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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 20, 1998 (MAY 20,
1998)
COMMISSION FILE NUMBER: 0-23214
----------------
SAMSONITE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-3511556
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NUMBER)
</TABLE>
11200 EAST 45TH AVENUE, DENVER, COLORADO 80239-3018
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(303) 373-2000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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<PAGE>
ITEM 5. OTHER EVENTS.
On May 20, 1998, Samsonite Corporation, a Delaware corporation (the
"Company"), commenced an offer to purchase up to 12,000,000 shares
(constituting approximately 59% of the shares presently outstanding) of its
common stock, $.01 par value per share (the "Common Stock"), and the
associated preferred stock purchase rights (the "Rights") (the Common Stock
and the Rights, on and after the date of their distribution, are herein
referred to as the "Shares") at $40.00 per Share, net to the seller in cash,
upon the terms and conditions set forth in the Offer to Purchase dated May 20,
1998 and in the related Letter of Transmittal (which together constitute the
"Offer"). The Company is making the Offer as part of its plan of
recapitalization described in the Offer to Purchase (the "Recapitalization").
The Recapitalization is conditioned on the Company's having obtained
sufficient financing to purchase the Shares pursuant to the Offer, to
refinance certain existing indebtedness and to pay related fees and expenses.
CERTAIN FINANCIAL INFORMATION.
The summary historical consolidated financial information of the Company and
its subsidiaries presented below has been derived from the Company's audited
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended January 31, 1998 (the "Annual Report"), which is
hereby incorporated herein by reference, and other information and data
contained therein. More comprehensive financial information is included in the
Annual Report and the financial information which follows is qualified in its
entirety by reference to such report and to all of the financial statements
and related notes contained therein. The summary unaudited consolidated pro
forma financial information set forth below gives effect to the
Recapitalization, including the purchase of Shares pursuant to the Offer,
based on certain assumptions described in the accompanying notes, and gives
effect thereto as if it had occurred on February 1, 1997, in the case of the
statement of operations and other data, and on January 31, 1998, in the case
of the balance sheet data. The summary unaudited consolidated pro forma
financial information should be read in conjunction with the summary
consolidated historical financial information and does not purport to be
indicative of the results that would actually have been obtained had the
Recapitalization been completed at the dates indicated or that may be obtained
in the future.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
--------------------------------
1997 1998
-------- --------------------
HISTORICAL PRO FORMA
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales.................................. $741,138 $736,875 $736,875
Cost of Goods Sold......................... 449,333 424,349 424,349
-------- -------- --------
Gross Profit............................... 291,805 312,526 312,526
Selling, General and Administrative
Expenses.................................. 233,761(a) 234,257 237,485(b)
Amortization of Intangible Assets(c)....... 31,837 7,101 7,101
Provision for Restructuring Operations..... 10,670 1,866 1,866
Other Income--Net(d)....................... 18,821 28,294 28,294
Interest Expense--Net(e)................... 34,251 17,344 49,244(f)
Income Tax Expense......................... 10,389 23,088 9,739(g)
Minority Interest in Earnings in
Subsidiaries.............................. (1,041) (287) (287)
-------- -------- --------
Income (Loss) from Continuing Operations... (11,323) 56,877 35,098
Income (Loss) from Operations Discontinued
and Sold, Cumulative Effect of
Change in Accounting Principles and
Extraordinary Items....................... -- (16,178) (22,354)
-------- -------- --------
Net Income (Loss).......................... $(11,323) $ 40,699 $ 12,744
======== ======== ========
Senior Preferred Stock Dividends(h)........ 22,383
--------
Net Income (Loss) Available to Common
Stockholders.............................. $ (9,639)
========
Income (Loss) per Share--Basic(h):
Continuing Operations..................... $ (.71) $ 2.81 $ 1.54
Net Income (Loss)......................... (.71) 2.01 (1.17)
Income (Loss) per Share--Assuming
Dilution(h):
Continuing Operations................... (.71) 2.70 1.40
Net Income (Loss)....................... (.71) 1.93 (1.06)
</TABLE>
(see footnotes beginning on following page)
2
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<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------------
1997 1998
-------- --------------------
HISTORICAL PRO FORMA
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C>
OTHER DATA:
EBIT(i)......................................... $ 34,358 $ 97,596 $ 97,596
Depreciation and Amortization................... 53,889 28,594 28,594
-------- -------- --------
EBITDA(j)....................................... 88,247 126,190 126,190
Items relating to Settlement of Contingent
Liabilities and Other Adjustments.............. (3,368) (13,762) (13,762)
-------- -------- --------
Adjusted EBITDA(k).............................. $ 84,879 $112,428 $112,428
======== ======== ========
Ratio of Earnings to Fixed Charges(l)........... 1.00 4.39 1.30
Capital Expenditures............................ 31,093 36,313 36,313
BALANCE SHEET DATA (AS OF END OF PERIOD):
Property, Plant and Equipment, Net.............. $143,959 $142,351 $142,351
Total Assets.................................... 592,658 610,049 630,206
Long-Term Obligations (including current
installments).................................. 290,617 179,223 518,657
Stockholders' Equity (Deficit).................. 24,998 208,886 (279,291)
</TABLE>
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(a) Selling, general and administrative expenses include $5.4 million of
expenses during the year ended January 31, 1997 for (i) consulting fees to
establish the restructuring plan ($0.8 million), (ii) the cessation of the
former chief executive officer's employment and the change in management
($4.1 million) and (iii) expenses in excess of the original provision in
fiscal 1996 for the consolidation of American Tourister manufacturing
facilities ($0.5 million).
(b) Pro forma selling, general and administrative expenses have been adjusted
to reflect a $2.8 million charge for estimated expenses associated with
the process of exploring alternatives to enhance stockholder value,
including the Recapitalization, and a $0.4 million charge for deferred
financing costs related to the Company's existing credit facility.
(c) Prior to July 14, 1995, the Company was a subsidiary of Astrum
International Corp. ("Astrum"). On July 14, 1995, Astrum merged with
Samsonite Corporation and changed its name to Samsonite Corporation.
In June 1993, Astrum completed a financial restructuring pursuant to a plan
of reorganization under Chapter 11 of the United States Bankruptcy Code.
Effective June 30, 1993 and 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-97"), 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. Since June 30, 1993, the Company's statements of operations
include amortization and depreciation related to these fresh start
adjustments. The most significant fresh start adjustment relates to
recording Reorganization Value in Excess of Identifiable Assets, which was
amortized over a three-year period which ended in June 1996. In addition,
fresh start amortization includes amortization of fresh start adjustments to
reflect the fair value of trademarks, licenses, patents and other
intangibles, which are being amortized over periods from one to forty years.
Fresh start amortization and depreciation also includes depreciation of
fresh start adjustments to reflect the fair value of property and equipment,
depreciated over their estimated useful lives ranging primarily from two to
six years.
(footnotes continue on following page)
3
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Fresh Start Amortization and Depreciation consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-----------------------
1997 1998
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
FRESH START AMORTIZATION:
Amortization of Reorganization Value in Excess of
Identifiable Assets................................. $ 22,947 $ --
Amortization of Licenses, Patents and Other.......... 4,897 3,158
Amortization of Trademarks........................... 3,079 3,026
----------- ----------
Total Fresh Start Amortization Included in
Amortization of Intangibles....................... 30,923 6,184
----------- ----------
FRESH START DEPRECIATION--PROPERTY AND EQUIPMENT:
Included in Cost of Goods Sold....................... 2,914 2,093
Included in Selling, General and Administrative
Expenses............................................ 647 461
----------- ----------
Total Fresh Start Depreciation..................... 3,561 2,554
----------- ----------
Total Fresh Start Amortization and Depreciation.... $ 34,484 $ 8,738
=========== ==========
</TABLE>
(d) Other Income--Net for fiscal 1997 and 1998 consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------
1997 1998
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Net gains from foreign currency forward delivery
contracts....................................... $ 2,829 $ 6,463
Rental income.................................... 1,987 1,633
Equity in loss of unconsolidated affiliate....... (33) (547)
Pension expense related to merged plans.......... -- (706)
Foreign currency transaction losses, net......... (211) (1,834)
Loss on disposition of fixed assets, net......... (62) (377)
Other, net....................................... (1,120) (1,247)
Favorable settlement of claims................... 3,802 2,060
Adjustment of allowances relating to previous
operations...................................... 529 5,299
Adjustment of contingent tax accruals............ -- 12,700
Collection of loans to settlement trust.......... -- 4,850
Adjustment of liability for PBGC claims.......... 11,100 --
----------- -----------
$ 18,821 $ 28,294
=========== ===========
</TABLE>
(e) Interest expense--net consists of interest expense and amortization of debt
issuance costs and premium less interest income.
(f) Pro forma interest expense gives effect to the debt financing incurred in
connection with the Recapitalization and the Offer, including the
amortization of debt issuance costs. The foregoing increases interest
expense-net by approximately $31.9 million, based on the Company's estimate
of interest rates at the time the financing for the Recapitalization is
expected to be consummated. Pro forma net interest expense consists of the
following (in millions):
<TABLE>
<S> <C>
Senior Subordinated Notes (9.25%)..................................... $32.4
New Credit Facility (7.775%).......................................... 14.3
Capital lease obligations and other foreign borrowings................ 3.9
Non-cash amortization of capitalized fees and expenses................ 1.2
Less interest income.................................................. (2.6)
-----
Net interest expense................................................ $49.2
=====
</TABLE>
(footnotes continue on following page)
4
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(g) Pro forma income tax expense reflects the tax effect of the additional
interest expense described in note (f) above and the tax effect of certain
other expenses described in note (b) above (an aggregate decrease of $13.3
million in income tax expense).
(h) Pro forma income (loss) per share data reflects the deduction of dividends
(at an estimated rate of 12.5%) and amortization of issuance costs related
to the redeemable preferred stock portion of the financing incurred in
connection with the Recapitalization and the Offer without allocating any
value to the related warrants. The value of such warrants cannot be
determined at this time and will depend on the market value of the Common
Stock based on the trading price after consummation of the
Recapitalization. Such cost will be amortized over the twelve-year term of
such redeemable preferred stock and will be deducted from net income
(loss) to determine income available to common stockholders in the
determination of net income (loss) per share.
(i) EBIT is defined as income (loss) from continuing operations plus net
interest expense and income tax expense plus minority interest plus, in
the case of pro forma EBIT, certain expenses described in note (b) above.
(j) EBITDA is defined as EBIT (as defined above) plus amortization and
depreciation.The Company believes that EBITDA provides useful information
regarding the Company's ability to service its indebtedness, but it should
not be considered in isolation or as a substitute for operating income or
cash flow from operations (in each case as determined in accordance with
generally accepted accounting principles) as an indicator of the Company's
operating performance or as a measure of the Company's liquidity. Other
companies may calculate EBITDA in a different manner than the Company.
EBITDA does not take into consideration substantial costs and cash flows
of doing business, such as interest expense, income taxes, depreciation
and amortization. EBITDA does not represent funds available for
discretionary use by the Company because those funds are required for debt
service, capital expenditures to replace fixed assets, working capital and
other commitments and contingencies. EBITDA is not an accounting term and
is not used in generally accepted accounting principles.
(k) Adjustments to EBITDA to arrive at Adjusted EBITDA include various income
and expense items included in EBIT and EBITDA which management believes
should be excluded in order to reflect recurring operating performance.
These items include (i) provisions for restructuring operations of $10,670
and $3,589 in fiscal 1997 and fiscal 1998, respectively, (ii) other income
primarily related to various items from the settlement of certain
contingent liabilities associated with previous operations, income and
expense from financing related activities, sale of assets and other
nonrecurring activities (which are reflected in the last eight line items
in note (d) above) and (iii) unfavorable production variances from the
Company's North American manufacturing operations during the second half
of fiscal 1998 totaling $4.1 million.
(l) For purposes of computing the ratio of earnings to fixed charges, fixed
charges consist of interest (including the interest component of rental
expenses), amortization of debt expense and dividends on preferred stock.
Earnings consist of earnings from continuing operations before taxes, plus
fixed charges. Earnings from continued operations before taxes include
significant nonrecurring amounts related to various items from the
settlement of certain continuing liabilities from previous operations.
CERTAIN FORECASTS.
In connection with the financing for the Recapitalization, the Company will
be providing to prospective investors certain nonpublic estimates as to the
possible future performance of the Company over a five-year period (the
"Forecasts"). The Offer to Purchase contains a summary of the Forecasts. The
Forecasts, which are as of May 15, 1998, are summarized below.
The Forecasts include an estimate quarterly performance for fiscal 1999 and
estimates of annual performance through fiscal 2003. For fiscal 1999, the
Company estimates that Adjusted EBITDA will be approximately $106 million, of
which approximately $30 million, or approximately 28%, will be from the
Company's U.S. wholesale business. The Forecasts assume that Adjusted EBITDA
from the Company's operations (excluding its U.S. wholesale business) will
increase in fiscal 1999 by approximately 11% over fiscal
5
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1998 and that Adjusted EBITDA from the Company's U.S. wholesale business will
decline in fiscal 1999 by 33% from fiscal 1998. As described under "THE
OFFER--Section 10" in the Offer to Purchase, the Company expects the results
of its U.S. wholesale business to be depressed for at least the first two
quarters of fiscal 1999 because of various factors, including steps being
taken to reduce excess working capital in the U.S. wholesale business by
approximately $45 million over the next 18 months. Although the Company's
operations (excluding its U.S. wholesale business) continue to perform well,
with Adjusted EBITDA for the first quarter of fiscal 1999 expected to be in
line with plan, the negative impact of reduced production levels and the
disposal of excess inventory, among other things, is expected to cause a sharp
decline in the Adjusted EBITDA of the Company's U.S. wholesale business from
the same period of the prior fiscal year. The Forecasts assume that the
Company's U.S. wholesale business will have negative Adjusted EBITDA of
approximately $6 million in the first quarter of fiscal 1999 and will have
positive Adjusted EBITDA of approximately $3 million in the second quarter of
fiscal 1999. On a quarterly basis for the year ended January 31, 1999, the
Company has projected net sales, EBIT and Adjusted EBITDA as set forth below:
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
------------------------------------------
APRIL 30, JULY 31, OCTOBER 31, JANUARY 31,
1998 1998 1998 1999
--------- -------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net Sales......................... $157 $187 $237 $215
EBIT.............................. (3) 11 35 27
Adjusted EBITDA(a)................ 6 22 43 35
</TABLE>
- --------
(a) See "--Certain Financial Information" above for a definition of Adjusted
EBITDA.
The Company expects to announce financial results for the first quarter of
fiscal 1999 on or about June 15, 1998; based on currently available
information, the Company believes that actual results for the first quarter of
fiscal 1999 will be in line with the above Forecasts.
The Forecasts contain estimates of net sales, EBIT and Adjusted EBITDA
through the year ended January 31, 2003, as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------------
1999 2000 2001 2002 2003
---- ---- ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net Sales..................................... $796 $908 $1,001 $1,101 $1,211
EBIT.......................................... 70 104 125 146 170
Adjusted EBITDA............................... 106 134 155 177 202
</TABLE>
The Forecasts assume that Adjusted EBITDA for the Company's U.S. wholesale
business will not exceed fiscal 1998 levels until fiscal 2001. In addition,
the Forecasts give effect to the restructuring of the Company's U.S. hardside
manufacturing operations described under "THE OFFER--Section 10" in the Offer
to Purchase and assume that approximately $45 million in excess working
capital will be converted to cash over the next 18 months and will be applied
to reduce outstanding borrowings under the new credit facility being entered
into by the Company in connection with the financing of the Recapitalization.
The Forecasts are being publicly disclosed solely because such information
is being provided to prospective investors in connection with the financing of
the Recapitalization. Neither the Company nor the Company's independent
auditors assume any responsibility for the accuracy of such information.
Neither the Company's independent auditors nor any other independent
accountants have compiled, examined or performed any procedures with respect
to the Forecasts, nor have they expressed any opinion or any other form of
assurance on such information or its achievability, and assume no
responsibility for, and disclaim any association with, the Forecasts.
THE FORECASTS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, ARE BASED UPON A
NUMBER OF ESTIMATES AND ASSUMPTIONS WHICH, THOUGH CONSIDERED REASONABLE BY THE
COMPANY AT THE TIME PRESENTED, ARE INHERENTLY SUBJECT TO MANY SIGNIFICANT
BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, BEYOND
6
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THE CONTROL OF THE COMPANY, AND UPON ASSUMPTIONS WITH RESPECT TO FUTURE
BUSINESS STRATEGIES AND DECISIONS WHICH ARE SUBJECT TO CHANGE AND MAY BE OUT
OF THE CONTROL OF THE CURRENT MANAGEMENT OF THE COMPANY. ACCORDINGLY, THERE
CAN BE NO ASSURANCE THAT THE FORECASTS WILL BE REALIZED. WHILE THE COMPANY
BELIEVES THE FORECASTS ARE BASED UPON REASONABLE ASSUMPTIONS AND ESTIMATES,
ACTUAL RESULTS WILL VARY AND SUCH VARIATIONS MAY BE MATERIAL. FORECASTS ARE
NECESSARILY SPECULATIVE IN NATURE, AND IT IS USUALLY THE CASE THAT ONE OR MORE
OF THE ASSUMPTIONS UNDERLYING ESTIMATES SUCH AS THE FORECASTS WILL NOT
MATERIALIZE. THE FORECASTS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE
OR COMPLIANCE WITH PUBLISHED GUIDELINES ESTABLISHED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS,
ANY REGULATORY OR PROFESSIONAL AGENCY OR BODY OR GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES.
IN LIGHT OF THE FOREGOING, THE COMPANY DOES NOT UNDERTAKE, AND HEREBY
DISCLAIMS ANY OBLIGATION TO, UPDATE THE FORECASTS. THE FORECASTS CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL
RESULTS, 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 OTHERS, THE
FOLLOWING GENERAL ECONOMIC AND BUSINESS CONDITIONS, INCLUDING FOREIGN CURRENCY
FLUCTUATIONS; INDUSTRY CAPACITY; CHANGES IN CUSTOMER PREFERENCES; DEMOGRAPHIC
CHANGES; COMPETITION; CHANGES IN METHODS OF DISTRIBUTION AND TECHNOLOGY; CHANGES
IN POLITICAL, SOCIAL AND ECONOMIC CONDITIONS AND LOCAL REGULATIONS, PARTICULARLY
IN EUROPE AND ASIA; GENERAL LEVELS OF ECONOMIC GROWTH IN EMERGING MARKET
COUNTRIES SUCH AS INDIA, CHINA, BRAZIL, ARGENTINA, AND OTHER ASIAN AND SOUTH
AMERICAN COUNTRIES; THE LOSS OF ANY SIGNIFICANT CUSTOMERS; COMPLETION OF NEW
PRODUCT DEVELOPMENTS WITHIN ANTICIPATED TIME FRAMES; CHANGES IN INTEREST RATES;
AND VARIOUS OTHER FACTORS BEYOND THE COMPANY'S CONTROL.
In addition, the Forecasts are effected by the Company's ability to
implement its business strategy which includes plans to broaden products
offerings and channels of distribution, strengthen marketing and product
innovation, continue worldwide expansion, reduce excess working capital and
resolve U.S. wholesale issues. The Company's strategic plan should be
considered in light of the risks and expenses associated with implementing
these strategies. Successful implementation of these strategies will depend on
numerous factors, many of which are beyond the Company's control, including
economic, competitive and other conditions and uncertainties and the ability
to retain qualified management personnel. No assurance can be given that the
Company will be successful in implementing its business strategy.
7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
SAMSONITE CORPORATION
(Registrant)
/s/ Richard H. Wiley
By: _________________________________
Name: Richard H. Wiley
Title: Chief Financial Officer
Dated: May 20, 1998
8
