -------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 31, 1996 AND 1995
(IN THOUSANDS)
(CONTINUED)
<TABLE>
<CAPTION>
Six Months Ended July 31,
-------------------------
1996 1995
----------- ---------
<S> <C> <C>
Cash flows provided (used) by investing activities:
Purchases of property, plant and equipment................................ $(11,890) (11,578)
Net cash from (used by) discontinued operations........................... 5,811 (8,899)
Cash received from spinoff of discontinued operations..................... -- 112,000
Other..................................................................... 663 --
-------- --------
Net cash provided (used) by investing activities....................... ( 5,416) 91,523
-------- --------
Cash flows provided (used) by financing activities:
Net proceeds from (repayment of) short-term debt.......................... (1,978) 14,437
Borrowings (repayments) on long-term debt................................. 8,157 (119,477)
Proceeds from sale of common stock........................................ 1,004 --
Other..................................................................... 1,124 (1,584)
-------- --------
Net cash provided (used) by financing activities....................... 8,307 (106,624)
-------- --------
Effect of exchange rate changes on cash and cash equivalents................. (2,298) (4,382)
-------- --------
Net increase (decrease) in cash and cash equivalents................... (5,812) (38,728)
Cash and cash equivalents, beginning of period............................... 15,179 51,283
-------- --------
Cash and cash equivalents, end of period..................................... $ 9,367 12,555
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest.................................. $ 15,880 33,058
======== ========
Cash paid during the period for income taxes.............................. $ 5,101 7,569
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
A. BUSINESS
--------
Samsonite Corporation and Subsidiaries (the "Company") was formerly known
as Astrum International Corp. ("Astrum"). On July 14, 1995, Astrum merged
with its wholly-owned subsidiary, Samsonite Corporation, and changed its
name to Samsonite Corporation. The Company is engaged in the manufacture
and sale of luggage and related products throughout the world, primarily
under the Samsonite, American Tourister, and Lark brand names. The
principal customers of the Company are department/specialty retail stores,
mass merchants, catalog showrooms and warehouse clubs. The Company's retail
sales consist primarily of American Tourister products sold through Company
owned stores.
B. BASIS OF PRESENTATION
---------------------
On May 25, 1993, the United States Bankruptcy Court for the Southern
District of New York confirmed the Amended Plan of Reorganization (the
"Plan") for Astrum. Pursuant to the terms of the Plan, which became
effective on June 8, 1993, Astrum completed a comprehensive financial
reorganization which reduced debt and annual interest expense (the
"Restructuring").
The Restructuring has been accounted for pursuant to the American Institute
of Certified Public Accountants Statement of Position 90-7, entitled
"Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7"). SOP 90-7 requires that assets and liabilities be
adjusted to their fair values ("fresh-start" values) and that a new
reporting entity be created. On June 30, 1993, for accounting purposes, the
Plan was consummated and SOP 90-7 was adopted. The consolidated financial
statements include the ongoing impact of fresh-start reporting.
C. INTERIM FINANCIAL STATEMENTS
----------------------------
The accompanying unaudited consolidated financial statements reflect all
adjustments, which are normal and recurring in nature, and which, in the
opinion of management, are necessary to a fair statement of the financial
position and results of operations as of July 31, 1996 and for the three-
month and six-month periods ended July 31, 1996 and 1995. These
consolidated financial statements and related notes should be read in
conjunction with the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1996.
See Note 14 to the aforementioned consolidated financial statements
included in the 1996 Form 10-K for a description of litigation, commitments
and contingencies.
D. USE OF ESTIMATES
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles 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 amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
E. PER SHARE DATA
--------------
Loss per share is calculated based on the weighted average number of shares
outstanding during the period. The weighted average number of shares
outstanding during the six months ended July 31, 1996 and 1995 was
15,924,835 and 15,659,000, respectively. The weighted average number of
shares outstanding during the three months ended July 31, 1996 and 1995 was
15,959,450 and 15,889,450, respectively.
8
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
F. ROYALTY REVENUES
----------------
The Company licenses its brand names to certain unrelated third parties as
well as certain foreign subsidiaries and joint ventures. Net sales include
royalties earned of $11,993,000 and $9,084,000 for the six months ended
July 31, 1996 and 1995, respectively, and $3,664,000 and $4,389,000 for the
three months ended July 31, 1996 and 1995, respectively. Included in
royalties for the six months ended July 31, 1996 is $3.9 million from the
sale of apparel tradename licenses in certain Pacific Rim countries during
the first quarter of fiscal 1997.
2. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
July 31, January 31,
1996 1996
----------- -----------
(In thousands)
<S> <C> <C>
Raw Materials................................................. $42,409 35,827
Work in Process............................................... 9,458 10,959
Finished Goods................................................ 77,306 68,950
-------- ---------
$129,173 115,736
======== =========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
July 31, January 31,
1996 1996
----------- -----------
(In thousands)
<S> <C> <C>
Land.......................................................... $ 13,459 14,172
Buildings..................................................... 60,148 62,281
Machinery, equipment and other................................ 112,288 106,511
------- -------
185,895 182,964
Less accumulated amortization and depreciation................ (49,041) (42,052)
------- -------
$136,854 140,912
======== =======
</TABLE>
Depreciation included in cost of goods sold and selling, general and
administrative expenses related to adjustments of assets and liabilities to
fair value in connection with the adoption of SOP 90-7 consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
July 31, July 31,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
"Fresh Start" Depreciation in Cost of Goods Sold................... $ 724 637 1,461 1,255
"Fresh Start" Depreciation in Selling, 162 141 325 278
General and Administrative Expenses............................... ----- ---- ----- -----
$ 886 778 1,786 1,533
Total "Fresh Start" Depreciation.............................. ===== ==== ===== =====
</TABLE>
Property and equipment revalued in connection with the adoption of SOP 90-7
are being depreciated over their respective estimated useful lives,
primarily ranging from two to six years.
9
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, consisted of the
following:
<TABLE>
<CAPTION>
July 31, January 31,
1996 1996
---------------- ----------------
(In thousands)
<S> <C> <C>
Reorganization value in excess of identifiable assets ....... $ -- 22,947
Trademarks................................................... 117,694 119,549
Licenses, Patents and Other ................................. 14,399 16,996
------- -------
$132,093 159,492
======== =======
</TABLE>
Amortization of intangible assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
July 31, July 31,
--------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Amortization of Reorganization Value in Excess of
Identifiable Assets.................................. $ 9,179 13,951 22,947 27,536
Amortization of Licenses, Patents and Other............ 1,300 1,384 2,602 2,763
Amortization of Trademarks............................. 928 803 1,856 1,601
------- ------ ------ ------
$11,407 16,138 27,405 31,900
======= ====== ====== ======
</TABLE>
The reorganization value in excess of identifiable assets was amortized
over a three-year period expiring June 1996; licenses, patents and other
are amortized over a period ranging from one to twenty-three years; and
trademarks are amortized over a period ranging from five to forty years.
5. DEBT
Debt consisted of the following:
<TABLE>
<CAPTION>
July 31, January 31,
1996 1996
----------- ---------------
(In thousands)
<S> <C> <C>
Series B Senior Subordinated Notes (a)............... $190,000 190,000
Senior Credit Facility (b)........................... 75,000 58,000
Short-term obligations expected to be refinanced
Capital lease obligations............................ 10,433 11,394
Other (c)............................................ 4,720 4,665
Total debt......................................... 56,727 70,387
-------- -------
Less short-term debt and current installments of 336,880 334,446
long-term obligations.............................. (41,625) (39,793)
-------- --------
$295,255 294,653
======== ========
</TABLE>
10
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(a) The Series B Senior Subordinated Notes bear interest at 11% and have
a maturity date of July 15, 2005.
(b) The Senior Credit Facility provides for a $50 million term loan and a
$175 million revolving credit facility. The credit facility matures
July 14, 2000.
The following amounts were outstanding at July 31, 1996 under the
Senior Credit Facility:
Term Loan $50.0 million
Revolving Credit Borrowings $25.0 million
Letters of Credit $57.6 million
Available borrowings were $92.4 million at July 31, 1996.
The Senior Credit Facility is secured by substantially all the
Company's U.S. assets, the capital stock of its principal domestic
subsidiaries, and 66% of the stock of its principal foreign
subsidiaries. The agreement contains financial covenants which require
the Company to maintain certain financial ratios and minimum amounts
of earnings, exclusive of interest, taxes, and non-cash charges. The
agreement also contains covenants limiting the amount of capital
expenditures, investments in certain subsidiaries, and dividends,
among other restrictions. Under the agreement, the Company has no
amount available for the payment of dividends at July 31, 1996. The
Company is in compliance with the terms of such covenants at July 31,
1996.
(c) Other obligations consist of various notes payable to banks by foreign
subsidiaries aggregating $51.4 million and a $5.3 million secured
financing arrangement with a foreign bank. Included in letters of
credit outstanding is a $48.3 million standby letter of credit issued
to secure the debt of foreign subsidiaries.
In July 1995, the Company redeemed its then outstanding senior subordinated
indebtedness with the proceeds from another issuance of subordinated debt.
The redemption price included a contractual premium of $18,000,000 which,
net of unamortized premium of $4,369,000 and income tax benefit of
$5,589,000, is included in the consolidated statements of operations for
the six-month and three-month periods ended July 31, 1995 as an
extraordinary loss on the extinguishment of debt.
6. OTHER INCOME (EXPENSE) - NET
Other income (expense) - net consisted of the following:
<TABLE>
<CAPTION>
Three months ended July 31, Six months ended July 31,
--------------------------- -------------------------
1996 1995 1996 1995
----------- --------------- --------- ---------------
(In thousands)
<S> <C> <C> <C> <C>
Foreign currency transaction income (losses) (a).. $ 652 (156) 2,107 (2,439)
Rental income..................................... 493 434 887 818
Favorable settlement of claim (b)................. 3,802 -- 3,802 --
Sale of television station........................ -- 5,368 -- 5,368
Other............................................. (207) (314) (264) (432)
------ ----- ----- -----
$4,740 5,332 6,532 3,315
====== ===== ===== =====
</TABLE>
(a) Foreign currency transaction income for the six months ended July 31,
1996 includes $300,000 of unrealized exchange gains related to open
forward exchange contracts entered into to reduce foreign currency
exposure on certain foreign operations.
(b) Other income of $3,802,000 results from the favorable settlement for
$200,000 of a claim against the Company by a related party. The
Company had previously accrued $4,002,000 for such claim. The claim is
part of the Contingent Liability with Respect to the Old Notes
described in Note 14 to the consolidated financial statements in the
1996 Form 10-K and relates to the claim for interest on overdue
installments of interest accruing prior to the bankruptcy of the
Company's predecessor in 1993. The contingent liability was recorded
as part of the reorganization. The holders of the claim were Apollo
Investment Fund, L.P. ("Apollo") and an affiliate of Apollo. Apollo
and its affiliates own 45.83% of the outstanding shares of the
Company's common stock.
11
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. NOTE RECEIVABLE
The note receivable deducted from stockholders' equity at July 31, 1996
arises from the sale of 425,532 shares of the Company's common stock to the
Company's former Chairman and Chief Executive Officer in April 1995 for
$23.50 per share. The note bears interest at 8% per annum. The note is due
April 13, 2000.
8. EMPLOYEE STOCK OPTIONS
The Company has authorized 1,050,000 shares for the granting of options
under the 1995 Stock Option and Award Plan. See Note 10 to the consolidated
financial statements included in the 1996 Form 10-K for a description of
such plan. In addition, the Company has outstanding options to current and
former executives in connection with employment agreements and incentive
plans.
At July 31, 1996, the Company had granted options for a total of 2,853,427
shares at option prices ranging from $11.14 to $32.85 per share. Options
for 1,982,523 shares were exercisable at July 31, 1996.
9. OTHER
Effective May 15, 1996, the employment of Mr. Steven J. Green as Chairman
of the Board, Chief Executive Officer and President ceased, and he was
succeeded as Chief Executive Officer and President by Richard R. Nicolosi.
Mr. Green resigned as a Director of the Company effective May 21, 1996. The
Company charged $2.6 million to general and administrative expenses during
the three months ended July 31, 1996 related to the cessation of Mr.
Green's employment and retention of Mr. Nicolosi.
The Company has granted Mr. Nicolosi options to purchase 425,532 shares of
common stock at an exercise price of $18.25 per share (subject to customary
antidilution adjustments). Options to purchase 186,170 shares of common
stock (the "Series A Options") are time-vesting options and options to
purchase 239,362 shares of common stock (the "Series B Options") are
subject to certain performance requirements with respect to vesting. The
options have a five year term. Fifty percent (50%) of the Series A Options
will vest on May 15, 1997 and the remaining fifty percent (50%) will vest
on May 15, 1998, so long as Mr. Nicolosi remains continually employed by
the Company through such date. All of the Series B Options shall vest on
April 15, 2001, so long as he remains continually employed by the Company
through April 15, 2001, subject to accelerated, performance-based vesting
as follows. The Series B Options will vest on May 15, 1998 if Mr. Nicolosi
remains continually employed by the Company through such date and the
average fair market value of the common stock equals or exceeds $30.00 per
share in any period of 30 consecutive days prior to May 15, 1998.
Notwithstanding the foregoing, if a change of control event occurs prior to
May 15, 1998, (i) all of the Series A Options will automatically vest and
(ii) all of the Series B Options will vest if Mr. Nicolosi remains
continually employed by the Company through the date of such event and
either the average fair market value of the common stock in any period of
30 consecutive days prior to such event or the fair market value of the
common stock as of the date of such event, equals or exceeds $30.00 per
share.
12
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Also in connection with the performance by Mr. Nicolosi of services
pursuant to his employment, the Company issued to Mr. Nicolosi 60,000
shares of restricted common stock (the "Restricted Shares"). Fifty percent
(50%) of the Restrict ed Shares will vest on May 15, 1997 and the remaining
fifty percent (50%) will vest on May 15, 1998; provided that if a change of
control event occurs and Mr. Nicolosi remains continually employed by the
Company through the date of such event, then all Restricted Shares that
have not vested will become vested as of the date of such event. The
Company is recognizing compensation expense for the fair market value of
the shares at the date of grant over the two-year vesting period.
On June 6, 1996, the Company sold and issued to Mr. Nicolosi 55,000 shares
of common stock at fair market value of $18.25 per share, or an aggregate
purchase price of $1,003,750.
Effective as of May 15, 1996, the Company entered into agreements with
three executive officers to provide stock bonuses to each of them of 38,889
shares of common stock, payable if the executive remains continually
employed by the Company through the earlier of May 15, 1999 or one year
after a change of control event. The Company is recognizing compensation
expense equal to the fair market value of the shares at May 15, 1996
($18.25 per share) over the three year vesting period.
10. ADOPTION OF RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of ("Statement 121"), which requires
impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company adopted Statement
121 in the first quarter of fiscal 1997. Such adoption had no effect on the
consolidated financial statements.
In October 1995, the FASB issued Statement No. 123, Accounting for Stock-
Based Compensation ("Statement 123"), which provides an alternative to APB
Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for
stock-based compensation issued to employees. The Statement allows for a
fair value based method of accounting for employee stock options and
similar equity instruments. However, for companies that continue to account
for stock-based compensation arrangements under Opinion No. 25, Statement
123 requires disclosure of the pro forma effect on net income and earnings
per share of its fair value based accounting for those arrangements. The
Company has elected not to adopt the recognition and measurement provisions
of the Statement; however, the required disclosures will be provided for
its fiscal year ended January 31, 1997.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
EFFECTS OF REORGANIZATION ON RESULTS OF OPERATIONS
---------------------------------------------------
Included in the Company's statements of operations are amortization and
depreciation expenses related to adjustments of assets and liabilities to
fair value in connection with the adoption of SOP 90-7. As a result of the
bankruptcy reorganization of the Company's predecessor in 1993, the Company
was required to adjust its assets and liabilities to their fair ("fresh
start") values and create a new entity for financial reporting purposes.
The most significant fresh start adjustment relates to recording
Reorganization Value in Excess of Identifiable Assets, which was amortized
over a three year period ending in June 1996. In addition, the Company
recorded fresh start adjustments to reflect trademarks, licenses, patents
and other intangibles at their fair values, which are being amortized over
periods ranging from one to forty years. Property and equipment adjusted to
fair values in connection with the adoption of SOP 90-7 is being
depreciated over their respective estimated useful lives, primarily ranging
from two to six years.
The effects of the amortization and depreciation of the fresh start
adjustments ("Fresh Start Amortization and Depreciation") on the operating
loss is summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31,
------------------------- ------------------------
1996 1995 1996 1995
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Operating loss................................................... $ (701) (4,044) (1,439) (6,302)
Fresh Start Amortization and Depreciation........................ 12,059 16,916 28,721 33,433
------ ------ ------ ------
Operating income before Fresh Start Amortization
and Depreciation.............................................. $11,358 12,872 27,282 27,131
======= ====== ====== ======
</TABLE>
Fresh Start Amortization and Depreciation consisted of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31,
------------------------- ------------------------
1996 1995 1996 1995
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Fresh Start Amortization:
Amortization of Reorganization Value in Excess
of Identifiable Assets...................................... $ 9,179 13,951 22,947 27,536
Amortization of Licenses, Patents, and Other................. 1,224 1,384 2,448 2,763
Amortization of Trademarks................................... 770 803 1,540 1,601
------- ------ ------ ------
Total Fresh Start Amortization.............................. 11,173 16,138 26,935 31,900
------- ------ ------ ------
Fresh Start Depreciation:
Fresh Start Depreciation in Cost of Goods Sold............... 724 637 1,461 1,255
Fresh Start Depreciation in Selling, General
and Administrative Expenses................................. 162 141 325 278
------- ------ ------ ------
Total Fresh Start Depreciation.............................. 886 778 1,786 1,533
------- ------ ------ ------
Fresh Start Amortization and Depreciation........................ $12,059 16,916 28,721 33,433
======= ====== ====== ======
</TABLE>
14
<PAGE>
The impact of the fresh start amortization and depreciation on net loss and net
loss per share is summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31,
------------------------- ----------------------
1996 1995 1996 1995
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Fresh Start Amortization and Depreciation................... $12,059 16,916 28,721 33,433
Tax Benefit................................................. (1,181) (1,216) (2,367) (2,418)
After-Tax Impact on Net Loss................................ $10,878 15,700 26,354 31,015
======= ====== ====== ======
Impact on Net Loss Per Share................................ $ .67 .99 1.63 1.98
======= ====== ====== ======
</TABLE>
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED JULY 31, 1996 ("SECOND QUARTER OF FISCAL 1997" OR "CURRENT
YEAR") COMPARED TO THREE MONTHS ENDED JULY 31, 1995 ("SECOND QUARTER OF FISCAL
1996" OR "LAST YEAR")
General. The Company analyzes its sales and operations by the following
categories: (1) "European operations" which consist of its western European
manufacturing and distribution operations whose functional currency is the
Belgian franc, (2) "U.S. operations" which includes activities within the U.S.
from the Samsonite and American Tourister manufacturing and distribution
operations and (3) "International operations" which include exports from the
U.S., manufacturing and distribution operations in countries with operations
which are smaller in size compared to the U.S. and European operations
(primarily Canada and Mexico) and global licensing operations.
Results of European operations were translated from Belgian francs to U.S.
dollars for the three months ended July 31, 1996 and 1995 at average rates of
approximately 31.21 and 28.66 francs to the U.S. dollar, respectively. This
represents a decrease in the value of the Belgian franc of 8.9%, which results
in significant decreases in reported sales, cost of sales and other expenses in
the second quarter of fiscal 1997 compared to last year. The most significant
effects from the difference in exchange rates from last year to the current year
are noted in the following analysis and referred to as an "exchange rate
difference."
Net Sales. Total net sales increased to $179.4 million for the second quarter
of fiscal 1997 from $167.7 million for the second quarter of fiscal 1996, an
increase of $11.7 million or 7.0%.
Sales from European operations decreased from $69.2 million last year to $67.0
million in the current year, a decrease of $2.2 million. The exchange rate
difference resulted in a $6.0 million decrease in reported sales versus last
year. The remainder, an increase of $3.8 million, results from an increase in
sales expressed in Belgian francs of 5.4% in the second quarter of fiscal 1997
compared to last year. The increase in sales is attributable to what the Company
believes is increased market share despite a generally weak level of consumer
demand and high unemployment throughout Europe.
U.S. operations sales increased from $80.0 million last year to $90.9 million in
the current year, an increase of $10.9 million or 13.6%. The increase is due to
continued market acceptance of new product lines introduced in the last six
months of fiscal 1996 such as the new upright Ultralite II, Profile and Acclaim
product lines and growth in American Tourister retail sales which increased $2.9
million from the same period last year.
Sales from the International operations increased from $18.5 million last year
to $21.5 million in the current year, an increase of $3.0 million or 16.2% due
to sales from new Far East distribution operations and increased sales in
Mexico.
Gross profit. Total gross profit for the second quarter of 1997 increased from
last year by $4.5 million. Gross margin percentages were consistent with last
year at 38.3%.
15
<PAGE>
Gross margins from European operations increased from last year by 2.6
percentage points due to price increases in selected product lines, declining
materials costs, and improving productivity variances compared to last year.
Margins from U.S. operations and export sales decreased from last year by 2.2
percentage points primarily due to lower margins on certain high volume new
product lines, an increase in sales of obsolete goods at low margins,
promotional sales of selected products, and negative productivity variances
caused by the startup of production of new hardside products. To improve U.S.
margins, the Company has announced price increases on certain products effective
as of October 1, 1996, as well as implementing cost improvements to certain
manufacturing processes beginning August 1, 1996.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $5.9 million from the second quarter of fiscal 1996 to the second
quarter of fiscal 1997. As a percent of sales, SG&A was 32.31% in the current
year and 31.06% last year.
European operations SG&A increased by $0.2 million. The exchange rate
difference caused SG&A to decrease by $1.6 million. The remainder, an increase
of $1.8 million, results from an increase in SG&A expressed in Belgian francs of
9.9% from last year. The increase is due primarily to variable selling and
distribution costs, salaries and employee benefits from staff additions, and
increased advertising expenditures.
U.S. SG&A increased from last year due to increased advertising expenses,
increased variable selling and marketing expenses associated with American
Tourister store openings, and $2.6 million of expense incurred in connection
with the cessation of the former CEO's employment and the retention of a new CEO
(see Note 9 to the consolidated financial statements). If the $2.6 million
charge is excluded, total SG&A as a percent of sales is comparable to last year.
SG&A for the International operations increased primarily due to the expenses
incurred in new foreign operations in Singapore, China, and India.
Amortization of intangibles. The Company recorded significant intangible assets
as a result of its reorganization in 1993. See the comparative analysis of
amortization of intangibles included elsewhere herein.
Reorganization value in excess of identifiable assets is fully amortized as of
June 30, 1996, which accounts for the decrease in amortization of intangible
assets from $16.1 million last year to $11.4 million in the current year.
Operating loss. Operating loss decreased by $3.3 million from last year as a
result of the increases in revenues and increased gross profit of $4.5 million
and the decline in amortization of intangibles of $4.7 million, which were
partially offset by increases in SG&A of $5.9 million.
Interest income. Interest income decreased from $3.1 million last year to $0.3
million in the second quarter of the current year. Last year interest income
included $2.9 million realized from a note receivable collected in connection
with the sale of an investment in a television station. Recurring interest
income results from temporary investments of cash on hand and is consistent with
last year.
Interest expense and amortization of debt issue costs and premium. Interest
expense decreased from $10.3 million last year to $8.9 million this year due
primarily to lower levels of outstanding indebtedness in the current year and
lower average interest rates. Current year interest expense includes $484,000 of
amortization of deferred debt acquisition costs. On July 1, 1996, the Company
obtained an amendment to its U.S. Senior Credit Facility which will enable it to
obtain lower rates on amounts outstanding and on amounts of standby letters of
credit outstanding beginning in the third quarter of fiscal 1997 by
approximately .375% per year. At July 31, 1996, $75 million was outstanding
under the Senior Credit Facility which accrued interest at 7.09% and $48.4
million of standby letters of credit were outstanding.
16
<PAGE>
Other-net. See Note 6 to the consolidated financial statements for a
comparative analysis of other income (expense). The Company has entered into
certain forward exchange contracts to hedge its exposure to changes in exchange
rates. Other income for the three months ended July 31, 1996 includes income
from such transactions of $0.7 million, $0.3 million of which is unrealized at
July 31, 1996. The realization of such income is subject to changes in exchange
rates during the period prior to settlement of the forward exchange contracts.
All outstanding forward exchange contracts have settlement dates prior to March
1997. In the second quarter of fiscal 1996, such foreign exchange transactions
resulted in a loss of $0.2 million.
Other income of $3,802,000 results from the favorable settlement for $200,000 of
a claim against the Company by a related party. The Company had previously
accrued $4,002,000 for such claim. This claim is part of the Contingent
Liability with Respect to the Old Notes described in Note 14 to the consolidated
financial statements included in the 1996 Form 10-K and relates to the claim for
interest on overdue installments of interest accruing prior to the commencement
of the bankruptcy of the Company's predecessor in 1993. The contingent liability
was recorded as part of the reorganization. The holders of this claim were
Apollo Investment Fund, L.P. ("Apollo") and an affiliate of Apollo. Apollo and
its affiliates own 45.83% of the outstanding shares of the Company's common
stock.
Income tax expense. Income taxes decreased from $3.5 million last year to $1.4
million in the current year. The decrease is due primarily to less nondeductible
amortization of intangible assets in the current year. Although the Company
incurred losses in both the current and prior fiscal years, the relationship
between income tax expense or benefit differs from that expected by applying the
U.S. statutory tax rate to pre-tax losses because of (i) the nondeductibility
for tax purposes of amortization of reorganization value in excess of
identifiable assets, (ii) foreign income tax expense provided on foreign
earnings, and (iii) state income taxes.
Extraordinary loss. The extraordinary loss of $8.0 million in the second
quarter of last year resulted from a loss on the early retirement of debt.
Net loss. The net loss decreased from $17.5 million last year to $6.2 million
this year, a decrease of $11.3 million. The decrease in the net loss is caused
by the total of the decreases in operating losses, interest expense, other
expenses, extraordinary losses, and income tax expense.
SIX MONTHS ENDED JULY 31, 1996 ("FIRST HALF OF FISCAL 1997" OR "CURRENT YEAR")
COMPARED TO SIX MONTHS ENDED JULY 31, 1995 ("FIRST HALF OF FISCAL 1996" OR "LAST
YEAR")
General. Results of European operations were translated from Belgian francs to
U.S. dollars for the six months ended July 31, 1996 and 1995 at average rates of
approximately 30.73 and 29.48 francs to the U.S. dollar, respectively. This
represents a decrease in the value of the Belgian franc of 4.2%, which results
in decreases in reported sales, cost of sales and other expenses in fiscal 1997
compared to last year. The most significant effects from the difference in
exchange rates from last year to the current year are noted in the following
analysis and referred to as an "exchange rate difference."
Net Sales. Total net sales increased to $349.3 million for the first half of
fiscal 1997 from $325.4 million for the first half of fiscal 1996, an increase
of $23.9 million or 7.3%.
Sales from the European operations increased from $133.5 million last year to
$134.3 million in the current year, an increase of $0.8 million. The exchange
rate difference resulted in a $5.7 million decrease in reported sales versus
last year. The remainder, an increase of $6.5 million, results from an increase
in sales expressed in Belgian francs of 4.8% from last year. Despite a generally
weak European economy, sales have increased due to increased market share and
increased sales of diversified products.
U.S. operations sales increased from $153.8 million last year to $170.2 million
in the current year, an increase of $16.4 million or 10.7%. American Tourister
retail sales accounted for $5.5 million of the increase in sales, while the
remainder is primarily due to consumer demand for redesigned upright luggage
lines, particularly lightweight softside products.
17
<PAGE>
Sales from the International operations increased from $38.1 million last year
to $44.7 million in the current year, an increase of $6.6 million or 17.3%. Of
the change in revenues from last year, $3.9 million is due to revenue from the
sale of McGregor apparel tradenames in certain Pacific Rim countries. The
remainder is due to sales from new Far East distribution operations and
increased sales in Mexico.
Gross profit. Overall gross profit for the first half of 1997 increased from
last year by $9.2 million. Gross margin decreased by 0.1 percentage point from
the same period last year.
Gross margins from European operations increased by 1.7 percentage points from
last year due to price increases in selected product lines, declining materials
costs, and improving productivity variances compared to last year.
Margins from U.S. operations decreased from last year primarily due to lower
margins on certain fast selling new product lines, an increase in sales of
obsolete goods at low margins, promotional sales of selected products, negative
productivity variances caused by the startup of production of new hardside
products, and a $0.7 million customer credit given on certain American Tourister
sales which were defective. To improve margins in the U.S., the Company has
announced price increases on certain products effective October 1, 1996, as well
as implementing cost improvements to certain manufacturing processes beginning
August 1, 1996.
Gross margin percentages from International operations, excluding the effect of
the sale of licenses, decreased from the first half of 1996 for the same reasons
given for the decline in U.S. margins.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $8.9 million from the first half of fiscal 1996 to the first half
of fiscal 1997. As a percent of sales, SG&A was 31.89% in the current year and
31.51% last year.
European operations SG&A increased by $2.3 million. The exchange rate
difference caused SG&A to decrease by $1.6 million. The remainder, an increase
of $3.9 million, resulted from an increase in SG&A expressed in Belgian francs
of 10.6%. The increase over last year is due to variable selling and
distribution expenses, increases in advertising expenses, increases in salaries
and employee benefits due to staff additions and increases in group insurance
premiums and the impact of credits in the prior year of a reversal of
termination benefits accruals, an increase in the provision for doubtful
accounts due to financial difficulties of certain customers, and increases in
new product development costs.
SG&A for U.S. operations increased by $6.0 million in the first half of fiscal
1997 over the same period last year primarily because of an increase in
advertising expenses of $1.9 million, an increase in American Tourister variable
selling and administrative expenses of $2.8 million due to a higher level of
retail sales activity, $2.6 million of expense incurred in connection with the
cessation of the former CEO's employment and the retention of a new CEO (see
Note 9 to the consolidated financial statements), and net decreases in various
other expenses of $1.3 million.
SG&A for the International operations increased primarily due to the expenses
incurred in new foreign operations in Singapore, China, and India.
Amortization of intangibles. The Company recorded significant intangible assets
as a result of its reorganization in 1993. See the comparative analysis of
amortization of intangibles included elsewhere herein.
Reorganization value in excess of identifiable assets is fully amortized as of
June 30, 1996, which accounts for the decrease in amortization of intangible
assets from $31.9 million last year to $27.4 million in the current year.
Operating loss. Operating loss decreased by $4.9 million from last year as a
result of the increases in revenues which increased gross profit by $9.2 million
and the decrease in amortization of intangibles of $4.5 million, both of which
were offset by increases in SG&A of $8.9 million.
18
<PAGE>
Interest income. Interest income decreased from $3.7 million last year to $0.8
million this year. Last year interest income included $2.9 million realized from
a note receivable collected in connection with the sale of an investment in a
television station. Recurring interest income results from temporary investments
of cash on hand and is consistent with last year.
Interest expense and amortization of debt issue costs and premium. Interest
expense decreased from $19.9 million last year to $18.0 million this year due to
lower levels of outstanding indebtedness in the first half of fiscal 1997 and
lower average interest rates.
Other-net. See Note 6 to the consolidated financial statements for a
comparative analysis of other income (expense). The Company has entered into
certain forward exchange contracts to hedge its exposures to changes in exchange
rates. Other income for the six months ended July 31, 1996 includes income from
foreign currency transactions of $2.1 million, $0.3 million of which is
unrealized at July 31, 1996. The realization of such income is subject to
changes in exchange rates during the period prior to the settlement of the
forward exchange contracts. All outstanding forward exchange contracts have
settlement dates prior to March 1997. In the first half of last year, such
foreign exchange transactions resulted in a loss of $2.4 million.
Other income of $3,802,000 results from the favorable settlement for $200,000 of
a claim against the Company by a related party. The Company had previously
accrued $4,002,000 for such claim. This claim is part of the Contingent
Liability with Respect to the Old Notes described in Note 14 to the consolidated
financial statements included in the 1996 Form 10-K and relates to the claim for
interest on overdue installments of interest accruing prior to the commencement
of the bankruptcy of the Company's predecessor in 1993. The contingent liability
was recorded as part of the reorganization. The holders of this claim were
Apollo and an affiliate of Apollo. Apollo and its affiliates own 45.83% of the
outstanding shares of the Company's common stock.
Income tax expense. Income taxes increased from $3.4 million last year to $4.4
million in the current year. The increase in tax expense is due to the decrease
in the pre-tax loss of $7.1 million, amounts of pre-tax earnings from European
and other foreign operations in the current year versus last year, and less
nondeductible amortization of intangible assets in the current year. Although
the Company incurred losses in both the current and prior fiscal years, the
relationship between income tax expense or benefit differs from that expected by
applying the U.S. statutory tax rate to pre-tax losses because of (i) the
nondeductibility for tax purposes of amortization of reorganization value in
excess of identifiable assets, (ii) foreign income tax expense provided on
foreign earnings, and (iii) state income taxes.
Extraordinary loss. The extraordinary loss of $8.0 million last year resulted
from a loss on the early retirement of debt.
Net loss. The net loss decreased from $30.8 million last year to $17.0 million
this year, a decrease of $13.8 million. The decrease in the net loss is caused
by the total of the decreases in operating losses, interest expense, other
expenses, and extraordinary losses, which were partly offset by the increase in
income tax expense.
19
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
One measure of liquidity is commonly referred to as Operating Cash Flow.
Operating Cash Flow is defined as operating income adjusted for noncash
operating expenses, including amortization and depreciation. The Company
believes that Operating Cash Flow provides useful information regarding the
Company's ability to incur and service debt, but that it should not be
considered a substitute for operating income or cash flow from operations
determined in accordance with generally accepted accounting principles.
Operating Cash Flow does not take into consideration substantial costs of doing
business, such as interest expense, and should not be considered in isolation to
other measures of performance. Operating Cash Flow for the six months ended July
31, 1996 and 1995 was computed as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31,
---------------------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Operating loss.................................... $(1,439) (6,302)
Fresh Start Amortization and Depreciation......... 28,721 33,433
------ ------
Operating income before Fresh Start Amortization
and Depreciation............................... 27,282 27,131
Other Amortization and Depreciation............... 9,335 8,931
------ ------
Operating Cash Flow............................... $36,617 36,062
======= ======
</TABLE>
Operating cash flow increased by $0.6 million from last year, primarily as a
result of the decrease in operating losses discussed elsewhere herein. The
Company believes that the current level of Operating Cash Flow is adequate to
support its existing credit facilities and service the Company's Series B Senior
Subordinated Notes and other long-term obligations.
Another measure of liquidity is net cash provided by operating activities, as
reflected in the Consolidated Statements of Cash Flows included elsewhere
herein. Net cash used by operating activities of $6.4 million for the first half
of fiscal 1997 and $19.2 million in the first half of fiscal 1996, reflects net
cash used by operations of the Company after taking into consideration the
substantial costs of doing business not reflected in Operating Cash Flow.
Cash flows used in operations decreased from $19.2 million in the first half of
fiscal 1996 to $6.4 million in the first half of fiscal 1997, a decrease of
$12.8 million. Of this amount, $10.0 million resulted from a reduction of cash
flow supporting working capital and other operating assets, and an increase in
cash flows provided by operations, adjusted for nonoperating and noncash
charges, of $2.8 million from last year.
Cash flow provided (used) by investing activities decreased from $91.5 million
last year to $(5.4) million this year. Last year's cash flow included the
receipt of $112.0 million from the discontinued water treatment business. Cash
flow provided from discontinued operations in the current year resulted from the
collection of accounts receivable related to the discontinued apparel business.
Capital expenditures were $11.9 million in the current year and $11.6 million
last year. Capital expenditures are made to improve facilities and equipment in
order to manufacture new product lines, increase manufacturing efficiencies, and
enhance the Company's competitiveness and profitability on a worldwide basis.
Cash flows provided (used) by financing activities increased from $(106.6)
million last year to $8.3 million this year, an increase of $114.9 million. Last
year's cash flow from financing activities included $119.5 million of debt
repayment financed largely by the cash received from the discontinued water
treatment business.
20
<PAGE>
At July 31, 1996, the Company had working capital of $121.8 million compared to
$99.5 million at January 31, 1996, an increase of $22.3 million. Current assets
increased by $20.3 million due to an increase of $28.3 million in accounts
receivable and inventory and a net decrease in cash and other current assets of
$8.0 million. The increase in accounts receivable and inventories is primarily
due to the cyclical nature of the Company's business. Accounts receivable and
inventory at July 31, 1996 are $6.4 million higher than at July 31, 1995 due to
higher sales levels in the current year. Accounts payable are higher at July 31,
1996 by $10.3 million compared to July 31, 1995 due to improved payables
management in current year.
The Company's cash flow from operations together with amounts available under
its credit facilities were sufficient to fund its operations, scheduled payments
of principal and interest on indebtedness, and capital expenditures. At July 31,
1996, the Company had $92.4 million available under its Senior Credit Facility.
Management of the Company believes that cash flow from operations and available
borrowings under its credit facilities and new credit facilities in emerging
markets will be adequate to fund operating requirements and expansion plans
during the next 12 months. In addition, management currently believes the
Company will be able to meet long-term cash flow obligations from cash provided
by operations and other existing resources.
The Company's principal foreign operations are located in Western Europe, the
economies of which are not considered to be highly inflationary. When
appropriate, the Company will enter into foreign exchange contracts in order to
hedge its exposure on certain foreign operations primarily through the use of
forward delivery commitments. During the past several years, the Company's most
effective hedge against foreign currency changes has been the foreign currency
denominated debt balances maintained in respect to its foreign operations.
Geographic concentrations of credit risk with respect to trade receivables are
not significant as a result of the diverse geographic areas covered by the
Company's operations.
21
<PAGE>
SAMSONITE CORPORATION
PART II - OTHER INFORMATION
- ---------------------------
Item I - Legal Proceedings
-----------------
Reference is made to Note 14 to the consolidated financial statements included
in the Company's Form 10-K Annual Report for the fiscal year ended January 31,
1996 which describes litigation, commitments, and contingencies.
Among the items described under Contingent Liabilities to Pension Benefit
Guaranty Corporation in that Note 14 was the Company's expectation that it would
enter into a final settlement agreement with the Pension Benefit Guaranty
Corporation and the sponsors of the Pension Plans (as described therein) to the
effect set forth in the McCrory Settlement Agreement (also as described therein)
during fiscal year 1997. Such a final settlement agreement was made as of June
20, 1996, and became effective when the Bankruptcy Court entered its order
approving the agreement on August 6, 1996.
Also in that Note 14, under the heading Contingent Liability with Respect to the
Old Notes, reference is made to a claim of approximately $16.4 million. Of this
amount approximately $12.2 million remains outstanding as of July 31, 1996 as a
result of the settlement described in Note 6(b) to the consolidated financial
statements included elsewhere herein.
The Company and certain of its subsidiaries are subject to or are defendants in
various other claims and actions arising in the ordinary course of business.
While it is not possible to predict the outcome of such other claims or actions,
it is management's opinion that, after discussion with counsel, the ultimate
disposition of these other claims and actions will not have a material adverse
effect on the Company's consolidated financial position.
Item 2 - Changes in Securities
---------------------
None.
Item 3 - Defaults Upon Senior Securities
-------------------------------
None.
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
At the Company's regular annual meeting of stockholders held on June 27, 1996,
the Company's stockholders elected directors and approved three proposals.
Robert L. Rosen, Marc J. Rowan, and Stephen J. Solarz were elected as directors.
The other directors whose term of office continued after the meeting are R.
Theodore Ammon, Bernard Attal, Leon D. Black, Robert H. Falk, Carl C. Icahn,
Richard R. Nicolosi, and Mark H. Rachesky.
A proposal to approve the Samsonite Corporation 1996 Directors' Stock Plan
whereby 200,000 shares of common stock were reserved for the payment of a
portion of directors fees in the Company's common stock was approved (13,534,118
votes for, 50,569 against, 4,675 abstentions, and 60,342 non-votes).
A proposal to approve the authorization of 550,000 additional shares for
issuance under the Samsonite Corporation 1995 Stock Option and Incentive Awards
Plan was approved (13,367,666 votes for, 218,326 against, 4,960 abstentions, and
58,752 non-votes).
22
<PAGE>
SAMSONITE CORPORATION
PART II - OTHER INFORMATION (CONTINUED)
- ---------------------------
A proposal to approve and ratify the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company and its subsidiaries for fiscal 1997 was
approved (13,641,065 for, 6,221 against, and 2,418 abstentions).
Item 5 - Other Information
-----------------
None.
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) See Exhibit Index.
(b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
23
<PAGE>
SIGNATURE
---------
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.
SAMSONITE CORPORATION
(REGISTRANT)
BY /S/ Thomas R. Sandler
----------------------------------------
Name: Thomas R. Sandler
Title: Chief Financial Officer,
Secretary and Treasurer
Date: September 9, 1996
---------------------
24
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of the
Company./1/
3.2 Certificate of Ownership and Merger dated July 14, 1995./2/
3.3 By-Laws of the Company./1/
4.1 Indenture, dated as of July 14, 1995, between the Company and
United States Trust Company of New York./2/
4.2 Registration Rights Agreement dated July 14, 1995, by and among
the Company, Donaldson, Lufkin & Jenrette Securities Corporation,
and Bear, Sterns & Co., Inc./2/
4.3 Specimen of Notes described in the Indenture./2/
10.1 Third Amendment, dated as of July 1, 1996, to Credit Agreement,
dated July 14, 1995, among the Company and the Banks named
therein (excluding schedules and exhibits thereto).
10.2 Samsonite Corporation Directors Stock Plan /3/
10.3 Samsonite Corporation 1995 Stock Option and Incentive Award Plan,
as amended./3/
10.4 Final Settlement Agreement, made as of June 20, 1996, among the
Company, the Pension Benefit Guaranty Corporation, and others
named therein (excluding exhibits thereto), with respect to the
Schenley Pension Plan.
10.5 Final Settlement Agreement, made as of June 20, 1996, among the
Company the Pension Benefit Guaranty Corporation, and others
named therein (excluding exhibits thereto), with respect to the
McCrory Pension Plan.
10.6 Purchase Agreement, dated as of June 13, 1996, between the
Company and Artemis America Partnership and Apollo Investment
Fund, L.P.
21 Subsidiaries of the Company.
27 Financial Data Schedule.
</TABLE>
_______________
/1/ Incorporated by reference from the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1996 (File No. 0-23214).
/2/ Incorporated by reference from the Registration Statement on Form S-4
(Registration No. 33-95642).
/3/ Incorporated by reference from Proxy Statement filed May 23, 1996.
25
<PAGE>
-1-
EXHIBIT 10.1
------------
THIRD AMENDMENT
TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
Third Amendment dated as of July 1, 1996 to Revolving Credit and Term Loan
Agreement (this "Amendment"), by and among SAMSONITE CORPORATION, a Delaware
corporation (the "Company") and THE FIRST NATIONAL BANK OF BOSTON, BANK OF
AMERICA ILLINOIS and the other lending institutions listed on Schedule 1 to the
----------
Credit Agreement (as hereinafter defined) (collectively, the "Lenders"),
amending certain provisions of the Revolving Credit and Term Loan Agreement
dated as of July 14, 1995 (as amended by the First Amendment thereto dated as of
December 27, 1995, the Second Amendment thereto dated as of April 30, 1996 and
as the same may be further amended, modified, supplemented, and in effect from
time to time, the "Credit Agreement") by and among the Company, the Lenders, THE
FIRST NATIONAL BANK OF BOSTON and BANK OF AMERICA ILLINOIS as managing agents
for the Lenders (in such capacity, the "Managing Agents"), BANK OF AMERICA
ILLINOIS as documentation agent for the Managing Agents and the Lenders and THE
FIRST NATIONAL BANK OF BOSTON as administrative agent for the Managing Agents
and the Lenders. Terms not otherwise defined herein which are defined in the
Credit Agreement shall have the same respective meanings herein as therein.
WHEREAS, the Company and the Lenders have agreed to modify certain terms
and conditions of the Credit Agreement as specifically set forth in this
Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
(S)1. AMENDMENTS TO THE CREDIT AGREEMENT. Subject to the satisfaction
---------- -- --- ------ ---------
of the applicable conditions precedent set forth in (S)3 hereof, the Credit
Agreement is hereby amended as follows:
(S)1.1 APPLICABLE MARGIN. Effective as of July 1, 1996, the
---------- ------
definition of Applicable Margin is hereby amended to read as follows:
"Applicable Margin. For each period commencing on an
---------- ------
Adjustment Date (or, as applicable, the Closing Date) through the
date immediately preceding the next (or, as applicable, the
first) Adjustment Date (each a "Rate Adjustment Period"), the
Leverage Ratio shall be determined for the applicable fiscal
period ending on the fiscal quarter end date occurring on or
about the date fifty (50) days before the applicable Adjustment
Date, and the resulting margin shall be as set forth
<PAGE>
-2-
below. The pricing tier applicable for the Leverage Ratio
applicable for such period as set forth below shall then be the
Applicable Margin for such Rate Adjustment Period.
<TABLE>
<CAPTION>
====================================================================================================================================
Documentary
Pricing Eurodollar Letter of Credit Base Commitment
Tier Leverage Ratio Rate Loans Fee Rate Rate Loans Fee
Rate
- ------------------------------------------------------------------------------------------------------------------------------------
(basis points) (basis points) (basis points) (basis points)
------------ ------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Greater than or equal 250 168 100 50
--------------------- --- --- --- --
Tier 6 to 4.90:1.00
------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
Less than 4.90:1.00, 225 151 75 50
------------------- --- --- -- --
Tier 5 but greater than or
------ -------------------
equal to 4.50:1.00
------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Less than 4.50:1.00 200 134 50 50
------------------- --- --- -- --
Tier 4 but greater than or
------ -------------------
equal to 4.00:1.00
------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Less than 4:00 but 162.5 118 12.5 37.5
------------------ ----- --- ---- ----
Tier 3 greater than or equal
------ ---------------------
to 3.25:1.00
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Less than 3.25 but 125 83 0 37.5
------------------ --- -- - ----
Tier 2 greater than or equal
------ ---------------------
to 2.50:1.00
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Less than 2.50:1.00 75 50 0 25
Tier 1 ------------------- -- -- - --
------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing,
- ------------------------------
(a) for purposes of interest on Loans outstanding, Commitment
--- ---------------------------------------------------------
Fee Rate and Documentary Letter of Credit Fee Rate with respect to the
----------------------------------------------------------------------
period commencing on July 1, 1996 through the date immediately preceding
------------------------------------------------------------------------
the Adjustment Date occurring on September 19, 1996, the Applicable Margin
--------------------------------------------------------------------------
shall be the Applicable Margin set forth in Tier 3 above;
---------------------------------------------------------
(b) in the event the Borrowers' estimates of the Leverage Ratio
--- -----------------------------------------------------------
based on the Borrowers' fourth quarter performance in any fiscal year
---------------------------------------------------------------------
pursuant to (S)9.4(d) hereof proves to be inaccurate after final
----------------------------------------------------------------
calculations of fourth quarter financial statements pursuant to the audited
---------------------------------------------------------------------------
financial statements for such fiscal year and the result of such inaccuracy
---------------------------------------------------------------------------
was such that the Applicable Margin applied for any applicable such Rate
------------------------------------------------------------------------
Adjustment Period was (i) too low, the Borrowers shall, within five (5)
-----------------------------------------------------------------------
Business Days upon becoming aware of (or receiving notice from the
------------------------------------------------------------------
Administrative Agent in reasonable detail, requesting an adjustment
-------------------------------------------------------------------
hereunder with respect to) such inaccuracy, pay to the Administrative Agent
---------------------------------------------------------------------------
for the respective ratable accounts of the Lenders the difference between
-------------------------------------------------------------------------
the interest, Commitment Fees, and Shared Documentary Letter of Credit Fees
---------------------------------------------------------------------------
the Borrowers should have paid with respect to such Rate Adjustment Period
--------------------------------------------------------------------------
and what was actually paid or (ii) too high, the Lenders severally, on a
------------------------------------------------------------------------
ratable basis, shall (within five (5) Business Days after receiving notice
--------------------------------------------------------------------------
thereof from the Company, in reasonable detail, requesting an adjustment
------------------------------------------------------------------------
hereunder with respect thereto) credit to the next interest payment,
--------------------------------------------------------------------
payment of Commitment Fees, or payment of Shared Documentary Letter of
----------------------------------------------------------------------
Credit Fees (but not the Documentary Letter of Credit Fronting Fee) due by
--------------------------------------------------------------------------
the Borrowers with (or if no Obligations are owing hereunder, severally, on
---------------------------------------------------------------------------
a ratable basis, shall refund to the Borrowers) the difference between the
--------------------------------------------------------------------------
interest, Commitment Fees, and Shared Documentary Letter of Credit Fees
-----------------------------------------------------------------------
(but not the Documentary Letter of Credit Fronting Fee) the Borrowers
---------------------------------------------------------------------
actually paid with respect to such Rate Adjustment Period and what should
-------------------------------------------------------------------------
have been paid; and
-------------------
<PAGE>
-3-
(c) if the Borrowers fail to deliver any quarterly financial
------------------------------------------------------------
statements or quarterly Compliance Certificate when required by (S)9.4(b)
-------------------------------------------------------------------------
or (S)9.4(d) hereof then, for the period commencing on the Adjustment Date
--------------------------------------------------------------------------
immediately following the period for which such quarterly financial
-------------------------------------------------------------------
statements or quarterly Compliance Certificates are delinquent and
------------------------------------------------------------------
continuing through the next Adjustment Date, the Applicable Margin shall be
---------------------------------------------------------------------------
the Applicable Margin set forth in Tier 6 above."
-------------------------------------------------
(S)1.2. SWING LINE LOANS. Section 3.1.2 of the Credit Agreement
------- ----- ---- -----
is hereby amended by deleting the word "seventh" and inserting in its place
the phrase "fourteenth (14th)".
(S)1.3. INTEREST MARGIN TEST COMPUTATIONS. Section 9.4(d) of
-------- ------ ---- ------------
the Credit Agreement is hereby amended by deleting the phrase "and Interest
Margin Test" which appears in (S)9.4(d).
(S)1.4. MISCELLANEOUS MODIFICATIONS. The form of Compliance
------------- -------------
Certificate set forth as Exhibit E to the Credit Agreement is hereby
------- -
modified by (a) deleting the phrase "and Interest Margin Test" which
appears immediately after the words "Leverage Ratio" in the third paragraph
of Exhibit E; and (b) properly and appropriately reflecting the applicable
------- -
provisions of this Amendment relating to the periodic determination of the
Applicable Margin so as to delete all references to the calculation of the
Interest Margin Test in the determination of the Applicable Margin.
(S)2. AMENDMENT FEE. The Company shall pay to the Agent for the
--------- ---
respective accounts of each of the Lenders an amendment fee, subject to and
simultaneously with the effectiveness of this Amendment, on the Amendment Date
(as hereinafter defined), equal to eight (8) basis points (0.08%) as applied to
the total of such Lender's Commitment and such Lender's ratable portion of the
Term Loan outstanding.
(S)3. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
---------- -- -------------
effective on July 1, 1996 (the "Amendment Date") in the manner, and to the
extent, provided below, subject to the satisfaction of the following applicable
conditions precedent on or prior to such date:
(a) the receipt, on or prior to the Amendment Date, by the
Administrative Agent of one or more counterparts of this Amendment signed
by each of the Obligors and each of the Lenders, the Issuing Banks, the
Swing Line Lenders, and the Agents; and
(b) the receipt, on or prior to the Amendment Date, by the
Administrative Agent, of the amendment fee provided for in Section 2 of
this Amendment, for the respective accounts of each of the Lenders, in
immediately available funds.
(S)4. REPRESENTATIONS AND WARRANTIES. The Company hereby repeats, on
--------------- --- ----------
and as of the date hereof and the Amendment Date, each of the representations
and warranties made by it in (S)8 of the Credit Agreement (except to the extent
of changes resulting from matters contemplated or permitted by the Credit
Agreement and the other Loan Documents, changes occurring in the ordinary course
of business that singly or in the aggregate are not materially adverse, and to
the extent that such representations and warranties relate expressly to an
earlier date), provided, that all references therein to the Credit Agreement
--------
shall refer to such Credit Agreement as amended hereby. In addition, the Company
hereby represents and warrants that the execution and delivery by the Company of
this Amendment and the performance by the Company of all of its agreements and
obligations under this Amendment
<PAGE>
-4-
and the Credit Agreement as amended hereby are within the corporate power and
authority of the Company and have been duly authorized by all necessary
corporate action on the part of the Company, and further represents and warrants
that the execution and delivery by the Company of this Amendment and the
performance by the Company of the transactions contemplated hereby will not
contravene any term or condition set forth in any agreement or instrument to
which the Company is a party or by which the Company is bound, including but not
limited to the Subordinated Indenture.
(S)5. RATIFICATION, ETC. Except as expressly amended hereby, the
------------ ---
Credit Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Amendment shall be read and construed as a single
agreement. This Amendment shall constitute one of the Loan Documents, and the
obligations of the Obligors under this Amendment shall constitute Obligations
for all purposes of the Loan Documents. All references in the Credit Agreement,
the Loan Documents or any related agreement or instrument to the Credit
Agreement shall hereafter refer to the Credit Agreement as amended hereby.
(S)6. NO WAIVER. Nothing contained herein shall constitute a waiver
-- ------
of, impair or otherwise adversely affect any Obligations, any other obligation
of the Company or any rights of the Agents or the Lenders consequent thereon.
(S)7. COUNTERPARTS. This Amendment may be executed in one or more
------------
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
(S)8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
--------- ---
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO CONFLICT OF LAWS).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
-5-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
under seal by their respective officers thereunto duly authorized.
[Signature Pages Follow]
<PAGE>
-6-
Signature Pages for Borrowers and Guarantors
--------- ----- --- --------- --- ----------
The undersigned Borrower hereby consents and agrees to all of the
provisions of the foregoing Amendment:
The Company: SAMSONITE CORPORATION
--- -------
By: /s/ Thomas R. Sandler
---------------------------------------
Name: Thomas R. Sandler
-------------------------------------
Title: CFO & Treasurer
------------------------------------
Each of the undersigned Guarantors hereby acknowledges and consents to all
of the provisions of the foregoing Amendment and agrees that its Guarantee dated
as of July 14, 1995, in favor of the Lenders and the Agents, and all other Loan
Documents to which such Guarantor is a party, remain in full force and effect,
and each of the undersigned Guarantors confirms and ratifies all of its
obligations thereunder.
The Guarantors: A.T. RETAIL, INC.
--- ----------
By: /s/ Thomas R. Sandler
---------------------------------------
Name: Thomas R. Sandler
-------------------------------------
Title: V.P.
------------------------------------
MCGREGOR CORPORATION
By: /s/ Thomas R. Sandler
---------------------------------------
Name: Thomas R. Sandler
-------------------------------------
Title: President
------------------------------------
<PAGE>
-7-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
THE FIRST NATIONAL BANK OF BOSTON, as
Lender, Issuing Bank, Swing Line Lender,
Administrative Agent, and Managing Agent
By: /s/ Richard D. Hill, Jr.
---------------------------------------
Name:_____________________________________
Title: Director
------------------------------------
<PAGE>
-8-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
BANK OF AMERICA ILLINOIS, as Lender, Issuing
Bank, Swing Line Lender, Documentation
Agent, and Managing Agent
By: /s/ Elizabeth A. Borow
---------------------------------------
Name: Elizabeth A. Borow
-------------------------------------
Title: Sr. Vice President
------------------------------------
<PAGE>
-9-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
BHF-BANK AKTIENGESELLSCHAFT
NEW YORK BRANCH
By: /s/ David Fraeukel
---------------------------------------
Name: David Fraeukel
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ Dan Dobrjanskyj
---------------------------------------
Name: Dan Dobrjanskyj
-------------------------------------
Title: Assistant Treasurer
------------------------------------
<PAGE>
-10-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/ Genichi Imai
---------------------------------------
Name: Genichi Imai
-------------------------------------
Title: Joint General Manager
------------------------------------
<PAGE>
-11-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
THE MITSUBISHI TRUST AND
BANKING CORPORATION, LOS
ANGELES AGENCY
By: /s/ Hiroaki Koseki
---------------------------------------
Name: Hiroaki Koseki
-------------------------------------
Title: Sr. Vice President & Chief Manager
------------------------------------
<PAGE>
-12-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
SOCIETE GENERALE
By: /s/ Erick R. Rinner
---------------------------------------
Name: Erick R. Rinner
-------------------------------------
Title: Assistant Vice President
------------------------------------
<PAGE>
-13-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
THE BANK OF NEW YORK
By: /s/ Robert Louk
---------------------------------------
Name: Robert Louk
-------------------------------------
Title: Vice President
------------------------------------
<PAGE>
-14-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/ Henry Lee
---------------------------------------
Name: Henry Lee
------------------------------------
Title: Assistant Vice President
------------------------------------
By: /s/ Daniel Touffu
---------------------------------------
Name: Daniel Touffu
-------------------------------------
Title: First VP and Regional Manager
------------------------------------
<PAGE>
-15-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
BANQUE PARIBAS
By: /s/ Mark S. Black
----------------------------------
Name: Mark S. Black
--------------------------------
Title: Assistant Vice President
-------------------------------
By: /s/ Mary T. Finnegan
---------------------------------------
Name: Mary T. Finnegan
-------------------------------------
Title: Group Vice President
------------------------------------
<PAGE>
-16-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
CITICORP USA, INC.
By: /s/ Keith R. Karako
---------------------------------------
Name: Keith R. Karako
-------------------------------------
Title: Vice President
------------------------------------
<PAGE>
-17-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
CREDIT LYONNAIS NEW YORK
BRANCH
By: /s/ Attila Koc
---------------------------------------
Name: Attila Koc
-------------------------------------
Title: Vice President
------------------------------------
<PAGE>
-18-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By: /s/ Attila Koc
--------------------------------------
Name: Attila Koc
------------------------------------
Title: Authorized Signature
-----------------------------------
<PAGE>
-19-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
GENERALE BANK
By: /s/ E. Matthews /s/ A. Verschueren
---------------------------------------
Name: E. Matthews A. Verschueren
-------------------------------------
Title: SVP SVP
------------------------------------
<PAGE>
-20-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
KREDIETBANK NV
By: /s/ Robert Snauffer
---------------------------------------
Name: Robert Snauffer
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ Tod R. Angus
---------------------------------------
Name: Tod R. Angus
-------------------------------------
Title: Vice President
------------------------------------
<PAGE>
-21-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
NATIONAL CITY BANK
By: /s/ Barry C. Robinson
---------------------------------------
Name: Barry C. Robinson
-------------------------------------
Title: Vice President
------------------------------------
<PAGE>
-22-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
THE NIPPON CREDIT BANK,
LOS ANGELES AGENCY
By: /s/ Bernardo E. Correa-Henschke
---------------------------------------
Name: Bernardo E. Correa-Henschke
-------------------------------------
Title: Vice President & Senior Manager
------------------------------------
<PAGE>
-23-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
By: /s/ Sandra A. Sauer
---------------------------------------
Name: Sandra A. Sauer
-------------------------------------
Title: Vice President
------------------------------------
Norwest Bank Colorado, N.A.-Denver
<PAGE>
-24-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
UNION BANK OF CALIFORNIA, N.A.
(AS SUCCESSOR BY MERGER TO UNION BANK)
By: /s/ Anthony B. Kwee
---------------------------------------
Name: Anthony B. Kwee
-------------------------------------
Title: Vice President
------------------------------------
<PAGE>
-25-
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing
Amendment:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Brian W. Good
---------------------------------------
Name: Brian W. Good
-------------------------------------
Title: Vice President
------------------------------------
<PAGE>
EXHIBIT 10.4
------------
EXECUTION COPY
SCHENLEY PENSION PLAN
FINAL SETTLEMENT AGREEMENT
This Agreement is made as of June 20, 1996 by and among the PBGC,
McCrory, SCH, the McCrory Principal Subsidiaries, Astrum and the Astrum
Subsidiaries.
RECITALS
--------
1. McCrory is the contributing sponsor (within the meaning of ERISA Section
4001(a)(13)), and the plan sponsor (within the meaning of ERISA Section
3(16)(B)), of the McCrory Pension Plan.
2. Future benefit accruals were effectively terminated under the Schenley
Pension Plan for salaried employees in 1984 and for hourly employees in 1987,
and over 80% of the Schenley Pension Plan participants were receiving benefits
as of January 1, 1991.
1. SCH is the former contributing sponsor and plan sponsor of the Schenley
Pension Plan and is a member of the McCrory Controlled Group but it no longer
has any material assets or conducts any active business.
1. Since February 26, 1992, McCrory, together with twenty-seven of its
subsidiaries, has been in reorganization proceedings under Chapter 11 of the
Bankruptcy Code.
2. A confirmation hearing on the McCrory Plan of Reorganization has been
scheduled by the Bankruptcy Court for September 30, 1996.
3. On May 12, 1993, the PBGC and the Astrum Subsidiaries entered into an
Interim Extension Agreement under which, inter alia, the Astrum Subsidiaries
----- ----
agreed to be secondarily liable for certain funding obligations of the Schenley
Pension Plan and the PBGC agreed to the withdrawal of all claims in the Astrum
Chapter 11 Case. The Interim Extension Agreement has been extended periodically
since May 12, 1993 and has continued in effect through the date hereof (as so
extended,
--
<PAGE>
the "Interim Extension Agreement").
4. On May 24, 1993, the Bankruptcy Court approved a Compromise and Settlement
Agreement among Astrum, McCrory, SCH and certain other parties (the "Compromise
and Settlement Agreement"), as a result of which, inter alia, (i) McCrory agreed
----- ----
to become the contributing sponsor and the plan sponsor of the Schenley Pension
Plan not later than May 25, 1995, restrict its right to make amendments
improving plan benefits, transfer plan sponsorship of the Schenley Pension Plan
to Astrum or one of the Astrum Subsidiaries at their election, and remain
primarily liable for all obligations arising under or with respect to the
Schenley Pension Plan until the date of such transfer, (ii) the Astrum
Controlled Group agreed, during the period prior to May 25, 1995, under
stipulated conditions, to provide McCrory with funds to pay certain required
contributions and PBGC insurance premiums with respect to the Schenley Pension
Plan due prior to the May 25, 1995, and to be primarily liable for certain
contingent liabilities under ERISA Section 4062 with respect to the Schenley
Pension Plan, and (iii) Astrum and McCrory agreed to enter into a definitive
settlement agreement with the PBGC consistent with the allocation of liabilities
under the Compromise and Settlement Agreement.
5. On May 25, 1993, the Bankruptcy Court confirmed the Astrum Plan of
Reorganization. The Astrum Plan Consummation Date occurred on June 8, 1993.
Immediately after the Astrum Plan Consummation Date, Astrum and the Astrum
Subsidiaries ceased to be members of the McCrory Controlled Group.
6. A duly authorized Amendment, Assignment and Assumption Agreement providing
for the transfer of plan sponsorship of the Schenley Pension Plan was executed
as of June 30, 1993 and placed in escrow with the law firm of Rosenman & Colin
in accordance with the provisions of an Escrow Agreement dated as of June 30,
1993 (collectively, the "Escrow Agreements"). Copies of the Escrow Agreements
are annexed hereto as Exhibit 1.
7. On July 14, 1995, Samsonite Corporation merged with and into Astrum
International Corp., Astrum changed its name to Samsonite Corporation, and
McGregor Corporation continued as a wholly-owned subsidiary of Samsonite
Corporation (formerly Astrum International Corp.). On September 12, 1995,
Culligan Water Technologies, Inc., owner of 100% of the stock of Culligan
International Company, was spun off to shareholders pursuant to the terms of a
Distribution Agreement dated July 14, 1995. The Distribution Agreement contains
certain provisions allocating
--
<PAGE>
contingent liabilities that may arise under this Agreement between the parties
to the Distribution Agreement, without affecting Culligan International
Company's obligations under the Interim Extension Agreement or this Agreement.
For convenience of reference, except as otherwise specifically provided herein,
the terms "Astrum International Corp.", "Samsonite Corporation", "McGregor
Corporation" and "Culligan International Company", when used herein or defined
herein, refer to the corporations which were so named during the period
immediately prior to July 14, 1995, and their respective successors in interest.
8. Under Title IV of ERISA, the PBGC has authority to make arrangements with
any contributing sponsors and members of their controlled groups who are or may
become liable under Title IV of ERISA for payment of their liability (including
arrangements for deferred payment of amounts of liability to the PBGC accruing
as of the termination date) on such terms and for such periods as the PBGC deems
equitable and appropriate.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by each party hereto, the parties hereto
agree as follows:
1. Definitions
-----------
For purposes of this Agreement:
Astrum means Astrum International Corp., a Delaware corporation, f/k/a
------
E-II Holdings Inc.
Astrum Chapter 11 Case means Chapter 11 case number 92-B-43614(CB)
------ ------- -- ----
formerly administered by the Bankruptcy Court.
Astrum Plan Consummation Date means June 8, 1993, the date of the
------ ---- ------------ ----
distribution of new Astrum common stock to creditors in accordance with the
Astrum Plan of Reorganization.
Astrum Plan of Reorganization means the final Second Amended Plan of
------ ---- -- --------------
Reorganization, as modified, and approved by the Bankruptcy Court on May 25,
1993.
Astrum Subsidiaries mean Culligan International Company, a Delaware
------ ------------
corporation, McGregor Corporation, a New York corporation, Samsonite
Corporation, a Delaware corporation and Culligan Water Technologies, Inc., a
Delaware corporation (in any such case, whether or not a subsidiary on the date
this Agreement is executed).
--
<PAGE>
Bankruptcy Court means the United States Bankruptcy Court for the
---------- -----
Southern District of New York.
Code means the Internal Revenue Code of 1986, as amended.
----
Controlled Group means, as to any entity, such entity and all related
---------- -----
entities that, at the relevant time for purposes of this Agreement, are under
common control with such entity (within the meaning of ERISA Sections
4001(a)(14) and 4001(b)(1) and Code Sections 414(b) and (c) and the regulations
promulgated thereunder and, solely for purposes of determining liability under
Code Section 412, Code Sections 414(m) and 414(o)).
ERISA means the Employee Retirement Income Security Act of 1974, as
-----
amended.
McCrory means McCrory Corporation, a Delaware corporation, a debtor
-------
and debtor in possession in the McCrory Chapter 11 Case, and all other joint
debtors and debtors in possession in such case. From and after the confirmation
of a plan of reorganization in the McCrory Chapter 11 Case, the term "McCrory"
shall also include all trades or businesses that result from the confirmation of
such a plan.
McCrory Chapter 11 Case means Chapter 11 case numbers 92-B-41133(CB)
------- ------- -- ----
through 92-B-41160(CB) currently being jointly administered in the Bankruptcy
Court.
McCrory Controlled Group means McCrory and all entities that are under
------- ---------- -----
common control with McCrory (within the meaning of ERISA Sections 4001(a)(14)
and 4001(b)(1) and Code Sections 414(b) and (c) and the regulations promulgated
thereunder), as such group may change from time to time, where applicable, in
accordance with Section 7 hereof. As used in this Agreement, the term McCrory
Controlled Group shall mean the group as it exists at the relevant time under
this Agreement.
McCrory Final Settlement Agreement means the McCrory Pension Plan
------- ----- ---------- ---------
Final Settlement Agreement dated the date hereof by and among the PBGC, McCrory,
the McCrory Principal Subsidiaries, Astrum and the Astrum Subsidiaries.
McCrory Plan Consummation Date means the effective date of the McCrory
------- ---- ------------ ----
Plan of Reorganization.
McCrory Plan of Reorganization means the Amended Joint
------- ---- -- --------------
--
<PAGE>
Plan of Reorganization proposed by McCrory and filed with the Bankruptcy Court
on February 19, 1993, as subsequently amended from time to time.
McCrory Principal Subsidiaries means J.J. Newberry Co., a Delaware
------- --------- ------------
corporation, T. G. & Y Stores Co., a Delaware corporation, Mack Realty Company,
a Pennsylvania corporation, Kress-New Providence, Inc., a Delaware corporation
and G.C. Murphy Company, a Pennsylvania corporation.
PBGC means the Pension Benefit Guaranty Corporation, a wholly-owned
----
United States Government corporation established under Section 4002 of ERISA.
SCH means SCH Holding Corp., a Delaware corporation.
---
Schenley Pension Plan means the Schenley Industries, Inc. Employees' Retirement
- -------- ------- ----
and Benefit Plan, a defined benefit pension plan subject to Title IV of ERISA.
Term means the term of this Agreement as provided in Section 9 hereof.
- ----
Unfunded Benefit Liabilities means, as of any date, the amount of
-------- ------- -----------
unfunded benefit liabilities, as such term is defined in ERISA Section
4001(a)(18), of the pension plan to which such term relates.
2. Liability for Schenley Pension Plan Underfunding, Contributions, and
-------------- ---
Premiums
--------
In the event Astrum or one of the Astrum Subsidiaries assumes the
sponsorship of the Schenley Pension Plan, as of and after the effective date of
such assumption, no member of the McCrory Controlled Group shall have any
obligation or liability with respect to the Schenley Pension Plan, to the
Schenley Pension Plan or to Astrum or any of the Astrum Subsidiaries (or to any
member of their respective Controlled Groups) or under Title IV of ERISA or
Section 412 of the Code or to the PBGC, other than with respect to (i)
contributions required to have been made to the Schenley Pension Plan under
Section 412 of the Internal Revenue Code and Section 302 of ERISA by the members
of the McCrory Controlled Group pursuant to the terms and conditions of the
Compromise and Settlement Agreement; (ii) fiduciary liability under ERISA; or
(iii) premium liability, and associated penalties and interest, under ERISA
Sections 4006 and 4007 with respect to the Schenley Pension Plan, where, in each
case, such liability arose prior to the effective date of the assumption of
--
<PAGE>
the sponsorship of the Schenley Pension Plan by Astrum or one of the Astrum
Subsidiaries. Until Astrum or any of the Astrum Subsidiaries has become the
plan sponsor of the Schenley Pension Plan, McCrory and the members of its
Controlled Group shall be primarily responsible for satisfaction of all
obligations arising under or with respect to the Schenley Pension Plan and,
subject to the provisions of this Agreement, the PBGC shall retain all rights
available to it under any applicable law which is effective during the Term;
provided, however, that the PBGC may not, unless sponsorship of the Schenley
Pension Plan has been transferred to Astrum or one of the Astrum Subsidiaries,
assert any right it may have to terminate the Schenley Pension Plan unless and
until: (i) the PBGC has complied with its obligations under Section 2A below,
and (ii) 40 days have elapsed from the date that the PBGC's liens arose under
Code Section 412(n) without Astrum, any of the Astrum Subsidiaries, or any
member of their respective Controlled Groups having paid the contributions then
due and owing to the Schenley Pension Plan, or made arrangements satisfactory to
the PBGC for the collection of such contributions; provided, further, however,
that the PBGC shall not file an application with a United States District Court
seeking involuntary termination of the Schenley Pension Plan pursuant to ERISA
Section 4042(a)(4) prior to the McCrory Plan Consummation Date if (i) all
contributions required to be made to the Schenley Pension Plan have been timely
made by members of the McCrory Controlled Group, and (ii) the composition of the
McCrory Controlled Group has not changed between the effective date of this
Agreement and the McCrory Plan Consummation Date, with the exception of those
changes resulting from and described in the McCrory Plan of Reorganization.
The following provisions of this Section 2 set forth the rights and
obligations of McCrory, Astrum and the Astrum Subsidiaries and certain
obligations of the PBGC with respect to the Schenley Pension Plan for the period
prior to the effective date of any assumption of sponsorship of such Plan by
Astrum or any of the Astrum Subsidiaries:
A. Astrum and the Astrum Subsidiaries agree to be secondarily liable
for 100% of the contributions required to be made to the McCrory Pension Plan
under Code Section 412 and ERISA Section 302 during the Term. Astrum or one of
the Astrum Subsidiaries will pay or loan to the plan sponsor pursuant to Section
5 hereof, or make arrangements satisfactory to the PBGC for the collection of,
any such contributions, provided (i) an accumulated funding deficiency, as
defined under Code Section 412(a), shall have occurred with respect to such
Plan, and 30 days shall have elapsed without such deficiency having been
--
<PAGE>
corrected, (ii) the amount of such deficiency shall be greater than $1,000,000,
(iii) the PBGC shall have made reasonable efforts, as determined within its
discretion, to perfect its available lien rights under Code Section 412(n), or
any successor thereto, against all known members of the McCrory Controlled
Group, and (iv) the PBGC has made a written demand upon Astrum for payment.
B. To the extent that McCrory has failed to make full payment of
premiums, penalties and interest required to be made with respect to the
Schenley Pension Plan under ERISA Sections 4006 and 4007 during the Term, Astrum
or the Astrum Subsidiaries shall make such payments to the PBGC within 30 days
of notice that such amounts are due and owing; provided, however, that the PBGC
shall first have given Astrum and the Astrum Subsidiaries notice of any such
failure and shall first have made reasonable efforts, as determined within its
discretion, to collect such amounts from all known members of the McCrory
Controlled Group.
C. In the event of the termination of the Schenley Pension Plan
during the Term, Astrum and the Astrum Subsidiaries agree to be secondarily
liable to the PBGC for an amount equal to the difference between (i) the total
amount of Unfunded Benefit Liabilities of the Schenley Pension Plan as of the
Plan's termination date, calculated in accordance with ERISA Section 4062 and
the regulations thereunder, together with interest from the Plan termination
date at the rate described at Code Section 6601(a) and (ii) (x) in the case of a
plan amendment, the entire portion of such Plan's benefit liabilities, as such
term is defined in ERISA Section 4001(a)(16), that is attributable to any such
plan amendment that accelerates or increases such benefit liabilities, occurring
after the Astrum Plan Consummation Date, and that affects such Plan's (1)
benefit accrual formula, (2) optional forms of benefits, (3) factors used for
determining actuarial equivalence, (4) early retirement eligibility requirements
or (5) vesting schedule, or (y) in the case of a plan merger, spinoff or
transfer of assets or liabilities, the increase in such Plan's Unfunded Benefit
Liabilities that is attributable to one or more plan mergers, spinoffs or
transfers of assets and liabilities to or from the Schenley Pension Plan
occurring after the Astrum Plan Consummation Date; provided, however, that (1)
the PBGC shall have first exercised all reasonable efforts, as determined within
its discretion, to perfect its available lien rights under ERISA Section 4068
against and to collect liability under ERISA Section 4062 from, all known
members of the plan sponsor's Controlled Group, and (2) pending final resolution
of the PBGC's claims against McCrory and members of the plan sponsor's
Controlled Group, Astrum and the
--
<PAGE>
Astrum Subsidiaries shall, pursuant to this Section 2C, pay to the PBGC the
liability under ERISA Section 4062, and the PBGC shall, to the extent of any
such payment by Astrum or an Astrum Subsidiary, assign to Astrum or the relevant
Astrum Subsidiary a portion of its claim against McCrory and members of the plan
sponsor's Controlled Group equal in value to the payment made by Astrum or the
Astrum Subsidiary.
3. Discontinuance of Controlled Group Relationships
-------------- -- ---------- ----- -------------
No provision of this Agreement, and no action pursuant to this
Agreement by Astrum or any of the Astrum Subsidiaries, shall cause any member of
the Astrum Controlled Group to be treated as part of the McCrory Controlled
Group, or of the Controlled Group of any entity (other than a member of the
Astrum Controlled Group) which is the plan sponsor of the Schenley Pension Plan,
as of any date which is on or after the Astrum Plan Consummation Date, for
purposes of any provision of ERISA or the Code, including without limitation,
action by Astrum or any of the Astrum Subsidiaries that causes any of them to
become the contributing sponsor or the plan sponsor maintaining the Schenley
Pension Plan, provided, however, that if Astrum or any of the Astrum
Subsidiaries becomes the plan sponsor of the Schenley Pension Plan, such party
and its Controlled Group shall be subject to any and all applicable provisions
of Titles I and IV of ERISA, including liability provisions thereof, as of the
date of assumption of plan sponsorship, notwithstanding this Section 3.
4. Lien Rights
-----------
A. Unless and until Astrum or any of the Astrum Subsidiaries has
become the plan sponsor or contributing sponsor of the Schenley Pension Plan,
the PBGC shall have no statutory lien rights against any member of the Astrum
Controlled Group on or after the Astrum Plan Consummation Date and no lien
rights shall arise under this Agreement against any members of the Astrum
Controlled Group. The making of contributions pursuant to this Agreement by
Astrum or any of the Astrum Subsidiaries prior to transfer of sponsorship of the
Schenley Pension Plan shall not, in and of itself, cause any such contributing
party to become or be treated as the plan sponsor or contributing sponsor of the
Schenley Pension Plan.
B. The parties hereto acknowledge that statutory lien rights arising
under Section 412(n) of the Code and Section 4068 may only be imposed against
the assets of the McCrory Controlled Group with respect to the Schenley Pension
Plan (i) under Code
--
<PAGE>
Section 412(n), in the event, and to the extent, that such lien rights have
accrued prior to the effective date of the assumption of the sponsorship of the
Schenley Pension Plan by Astrum or one of the Astrum Subsidiaries, and (ii)
under ERISA Section 4068, in the event the Schenley Pension Plan is terminated
prior to the effective date of the assumption of the sponsorship of the Schenley
Pension Plan by Astrum or one of the Astrum Subsidiaries.
5. Satisfaction of Contribution
Obligations; Commercially Reasonable Terms
----------- ------------ ---------- -----
A. Prior to the date on which Astrum or any of the Astrum
Subsidiaries has become the contributing sponsor or the plan sponsor of the
Schenley Pension Plan, Astrum or any one of the Astrum Subsidiaries may elect to
satisfy any obligation to make any contributions required to be made to the
Schenley Pension Plan under this Agreement by loaning the amount thereof to the
plan sponsor, or any member of the plan sponsor's Controlled Group, under
circumstances requiring the proceeds of such loan to be contributed to the
Schenley Pension Plan.
B. If the Schenley Pension Plan is terminated, during or after the
Term of this Agreement, then the terms of satisfaction of liability due upon
plan termination (including interest) shall be made (i) under commercially
reasonable terms prescribed by the PBGC under ERISA (S) 4062(b)(2), to the
extent such liability exceeds 30% of the collective net worth of any liable
party and its Controlled Group, or (ii) under alternative arrangements agreed to
by the PBGC under ERISA (S) 4062(b)(3).
6. Assignment of Lien Rights
---------- -- ---- ------
If Astrum or any of the Astrum Subsidiaries becomes the plan sponsor
of the Schenley Pension Plan, the PBGC agrees that, to the extent permitted by
law, it will direct (under Code Section 412(n)(5) or any successor or similar
Code provision) such plan sponsor to perfect and enforce any lien created under
Section 412(n)(1) of the Code with respect to the Schenley Pension Plan;
provided, however, that (i) such lien shall only apply to obligations of the
McCrory Controlled Group which continue in accordance with the first sentence of
Section 2 hereof; and (ii) the PBGC will be furnished as soon as practicable
with notice of any challenge to such lien rights.
7. Transactions Involving Membership Changes
--
<PAGE>
in the Astrum and McCrory Controlled Groups
-- --- ------ --- ------- ---------- ------
The PBGC, Astrum, the Astrum Subsidiaries, and each known member of the McCrory
Controlled Group shall be given no fewer than 60 days' (if practicable, but in
no event less than 30 days') notice by McCrory or Astrum, as appropriate, prior
to the consummation of any transaction as a result of which (i) Astrum or any of
the Astrum Subsidiaries would exit the Astrum Controlled Group, (ii) McCrory or
any of the McCrory Principal Subsidiaries would exit the McCrory Controlled
Group, or (iii) there would be a sale or other divestiture of the assets of one
or more of such entities (or of the stock or assets of any other member of the
McCrory Controlled Group to which the stock or assets of McCrory or a McCrory
Principal Subsidiary has been transferred ("McCrory Transferee")) involving 30%
or more of the assets of any one of such entity's total asset value, as
determined (for purposes of clauses (ii) and (iii) in accordance with generally
accepted accounting principles. For purposes of the preceding sentence, the
rights and obligations established by this Agreement shall not be valued as
assets. Unless notice is given to the PBGC as provided herein, the obligations
under this Agreement during the Term shall continue to apply to any of the
Astrum Subsidiaries or any of the McCrory Principal Subsidiaries leaving the
Astrum and McCrory Controlled Groups, as applicable, unless the PBGC otherwise
gives its written consent. Upon receipt of such notice, the PBGC shall determine
whether or not the proposed transaction would result in its possible long-run
loss reasonably being expected to increase unreasonably, in a manner consistent
with its prevailing practice. The PBGC will complete its analysis within 30 days
of receipt of such notice, provided that Astrum and the Astrum Subsidiaries, or
McCrory and the McCrory Principal Subsidiaries, as the case may be, comply with
reasonable information requests. Unless the PBGC determines, in a manner
consistent with its prevailing practice and by the expiration of such period or
within 30 days of the date on which all such information has been provided in
response to its requests, that the transaction would reasonably be expected to
increase its long-run loss unreasonably, the obligations of such entity to the
PBGC under this Agreement shall cease to apply to the entity leaving the Astrum,
or McCrory, Controlled Group, as applicable. The PBGC shall provide written
notice of any such determination within 7 days of the period referenced in the
preceding sentence under this Section to Astrum and the Astrum Subsidiaries, or
to McCrory and the McCrory Principal Subsidiaries, as applicable.
Notwithstanding any other provision of this Agreement, the obligations imposed
on McCrory and the McCrory Principal Subsidiaries (and any McCrory Transferee)
under this Section 7 shall be inapplicable unless the acquiror of the stock or
transferee of the assets of the corporation exiting the
--
<PAGE>
Controlled Group bears a relationship to the transferor which is a relationship
specified in Code Section 267(b), taking into account the application of Code
Section 267(c).
8. Effective Date
--------------
This Agreement shall be effective immediately upon the later of (i)
delivery of fully executed counterparts to all parties in the manner provided in
Section 13 hereof, and (2) the issuance of an order by the Bankruptcy Court in
the McCrory Chapter 11 Case approving this Agreement.
9. Term of Agreement; Survival of Certain Astrum Obligations; Involuntary
-----------
Termination
-----------
A. Subject to Section 9B hereof, this Agreement shall expire on the
date which is the earlier to occur of (i) the effective date on which
sponsorship of the Schenley Pension Plan has been assumed by Astrum or any of
the Astrum Subsidiaries, or (ii) the later to occur of (I) the end of McCrory's
first complete fiscal year which ends more than three years from the McCrory
Plan Consummation Date or (II) the first date on which the ratio of McCrory's
consolidated earnings before interest and taxes for the three consecutive fiscal
years immediately preceding the date of determination, to consolidated total
interest expense for each of such years, equals or exceeds 2.5 to 1.0; provided
that (1) McCrory has then satisfied all funding requirements applicable to
McCrory under Code Section 412 with respect to the Schenley Pension Plan and (2)
all loans from Astrum or any of the Astrum Subsidiaries with respect to the
Schenley Pension Plan shall have been repaid or otherwise extinguished (it being
understood that all loans made prior to the date hereof from Astrum, any of the
Astrum Subsidiaries or any member of the Astrum Controlled Group with respect to
the Schenley Pension Plan are extinguished). Such term shall not be extended
thereafter without the written consent of each party which would be subject to
continuing obligations as a result of the extension. If fewer than all required
parties consent to an extension, the extension shall be effective only as to
those parties whose consent has been provided.
B. The obligations imposed and the rights conferred under Sections 2,
3, 4, 5, 6, 9B, 10, 11, 14 and 15 hereof shall survive the termination of this
Agreement.
C. The PBGC agrees that it shall not consider the expiration of this
Agreement in any determination involving an involuntary termination of the
Schenley Pension Plan under ERISA Section 4042(a)(4).
--
<PAGE>
10. Remedies of PBGC
-------- -- ----
A. Provided Astrum and the Astrum Subsidiaries have complied with
their obligations under this Agreement, then unless and until Astrum or one of
the Astrum Subsidiaries has assumed sponsorship of the Schenley Pension Plan,
this Agreement sets forth the exclusive remedies of the PBGC against the members
of the Astrum Controlled Group. Unless Astrum or one of the Astrum Subsidiaries
has assumed sponsorship of the Schenley Pension Plan, the PBGC's remedies
against Astrum and the Astrum Subsidiaries shall not be enlarged or diminished
by any law which is enacted after the date of this Agreement. Without any
limitation on the rights conferred under the first two sentences of this Section
10, if any such law is enacted, Astrum and the Astrum Subsidiaries agree not to
assert the benefits of any provision of such law which diminishes the rights of
the PBGC from its rights as they exist hereunder on the effective date of this
Agreement, and the PBGC agrees not to assert the benefits of any provision of
such law which enlarges the rights of the PBGC from its rights as they exist
hereunder on the effective date of this Agreement. This Agreement sets forth the
exclusive remedies of the PBGC against the members of the McCrory Controlled
Group following the date the sponsorship of the Schenley Pension Plan is assumed
by Astrum or one of the Astrum Subsidiaries and the PBGC's remedies shall not be
enlarged or diminished with respect thereto by any law which is enacted after
the date of this Agreement, to the extent such law would result in the
imposition of any obligation or liability on members of the McCrory Controlled
Group following the assumption of the Schenley Pension Plan by Astrum or one of
the Astrum Subsidiaries which would not have been imposed under the law as it
exists on the date of this Agreement. Each member of the McCrory Controlled
Group agrees not to assert the benefits of any provisions of such law which
diminishes the rights of the PBGC with respect to the foregoing from its rights
as they exist hereunder on the effective date of this Agreement, and the PBGC
agrees not to assert the benefits of any such law which enlarges the rights of
the PBGC as they exist hereunder on the effective date of this Agreement.
B. Section 10A hereof shall not limit (i) the PBGC's rights against
McCrory or any member of the McCrory Controlled Group during the period McCrory
or any member of the McCrory Controlled Group acts as the plan sponsor of the
Schenley Pension Plan, (ii) except with respect to the rights of Astrum and the
Astrum Subsidiaries conferred under provisions which survive the termination of
this Agreement, the PBGC's rights against Astrum, the Astrum Subsidiaries or any
member of their respective Controlled Groups, after the date on which Astrum or
any of the Astrum Subsidiaries has assumed sponsorship of the Schenley
--
<PAGE>
Pension Plan, (iii) any party's liability under Section 4069 of ERISA, subject
to and limited by Section 10C and Section 15 hereof, (iv) any party's liability
for premiums under Sections 4006 and 4007 of ERISA, (v) any party's fiduciary
liability under Title I or IV of ERISA, or (vi) the applicability to any party
of the provisions of Code Section 412.
C. In the event that the Schenley Pension Plan terminates within five
years of sponsorship thereof being transferred to Astrum or one of the Astrum
Subsidiaries pursuant to the terms of this Agreement, no party to such transfer
shall be deemed to have as a principal purpose in effecting such transfer the
evasion of liability under Section 4069 of ERISA or any successor provision
thereto.
11. Limitation on Astrum Liability
---------- -- ------ ---------
No member of the Astrum Controlled Group shall have any liability to
the PBGC, or to any other party, entity or person, with respect to any successor
pension plan to the Schenley Pension Plan which is or may be adopted or, except
as set forth in the McCrory Final Settlement Agreement, with respect to any
other employee benefit plan, compensation arrangement or payroll practice, at
any time maintained or contributed to by any member of the McCrory Controlled
Group, whether or not such plan, arrangement or practice is covered by ERISA.
12. Actuarial & Financial Information
--------- - --------- -----------
A. During the Term, McCrory shall provide to the PBGC and, with
respect to the information described in subparagraphs (i) and (ii), to Astrum,
(i) copies of all actuarial plan valuations with respect to the Schenley Pension
Plan within ten days after McCrory's receipt thereof, (ii) copies of all IRS
Forms 5500 with respect to the Schenley Pension Plan within ten days after the
filing thereof with the Internal Revenue Service, and (iii) copies of all
information filed by McCrory with the Securities Exchange Commission within ten
days after the filing thereof with the Securities Exchange Commission. The
provision of such information may be accomplished by electronic transmission.
Nothing in this Agreement shall limit the obligations of McCrory and the McCrory
Controlled Group under Code Section 412 or ERISA Sections 4010 or 4043 or the
regulations thereunder, unless the same information has previously been provided
pursuant to the requirements of this Section 12A.
B. Unless such information has previously been provided pursuant to
Section 12A hereof, McCrory shall provide to
--
<PAGE>
Astrum a copy of each notice required to be filed during the term of this
Agreement pursuant to Code Section 412(n) or ERISA Sections 4010 or 4043 not
later than the time such notices are required to be provided to the PBGC.
13. Bankruptcy Approval and Disclosure
---------- -------- --- ----------
McCrory shall seek Bankruptcy Court approval of this Agreement within
10 business days of the execution of this Agreement. McCrory agrees that, in the
event the McCrory Plan of Reorganization is not amended to incorporate the terms
of this Agreement, any order confirming the McCrory Plan of Reorganization shall
expressly provide for the incorporation of this Agreement into the McCrory Plan
of Reorganization, and shall further provide that this Agreement supersedes any
language in the McCrory Plan of Reorganization relating to the Schenley Pension
Plan and the claims of the PBGC, including, but not limited to, Sections 5.03,
6.09, 6.10, 9.03, 12.01, 15.01, 17.01, and 17.08 thereof.
14. Representations and Warranties
--------------- --- ----------
The parties represent and warrant to each other (i) that they have
been fully informed and have full knowledge of the terms, conditions and effects
of this Agreement; (ii) that they have been represented by legal counsel of
their choice throughout all negotiations preceding their execution of this
Agreement and have received the advice of their attorneys in entering into this
Agreement; (iii) that they, either personally or through independently retained
attorneys, have fully investigated to their satisfaction all facts surrounding
the controversies and disputes compromised by this Agreement and are fully
satisfied with the terms and effects of this Agreement; (iv) that no promise or
inducement has been offered or made to any of them except as expressly stated in
this Agreement, and that this Agreement is executed without reliance on any
statement or representation by anyone other than the representations expressed
in this Agreement; (v) that all parties (including the PBGC and in the case of
McCrory, subject to Bankruptcy Court approval) have full authority to enter into
this Agreement and that it constitutes a legal, valid, and binding obligation
enforceable against each such party in accordance with its terms. Each party
recognizes and acknowledges that every other party has relied on each of the
foregoing warranties and representations in entering into this Agreement and
that the representations and warranties shall survive the execution of the
Agreement.
15. McCrory's Plan of Reorganization
--------- ---- -- --------------
--
<PAGE>
Provided that McCrory has made all required contributions to the
Schenley Pension Plan and paid all PBGC premiums with respect thereto; and that
the Schenley Pension Plan has not terminated, the PBGC agrees that (i) it will
not file any objection to the confirmation of the McCrory Plan of
Reorganization, (ii) on or immediately prior to the McCrory Plan Consummation
Date, it will withdraw all claims it filed in the McCrory Chapter 11 case; and
(iii) it will not at any time assert that, or seek to establish liability under
Section 4062 or 4069 of ERISA or any successor provisions thereto on the basis
that, a principal purpose of the filing of the McCrory Chapter 11 Case or the
McCrory Plan of Reorganization was the evasion of liability under Title IV of
ERISA.
16. General Provisions
------- ----------
A. This Agreement and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with the laws of the
state of New York without regard to its conflict of law rules, except to the
extent such laws are preempted by federal law. Following the McCrory Plan
Consummation Date, the United States District Courts shall have exclusive
jurisdiction over the parties hereto for purposes of enforcing the terms hereof
and resolving any disputes hereunder.
B. This Agreement constitutes the entire final agreement and
understanding with respect to the liability of the parties to the PBGC for the
Schenley Pension Plan and the other matters provided for herein, and no other
agreement or understanding exists except as expressly set forth herein. This
Agreement supersedes all previous understandings related to the subject matter
hereof, other than the Compromise and Settlement Agreement, insofar as it sets
forth the rights and obligations of Astrum and McCrory and the members of each
of their respective Controlled Groups, and the Escrow Agreements. The parties
hereto agree that as among Astrum, the Astrum Subsidiaries and McCrory, except
with respect to the provisions hereof delineating the circumstances under which
members of the Astrum Controlled Group shall be secondarily liable for certain
liabilities relating to the Schenley Pension Plan (the "Secondary Liability
Provisions", nothing in this Agreement is intended to modify the terms and
conditions of the Compromise and Settlement Agreement and in the event and to
the extent that the terms and conditions set forth herein, other than the
Secondary Liability Provisions, conflict with those set forth in the Compromise
and Settlement Agreement, the Compromise and Settlement Agreement shall govern.
Nothing in Section 6 of the Compromise and Settlement Agreement shall be
construed to modify, amend, or otherwise alter any party's liability to the PBGC
under the terms of this Agreement or ERISA.
--
<PAGE>
C. This Agreement shall not be modified or amended, except by written
instrument signed by the parties hereto.
D. McCrory agrees to take all reasonable steps to insure that the
Schenley Pension Plan and its related trust continue to meet the applicable
requirements for qualification and exemption from taxation under Sections 401(a)
and 501(a) of the Code, and to obtain a current favorable IRS determination
letter.
E. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be given by personal service, by
delivering the same to a recognized express delivery service or by depositing
the same in the United States certified mail, returned receipt requested,
postage prepaid, addressed as follows:
To Samsonite Corporation:
D. Michael Clayton, Esq.
General Counsel
Samsonite Corporation
11200 East 45th Avenue
Denver, CO 80239
with a copy to:
Myron Trepper, Esq.
Willkie Farr & Gallagher
153 E. 53rd Street
New York, NY 10022-4677
To Culligan Water Technologies, Inc.:
General Counsel
Culligan Water Technologies, Inc.
One Culligan Parkway
Northbrook, Illinois 60062
with a copy to:
Myron Trepper, Esq.
Willkie Farr & Gallagher
153 E. 53rd Street
New York, NY 10022-4677
To McGregor Corporation:
--
<PAGE>
General Counsel
McGregor Corporation
Seventeenth Floor
1330 Avenue of the Americas
New York, NY 10019
with a copy to:
Myron Trepper, Esq.
Willkie Farr & Gallagher
153 E. 53rd Street
New York, NY 10022-4677
To the PBGC:
Office of the General Counsel
Pension Benefit Guaranty Corporation
Suite 340
1200 K Street, N.W.
Washington, DC 20005-4026
with a copy to:
Corporate Finance and Negotiations Department
Pension Benefit Guaranty Corporation
Suite 270
1200 K Street, N.W.
Washington, DC 20005-4026
To McCrory or any of the McCrory Principal Subsidiaries:
McCrory Corporation
Attn: Paul Weiner
667 Madison Avenue
12th Floor
New York, NY 10021
with a copy to:
Brad Eric Scheler, Esq. and
Donald P. Carleen, Esq.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
or to such other address as any party hereto may designate to the other. Each
party shall use its best efforts to confirm receipt
--
<PAGE>
of any notice from the other.
F. The failure of any party to this Agreement to enforce at any time
any of the provisions of this Agreement or to exercise any option under this
Agreement shall in no way be construed to be a waiver of such provision or
option, and shall in no way affect the validity of this Agreement or the right
of any party to enforce each and every one of its provisions or options. Any
remedies hereunder for breach of this Agreement or default in any party's
obligations hereunder are cumulative, and the exercise of one shall not be
deemed to be a waiver of the right to exercise any other under this Agreement or
otherwise.
G. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
or provisions of this Agreement, which shall remain in full force and effect.
H. This Agreement shall inure to the benefit of, and may be enforced
solely by, and be enforceable against, the parties hereto, and, in each case,
their respective successors and permitted assigns, including any purchaser of
substantially all the assets of McCrory or any of the McCrory Principal
Subsidiaries, Astrum or any of the Astrum Subsidiaries, and the members of each
of their respective Controlled Groups and any trustee succeeding to the rights
of any of the foregoing parties pursuant to Chapter 11 of the Bankruptcy Code or
pursuant to the conversion of any Chapter 11 case to a case under Chapter 7 of
the Bankruptcy Code.
I. The parties agree to execute such further agreements and other
documents as may be necessary to effectuate this Agreement.
J. This Agreement may be executed in any number of identical
counterparts, each of which shall be an original as against the party who signed
it, and all of which shall constitute one and the same instrument. No party to
this Agreement shall be bound by it until a counterpart has been executed by
each party hereto.
K. The parties shall each bear their own costs, expenses and
professional fees incurred in connection with the preparation and negotiation of
this Agreement and in the performance of each party's respective obligations
hereunder.
L. Nothing contained herein shall cause any claim of the PBGC to be
or become a secured or priority claim against McCrory solely by reason of
McCrory's execution and delivery of
--
<PAGE>
this Agreement and nothing contained herein shall limit or otherwise affect the
PBGC's right to assert priority claims against McCrory in any proceeding under
the Federal Bankruptcy Law.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the day and year first written above.
PENSION BENEFIT GUARANTY CORPORATION
By: /s/ Authorized Person
---------------------------------
SAMSONITE CORPORATION
By: /s/ D. Michael Clayton
---------------------------------
CULLIGAN WATER TECHNOLOGIES, INC.
By: /s/ Authorized Person
------------------------------------
CULLIGAN INTERNATIONAL COMPANY
By: /s/ Authorized Person
------------------------------------
McGREGOR CORPORATION
By: /s/ D. Michael Clayton
------------------------------------
McCRORY CORPORATION
--
<PAGE>
By /s/ Paul Weiner
------------------------------------
J.J. NEWBERRY CO.
By: /s/ Paul Weiner
-----------------------------------
T. G. & Y. STORES CO.
By: /s/ Paul Weiner
-----------------------------------
MACK REALTY COMPANY
By: /s/ Paul Weiner
------------------------------------
KRESS-NEW PROVIDENCE, INC.
By: /s/ Paul Weiner
------------------------------------
G.C. MURPHY COMPANY
By: /s/ Paul Weiner
------------------------------------
--
<PAGE>
EXHIBIT 10.5
------------
EXECUTION COPY
MCCRORY PENSION PLAN
FINAL SETTLEMENT AGREEMENT
This Agreement is made as of June 20, 1996 by and among the PBGC, McCrory,
the McCrory Principal Subsidiaries, Astrum and the Astrum Subsidiaries.
RECITALS
--------
1. McCrory is the contributing sponsor (within the meaning of ERISA Section
4001(a)(13)), and the plan sponsor (within the meaning of ERISA Section
3(16)(B)), of the McCrory Pension Plan.
2. The predecessor of the McCrory Pension Plan was terminated in 1985. Benefits
accrued for service performed by participants under the predecessor plan were
fully annuitized through the purchase of an annuity contract from an insurance
company. As a result, the McCrory Pension Plan has no liability to participants
who were also participants in the predecessor plan for service performed prior
to 1986. The McCrory Pension Plan provides benefits solely for service performed
after 1985 and prior to July 1, 1993.
3. Since February 26, 1992, McCrory, together with twenty-seven of its
subsidiaries, has been in reorganization proceedings under Chapter 11 of the
Bankruptcy Code.
4. A confirmation hearing on the McCrory Plan of Reorganization has been
scheduled by the Bankruptcy Court for September 30, 1996.
5. On May 12, 1993, the PBGC and the Astrum Subsidiaries entered into an
Interim Extension Agreement under which, inter alia, the Astrum Subsidiaries
----- ----
agreed to be secondarily liable for certain funding obligations of the McCrory
Pension Plan and the PBGC agreed to the withdrawal of all claims in the Astrum
Chapter 11 Case. The Interim Extension Agreement has been extended periodically
since May 12, 1993 and has continued in effect through the date hereof (as so
extended, the "Interim Extension Agreement").
--
<PAGE>
6. On May 24, 1993, the Bankruptcy Court approved a Compromise and Settlement
Agreement among Astrum, McCrory and certain other parties (the "Compromise and
Settlement Agreement"), as a result of which, inter alia, (i) McCrory agreed to
----- ----
freeze the McCrory Pension Plan, restrict its right to make amendments improving
plan benefits, transfer plan sponsorship of the McCrory Pension Plan to Astrum
or one of the Astrum Subsidiaries upon the occurrence of certain specified
conditions precedent, and remain primarily liable for all obligations arising
under or with respect to the McCrory Pension Plan until the date of such
transfer, (ii) the Astrum Controlled Group agreed to be secondarily liable for
certain contributions, premiums and liability under ERISA Section 4062 with
respect to the McCrory Pension Plan during the period prior to any transfer of
plan sponsorship to Astrum or one of the Astrum Subsidiaries, and to be
primarily liable for such liabilities after any such transfer, and (iii) Astrum
and McCrory agreed to enter into a definitive settlement agreement with the PBGC
consistent with the allocation of obligations and liabilities under the
Compromise and Settlement Agreement.
7. On May 25, 1993, the Bankruptcy Court confirmed the Astrum Plan of
Reorganization. The Astrum Plan Consummation Date occurred on June 8, 1993.
Immediately after the Astrum Plan Consummation Date, Astrum and the Astrum
Subsidiaries ceased to be members of the McCrory Controlled Group.
8. The McCrory Pension Plan was frozen as of June 30, 1993, and related
amendments to the McCrory Pension Plan prohibiting benefit improvements were
adopted as of June 30, 1993. A duly authorized Amendment, Assignment and
Assumption Agreement providing for the transfer of plan sponsorship of the
McCrory Pension Plan was executed as of June 30, 1993 and placed in escrow with
the law firm of Rosenman & Colin in accordance with the provisions of an Escrow
Agreement dated as of June 30, 1993 (collectively, the "Escrow Agreements").
Copies of the Escrow Agreements are annexed hereto as Exhibit 1.
9. On July 14, 1995, Samsonite Corporation merged with and into Astrum
International Corp., Astrum changed its name to Samsonite Corporation, and
McGregor Corporation continued as a wholly-owned subsidiary of Samsonite
Corporation (formerly Astrum International Corp.). On September 12, 1995,
Culligan Water Technologies, Inc., owner of 100% of the stock of Culligan
International Company, was spun off to shareholders pursuant to the terms of a
Distribution Agreement dated July 14, 1995. The Distribution Agreement contains
certain provisions allocating contingent liabilities that may arise under this
Agreement
--
<PAGE>
between the parties to the Distribution Agreement, without affecting Culligan
International Company's obligations under the Interim Extension Agreement or
this Agreement. For convenience of reference, except as otherwise specifically
provided herein, the terms "Astrum International Corp.", "Samsonite
Corporation", "McGregor Corporation" and "Culligan International Company" when
used herein or defined herein, refer to the corporations which were so named
during the period immediately prior to July 14, 1995, and their respective
successors in interest.
10. Under Title IV of ERISA, the PBGC has authority to make arrangements with
any contributing sponsors and members of their controlled groups who are or may
become liable under Title IV of ERISA for payment of their liability (including
arrangements for deferred payment of amounts of liability to the PBGC accruing
as of the termination date) on such terms and for such periods as the PBGC deems
equitable and appropriate.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by each party hereto, the parties hereto
agree as follows:
1. Definitions
-----------
For purposes of this Agreement:
Astrum means Astrum International Corp., a Delaware corporation, f/k/a
------
E-II Holdings Inc.
Astrum Chapter 11 Case means Chapter 11 case number 92-B-43614(CB)
------ ------- -- ----
formerly administered by the Bankruptcy Court.
Astrum Plan Consummation Date means June 8, 1993, the date of the
------ ---- ------------ ----
distribution of new Astrum common stock to creditors in accordance with the
Astrum Plan of Reorganization.
Astrum Plan of Reorganization means the final Second Amended Plan of
------ ---- -- --------------
Reorganization, as modified, and approved by the Bankruptcy Court on May 25,
1993.
Astrum Subsidiaries mean Culligan International Company, a Delaware
------ ------------
corporation, McGregor Corporation, a New York corporation, Samsonite
Corporation, a Delaware corporation and Culligan Water Technologies, Inc., a
Delaware corporation (in any such case, whether or not a subsidiary on the date
this Agreement is executed).
Bankruptcy Court means the United States Bankruptcy
---------- -----
--
<PAGE>
Court for the Southern District of New York.
Code means the Internal Revenue Code of 1986, as amended.
----
Controlled Group means, as to any entity, such entity and all related
---------- -----
entities that, at the relevant time for purposes of this Agreement, are under
common control with such entity (within the meaning of ERISA Sections
4001(a)(14) and 4001(b)(1) and Code Sections 414(b) and (c) and the regulations
promulgated thereunder and, solely for purposes of determining liability under
Code Section 412, Code Sections 414(m) and 414(o)).
ERISA means the Employee Retirement Income Security Act of 1974, as
-----
amended.
McCrory means McCrory Corporation, a Delaware corporation, a debtor
-------
and debtor in possession in the McCrory Chapter 11 Case, and all other joint
debtors and debtors in possession in such case. From and after the confirmation
of a plan of reorganization in the McCrory Chapter 11 Case, the term "McCrory"
shall also include all trades or businesses that result from the confirmation of
such a plan.
McCrory Chapter 11 Case means Chapter 11 case numbers 92-B-41133(CB)
------- ------- -- ----
through 92-B-41160(CB) currently being jointly administered in the Bankruptcy
Court.
McCrory Controlled Group means McCrory and all entities that are under
------- ---------- -----
common control with McCrory (within the meaning of ERISA Sections 4001(a)(14)
and 4001(b)(1) and Code Sections 414(b) and (c) and the regulations promulgated
thereunder), as such group may change from time to time, where applicable, in
accordance with Section 7 hereof. As used in this Agreement, the term McCrory
Controlled Group shall mean the group as it exists at the relevant time under
this Agreement.
McCrory Pension Plan means the McCrory Stores Pension Plan, a defined
------- ------- ----
benefit pension plan subject to Title IV of ERISA, as adopted effective February
1, 1987, and as subsequently amended from time to time.
McCrory Plan Consummation Date means the effective date of the McCrory
------- ---- ------------ ----
Plan of Reorganization.
McCrory Plan of Reorganization means the Amended Joint Plan of
------- ---- -- --------------
Reorganization proposed by McCrory and filed with the Bankruptcy Court on
February 19, 1993, as subsequently amended
--
<PAGE>
from time to time.
McCrory Principal Subsidiaries means J.J. Newberry Co., a Delaware
------- --------- ------------
corporation, T. G. & Y Stores Co., a Delaware corporation, Mack Realty Company,
a Pennsylvania corporation, Kress-New Providence, Inc., a Delaware corporation
and G.C. Murphy Company, a Pennsylvania corporation.
PBGC means the Pension Benefit Guaranty Corporation, a wholly-owned
----
United States Government corporation established under Section 4002 of ERISA.
Schenley Final Settlement Agreement means the Schenley Pension Plan
-------- ----- ---------- ---------
Final Settlement Agreement dated the date hereof by and among the PBGC, McCrory,
the McCrory Principal Subsidiaries, Astrum and the Astrum Subsidiaries.
Term means the term of this Agreement as provided in Section 9 hereof.
----
Unfunded Benefit Liabilities means, as of any date, the amount of
-------- ------- -----------
unfunded benefit liabilities, as such term is defined in ERISA Section
4001(a)(18), of the pension plan to which such term relates.
2. Liability for McCrory Pension Plan Underfunding, Contributions, and
------------- ---
Premiums
--------
In the event Astrum or one of the Astrum Subsidiaries assumes the
sponsorship of the McCrory Pension Plan, as of and after the effective date of
such assumption, no member of the McCrory Controlled Group shall have any
obligation or liability with respect to the McCrory Pension Plan, to the McCrory
Pension Plan or to Astrum or any of the Astrum Subsidiaries (or to any member of
their respective Controlled Groups) or under Title IV of ERISA or Section 412 of
the Code or to the PBGC, other than with respect to (i) contributions required
to have been made to the McCrory Pension Plan under Section 412 of the Internal
Revenue Code and Section 302 of ERISA by the members of the McCrory Controlled
Group pursuant to the terms and conditions of the Compromise and Settlement
Agreement; (ii) fiduciary liability under ERISA; or (iii) premium liability, and
associated penalties and interest, under ERISA Sections 4006 and 4007 with
respect to the McCrory Pension Plan, where, in each case, such liability arose
prior to the effective date of the assumption of the sponsorship of the McCrory
Pension Plan by Astrum or one of the Astrum Subsidiaries. Until Astrum or any
of the Astrum Subsidiaries has become the plan sponsor of the McCrory Pension
--
<PAGE>
Plan, McCrory and the members of its Controlled Group shall be primarily
responsible for satisfaction of all obligations arising under or with respect to
the McCrory Pension Plan and, subject to the provisions of this Agreement, the
PBGC shall retain all rights available to it under any applicable law which is
effective during the Term; provided, however, that the PBGC may not, unless
sponsorship of the McCrory Pension Plan has been transferred to Astrum or one of
the Astrum Subsidiaries, assert any right it may have to terminate the McCrory
Pension Plan unless and until: (i) the PBGC has complied with its obligations
under Section 2A below, and (ii) 40 days have elapsed from the date that the
PBGC's liens arose under Code Section 412(n) without Astrum, any of the Astrum
Subsidiaries, or any member of their respective Controlled Groups having paid
the contributions then due and owing to the McCrory Pension Plan, or made
arrangements satisfactory to the PBGC for the collection of such contributions;
provided, further, however, that the PBGC shall not file an application with a
United States District Court seeking involuntary termination of the McCrory
Pension Plan pursuant to ERISA Section 4042(a)(4) prior to the McCrory Plan
Consummation Date if (i) all contributions required to be made to the McCrory
Pension Plan have been timely made by members of the McCrory Controlled Group,
and (ii) the composition of the McCrory Controlled Group has not changed between
the effective date of this Agreement and the McCrory Plan Consummation Date,
with the exception of those changes resulting from and described in the McCrory
Plan of Reorganization.
The following provisions of this Section 2 set forth the rights and
obligations of McCrory, Astrum and the Astrum Subsidiaries and certain
obligations of the PBGC with respect to the McCrory Pension Plan for the period
prior to the effective date of any assumption of sponsorship of such Plan by
Astrum or any of the Astrum Subsidiaries:
A. Astrum and the Astrum Subsidiaries agree to be secondarily liable for
100% of the contributions required to be made to the McCrory Pension Plan under
Code Section 412 and ERISA Section 302 during the Term. Astrum or one of the
Astrum Subsidiaries will pay or loan to the plan sponsor pursuant to Section 5
hereof, or make arrangements satisfactory to the PBGC for the collection of, any
such contributions, provided (i) an accumulated funding deficiency, as defined
under Code Section 412(a), shall have occurred with respect to such Plan, and 30
days shall have elapsed without such deficiency having been corrected, (ii) the
amount of such deficiency shall be greater than $1,000,000, (iii) the PBGC shall
have made reasonable efforts, as determined within its discretion, to perfect
its
--
<PAGE>
available lien rights under Code Section 412(n), or any successor thereto,
against all known members of the McCrory Controlled Group, and (iv) the PBGC has
made a written demand upon Astrum for payment.
B. To the extent that McCrory has failed to make full payment of
premiums, penalties and interest required to be made with respect to the McCrory
Pension Plan under ERISA Sections 4006 and 4007 during the Term, Astrum or the
Astrum Subsidiaries shall make such payments to the PBGC within 30 days of
notice that such amounts are due and owing; provided, however, that the PBGC
shall first have given Astrum and the Astrum Subsidiaries notice of any such
failure and shall first have made reasonable efforts, as determined within its
discretion, to collect such amounts from all known members of the McCrory
Controlled Group.
C. In the event of the termination of the McCrory Pension Plan during the
Term, Astrum and the Astrum Subsidiaries agree to be secondarily liable to the
PBGC for an amount equal to the difference between (i) the total amount of
Unfunded Benefit Liabilities of the McCrory Pension Plan as of the Plan's
termination date, calculated in accordance with ERISA Section 4062 and the
regulations thereunder, together with interest from the Plan termination date at
the rate described at Code Section 6601(a) and (ii) (x) in the case of a plan
amendment, the entire portion of such Plan's benefit liabilities, as such term
is defined in ERISA Section 4001(a)(16), that is attributable to any such plan
amendment that accelerates or increases such benefit liabilities, occurring
after the Astrum Plan Consummation Date, and that affects such Plan's (1)
benefit accrual formula, (2) optional forms of benefits, (3) factors used for
determining actuarial equivalence, (4) early retirement eligibility requirements
or (5) vesting schedule, or (y) in the case of a plan merger, spinoff or
transfer of assets or liabilities, the increase in such Plan's Unfunded Benefit
Liabilities that is attributable to one or more plan mergers, spinoffs or
transfers of assets and liabilities to or from the McCrory Pension Plan
occurring after the Astrum Plan Consummation Date; provided, however, that (1)
the PBGC shall have first exercised all reasonable efforts, as determined within
its discretion, to perfect its available lien rights under ERISA Section 4068
against and to collect liability under ERISA Section 4062 from, all known
members of the plan sponsor's Controlled Group, and (2) pending final resolution
of the PBGC's claims against McCrory and members of the plan sponsor's
Controlled Group, Astrum and the Astrum Subsidiaries shall, pursuant to this
Section 2C, pay to the PBGC the liability under ERISA Section 4062, and the PBGC
shall, to the extent of any such payment by Astrum or an Astrum
--
<PAGE>
Subsidiary, assign to Astrum or the relevant Astrum Subsidiary a portion of its
claim against McCrory and members of the plan sponsor's Controlled Group equal
in value to the payment made by Astrum or the Astrum Subsidiary.
3. Discontinuance of Controlled Group Relationships
-------------- -- ---------- ----- -------------
No provision of this Agreement, and no action pursuant to this
Agreement by Astrum or any of the Astrum Subsidiaries, shall cause any member of
the Astrum Controlled Group to be treated as part of the McCrory Controlled
Group, or of the Controlled Group of any entity (other than a member of the
Astrum Controlled Group) which is the plan sponsor of the McCrory Pension Plan,
as of any date which is on or after the Astrum Plan Consummation Date, for
purposes of any provision of ERISA or the Code, including without limitation,
action by Astrum or any of the Astrum Subsidiaries that causes any of them to
become the contributing sponsor or the plan sponsor maintaining the McCrory
Pension Plan, provided, however, that if Astrum or any of the Astrum
Subsidiaries becomes the plan sponsor of the McCrory Pension Plan, such party
and its Controlled Group shall be subject to any and all applicable provisions
of Titles I and IV of ERISA, including liability provisions thereof, as of the
date of assumption of plan sponsorship, notwithstanding this Section 3.
4. Lien Rights
---- ------
A. Unless and until Astrum or any of the Astrum Subsidiaries has become
the plan sponsor or contributing sponsor of the McCrory Pension Plan, the PBGC
shall have no statutory lien rights against any member of the Astrum Controlled
Group on or after the Astrum Plan Consummation Date and no lien rights shall
arise under this Agreement against any members of the Astrum Controlled Group.
The making of contributions pursuant to this Agreement by Astrum or any of the
Astrum Subsidiaries prior to transfer of sponsorship of the McCrory Pension Plan
shall not, in and of itself, cause any such contributing party to become or be
treated as the plan sponsor or contributing sponsor of the McCrory Pension Plan.
B. The parties hereto acknowledge that statutory lien rights arising
under Section 412(n) of the Code and Section 4068 may only be imposed against
the assets of the McCrory Controlled Group with respect to the McCrory Pension
Plan (i) under Code Section 412(n), in the event, and to the extent, that such
lien rights have accrued prior to the effective date of the assumption of the
sponsorship of the McCrory Pension Plan by Astrum or one
--
<PAGE>
of the Astrum Subsidiaries, and (ii) under ERISA Section 4068, in the event the
McCrory Pension Plan is terminated prior to the effective date of the assumption
of the sponsorship of the McCrory Pension Plan by Astrum or one of the Astrum
Subsidiaries.
5. Satisfaction of Contribution
Obligations; Commercially Reasonable Terms
------------ ------------ ---------- -----
A. Prior to the date on which Astrum or any of the Astrum Subsidiaries
has become the contributing sponsor or the plan sponsor of the McCrory Pension
Plan, Astrum or any one of the Astrum Subsidiaries may elect to satisfy any
obligation to make any contributions required to be made to the McCrory Pension
Plan under this Agreement by loaning the amount thereof to the plan sponsor, or
any member of the plan sponsor's Controlled Group, under circumstances requiring
the proceeds of such loan to be contributed to the McCrory Pension Plan.
B. If the McCrory Pension Plan is terminated, during or after the Term of this
Agreement, then the terms of satisfaction of liability due upon plan termination
(including interest) shall be made (i) under commercially reasonable terms
prescribed by the PBGC under ERISA (S) 4062(b)(2), to the extent such liability
exceeds 30% of the collective net worth of any liable party and its Controlled
Group, or (ii) under alternative arrangements agreed to by the PBGC under ERISA
(S) 4062(b)(3).
6. Assignment of Lien Rights
---------- -- ---- ------
If Astrum or any of the Astrum Subsidiaries becomes the plan sponsor
of the McCrory Pension Plan, the PBGC agrees that, to the extent permitted by
law, it will direct (under Code Section 412(n)(5) or any successor or similar
Code provision) such plan sponsor to perfect and enforce any lien created under
Section 412(n)(1) of the Code with respect to the McCrory Pension Plan;
provided, however, that (i) such lien shall only apply to obligations of the
McCrory Controlled Group which continue in accordance with the first sentence of
Section 2 hereof; and (ii) the PBGC will be furnished as soon as practicable
with notice of any challenge to such lien rights.
7. Transactions Involving Membership Changes
in the Astrum and McCrory Controlled Groups
-- --- ------ --- ------- ---------- ------
The PBGC, Astrum, the Astrum Subsidiaries, and each known member of the McCrory
Controlled Group shall be given no fewer than 60 days' (if practicable, but in
no event less than 30 days') notice by McCrory or Astrum, as appropriate, prior
to the consummation
--
<PAGE>
of any transaction as a result of which (i) Astrum or any of the Astrum
Subsidiaries would exit the Astrum Controlled Group, (ii) McCrory or any of the
McCrory Principal Subsidiaries would exit the McCrory Controlled Group, or (iii)
there would be a sale or other divestiture of the assets of one or more of such
entities (or of the stock or assets of any other member of the McCrory
Controlled Group to which the stock or assets of McCrory or a McCrory Principal
Subsidiary has been transferred ("McCrory Transferee")) involving 30% or more of
the assets of any one of such entity's total asset value, as determined (for
purposes of clauses (ii) and (iii) in accordance with generally accepted
accounting principles. For purposes of the preceding sentence, the rights and
obligations established by this Agreement shall not be valued as assets. Unless
notice is given to the PBGC as provided herein, the obligations under this
Agreement during the Term shall continue to apply to any of the Astrum
Subsidiaries or any of the McCrory Principal Subsidiaries leaving the Astrum and
McCrory Controlled Groups, as applicable, unless the PBGC otherwise gives its
written consent. Upon receipt of such notice, the PBGC shall determine whether
or not the proposed transaction would result in its possible long-run loss
reasonably being expected to increase unreasonably, in a manner consistent with
its prevailing practice. The PBGC will complete its analysis within 30 days of
receipt of such notice, provided that Astrum and the Astrum Subsidiaries, or
McCrory and the McCrory Principal Subsidiaries, as the case may be, comply with
reasonable information requests. Unless the PBGC determines, in a manner
consistent with its prevailing practice and by the expiration of such period or
within 30 days of the date on which all such information has been provided in
response to its requests, that the transaction would reasonably be expected to
increase its long-run loss unreasonably, the obligations of such entity to the
PBGC under this Agreement shall cease to apply to the entity leaving the Astrum,
or McCrory, Controlled Group, as applicable. The PBGC shall provide written
notice of any such determination within 7 days of the period referenced in the
preceding sentence under this Section to Astrum and the Astrum Subsidiaries, or
to McCrory and the McCrory Principal Subsidiaries, as applicable.
Notwithstanding any other provision of this Agreement, the obligations imposed
on McCrory and the McCrory Principal Subsidiaries (and any McCrory Transferee)
under this Section 7 shall be inapplicable unless the acquiror of the stock or
transferee of the assets of the corporation exiting the Controlled Group bears a
relationship to the transferor which is a relationship specified in Code Section
267(b), taking into account the application of Code Section 267(c).
8. Effective Date
--------- ----
--
<PAGE>
This Agreement shall be effective immediately upon the later of (i)
delivery of fully executed counterparts to all parties in the manner provided in
Section 13 hereof, and (2) the issuance of an order by the Bankruptcy Court in
the McCrory Chapter 11 Case approving this Agreement.
9. Term of Agreement; Survival of Certain Astrum Obligations; Involuntary
-----------
Termination
-----------
A. Subject to Section 9B hereof, this Agreement shall expire on the date which
is the earlier to occur of (i) the effective date on which sponsorship of the
McCrory Pension Plan has been assumed by Astrum or any of the Astrum
Subsidiaries, or (ii) the later to occur of (I) the end of McCrory's first
complete fiscal year which ends more than three years from the McCrory Plan
Consummation Date or (II) the first date on which the ratio of McCrory's
consolidated earnings before interest and taxes for the three consecutive fiscal
years immediately preceding the date of determination, to consolidated total
interest expense for each of such years, equals or exceeds 2.5 to 1.0; provided
that (1) McCrory has then satisfied all funding requirements applicable to
McCrory under Code Section 412 with respect to the McCrory Pension Plan and (2)
all loans from Astrum or any of the Astrum Subsidiaries with respect to the
McCrory Pension Plan shall have been repaid or otherwise extinguished (it being
understood that all loans made prior to the date hereof from Astrum, any of the
Astrum Subsidiaries or any member of the Astrum Controlled Group with respect to
the McCrory Pension Plan are extinguished). Such term shall not be extended
thereafter without the written consent of each party which would be subject to
continuing obligations as a result of the extension. If fewer than all required
parties consent to an extension, the extension shall be effective only as to
those parties whose consent has been provided.
B. The obligations imposed and the rights conferred under Sections 2,
3, 4, 5, 6, 9B, 10, 11, 14 and 15 hereof shall survive the termination of this
Agreement.
C. The PBGC agrees that it shall not consider the expiration of this
Agreement in any determination involving an involuntary termination of the
McCrory Pension Plan under ERISA Section 4042(a)(4).
10. Remedies of PBGC
-------- -- ----
A. Provided Astrum and the Astrum Subsidiaries have complied with
their obligations under this Agreement, then unless
--
<PAGE>
and until Astrum or one of the Astrum Subsidiaries has assumed sponsorship of
the McCrory Pension Plan, this Agreement sets forth the exclusive remedies of
the PBGC against the members of the Astrum Controlled Group. Unless Astrum or
one of the Astrum Subsidiaries has assumed sponsorship of the McCrory Pension
Plan, the PBGC's remedies against Astrum and the Astrum Subsidiaries shall not
be enlarged or diminished by any law which is enacted after the date of this
Agreement. Without any limitation on the rights conferred under the first two
sentences of this Section 10, if any such law is enacted, Astrum and the Astrum
Subsidiaries agree not to assert the benefits of any provision of such law which
diminishes the rights of the PBGC from its rights as they exist hereunder on the
effective date of this Agreement, and the PBGC agrees not to assert the benefits
of any provision of such law which enlarges the rights of the PBGC from its
rights as they exist hereunder on the effective date of this Agreement. This
Agreement sets forth the exclusive remedies of the PBGC against the members of
the McCrory Controlled Group following the date the sponsorship of the McCrory
Pension Plan is assumed by Astrum or one of the Astrum Subsidiaries and the
PBGC's remedies shall not be enlarged or diminished with respect thereto by any
law which is enacted after the date of this Agreement, to the extent such law
would result in the imposition of any obligation or liability on members of the
McCrory Controlled Group following the assumption of the McCrory Pension Plan by
Astrum or one of the Astrum Subsidiaries which would not have been imposed under
the law as it exists on the date of this Agreement. Each member of the McCrory
Controlled Group agrees not to assert the benefits of any provisions of such law
which diminishes the rights of the PBGC with respect to the foregoing from its
rights as they exist hereunder on the effective date of this Agreement, and the
PBGC agrees not to assert the benefits of any such law which enlarges the rights
of the PBGC as they exist hereunder on the effective date of this Agreement.
B. Section 10A hereof shall not limit (i) the PBGC's rights against
McCrory or any member of the McCrory Controlled Group during the period McCrory
or any member of the McCrory Controlled Group acts as the plan sponsor of the
McCrory Pension Plan, (ii) except with respect to the rights of Astrum and the
Astrum Subsidiaries conferred under provisions which survive the termination of
this Agreement, the PBGC's rights against Astrum, the Astrum Subsidiaries or any
member of their respective Controlled Groups, after the date on which Astrum or
any of the Astrum Subsidiaries has assumed sponsorship of the McCrory Pension
Plan, (iii) any party's liability under Section 4069 of ERISA, subject to and
limited by Section 10C and Section 15 hereof, (iv) any party's liability for
premiums under Sections
--
<PAGE>
4006 and 4007 of ERISA, (v) any party's fiduciary liability under Title I or IV
of ERISA, or (vi) the applicability to any party of the provisions of Code
Section 412.
C. In the event that the McCrory Pension Plan terminates within five
years of sponsorship thereof being transferred to Astrum or one of the Astrum
Subsidiaries pursuant to the terms of this Agreement, no party to such transfer
shall be deemed to have as a principal purpose in effecting such transfer the
evasion of liability under Section 4069 of ERISA or any successor provision
thereto.
11. Limitation on Astrum Liability
---------- -- ------ ---------
No member of the Astrum Controlled Group shall have any liability to
the PBGC, or to any other party, entity or person, with respect to any successor
pension plan to the McCrory Pension Plan which is or may be adopted or, except
as set forth in the Schenley Final Settlement Agreement, with respect to any
other employee benefit plan, compensation arrangement or payroll practice, at
any time maintained or contributed to by any member of the McCrory Controlled
Group, whether or not such plan, arrangement or practice is covered by ERISA.
12. Actuarial & Financial Information
--------- - --------- -----------
A. During the Term, McCrory shall provide to the PBGC and, with
respect to the information described in subparagraphs (i) and (ii), to Astrum,
(i) copies of all actuarial plan valuations with respect to the McCrory Pension
Plan within ten days after McCrory's receipt thereof, (ii) copies of all IRS
Forms 5500 with respect to the McCrory Pension Plan within ten days after the
filing thereof with the Internal Revenue Service, and (iii) copies of all
information filed by McCrory with the Securities Exchange Commission within ten
days after the filing thereof with the Securities Exchange Commission. The
provision of such information may be accomplished by electronic transmission.
Nothing in this Agreement shall limit the obligations of McCrory and the McCrory
Controlled Group under Code Section 412 or ERISA Sections 4010 or 4043 or the
regulations thereunder, unless the same information has previously been provided
pursuant to the requirements of this Section 12A.
B. Unless such information has previously been provided pursuant to
Section 12A hereof, McCrory shall provide to Astrum a copy of each notice
required to be filed during the term of this Agreement pursuant to Code Section
412(n) or ERISA
--
<PAGE>
Sections 4010 or 4043 not later than the time such notices are required to be
provided to the PBGC.
13. Bankruptcy Approval and Disclosure
---------- -------- --- ----------
McCrory shall seek Bankruptcy Court approval of this Agreement within
10 business days of the execution of this Agreement. McCrory agrees that, in the
event the McCrory Plan of Reorganization is not amended to incorporate the terms
of this Agreement, any order confirming the McCrory Plan of Reorganization shall
expressly provide for the incorporation of this Agreement into the McCrory Plan
of Reorganization, and shall further provide that this Agreement supersedes any
language in the McCrory Plan of Reorganization relating to the McCrory Pension
Plan and the claims of the PBGC, including, but not limited to, Sections 5.03,
6.09, 6.10, 9.03, 12.01, 15.01, 17.01, and 17.08 thereof.
14. Representations and Warranties
--------------- --- ----------
The parties represent and warrant to each other (i) that they have
been fully informed and have full knowledge of the terms, conditions and effects
of this Agreement; (ii) that they have been represented by legal counsel of
their choice throughout all negotiations preceding their execution of this
Agreement and have received the advice of their attorneys in entering into this
Agreement; (iii) that they, either personally or through independently retained
attorneys, have fully investigated to their satisfaction all facts surrounding
the controversies and disputes compromised by this Agreement and are fully
satisfied with the terms and effects of this Agreement; (iv) that no promise or
inducement has been offered or made to any of them except as expressly stated in
this Agreement, and that this Agreement is executed without reliance on any
statement or representation by anyone other than the representations expressed
in this Agreement; (v) that all parties (including the PBGC and in the case of
McCrory, subject to Bankruptcy Court approval) have full authority to enter into
this Agreement and that it constitutes a legal, valid, and binding obligation
enforceable against each such party in accordance with its terms. Each party
recognizes and acknowledges that every other party has relied on each of the
foregoing warranties and representations in entering into this Agreement and
that the representations and warranties shall survive the execution of the
Agreement.
15. McCrory's Plan of Reorganization
--------- ---- -- --------------
Provided that McCrory has made all required
--
<PAGE>
contributions to the McCrory Pension Plan and paid all PBGC premiums with
respect thereto; and that the McCrory Pension Plan has not terminated, the PBGC
agrees that (i) it will not file any objection to the confirmation of the
McCrory Plan of Reorganization, (ii) on or immediately prior to the McCrory Plan
Consummation Date, it will withdraw all claims it filed in the McCrory Chapter
11 case; and (iii) it will not at any time assert that, or seek to establish
liability under Section 4062 or 4069 of ERISA or any successor provisions
thereto on the basis that, a principal purpose of the filing of the McCrory
Chapter 11 Case or the McCrory Plan of Reorganization was the evasion of
liability under Title IV of ERISA.
16. General Provisions
------- ----------
A. This Agreement and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with the laws of the
state of New York without regard to its conflict of law rules, except to the
extent such laws are preempted by federal law. Following the McCrory Plan
Consummation Date, the United States District Courts shall have exclusive
jurisdiction over the parties hereto for purposes of enforcing the terms hereof
and resolving any disputes hereunder.
B. This Agreement constitutes the entire final agreement and
understanding with respect to the liability of the parties to the PBGC for the
McCrory Pension Plan and the other matters provided for herein, and no other
agreement or understanding exists except as expressly set forth herein. This
Agreement supersedes all previous understandings related to the subject matter
hereof, other than the Compromise and Settlement Agreement, insofar as it sets
forth the rights and obligations of Astrum and McCrory and the members of each
of their respective Controlled Groups, and the Escrow Agreements. The parties
hereto agree that as among Astrum, the Astrum Subsidiaries and McCrory, except
with respect to the provisions hereof delineating the circumstances under which
members of the Astrum Controlled Group shall be secondarily liable for certain
liabilities relating to the McCrory Pension Plan (the "Secondary Liability
Provisions", nothing in this Agreement is intended to modify the terms and
conditions of the Compromise and Settlement Agreement and in the event and to
the extent that the terms and conditions set forth herein, other than the
Secondary Liability Provisions, conflict with those set forth in the Compromise
and Settlement Agreement, the Compromise and Settlement Agreement shall govern.
Nothing in Section 6 of the Compromise and Settlement Agreement shall be
construed to modify, amend, or otherwise alter any party's liability to the PBGC
under the terms of this Agreement or ERISA.
--
<PAGE>
C. This Agreement shall not be modified or amended, except by written
instrument signed by the parties hereto.
D. McCrory agrees to take all reasonable steps to insure that the
McCrory Pension Plan and its related trust continue to meet the applicable
requirements for qualification and exemption from taxation under Sections 401(a)
and 501(a) of the Code, and to obtain a current favorable IRS determination
letter.
E. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be given by personal service, by
delivering the same to a recognized express delivery service or by depositing
the same in the United States certified mail, returned receipt requested,
postage prepaid, addressed as follows:
To Samsonite Corporation:
D. Michael Clayton, Esq.
General Counsel
Samsonite Corporation
11200 East 45th Avenue
Denver, CO 80239
with a copy to:
Myron Trepper, Esq.
Willkie Farr & Gallagher
153 E. 53rd Street
New York, NY 10022-4677
To Culligan Water Technologies, Inc.:
General Counsel
Culligan Water Technologies, Inc.
One Culligan Parkway
Northbrook, Illinois 60062
with a copy to:
Myron Trepper, Esq.
Willkie Farr & Gallagher
153 E. 53rd Street
New York, NY 10022-4677
--
<PAGE>
To McGregor Corporation:
General Counsel
McGregor Corporation
Seventeenth Floor
1330 Avenue of the Americas
New York, NY 10019
with a copy to:
Myron Trepper, Esq.
Willkie Farr & Gallagher
153 E. 53rd Street
New York, NY 10022-4677
To the PBGC:
Office of the General Counsel
Pension Benefit Guaranty Corporation
Suite 340
1200 K Street, N.W.
Washington, DC 20005-4026
with a copy to:
Corporate Finance and Negotiations Department
Pension Benefit Guaranty Corporation
Suite 270
1200 K Street, N.W.
Washington, DC 20005-4026
To McCrory or any of the McCrory Principal Subsidiaries:
McCrory Corporation
Attn: Paul Weiner
667 Madison Avenue
12th Floor
New York, NY 10021
with a copy to:
Brad Eric Scheler, Esq. and
Donald P. Carleen, Esq.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
--
<PAGE>
or to such other address as any party hereto may designate to the other. Each
party shall use its best efforts to confirm receipt of any notice from the
other.
F. The failure of any party to this Agreement to enforce at any time
any of the provisions of this Agreement or to exercise any option under this
Agreement shall in no way be construed to be a waiver of such provision or
option, and shall in no way affect the validity of this Agreement or the right
of any party to enforce each and every one of its provisions or options. Any
remedies hereunder for breach of this Agreement or default in any party's
obligations hereunder are cumulative, and the exercise of one shall not be
deemed to be a waiver of the right to exercise any other under this Agreement or
otherwise.
G. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
or provisions of this Agreement, which shall remain in full force and effect.
H. This Agreement shall inure to the benefit of, and may be enforced
solely by, and be enforceable against, the parties hereto, and, in each case,
their respective successors and permitted assigns, including any purchaser of
substantially all the assets of McCrory or any of the McCrory Principal
Subsidiaries, Astrum or any of the Astrum Subsidiaries, and the members of each
of their respective Controlled Groups and any trustee succeeding to the rights
of any of the foregoing parties pursuant to Chapter 11 of the Bankruptcy Code or
pursuant to the conversion of any Chapter 11 case to a case under Chapter 7 of
the Bankruptcy Code.
I. The parties agree to execute such further agreements and other
documents as may be necessary to effectuate this Agreement.
J. This Agreement may be executed in any number of identical
counterparts, each of which shall be an original as against the party who signed
it, and all of which shall constitute one and the same instrument. No party to
this Agreement shall be bound by it until a counterpart has been executed by
each party hereto.
K. The parties shall each bear their own costs, expenses and
professional fees incurred in connection with the preparation and negotiation of
this Agreement and in the performance of each party's respective obligations
hereunder.
--
<PAGE>
L. Nothing contained herein shall cause any claim of the PBGC to be
or become a secured or priority claim against McCrory solely by reason of
McCrory's execution and delivery of this Agreement and nothing contained herein
shall limit or otherwise affect the PBGC's right to assert priority claims
against McCrory in any proceeding under the Federal Bankruptcy Law.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the day and year first written above.
PENSION BENEFIT GUARANTY CORPORATION
By: /s/ Authorized Person
---------------------------------
SAMSONITE CORPORATION
By: /s/ D. Michael Clayton
---------------------------------
CULLIGAN WATER TECHNOLOGIES, INC.
By: /s/ Authorized Person
---------------------------------
CULLIGAN INTERNATIONAL COMPANY
By: /s/ Authorized Person
---------------------------------
McGREGOR CORPORATION
By: /s/ D. Michael Clayton
---------------------------------
--
<PAGE>
McCRORY CORPORATION
By: /s/ Paul Weiner
---------------------------------
J.J. NEWBERRY CO.
By: /s/ Paul Weiner
---------------------------------
NACK REALTY COMPANY
By: /s/ Paul Weiner
---------------------------------
KRESS-NEW PROVIDENCE, INC.
By: /s/ Paul Weiner
---------------------------------
G.C. MURPHY COMPANY
By: /s/ Paul Weiner
---------------------------------
--
<PAGE>
EXHIBIT 10.6
------------
PURCHASE AGREEMENT
------------------
THIS PURCHASE AGREEMENT, dated as of June 13, 1996, by and between, on
the one hand, SAMSONITE CORPORATION ("Purchaser"), a Delaware corporation having
an address at 11200 East 45th Avenue, Denver, Colorado 80239, and, on the other
hand, ARTEMIS AMERICA PARTNERSHIP and APOLLO INVESTMENT FUND, L.P. (together,
"Apollo," and together with Purchaser, the "Parties"), having an address at 1301
Avenue of the Americas, New York, New York 10019.
RECITALS
--------
WHEREAS, pursuant to an Indenture dated as of July 1, 1987 (the
"Indenture"), E-II Holdings Inc. ("E-II"), the predecessor in interest to
Purchaser, issued 12.85% Senior Subordinated Notes due 1997, in the original
principal amount of $750,000,000 (the "Old Notes").
WHEREAS, on September 1, 1990, E-II defaulted on a semi-annual payment
of interest due under the Indenture, and thereafter E-II failed to make any
other payments of interest under the Indenture or to cure such defaults.
WHEREAS, the Indenture provided for the payment of interest on overdue
installments of interest, to the extent permitted by law.
WHEREAS, on July 15, 1992 (the "Consent Date"), E-II consented to the
commencement of a bankruptcy case under chapter 11 of title 11 of the United
States Code (the "Bankruptcy Code).
WHEREAS, E-II proposed its Second Amended Plan of Reorganization,
dated February 17, 1993 (the "Plan"), which provided that, inter alia, on or
----- ----
after the Effective Date of the Plan (as defined therein), each holder of Old
Notes (except for E-II and its affiliates) would receive, on account of the
principal, interest and interest on overdue interest due and owing on such Old
Notes as of the Consent Date, certain distributions of cash and new securities
issued by reorganized E-II.
WHEREAS, immediately prior to the hearing scheduled to consider
confirmation of the Plan, certain subordinated creditors of E-II objected to the
Plan to the extent it called for a distribution to be made to holders of Senior
Notes on account of compound interest.
WHEREAS, Harris Trust and Savings Bank, the indenture trustee under
the Indenture (the "Indenture Trustee"), opposed this objection to the Plan.
WHEREAS, by order of the Bankruptcy Court for the Southern District of
New York, dated May 25, 1993, the Plan, as
1
<PAGE>
modified, was confirmed without resolving the dispute over compound interest,
resolution of which dispute was reserved for a later day.
WHEREAS, on June 8, 1993 (the "Effective Date"), the Plan was
consummated and distributions commenced to holders of the Old Notes.
WHEREAS, as of the Effective Date of the Plan, $526,998,000.00 in
principal amount of Old Notes were held by parties other than E-II and its
affiliates, with Apollo (or its predecessors) holding Old Notes with a principal
face amount of $128,600,000.00.
WHEREAS, except for the right, if any, to receive compound interest,
Apollo has received the full amount of distributions it is entitled to receive
on account of its Old Notes.
WHEREAS, Purchaser, as the successor in interest to E-II, is
responsible for payment of the compound interest due and owing to the holders of
Old Notes as of the Consent Date, in the event it is determined by final order
that the holders of Old Notes are entitled to receive such interest.
WHEREAS, as of the date hereof, the Bankruptcy Court has not issued a
ruling on the compound interest dispute.
WHEREAS, Purchaser proposes to purchase, and Apollo proposes to sell,
any and all rights, claims and interests, if any, Apollo may have to receive
compound interest on account of its holdings of Old Notes, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:
1. COMPOUND INTEREST
-----------------
"Compound Interest" shall mean: any and all interest on overdue and
unpaid interest on the Old Notes, determined as of the Consent Date and pursuant
to the Indenture, that would be payable to holders of Old Notes as of the
Effective Date (except for E-II and its affiliates), in the event it is
determined by final order that the holders of Old Notes are entitled to receive
such compound interest. For the purposes of this Purchase Agreement, Compound
Interest shall be deemed to be $16,400,000.00.
2
<PAGE>
2. PURCHASE AND SALE
-----------------
Apollo agrees to sell and convey to Purchaser and Purchaser agrees to
purchase from Apollo, for the Purchase Price (as defined below) and upon the
terms and conditions herein set forth, the following: (i) all remaining rights,
claims and interests, if any, Apollo may have on account of or arising from its
Old Notes held as of the Effective Date, which Old Notes were tendered to the
Indenture Trustee in return for distributions under the Plan, including any
right to the Compound Interest; and (ii) any distributions made or payable to
Apollo on account of such rights, claims or interests, including any
distributions under the Plan on account of its Old Notes (collectively, the
"Property").
3. CONSTRUCTIVE TRUST
------------------
Apollo agrees that, in the event Apollo receives Property, value or
other consideration, in any form, on or after the date hereof, on account of or
arising from Apollo's rights, claims or interests in the Old Notes, such
Property, value or other consideration shall be segregated and deemed to be held
in constructive trust for the benefit of Purchaser, and Apollo shall notify
Purchaser by facsimile transmission and overnight mail immediately after receipt
of such Property of the amount and nature of the Property received, and as soon
as practicable, transfer such Property, value or other consideration to
Purchaser.
4. COOPERATION
-----------
Apollo agrees to use its reasonable best efforts, and to otherwise
provide Purchaser with reasonable cooperation and assistance, to ensure that
Purchaser receives the benefits of this Purchase Agreement, including any
reasonable assistance required of Apollo to permit Purchaser at Purchaser's
expense to re-register Apollo's Old Notes into the name of Purchaser on the
securities register maintained by the Indenture Trustee.
5. PURCHASE PRICE
--------------
(a) The Purchase Price for the sale of Apollo's Property shall be
calculated as the dollar amount equal to: (i) five percent (5%) multiplied by
(ii) the proportion of (x) the principal face amount of Old Notes held by the
Apollo as of the Effective Date to (y) the aggregate principal face amount of
all Old Notes outstanding as of the Effective Date (excluding Old Notes held by
E-II or its affiliates), multiplied by (iii) the Compound Interest.
(b) Apollo. The Purchase Price payable to Apollo hereunder is
-------
$200,099.43.
(c) The Purchase Price shall be paid no later than ten
3
<PAGE>
(10) business days following the date on which this Purchase Agreement is last
executed below.
6. SUCCESSORS AND ASSIGNS
----------------------
This Purchase Agreement shall be binding upon and shall inure to the
benefit of all successors, assigns, and heirs of the Parties, including without
limitation any chapter 7, chapter 11 or equivalent trustee in bankruptcy.
7. AUTHORITY
---------
Each Party hereby represents and warrants that he or it enters into
this Purchase Agreement voluntarily and without coercion or duress, that he or
it has been fully advised and represented by counsel in connection with this
matter, and that he or it has the power and authority to enter into this
Purchase Agreement and has not heretofore assigned or transferred or purported
to assign or transfer, in whole or in part, to any other person, corporation or
any other entity, in any manner, including but not limited to assignment or
transfer by subrogation or by operation of law, the Property sold herein.
8. GOVERNING LAW
-------------
This Purchase Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to its conflict
of law principles and rules.
9. COUNTERPARTS
------------
This Purchase Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute a single agreement.
IN WITNESS WHEREOF, the Parties have caused this Purchase Agreement to
be duly executed.
SAMSONITE CORPORATION
By: /s/ Thomas R. Sandler
--------------------------
Thomas R. Sandler
Chief Financial Officer and
Treasurer
11200 East 45th Avenue
Denver, Colorado 80239
(313) 373-6100
4
<PAGE>
APOLLO INVESTMENT FUND, L.P.
By:APOLLO ADVISORS, L.P.
-----------------------
its General Partner
By:APOLLO CAPITAL MANAGEMENT, INC.
---------------------------------
its General Partner
By: /s/ Robert H. Falk
--------------------------------
Robert H. Falk
Vice President
1301 Avenue of the Americas
New York, New York 10019
(212) 261-4000
[CONTINUED ON NEXT PAGE]
5
<PAGE>
LION ADVISORS, L.P., as as attorney-in-
fact and representative for ARTEMIS
AMERICA PARTNERSHIP (successor to
Artemis Finance SNC)
By:LION CAPITAL MANAGEMENT, INC.
-------------------------------
its General Partner
By: /s/ Robert H. Falk
-------------------------------
Robert H. Falk
Vice President
1301 Avenue of the Americas
New York, New York 10019
(212) 261-4000
6
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES OF SAMSONITE CORPORATION (Delaware)
Samsonite Europe N.V. Belgium
Samsonite S.A. France
Samsonite Limited United Kingdom
Samsonite B.V. Netherlands
Samsonite Ges.m.b.H. Austria
Samsonite GmbH Germany
Samsonite-Hungaria Luggage Ltd. Hungary
Samsonite Finanziaria S.r.l. Italy
Samsonite Italia S.r.l. Italy
Saturn & Saturn S.r.l. Italy
Bogey S.r.l. Italy
Samsonite Espana S.A. Spain
Samsonite AB (Aktiebolag) Sweden
Samsonite A/S Denmark
Samsonite AG Switzerland
Samsonite Mexico, S.A. de C.V. Mexico
Samsonite Comercio E Participacoes Ltda. Brazil
Samsonite Industrial E Comercial Ltda. Brazil
Samsonite Canada Inc. Canada
Samson S.A. de C.V. Mexico
Samsonite Mauritius Limited Mauritius
Samsonite India Private Limited India
Samsonite Singapore Pte Ltd Singapore
Samsonite Asia Services Limited Hong Kong
A.T. Retail, Inc. Indiana
Samsonite Outlet Stores, Inc. Colorado
Samsonite Pacific Ltd. Colorado
Direct Marketing Ventures, Inc. Colorado
Legacy Luggage Inc. Colorado
Samsonite Service Corporation Colorado
Samsonite Financial Co. Delaware
Samsonite Realty Inc. Delaware
Global Licensing Company Colorado
<PAGE>
Astrum R.E. Corp. Delaware
Astrum Food Specialties Company, Inc. Delaware
Astrum Management Corp. Delaware
Astrum Service Corp. Delaware
KBBL Inc. Delaware
LA 30, Inc. Delaware
Sandino Telecasters, Inc. Delaware
McGregor Corporation New York
Five Hundred Fashion International, Inc. Delaware
FHF Apparel Corp. Delaware
Hortex Incorporated Texas
BTK Sales Co. Texas
Gilead Manufacturing Corporation Rhode Island
Jody Apparel, Inc. New York
WMI, Inc. Delaware
Wonderknit Corporation New York
McGregor China Corp. Delaware
Bernhard Altmann (CA) Ltd. Canada
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED JULY 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 9,367
<SECURITIES> 0
<RECEIVABLES> 96,569
<ALLOWANCES> 8,211
<INVENTORY> 129,173
<CURRENT-ASSETS> 306,675
<PP&E> 185,895
<DEPRECIATION> 49,041
<TOTAL-ASSETS> 608,995
<CURRENT-LIABILITIES> 184,858
<BONDS> 295,255
<COMMON> 160
0
0
<OTHER-SE> 6,115
<TOTAL-LIABILITY-AND-EQUITY> 608,995
<SALES> 349,307
<TOTAL-REVENUES> 349,307
<CGS> 211,950
<TOTAL-COSTS> 211,950
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 469
<INTEREST-EXPENSE> 18,034
<INCOME-PRETAX> (12,142)
<INCOME-TAX> 4,400
<INCOME-CONTINUING> (16,985)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,985)
<EPS-PRIMARY> (1.07)
<EPS-DILUTED> (1.07)
</TABLE>
