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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8K
Current Report
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 24, 1998 (March 23,
1998)
SAMSONITE CORPORATION
(Exact name of registrant as specified in its charter)
Commission file number 0-23214
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<S> <C>
DELAWARE 36-3511556
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11200 East 45th Avenue 80239
Denver, Colorado (Zip Code)
(Address of principal executive offices)
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Registrant's telephone number, including area code: (303) 373-2000
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ITEM 5. OTHER EVENTS
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On March 23, 1998, the Company issued press releases filed herewith as
Exhibits 99.1, 99.2 and 99.3. Such press releases are incorporated herein
by reference.
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements of Business Acquired.
Not applicable
(b) Pro Forma Financial Information.
Not applicable
(c) Exhibits.
Exhibit Number Description
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99.1 Press Release issued by Samsonite Corporation on March 23, 1998.
99.2 Press Release issued by Samsonite Corporation on March 23, 1998.
99.3 Press Release issued by Samsonite Corporation on March 23, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 24, 1998 Samsonite Corporation
by: /s/ Thomas R. Sandler
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Name: Thomas R. Sandler
Title:Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit Number Description
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99.1 Press Release issued by Samsonite Corporation on March 23, 1998.
99.2 Press Release issued by Samsonite Corporation on March 23, 1998.
99.3 Press Release issued by Samsonite Corporation on March 23, 1998.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Richard Wiley
Samsonite Corporation
(303) 373-6373
SAMSONITE REPORTS FOURTH QUARTER AND FISCAL 1998 FINANCIAL RESULTS
Denver, March 23, 1998 - Samsonite Corporation (Nasdaq: SAMC) today
announced financial results for the fourth quarter and the fiscal year ended
January 31, 1998. Revenues for the fourth quarter and the fiscal year were
$176.7 million and $736.9 million, respectively. Income before extraordinary
item for the fourth quarter and fiscal year was $4.6 million and $56.9 million,
respectively. Operating results for the quarter include the negative effect of
$3.6 million ($0.11 per share) from the restructuring charge announced in
January of this year relating to the elimination of 180 positions in the
Company's Mexico City operations, severance and other costs attributable to a
number of management changes and the elimination of 20 management positions in
the Company's U.S. Wholesale Operations, the negative effect of $1.7 million of
unfavorable production variances ($0.05 per share) relating primarily to the
Company's operations which were the subject of the restructuring charge, and the
positive effect of an unusually low tax rate ($0.07 per share). Operating
results for the fiscal year include the positive effect of $25.6 million ($0.97
per share) from the favorable resolution of certain contingent liabilities, the
negative effect of $3.8 million ($0.11 per share) primarily from the
restructuring charge discussed above, the negative effect of $4.1 million
relating to unfavorable
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production variances ($0.12 per share) incurred in the Company's third and
fourth quarters and the positive effect of $3.3 million ($0.15 per share) from
an unusually low tax rate recorded in fiscal 1998.
For the fourth quarter ended January 31, 1998, the Company reported
revenues of $176.7 million, net income of $4.6 million and earnings per share of
$0.22 assuming dilution. Revenues of $176.7 million during the quarter compare
with $188.0 million during the fourth quarter of the prior year. Excluding the
depressing effect of currency translation, revenues increased $0.2 million over
the fourth quarter of the prior year. Gross profit margins during the fourth
quarter increased to 42.0% of revenues, versus 39.4% of revenues during the
fourth quarter of the prior year. Gross margins were adversely affected by the
unfavorable production variances discussed above. Fourth quarter EBIT (earnings
before interest and taxes) (before the restructuring charge and expenses and
unfavorable production variances discussed previously) was $17.3 versus $14.9
million for the same period in the prior year, an increase of 16.1% over the
fourth quarter of the prior year.
For the year ended January 31, 1998, the Company reported revenues of
$736.9 million, income before extraordinary item of $56.9 million and earnings
per share of $2.70 assuming dilution. Revenues of $736.9 million for the year
compare with $741.1 million during the prior year. Excluding the depressing
effects of currency translation, revenues increased 5.2% or $38.3 million over
the prior year. Gross profit margins for the year increased to 42.4% of
revenues, versus 39.4% of revenues for the prior year. Gross margins were
adversely affected by the production variances during the third and fourth
quarters. EBIT for the year (before the restructuring charge and expenses and
the
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unfavorable production variances discussed previously) was $84.0 versus $59.3
million in the prior year, an increase of 41.7% over the prior year. Prior year
figures in all instances exclude the effects of amortization of reorganization
value in excess of identifiable assets.
EBITDA (earnings before interest expense, taxes, depreciation and
amortization) (excluding restructuring charges and the unfavorable production
variances), a measure of core business cash flow, was $24.3 million for the
fourth quarter of fiscal 1998, an 8.0% increase compared with $22.5 million in
the prior year. EBITDA for the fiscal year was $112.6 million compared to $90.3
million in fiscal 1997, a 24.7% increase.
Luc Van Nevel, President and Chief Operating Officer of Samsonite, stated:
"Clearly, the Company's financial performance year over year has improved
significantly. Sales on a local currency basis increased 5.2%, while EBIT and
EBITDA (excluding restructuring charges and expenses and unfavorable production
variances) increased 41.7% and 24.7%, respectively, over the prior year.
However, we were disappointed not to meet the aggressive financial goals that
were set for the Company earlier this year. While our European and U.S. Retail
Operations both turned in strong results throughout the year, our U.S. Wholesale
Operations continue to perform sub-optimally. Even with sub-optimal
performance, operating income in our U.S. Wholesale Operations exceeded prior
years results."
"Our European Business continued its strong performance and finished the
year with sales and operating income increasing, on a local currency basis,
13.8% and 47.3%, respectively, over prior year."
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"The International Business, which now encompasses our wholly-owned
operations in Asia, Middle East and Latin America, as well as our joint ventures
in India, Brazil, China, Korea and Singapore, successfully completed its
transition from a U.S. export driven business to a local manufacturer and
distributor in its key markets."
"Our U.S. Retail Business also continued to produce strong financial results
with sales for the year reaching a record $108.9 million with same store sales
growth of 15.5%. Operating income reached record levels in this segment."
"In the U.S. Wholesale Business, sales were down 7.4% versus prior year
while operating income was up in excess of 80% over the prior year's results.
Despite the improved profitability, the performance of this segment is below
expectations. Although our new products have been well received by our
customers, the large number of new products introduced and the aggressive
pursuit of sales growth in the third quarter combined with price increases taken
earlier in fiscal 1998 (which negatively impacted retailer sell-through) caused
us to grant additional promotional allowances and markdowns to our wholesale
customers which limited our sales growth opportunity and reduced our
profitability in this segment and left us with excess inventory at year-end."
"We are moving aggressively to correct the problems in our U.S. Wholesale
Business. First, excess promotional allowances and sales programs have been
eliminated to allow customer inventories to be depleted. Although this hurt
sales in the fourth quarter and will likely keep us from posting sales increases
in the U.S. Wholesale Business during the first half of fiscal 1999, it is the
right move for our business long term. Second, we have changed the senior
management in this business to insure that the same principles that have made
Samsonite successful around the world - innovative
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products, world class quality and service and marketing which leverages off the
strength of our global brand name - are rigorously applied in the U.S. Tom
Sandler, Carlo Zezza and Jorge Valls have been promoted to run our U.S. business
with the titles President of the Americas, Senior Vice President and General
Manager of U.S. Wholesale, respectively, replacing senior executives who were
previously responsible for this business. In addition, Richard Wiley, formerly
Vice President - Finance, has been promoted to Chief Financial Officer. Finally,
as we announced in January, we are restructuring our U.S. operations to further
reduce the cost structure, increase the flexibility of our manufacturing
operations and resolve production problems in our Denver hardside plant that
resulted in quality problems and production variances during fiscal 1998."
"Going forward, I am optimistic that we will be able to increase Samsonite's
local currency sales in excess of 7.5% and that we will be able to increase EBIT
and EBITDA by at least a comparable amount year over year. Our European,
International and U.S. Retail Businesses are off to a strong start, and I expect
the U.S. Wholesale Business to have positive trends year over year, beginning in
the second half of this year. With the tender offer for the remaining $53
million of our senior subordinated notes, the initiation of the previously
planned restructuring of our plant in Torhout, Belgium and the conclusion of the
Goldman Sachs process all expected to occur in our first quarter of this year,
hopefully, this quarter will mark the end of the special charges associated with
the implementation of the Samsonite game plan announced in July 1996."
Richard, Nicolosi, Chairman and CEO of the Company, stated: "The
recapitalization plan and other actions announced today to enhance stockholder
value
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represents the culmination of my two-year commitment as CEO of Samsonite. Since
I joined Samsonite in May 1996, much has been accomplished to significantly
improve the Company's business and performance worldwide. Although these
improvements have continued in fiscal 1998 as indicated by the impressive year-
over-year comparisons referred to above, I am disappointed that we did not fully
meet the aggressive financial goals we expected to achieve this year.
Nevertheless, there is no doubt in my mind that Luc Van Nevel and his management
team are the right people and have the right experience to fix the continuing
problems in our U.S. Wholesale business and to execute the next phase of
Samsonite's game plan in fiscal 1999 and beyond. I anticipate that Luc will move
up to the position of CEO in May of this year when my contractual commitment
expires. I plan to continue as Chairman of Samsonite's Board, and my role going
forward will be to support and guide the efforts of Luc and his management
team."
In addition, Samsonite announced today that a complaint has been filed in
Colorado State Court, County of Denver against the Company, certain directors of
the Company and Apollo Advisors, L.P. The purported class action, which seeks
unspecified damages, alleges, among other things, that certain statements and
earnings forecasts made by management in the last 18 months were misleading
and/or misrepresented material facts and that the Company is also liable for
certain allegedly misleading statements contained in various analysts' reports.
The Company believes that the complaint is without merit and intends to contest
it vigorously.
Samsonite is one of the world's largest manufacturers and distributors of
luggage and markets its products primarily under the SAMSONITE, AMERICAN
TOURISTER and LARK brand names.
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Certain statements contained herein constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve numerous assumptions, known and unknown
risks, uncertainties and other factors which may cause actual cost savings and
future performance or achievements of the Company to be materially different
from any future estimated results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, the following: achievement of estimated cost savings while maintaining
work flow in the functional areas affected; completion of cost reductions within
an estimated time frame; completion of new product development within an
estimated time frame; general economic and business conditions including foreign
currency fluctuations; and competition.
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EXHIBIT 99.2
SAMSONITE ANNOUNCES $2.6 MILLION RESTRUCTURING CHARGE FOR EUROPEAN OPERATIONS-
EXPECTED TO SAVE $2.2 MILLION ANNUALLY
Denver, March 23, 1998 /PR Newswire/-- Samsonite Corporation (Nasdaq:SAMC)
announced today a restructuring of its Torhout, Belgium softside manufacturing
operations. The Company will incur a restructuring charge totaling approximately
$2.6 million pre-tax in its first fiscal 1999 quarter which ends April 30, 1998.
It expects annual savings of $2.2 million pre-tax from the restructuring, or
approximately $0.07 per share after taxes.
Samsonite Europe has begun negotiations with trade unions which should lead to
the elimination of approximately 111 full-time jobs at the Torhout softside
plant which will be restructured as a European "competence center" where
approximately 100 full-time jobs will be maintained for product development and
design. Samsonite said the Torhout restructuring will not affect the Oudenaarde,
Belgium hardside production facility.
Over the past 30 months, Samsonite has recorded a series of restructuring
provisions to accrue the costs of consolidating and reorganizing various
operations and realigning its management and workforce structure. Samsonite's
President and Chief Operating Officer, Luc Van Nevel, stated, "This
restructuring is in furtherance of our efforts to restructure our worldwide
operations to operate in the most cost efficient and competitive manner. The
need for this restructuring is a consequence of the high Western European labor
cost to produce softside luggage. While we regret having to take these actions,
we are very pleased to be able to maintain the Torhout plant as a competence
center which will be responsible for new softside product development and
design."
Samsonite Corporation, headquartered in Denver, Colorado with European
headquarters in Oudenaarde, Belgium, is the world's largest manufacturer and
distributor of luggage and business cases. The majority of its products are
marketed under the Samsonite, American Tourister and Lark brand names. The
Company has operations in the United States, Canada, Mexico, several European
countries, Brazil, China, India, Korea, Hong Kong, and Singapore.
Certain statements contained herein constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve numerous assumptions, known and unknown
risks, uncertainties and other factors which may cause actual estimated cost
savings and future performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, the following: achieving estimated staff reductions while maintaining
workflow and product supply at costs lower than are currently incurred; general
economic and business conditions; and competition.
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EXHIBIT 99.3
FOR IMMEDIATE RELEASE CONTACT: RICHARD WILEY
SAMSONITE CORPORATION
(303) 373-6373
SAMSONITE ANNOUNCES RECAPITALIZATION PLAN.
Denver, Colorado, March 23, 1998-Samsonite Corporation (Nasdaq: SAMC)
announced today that its Board of Directors has approved a plan to recapitalize
the Company, pursuant to which it intends to pay a special cash dividend to
stockholders of $12.50 per share (or approximately $255 million in the
aggregate).
In connection with the recapitalization plan, the Company has received
financing commitments from Bank of America and BankBoston with respect to a new
$600 million credit facility. Although the new credit facility permits the
Company to pay special cash dividends to stockholders of up to an aggregate of
$375 million (or approximately $18.00 per share) over a period of 13 months, the
Company has no present intention to pay dividends in excess of the initial
dividend of $12.50 per share. Borrowings under the new credit facility will be
used to fund payment of the initial dividend, as well as to refinance existing
indebtedness and finance related transaction costs and on-going working capital
requirements. At year-end, the Company had net indebtedness of approximately
$182 million, including approximately $53 million principal amount of Senior
Subordinated Notes.
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The Company also said that it is having discussions with third parties
concerning a possible alternative transaction which would involve the purchase
by one or more of these parties of newly issued voting stock of the Company,
representing approximately 50% of the Company's equity after giving effect to
such investment. An alternative transaction, if consummated, would permit the
Company to make cash payments to stockholders in the range of $30 per share,
with existing stockholders retaining a significant percentage of the Company's
equity. The Company said that there are currently no understandings or
agreements with any third party regarding such investment, and, accordingly, no
assurance can be given that an alternative transaction will take place.
Richard Nicolosi, CEO of Samsonite, stated: "The recapitalization plan
announced today, as well as the possible alternative transaction involving a
sponsored recapitalization, are the result of the process begun several months
ago to explore strategic alternatives designed to enhance stockholder value.
Both the recapitalization plan and the alternative transaction will enable
Samsonite stockholders to receive a significant cash distribution while at the
same time maintaining an ownership interest in the Company. We believe this can
be accomplished without hurting Samsonite's business or its ability to grow in
the future."
Consummation of the recapitalization plan and the payment of the initial
dividend of $12.50 per share is subject to a number of conditions, including the
satisfactory completion of a tender offer and consent solicitation for the
Senior Subordinated Notes (which the Company plans to launch promptly), the
closing of the new bank credit facility, and declaration of the dividend by the
Company's Board of Directors. Based on
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the Company's current estimate of earnings and profits, it is expected that a
significant portion of this dividend will be treated as a return of capital to
the extent of each U.S. person's tax basis in Samsonite common stock. Subject to
satisfaction of the conditions referred to above, it is currently anticipated
that the initial dividend of $12.50 per share will be declared in April 1998,
unless the Company reaches agreement with a new equity sponsor and determines to
proceed with a possible alternative transaction as described above. In order to
proceed with an alternative transaction, it would be necessary to, among other
things, arrange additional debt financing and obtain stockholder approval.
Samsonite is one of the world's largest manufacturers and distributors of
luggage and markets its products primarily under the SAMSONITE, AMERICAN
TOURISTER and LARK brand names.
Certain statements contained herein constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve numerous assumptions, known and unknown
risks, uncertainties and other factors which may cause future performance or
achievements of the Company to be materially different from any future estimated
results, performance or achievements expressed or implied by such forward-
looking statements.
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