<PAGE>
As filed with the Securities and Exchange Commission on May 19, 1999
Registration No. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SAMSONITE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 3161 36-3511556
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification Number)
Incorporation or
Organization)
11200 East 45th Avenue
Denver, Colorado 80239
(303) 373-2000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Agent for Service)
Steve Armstrong, Esq.
General Counsel
Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239
(303) 373-2000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
----------------
Copy to:
Gregory A. Fernicola, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Title of Each Class of
Securities Amount to be Proposed Maximum Amount of
to be Registered Registered Aggregate Offering Price Registration Fee
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<S> <C> <C> <C>
Rights (1) N/A None (2)
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Common Stock, par value
$.01 per share......... (3) $49,590,000(4) $13,786
</TABLE>
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(1) Such indeterminable number of Rights as may be issued to existing
stockholders.
(2) Pursuant to Rule 457(g), no registration fee is payable with respect to the
Rights since the Rights are being registered in the same registration
statement as the securities to be offered pursuant thereto.
(3) Such indeterminable number of shares of Common Stock as may be issued to
the public at the actual offering price per share such that the maximum
aggregate offering price for such securities equals $49,590,000.
(4) Includes $49,590,000 in gross proceeds from the exercise of the maximum
number of Rights as may be issued.
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion. Dated May 19, 1999.
Prospectus
[LOGO] Shares
Samsonite Corporation
Common Stock
-----------
We are distributing to the holders of our common stock transferable rights to
purchase up to an aggregate of shares of our common stock at a cash
subscription price of $ per share. The total purchase price of shares
offered in this rights offering will be $75,000,000 if the rights offering is
fully subscribed. You will not be entitled to receive any Rights unless you are
a stockholder of record as of the close of business on , 1999.
The Rights will expire if they are not exercised by 5:00 p.m., New York City
time, on , 1999, the expected expiration date of this rights offering. We,
in our sole discretion, may extend the period for exercising the Rights. Rights
which are not exercised by the expiration date of the rights offering will
expire and will have no value. You should carefully consider whether or not to
exercise or sell your Rights before the expiration date.
On April 7, 1999, we entered into an agreement with Apollo Investment Fund,
L.P. under which Apollo agreed to make a "bridge" investment equal to the
aggregate subscription price of the rights distributable to Apollo and an
affiliate in the rights offering and to "back-stop" the rights offering by
purchasing additional shares not subscribed for by other stockholders, up to a
maximum total investment by Apollo of $37.5 million. Apollo, together with its
affiliates, is our largest stockholder.
In April 1999, Apollo made its bridge investment of $25,410,000 by purchasing
1,000 shares of our Series Z Convertible Preferred Stock which is initially
convertible into our common stock at the rate of $6.00 per common share for a
total of 4,235,000 shares. The Series Z Convertible Preferred Stock purchased
by Apollo is intended to be the economic equivalent of the underlying shares of
common stock. We used part of the proceeds from Apollo's bridge investment to
pay the cash premium for an insurance policy covering various lawsuits filed
against us and related parties between March 13, 1998 and March 9, 1999, and to
pay certain costs incurred to defend these lawsuits.
<TABLE>
<CAPTION>
Per Share Minimum Maximum
--------- ------------ -----------
<S> <C> <C> <C>
Subscription Price....................... $ $ 37,500,000(a) $75,000,000
Estimated Expenses....................... $ $ $
Net Proceeds to Samsonite................ $ $ $
</TABLE>
- -----
(a) Represents proceeds from the Apollo bridge investment and backstop
agreement.
An investment in our common stock is very risky. You should consider
carefully the risk factors beginning on page 9 in this prospectus before
exercising your Rights.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
-----------
The date of this prospectus is , 1999.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
No Board Recommendation.................................................. ii
Questions and Answers About the Rights Offering.......................... iii
Prospectus Summary....................................................... 1
Risk Factors............................................................. 9
The Rights Offering...................................................... 16
Apollo Bridge Investment and Back-stop Agreement......................... 23
Use of Proceeds.......................................................... 24
Price Range of Our Common Stock and Dividend Policy...................... 25
Capitalization........................................................... 26
Selected Historical Consolidated Financial Information................... 27
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 31
Business................................................................. 46
Management............................................................... 54
Executive Compensation................................................... 57
Security Ownership of Management and Beneficial Owners of More than 5% of
Our Common Stock........................................................ 70
Description of Our Principal Indebtedness................................ 73
Recapitalization......................................................... 76
Description of Our Capital Stock......................................... 77
Certain United States Federal Income Tax Consequences.................... 87
Legal Matters............................................................ 88
Experts.................................................................. 88
Where Can You Find More Information...................................... 88
Index to Consolidated Financial Statements............................... F-1
</TABLE>
<PAGE>
No Board Recommendation
Our board of directors believes the rights offering is in the best interests
of Samsonite. The rights offering, and in particular, Apollo's bridge
investment, enabled us to pay the cash premium for an insurance policy covering
various lawsuits filed against us and related parties between March 13, 1998
and March 9, 1999, and to pay certain costs incurred to defend these lawsuits.
Under the terms of our Credit Facility, we were, in effect, required to fund
these payments with the proceeds of an equity issuance. The rights offering
will also result in the reduction of outstanding indebtedness and availability
under our Credit Facility and, depending whether or not the offering is well
subscribed, may provide us with additional funds that will be available for
general corporate purposes.
Our board of directors is not making any recommendation to you as to whether
you should exercise your subscription privileges. Each of you must make your
own decision as to whether to exercise your subscription privileges. You should
not view Apollo's bridge investment or back-stop agreement as a recommendation
or other indication by our board of directors, or Apollo, that the exercise of
your Rights is in your best interests. An investment in shares of our common
stock must be made according to your own evaluation of your best interests.
No dealer, salesman or other person has been authorized by us to provide you
with any information other than the information contained in this prospectus.
You should rely only on the information provided in this document or other
information that we have referred you to. This prospectus and rights offering
do not constitute an offer to sell or solicitation to buy these securities in
any jurisdiction in which an offer or solicitation would be unlawful.
, our subscription and information agent, has agreed to provided
services to us in connection with the rights offering. If you require
assistance, please contact our Subscription and Information Agent at ,
Telephone .
ii
<PAGE>
Questions and Answers About the Rights Offering
Q: What is the rights offering?
A: The rights offering is a distribution of Rights on a pro rata basis to all
of our stockholders who hold shares of our common stock on , 1999, the
record date. "Pro rata" means in proportion to the number of shares of our
common stock which you and the other stockholders hold on the record date.
We are distributing one Right for every share of our common stock held on
the record date. The rights offering includes Apollo's bridge investment and
"back-stop" agreement referred to below.
Q: What is a Right?
A: Each Right entitles its holder to purchase one share of our common stock at
a subscription price of $ per share. Each Right carries with it a basic
subscription privilege and an over-subscription privilege.
Q: How was the subscription price per share determined?
A: The range of subscription prices (a minimum of $5 per share and a maximum of
$7 per share) was established pursuant to the agreement dated April 7, 1999,
between the Company and Apollo, pursuant to which Apollo agreed to make the
bridge investment and to back-stop the rights offering, up to a maximum
total investment by Apollo of $37.5 million. The average of the closing
prices of our common stock on Nasdaq for the five trading days immediately
preceding April 7, 1999, was slightly less than $6 per share, and the
initial conversion rate of the Series Z Convertible Preferred Stock
purchased by Apollo was set at $6 per common share, subject to adjustment if
the subscription price is set at more or less than $6 per share. Our
agreement with Apollo provides that we cannot set the subscription price at
a price other than $6 per share unless the NASD confirms that a downward
adjustment of the conversion rate of the preferred stock will not require
shareholder approval under Rule 4460(i)(1)(D) of the Nasdaq Stock Market
Marketplace Rules. For more information regarding the agreement with Apollo,
see "Apollo Bridge Investment and Back-stop Agreement".
Q: What is the basic subscription privilege?
A: The basic subscription privilege of each Right entitles you to purchase one
share at the subscription price.
Q: What is the over-subscription privilege?
A: The over-subscription privilege of each Right entitles you, if you fully
exercise your basic subscription privilege, to subscribe for additional
shares of our common stock at the same subscription price per share.
Q: What are the limitations of the over-subscription privilege?
A: We will be able to satisfy your exercise of the over-subscription privilege
only if other Rights holders do not fully exercise their basic subscription
privileges. If sufficient shares of our common stock are available, we will
honor the over-subscription requests in full. If over-subscription requests
exceed the number of shares which are available, we will allocate the
available shares pro rata among those Rights holders who over-subscribed.
Apollo has agreed not to exercise its over-subscription privilege. Instead
it has agreed to the back-stop the rights offering as described below.
Q: What are Apollo's obligations to "back-stop" the rights offering?
A: Apollo has agreed to purchase remaining shares of our common stock not
subscribed for by other Rights holders up to a maximum additional
subscription by Apollo of $12,090,000. This is referred to as Apollo's back-
stop agreement.
iii
<PAGE>
Q: How will the rights offering affect Apollo's ownership of Samsonite common
stock?
A: Prior to the bridge investment, Apollo and its affiliates beneficially owned
approximately 34% of our outstanding common stock. If no Rights holder
exercises its Rights in the rights offering and once Apollo converts its
shares of Series Z Convertible Preferred Stock, Apollo will beneficially own
approximately 59% of the outstanding shares after it satisfies its
obligations in full under the back-stop agreement. If all Rights holders
fully exercise their basic subscription privileges, then Apollo will
continue to beneficially own approximately 34% of our outstanding shares,
the same percentage as before its bridge investment. The Series Z
Convertible Preferred Stock is non-voting. Apollo has agreed to vote any
shares of our common stock issuable upon conversion of the Series Z
Convertible Preferred Stock and any shares of our common stock purchased
pursuant to the back-stop agreement in proportion to the votes of other
stockholders to the extent Apollo's beneficial ownership in Samsonite
exceeds approximately 34% of the total outstanding voting stock. This will
have the effect of negating any incremental impact of Apollo's vote of those
shares in excess of its beneficial ownership percentage prior to the bridge
investment.
Q: What should I do if I want to participate in the rights offering but my
shares are held in the name of my broker, custodian bank or other nominee?
A: If you hold shares of our common stock through a broker, custodian bank or
other nominee, we will ask your broker, custodian bank or other nominee to
notify you of the rights offering. If you wish to sell or exercise your
Rights, you will need to have your broker, custodian bank or other nominee
act for you. To indicate your decision, you should complete and return to
your broker, custodian bank or other nominee the form entitled "Beneficial
Owner Election Form." You should receive this form from your broker,
custodian bank or other nominee with the other rights offering materials.
Q: Will I be charged a sales commission or a fee if I exercise my Rights?
A: No. We will not charge a brokerage commission or a fee to Rights holders for
exercising their Rights. However, if you exercise your Rights through a
broker or nominee, you will be responsible for any fees charged by your
broker or nominee. If you sell your Rights, you will be responsible for any
fees arising from the sale.
Q: Are there any conditions to my right to exercise my Rights?
A: Yes. Your right to exercise your Rights is subject to the conditions
described under "The Rights Offering--Conditions to the Rights Offering."
Q: May I transfer my Rights if I do not want to purchase any shares?
A: Yes. The Rights are transferable until the close of business on the last
trading day before the rights offering expires.
Q: How may I sell my Rights?
A: You may try to sell your Rights through normal investment channels. However,
the Rights are a new issue of securities with no established trading market
and we can give no assurance that a market for the Rights will develop, or
if a market does develop, as to how long it will continue. Therefore, we
cannot assure you that you will be able to sell any of your Rights.
Q: Will I be able to trade my Rights on Nasdaq?
A: No. The Rights will not be listed for trading on Nasdaq or any stock
exchange.
Q: Am I required to subscribe in the rights offering?
A: No.
iv
<PAGE>
Q: If I exercise Rights in the rights offering, may I cancel or change my
decision?
A: No. Once you have exercised your subscription privileges your exercise may
not be revoked.
Q: If the rights offering is not completed, will my subscription payment be
refunded to me?
A: Yes. The Subscription and Information Agent will hold all funds it receives
in escrow until completion of the rights offering. If the rights offering is
not completed, the Subscription and Information Agent will return promptly,
without interest, all subscription payments.
Q: What should I do if I have other questions?
A: If you have questions or need assistance, please contact , the Subscription
and Information Agent, at:
Banks and brokerage firms please call .
For a more complete description of the rights offering, see "The Rights
Offering" beginning on page 16.
v
<PAGE>
Prospectus Summary
This summary may not contain all the information that may be important to
you. You should read the entire prospectus, including the financial data and
related notes, before making an investment decision. The terms "Samsonite",
"the Company", "our" and "we" as used in this Prospectus refer to Samsonite
Corporation and its consolidated subsidiaries, unless we indicate otherwise or
the context otherwise requires. Our fiscal year ends on January 31 and any
references to a fiscal year refer to the calendar year in which it ended (for
example, "fiscal 1999" refers to the 12 months ended January 31, 1999). For
purposes of this Prospectus, the shares offered in this rights offering
include the shares purchased by Apollo pursuant to its bridge investment and
back-stop agreement.
The Company
We are one of the world's largest manufacturers and distributors of luggage,
marketing products under brands such as Samsonite(R), American Tourister(R) and
Lark(R). With net sales of $697.4 million in fiscal 1999, we are a leader in
the highly fragmented luggage market where the vast majority of our competitors
have annual luggage sales that are less than 15% of ours. We offer a broad
range of luggage and luggage-related products, including suitcases, garment
bags, casual bags, business cases and other travel bags. We also license our
trademarks for use on products such as travel accessories, personal leather
goods, handbags and furniture.
Our products are produced around the world at 14 Samsonite-operated
manufacturing facilities or by third-party suppliers. We benefit from our large
size through volume-driven purchasing and manufacturing economies. We sell our
products in more than 100 countries at approximately 27,000 retail locations,
including department stores, specialty stores, catalog showrooms, mass
merchants and warehouse clubs. In the United States, we also sell our products
through 195 Samsonite-operated stores.
Our leading position in the global luggage industry is due primarily to:
. Widely Recognized Brand Names. Samsonite and American Tourister are two
of the most widely-recognized luggage brand names in the world. The Lark
brand is also well established in the premium segment of the U.S.
luggage market. We support our brands with brand advertising programs.
We are the only luggage maker who regularly advertises on national
television in the United States and Europe. For the last five fiscal
years we have invested, on average, in excess of $50 million annually in
national and co-op advertising programs and related promotional
activities.
. Innovative, High Quality Products. We design and develop innovative,
consumer preferred luggage. We have introduced or popularized many of
today's most successful luggage products and features, including
suitcases on wheels, suitcases with a built-in luggage cart and full
featured structured garment bags, and we are a leader in new luggage
technologies. Our products have a worldwide reputation for high quality
and durability.
. Global Manufacturing and Distribution. Our global production network
consists of 14 Samsonite-operated manufacturing facilities and third
party suppliers located in the Far East, Eastern Europe and the
Dominican Republic. By operating our own facilities to produce hardside
luggage and various softside products, we are able to control
manufacturing quality and reduce production lead time and delivery
costs. Our global sourcing network also enables us to opportunistically
source products from countries with low production costs and favorable
currency exchange rates. Our luggage distribution networks in the United
States and in Europe are the largest and most technologically advanced
in the industry.
Our principal corporate office is at 11200 East 45th Avenue, Denver, Colorado
80239, and our telephone number is (303) 373-2000.
1
<PAGE>
Recent Unsatisfactory Performance of the U.S. Wholesale Business
Despite record sales and operating results achieved by our European and U.S.
Retail businesses (which together accounted for approximately 62% of our
consolidated net sales in fiscal 1999), our consolidated results for fiscal
1999 were depressed by the unsatisfactory performance of our U.S. Wholesale
business. The performance of our U.S. Wholesale business was badly hurt by a
variety of operating problems that began to emerge at the end of the third
quarter of fiscal 1998, as well as by factors affecting the U.S. luggage
industry in general, including weaker than anticipated demand, numerous
discount luggage promotions and excess inventories in the market place. The
operating problems affecting our U.S. Wholesale business were, in significant
part, attributable to certain marketing, product and pricing strategies to grow
revenues of Samsonite branded products in the United States.
Commencing at the beginning of fiscal 1999, we took aggressive actions to
turn around our U.S. Wholesale business. These actions include:
. Replacing the management responsible for U.S. Wholesale operations.
. Reorganizing management along "channel management" lines that focus
separately on each of our channels of distribution.
. Substantially eliminating cross distribution channel selling and
modifying our strategy for Samsonite- operated retail stores to improve
customer relationships.
. Revising our product offerings and pricing strategy to be more
responsive to trade customer needs and to the competition.
. Modifying our co-op advertising and sales promotion policies to be more
cost effective.
. Reducing production levels, particularly in our Denver hardside plant
and Tucson/Nogales softside plants, to bring volume into line with
expected sales.
. Working with our trade customers and Samsonite-operated stores to reduce
our excess working capital.
. Rightsizing the cost structure of our U.S. Wholesale operations and
support functions, including restructuring our U.S. manufacturing
operations.
Although the foregoing actions did not have a meaningful impact on our
financial results in fiscal 1999, by fiscal 1999 year-end, these measures had
significantly reduced operating costs and negative plant production variances,
balanced Samsonite branded inventories in the marketplace and greatly improved
relationships with our trade customers. Despite these positive developments,
the U.S. Wholesale business has continued to perform well below historical
levels.
In February 1999, we took further steps to restructure U.S. Wholesale sales
and marketing by consolidating these functions in our Warren, Rhode Island
offices and by promoting the executive responsible for the success of our U.S.
Retail operation to the position of President, Samsonite USA, with
responsibilities for all U.S. and Canadian operations. In February 1999, we
also leased a newly constructed 322,000 square foot warehouse adjacent to our
Denver headquarters, which should improve distribution service levels to our
customers and permit us over time to close a significant number of the 13 other
warehouses currently operated by the U.S. Wholesale business. In April 1999, we
succeeded in negotiating the renewal of our labor agreement covering employees
in our Denver plant to provide more flexible work rules which should further
improve the efficiency of this operation. Finally, we are revising our prior
marketing strategy, which we believe focused too heavily on the Samsonite brand
to the detriment of our two other principal brands, American Tourister and
Lark. As part of our refocused emphasis on channel management, we will be
taking steps to "re-launch" our American Tourister and Lark brands with new
competitively priced products in the first half of fiscal 2000.
As a result of the on-going corrective measures described above, we believe
that our U.S. Wholesale business will show significant improvement as fiscal
2000 progresses.
2
<PAGE>
Our Strategy
While our highest priority is to turn around our U.S. Wholesale business, we
will continue to implement and refine strategies used in our successful
European, U.S. Retail and International businesses as described below.
. Expand Channels of Distribution and Product Offerings. We plan to
increase our presence in channels of distribution where we believe we
are under-represented by using targeted marketing and sales efforts
tailored to each channel, and by exploiting our manufacturing and
sourcing leverage. As part of this strategy, we plan to aggressively
pursue opportunities to sell American Tourister and retailer labeled
products to mass merchant retailers and in other high volume potential
channels throughout the world. We also plan to introduce more casual
bags and business cases in the U.S. in order to expand our sales in
these growth categories.
. Strengthen Marketing and Product Innovation. We plan to continue to
expand our presence in the worldwide luggage market from both a trade
and consumer standpoint. We believe that the company-wide organization
of management along "channel management" lines will strengthen our
marketing efforts by facilitating more accurate forecasting, sound
inventory management and more rapid response to competitive pressures,
on a channel-by-channel basis. As a result, we expect to introduce more
consumer-preferred products, styles and features at price-to-value
relationships appropriate to each channel, supported by more effective
advertising, strengthened point-of-sales programs and better customer
service.
. Continue Worldwide Expansion. We plan to continue expansion in countries
where growing economies and reduced political and trade barriers provide
opportunities for long-term growth. We currently have operations in a
number of emerging foreign markets, including India, China, South
America and the Pacific Rim.
. Improve Distribution Systems in the U.S. We plan to improve the ability
of our U.S. Wholesale business to process and ship customer orders in a
timely, cost effective manner, modeled after our integrated order
processing, distribution and automated warehousing system in Europe. We
believe that the European system has resulted in a number of benefits,
including increased shipping capacity, lower distribution costs, lower
customer inventory levels and fewer returns and customer disputes, and
that it affords us a competitive advantage over other manufacturers and
distributors of luggage in Europe. We have completed the installation of
new distribution software in the U.S. and leased a newly constructed
322,000 square foot warehouse in Denver, which are the first steps in
moving towards our European distribution model.
Recent Events
Additional Insurance for Stockholders Lawsuits. Subsequent to the end of
fiscal 1999, we took action to protect ourselves from various purported
stockholder class action lawsuits and a purported derivative action filed
against us and related parties between March 13, 1998 and March 9, 1999. In
April 1999, we purchased an insurance policy pursuant to which the insurer
assumed responsibility for the defense and ultimate resolution of these
lawsuits. We believe that the insurance policy will cover substantially all
future costs to defend and resolve these lawsuits. Our consolidated statements
of operations for the fiscal year ended January 31, 1999 reflect the accrual of
substantially all costs incurred and expected to be incurred in connection with
these lawsuits, including the premium for the insurance policy described above.
Apollo's Bridge Investment. In April 1999, Apollo made its bridge investment
of $25,410,000 by purchasing 1,000 shares of our Series Z Convertible Preferred
Stock which is initially convertible into our common stock at the rate of $6.00
per common share for a total of 4,235,000 shares. The Series Z Convertible
3
<PAGE>
Preferred Stock is intended to be the economic equivalent of the underlying
shares of common stock. Apollo's bridge investment enabled us to pay the cash
premium for the insurance policy described above, and to pay certain costs
incurred to defend these lawsuits. Under the terms of our Credit Facility, we
were, in effect, required to fund these payments with the proceeds of an equity
issuance.
4
<PAGE>
The Rights Offering
Rights...................... We will distribute to each stockholder of record
on , 1999, at no charge, transferable
subscription Rights for each share of our common
stock then owned. Because we will not issue
fractional Rights, we will round up to the
nearest whole number the number of Rights we
distribute to each stockholder. For example, if
you own 100 shares of our common stock, you will
receive Rights instead of Rights. The
Rights will be evidenced by a transferable Rights
certificate.
Basic Subscription Each Right will entitle the holder to purchase
Privilege................... one share of our common stock for $ , the per
share subscription price.
Over-Subscription Each Rights holder who elects to exercise the
Privilege................... basic subscription privilege in full may also
subscribe for additional shares at the same
subscription price per share. If an insufficient
number of shares is available to fully satisfy
the over-subscription privilege requests, the
available shares will be distributed pro rata
among Rights holders who exercised their over-
subscription privilege based on the number of
shares each Rights holder subscribed for under
the basic subscription privilege. The
Subscription and Information Agent will return
any excess payments by mail without interest or
deduction promptly after the expiration of the
rights offering.
Conditions to the Rights Your right to exercise your Rights is subject to
Offering.................... the conditions described under "The Rights
Offering--Conditions to the Rights Offering."
Apollo Bridge Investment
and Back-stop...............
On April 7, 1999, Apollo agreed to make a bridge
investment of $25,410,000, an amount equal to the
aggregate subscription price of the Rights
distributable to Apollo and an affiliate. Apollo
has agreed to purchase remaining shares not
subscribed for by other Rights holders under
their basic subscription privileges and over-
subscription privileges, up to a maximum
aggregate additional subscription by Apollo of
$12,090,000. In connection with Apollo's bridge
investment and back-stop agreement, Apollo has
agreed not to exercise or transfer the Rights it
receives in the rights offering and to hold the
Rights until they expire.
Subscription Price.......... $ per share.
Record Date................. , 1999.
Expiration Date............. The Rights will expire, if not exercised, at 5:00
p.m., New York City time, on , 1999, unless we
decide to extend the rights offering until some
later time.
Transferability of Rights... The Rights will be evidenced by transferable
Rights certificates. The Rights are transferable
until the close of business on the last trading
day prior to the expiration date, at which time
they will cease to have any value. However, we
can give no assurance that a market for the
Rights will develop or, if a market develops, how
long it will continue.
5
<PAGE>
Procedure for Exercising You may exercise your Rights by properly
Rights...................... completing and signing your Rights certificate.
You must deliver your Rights certificate with
full payment of the subscription price to the
Subscription and Information Agent on or prior to
the expiration date. If you use the mail, we
recommend that you use insured, registered mail,
return receipt requested. If you cannot deliver
your Rights certificate to the Subscription and
Information Agent on time, you may follow the
guaranteed delivery procedures described under
"The Rights Offering--Guaranteed Delivery
Procedures" beginning on page .
Once you have exercised the basic subscription
privilege or over-subscription privilege your
exercise may not be revoked. Rights not exercised
prior to the expiration of the rights offering
will lose their value.
How Rights Holders Can
Exercise Rights Through
Others......................
If you hold shares of our common stock through a
broker, custodian bank or other nominee, we will
ask your broker, custodian bank or other nominee
to notify you of the rights offering. If you wish
to sell or exercise your Rights, you will need to
have your broker, custodian bank or other nominee
act for you. To indicate your decision, you
should complete and return to your broker,
custodian bank or other nominee the form entitled
"Beneficial Owner Election Form." You should
receive this form from your broker, custodian
bank or other nominee with the other rights
offering materials.
How Foreign Stockholders
and Stockholders with APO
or FPO Addresses Can
Exercise Rights.............
The Subscription and Information Agent will mail
Rights certificates to you if you are a
stockholder whose address is outside the United
States or if you have an Army Post Office or a
Fleet Post Office address. To exercise your
Rights, you must notify the Subscription and
Information Agent on or prior to 11:00 a.m., New
York City time, on , 1999, and take all other
steps which are necessary to exercise your
Rights, on or prior to the date on which the
rights offering expires. If you do not follow
these procedures prior to the expiration of the
rights offering, your Rights will expire.
Certain United States
Federal Income Tax
Consequences................ For United States federal income tax purposes,
the receipt of Rights in the rights offering and
the exercise of the Rights will not be a taxable
event.
Issuance of Our Common We will issue certificates representing shares
Stock....................... purchased in the rights offering as soon as
practicable after the expiration of the rights
offering.
6
<PAGE>
No Recommendation to Rights
Holders.....................
We are not making any recommendations as to
whether or not you should subscribe for shares of
our common stock. You should decide whether to
subscribe for shares based upon your own
assessment of your best interests. You should not
view Apollo's bridge investment or back-stop
agreement as a recommendation or other indication
that the exercise of your Rights is in your best
interests.
Nasdaq Listing of Our
Common Stock................
Our common stock is traded on the Nasdaq National
Market under the symbol "SAMC." On , 1999, the
last trading day prior to our public announcement
of the rights offering, the closing price of our
common stock on Nasdaq was $ per share. On ,
1999, the last trading day before the date of
this prospectus, the closing price of our common
stock on Nasdaq was $ per share.
Listing of the Rights....... The Rights will not be listed on Nasdaq or any
stock exchange.
Nasdaq Symbol for Our
Common Stock................
"SAMC"
Use of Proceeds............. Our minimum gross proceeds from this rights
offering will be $37.5 million, which represents
proceeds from Apollo's bridge investment and
back-stop agreement. If at least % of the
Rights distributed to stockholders, other than
Apollo and an affiliate, are exercised, the gross
proceeds from the rights offering will be
$75 million. We used a portion of the net
proceeds from the bridge investment to pay the
cash premium for the insurance policy covering
various lawsuits filed against us and related
parties between March 13, 1998 and March 9, 1999,
and to pay certain costs of defending these
lawsuits. Under the terms of our Credit Facility,
we are required to use up to $30 million of the
net proceeds remaining after the payments
referred to above, to repay borrowings under the
Credit Facility. Any remaining net proceeds will
be available for general corporate purposes. We
are not making any recommendations as to whether
or not you should subscribe for shares of our
common stock. You should decide whether to
subscribe for shares based upon your own
assessment of your best interests.
Subscription and
Information Agent...........
For additional information concerning the Rights and our common stock, see
"The Rights Offering" and "Description of Our Capital Stock" below.
Risk Factors
An investment in the shares of our common stock is very risky. You should
carefully consider the information set forth under "Risk Factors" beginning on
page 9 and all of the information in this prospectus before deciding to
exercise your Rights.
7
<PAGE>
Summary Consolidated Financial Information
Our summary historical consolidated financial information presented below has
been derived from our audited consolidated financial statements. This
information should be read in conjunction with the other information contained
under the captions "Capitalization," "Selected Historical Consolidated
Financial Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and with our consolidated financial
statements and related notes to those financial statements included elsewhere
in this prospectus.
You should bear in mind the recapitalization that we completed on June 24,
1998 when reviewing the summary information for the year ended January 31,
1999, presented below. The purpose of the recapitalization was to return a
significant amount of cash to our stockholders while allowing them to retain
their equity ownership in Samsonite, subject to limited dilution as a result of
the issuance of the warrants described below. The recapitalization involved the
following: (1) the sale of 175,000 units consisting of 175,000 shares of our 13
7/8% senior redeemable exchangeable preferred stock, with a stated amount of
$175 million, and warrants to purchase 1,959,000 shares of our common stock at
an exercise price of $13.02 per share; (2) the sale of $350 million total
principal amount of our 10 3/4% senior subordinated notes due 2008; (3) our
entering into, and borrowing $110 million under, our current Credit Facility;
(4) the repayment of $185.5 million of then existing indebtedness, including
indebtedness under our prior credit facility; and (5) the repurchase pursuant
to a tender offer of 10.5 million shares of our common stock for a total of
$420 million.
You should refer to note (d) to the selected historical consolidated
financial information for the definition of "EBITDA" and how we arrived at
"Adjusted EBITDA."
<TABLE>
<CAPTION>
Year Ended January 31,
-------------------------------------------------
1995 1996 1997 1998 1999
--------- -------- -------- -------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net Sales.................. $ 635,452 $675,209 $741,138 $736,875 $ 697,421
Net Income (Loss).......... (111,579) (61,447) (11,323) 40,699 (88,778)
Net Income (Loss) to Common
Stockholders.............. (111,579) (61,447) (11,323) 40,699 (104,410)
Income(Loss) per Common
Share--Basic:
Continuing Operations.... $ (3.05) $ (3.24) $ (0.71) $ 2.81 $ (6.79)
Net Income (Loss)........ (7.22) (3.89) (0.71) 2.01 (7.24)
Income (Loss) per Common
Share--Assuming Dilution:
Continuing Operations.... $ (3.05) $ (3.24) $ (0.71) $ 2.70 $ (6.79)
Net Income (Loss)........ (7.22) (3.89) (0.71) 1.93 (7.24)
Other Data:
Adjusted EBITDA............ $ 81,931 $ 78,335 $ 84,879 $108,328 $ 50,301
Balance Sheet Data (as of
end of period):
Property, Plant and
Equipment, Net............ $ 137,686 $140,912 $143,959 $142,351 $ 149,641
Total Assets............... 866,000 607,443 592,658 610,049 621,435
Long-Term Obligations
(Including Current
Installments)............. 417,175 310,959 290,617 179,223 503,096
Senior Redeemable Preferred
Stock..................... -- -- -- -- 178,329
Stockholders' Equity
(Deficit)................. 148,472 25,116 24,998 208,886 (295,446)
</TABLE>
8
<PAGE>
Risk Factors
An investment in our common stock is very risky. You should carefully
consider the following factors and all of the information in this prospectus
before deciding to exercise your Rights.
Our substantial leverage could adversely affect our financial health, our
ability to service our indebtedness and your investment in our common stock.
As a result of the Recapitalization, we have a substantial level of
indebtedness. As of January 31, 1999:
. we had total indebtedness of $511.5 million,
. we had total outstanding 13 7/8% Senior Preferred Stock with a
liquidation preference of $186.7 million and
. our stockholders' equity was a deficit of $295.4 million.
Our substantial level of indebtedness will have a negative effect on our net
income. Assuming that we had completed the Recapitalization on February 1,
1998, for our fiscal year ended January 31, 1999:
. our net loss to common stockholders would have been $129.7 million,
compared to our historical net loss to common stockholders of $104.4
million for the same period, and
. our net interest expense would have been approximately $54.3 million
compared to our historical net interest expense of $40.0 million for the
same period.
Our high level of indebtedness could have important consequences to you. For
example, it could:
. limit our ability to obtain additional financing for working capital,
capital expenditures, acquisitions or general corporate purposes;
. require us to dedicate a substantial portion of our cash flow from
operations to the payment of principal and interest on our indebtedness
(this would reduce the cash flow available to us for our operations,
working capital, capital expenditures, acquisitions and general
corporate purposes);
. place us at a competitive disadvantage compared to our competitors that
have less debt;
. limit our ability to react rapidly to changing market conditions,
changes in our industry and economic conditions; or
. make us more vulnerable in the event of a downtown in general economic
conditions or in our business.
Despite our current levels of indebtedness, we and our subsidiaries may be
able to incur substantial additional indebtedness in the future. Our Credit
Facility, the indenture governing our 10 3/4% Notes and the certificate of
designation governing our 13 7/8% Senior Preferred Stock each permits us and
our subsidiaries to incur or guarantee additional indebtedness, with some
limitations. If we or our subsidiaries incur additional indebtedness, the risks
related to our current debt levels could increase. See "Description of Our
Principal Indebtedness" and "Description of Our Capital Stock" below.
Our ability to make payments on or refinance our indebtedness or to pay
required cash dividends on our 13 7/8% Senior Preferred Stock will depend on
our future financial and operating performance. This will be subject to
prevailing economic and competitive conditions and to financial, business and
other factors which are beyond our control. These factors could include:
. operating difficulties;
. increased operating costs;
. product pricing pressures;
.the response of our competitors; or
. delays in implementing our current or future strategic plans.
9
<PAGE>
In addition, our ability to meet our debt service and other obligations may
also significantly depend on the extent to which we can implement successfully
our business strategy. We cannot assure you that we will be able to implement
our strategy fully or that we will realize the anticipated benefits of our
strategy.
Because our obligations under our Credit Facility bear interest at floating
rates, an increase in interest rates could adversely affect our ability to meet
our financing obligations.
We cannot assure you that our cash flow and capital resources will be
sufficient for us to make payments on our indebtedness or meet our other
obligations in the future. If our cash flow and other capital resources are
insufficient, we may be forced to reduce or delay capital expenditures, sell
assets, try to obtain additional equity capital or refinance or restructure our
debt. We cannot assure you that any of those alternatives would be successful
or allow us to meet our scheduled obligations in the future.
Our obligations under our 13 7/8% Senior Preferred Stock could adversely affect
our financial health, our ability to service our indebtedness and your
investment in our common stock.
We issued our 13 7/8% Senior Preferred Stock in the Recapitalization. On or
before June 15, 2003, we have a "pay-in-kind" option on our 13 7/8% Senior
Preferred Stock. This means that instead of paying holders of our 13 7/8%
Senior Preferred Stock cash dividends at a rate of 13 7/8%, we have the option
of issuing additional shares of our 13 7/8% Senior Preferred Stock with a
liquidation preference equal to the amount of dividends that we owe our 13 7/8%
Senior Preferred Stockholders. Any unpaid dividends compound on a quarterly
basis. Since issuance, all dividends on the 13 7/8% Senior Preferred Stock have
been paid in kind and the liquidation preference of the 13 7/8% Senior
Preferred Stock has grown from $175 million to $186.7 million as of January 31,
1999. Our Credit Facility imposes limitations on our ability to pay cash
dividends on the 13 7/8% Senior Preferred Stock. If we do not repurchase or
refinance our 13 7/8% Senior Preferred Stock on or before June 15, 2003, we
must then begin paying our 13 7/8% Senior Preferred Stockholders cash dividends
on the total amount of our 13 7/8% Senior Preferred Stock outstanding at that
time. If we do not repurchase or refinance our 13 7/8% Senior Preferred Stock
before June 15, 2010, we must redeem it for cash at 100% of its total
liquidation preference.
We cannot assure you that our cash flow and capital resources will be
sufficient for us to make the required cash dividend payments on our 13 7/8%
Senior Preferred Stock or meet our other obligations in the future. If our cash
flow and other capital resources are insufficient, we may be forced to reduce
or delay capital expenditures, sell assets, try to obtain additional equity
capital or further refinance or restructure our 13 7/8% Senior Preferred Stock
and indebtedness. We cannot assure you that any of those alternatives would be
successful or allow us to meet our scheduled obligations in the future.
Our Credit Facility and the 10 3/4% Notes Indenture contain covenants that
affect our operating flexibility.
Our Credit Facility and the 10 3/4% Notes Indenture contain numerous
financial and operating covenants, including restrictions on our ability to:
. pay dividends;
. incur indebtedness;
. merge, consolidate or transfer all or substantially all of our assets;
. make certain sales of assets;
. make investments;
. make capital expenditures; and
. create, incur or permit the existence of certain liens.
10
<PAGE>
Our Credit Facility also requires us to achieve and maintain certain
financial ratios. See "Description of Our Principal Indebtedness" below. These
financial tests affect our operating flexibility. In addition, the Certificate
of Designation governing our 13 7/8% Senior Preferred Stock contains a number
of restrictive covenants.
We may need to further amend our Credit Facility and possibly restructure our
debt.
At January 31, 1999, under our Credit Facility, we had approximately $135.1
million of indebtedness outstanding. Our Credit Facility requires us to achieve
and maintain certain financial ratios. The banks who lend to us under our
Credit Facility agreed in fiscal 1999 and again in March 1999 to amend these
financial ratios to enable us to comply with them in subsequent quarters. We
provided goals in our business plan to our bank lenders which formed the basis
for the recent amendments to these financial ratios. If actual results are
poorer than the goals set forth in our business plan in any significant
respect, we would be in violation of the amended and restated financial ratios.
If this happens, we would need to seek a waiver or a further amendment to these
financial ratios. However, if we were unable to reach agreement with our bank
creditors, they would be able to accelerate all the indebtedness we owe them,
making it immediately due and payable.
Whether or not we would be able to effect a waiver or a further amendment to
our Credit Facility, we may have to consider the possibility of restructuring
our indebtedness.
Our U.S. Wholesale business continues to be depressed.
As discussed below under "Business--Recent Unsatisfactory Performance of the
U.S. Wholesale Business," despite record sales and operating results achieved
by our European and U.S. Retail businesses, our consolidated results for fiscal
1999 were depressed by the unsatisfactory performance of our U.S. Wholesale
business. The performance of our U.S. Wholesale business was badly hurt by a
variety of operating problems that began to emerge at the end of the third
quarter of fiscal 1998, as well as by factors affecting the U.S. luggage
industry in general, including weaker than anticipated demand, numerous
discount luggage promotions and excess inventories in the market place. The
operating problems affecting our U.S. Wholesale business were, in significant
part, attributable to certain marketing, product and pricing strategies to grow
revenues of Samsonite branded products in the United States. Commencing at the
beginning of fiscal 1999, we took the actions discussed under "Business--Recent
Unsatisfactory Performance of the U.S. Wholesale Business," to turn around our
U.S. Wholesale business. Although these actions did not have a meaningful
impact on our financial results in fiscal 1999, by fiscal 1999 year-end, these
measures had significantly reduced operating costs and negative plant
production variances, balanced Samsonite branded inventories in the marketplace
and greatly improved relationships with our trade customers. Despite these
positive developments, the U.S. Wholesale business has continued to perform
well below historical levels, and there can be no assurance that our continued
actions will result in improved performance in this business.
We are subject to risks because of our significant international operations,
including currency risks.
Approximately 54% of our net sales for fiscal 1999 were attributable to our
European sales and other foreign operations. In addition to our European
manufacturing and distribution subsidiaries, we have a 100% owned Mexican
manufacturing and distribution company and we are a partner in joint ventures
in Singapore, South Korea, India, Brazil, China, Argentina and Uruguay. We also
have a wholly owned distribution organization in Hong Kong. Our operations may
be affected by economic, political and governmental conditions in some of the
countries where we have manufacturing facilities or where our products are
sold.
In addition, factors such as changes in economic or political conditions in
any of the countries in which we operate could result in unfavorable exchange
rates, new or additional currency or exchange controls, other restrictions
being imposed on our operations, or expropriations. Our operations may also be
adversely affected by significant fluctuations in the value of the U.S. dollar
or the failure of a partner in an international joint venture to meet
performance expectations. When appropriate, we enter into foreign exchange
contracts in order to reduce our economic exposure on translated earnings from
foreign operations and/or royalty agreements
11
<PAGE>
through the use of forward delivery commitments. See "Management's Discussion
and Analysis of Financial Conditions and Results of Operations" and "Business"
below.
We operate in a competitive market.
We operate in a competitive market. We compete based on brand name, consumer
advertising, product innovation, product quality, product differentiation,
customer service, access to established distribution channels, new product
offerings and price. Price becomes more important as the price point of the
product decreases and fewer differentiating features are offered. In addition
to companies in the business of manufacturing and distributing luggage
products, we compete with various large retailers who purchase private label
luggage directly from manufacturers in low labor cost countries, primarily in
Asia. See "Business-- Competition" below.
Apollo and its affiliates own a large percentage of our voting stock.
Prior to the bridge investment, Apollo and its affiliates beneficially owned
approximately 34% of our outstanding common stock. See "Security Ownership of
Management and Beneficial Owners of More than 5% of Our Common Stock" below. If
no Rights holder exercises its Rights in the rights offering and once Apollo
converts its shares of the Series Z Convertible Preferred Stock, Apollo will
beneficially own approximately 59% of the outstanding shares after it satisfies
its obligations in full under the back-stop agreement. However, in connection
with the bridge investment, Apollo has agreed to vote any shares of our common
stock issuable upon conversion of the Series Z Convertible Preferred Stock that
it purchased in the bridge investment and any shares of our common stock that
it may purchase pursuant to the back-stop agreement to the extent its ownership
in Samsonite exceeds 34% of the total outstanding voting stock in proportion to
the votes of the other shares of voting stock. This will have the effect of
negating any impact of Apollo's vote for those shares. Because it has such a
large percentage of ownership, Apollo may have significant control over our
management and policies. In addition, the level of Apollo's ownership of our
shares of common stock could have the effect of discouraging or impeding an
unsolicited acquisition proposal.
We may be unable to fully or successfully implement our business strategy.
Our business strategy includes plans to:
. Improve our U.S. Wholesale business, including taking the corrective
measures described below in "Business--Recent Unsatisfactory Performance
of the U.S. Wholesale Business."
. Expand channels of distribution and product offerings.
. Strengthen marketing and product innovation.
. Continue worldwide expansion.
. Improve distribution systems in the U.S.
You should consider our strategic plan 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 our
control. These factors include economic, competitive and other conditions and
uncertainties and our ability to retain qualified management personnel. We
cannot assure you that we will be successful in implementing our strategy.
Our ability to utilize our net operating loss carryforwards will be limited.
As a result of changes in the ownership of our common stock, we believe that
our ability to utilize our net operating loss carryforwards for United States
federal income tax purposes will be subject to some limitations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and Note 12 to our consolidated
financial statements for the year ended January 31, 1999, included elsewhere in
this prospectus for a description of these matters.
12
<PAGE>
Year 2000 compliance may involve significant time and expense and adversely
effect our operations.
We have conducted a review of our computer systems to identify the systems
that could be affected by the Year 2000 issue which results from computer
programs being written using two digits rather than four to define the
applicable year. Any computer programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000,
resulting in a major system failure or miscalculations. In the U.S., we have
installed new financial, manufacturing and distribution software which we
believe is Year 2000 compliant. We experienced some difficulties in connection
with the conversion of our systems to our new distribution software, as
described in the press release included as an exhibit to our report on Form 8-
K, dated August 12, 1998, filed with the SEC. See "Where Can You Find More
Information" below. These new systems are being installed in response to our
other business needs as well as Year 2000 issues. Our European division is
updating its systems to be Year 2000 compliant and expects this to be completed
during fiscal 1999. Our other operations throughout the world are generally
using recently purchased software which we believe is Year 2000 compliant. We
have spent $10.2 million in the U.S. for new systems through January 31, 1999
and we expect to incur additional costs of approximately $0.75 million to $1.5
million in the U.S. in connection with the Year 2000 issue, excluding internal
costs. Costs incurred in Europe and the remainder of the world for Year 2000
compliance are not expected to be material. Although we believe we have
identified internal Year 2000 issues which might have a significant impact on
operations, we cannot assure you that we have identified all such issues or
that they will be corrected. Additionally, we cannot assure you that our
customers, vendors, banks or other third parties will not experience Year 2000
issues which may have a material adverse effect on our operations. See
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations --Effect of Year 2000 Issue on Our Operations" below.
Our charter, by-laws and shareholder rights plan contain anti-takeover
provisions which could hamper a change of control of Samsonite.
Our charter, by-laws and preferred stock rights contain various provisions
that may inhibit the acquisition of control of Samsonite. Provisions of our
Charter and By-laws, among other things, classify our board of directors into
three classes, each of which serve for staggered three-year periods. Our board
of directors has the authority to issue shares of preferred stock in one or
more Series and to fix the rights and preferences of the shares of any such
Series without stockholder approval. Any Series of preferred stock will be
senior to our common stock with respect to dividends, liquidation rights and,
possibly, voting. The ability to issue preferred stock could have the effect of
discouraging unsolicited acquisition proposals. In addition, our board of
directors has adopted a shareholder rights plan providing for the issuance of
preferred stock rights, which would cause substantial dilution to a person or
group that attempts to acquire us on terms not approved in advance by our board
of directors. In addition, our Charter and By-laws require advance notice for
actions to be taken at annual meetings and director nominations.
Future sales of our common stock may depress our stock price.
No prediction can be made as to the effect, if any, that future sales of our
common stock, or the availability of common stock for future sales, will have
on the market price of our common stock. Sales in the public market of
substantial amounts of our common stock, or the perception that such sales
could occur, could adversely affect prevailing market prices for our common
stock.
We do not intend on declaring any cash dividends on our common stock.
We do not intend to declare any cash dividends on our common stock for the
foreseeable future. See "Price Range of Our Common Stock and Dividend Policy"
below.
The subscription price may not reflect the value of Samsonite.
Although the subscription price is closely related to the market price per
share of our common stock at a date proximate to the commencement of this
rights offering, the market price of our common stock has been volatile and has
declined substantially since the end of the third quarter of our fiscal year
ended
13
<PAGE>
January 31, 1999. Accordingly, the subscription price does not necessarily bear
a relationship to historic or future cash flows, earnings or financial
condition. For further information regarding the way in which the subscription
price was determined, see "Apollo Bridge Investment and Backstop Agreement".
Stockholders who do not fully exercise their Rights will have their interests
diluted by Apollo and those other stockholders who do exercise their Rights.
The rights offering may result in our issuance of up to an additional
shares of our common stock, assuming full exercise of Rights. However, if no
Rights holder exercises Rights in the rights offering, the closing of the
rights offering may result in the issuance of only an additional shares of
our common stock to Apollo pursuant to its obligations under the back-stop
agreement. If you choose not to fully exercise your Rights, your relative
ownership interests in Samsonite will be diluted. Rights holders who do not
exercise or sell their Rights will lose any value in their Rights.
No prior market exists for the Rights.
The Rights are a new issue of securities with no established trading market.
The Rights are transferable until the close of business on the last trading day
prior to the expiration date, at which time they will cease to have any value.
However, we can give no assurance that a market for the Rights will develop, or
if a market does develop, as to how long it will continue.
Our proceeds from this rights offering are indefinite.
Our minimum gross proceeds from this rights offering will be $37.5 million,
which represents proceeds from Apollo's bridge investment and back-stop
agreement. If at least % of the Rights distributed to stockholders, other
than Apollo and an affiliate, are exercised, the gross proceeds from the Rights
offering will be $75 million. However, there can be no assurance that other
stockholders will subscribe and that our total gross proceeds will exceed $37.5
million.
You should not unduly rely on forward-looking statements; certain information
in our business plan does not constitute an estimate of future performance.
This prospectus contains forward-looking statements. Any statement in this
prospectus, other than a statement of historical fact, may be a forward-looking
statement. These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to differ significantly from any future results, performance or
achievements expressed or implied by those forward-looking statements. Those
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 level 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 our control.
14
<PAGE>
You can identify forward-looking statements by looking for words such as
"may," "will," "anticipate," "believe," "estimate," "intend," "plan" and
"expect" and similar expressions. Variations on those or similar words, or the
negatives of those words, also may indicate forward-looking statements.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Forward-Looking Information" sets forth certain information
contained in our business plan for FY 2000 and a more conservative plan
provided to the lenders under our Credit Facility. Although this information
includes forward-looking statements, it is important for investors to
understand that the FY 2000 plan and the more conservative plan were prepared
for internal use, and not with a view to public disclosure. Neither of the
plans was intended to constitute a projection or forecast of the likely results
of our operations for the periods covered, and were not prepared in compliance
with the published guidelines of the SEC or the American Institute of Certified
Public Accountants regarding projections or forecasts. Information regarding
the plans is included in this Prospectus solely because certain members of
Samsonite's Board of Directors, who are principals of Apollo, were familiar
with this information at the time that Apollo made its bridge investment and
entered into the backstop agreement. For the foregoing reasons, and because our
business is subject to numerous risks, uncertainties and other factors,
including those set forth above, investors should not rely on this information
as an estimate or prediction of future performance. Actual results will differ
from those reflected in the plans, and the differences could be substantial.
Neither our auditors or any other independent accountant has compiled or
examined the plans, and our auditors disclaim any association with them. We
disclaim any obligation to publicly update the plans, or disclose any
difference between our actual results and those reflected in the plans. The
information constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.
Although we believe that statements regarding our expectations contained in
this prospectus are reasonable, we cannot assure you that these expectations
will be achieved. You are cautioned that any forward-looking statements,
including statements regarding our intent, belief or current expectations, are
not guarantees of our future performance and involve risks and uncertainties,
and that our actual results may differ significantly from those in the forward-
looking statements.
The forward-looking statements in this prospectus are accurate only as of its
date. If our expectations change, or if new events, conditions or circumstances
arise, we are not required to, and may not, update or revise any forward-
looking statement in this prospectus.
15
<PAGE>
The Rights Offering
The Rights
We will distribute to each holder of our common stock who is a record holder
of our common stock on the record date, which is 5:00 p.m., New York City time,
on , 1999, at no charge, transferable subscription Rights for each
share of our common stock they own. We will round up, to the nearest whole
number, the number of Rights we distribute to each stockholder. The Rights will
be evidenced by transferable Rights certificates. Each Right will allow you to
purchase one additional share of our common stock at a price of $ . If you
elect to exercise your basic subscription privilege in full, you may also
subscribe, at the subscription price, for additional shares of our common stock
under your over-subscription privilege, if there are enough shares available.
No Fractional Rights
We will not issue fractional Rights, but rather will round up any fractional
Rights to the nearest whole number. For example, if you own 100 shares of our
common stock, you will receive Rights, instead of Rights you would have
received without rounding.
You may request that the Subscription and Information Agent divide your
Rights certificate into transferable parts, for instance, if you are the record
holder for a number of beneficial holders of our common stock. However, the
Subscription and Information Agent will not divide your Rights certificate so
that you would receive any fractional Rights.
Expiration of the Rights Offering
You may exercise your subscription privilege at any time before 5:00 p.m.,
New York City time, on , 1999, the expiration date for the rights offering. We
may, in our sole discretion, extend the time for exercising the Rights. If you
do not exercise your Rights before the expiration date, your unexercised Rights
will be null and void. We will not be obligated to honor your exercise of
Rights if the Subscription and Information Agent receives the documents
relating to your exercise after the rights offering expires, regardless of when
you transmitted the documents, except when you have timely transmitted the
documents under the guaranteed delivery procedures described below. We may
extend the expiration date by giving oral or written notice to the Subscription
and Information Agent on or before the scheduled expiration date. If we elect
to extend the expiration of the rights offering, we will issue a press release
announcing the extension no later than 9:00 a.m., New York City time, on the
next business day after the most recently announced expiration date.
Subscription Privileges
Your Rights entitle you to the basic subscription privilege and the over-
subscription privilege.
Basic Subscription Privilege. With your basic subscription privilege, you may
purchase one share of our common stock per Right, upon delivery of the required
documents and payment of the subscription price of $ per share. You are not
required to exercise all of your Rights unless you wish to purchase shares
under your over-subscription privilege. We will deliver to you certificates
representing the shares which you purchased with your basic subscription
privilege as soon as practicable after the rights offering has expired.
Over-Subscription Privilege. In addition to your basic subscription
privilege, you may subscribe for additional shares of our common stock, upon
delivery of the required documents and payment of the subscription price of
$ per share, before the expiration of the rights offering. You may only
exercise your over-subscription privilege if you exercised your basic
subscription privilege in full and other holders of Rights do not exercise
their basic subscription privileges in full.
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Pro Rata Allocation. If there are not enough shares to satisfy all
subscriptions made under the over-subscription privilege, we will allocate the
remaining shares pro rata, after eliminating all fractional shares, among those
over-subscribing Rights holders. "Pro rata" means in proportion to the number
of shares of our common stock which you and the other Rights holders have
purchased by exercising your basic subscription privileges. If there is a pro
rata distribution of the remaining shares and you receive a pro rata allocation
of a greater number of shares than you subscribed for under your over-
subscription privilege, then we will allocate to you only the number of shares
for which you subscribed. We will allocate the remaining shares among all other
holders exercising their over-subscription privileges.
Apollo will not be allocated any additional shares of our common stock
pursuant to the back-stop agreement until all other Rights holders exercising
their over-subscription privileges have been allocated the number of additional
shares for which they over-subscribed.
Full Exercise of Basic Subscription Privilege. You may exercise your over-
subscription privilege only if you exercise your basic subscription privilege
in full. To determine if you have fully exercised your basic subscription
privilege, we will consider only the basic subscription privileges held by you
in the same capacity. For example, suppose that you were granted Rights for
shares of our common stock which you own individually and shares of our common
stock which you own collectively with your spouse. If you wish to exercise your
over-subscription privilege with respect to the Rights you own individually,
but not with respect to the Rights you own collectively with your spouse, you
only need to fully exercise your basic subscription privilege with respect to
your individually owned Rights. You do not have to subscribe for any shares
under the basic subscription privilege owned collectively with your spouse to
exercise your individual over-subscription privilege.
When you complete the portion of your Rights certificate to exercise your
over-subscription privilege, you will be representing and certifying that you
have fully exercised your subscription privileges as to shares of our common
stock which you hold in that capacity. You must exercise your over-subscription
privilege at the same time you exercise your basic subscription privilege in
full.
If you own shares of our common stock through your bank, broker or other
nominee holder who will exercise your subscription privilege on your behalf,
the bank, broker or other nominee holder will be required to certify to us and
the Subscription and Information Agent the following information:
. the number of shares held on your behalf on the record date;
. the number of Rights exercised under your basic subscription privilege;
. that your basic subscription privilege held in the same capacity has
been exercised in full; and
. the number of shares subscribed for under your over-subscription
privilege.
Your bank, broker or other nominee holder may also disclose to us other
information received from you.
Return of Excess Payment. If you exercised your over-subscription privilege
and are allocated less than all of the shares for which you wished to
subscribe, your excess payment for shares that were not allocated to you will
be returned by mail without interest or deduction as soon as practicable after
the expiration date. We will deliver to you certificates representing the
shares which you purchased as soon as practicable after the expiration date and
after all pro rata allocations and adjustments have been completed.
Conditions to the Rights Offering
Samsonite may terminate the rights offering if at any time before completion
of the rights offering there is any judgment, order, decree, injunction,
statute, law or regulation entered, enacted, amended or held to be applicable
to the rights offering that in the sole judgment of the board of directors of
Samsonite would or might make the rights offering or its completion illegal or
otherwise restrict or prohibit completion of the rights offering. Samsonite may
waive any of these conditions and choose to proceed with the rights offering
even if one or more of these events occur. If Samsonite terminates the rights
offering, all rights will expire without value and all subscription payments
received by the Subscription and Information Agent will be returned promptly,
without interest.
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<PAGE>
Apollo Back-stop
Because Apollo funded in advance its pro rata subscription amount, it has
agreed not to exercise its basic subscription privilege and to hold the Rights
it receives in the rights offering until they expire. Pursuant to its back-
stop agreement, Apollo has agreed to purchase remaining shares of common stock
not subscribed for by other Rights holders under their basic subscription
privileges and over-subscription privileges, up to a maximum aggregate
additional subscription by Apollo of $12,090,000.
The number of shares that Apollo purchases will be determined after all
Rights holders exercise their subscription privileges.
Assuming no other Rights holders exercise their Rights and once Apollo
converts all of its shares of preferred stock that it has purchased in the
bridge investment into shares of common stock, Apollo will own approximately
% of our issued and outstanding common stock after the rights offering
closes.
Method of Subscription--Exercise of Rights
You may exercise your Rights by delivering the following to the Subscription
and Information Agent, at or prior to 5:00 p.m., New York City time, on ,
1999, the date on which the Rights expire:
. Your properly completed and executed Rights certificate with any
required signature guarantees or other supplemental documentation; and
. Your full subscription price payment for each share subscribed for under
your subscription privileges.
Method of Payment
Your payment of the subscription price must be made in U.S. dollars for the
full number of shares of common stock you are subscribing for by either:
. Check or bank draft drawn upon a U.S. bank or postal, telegraphic or
express money order payable to the Subscription and Information Agent;
or
. Wire transfer of immediately available funds, to the subscription
account maintained by the Subscription and Information Agent at ABA
No. , further credit to , Attention: .
Receipt of Payment
Your payment will be considered received by the Subscription and
Information Agent only upon:
. Clearance of any uncertified check;
. Receipt by the Subscription and Information Agent of any certified check
or bank draft drawn upon a U.S. bank or of any postal, telegraphic or
express money order; or
. Receipt of collected funds in the subscription account designated above.
Clearance of Uncertified Checks
If you are paying by uncertified personal check, please note that
uncertified checks may take at least five (5) business days to clear. If you
wish to pay the subscription price by uncertified personal check, we urge you
to make payment sufficiently in advance of the time the rights offering
expires to ensure that your payment is received and clears by that time. We
urge you to consider using a certified or cashier's check, money order or wire
transfer of funds to avoid missing the opportunity to exercise your Rights.
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<PAGE>
Delivery of Subscription Materials and Payment
You should deliver your Rights certificate and payment of the subscription
price or, if applicable, notices of guaranteed delivery, to the Subscription
and Information Agent by one of the methods described below:
If by mail to:
If by hand delivery or by overnight courier to:
You may call the Subscription and Information Agent at .
Your delivery to an address other than the address set forth above will not
constitute valid delivery.
Calculation of Rights Exercised
If you do not indicate the number of Rights being exercised, or do not
forward full payment of the total subscription price payment for the number of
Rights that you indicate are being exercised, then you will be deemed to have
exercised your basic subscription privilege with respect to the maximum number
of Rights that may be exercised with the aggregate subscription price payment
you delivered to the Subscription and Information Agent. If your aggregate
subscription price payment is greater than the amount you owe for your
subscription, you will be deemed to have exercised your over-subscription
privilege to purchase the maximum number of shares with your overpayment. If we
do not apply your full subscription price payment to your purchase of shares of
our common stock, we will return the excess amount to you my mail without
interest or deduction as soon as practicable after the expiration date of the
rights offering.
Exercising a Portion of Your Rights
If you subscribe for fewer than all of the shares of our common stock
represented by your Rights certificate, you may receive from the Subscription
and Information Agent a new Rights certificate representing your unused Rights.
Your Funds Will Be Held by the Subscription and Information Agent Until Shares
of Common Stock Are Issued
The Subscription and Information Agent will hold your payment of the
subscription price payment in a segregated account with other payments received
from other Rights holders until we issue your shares to you.
Signature Guarantee May Be Required
Your signature on each Rights certificate must be guaranteed by an eligible
institution such as a member firm of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc., or from a
commercial bank or trust company having an office or correspondent in the
United States, subject to standards and procedures adopted by the Subscription
and Information Agent, unless:
. Your Rights certificate provides that shares are to be delivered to you
as record holder of those Rights; or
. You are an eligible institution.
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Notice to Beneficial Holders
If you are a broker, a trustee or a depositary for securities who holds
shares of our common stock for the account of others on , 1999, the record
date for the rights offering, you should notify the respective beneficial
owners of such shares of the rights offering as soon as possible to find out
their intentions with respect to exercising their Rights. You should obtain
instructions from the beneficial owner with respect to the Rights, as set forth
in the instructions we have provided to you for your distribution to beneficial
owners. If the beneficial owner so instructs, you should complete the
appropriate Rights certificates and submit them to the Subscription and
Information Agent with the proper payment. If you hold shares of our common
stock for the account(s) of more than one beneficial owner, you may exercise
the number of Rights to which all such beneficial owners in the aggregate
otherwise would have been entitled had they been direct record holders of our
common stock on the record date for the rights offering, provided that, you, as
a nominee record holder, make a proper showing to the Subscription and
Information Agent by submitting the form entitled "Nominee Holder
Certification" which we will provide to you with your rights offering
materials.
Beneficial Owners
If you are a beneficial owner of shares of our common stock or will receive
your Rights through a broker, custodian bank or other nominee, we will ask your
broker, custodian bank or other nominee to notify you of this rights offering.
If you wish to sell or exercise your Rights, you will need to have your broker,
custodian bank or other nominee act for you. If you hold certificates of our
common stock directly and would prefer to have your broker, custodian bank or
other nominee, you should contact your nominee and request it to effect the
transactions for you. To indicate your decision with respect to your Rights,
you should complete and return to your broker, custodian bank or other nominee
the form entitled "Beneficial Owners Election Form." You should receive this
form from your broker, custodian bank or other nominee with the other rights
offering materials. If you wish to obtain a separate Rights certificate, you
should contact the nominee as soon as possible and request that a separate
Rights certificate be issued to you.
Instructions for Completing Your Rights Certificate
You should read and follow the instructions accompanying the Rights
certificates carefully.
If you want to exercise your Rights, you should send your Rights
certificate(s) with your subscription price payment to the Subscription and
Information Agent. Do not send your Rights certificate(s) and subscription
price payment to us.
You are responsible for the method of delivery of your Rights certificate(s)
with your subscription price payment to the Subscription and Information Agent.
If you send your Rights certificate(s) and subscription price payment by mail,
we recommend that you send them by registered mail, properly insured, with
return receipt requested. You should allow a sufficient number of days to
ensure delivery to the Subscription and Information Agent prior to the time the
rights offering expires. Because uncertified personal checks may take at least
five (5) business days to clear, you are strongly urged to pay, or arrange for
payment, by means of certified or cashier's check, money order or wire transfer
of funds.
Determinations Regarding the Exercise of Your Rights
We will decide all questions concerning the timeliness, validity, form and
eligibility of your exercise of your Rights and our determinations will be
final and binding. We, in our sole discretion, may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as we may determine. We may reject the exercise of any of your Rights
because of any defect or irregularity. We will not receive or accept any
subscription until all irregularities have been waived by us or cured by you
within such time as we decide, in our sole discretion.
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Neither we nor the Subscription and Information Agent will be under any duty
to notify you of any defect or irregularity in connection with your submission
of Rights certificates and we will not be liable for failure notify you of any
defect or irregularity. We reserve the right to reject your exercise of Rights
if your exercise is not in accordance with the terms of the rights offering or
in proper form. We will also not accept your exercise of Rights if our issuance
of shares of our common stock to you could be deemed unlawful under applicable
law or is materially burdensome to Samsonite.
Guaranteed Delivery Procedures
If you wish to exercise Rights, but you do not have sufficient time to
deliver the Rights certificate evidencing your Rights to the Subscription and
Information Agent on or before the time your Rights expire, you may exercise
your Rights by the following guaranteed delivery procedures:
. Deliver your subscription price payment in full for each share you
subscribed for under your subscription privileges in the manner set
forth above in "--Method of Payment" on page to the Subscription and
Information Agent on or prior to the expiration date;
. Deliver the form entitled "Notice of Guaranteed Delivery", substantially
in the form provided with the "Instructions as to Use of Samsonite
Corporation Rights Certificates" distributed with your Rights
certificates at or prior to the expiration date; and
. Deliver the properly completed Rights certificate evidencing your Rights
being exercised and, the related nominee holder certification, if
applicable, with any required signatures guaranteed, to the Subscription
and Information Agent within three (3) business days following the date
of your Notice of Guaranteed Delivery.
Your Notice of Guaranteed Delivery must be delivered in substantially the
same form provided with the Instructions as to the Use of Samsonite Rights
Certificates, which will be distributed to you with your Rights certificate.
Your Notice of Guaranteed Delivery must come from an eligible institution, or
other eligible guarantee institutions which are members of, or participants in,
a signature guarantee program acceptable to the Subscription and Information
Agent.
In your Notice of Guaranteed Delivery, you must state:
. Your name;
. The number of Rights represented by your Rights certificates, the number
of shares of our common stock you are subscribing for under your basic
subscription privilege and the number of shares of our common stock you
are subscribing for under your over-subscription privilege, if any; and
. Your guarantee that you will deliver to the Subscription and Information
Agent any Rights certificates evidencing the Rights you are exercising
within three (3) business days following the date the Subscription and
Information Agent receives your Notice of Guaranteed Delivery.
You may deliver your Notice of Guaranteed Delivery to the Subscription and
Information Agent in the same manner as your Rights certificates at the address
set forth above under "--Delivery of Subscription Materials and Payment" on
page . You may alternatively transmit your Notice of Guaranteed Delivery to
the Subscription and Information Agent by facsimile transmission (Telecopy No.:
or ). To confirm facsimile deliveries, you may call .
The Subscription and Information Agent will send you additional copies of the
form of Notice of Guaranteed Delivery if you need them. Please call to
request any copies of the form of Notice of Guaranteed Delivery. Banks and
brokerage firms please call to request any copies of the form of Notice
of Guaranteed Delivery.
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Questions About Exercising Rights
If you have any questions or require assistance regarding the method of
exercising your Rights or requests for additional copies of this prospectus,
the Instructions as to the Use of Samsonite Rights Certificates or the Notice
of Guaranteed Delivery, you should contact the Subscription and Information
Agent at the address and telephone number set forth above under "--Delivery of
Subscription Materials and Payment" on page .
Subscription and Information Agent
We have appointed to act as Subscription and Information Agent for the
rights offering. We will pay all fees and expenses of the Subscription and
Information Agent related to the rights offering and have also agreed to
indemnify the Subscription and Information Agent from liabilities which it may
incur in connection with the rights offering.
No Revocation
Once you have exercised your subscription privileges, you may not revoke your
exercise. Rights not exercised prior to the expiration date of the rights
offering will expire.
Procedures for DTC Participants
We expect that Rights will be eligible for transfer through, and that your
exercise of your basic subscription privilege and your over-subscription
privilege may be made through, the facilities of the Depository Trust Company.
If your Rights are held of record through DTC, you may exercise your basic
subscription privilege and your over-subscription privilege by instructing DTC
to transfer your Rights from your account to the account of the Subscription
and Information Agent, together with certification as to the aggregate number
of Rights you are exercising and the number of shares of our common stock you
are subscribing for under your basic subscription privilege and your over-
subscription privilege, if any, and your subscription price payment for each
share you subscribed for pursuant to your basic subscription privilege and your
over-subscription privilege.
Subscription Price
The subscription price is $ per share. For more information with respect to
how the subscription price was determined, see "Questions and Answers About the
Rights Offering," "Risk Factors" and "Apollo Bridge Investment and Back-stop
Agreement" included elsewhere in this prospectus.
Extensions and Termination
We may extend the rights offering and the period for exercising your Rights,
in our sole discretion. In addition, we may terminate the rights offering at
any time prior to the time the rights offering expires.
No Board Recommendation
An investment in shares of our common stock must be made according to each
investor's evaluation of its own best interests. Our board of directors makes
no recommendation to Rights holders regarding whether they should exercise
their Rights. You should not view Apollo's bridge investment or back-stop
agreement as a recommendation or other indication by our Board of Directors, or
Apollo, that the exercise of your Rights is in your best interests.
Foreign and Other Stockholders
Rights certificates will be mailed to Rights holders whose addresses are
outside the United States or who have an APO or FPO address. To exercise such
Rights, you must notify the Subscription and Information Agent, and take all
other steps which are necessary to exercise your Rights on or prior to the
expiration date of the rights offering. If the procedures set forth in the
preceding sentence are not followed prior to the expiration date your Rights
will expire.
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Shares of Common Stock Outstanding after the Rights Offering and the Conversion
of the Series Z Convertible Preferred Stock
Assuming we issue all of the shares in the rights offering and assuming the
conversion of all shares of the Series Z Convertible Preferred Stock sold to
Apollo, approximately shares of our common stock will be issued and
outstanding after the rights offering expires. Based on the shares of our
common stock issued and outstanding as of , 1999, our issuance of shares in
the rights offering and upon conversion of all shares of the Series Z
Convertible Preferred Stock would result (on a pro forma basis as of , 1999)
in a % increase in the number of outstanding shares of our common stock.
Other Matters
We are not making this rights offering in any state or other jurisdiction in
which it is unlawful to do so, nor are we selling or accepting any offers to
purchase any shares of our common stock from Rights holders who are residents
of those states or other jurisdictions. We may delay the commencement of the
rights offering in those states or other jurisdictions, or change the terms of
the rights offering, in order to comply with the securities law requirements of
those states or other jurisdictions. We may decline to make modifications to
the terms of the rights offering requested by those states or other
jurisdictions, in which case, if you are a resident in those states or
jurisdictions you will not be eligible to participate in the rights offering.
Apollo Bridge Investment and Back-stop Agreement
On April 7, 1999, we entered into an agreement with Apollo, pursuant to which
Apollo agreed to make a "bridge" investment equal to the aggregate subscription
price of the rights distributable to Apollo and an affiliate in the rights
offering and to "back-stop" the rights offering by purchasing additional shares
not subscribed for by other stockholders, subject to a maximum total investment
by Apollo of $37.5 million. In consideration of its agreement, we agreed to pay
Apollo a fee of approximately $1 million. The terms and conditions of our
agreement with Apollo, including the purchase price per share of the securities
purchased by Apollo, on an as converted basis, were negotiated between
representatives of our management and Apollo.
In April 1999, Apollo made its bridge investment by purchasing 1,000 shares
of our non-voting Series Z Convertible Preferred Stock for a total purchase
price of $25,410,000. The Series Z Convertible Preferred Stock is initially
convertible into common stock at the rate of $6 per common share for a total of
4,235,000 shares. Apollo made its bridge investment in the form of the Series Z
Convertible Preferred Stock to comply with certain provisions of the U.S.
antitrust laws. The Series Z Convertible Preferred Stock is intended to be the
economic equivalent of common stock. It has a nominal liquidation preference,
and is entitled to receive dividends equal to the dividends payable on the
shares of common stock into which it is convertible.
The Series Z Convertible Preferred Stock's initial conversion rate of $6 per
common share is slightly in excess of the average of the closing prices of our
common stock on Nasdaq for the five trading days immediately preceding April 7,
1999. Under the terms of our agreement with Apollo, we are required to set the
subscription price for the shares of common stock offered in the rights
offering at $6 per share, provided that we may determine to set the
subscription price at more than $6 per share, but not more than $7 per share,
or at less than $6 per share, but not less than $5 per share. The agreement
with Apollo provides that we cannot set the subscription price at a price other
than $6 per share unless the NASD confirms that a downward adjustment of the
conversion rate of the preferred stock will not require shareholder approval
under Rule 4460(i)(l)(D) of the Nasdaq Stock Marketplace Rules. In the event
that the subscription price is set at a price which is different than $6 per
share, the conversion rate of the Series Z Convertible Preferred Stock will be
adjusted to reflect the difference in price.
Pursuant to the back-stop agreement, if the rights offering is not fully
subscribed by our stockholders, Apollo has agreed to purchase additional shares
of our common stock at the same subscription price as shares offered in the
rights offering, up to a total additional subscription by Apollo of
$12,090,000. If Apollo's
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purchase of shares of common stock pursuant to the back-stop agreement is not
permitted under U.S. antitrust laws at the time the rights offering is
consummated, Apollo has agreed to purchase Series Z Convertible Preferred Stock
which is convertible into the number of shares of common stock that Apollo
would have purchased if its purchase of common stock had been permitted under
U.S. antitrust laws.
For a fuller understanding of Apollo's bridge investment and back-stop
agreement, you should carefully read our agreement with Apollo, dated as of
April 7, 1999, which is included as an exhibit to the registration statement
containing this Prospectus.
As was required by the terms of the indenture for the Company's 10 3/4%
Senior Subordinated Notes due 2008, Samsonite's board of directors received the
written opinion of a nationally recognized investment bank which acted as our
financial advisor in connection with Apollo's bridge investment and backstop
agreement. The opinion stated that the financial terms of the bridge investment
and backstop arrangement are fair, from a financial point of view, to the
Company. The opinion is subject to various qualifications customary for
opinions of this kind.
In addition, Apollo has agreed to vote, and to cause its affiliates to vote,
. any shares of common stock issued upon conversion of the Series Z
Convertible Preferred Stock,
. any shares of common stock acquired in connection with Apollo's back-
stop agreement and
. any shares of common stock acquired by Apollo or its affiliates upon
exercise of Rights acquired in the open market
pro rata with all other shares of common stock outstanding so that the number
of shares that Apollo and its affiliates are entitled to vote in their sole
discretion does not exceed the percentage of the outstanding common stock
beneficially owned by Apollo and its affiliates immediately prior to the
issuance and sale of the Series Z Convertible Preferred Stock.
The Series Z Convertible Preferred Stock and the common stock issuable upon
conversion of the Series Z Convertible Preferred Stock have not been registered
under the Securities Act of 1933 and are subject to transfer restrictions.
Apollo or any person designated by Apollo are currently entitled to require us
to effect three registrations under the Securities Act of 1933 for the resale
of the shares of common stock underlying the Series Z Convertible Preferred
Stock. We have the ability to delay or postpone the registration or the sale of
these shares under a registration statement during specific periods of time
called "blackout periods." Upon any demand by Apollo or any person designated
by Apollo, we are required to prepare and file as expeditiously as possible and
to cause to be effective as soon as practicable thereafter, a registration
statement covering the shares of common stock requested to be registered. In
addition, Apollo or any person designated by Apollo have the right to include
their securities in any registration statement relating to any of our common
equity securities filed under the Securities Act of 1933 for its own account or
for the account of any of its securityholders, subject to some exceptions and
conditions. We have agreed to pay the costs of these registrations, other than
underwriting discounts and commissions on shares sold by the selling
stockholders.
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Use of Proceeds
Our minimum gross proceeds from this rights offering will be $37.5 million,
which represents proceeds from Apollo's bridge investment and back-stop
agreement. If at least % of the Rights distributed to stockholders, other
than Apollo and an affiliate, are exercised, the gross proceeds from the rights
offering will be $75 million. We used a portion of the net proceeds from the
bridge investment to pay the cash premium for the insurance policy covering
various lawsuits filed against us and related parties between March 13, 1998
and March 9, 1999, and to pay certain costs incurred to defend these lawsuits.
Under the terms of our Credit Facility, we are required to use up to $30
million of the net proceeds remaining after the payments referred to above, to
repay borrowings under the Credit Facility. Any remaining net proceeds will be
available for general corporate purposes.
As of January 31, 1999, there were approximately $135.1 million of
outstanding borrowings under our Credit Facility which bore interest at a
weighted average rate of approximately 7.23% per annum. See "Description of Our
Principal Indebtedness" below.
Price Range of Our Common Stock and Dividend Policy
Our common stock is presently traded on Nasdaq under the symbol "SAMC." The
table below sets forth the high and low sale prices for our common stock for
fiscal years 1998 and 1999 and through , 1999 as reported on the Nasdaq.
The closing price of our common stock on Nasdaq on , 1999, was $ per
share.
<TABLE>
<CAPTION>
High Low
---- ----
<S> <C> <C>
Fiscal 1998
<CAPTION>
Fiscal quarter ended:
<S> <C> <C>
April 30, 1997.................................... $50 7/8 $37 1/4
July 31, 1997..................................... 51 1/4 40 3/4
October 31, 1997.................................. 53 1/8 35 7/8
January 31, 1998.................................. 46 3/4 25
Fiscal 1999
Fiscal quarter ended:
April 30, 1998.................................... $37 7/8 $26 9/16
July 31, 1998..................................... 33 5/8 7 1/2(a)
October 31, 1998.................................. 8 9/16 4 1/8
January 31, 1999.................................. 9 15/16 5
Fiscal 2000
Fiscal quarter ended:
April 30, 1999.................................... $ 6 7/8 $ 4 7/8
May 1 through , 1999............................
</TABLE>
- --------
(a) We completed our Recapitalization on June 24, 1998. From May 1, 1998
through June 23, 1998, the high and low sale prices for our common stock
were $33 5/8 and $23 1/2, respectively. From June 24 through July 31, 1998,
the high and low sale prices for our common stock were $12 9/16 and $7 1/2,
respectively.
As of May 3, 1999, the number of holders of record of our common stock was
91.
We have not declared any cash dividends on our common stock and do not
currently anticipate paying cash dividends in the foreseeable future. The
payment of dividends on our common stock is a business decision made from time
to time by our board of directors based on considerations which the board finds
relevant. In addition, dividends are payable only out of funds which are
legally available under Delaware law and are restricted by provisions in our
debt instruments. The payment of cash dividends on our common stock is
restricted by the terms of our Credit Facility, our 10 3/4% Notes Indenture and
our 13 7/8% Senior Preferred Stock.
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Capitalization
The following table presents our cash and cash equivalents, short-term
obligations, and capitalization as of January 31, 1999, and as adjusted to give
pro forma effect to this rights offering (assuming minimum gross proceeds of
$37.5 million) and the application of the proceeds from the rights offering as
if these transactions had occurred on January 31, 1999. See "The Rights
Offering," and "Use of Proceeds." You should read the following information
together with "Selected Historical Consolidated Financial Information,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and the notes to those
financial statements included elsewhere in this prospectus.
<TABLE>
<CAPTION>
As of January 31, 1999
-----------------------------------
As
Actual Adjustments(a) Adjusted
--------- ------------- ---------
(In thousands, except share
amounts)
<S> <C> <C> <C>
Cash and cash equivalents................. $ 41,932 $ -- $ 41,932
========= ======= =========
Short-term debt and current installments
of long-term obligations................. $ 15,332 $ (110) $ 15,222
--------- ------- ---------
Long-term obligations:
Credit Facility......................... 134,174 (13,590) 120,584
10 3/4% Senior Subordinated Notes....... 350,000 -- 350,000
Capital leases and other obligations.... 11,467 -- 11,467
11 7/8% Series B Senior Subordinated
Notes.................................. 532 -- 532
--------- ------- ---------
Total long-term obligations........... 496,173 (13,590) 482,583
--------- ------- ---------
Total obligations................... 511,505 (13,700) 497,805
========= ======= =========
13 7/8% Senior Preferred Stock; 186,723
shares issued and
outstanding (b).......................... 178,329 -- 178,329
Stockholders' equity:
Preferred stock, $.01 par value;
2,000,000 shares authorized............ -- -- --
Common stock, $.01 par value; 60,000,000
shares authorized; 21,000,039 shares
issued; 10,500,039 shares issued and
outstanding; and 16,750,039 shares to
be issued and outstanding (c).......... 210 63 273
Additional paid-in capital.............. 436,351 35,187 471,538
Accumulated deficit..................... (299,581) -- (299,581)
Foreign currency translation
adjustment............................. (12,426) -- (12,426)
Treasury stock, at cost (10,500,000
shares)................................ (420,000) -- (420,000)
--------- ------- ---------
Total stockholders' equity (deficit).. $(295,446) $35,250 $(260,196)
========= ======= =========
Total capitalization (including
short-term debt,
net of cash and cash equivalents).. $ 352,456 $21,550 $ 374,006
========= ======= =========
</TABLE>
- --------
(a) A portion of the net proceeds from Apollo's bridge investment were used to
pay the cash premium for an insurance policy covering various lawsuits
filed against us and related parties between March 13, 1998 and March 9,
1999 and certain costs incurred to defend these lawsuits.
(b) The carrying value of our 13 7/8% Senior Preferred Stock, which is
mandatorily redeemable and which has a liquidation preference of $186.7
million at January 31, 1999, is recorded net of unamortized issuance costs
of approximately $6.5 million and the aggregate value assigned to our
Warrants of $5.8 million, which are being amortized over the twelve-year
term of our 13 7/8% Senior Preferred Stock.
(c) Gives effect to conversion of the Series Z Convertible Preferred Stock but
does not include shares issuable upon exercise of the warrants issued in
connection with the Recapitalization and shares issuable upon exercise of
employee stock options. Of the 21,000,039 shares of common stock issued,
10.5 million shares were purchased by us in the Recapitalization and are
held in treasury.
26
<PAGE>
Selected Historical
Consolidated Financial Information
Our selected historical consolidated financial information presented below
has been derived from our audited consolidated financial statements. You should
read this information together with the other information contained under the
captions "Capitalization," "Management's Discussion and the Analysis of
Financial Condition and Results of Operations" and with our consolidated
financial statements and related notes to those financial statements included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year Ended January 31,
--------------------------------------------------
1995 1996 1997 1998 1999
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net Sales................. $ 635,452 $675,209 $741,138 $736,875 $ 697,421
Cost of Goods Sold........ 373,967 414,691 449,333 424,349 413,124
--------- -------- -------- -------- ---------
Gross Profit.............. 261,485 260,518 291,805 312,526 284,297
Selling, General and
Administrative
Expenses (a)............. 197,716 203,701 233,761 234,257 263,892
Amortization of Intangible
Assets (b)............... 67,189 63,824 31,837 7,101 5,633
Provision for
Restructuring
Operations............... -- 2,369 10,670 1,866 6,598
--------- -------- -------- -------- ---------
Operating Income (Loss)... (3,420) (9,376) 15,537 69,302 8,174
Interest Income........... 2,909 4,709 1,419 2,574 2,453
Interest Expense and
Amortization of Debt
Issue Costs and Premium
(c)...................... 37,875 39,974 35,670 19,918 39,954
Other Income (Expenses)--
Net...................... 2,729 3,967 18,821 28,294 (25,351)
Income Tax Expense........ 10,619 9,095 10,389 23,088 26,800
Minority Interest in
Earnings of
Subsidiaries............. (931) (1,385) (1,041) (287) (840)
--------- -------- -------- -------- ---------
Income (Loss) from
Continuing Operations.... (47,207) (51,154) (11,323) 56,877 (82,318)
Income (Loss) from
Operations Discontinued
and Sold and
Extraordinary Items...... (64,372) (10,293) -- (16,178) (6,460)
--------- -------- -------- -------- ---------
Net Income (Loss) (c)..... (111,579) (61,447) (11,323) 40,699 (88,778)
Senior Preferred Stock
Dividends (c)............ -- -- (15,632)
--------- -------- -------- -------- ---------
Net Income (Loss)
Available to Common
Stockholders............. $(111,579) $(61,447) $(11,323) $ 40,699 $(104,410)
========= ======== ======== ======== =========
Income (Loss) per Common
Share--Basic (c):
Continuing Operations... $ (3.05) $ (3.24) $ (.71) $ 2.81 $ (6.79)
Net Income (Loss)....... (7.22) (3.89) (.71) 2.01 (7.24)
Income (Loss) per Common
Share--Assuming Dilution
(c):
Continuing Operations... (3.05) (3.24) (.71) 2.70 (6.79)
Net Income (Loss)....... (7.22) (3.89) (.71) 1.93 (7.24)
Balance Sheet Data (as of
end of period):
Property, Plant and
Equipment, Net........... $ 137,686 $140,912 $143,959 $142,351 $ 149,641
Total Assets.............. 866,000 607,443 592,658 610,049 621,435
Long-Term Obligations
(Including Current
Installments)............ 417,175 310,959 290,617 179,223 503,096
Senior Preferred Stock.... -- -- -- -- 178,329
Stockholders' Equity
(Deficit)................ 148,472 25,116 24,998 208,886 (295,446)
Other Data:
Depreciation and
Amortization............. 85,486 84,101 53,889 28,594 27,054
Capital Expenditures...... 17,963 21,668 31,093 36,313 26,679
Adjusted EBITDA (d)....... 81,931 78,335 84,879 108,328 50,301
</TABLE>
(see footnotes on the following pages)
27
<PAGE>
Impact of Fair Value Adjustments Attributable to the Reorganization Of Astrum,
Restructurings and Certain Other Expenses:
Included in our statements of operations are amortization and depreciation
related to adjustments of assets and liabilities to fair value in connection
with our adoption of 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") in June 1993 in
conjunction with the reorganization of Astrum International Corp. Prior to July
14, 1995, we were a subsidiary of Astrum. On July 14, 1995, Astrum merged with
Samsonite Corporation and changed its name to Samsonite Corporation. The most
significant adjustment related to reorganization value in excess of
identifiable assets which was amortized over the three-year period ended June
1996. We also recorded fresh start adjustments to reflect tradenames, 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 are being
depreciated over their respective useful lives, primarily ranging from two to
six years. In addition, our statements of operations include provisions for
restructuring operations in fiscal years 1996 through 1999 as well as certain
other expenses associated with the fiscal 1997 restructuring and management
team changes, and expenses in fiscal 1999 related to the Recapitalization.
Due to the significance of these items, we believe that it is useful to
isolate their impact on operating income (loss) as shown below. This
information does not represent and should not be considered an alternative to
operating income, any other measure of performance as determined by generally
accepted accounting principles or as an indicator of operating performance. The
information presented may not be comparable to similar presentations reported
by other companies.
<TABLE>
<CAPTION>
Year Ended January 31,
-----------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Impact on Operating Income (Loss)
Operating Income (Loss)............. $(3,420) $(9,376) $15,537 $69,302 $ 8,174
Fresh Start Amortization and
Depreciation (b)................... 70,599 66,433 34,484 8,738 5,608
Provision for Restructuring
Operations......................... -- 2,369 10,670 1,866 6,598
Certain Other Expenses Associated
with Restructuring, Operations,
Management Changes and the
Recapitalization (a)............... -- -- 5,400 -- 9,083
------- ------- ------- ------- -------
Operating Income Before Fresh Start
Amortization and Depreciation,
Provision for Restructuring
Operations, Certain Other Expenses
Associated with Restructuring
Operations, Management Changes and
the Recapitalization............... $67,179 $59,426 $66,091 $79,906 $29,463
======= ======= ======= ======= =======
</TABLE>
(see footnotes on the following pages)
28
<PAGE>
Notes to Selected Historical and Pro Forma Consolidated Financial Information
(a) Selling, General and Administrative Expenses include $9.1 million of
expenses during the year ended January 31, 1999 for (1) legal, printing and
other expenses associated with the Recapitalization of $4.8 million and (2)
compensation expenses recorded for adjustments and modifications made to
outstanding stock options as a result of the Recapitalization of $4.3
million. Selling, General and Administrative Expenses include $5.4 million
of expenses during the year ended January 31, 1997 for (1) consulting fees
to establish a restructuring plan ($0.8 million), (2) the cessation of the
former chief executive officer's employment and the change in management
($4.1 million) and (3) expenses in excess of the original provision in
fiscal 1996 for the consolidation of American Tourister manufacturing
facilities ($0.5 million).
(b) We adjusted our assets and liabilities to their fresh start values pursuant
to SOP 90-7 and created a new entity for financial reporting purposes.
Since June 30, 1993, our 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 ending
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.
Fresh Start Amortization and Depreciation consists of the following:
<TABLE>
<CAPTION>
Year Ended January 31,
-------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------ ------
(In thousands)
<S> <C> <C> <C> <C> <C>
Fresh Start Amortization:
Amortization of Reorganization Value
in Excess of Identifiable Assets.... $55,072 $55,072 $22,947 $ -- $ --
Amortization of Licenses, Patents and
Trademarks and Other................ 12,117 7,823 7,976 6,184 4,405
------- ------- ------- ------ ------
Total Fresh Start Amortization
Included in Amortization of
Intangibles......................... 67,189 62,895 30,923 6,184 4,405
------- ------- ------- ------ ------
Fresh Start Depreciation--Property
and Equipment:
Included in Cost of Goods Sold....... 2,790 2,895 2,914 2,093 982
Included in Selling, General and
Administrative Expenses............. 620 643 647 461 221
------- ------- ------- ------ ------
Total Fresh Start Depreciation....... 3,410 3,538 3,561 2,554 1,203
------- ------- ------- ------ ------
Total Fresh Start Amortization and
Depreciation........................ $70,599 $66,433 $34,484 $8,738 $5,608
======= ======= ======= ====== ======
</TABLE>
(c) If the Recapitalization had occurred on February 1, 1998, Pro Forma
Interest Expense and Amortization of Debt Issue Costs and Premium, Pro
Forma Senior Preferred Stock Dividends, Pro Forma Net Income (Loss), and
Pro Forma Income (Loss) per Common Share--Basic and Assuming Dilution for
the year ended January 31, 1999 would have been $54.3 million, $26.6
million, $(129.7 million), and $(12.65), respectively. Such pro forma
amounts include pro forma adjustments to increase interest expense and
Senior Preferred Stock Dividends by $14.3 million and $11.0 million,
respectively, as if the 10 3/4% Notes and the Senior Redeemable Preferred
Stock had been issued on February 1, 1998 and the additional borrowings
under our Credit Facility had occurred on February 1, 1998.
(d) EBITDA is defined as Income (Loss) from Continuing Operations plus (1)
Interest Expense and Amortization of Debt Issue Costs and Premium net of
Interest Income, (2) Income Tax Expense, (3) Minority Interest in Earnings
of Subsidiaries, and (4) Depreciation and Amortization.
29
<PAGE>
We believe that EBITDA provides useful information regarding our ability
to service our 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 our operating performance or as a measure of
our liquidity. Other companies may calculate EBITDA in a different manner
than ours. 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 us 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.
Adjustments to EBITDA to arrive at Adjusted EBITDA include various items
of income (expense) including (1) restructuring provisions; (2) other
income in prior years primarily related to various items from previous
operations; and (3) accrued costs related to the defense and resolution of
shareholder litigation; expenses of the Recapitalization; gain (loss) on
disposition of fixed assets, net; and other items, net; which items
together aggregate $(2.9) million, $(0.4) million, $(3.4) million, $(17.9)
million, and $40.4 million for the years ended January 31, 1995, 1996,
1997, 1998, and 1999, respectively, which management believes should be
added to (deducted from) the calculation of EBITDA. Adjusted EBITDA for
fiscal 1998 reflect a reduction of $4.1 million for negative production
variances incurred during the last half of fiscal 1998.
30
<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion and analysis should be read in conjunction with
"Selected Historical and Pro Forma Consolidated Financial Information" and our
consolidated financial statements and the notes to those financial statements
appearing elsewhere in this prospectus. Our fiscal year ends on January 31.
References to a fiscal year denote the calendar year in which the fiscal year
ended. For example, "fiscal 1999" refers to the 12 months ended January 31,
1999. Our continuing operations consist of a single business segment, the
manufacture and sale of luggage and luggage related products.
Results of Operations
We analyze our net sales and operations by the following categories:
. ""European operations" which include its European sales, manufacturing
and distribution operations whose reporting currency is the Belgian
franc;
. ""the Americas operations" which include sales, manufacturing, and
distribution operations in the United States, Canada and Latin America;
. ""Asian operations" which include the sales, manufacturing and
distribution operations in India, China, Singapore, South Korea, Hong
Kong and Taiwan; and
. licensing operations and corporate overhead.
Divisions previously included in the "International" category have been
reclassified to conform with the current year presentation described above.
Fiscal 1999 Compared to Fiscal 1998
General. Results of European operations were translated from Belgian francs
to U.S. dollars in fiscal 1999 and fiscal 1998 at average rates of
approximately 36.32 and 35.67 francs to the U.S. dollar, respectively. This
decrease in the value of the Belgian franc of 1.8% resulted in decreases in
European reported sales, cost of sales and other expenses in fiscal 1999
compared to fiscal 1998. 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". We enter into
forward foreign exchange contracts and option contracts to reduce our economic
exposure on translated earnings from foreign operations and/or royalty
agreements to fluctuations in currency exchange rates for the Belgian franc and
other foreign currencies. Such instruments are marked to market at the end of
each accounting period; realized and unrealized gains and losses are recorded
in Other Income (Expense)--Net. During fiscal 1999, we had net gains from such
instruments of $0.2 million including an unrealized loss of $1.2 million;
during fiscal 1998, we had net gains on such instruments of $6.5 million. We
estimate the reduction in operating income from the year-to-year strengthening
of the U.S. dollar versus the Belgian franc to be approximately $0.5 million
and $5.6 million in fiscal 1999 and 1998, respectively.
Net Sales. Consolidated net sales decreased from $736.9 million in fiscal
1998 to $697.4 million in fiscal 1999, a decrease of $39.5 million. Fiscal 1999
sales were adversely affected by the decrease in the value of the Belgian franc
compared to the U.S. dollar in fiscal 1998. Without the effect of the exchange
rate difference, fiscal 1999 sales would have decreased by $33.9 million or
approximately 4.6%.
On a U.S. dollar basis, sales from European operations increased from $277.2
million in fiscal 1998 to $305.0 million in fiscal 1999, an increase of $27.8
million. Expressed in the local European reporting currency (Belgian francs),
fiscal 1998 sales increased by 12.1%, or the U.S. constant dollar equivalent of
$33.4 million, from fiscal 1998; however, the local currency increase was
partially offset by a $5.6 million exchange rate
31
<PAGE>
difference. Sales of hardside products were 7.8% above the prior year due to
the successful introduction of new product lines, growth in sales of American
Tourister products, and higher business case sales. Sales of softside products
were 12.8% above the prior year because of strong sales of new products,
excellent growth in sales of business cases and growth of lower priced luggage
products. Sales in most European countries showed significant improvement over
the prior year. New product lines which contributed to sales growth in fiscal
1999 include Spark, Base Hits, and Accent softside products and Oyster II
hardside.
Sales from the Americas operations decreased from $419.3 million in fiscal
1998 to $353.8 million in fiscal 1999, a decrease of $65.5 million or 15.6%.
The decrease was largely due to a decline in U.S. Wholesale sales of $90.1
million, offset by an increase in U.S. retail sales of $19.7 million from the
prior year and an increase in sales from other Americas of $4.9 million.
. U.S. Wholesale revenues of $179.6 million were less than the prior year
of $269.7 million by $90.1 million, or 33.4%. U.S. Wholesale sales
decreased due to a number of factors affecting the U.S. luggage industry
in general, including numerous discount luggage promotions, industry-
wide excess inventory levels at retail, a poor Christmas selling season
for luggage, and to a lesser extent, economic conditions in Asia and
Latin America affecting tourism to the U.S. An additional factor in
declining sales is increased competition from luggage companies which
are offering products which are similar to our products in terms of
style, features and durability of construction. U.S. Wholesale sales
were also negatively impacted by a computer conversion problem which
virtually halted shipments to customers during the first 20 days of July
1998 and slowed shipments through the remainder of July 1998 and part of
August 1998. Conversion of the U.S. distribution system was the last
phase of the project to upgrade computer systems in the U.S., which
included the installation of the new financial, manufacturing and
distribution software. The computer conversion problems were largely
resolved during the third quarter of the fiscal year such that shipping
and invoicing functions were restored.
We expect U.S. Wholesale sales to continue to be depressed through
fiscal 2000 because of the continuation of market factors which
affected U.S. Wholesale sales in fiscal 1998 and 1999. We are executing
various strategies to improve its sales and marketing functions, cost
structure and product competitiveness in the U.S. Wholesale market in
response to current competitive conditions.
. U.S. retail sales increased from $108.9 million in the prior year to
$128.6 million in the current year due to the effect of a full year of
operations for the net increase of 40 stores during fiscal 1998 and a
net increase of six stores opened during fiscal 1999. Comparable store
sales decreased by $0.3 million or less than 1% from fiscal 1998.
. Sales from other Americas operations, including Mexico, Canada, Brazil,
Argentina and Uruguay, were increased from the prior year by $4.9
million, from $40.7 million in fiscal 1998 to $45.6 million in fiscal
1999. The increase in sales from other Americas operations is due to new
joint venture operations in Argentina and Uruguay beginning in fiscal
1999, a full year of sales for joint venture operations established in
fiscal 1998 in Brazil, and increases in Canada's sales.
Sales from Asian operations increased from $21.9 million in fiscal 1998 to
$22.9 million in fiscal 1999, an increase of $1.0 million, primarily due to a
full year of operations in India, Hong Kong and Korea which were established in
fiscal 1998, offset by declines in revenues from other Asian countries due to
poor economic conditions in Asia and the effect of weakened Asian currencies on
sales translated to U.S. dollars.
Revenues from U.S. licensing declined $2.8 million compared to revenues in
the prior year due to two large license sale transactions in the prior year
which totaled $2.2 million and the continued decline in revenues from aging
non-luggage McGregor brands. Samsonite and American Tourister label licensing
revenues increased compared to prior year by $0.8 million because of increased
marketing efforts to license the Samsonite brand.
32
<PAGE>
Gross Profit. Consolidated gross profit for fiscal 1999 decreased from fiscal
1998 by $28.2 million. Gross margin decreased by 1.6 percentage points, from
42.4% in fiscal 1998 to 40.8% in fiscal 1999. Because of our excess inventory
position described elsewhere herein, we may experience lower than normal gross
profit margins on the sale of excess inventory.
Gross margins from European operations increased by 0.3 percentage points,
from 39.9% in fiscal 1998 to 40.2% in fiscal 1999. The improvement is due to
stronger sales of higher margin products.
Gross margins for the Americas operations decreased 4.1 percentage points
from 42.7% in fiscal 1998 to 38.6% in fiscal 1999. This was caused primarily by
the decrease in U.S. Wholesale margins from 43.1% to 30.5%, because of lower
sales volume, increased sales allowances, increased sales of discontinued and
obsolete goods, and higher in-bound freight costs offset by lower plant
production variances, period manufacturing and global sourcing costs. Gross
margins for U.S. Retail improved from 48.9% in the prior year to 52.1% in the
current year due primarily to the change in product mix sold during fiscal
1999.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $29.6 million from fiscal 1998 to fiscal 1999. As a percent of
sales, SG&A was 37.8% in fiscal 1999 and 31.8% in fiscal 1998.
SG&A for European operations increased by $5.9 million from fiscal 1998 to
fiscal 1999. The exchange rate difference caused SG&A to decrease by $1.4
million. The remaining increase of $7.3 million was primarily to support
increased sales levels in fiscal 1999. As a percent of sales, Europe's SG&A was
25.2% in 1999 compared to 25.6% in 1998.
SG&A for the Americas operations, including worldwide corporate headquarters,
increased by $22.2 million in fiscal 1999 compared to fiscal 1998. SG&A related
to U.S. Wholesale operations decreased by $2.7 million, from $85.2 million in
fiscal 1998 to $82.5 million in fiscal 1999. As a percent of sales, U.S.
Wholesale SG&A was 45.9% in the current year compared to 31.6% in the prior
year primarily due to higher expenses incurred for warehousing, national
advertising and warranty in 1999 and lower sales volume in fiscal 1999. SG&A
related to U.S. retail operations increased by $11.3 million because of an
increase in the number of stores open and increased sales volume. As a percent
of sales, retail SG&A increased from 42.6% in fiscal 1998 to 44.8% in fiscal
1999. SG&A for other Americas operations increased by $2.4 million primarily
because of new joint venture operations in Argentina and Uruguay beginning in
fiscal 1999 and a full year of operations since the formation of the Brazilian
joint venture in 1998. Corporate SG&A increased by $11.2 million from the prior
year due primarily to $9.1 million in expenses associated with the
Recapitalization including expenses associated with adjustments to employee
stock options, increases in legal costs, and expenses associated with
assessment and implementation of Year 2000 readiness strategies.
SG&A for Asian operations, including India, increased by $1.5 million from
fiscal 1998 due to a full year of operations for new joint venture subsidiaries
in Hong Kong and Korea and a full year of operations for India.
Amortization of Intangible Assets. Amortization of intangible assets
decreased from $7.1 million in fiscal 1998 to $5.6 million in fiscal 1999 due
primarily to Samsonite licenses which became fully amortized in fiscal 1998 and
McGregor licenses which became fully amortized in fiscal 1999.
Provision for Restructuring Operations. The provision for restructuring
operations in fiscal 1999 results primarily from the restructuring of the U.S.
Wholesale and Torhout, Belgium manufacturing operations. The U.S. Wholesale
restructuring provision of $5.6 million recorded in the second quarter of
fiscal 1999 is primarily related to termination and severance costs for the
elimination of approximately 227 positions and costs related to the disposal of
molding and other equipment representing excess capacity. The Torhout, Belgium
restructuring provision of $2.6 million is primarily related to termination and
severance costs for the elimination of approximately 111 positions. The fiscal
1999 provisions are comprised of estimated cash
33
<PAGE>
expenditures of $6.0 million and estimated non-cash charges of $2.2 million.
During the fourth quarter of fiscal 1999, certain excess restructuring reserves
of $1.6 million were reversed, including $0.5 million related to the fiscal
1997 reserve, and $1.1 million related to the fiscal 1999 U.S. Wholesale
restructuring reserve. In fiscal 1998, we recorded a $3.6 million restructuring
provision and reduced the restructuring provision by $1.7 million for excess
accruals related to the fiscal 1997 restructuring. The fiscal 1998 provision
consists primarily of costs associated with involuntary employee terminations
and is comprised of estimated cash expenditures of $3.3 million and estimated
non-cash charges of $0.3 million. The reversals of excess reserves in fiscal
1999 and 1998 was necessary because certain expenses contemplated in the
restructurings did not materialize.
Operating Income. Operating income decreased from $69.3 million in fiscal
1998 to $8.2 million in fiscal 1999. This is a result of decreased gross profit
of $28.2 million, increased SG&A of $29.6 million and an increased
restructuring provision of $4.8 million, net of a decrease in amortization of
intangibles of $1.5 million.
Interest Income. Interest income decreased from the prior year by $0.1
million. Interest income in fiscal 1999 includes interest received from the
temporary investment of funds from proceeds of the financing component of the
Recapitalization until the Recapitalization was completed, interest income
received on a refund of state income taxes, and interest income from temporary
investments. Interest income in fiscal 1998 includes nonrecurring interest
income of $1.4 million received upon recovery of a loan to the settlement trust
created as a result of the Reorganization in 1993.
Interest Expense and Amortization of Debt Issue Costs and Premium. Interest
expense and amortization of debt issue costs increased from $19.9 million in
fiscal 1998 to $40.0 million in fiscal 1999. The increase was caused primarily
by an increase in interest expense related to debt incurred on June 24, 1998 to
finance the Recapitalization.
Other Income (Expense)--Net. See Note 16 to the consolidated financial
statements included elsewhere herein for a comparative analysis of Other Income
(Expense)--Net. We have entered into certain forward exchange contracts to
hedge its exposures to changes in exchange rates. We estimate the reduction in
operating income from the strengthening of the U.S. dollar versus the Belgian
franc from the same period in the prior year to be approximately $0.5 million
and $5.6 million for fiscal 1999 and 1998, respectively. Other Income
(Expense)--Net for fiscal 1999 includes gains from forward exchange contracts
of $0.2 million, including a $1.2 million loss which was unrealized. In fiscal
1998, such transactions resulted in gains of $6.5 million.
Other Income (Expense)--Net also includes $23.2 million expense in fiscal
1999 and $24.9 million income in fiscal 1998 for favorable adjustments to
accruals and allowances related to previous operations and to an accrual for
taxes recorded in connection with the Reorganization and accrued costs related
to shareholder litigation (see Note 15 to the consolidated financial statements
included elsewhere herein). Other expense of $1.8 million was recorded in
fiscal 1999 compared to $0.5 million in fiscal 1998 for equity in loss of
affiliates related to our investment in the China joint venture. Gain (loss) on
disposition of assets held for sale and fixed assets, net improved from a loss
of $0.4 million in fiscal 1998 compared to a gain of $3.2 million in fiscal
1999 due primarily to a gain on the sale of our Murfreesboro, Tennessee
building in fiscal 1999 which had been previously leased to third parties.
Income Taxes. Income tax expense increased from $23.1 million in fiscal 1998
to $26.8 million in fiscal 1999. The increase in tax expense is due primarily
to the net effect of U.S. deferred tax assets which were fully reserved through
valuation allowances during 1999 and the reduction in income tax expense for
previously accrued taxes which were reversed in 1999, tax expense related to
the tax effect in the U.S. of $45 million of deemed dividends received from
Samsonite Europe in connection with the sale and transfer of certain Asian
subsidiaries to Samsonite Europe, and taxes on foreign income; offset by a
reduction in income tax expense
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due to the consolidated pretax loss in 1999. The valuation allowances were
provided for U.S. deferred tax assets based on an assessment of the likelihood
of their realization in view of:
. the current year net operating loss for book and tax purposes,
. expiration dates for tax net operating losses incurred in prior years,
and
. our forecasts of future taxable income taking into account the increased
level of ongoing interest expense as a result of the Recapitalization.
The difference between expected income tax expense, computed by applying the
U.S. statutory rate to income from continuing operations, and income tax
expense recognized, results primarily because of:
. foreign income tax expense provided on foreign earnings,
. valuation allowances provided on deferred tax assets,
. certain nontaxable liability adjustments, and
. state and local income taxes.
See Note 12 to the consolidated financial statements included elsewhere
herein for further analysis of income tax expense.
Extraordinary Loss. During fiscal 1999, we completed a tender offer for our
11 1/8% Series B Senior Subordinated Notes. We retired $52.3 million principal
amount of the Series B Notes and paid redemption premiums and other related
expenses totaling approximately $8.5 million. These costs along with $1.5
million of deferred financing costs were charged to expense and classified as
an extraordinary item, net of tax effects, during fiscal 1999. On June 24,
1998, we completed the Recapitalization. In connection with the
Recapitalization, deferred financing costs related to the refinanced senior
credit facility of $0.4 million were charged to expense and classified as an
extraordinary item, net of tax effects. The extraordinary loss of $16.2 million
for fiscal 1998 resulted from:
. the payment of $17.3 million of redemption and market premiums and the
write-off of deferred financing costs of $4.6 million related to the
early retirement of $137.2 million principal amount of the Series B
Notes,
. the payment of $0.3 million of early retirement fees and the write-off
of $3.9 million of deferred financing costs related to refinancing of
the previous senior credit facility, and
. the tax benefit from the aforementioned transactions of $9.9 million.
See Note 9 to the consolidated financial statements included elsewhere
herein.
Net Income (Loss). We had net income in fiscal 1998 of $40.7 million and a
net loss in fiscal 1999 of $88.8 million. The decrease in the net income from
the prior year of $129.5 million is caused by the effect of the decreases in
operating income and other income (expense)--net and the increase in interest
expense and income tax expense, offset by the decrease in extraordinary loss.
Senior Redeemable Preferred Stock Dividends and Accretion of Senior
Redeemable Preferred Stock Discount. In fiscal 1999, this item represents the
accrual of cumulative dividends on the 13 7/8% Senior Preferred Stock issued in
connection with the Recapitalization and accretion of the discount over the
twelve-year term of the 13 7/8% Senior Preferred Stock.
Net Income (Loss) to Common Stockholders. This amount represents Net Income
(Loss) reduced for dividends payable and the accretion of discount on the
Senior Redeemable Preferred Stock and is the amount used to calculate Income
(Loss) per Common Share.
Fiscal 1998 Compared to Fiscal 1997
General. Results of European operations were translated from Belgian francs
to U.S. dollars in fiscal 1998 and fiscal 1997 at average rates of
approximately 35.67 and 30.93 Belgian francs to the U.S. dollar, respectively.
This decrease in the value of the Belgian franc of 13% resulted in decreases in
European reported
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sales, cost of sales and other expenses in fiscal 1998 compared to fiscal 1997.
The most significant effects from the difference in exchange rates from fiscal
1997 to fiscal 1998 are noted in the following analysis and referred to as an
"exchange rate difference". The Company enters into forward foreign exchange
contracts and option contracts to reduce its economic exposure to fluctuations
in currency exchange rates for the Belgian franc and other foreign currencies.
Such instruments are marked to market at the end of each accounting period;
realized and unrealized gains and losses are recorded in Other Income
(Expense)--Net. During fiscal 1998, the Company had net realized gains from
such instruments of $6.5 million; during fiscal 1997, the Company had net
realized gains on such instruments of $2.8 million. The Company estimates the
reduction in operating income from the year-to-year strengthening of the U.S.
dollar versus the Belgian franc to be approximately $5.6 million and $2.9
million in fiscal 1998 and 1997, respectively.
Net Sales. Consolidated net sales decreased from $741.1 million in fiscal
1997 to $736.9 million in fiscal 1998, a decrease of $4.2 million. Fiscal 1998
sales were adversely affected by the large decrease in the value of the Belgian
franc compared to the U.S. dollar in fiscal 1998. Without the effect of the
exchange rate difference, fiscal 1998 sales would have increased by $38.3
million or approximately 5%.
On a U.S. dollar basis, sales from European operations decreased from $280.8
million in fiscal 1997 to $277.2 million in fiscal 1998, a decrease of $3.6
million. Expressed in the local European reporting currency (Belgian francs),
fiscal 1998 sales increased by 13.8%, or the U.S. constant dollar equivalent of
$38.9 million, from fiscal 1997; however, the increase was more than offset by
a $42.5 million exchange rate difference. Despite the effect of the strong U.S.
dollar on reported sales, Europe's local results were much improved over the
prior year. Sales of hardside products were 7% above the prior year due
primarily to the success of the new Oyster II product. Sales of softside
products were 22% above the prior year because of strong traditional softside
luggage sales, the new Trunk & Co product line, and strong computer and other
softside business case lines. Sales in most European countries increased over
the prior year, with the exceptions of Germany and Belgium, where sales were
down approximately 1% from fiscal 1997.
Sales from the Americas operations increased from $414.2 million in fiscal
1997 to $419.3 million in fiscal 1998, an increase of $5.1 million or 1.2%. The
increase was largely due to an increase in U.S. retail sales of $30.4 million
or 39% from the prior year. Comparable store sales increased by 15.6% from
fiscal 1997 and the number of stores open increased from 149 at January 31,
1997 to 189 at January 31, 1998. The Company has rapidly expanded the number of
retail locations during the past two fiscal years which, along with the
increase in comparable store sales growth, contributed to the 39% growth in
fiscal 1998 sales over fiscal 1997 sales. The Company does not expect to
continue the rate of growth in retail store openings in fiscal 1999 and
therefore will not sustain the level of retail sales growth achieved in fiscal
1998. U.S. Wholesale revenues of $269.7 million were less than the prior year
by $22.6 million, or 7.7%. U.S. Wholesale sales decreased due to market
disruptions caused by the adverse impact of higher pricing strategies, various
forms of cross distribution-channel selling, dealer bankruptcies, and product
availability problems associated with forecasting and production issues. Sales
from other Americas operations, including Mexico, Canada and Latin America,
were less than the prior year by an aggregate of $2.7 million, or 6.2%. The
decrease in the other Americas countries was caused primarily by a decline in
Canadian sales caused by issues related to product standardization requirements
which were modified subsequent to January 31, 1998.
Sales from Asian operations, including India, decreased from $26.2 million in
fiscal 1997 to $21.9 million in fiscal 1998, a decrease of $4.3 million. Sales
previously classified as export sales from the U.S. were moved to distributors
established in Singapore, Hong Kong and South Korea in fiscal 1998. Transition
issues resulting from the formation of the joint ventures and the economic
problems in Asia resulted in decreased sales attributed to this region. Sales
in India were $2.7 million for fiscal 1998. Samsonite products were introduced
to the Indian market through the new Indian manufacturing and distribution
joint venture which completed construction and began operations in April 1997.
Revenues from licensing decreased by $1.4 million from fiscal 1997 to fiscal
1998 primarily because of lower revenues from non-luggage licenses for aging
brand names held by McGregor.
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Gross Profit. Consolidated gross profit for fiscal 1998 increased from fiscal
1997 by $20.7 million. Gross margin increased by 3.0 percentage points, from
39.4% in fiscal 1997 to 42.4% in fiscal 1998.
Gross margins from European operations increased by 0.7 percentage points,
from 39.2% in fiscal 1997 to 39.9% in fiscal 1998. The improvement is due to
price increases in selected product lines and lower costs from standardized
global production sources.
Gross margins for the Americas operations increased 5.0 percentage points
from 37.7% in fiscal 1997 to 42.7% in fiscal 1998. U.S. wholesale margins
increased from 35.0% to 43.1%, primarily as a result of price increases on
product sales to both trade customers and the Company's retail division and
product cost improvements from global sourcing and product design improvements.
The increase in gross margins was achieved despite negative production
variances incurred during the last half of fiscal 1998 of approximately $4.1
million. Margins in the Americas also benefitted from a higher mix of retail
versus wholesale sales compared to the prior year.
Selling, General and Administrative Expenses. Consolidated SG&A increased by
$0.5 million from fiscal 1997 to fiscal 1998. As a percent of sales, SG&A was
31.8% in fiscal 1998 and 31.5% in fiscal 1997.
SG&A for European operations decreased by $5.6 million from fiscal 1997 to
fiscal 1998. The exchange rate difference caused SG&A to decrease by $10.7
million. The remaining increase of $5.1 million was due primarily to higher
variable selling expenses of $2.5 million related to the higher sales levels,
higher advertising expenses of $2.4 million and various other net increases of
$0.2 million.
SG&A for the Americas operations, including worldwide corporate headquarters,
increased by $4.8 million in fiscal 1998 compared to fiscal 1997. SG&A related
to U.S. Wholesale operations was $0.1 million higher in fiscal 1998 compared to
fiscal 1997. In fiscal 1998, U.S. Wholesale price increases and the relatively
high rate of new product introductions were supported by increased co-op
advertising allowances and other sales promotion credits given to customers,
particularly during the second half of fiscal 1998. SG&A related to U.S. retail
operations increased by $10.4 million because of an increase in the number of
stores open and increased sales volume. As a percent of sales, retail SG&A
decreased from 45.9% of sales in fiscal 1997 to 42.6% of sales in fiscal 1998.
SG&A for other Americas operations increased by $1.5 million primarily because
of a new Brazilian joint venture. Corporate SG&A decreased by $7.2 million from
the prior year due primarily to expenses incurred in the prior year related to
a restructuring and changing organization structure in fiscal 1997.
SG&A for Asian operations, including India, increased by $1.4 million from
fiscal 1997 due to the addition of new joint venture subsidiaries in the Far
East and startup of operations in India, net of various cost savings from the
reorganization of export operations from the U.S. to Europe and the Far East.
SG&A related to non-luggage licensing of McGregor brands was consistent with
the prior year, declining by $0.1 million.
Amortization of Intangible Assets. The Company recorded significant
intangible assets as a result of its reorganization in 1993. See Notes 1(b),
1(i) and 7 to the Company's consolidated financial statements included
elsewhere herein for a discussion of the recording and amortization of
intangible assets.
Reorganization value in excess of identifiable assets became fully amortized
in fiscal 1997, which generally accounts for the decrease in amortization of
intangible assets of $24.8 million in fiscal 1998.
Provision for Restructuring Operations. Net restructuring provisions
decreased from $10.7 million in fiscal 1997 to $1.9 million in fiscal 1998. In
fiscal 1998, the Company recorded a $3.6 million restructuring provision and
reduced the restructuring provision by $1.7 million for excess accruals related
to the fiscal 1997
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restructuring. The fiscal 1998 restructuring includes the elimination of
approximately 180 positions in the Mexico City manufacturing plant and 20
management positions in the U.S. and is expected to be completed by July 31,
1998. The provision consists primarily of costs associated with involuntary
employee terminations and is comprised of estimated cash expenditures of $3.3
million and estimated non-cash charges of $0.3 million. The fiscal 1997
provision of $10.7 million resulted from a program to further consolidate
functions and operations in North America, Europe and the Far East, and to
reduce or eliminate certain other operations. The fiscal 1997 restructuring
plan included further consolidation of hardside luggage production to
Samsonite's largest U.S. facility located in Denver, Colorado from other
locations in the Americas, as well as eventual consolidation of many
administrative and control functions, primarily to Denver. The fiscal 1997 plan
included the elimination of as many as 450 positions worldwide, including
approximately 150 manufacturing positions and approximately 300 managerial,
office and clerical positions. The restructuring provision consisted primarily
of costs associated with involuntary employee terminations and was comprised of
estimated cash expenditures of $9.7 million and estimated non-cash charges of
$1.0 million, both on a pretax basis.
Operating Income (Loss). Operating income increased from $15.5 million in
fiscal 1997 to $69.3 million in fiscal 1998. This is a result of increased
gross profit of $20.7 million, the decrease in amortization of intangibles of
$24.8 million, the decrease in restructuring provisions of $8.8 million, net of
the increase in SG&A of $0.5 million.
Interest Income. Interest income increased from the prior year by $1.2
million, primarily as a result of nonrecurring interest income received in
fiscal 1998 upon recovery of a loan to the settlement trust created as a result
of the Reorganization in 1993.
Other Income (Expense)--Net. See Note 16 to the consolidated financial
statements included elsewhere herein for a comparative analysis of Other Income
(Expense)--Net. The Company has entered into certain forward exchange contracts
to hedge its exposures to changes in exchange rates. The Company estimates the
reduction in operating income from the strengthening of the U.S. dollar versus
the Belgian franc from the same period in the prior year to be approximately
$5.6 million and $2.9 million for fiscal 1998 and 1997, respectively. Other
income for fiscal 1998 includes gains from forward exchange contracts of $6.5
million. In fiscal 1997, such transactions resulted in income of $2.8 million.
Other income for fiscal 1998 includes $2.1 million from favorable settlement
of claims for interest on overdue installments of interest accruing prior to
the commencement of the bankruptcy of the Company's predecessor in 1993. Other
income for fiscal 1998 also includes $3.8 million from the adjustment of an
accrual for potential environmental liability related to real estate used in
previous operations, for which no claims were filed, which terminated by
agreement with the purchasers of the real estate during fiscal 1998; and $1.5
million for the reversal of allowances for factored receivables from previous
operations which were no longer necessary upon the favorable settlement of the
receivables for which such allowances were established. Other income for fiscal
1998 also includes an adjustment for $12.7 million related to an accrual for
taxes recorded in connection with the Reorganization. Additionally, other
income for fiscal 1998 includes $4.9 million from the collection of a loan to a
trust established for the benefit of the holders of certain classes of pre-
bankruptcy claims against the Company. Other income for fiscal 1997 included
$15.4 million which also related to favorable settlements of claims and
adjustments of allowances related to previous operations.
Interest Expense and Amortization of Debt Issue Costs and Premium. Interest
expense and amortization of debt issue costs decreased from $35.7 million in
fiscal 1997 to $19.9 million in fiscal 1998. The decrease was caused primarily
by retirement of indebtedness out of the proceeds of a public stock offering
completed in February 1997, a lower interest rate on borrowings under the
senior credit facility which was refinanced in June 1997, and interest savings
from the retirement of high interest rate subordinated debt financed by lower
rate bank borrowings. See Notes 9 and 19 to the consolidated financial
statements included elsewhere herein.
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Income Taxes. Income tax expense increased from $10.4 million in fiscal 1997
to $23.1 million in fiscal 1998. The increase in tax expense is due primarily
to higher consolidated pretax earnings in fiscal 1998. The difference between
expected income tax expense, computed by applying the U.S. statutory rate to
income from continuing operations, and income tax expense recognized, results
primarily because of:
. the nondeductibility for tax purposes of amortization of reorganization
value in excess of identifiable assets,
. foreign income tax expense provided on foreign earnings,
. certain nontaxable liability adjustments,
. foreign tax credits, and
. state and local income taxes.
See Note 12 to the consolidated financial statements included elsewhere
herein for further analysis of income tax expense.
Extraordinary Loss. The extraordinary loss of $16.2 million for fiscal 1998
resulted from:
. the payment of $17.3 million of redemption and market premiums and the
write-off of deferred financing costs of $4.6 million related to the
early retirement of $137.2 million principal amount of the Company's
Series B Notes;
. the payment of $0.3 million of early retirement fees and the write-off
of $3.9 million of deferred financing costs related to refinancing of
the previous senior credit facility; and
. the tax benefit from the aforementioned transactions of $9.9 million.
See Note 9 to the consolidated financial statements included elsewhere
herein.
Net Income (Loss). The Company had a net loss in fiscal 1997 of $11.3 million
and net income in fiscal 1998 of $40.7 million. The increase in the net income
from the prior year of $52.0 million was caused by the effect of the increases
in operating income and other income and the decrease in interest expense,
offset by the increase in income tax expense and the extraordinary loss.
Liquidity and Capital Resources
Although we have high levels of debt, we believe that cash flow from
operating activities and available borrowings under our Credit Facility and
existing lines of credit will be adequate to meet operating cash flow
requirements during the next 12 months and to execute our business strategy.
As reflected in the consolidated statements of cash flows included elsewhere
herein, cash flows provided by operating activities decreased by $19.3 million
in fiscal 1999 from fiscal 1998. Cash flows from net income, adjusted for
nonoperating and noncash charges, decreased by $93.1 million, primarily as a
result of the decreases in operating income described above, while cash flow
used for increases in working capital and other operating assets decreased by
$73.8 million. At January 31, 1999, we had working capital of $174.2 million
compared to $195.3 million at January 31, 1998, a decrease of $21.1 million.
Current assets decreased by $6.0 million primarily due to the net effect of
increases in cash of $38.8 million, inventories of $14.9 million, prepaid
expenses and other current assets of $0.6 million, offset by decreases in
assets held for sale of $11.4 million, receivables of $19.8 million and
deferred taxes of $29.1 million. The increase in inventories occurred primarily
in U.S. wholesale operations and resulted from sales and forecasting issues
during fiscal 1998 and 1999 which caused excess production and purchases of
finished goods in the U.S. Wholesale division and from depressed U.S. Wholesale
sales as discussed elsewhere herein. Excess inventories in the U.S. are
comprised primarily of current product line items for which we have inventory
in excess of six months' forecasted sales. Because of the excess inventory
position, we may experience lower than normal gross profit margins on the sale
of these products. Our strategy is to gradually reduce inventory levels in the
U.S. over the next eighteen
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months by improving the forecasting function, reducing purchases and production
to meet changes in customer demand, and selling discontinued products through
its retail stores and in limited amounts at discounts to its wholesale
customers. Assets held for sale decreased as a result of the sale of the
Murfreesboro, Tennessee building which had previously been leased to third
parties. Receivables decreased primarily due to lower sales volume during
fiscal 1999 compared to fiscal 1998. Deferred tax assets decreased due
primarily to valuation allowances established in fiscal 1999 for U.S. deferred
tax asset balances. The valuation allowances were provided for U.S. deferred
tax assets based on an assessment of the likelihood of their realization in
view of:
. the current year U.S. net operating loss for book and tax purposes,
. expiration dates for U.S. tax net operating losses incurred in prior
years, and
. our forecasts of future U.S. taxable income taking into account the
increased level of ongoing interest expense as a result of the
Recapitalization.
Cash flows used in investing activities decreased from $37.9 million in
fiscal 1998 to $15.6 million in fiscal 1999, a decrease of $22.3 million.
Capital expenditures were $26.7 million in fiscal 1999 compared to $36.3
million in fiscal 1998. Capital expenditures in fiscal 1999 consist primarily
of costs incurred to upgrade computer systems in the U.S. including the
installation of new financial, manufacturing and distribution software, costs
to complete the warehouse expansion in Europe, tooling for new products, and
costs incurred opening additional retail stores in the U.S. Capital
expenditures of $1.9 million in fiscal 1999 were incurred in less than 100%
owned subsidiaries, and were therefore financed in part by the other
shareholders in the ventures. During fiscal 1999, we, through a 51% owned joint
venture, acquired two distributors in Argentina and Uruguay. During fiscal
1999, the joint venture paid $2.5 million toward the purchase of the
distributorships and recorded a liability for the estimated additional purchase
price due of approximately $1.3 million.
Cash flows provided by (used in) financing activities increased from cash
provided by financing activities in fiscal 1998 of $21.1 million to cash
provided by financing activities in fiscal 1999 of $51.6 million, an increase
in cash of $30.5 million. We completed the Recapitalization on June 24, 1998
involving the repurchase pursuant to a tender offer of 10.5 million shares of
our common stock at a purchase price of $40.00 per share ($420 million in the
aggregate) and refinancing of certain existing indebtedness. We financed the
Recapitalization through the sale of $350 million of 10 3/4% senior
subordinated notes, $175 million of 13 7/8% redeemable senior preferred stock
and warrants, and a new bank senior credit facility. We incurred cash issuance
costs for the senior subordinated notes, preferred stock and credit facility
totaling $23.6 million. Additionally, during fiscal 1999, we completed a tender
offer and retired $52.3 million principal amount of the Series B Notes
representing 99% of such outstanding notes, and paid redemption premium and
incurred other expenses of the tender offer totaling approximately $8.5 million
to complete the transaction. During fiscal 1999, we received $7.4 million from
the exercise of employee stock options.
At January 31, 1999, long-term debt obligations (including current
installments) were $503.1 million compared to $179.2 million at January 31,
1998, an increase of $323.9 million. The increase was caused primarily by the
effect of financing the Recapitalization.
Our Credit Facility requires the achievement and maintenance of certain
financial ratios. Lenders under the Credit Facility agreed during fiscal 1999
and again in March 1999 to amend these financial ratios to enable us to avoid
violation of financial covenants while continuing to implement strategies to
improve U.S. wholesale operations. Our Senior Credit Facility provides for a
$110 million term loan and a $100 million revolving credit facility. At January
31, 1999, we had used $31.4 million of availability under the revolving credit
facility. Additional borrowings under the Senior Credit Facility could be
limited by our ability to meet and maintain the financial ratios after giving
effect to any additional borrowings.
Our cash flow from operations together with amounts available under our
Credit Facility were sufficient to fund fiscal 1999 operations, scheduled
payments of principal and interest on indebtedness, and capital expenditures.
We believe that cash flow from future operations and amounts available under
our Credit Facility, credit facilities in emerging markets, and equity
financing will be adequate to fund operating requirements and
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expansion plans during the next 12 months. In addition, we currently believe
we will be able to meet long-term cash flow obligations from cash provided by
operations and other existing resources.
Our principal foreign operations are located in Western Europe, the
economies of which are not considered to be highly inflationary. The economy
in Mexico is considered highly inflationary beginning February 1, 1997. We
enter into foreign exchange contracts in order to reduce its exposure on
certain foreign operations through the use of forward delivery commitments.
During the past several years, our 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 our operations.
Our foreign operations in Asia consist primarily of distributorships
organized as joint venture subsidiaries. Economies and local currencies
throughout much of Asia entered a tumultuous period beginning in fiscal 1998
as a result of political turmoil and general economic problems with principal
industries. The Asian economies continued to struggle throughout fiscal 1999.
We believe the situation has stabilized to some degree and has experienced
some improvement at the end of fiscal 1999 and the beginning of fiscal 2000 in
operations in certain Asian countries. During fiscal 1999, we had
approximately $30.1 million of revenues from Asian sales, including licensing
royalties, and as of January 31, 1999, approximately $13.7 million in
investments and receivables from Asian subsidiaries.
Because of the relatively small part of our revenues and assets related to
Asia, we do not believe the Asian economic problems will have a material
impact on our overall operations. However, if such conditions were to
continue, our expected growth in this area of the world could be adversely
affected.
We believe that disclosure of our Earnings Before Interest, Taxes,
Depreciation, and Amortization (EBITDA) provides useful information regarding
our 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. Other companies may
calculate EBITDA in a different manner than us. EBITDA does not take into
consideration substantial costs and cash flows of doing business, such as
interest expense, income taxes, depreciation, and amortization, and should not
be considered in isolation to or as a substitute for other measures of
performance. EBITDA does not represent funds available for discretionary use
by us 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. EBITDA, as calculated by us, also excludes
extraordinary items, discontinued operations, and minority interest in
earnings of subsidiaries. Our EBITDA for the years ended January 31, 1999,
1998, and 1997 was $9.9 million, $126.2 million, and $88.2 million,
respectively. However, these amounts include various items of income (expense)
including:
. restructuring provisions;
. other income in prior years primarily related to various items from
previous operations; and
. accrued costs related to the defense and resolution of shareholder
litigation, expenses of the Recapitalization; gain (loss) on disposition
of fixed assets, net; and other items, net; which items together
aggregate $40.4 million, $(17.9) million, and $(3.4) million for the
years ended January 31, 1999, 1998, and 1997, respectively, which
management believes should be added to (deducted from) the calculation
of EBITDA. As adjusted for the aggregate of these items of other income
(expense), EBITDA for the years ended January 31, 1999, 1998 and 1997 is
$50.3 million, $108.3 million, and $84.8 million, respectively. EBITDA
for fiscal 1998 reflects a reduction of $4.1 million for negative
production variances incurred during the last half of fiscal 1998.
As of January 31, 1999, we and our subsidiaries had net operating loss
carryforwards of approximately $173 million for United States federal income
tax purposes. These NOLs, if not utilized to offset taxable income in future
periods, will expire at various dates through fiscal 2019. We believe that
certain changes in
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the ownership of our stock which have occurred will cause us to experience an
"ownership change" within the meaning of Section 382 of the Internal Revenue
Code of 1986, as amended (the "Code"), in fiscal 2000. Following such ownership
change, our ability to utilize for United States federal income tax purposes
our NOLs arising in periods before the ownership change will be subject to an
annual limitation, which will generally be equal to the product of the value of
all of our outstanding stock immediately prior to the ownership change (less
certain capital contributions made within the preceding two years) and the
relevant "long-term tax-exempt rate," which is approximately 4.70%. We cannot
currently predict the effect of any limitation on our ability to utilize our
NOLs.
Effect of Year 2000 Issue on Our Operations
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of our computer
programs that have date sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in normal business activities. Following is a report on the status of the
actions we are taking to address the Year 2000 Issue.
United States Operations. In the United States, we have installed in fiscal
years 1998 and 1999 new financial manufacturing and distribution software
developed by J.D. Edwards in response to general needs of the business as well
as the Year 2000 Issue. This software system comprises the majority of the
information technology used in the U.S. operations. Based on documents provided
by the developer of the software, we believe the software is Year 2000
compliant. We have incurred costs to purchase and implement this software
through January 31, 1999 of approximately $10.2 million and expects to incur
additional costs of approximately $0.8 million to fully implement such
software, train personnel, and modify business processes. Additionally, we have
obtained system upgrades from the provider of the information system software
used in its retail operations in order to make it Year 2000 compliant. Based on
documents provided by the developer of the software, we believe the software is
Year 2000 compliant. The aforementioned cost estimates do not include
significant costs of existing internal staff who have devoted significant
resources to resolving Year 2000 issues.
In order to identify and remediate Year 2000 issues associated with other
information systems used by us, non-information technology systems, and third
party organizations, we contracted with a third party consultant in November
1998 to coordinate our Year 2000 project efforts. The Y2K Project's scope
includes an inventory of non-information technology automated systems with
potential Year 2000 issues, evaluation of suspect systems, and development of a
project plan schedule and budget for remediation or replacement of non-
compliant systems. The Y2K Project includes identifying any Year 2000 risks
associated with key business partners, product purchasers, materials suppliers,
public utility providers, and other organizations with which we have a material
relationship. Non-information technology systems being evaluated include
systems using embedded chip technology (i.e. telecommunications, heating and
air conditioning, manufacturing process control). The Y2K Project includes five
phases as follows:
. Phase 1--System level inventory and business risk assessment.
. Phase 2--Detailed inventory and evaluation to identify non-compliant
systems.
. Phase 3--Remediation of non-compliant systems.
. Phase 4--Acceptance testing of remediated systems in a production
environment.
. Phase 5--Implementation of remediated systems in a production
environment.
As of April 1, 1999, Phases 1 and 2 have been completed. Phases 3 through 5
are projected to be completed at various dates through September 30, 1999 and
remediation of identified non-compliant systems has been initiated throughout
Phases 1 and 2. As of April 1, 1999, we have not identified or become aware of
42
<PAGE>
any Year 2000 problem specific to its major customers, vendors or suppliers,
municipalities, public utilities, or other service providers which could have a
material effect on our operations. We have incurred consulting expenses for the
Y2K Project management through April 1, 1999 of approximately $350,000. We have
not completed a detailed estimate of costs to remediate Year 2000 problems
identified as a result of the Y2K Project; however, based on preliminary
evaluations, we expect such costs will be in the range of $750,000 to
$1,500,000.
For the U.S. operations, we have not developed a likely worst case Year 2000
scenario. However, we have begun to develop comprehensive contingency plans
that consider internal systems as well as potential impacts from third party
organizations. The contingency plans are expected to be substantially completed
by June 30, 1999, but will continue to evolve as new information becomes
available.
Europe. Samsonite Europe generally uses information technology systems which
have been developed internally over many years. We began evaluating and
remediating such systems for Year 2000 problems in calendar 1997 and believe
that all necessary modifications have been completed as of April 1, 1999 and
will be implemented and tested by midyear 1999.
In January 1998, Samsonite Europe formed a Year 2000 compliance task force to
survey and remediate non-information technology systems using embedded chip
technology and to survey customers and suppliers for Year 2000 compliance. As
of January 31, 1999, Samsonite Europe believes is has identified critical
noncompliance issues with respect to non-information technology systems and has
scheduled remediation through equipment upgrades or replacements by midyear
1999. It also expects its survey of customers and suppliers to be completed by
that time.
Through January 31, 1999, Samsonite Europe has incurred incremental costs
related to the Year 2000 issue of approximately $50,000 and estimates total
costs will not exceed $100,000. Such cost estimates do not include significant
costs of existing internal staff who have devoted significant resources to
resolving Year 2000 issues.
Samsonite Europe is developing a likely worst case scenario and contingency
plans to handle such a scenario for potential Year 2000 problems with its non-
information technology systems, customers, vendors, and service providers. It
expects this plan to be completed by approximately midyear 1999.
Other International Operations. Our other operations throughout the world
outside of Europe and the U.S. are generally using recently purchased and
installed information software which we currently believe is Year 2000
compliant. The same third party consultants who evaluated Year 2000 issues in
the U.S. are also surveying major systems in Canada and Latin America to
identify areas requiring remediation. We expect this evaluation to be completed
by midyear 1999.
The aforementioned cost data related to costs incurred to acquire and install
software and to identify and remediate other Year 2000 issues does not include
substantial internal costs which have been incurred. Such internal costs are
principally payroll costs for information systems personnel and are not tracked
separately as they relate to Year 2000 issues.
No assurance can be given that we can identify all Year 2000 issues which may
have a material adverse effect on our operations in the U.S., Europe, or
elsewhere, or that it can correct identified issues before a Year 2000 problem
occurs. Additionally, no assurances can be given that our customers, vendors or
suppliers, municipalities, public utilities, or other third party organizations
will not experience Year 2000 issues which may have a material adverse impact
on our operations.
Conversion to the Euro
On January 1, 1999, eleven countries in Europe adopted a common currency, the
"euro" and exchange rates between the currencies of the eleven countries were
fixed against the new euro. The former currencies of
43
<PAGE>
those eleven countries will remain legal tender as denominations of the euro
until January 1, 2002 and goods and services may be paid for using either the
euro or the former currency until that time. Approximately 75% of Samsonite
Europe's sales are within these eleven countries. The euro conversion has a
significant impact on our operations in terms of pricing policies, currency
risk and exchange, information systems, and financial reporting. Samsonite
Europe has been addressing euro implementation issues since fiscal 1998 and has
formed two different project teams to address euro issues: one to address
competitive and marketing issues and another to address administrative,
financial and computer systems issues.
We believe the adoption of the euro will have a positive effect on Samsonite
Europe's operations. Having a common currency among many of the countries that
Samsonite Europe sells into will reduce the administrative burden of multiple
currencies as well as reduce the costs of hedging and exchanging currencies and
resulting exchange gains and losses. As the euro becomes accepted in the
international money markets, Samsonite Europe may also reduce its currency risk
against the U.S. dollar for purchases of goods in the Far East by using the
euro to pay for such purchases rather than the U.S. dollar, which is currently
the primary currency used in international trade.
Samsonite Europe has adjusted its wholesale pricing to reduce product pricing
differences between countries which have existed historically; however, price
variations between countries will continue to exist at the retail level due to
differences in transportation costs, value added tax rates, and dealer margins
in the various European countries. Because of Samsonite Europe's strong
competitive position throughout the countries participating in the euro
conversion and significant economic barriers to entry, we do not believe that
potential increased competition and price transparency as a result of the euro
will have an adverse effect on our sales or results of operations.
Samsonite Europe currently intends to continue using the Belgian franc as its
functional currency until its fiscal year beginning January 1, 2001. As of
December 31, 1998, Samsonite Europe's information systems have been modified
such that order entry, customer invoicing, and payment processing can be
accomplished in the former currency or the euro, while converting financial
reporting to the functional currency (the Belgian franc). Additional extensive
system modifications are necessary to convert the functional currency to the
euro. The target completion date for such modifications, which are being
accomplished using existing internal staffing, is September 15, 1999. Most
system modifications to date have also been accomplished using internal
staffing with minimal incremental costs incurred to date. We estimate that we
have incurred incremental costs through January 31, 1999 of approximately
$37,000 to implement the euro conversion and estimates that it will spend a
total of approximately $85,000 to fully implement its euro conversion. All
costs related to the Euro conversion have been charged to expense.
Effect of Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133),
which is effective for fiscal quarters beginning after June 15, 1999. FAS No.
133 requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on the use of
the derivative and whether it qualifies under the standard for hedge
accounting. We do not anticipate a material impact on the results of operations
as a result of implementing this standard.
Forward-Looking Information
We routinely prepare a business plan prior to the beginning of each fiscal
year. The business plan is used by management to manage our business and
monitor performance. In accordance with customary practice, prior to the end of
fiscal 1999, a business plan for fiscal 2000 ("FY 2000") was prepared and
submitted for approval to the Executive Committee and the Board of Directors.
44
<PAGE>
The following table sets forth certain information contained in the FY 2000
plan.
<TABLE>
<CAPTION>
Fiscal Quarter Ending
------------------------------------------------
July
April 30, 31, October 31, January 31, FY 2000
1999 1999 1999 2000 Totals
--------- ------ ----------- ----------- -------
(In millions)
<S> <C> <C> <C> <C> <C>
FY 2000:
Net Sales.................... $177.6 $196.2 $213.2 $215.1 $802.1
EBIT(a)(b)................... 10.9 15.9 20.6 22.7 70.1
Adjusted EBITDA(b)(c)........ 18.4 23.5 28.4 30.3 100.6
Capital Expenditures......... 7.6 7.4 4.4 6.2 25.6
</TABLE>
- --------
(a) EBIT is defined as Income (Loss) from Continuing Operations plus Interest
Expense and Amortization of Debt Issue Costs and Premium and Income Tax
Expense plus Minority Interest in Earnings of Subsidiaries.
(b) Does not give effect to increased compensation expense recognized and to be
recognized as outstanding employee stock options vest over the applicable
vesting period, due to adjustments and other modifications to employee
stock options as a result of the Tender Offer. See note (a) of "Selected
Historical Consolidated Financial Information."
(c) Adjusted EBITDA is calculated on a basis consistent with "Selected
Historical Consolidated Financial Information" (see note (d) thereto). For
the comparable quarters of fiscal 1999, Adjusted EBITDA was $5.9 million,
$7.8 million, $27.5 million and $9.1 million, respectively.
----------------
The FY 2000 plan reflects the turn-around and substantial recovery of our
U.S. Wholesale business, as well as continued strong performance by our other
major business units. There is no assurance that the FY 2000 plan can be
achieved.
In March 1999, a more conservative plan was provided to the lenders under our
Credit Facility and was available to members of the Executive Committee and the
Board of Directors. Although the corrective actions taken by management to turn
around the U.S. Wholesale business have begun to take effect, due to the
uncertainties and risks associated with the turn-around, this plan reflects a
lower level of performance for the U.S. Wholesale business than reflected in
the FY 2000 plan. The more conservative plan was provided in connection with
our request to amend the financial covenants under the Credit Facility.
Generally, these covenants establish certain minimum financial ratios (based on
Adjusted EBITDA) that must be maintained on an on-going basis. The Adjusted
EBITDA numbers contained in the more conservative plan were $14.7 million,
$15.8 million, $21.9 million and $25.5 million for the fiscal quarters ending
April 30, 1999, July 31, 1999, October 31, 1999 and January 31, 2000,
respectively.
Although the information set forth above includes forward-looking statements,
it is important for investors to understand that the FY 2000 plan and the more
conservative plan were prepared for the limited purposes described above, and
not with a view to public disclosure. Neither of the plans was intended to
constitute a projection or forecast of the likely results of our operations for
the periods covered, and were not prepared in compliance with the published
guidelines of the SEC or the American Institute of Certified Public Accountants
regarding projections or forecasts. Information regarding the plans is included
in this Prospectus solely because certain members of Samsonite's Board of
Directors, who are principals of Apollo, were familiar with this information at
the time that Apollo made its bridge investment and entered into the back-stop
agreement. For the foregoing reasons, and because our business is subject to
numerous risks, uncertainties and other factors (see "Risk Factors"), investors
should not rely on this information as an estimate or prediction of future
performance. Actual results will differ from those reflected in the plans, and
the differences could be substantial. Neither our auditors or any other
independent accountant has compiled or examined the plans, and our auditors
disclaim any association with them. We disclaim any obligation to publicly
update the plans, or disclose any difference between our actual results and
those reflected in the plans. The information constitutes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995.
45
<PAGE>
Business
We are one of the world's largest manufacturers and distributors of luggage,
marketing products under brands such as Samsonite, American Tourister and Lark.
With net sales of $697.4 million in fiscal 1999, we are a leader in the highly
fragmented luggage market where the vast majority of our competitors have
annual luggage sales that are less than 15% of ours. We offer a broad range of
luggage and luggage-related products, including suitcases, garment bags, casual
bags, business cases and other travel bags. We also license our trademarks for
use on products such as travel accessories, personal leather goods, handbags
and furniture.
Our products are produced around the world at 14 Samsonite-operated
manufacturing facilities or by third-party suppliers. We benefit from our large
size through volume-driven purchasing and manufacturing economies. We sell our
products in more than 100 countries at approximately 27,000 retail locations,
including department stores, specialty stores, catalog showrooms, mass
merchants and warehouse clubs. In the United States, we also sell our products
through 195 Samsonite-operated stores.
Our leading position in the global luggage industry is due primarily to:
Widely Recognized Brand Names. Samsonite and American Tourister are
two of the most widely-recognized luggage brand names in the world. The
Lark brand is also well established in the premium segment of the U.S.
luggage market. We support our brands with brand advertising programs. We
are the only luggage maker who regularly advertises on national television
in the United States and Europe. For the last five fiscal years we have
invested, on average, in excess of $50 million annually in national and co-
op advertising programs and related promotional activities.
Innovative, High Quality Products. We design and develop innovative,
consumer preferred luggage. We have introduced or popularized many of
today's most successful luggage products and features, including suitcases
on wheels, suitcases with a built-in luggage cart and full featured
structured garment bags, and we are a leader in new luggage technologies.
Our products have a worldwide reputation for high quality and durability.
Global Manufacturing and Distribution. Our global production network
consists of 14 Samsonite-operated manufacturing facilities and third party
suppliers located in the Far East, Eastern Europe and the Dominican
Republic. By operating our own facilities to produce hardside luggage and
various softside products, we are able to control manufacturing quality and
reduce production lead time and delivery costs. Our global sourcing network
also enables us to opportunistically source products from countries with
low production costs and favorable currency exchange rates. Our luggage
distribution networks in the United States and in Europe are the largest
and most technologically advanced in the industry.
Our principal corporate office is at 11200 East 45th Avenue, Denver, Colorado
80239, and our telephone number is (303) 373-2000.
Recent Unsatisfactory Performance of the U.S. Wholesale Business
Despite record sales and operating results achieved by our European and U.S.
Retail businesses (which together accounted for approximately 62% of our
consolidated net sales in fiscal 1999), our consolidated results for fiscal
1999 were depressed by the unsatisfactory performance of our U.S. Wholesale
business. The performance of our U.S. Wholesale business was badly hurt by a
variety of operating problems that began to emerge at the end of the third
quarter of fiscal 1998, as well as by factors affecting the U.S. luggage
industry in general, including weaker than anticipated demand, numerous
discount luggage promotions and excess inventories in the market place. The
operating problems affecting our U.S. Wholesale business were, in significant
part, attributable to certain marketing, product and pricing strategies to grow
revenues of Samsonite branded products in the United States.
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<PAGE>
Commencing at the beginning of fiscal 1999, we took aggressive actions to
turn around our U.S. Wholesale business. These actions include:
. Replacing the management responsible for U.S. Wholesale operations.
. Reorganizing management along "channel management" lines that focus
separately on each of our channels of distribution.
. Substantially eliminating cross distribution channel selling and
modifying our strategy for Samsonite- operated retail stores to improve
customer relationships.
. Revising our product offerings and pricing strategy to be more
responsive to trade customer needs and to the competition.
. Modifying our co-op advertising and sales promotion policies to be more
cost effective.
. Reducing production levels, particularly in our Denver hardside plant
and Tucson/Nogales softside plants, to bring volume into line with
expected sales.
. Working with our trade customers and Samsonite operated stores to reduce
our excess working capital.
. Rightsizing the cost structure of our U.S. Wholesale operations and
support functions, including restructuring our U.S. manufacturing
operations.
Although the foregoing actions did not have a meaningful impact on our
financial results in fiscal 1999, by fiscal 1999 year-end, these measures had
significantly reduced operating costs and negative plant production variances,
balanced Samsonite branded inventories in the marketplace and greatly improved
relationships with our trade customers. Despite these positive developments,
the U.S. Wholesale business has continued to perform well below historical
levels.
In February 1999, we took further steps to restructure U.S. Wholesale sales
and marketing by consolidating these functions in our Warren, Rhode Island
offices and by promoting the executive responsible for the success of our U.S.
Retail operation to the position of President, Samsonite USA, with
responsibilities for all U.S. and Canadian operations. In February 1999, we
also leased a newly constructed 322,000 square foot warehouse adjacent to our
Denver headquarters, which should improve distribution service levels to our
customers and permit us over time to close a significant number of the 13 other
warehouses currently operated by the U.S. Wholesale business. In April 1999, we
succeeded in negotiating the renewal of our labor agreement covering employees
in our Denver plant to provide more flexible work rules which should further
improve the efficiency of this operation. Finally, we are revising our prior
marketing strategy, which we believe focused too heavily on the Samsonite brand
to the detriment of our two other principal brands, American Tourister and
Lark. As part of our refocused emphasis on channel management, we will be
taking steps to "re-launch" our American Tourister and Lark brands with new
competitively priced products in the first half of fiscal 2000.
As a result of the on-going corrective measures described above, we believe
that our U.S. Wholesale business will show significant improvement as fiscal
2000 progresses.
Our Strategy
While our highest priority is to turn-around our U.S. Wholesale business, we
will continue to implement and refine strategies used in our successful
European, U.S. Retail and International businesses as described below.
Expand Channels of Distribution and Product Offerings. We plan to increase
our presence in channels of distribution where we believe we are under-
represented by using targeted marketing and sales efforts tailored to each
channel, and by exploiting our manufacturing and sourcing leverage. As part of
this strategy, we plan to
47
<PAGE>
aggressively pursue opportunities to sell American Tourister and retailer
labeled products to mass merchant retailers and in other high volume potential
channels throughout the world. We also plan to introduce more casual bags and
business cases in the U.S. in order to expand our sales in this growth
category.
Strengthen Marketing and Product Innovation. We plan to continue to expand
our presence in the worldwide luggage market from both a trade and consumer
standpoint. We believe that the company-wide organization of management along
"channel management" lines will strengthen our marketing efforts by
facilitating more accurate forecasting, sound inventory management and more
rapid response to competitive pressures, on a channel-by-channel basis. As a
result, we expect to introduce more consumer-preferred products, styles and
features at price-to-value relationships appropriate to each channel, supported
by more effective advertising, strengthened point-of-sales programs and better
customer service.
Continue Worldwide Expansion. We plan to continue expansion in countries
where growing economies and reduced political and trade barriers provide
opportunities for long-term growth. We currently have operations in a number of
emerging foreign markets, including India, China, South America and the Pacific
Rim.
Improve Distribution Systems in the U.S. We plan to improve the ability of
our U.S. Wholesale business to process and ship customer orders in a timely,
cost effective manner, modeled after our integrated order processing,
distribution and automated warehousing system in Europe. We believe that the
European system has resulted in a number of benefits, including increased
shipping capacity, lower distribution costs, lower customer inventory levels
and fewer returns and customer disputes, and that it affords us a competitive
advantage over other manufacturers and distributors of luggage in Europe. We
have completed the installation of new distribution software in the U.S. and
leased a newly constructed 322,000 square foot warehouse in Denver, which are
the first steps in moving towards our European distribution model.
The Luggage Market
The worldwide luggage market encompasses a wide range of products, values and
price points. At the highest end of the market are luxury products (such as
Louis Vuitton and Gucci) that have prestigious identities, high prices and
tightly confined distribution. Beneath the luxury segment is a broad middle
band of the luggage market in which products are differentiated by features,
brand name and price. Within this band, unit sales volumes are largest at the
middle and lower prices. Product differentiation decreases and breadth of
distribution increases with decreasing price levels. At the low end of the
luggage market, unbranded products with few, if any, differentiating features
are sold in significant volumes and at low margins, competing primarily on the
basis of price. We have products designed to sell into all three segments of
the luggage market.
Products
We offer a broad range of products, including softside suitcases, hardside
suitcases, casual bags, garment bags, business cases and laptop computer cases.
Below are the approximate percentages of our fiscal 1999 revenues from sales of
luggage and travel related products by product type:
<TABLE>
<S> <C>
Softside suitcases................................................. 36%
Hardside suitcases................................................. 32
Casual bags ....................................................... 12
Garment bags....................................................... 5
Business cases..................................................... 4
Other products (primarily non-luggage)............................. 11
---
100%
===
</TABLE>
48
<PAGE>
Below are our market positioning and targeted consumer for each of our
principal luggage brands:
<TABLE>
<CAPTION>
U.S. Target Europe Target
Brand Name Market Positioning Consumer Consumer
---------- ------------------ ----------- -------------
<S> <C> <C> <C>
Samsonite Innovative, high quality, Business/frequent Affluent traveler
durable luggage (including traveler
prestige segment in
Europe)
American Quality luggage Value-conscious Value-conscious
Tourister offering value traveler traveler
Lark Premium luggage with Affluent traveler Not offered
luxurious styling
</TABLE>
In Europe, our Samsonite brand enjoys more of a premium image than in the
U.S., and we offer products within the Samsonite line in Europe that compete
with prestigious luxury brands.
Softside Luggage. Approximately 70% of our softside luggage and other bags
are made by numerous independent suppliers. We produce the balance of our
softside luggage in our own facilities. We have introduced many innovative
features in our softside products in response to consumer needs for better
interior organization, ease of use, mobility and portability. Our softside
products are sold under all of our major brands.
We have introduced numerous softside products with proprietary features.
These products include the Ultravalet(R) Garment Bag, with a unique wrinkle-
free folding system, also available on wheels; the EZ Big Wheel(R) rolling
system, which allows effortless passage over carpet and rough surfaces; and the
EZ CART(R) system which has 4 wheels that support all the weight of the case
and a push handle that provides optimum stability and mobility.
Hardside Luggage. We manufacture all of our hardside luggage in our own
factories. Hardside luggage is sold under the Samsonite brand globally. In the
United States and Europe, hardside luggage is also sold under the American
Tourister brand. Both in Europe and in the United States, hardside products are
offered in several lines, each including a variety of sizes and styles to suit
different consumer needs. In the United States, Samsonite-branded hardside
products include the luxurious, leather trimmed Silhouette(R) DLX and the
Silhouette(R) 700 Series in the upper range, Ultralite 3(TM) 550 Series in the
upper-middle range and Epsilon(R) II 400 Series and Oyster(TM) 200 Series
products in the middle and lower ranges.
In Europe, popular Samsonite-branded hardside lines include the Classic 1000,
System 4 Deluxe and System 4 Art lines, at the higher end of the market, the
Epsilon, Spark and Oyster II lines in the upper-middle range and Oyster
products at the lower end.
We sell hardside suitcases that are easy to transport. These hardside
suitcases include the patented Piggyback(R) product, that incorporates a
luggage cart, an extendable handle and a strap allowing additional bags to be
attached and transported. Hardside suitcases are also available with the EZ
Cart(R) system.
Other Luggage. We use our global manufacturing and product sourcing leverage
to compete in the high-volume discount channels of retail luggage distribution
by marketing luggage products under a number of secondary brands and retailer
labels. These hardside and softside luggage products are generally lower priced
than our Samsonite, American Tourister and Lark products and usually provide
fewer features. Our secondary brands include Magnum(R) and Royal Traveler(R) in
Europe, Tauro(R) in Spain, Azzura(R) and Bogey(R) in Italy and Legacy(R) in the
U.S.
Non-luggage Licensed Products. We license Samsonite brand names and apparel
brand names owned by Samsonite including McGregor(R), Botany 5007 and Bert
Pulitzer(R) and others to third parties primarily for the sale of non-luggage
travel related products, clothing and furniture. Licensees are selected for
competency in their product categories, and usually sell parallel lines of
products under their own or other brands. Currently, licensed products
distributed by Samsonite or by third party licensees include apparel,
furniture, travel accessories, photo and audio storage cases, personal leather
goods, ladies handbags, umbrellas, binoculars, pet carriers, auto accessories,
cellular phone cases, back-to-school bags and other children's products.
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<PAGE>
New Product Design and Development. We devote significant resources to new
product design and development. We use market research to identify consumers'
luggage needs and style preferences and develop products that meet those needs
and preferences. We employ full-time designers and development engineers and
retain outside designers with whom we have long-term relationships to ensure a
continuous flow of product ideas based on material developments and trends in
consumer preferences and technologies. We strongly believe that our intensive
product development and emphasis on innovation distinguish us from our
competitors.
Distribution
Our products are sold in more than 100 countries around the world at an
estimated 27,000 retail outlets.
North America. We sell our Samsonite brand products in North America
primarily through department stores, luggage specialty stores and national
retailers such as JCPenney and Sears. Discount channels such as mass merchants,
warehouse clubs and factory outlets are becoming increasingly important in the
distribution of our products in North America. We have a direct sales force of
approximately 75 persons who serve approximately 10,000 stores in the United
States.
In addition, as of January 31, 1999, we operated 195 retail stores, largely
in factory outlet centers, in the United States that distribute a line of
Samsonite and American Tourister products specially designed for these stores,
as well as excess, discontinued and obsolete products. Our company-operated
stores allow us to efficiently balance inventories and test market new products
and designs. The stores also sell a variety of travel related products.
Europe. We distribute our Samsonite brand products in Europe through
specialty luggage stores and department stores. Samsonite-branded products are
generally not distributed through the discount retailers in Europe in order to
preserve the premium image enjoyed by the Samsonite brand in Europe. Our
American Tourister brand has been introduced in Europe to help balance our
retail distribution in each of the primary retail channels and is being used to
establish a single pan-European brand name in the discount channel. We service
an estimated 11,000 stores in Europe through a direct sales and product
demonstration force of approximately 120 persons.
In over 20 European countries where we do not have a direct sales force, we
sell through distributors and agents. These distributors and agents, as well as
those mentioned under "International" below, handle various non-luggage
products in addition to our products. Distribution agreements generally provide
for mutual exclusivity, whereby distributors do not handle competitors' luggage
products, and we do not deal with other distributors or agents in their
territory.
International. In markets outside the United States and Western Europe, we
sell our products directly, through agents and distributors, and under license.
Products sold in international markets are shipped from the United States,
Western Europe or Asia depending upon product type, availability and exchange
rate. In some instances, we have entered new markets through third party
distributors and have acquired these third party distributors as markets have
matured. We have a long-standing licensing arrangement to sell our products in
Japan. We have joint ventures in Singapore, South Korea, India, Brazil and
China, as well as wholly-owned distribution organizations in Hong Kong and
Taiwan. We also have a joint venture operations in Argentina and Brazil to
distribute Samsonite products in those countries as well as other major South
American markets.
Advertising
We commit substantial resources to brand advertising programs that promote
the features, durability and quality of our luggage and travel products under
the marketing theme "Samsonite Worldproof(R)." In connection with our efforts
to re-launch a new line of American Tourister branded products in the second
half of fiscal 2000, we are bringing back our very popular "gorilla"
advertising theme. We are the only luggage maker who regularly advertises on
national television in the United States and Europe. For the last five fiscal
years we have invested, on average, in excess of $50 million annually in
national and co-op advertising programs and related promotional activities.
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Manufacturing and Sourcing Products
Our global product sourcing network consists of 14 Samsonite operated
manufacturing facilities and various third party suppliers located principally
in the Far East, Eastern Europe and the Dominican Republic. By operating our
own facilities to produce hardside luggage and more complex softside products,
we are able to control manufacturing quality and reduce lead times and delivery
costs. Our global sourcing network also enables us to source products from
countries with lower production costs and favorable currency exchange rates.
Samsonite operated manufacturing facilities are located in Belgium, France,
Hungary, Italy, the Slovak Republic, Mexico, Spain, India, China and the United
States.
In fiscal 1999, approximately 30% of our revenues from softside luggage
products were from products manufactured at our own facilities. We source the
remainder of our softside luggage products primarily from third-party vendors
in the Far East, Eastern Europe and the Dominican Republic. We believe that the
significant volume of our softside luggage purchases enable us to obtain a
reliable supply of high quality, low cost products and prompt order
fulfillment. We are able to select different third party suppliers to take
advantage of changes in manufacturing, payment terms and shipping costs. We do
not rely on any single third party supplier, the loss of whom would be material
to us.
We manufacture virtually all of the hardside luggage products that we
distribute. Our hardside production facilities are located in Denver, Colorado;
Oudenaarde, Belgium; Nashik, India; Henin-Beaumont, France and Ningbo, China.
We maintain a rigorous quality control program for goods manufactured at our
own plants and at third party vendor facilities. Products are designed to
assure durability and strength, and a prototype of each new product is put
through a series of simulation and stress tests. In our manufacturing
facilities and our Asian sourcing office, we use quality control inspectors,
engineers and lab technicians to perform inspection and laboratory testing on
raw materials, parts and finished goods.
Competition
We operate in a competitive market. We compete based on brand name, consumer
advertising, product innovation, product quality, product styling and features,
customer service, access to established distribution channels, number of new
product offerings and price. Price becomes more important as the price point of
the product decreases and fewer differentiating features are offered. In
addition to companies in the business of manufacturing and distributing luggage
products, we compete with various large retailers who purchase private label
luggage directly from manufacturers in low labor cost countries, primarily in
Asia.
Customers
Our customers include most major department stores that carry luggage, most
specialty stores featuring luggage products and many other retailers (including
catalog showrooms, mass merchants and discounters). We also sell directly to
consumers through Samsonite-operated retail stores in the United States and
Europe. We are not dependent on any single customer, and no single customer
accounts for more than 5% of our consolidated revenues.
Trademarks and Patents
Trademarks and patents are important to us. We are the registered owner of
Samsonite, American Tourister, Lark and other trademarks. As of January 31,
1999, we had approximately 2,144 trademark registrations and approximately 250
trademark applications pending in the United States and abroad covering
luggage, apparel products and retail concepts. We also own approximately 180
United States patents and approximately 511 patent equivalents in selected
foreign countries. In addition, we have approximately 250
51
<PAGE>
patent applications pending worldwide. We pursue a policy of seeking patent
protection where appropriate for inventions embodied in our products. Our
patents cover features popularized in our EZ CART(R), Smart Pocket(TM), Easy
Turn(R), Piggyback(R), Ultravalet(R) and Oyster(TM) luggage. We have also
patented our CPX production technology for making luggage shells. Although some
companies have sought to imitate some of our patented products and our
trademarks, we have generally been successful in enforcing our worldwide
intellectual property rights.
Employees and Labor Relations
At January 31, 1999, we had approximately 7,300 employees worldwide, with
approximately 2,100 employees in the United States and approximately 5,200
employees in other countries. In the United States, approximately 500 employees
are unionized under a contract that is renewed every three years and was most
recently renewed in April 1999. We employ approximately 2,100 workers in our 5
European manufacturing plants located in Belgium, France, Spain, Italy and
Hungary. In Europe union membership varies from country to country and is not
officially known to Samsonite; however, it is probable that most of our
European workers are affiliated with a union. Most European union contracts
have a one-year duration. We believe our employee relations are good.
Properties
The following table sets forth certain information relating to our principal
properties and facilities. All of our manufacturing plants, in our opinion,
have been adequately maintained and are in good operating condition. We believe
that our existing facilities have sufficient capacity, together with sourcing
capacity from third parties, to handle our sales volumes for the foreseeable
future. Our headquarters in Denver share the same location as a manufacturing
facility.
<TABLE>
<CAPTION>
Approximate
Owned or Facility Size
Location Leased (thousands of sq. ft.)
-------- ------------ ----------------------
<S> <C> <C>
Denver, CO......................... Owned/Leased 1,609
Tucson, AZ......................... Owned/Leased 63
Jacksonville, FL................... Leased 510
Warren, RI......................... Leased 94
Stratford, Canada ................. Owned 212
Nogales, Mexico ................... Leased 333
Mexico City, Mexico................ Owned/Leased 182
Oudenaarde, Belgium................ Owned 649
Ningbo, China...................... Owned 100
Nashik, India...................... Owned 743
Torhout, Belgium................... Owned 79
Henin-Beaumont, France Owned 98
Szekszard, Hungary................. Owned 81
Tres Cantos, Spain................. Owned 37
Saltrio, Italy..................... Leased 74
Singapore.......................... Leased 13
Hong Kong.......................... Leased 29
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Approximate
Owned or Facility Size
Location Leased (thousands of sq. ft.)
-------- -------- ----------------------
<S> <C> <C>
Seoul, South Korea..................... Leased 19
Samorin, Slovak Republic............... Owned 43
Buenos Aires, Argentina................ Leased 17
Sao Paulo, Brazil...................... Leased 1
</TABLE>
We also maintain numerous sales offices, retail outlets and distribution
centers in the United States and abroad.
Legal Proceedings and Contingent Obligations
Litigation. We and certain parties related to us have been the subject of
various purported stockholder class action lawsuits and a purported derivative
action filed between March 13, 1998 and March 9, 1999 in various courts,
including Colorado State District Court, City and County of Denver; United
States District Court for the District of Colorado; and the Delaware Court of
Chancery. In April 1999, we entered into an insurance agreement with a major
insurance carrier whereby the carrier assumed responsibility for the defense
and ultimate resolution of the shareholder litigation and any other actions
asserted at any time that involve essentially the same or similar allegations,
facts or circumstances as those alleged in the shareholder litigation. In
connection with the insurance agreement, we entered into some agreements and
releases and agreed to make a cash premium payment, net of potential future
reimbursements, to the insurer ranging from an estimated minimum payment of
$7.0 million to a maximum payment of $17.5 million depending on the ultimate
cost to defend and resolve the pending litigation. We are responsible for
paying all legal defense costs prior to the effective date of the insurance
agreement. However, we expect that substantially all costs incurred subsequent
to the effective date to defend and resolve the shareholder litigation will be
covered by the insurance agreement. Our consolidated statements of operations
for the fiscal year ended January 31, 1999 reflect the accrual of substantially
all costs incurred and expected to be incurred in connection with these
lawsuits.
Contingent Liability with Respect to Old Notes. The 1993 reorganization plan
provides for payment in full of 100% of the allowed claims of the holders of
certain old notes of E-II Holdings, Inc. (predecessor to Astrum), including
approximately $16.4 million of interest on overdue installments of interest
accruing prior to the commencement of Astrum's bankruptcy case. Various parties
have challenged the allowability of the claim on the basis that interest on
overdue installments of interest is not permitted under applicable non-
bankruptcy law. We provided for this contingent liability in its consolidated
financial statements when it emerged from bankruptcy in the amount of $16.4
million.
During fiscal 1997, $4.0 million of such claims were settled for $0.2
million, resulting in the recording of $3.8 million of other nonoperating
income from the favorable settlement of this claim. The holders of the claim
were Apollo Investment Fund, L.P. and one of its affiliates. At January 31,
1997, Apollo and its affiliates owned 45.75% of our issued and outstanding
common stock. During fiscal 1998, we recorded other income of $2,060,000 from
the favorable settlement of $2,139,000 of such claims.
As a result of a change in New York law in fiscal 1998, which adversely
affected our ability to favorably settle the remaining claims, we have entered
into a non-binding agreement-in-principle to settle the remaining amount of
these claims for approximately $9.4 million. At January 31, 1999, other accrued
expenses include $10.3 million provided for these remaining claims. We expect
final settlement to occur in the first half of fiscal 2000.
Other. In addition, we are is a party to various other legal proceedings and
claims in the ordinary course of business. We believe that the outcome of these
other pending matters will not have a material adverse affect on its
consolidated financial position, results of operations or liquidity.
53
<PAGE>
Management
Directors and Executive Officers
Samsonite's directors and executive officers and their ages as of March 31,
1999 are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Luc Van Nevel............ 52 President and Chief Executive Officer and Director
Thomas R. Sandler........ 52 President, Samsonite, the Americas
Mark A. Korros........... 47 President, Samsonite USA and Canada
Richard H. Wiley......... 42 Chief Financial Officer, Treasurer and Secretary
Karlheinz Tretter........ 56 President, Samsonite Europe and Asia
Carlo Zezza.............. 63 Executive Vice President
Steven R. Armstrong...... 40 General Counsel and Assistant Secretary
Bernard Attal............ 35 Director
Leon D. Black............ 47 Director
Robert H. Falk........... 60 Director
Richard R. Nicolosi...... 51 Director
Mark H. Rachesky......... 40 Director
Robert L. Rosen.......... 52 Director
Marc J. Rowan............ 36 Director
Stephen J. Solarz........ 58 Director
</TABLE>
Richard R. Nicolosi. Age 51. Mr. Nicolosi has been one of our directors since
May 1996. He served as our President and Chief Executive Officer from May 15,
1996 to May 15, 1998. From 1994 to 1996, Mr. Nicolosi was Senior Vice President
of Scott Paper Company. From 1992 to 1994, Mr. Nicolosi was President of
Nicolosi & Associates, a privately owned business consulting firm. From 1969 to
1992, Mr. Nicolosi was employed by Procter & Gamble in various positions, the
latest being President, Pulp and Paper Sector, Corporate Group Vice President,
as well as a member of the Executive Committee. He is a member of the Advisory
Board of Directors of Domino's Pizza, Inc.
Luc Van Nevel. Age 52. Mr. Van Nevel was elected as our President in February
1998 and became Chief Executive Officer and a Director in May 1998. Prior to
that time, Mr. Van Nevel held various positions including Chief Operating
Officer (since September 1997) and President of Samsonite Europe N.V. (since
1989). Since 1984, he has held the additional position of Managing Director of
Samsonite Europe N.V. He joined Samsonite Europe N.V. in 1975 as Manager,
Financial Planning and progressed to the position of Controller before being
promoted to President of Samsonite Europe in 1989. Mr. Van Nevel worked in
audit positions with Touche Ross & Co. in Europe for five years before joining
Samsonite.
Thomas R. Sandler. Age 52. Mr. Sandler was appointed President of our
Americas division effective March 1998. Prior to that Mr. Sandler was the Chief
Financial Officer and Treasurer of Samsonite since May 1, 1995. Prior to
joining Samsonite, Mr. Sandler was the managing partner of the Denver office of
BDO Seidman, an international public accounting firm, since July 1, 1994. Prior
to joining BDO Seidman, Mr. Sandler was an audit and consulting partner in the
international public accounting firm of KPMG LLP, specializing in corporate
restructurings.
Mark A. Korros. Age 47. Mr. Korros was appointed President of Samsonite USA
and Canada in February 1999. Prior to that Mr. Korros was President of
Samsonite Company Stores and had responsibility for our Canadian operations.
Mr. Korros joined Samsonite in June 1995 as Senior Vice President of the
American Tourister Retail Division. Prior to joining Samsonite, Mr. Korros
spent 5 1/2 years at Reebok as General Manager Reebok Retail Division. From
1976 to 1989, Mr. Korros was employed by Health-tex children's wear, where he
held several sales and marketing positions, including Vice President of Sales.
54
<PAGE>
Richard H. Wiley. Age 42. Mr. Wiley has been our Chief Financial Officer and
Treasurer since March 1998. Prior to that Mr. Wiley was Chief Financial Officer
of our Americas division and Assistant Treasurer since May 15, 1995. Prior to
joining us, Mr. Wiley was an audit and consulting senior manager with BDO
Seidman, an international public accounting firm, since July 1994. Prior to
that, Mr. Wiley was with KPMG LLP since 1982, working in the audit and
consulting areas.
Karlheinz Tretter. Age 56. Mr. Tretter was appointed President of Samsonite
Europe on October 16, 1997 and additionally as President of Samsonite Asia on
February 15, 1998. Prior to that Mr. Tretter was Vice President and Managing
Director of Samsonite Europe since May 1994. From 1990 until 1994, Mr. Tretter
has served as Vice President of Marketing and/or Sales for Samsonite Europe.
Carl Zezza. Age 63. Mr. Zezza has been our Executive Vice President since
1990, with responsibility for new products and licensing. Mr. Zezza joined us
in 1971 from the J. Walter Thompson advertising agency, where he was Vice
President serving Samsonite and other accounts. From 1976 to 1983, Mr. Zezza
was President, Samsonite Europe, and in 1984 was responsible for Samsonite USA
marketing and operations. From 1985 to 1990, Mr. Zezza was President, Delsey
USA, a competitor luggage business in the United States.
Steven R. Armstrong. Age 40. Mr. Armstrong was appointed our General Counsel
and Assistant Secretary in February 1999. From November 1997 until joining
Samsonite, Mr. Armstrong engaged in the private practice of law and taught at
the University of Denver School of Law. Prior to that, Mr. Armstrong was a
partner in the national law firms, Paul, Hastings, Janofsky & Walker and Baker
& Hostetler, successively.
Bernard Attal. Age 35. Mr Attal has been one of our directors since March
1996. Mr. Attal is a Director of Heights Advisors LLC, which acts as a
financial advisor and a representative for certain European institutional
investors with respect to their investments in the United States. From 1992 to
1995, Mr. Attal was a Vice President at Credit Lyonnais Securities. Prior to
1992, Mr. Attal was Chief Financial Officer of Altus Patrimoine & Gestion, a
money management firm. Mr. Attal is a director of New California Life Holdings,
Inc., the Florsheim Group, Inc, and Aurora National Life Insurance.
Leon D. Black. Age 47. Mr. Black has been one or our directors since 1993.
Mr. Black is one of the founding principals of Apollo Advisors, L.P., which,
together with its affiliates, acts as managing general partner of Apollo
Investment Fund, L.P., AIF II, L.P., Apollo Investment Fund III, L.P., and
Apollo Investment Fund IV, L.P. (the "Apollo Funds"), private securities
investment funds, and Lion Advisors, L.P., which acts as financial advisor to
and representative for certain institutional investors with respect to
securities investments, and of Apollo Real Estate Advisors, L.P., which serves
as managing general partner of the Apollo Real Estate Investment Funds, private
real estate oriented investment funds. Mr. Black is also a director of
Converse, Inc., Vail Resorts, Inc., Telemundo Group, Inc., Sequa Industries,
Inc., and United Rentals Industries, Inc.
Robert H. Falk. Age 60. Mr. Falk has been an officer since April 1992 of
Apollo Capital Management, Inc. and Lion Capital Management, Inc., which
respectively act as general partners of Apollo Advisors, L.P. and Lion
Advisors, L.P. Mr. Falk is a limited partner of Apollo Advisors, L.P., which,
together with its affiliates, acts as managing general partner of the Apollo
Funds, and a limited partner of Lion Advisors, L.P. Prior to 1992, Mr. Falk was
a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Falk
is a director of Alliance Imaging, Inc., Converse, Inc., and the Florsheim
Group, Inc.
Mark H. Rachesky, M.D. Age 40. Dr. Rachesky has been one of our directors
since 1993. Dr. Rachesky is the founder of MHR Capital Partners LP and MHR
Institutional Partners, LP, investment funds which invest in distressed
securities. Dr. Rachesky is the principal owner and President of the general
partners and investment manager of these investment funds. From February 1,
1990 through June 11, 1996, Dr. Rachesky was employed by Icahn Holding
Corporation, where he served as the sole Managing Director the last three
years, and in such capacity, acted as Carl C. Icahn's chief investment advisor.
From June 1987 to January 1990, Dr. Rachesky was employed by an affiliate of
the Robert M. Bass Group, where he was involved in financing and investment
activity.
55
<PAGE>
Robert L. Rosen. Age 52. Mr. Rosen is Chief Executive Officer of RLR
Partners, LLC, a private investment partnership founded in April 1987. Mr.
Rosen is a director of the Municipal Advantage Fund, Inc., Municipal Partners
Fund, Inc., Municipal Partners Fund II, Inc., the Spring Mountain Group,
Mariner Post-Acute Networks, Inc. and WMC Finance Co. and Chairman of the Board
of National Financial Partners, Inc.
Marc J. Rowan. Age 36. Mr. Rowan is one of the founding principals of Apollo
Advisors, L.P., and of Lion Advisors, L.P. Mr. Rowan is also a director of Vail
Resorts, Inc., Quality Distribution, Inc., National Financial Partners, Inc.
and NRT Incorporated. Mr. Rowan is also a founding member and serves on the
executive committee of the Youth Renewal Fund and is a member of the board of
directors of National Jewish Outreach Program and the Undergraduate Executive
Board of The Wharton School.
Stephen J. Solarz. Age 58. Mr. Solarz was elected, in 1974, to the House of
Representatives from Brooklyn's 13th Congressional District and was re-elected
eight times. In the House he served on four committees: Foreign Affairs,
Merchant Marine and Fisheries, Intelligence, and the Joint Economic Committee.
Mr. Solarz ranked second in seniority on the House Foreign Affairs Committee,
where he chaired the Subcommittee on Asian and Pacific Affairs. Since his
departure from the House, Mr. Solarz has been: Senior Counselor at APCO
Associates, an international public affairs firm; President of Solarz and
Associates, a global consulting firm; Chairman of the Central Asian American
Enterprise Fund; Vice Chairman of the International Crisis Group; a
Distinguished Fellow at the Carnegie Endowment for International Peace;
Professor of International Affairs at George Washington University; a Member of
the Board of Directors of the National Endowment for Democracy and National
Democratic Institute; and a member of the Council on Foreign Relations and the
International Rescue Committee. Mr. Solarz is a director of First Philippine
Fund, IRI International, and the Santa Fe Corporation.
Committees of the Board of Directors
Our board of directors has the following standing committees: an Executive
Committee, an Audit Committee and a Compensation Committee.
The current members of the Executive Committee are Messrs. Falk, Rowan and
Van Nevel. The Executive Committee has all powers and rights necessary to
exercise the full authority of the board of directors in the management of the
business and affairs of Samsonite when necessary in between meetings of the
board of directors, except as otherwise provided by Delaware law.
The current members of the Audit Committee are Messrs. Attal, Rachesky, Rowan
and Van Nevel. The Audit Committee is primarily concerned with the
effectiveness of Samsonite's accounting policies and practices, financial
reporting, and internal controls. The Audit Committee is to:
. make recommendations to the board of directors regarding the engagement
of Samsonite's independent accountants,
. review the plan, scope and results of the annual audit, the independent
accountants' letter of comments and management's response thereto, and
the scope of any non-audit services which may be performed by the
independent accountants,
. manage our policies and procedures with respect to internal accounting
and financial controls, and
. review any changes in accounting policy.
The current members of the Compensation Committee are Messrs. Falk and Rowan.
The Compensation Committee is authorized and directed to:
. review and approve the compensation and benefits of the executive
officers,
. review and approve the annual salary plans,
56
<PAGE>
. review management organization and development,
. review and advise management regarding the benefits, including bonuses,
and other terms and conditions of employment of other employees,
. administer any stock option plans which may be adopted and the granting
of options under such plans, and
. review and recommend for the approval of the Board the compensation of
directors.
Executive Compensation
The Compensation Committee of the Board of Directors reviews and approves the
salaries and bonuses of our executive officers as well as all grants of options
to purchase shares of common stock and other equity-based compensation awards.
Objectives. The Compensation Committee's primary objectives are to retain the
best qualified people and to insure that they are properly motivated to have us
prosper over the long term. In furtherance of the foregoing, the Compensation
Committee, in establishing the components and levels of compensation for its
executive officers, seeks to:
. enable us to attract and retain highly qualified executives, and
. provide financial incentives in the form of cash bonuses and equity
compensation in order to align the interests of executive officers more
closely with those of stockholders and to motivate such executives to
increase stockholder value by improving corporate performance and
profitability.
Employment Agreements. We have entered into employment agreements with
certain of our executive officers, including certain of the named executive
officers listed in the Summary Compensation Table below. The Compensation
Committee has considered the advisability of using employment agreements and
has determined that the use of employment agreements is in our best interest
because it facilitates (consistent with the Compensation Committee's overall
objectives) our ability to attract and retain the services of the most highly
qualified executive officers. Each such employment agreement separately
reflects the terms that the Compensation Committee felt were appropriate and/or
necessary to retain the services of the particular executive.
Components of Executive Compensation. There are two components of our
executive compensation program:
. Cash compensation.
. Equity compensation.
Cash Compensation. Cash compensation is comprised of base salary and annual
cash incentive bonuses. Since, as noted above, some of our named executive
officers were party to employment agreements with us effective during the past
fiscal year, their respective cash compensation levels were subject to the
provisions of such employment agreements. The Compensation Committee
subjectively arrived at appropriate base salary compensation levels in the
process of negotiating such agreements.
We offer each of our executive officers an opportunity to earn additional
cash compensation in the form of annual bonuses that are awarded if we attain
specified performance goals or if the officer satisfactorily completes certain
annual projects approved by the Compensation Committee. The Compensation
Committee believes that making a significant portion of executive officer
compensation subject to attaining specified performance goals or the successful
completion of specified projects motivates the executive officers to increase
their individual efforts on our behalf. The Compensation Committee also
believes that it is appropriate that our executive officers receive lower
compensation when we do not attain our specified performance goals and higher
compensation when we attain such goals.
57
<PAGE>
Annual bonus amounts for the named executive officers were determined
pursuant to terms provided in their respective employment agreements and, as
noted above, were conditioned on our attainment of specified performance goals
or the officer's satisfactory completion of certain annual projects approved by
the Compensation Committee.
Equity Compensation. Equity compensation is comprised of stock options,
restricted stock awards, and stock bonus awards. Stock option grants reflect
the Compensation Committee's desire to provide a meaningful equity incentive
for the executive to have us prosper over the long term. The Compensation
Committee expects options to continue as a significant component of the
executive compensation arrangements in the future. At January 31, 1999, options
to purchase 837,561 shares were held by certain of our executive officers as
described elsewhere herein. At January 31, 1999, options to purchase 1,615,794
shares by all executives and other employees were outstanding.
On June 24, 1998, we completed the Recapitalization. As a result of the
Recapitalization, we determined, with the approval of the Board of Directors,
to make an equitable adjustment to the terms of outstanding options held by all
employees, for options which remained unexercised after the Recapitalization,
including the named executives listed below. We allowed employees to accept a
$12.50 per share reduction in the option exercise price, or alternatively to
surrender options held for a reduced number of options (approximately 42.7%
fewer options) at an exercise price equal to the price for the ten-day trading
period following completion of the Recapitalization, which turned out to be
$10.00 per share. New options issued had the same proportionate vesting
schedule and performance criteria, if any, as the options surrendered. Exercise
prices for those options which received the $12.50 per share reduction could
not be reduced to less than 25% of the post tender offer trading price of
$10.00, or $2.50 per share. To the extent a $12.50 reduction would have
resulted in an exercise price of less than $2.50 per share, the option holder
received the right to receive a cash payment when the options become
exercisable. The following table summarizes adjustments to options as a result
of the foregoing for those named executive officers who received option
amendments:
<TABLE>
<CAPTION>
Number of Market Length of
securities price of Exercise original options
underlying stock at price at term remaining
options time of time of New New at date of
repriced or repricing or repricing or number exercise repricing or
Name Date amended (#) amendment amendment of options price (a) amendment
---- ---- ----------- ------------ ------------ ---------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard R. Nicolosi..... July 16, 1998 425,532 $10.00 $18.250 425,532 $ 5.75 34 mos.
Luc Van Nevel........... July 16, 1998 98,619 10.00 10.875 98,619 2.50 43 mos.
Thomas R. Sandler....... July 16, 1998 73,964 10.00 12.875 73,964 2.50 43 mos.
Thomas R. Sandler....... July 16, 1998 24,655 10.00 35.500 14,132 10.00 51 mos.
Karlheinz Tretter....... July 16, 1998 15,780 10.00 10.875 15,780 2.50 43 mos.
Karlheinz Tretter....... July 16, 1998 50,000 10.00 35.500 28,659 10.00 51 mos.
Carlo Zezza............. July 16, 1998 14,000 10.00 13.875 14,000 2.50 44 mos.
Carlo Zezza............. July 16, 1998 15,000 10.00 35.500 8,598 10.00 51 mos.
Richard H. Wiley........ July 16, 1998 7,737 10.00 13.875 7,737 2.50 44 mos.
Richard H. Wiley........ July 16, 1998 12,263 10.00 35.500 7,029 10.00 99 mos.
Richard H. Wiley........ July 16, 1998 10,000 10.00 39.500 5,732 10.00 102 mos.
Mark Korros............. July 16, 1998 11,052 10.00 13.875 11,052 2.50 45 mos.
Mark Korros............. July 16, 1998 23,948 10.00 35.500 13,727 10.00 99 mos.
</TABLE>
- --------
(a) In lieu of reduction of option prices below $2.50 per share, Messrs. Van
Nevel, Sandler, Tretter, Zezza, Wiley and Korros were paid cash
compensation for options which vested and became exercisable through
January 31, 1999 of $325,441, $125,738, $32,546, $11,250, $6,962 and
$9,947, respectively.
Chief Executive Officer Compensation. In fiscal 1999, the compensation of Mr.
Van Nevel was determined pursuant to the Van Nevel agreement described in "--
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements."
58
<PAGE>
Summary Compensation Table
The following table sets forth the compensation paid or awarded to our Chief
Executive Officer, and our other four most highly compensated executive
officers during the last fiscal year for services rendered in all capacities
for the last three fiscal years.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
---------------------------------- --------------------------
Other Restricted Securities
Annual Stock Underlying All Other
Year Salary Bonus Compensation Awards Options/SARs Compensation
Name/Principal Position (a) ($) ($) ($) ($) (#) (i) ($) (j)
- ----------------------- ---- -------- ------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard R.
Nicolosi(b)........... 1999 $175,385 $ -- $43,750(e) $ -- -- $ 3,980
Chairman of the Board 1998 600,000 -- 150,000(e) -- -- 7,318
1997 425,000 500,000 112,500(e) 1,095,000(g) 425,532 109,034
Luc Van Nevel(c)....... 1999 422,797 650,000 50,000(f) -- 40,000 414,548
President, Chief 1998 252,313 125,000 -- -- -- 96,726
Executive Officer
and Director 1997 290,980 275,000 -- 709,724(h) 98,619 102,704
Thomas R. Sandler...... 1999 325,000 70,000 -- -- 20,000 132,514
President, Samsonite 1998 200,000 192,000 -- -- -- 7,058
--the Americas 1997 200,000 220,000 -- 709,724(h) 88,096 5,968
Karlheinz Tretter(d)... 1999 325,000 105,000 -- -- 20,000 65,385
President, Samsonite 1998 168,023 120,000 -- -- -- 15,757
--Europe and Asia 1997 192,667 69,710 -- -- 68,107 18,062
Carlo Zezza............ 1999 250,000 40,000 -- -- -- 18,031
Executive Vice-
President 1998 200,000 70,000 -- -- -- 9,664
1997 200,000 90,000 -- -- 28,598 9,664
Richard H. Wiley....... 1999 206,250 100,000 -- -- 15,000 13,457
Chief Financial
Officer, Treasurer 1998 122,166 70,000 -- -- 5,732 5,079
and Secretary 1997 107,497 38,983 -- -- 14,766 4,707
</TABLE>
- --------
(a) Fiscal year ending January 31.
(b) Mr. Nicolosi was succeeded by Mr. Van Nevel as Chief Executive Officer on
May 15, 1998. Mr Nicolosi resigned as Chairman in May 1999 but remains a
director.
(c) A portion of Mr. Van Nevel's cash compensation is paid in Belgian francs.
His salary, bonuses, and all other compensation amounts, to the extent
denominated in Belgian francs ("BF"), have been translated to U.S. dollars
at rates of BF36.32, BF35.67, and BF30.93 to the U.S. dollar for the years
ended January 31, 1999, 1998, and 1997, respectively. Mr. Van Nevel was
president of Samsonite Europe until September 25, 1997 when he was
appointed Chief Operating Officer. Mr. Van Nevel was appointed President
and Chief Executive Officer effective February 1, 1998.
(d) In fiscal 1999, Mr. Tretter's base salary was paid in various European
currencies equivalent to ECU 300,147 (equivalent to US $325,000 at the
effective date of Mr. Tretter's employment contract). Prior to fiscal 1999,
Mr. Tretter's cash compensation was paid in Deutschemarks (DM). His salary,
bonuses, and all other compensation amounts, to the extent denominated in
DM, have been translated to U.S. dollars at rates of DM1.72 and DM1.50 to
the U.S. dollar for the years ended January 31, 1998 and 1997,
respectively.
(e) Consists of amounts paid for a housing allowance at the rate of $12,500 per
month.
(f) Consists of amounts paid to Mr. Van Nevel to cover the cost of maintaining
a second residence in Denver, Colorado.
(g) We issued 60,000 shares of restricted stock to Mr. Nicolosi on May 15, 1996
pursuant to the terms of his employment agreement (see "--Employment
Contracts and Termination of Employment and Change-in-Control
Arrangements"). Mr. Nicolosi became fully vested in the shares effective
May 15, 1998. In connection with the Recapitalization, Mr. Nicolosi
tendered 30,897 of these shares to us at $40.00 per share. The aggregate
market value of the remaining 29,103 shares held by Mr. Nicolosi at January
31, 1999 was $196,445.
(h) Effective as of May 15, 1996, we entered into agreements with Messrs. Van
Nevel and Sandler that provide for stock bonuses to each of them of 38,889
shares of common stock. The market value of the stock at May 15, 1996 was
$18.25 per share. In connection with the Recapitalization, we determined to
permit Mr. Van Nevel and Mr. Sandler to tender such shares. As a result,
20,026 shares for each of Mr. Van Nevel and Mr. Sandler were tendered to us
at $40.00 per share. The remaining shares are subject to the original
vesting requirements and the aggregate market value of the remaining stock
award shares for each of Messrs. Van Nevel and Sandler is $127,325 at
January 31, 1999. See "--Employment Contracts and Termination of Employment
and Change-in-Control Arrangements" for vesting provisions with respect to
the stock bonus shares.
(i) As a result of the Recapitalization, we have determined to allow holders of
options to either (1) accept a $12.50 reduction of their option exercise
prices or (2) voluntarily surrender such options to us and in exchange
receive new options to purchase a reduced number of shares of common stock
(which reflects the number of shares outstanding after the tender offer) at
exercise prices equal to the post tender offer trading price, with the same
proportionate vesting schedule as the options surrendered. The number of
Securities Underlying Options/SARs has been adjusted to reflect options
surrendered in exchange for a reduced number of options.
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<PAGE>
(j) Represents the following amounts paid by us for the benefit of each of the
named executives:
<TABLE>
<CAPTION>
Cash paid
in lieu of
reduction
Company Life insurance in options
contribution to premium and exercise
Name Year (1) 401(k) Plan excess medical price (3)
---- -------- --------------- -------------- ----------
<S> <C> <C> <C> <C>
Mr. Nicolosi.............. 1999 $3,500 $ 480 $ --
Mr. Van Nevel(2).......... 1999 -- -- 325,441
Mr. Sandler............... 1999 5,000 1,776 125,738
Mr. Tretter(2)............ 1999 -- -- 32,546
Mr. Zezza................. 1999 5,125 1,656 11,250
Mr. Wiley................. 1999 5,187 1,308 6,962
</TABLE>
- --------
(1) Fiscal year ending January 31.
(2) Mr. Van Nevel and Mr. Tretter participate in an employee benefit
arrangement available to our employees located in Belgium and Germany,
respectively, which combines retirement and life insurance benefits based
on salary. An amount is contributed by us on behalf of such employees in
order to purchase insurance contracts that contain both a life insurance
and retirement pension provision. In fiscal 1999, $89,107 and $32,839 was
contributed on behalf of Mr. Van Nevel and Mr. Tretter, respectively.
(3) In connection with the Recapitalization completed on June 24, 1998, we
determined to adjust all options that remained unexercised after the
Recapitalization by reducing the exercise price of each option by $12.50,
but not to less than 25% ($2.50) of the average trading price for a
specified period of time following completion of the Recapitalization
($10.00). If the $12.50 adjustment resulted in the exercise price of an
option being reduced to less than $2.50, the option holder has the right to
receive cash in lieu of further reduction of the option price as the
options vest and become exercisable.
The following table discloses the grants of stock options during fiscal 1999
to the named executives.
Option/SAR Grants in Fiscal Year 1999
<TABLE>
<CAPTION>
Potential realizable
value at assumed
annual rates
of stock
price appreciation
Individual Grants for option term
------------------------------------------------------------- --------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in or Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ---- ------------ ------------ ------------- ------------- ------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Luc Van Nevel....... 40,000 18.35% 9.375 July 15, 2008 236,000 598,000
Mr. Sandler............. 20,000 9.17% 9.375 July 15, 2008 118,000 299,000
Mr. Tretter............. 20,000 9.17% 9.375 July 15, 2008 118,000 299,000
Mr. Wiley............... 15,000 6.88% 9.375 July 15, 2008 88,000 224,000
</TABLE>
60
<PAGE>
The following table discloses, for the named executives, information
regarding stock options that were held at January 31, 1999.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year End Option/SAR Values Name
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Options/SARs at in-the-money Options/SARs
Shares Acquired Value Fiscal Year-End (#) at Fiscal Year End ($)
Name on Exercise (#) Realized $ Exercisable/ Unexercisable Exercisable/Unexercisable(a)
- ---- --------------- ---------- -------------------------- ----------------------------
<S> <C> <C> <C> <C>
Mr. Nicolosi............ -- -- 425,532/-0- 425,532/-0-
Mr. Van Nevel........... -- -- 86,895/51,724 335,000/176,000
Mr. Sandler............. -- -- 77,303/30,793 251,000/94,000
Mr. Tretter............. 23,668 334,311 40,549/23,890 34,000/66,000
Mr. Zezza............... -- -- 19,798/2,800 48,000/14,000
Mr. Wiley............... -- -- 13,146/22,352 26,000/8,000
</TABLE>
- --------
(a) Total value of options based on fair market value of common stock of $6.75
as of January 31, 1999. There were no awards under long-term incentive
plans other than stock options to any named executives in fiscal 1999.
Pension Plan Table
The U.S. executives are participants in the Samsonite Retirement Income Plan
and certain of the U.S. executives participate in the Supplementary Executive
Retirement Plan. The Samsonite Retirement Plan is a qualified defined benefit
plan which provides benefits to the participants retiring at normal retirement
age calculated based on years of service and average compensation (as defined
by the pension plan), net of offsets for Social Security benefits. The
Supplementary Plan, which is a nonqualified unfunded plan, was adopted on
December 1, 1995 and provides to eligible executives retirement benefits on
compensation and benefits in excess of Internal Revenue Code maximums for
qualified plans.
The following table shows the estimated hypothetical annual benefits payable
pursuant to the Samsonite Pension Plan and the Supplementary Plan to persons
retiring at their normal retirement age in specified eligible compensation and
years of service classifications.
<TABLE>
<CAPTION>
Years of Service
---------------------------------------------------------------
Remuneration 15 20 25 30 35
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000 $24,429 $32,572 $40,715 $48,857 $57,411
150,000 30,054 40,072 50,090 60,107 70,536
175,000 35,679 47,572 59,465 71,357 83,661
200,000 41,304 55,072 68,840 82,607 96,786
225,000 46,929 62,572 78,215 93,857 109,911
250,000 52,554 70,072 87,590 105,107 123,036
300,000 63,804 85,072 106,340 127,607 149,286
400,000 75,054 100,072 125,090 150,107 175,536
450,000 75,054 100,072 125,090 150,107 175,536
500,000 75,054 100,072 125,090 150,107 175,536
550,000 75,054 100,072 125,090 150,107 175,536
600,000 75,054 100,072 125,090 150,107 175,536
</TABLE>
61
<PAGE>
Compensation covered by the above plans is total cash compensation paid,
including any amount contributed under a Section 401(k) plan. The benefits
shown above are payable on a life annuity basis and are not subject to any
offset amounts.
Mr. Sandler, Mr. Zezza, and Mr. Wiley have accrued 3, 27, and 3 years,
respectively, of service credit under the Samsonite Pension Plan and the
Supplementary Plan.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Richard R. Nicolosi. We entered into an employment agreement, effective as of
May 15, 1996, with Richard R. Nicolosi, pursuant to which Mr. Nicolosi served
as our President and Chief Executive Officer. The Nicolosi agreement was for a
two-year term and expired on May 15, 1998.
The Nicolosi agreement provided Mr. Nicolosi with an annual base salary of
$600,000 and an opportunity to receive an annual incentive bonus of up to
$500,000 (80% of which was guaranteed for the first year) if we attained
certain performance goals and Mr. Nicolosi completed certain annual projects
prescribed by the Board. In connection with the Nicolosi agreement, we granted
Mr. Nicolosi options to purchase 425,532 shares of common stock at an exercise
price of $5.75 per share (as adjusted for the Recapitalization as described
under "--Equity Compensation") which are fully vested.
Also, in connection with the performance by Mr. Nicolosi of services pursuant
to the Nicolosi agreement, we issued Mr. Nicolosi 60,000 shares of restricted
common stock. The restricted shares vested on May 15, 1998.
Pursuant to a May 16, 1996 stock purchase agreement with Mr. Nicolosi, we
sold and issued to Mr. Nicolosi 55,000 shares of common stock at a purchase
price of $18.25 per share (the market price at the date of the sale), for an
aggregate purchase price of $1,003,750.
The Nicolosi agreement provided Mr. Nicolosi with participation in certain
employee benefit plans and arrangements on the same basis as our other
executive officers. The Nicolosi agreement provided for a one-time relocation
allowance of $100,000 and a housing allowance at the rate of $12,500 per month.
The Nicolosi agreement provides that during Mr. Nicolosi's employment with us
and for a period of two years thereafter, Mr. Nicolosi will not, directly or
indirectly, as a principal, officer, director, employee or in any other
capacity whatsoever, without our prior written consent, engage in, or be or
become interested or acquire any ownership of any kind in, or become associated
with, or make loans or advance property to any person engaged in or about to
engage in, any business activity which is competitive with any of the
businesses engaged in by us in any of the geographic areas in which such
businesses have been conducted by us during the last twelve months of his
employment. The Nicolosi agreement also limits the amount of additional shares
of common stock that Mr. Nicolosi can purchase without the consent of our Board
of Directors, and it restricts him from becoming involved in proxy contests or
takeover proposals and certain similar activities with respect to us, except on
our behalf.
Luc Van Nevel. We entered into an Executive Management Agreement, effective
February 1, 1998 with Mr. Van Nevel for a four year term beginning on February
1, 1998. Under the Van Nevel agreement, Mr. Van Nevel is obligated to devote
full time to our affairs, except to the extent that he is required to provide
services to Samsonite Europe and its subsidiaries pursuant to the consulting
agreement described below. The Van Nevel agreement provides for an annual base
salary of $175,000 and a living allowance not to exceed $50,000 per year to
cover actual expenses incurred to maintain a secondary residence near our
headquarters in Denver, Colorado. Mr. Van Nevel is entitled to receive an
incentive bonus of up to $495,000 if we attain certain performance goals and
Mr. Van Nevel completes certain annual projects prescribed by the Board. The
Van
62
<PAGE>
Nevel agreement provides for an additional bonus of $400,000 payable on January
31, 1999, or such earlier date as we terminate the assignment of Goldman, Sachs
& Co. in connection with the possible sale of Samsonite. This bonus was paid in
June 1998. The Van Nevel agreement provides that upon termination by us without
Cause or by Mr. Van Nevel for Good Reason (each as defined in the Van Nevel
agreement), we are required to pay Mr. Van Nevel severance compensation of
$500,000. The Van Nevel agreement provides that during Mr. Van Nevel's
employment with us and for a period of one year thereafter (unless such
employment is terminated by us without Cause or by the Executive with Good
Reason), he shall not engage in any business activity that is in substantial
competition with any of the businesses engaged in by us in any of the
geographic areas in which business is conducted by us during the twelve months
preceding the termination of employment.
On February 1, 1998, Samsonite Europe entered into an Amended and Restated
Consulting Agreement with Mr. Van Nevel, which amends and restates a consulting
agreement effective January 1, 1990 and amended and restated as of January
1992. Under the consulting agreement, Mr. Van Nevel is required to provide
consulting services to Samsonite Europe and certain of its subsidiaries. The
consulting agreement provides for an annual consulting fee of BF9,000,000 (US
$283,000 at February 1, 1998). The consulting agreement may be terminated by
Samsonite Europe with prior written notice. The notice period is based on a
formula which takes into consideration, among other things, Mr. Van Nevel's age
and length of service at the time the notice is given. If Samsonite Europe
fails to give the required notice, the consulting agreement provides for the
payment of liquidated damages equal to the aggregate consulting fee to which
Mr. Van Nevel would have been entitled had the notice period been fully
observed. Under certain circumstances the termination of the Van Nevel
agreement will be deemed to be a termination of the consulting agreement by
Samsonite Europe.
On February 20, 1996, Mr. Van Nevel was granted options under our 1995 Stock
Option and Incentive Award Plan to purchase 98,619 shares of our common stock
at a price of $2.50 per share (as adjusted for the Recapitalization as
described under "--Equity Compensation"). The options have a six-year term. 20%
of the options vest and become exercisable on the date of grant and an
additional 20% vest and become exercisable on the last day of each fiscal year
over a four-year period beginning on January 31, 1997. On July 15, 1998,
pursuant to the FY 1999 Stock Award Program, Mr. Van Nevel was awarded options
to purchase 40,000 shares of our common stock at a price of $9.375 per share,
the market price of the common stock at the date of the grant. The options,
which were granted out of shares reserved for our 1995 Stock Option and
Incentive Award Plan, have a ten year term. 20% of the options vest and become
exercisable on the date of the grant and an additional 20% vest and become
exercisable on the first, second, third, and fourth anniversaries of the date
of grant. The options granted on July 15, 1998 vest and become exercisable upon
a Change in Control, as defined in the option agreement. On March 24, 1999,
pursuant to the FY 1999 Stock Award Program, Mr. Van Nevel was awarded options
to purchase 40,000 shares of our common stock at a price of $5.00 per share,
the market value at the date of grant. The options, which were granted out of
shares reserved for our 1995 Stock Option and Incentive Award Plan, have a ten-
year term. 20% of the options vest and become exercisable on April 30, 2000 and
an additional 20% become exercisable on each April 30, 2001, 2002, 2003, and
2004. The options granted on March 24, 1999 vest and become fully exercisable
upon a Change in Control, as defined in the option agreement.
Effective as of May 15, 1996, we entered into an agreement with Mr. Van Nevel
that provides for a stock bonus of 38,889 shares of common stock. The bonus
shares vest and are payable if Mr. Van Nevel remains continually employed by us
through the earlier of the third anniversary of the date of the Van Nevel bonus
shares agreement and the first anniversary of a Change of Control Event (as
defined in the Van Nevel share bonus agreement); provided that if Mr. Van
Nevel's employment is terminated prior to such date (1) by reason of death, (2)
by us other than for Cause or Disability, (each as defined in the Van Nevel
bonus shares agreement), or (3) by Mr. Van Nevel for Good Reason (as defined in
the Van Nevel bonus shares agreement), then notwithstanding such termination of
employment, such bonus shares shall be payable not later than 30 days following
such termination. The Van Nevel shares bonus agreement also provides that if a
Change of Control Event occurs, all options to purchase common stock granted to
Mr. Van Nevel on February 20, 1996 vest and become exercisable on the first
anniversary of the date on which such event occurs (to the extent such
63
<PAGE>
options shall not have otherwise vested as of such first anniversary date), so
long as Mr. Van Nevel remains continually employed by us through such first
anniversary date. In connection with the completion of the Recapitalization in
fiscal 1999, the Van Nevel share bonus agreement awarding the bonus shares was
amended to permit the tender of the bonus shares to us. As a result, we
purchased for $40.00 per share 20,026 of the bonus shares from Mr. Van Nevel,
representing the same percentage of shares accepted in the Recapitalization
from other stockholders. The remainder of the bonus shares are subject to the
original terms of the Van Nevel share bonus agreement (including the vesting
provisions thereof).
Thomas R. Sandler. We entered into an employment agreement with Mr. Sandler
effective as of February 1, 1998 for a four-year term. The Sandler agreement
provides for an annual salary of $325,000. Mr. Sandler is also entitled to
receive an incentive bonus of up to $192,500 based on our performance and Mr.
Sandler's completion of certain annual projects prescribed by the Board. The
Sandler agreement provides for participation of Mr. Sandler in all our pension,
welfare, savings, and other benefit and insurance plans on the same basis as
other executive officers. The Sandler agreement provides that if we terminate
Mr. Sandler's employment without Cause, or if Mr. Sandler terminates his
employment for Good Reason (each as defined in the Sandler agreement), then (1)
we will be required to pay Mr. Sandler an amount equal to the lesser of (a)
$500,000 or (b) the amount of the base salary which would have been paid from
the date of termination to the expiration of the Sandler agreement had the
Sandler agreement not been terminated and (2) until Mr. Sandler becomes
eligible for coverage under another employer's benefit plans, we will allow Mr.
Sandler to continue to participate, for the number of months remaining in the
term of the Sandler agreement, in all our benefit plans, provided such
participation is permissible under the general terms and provisions of those
plans. The Sandler agreement provides that in the event the agreement continues
in effect until the end of its term, and we have not offered continued
employment to Mr. Sandler on substantially similar terms for an additional term
of at least one year, we will be required to pay Mr. Sandler $250,000. The
Sandler agreement provides that during Mr. Sandler's employment with us and for
a period of one year thereafter, Mr. Sandler will not, directly or indirectly,
as a principal, officer, director, employee or in any other capacity
whatsoever, without our prior written consent, engage in, or be or become
interested or acquire any ownership of any kind in, or become associated with,
or make loans or advance property to any person engaged in or about to engage
in, any business activity which is competitive with any of the businesses then
engaged in by us in any of the geographic areas in which such businesses have
been conducted by us during the last twelve months of his employment.
On February 20, 1996, Mr. Sandler was granted options under our 1995 Stock
Option and Incentive Award Plan to purchase 73,964 shares of our common stock
at a price of $2.50 per share (as adjusted for the Recapitalization as
described under "--Equity Compensation"). The options have a six-year term. 20%
of the options vest and become exercisable on the date of grant and 20% vest
and become exercisable on the last day of each fiscal year over a four-year
period beginning on January 31, 1997. On October 29, 1996, Mr. Sandler was
granted options under our 1995 Stock Option and Incentive Award Plan to
purchase 14,132 shares of our common stock at a price of $10.00 per share (as
adjusted for the Recapitalization as described under "--Equity Compensation" ).
The options have a six-year term. One-third of the options vest and become
exercisable beginning on January 31, 1997 and an additional one-third vest and
become exercisable on January 31, 1998 and January 31, 1999. Under the Sandler
option agreement, if a Change in Control Event (as defined in the Sandler
option agreement) occurs, the options vest and become exercisable on the one-
year anniversary of the Change in Control Event, provided that Mr. Sandler
remains employed through such date. In addition, if Mr. Sandler's employment is
terminated by us without Cause or by Mr. Sandler for Good Reason (each as
defined in the Sandler option agreement), all unvested options vest and become
exercisable. On July 15, 1998, pursuant to the FY 1999 Stock Award Program, Mr.
Sandler was awarded options to purchase 20,000 shares of our common stock at a
price of $9.375 per share, the market value at the date of grant. The options,
which were granted out of shares reserved for our 1995 Stock Option and
Incentive Award Plan, have a ten year term. 20% of the options vest and become
exercisable on the date of grant and an additional 20% vest and become
exercisable on the first, second, third and fourth anniversaries of the date of
grant. The options granted on July 15, 1998 vest and become fully exercisable
upon a Change in Control, as defined in the option agreement. On
64
<PAGE>
March 24, 1999, pursuant to the FY 1999 Stock Award Program, Mr. Sandler was
awarded options to purchase 20,000 shares of our common stock at a price of
$5.00 per share, the market value at the date of grant. The options, which were
granted out of shares reserved for our 1995 Stock Option and Incentive Award
Plan, have a ten-year term. 20% of the options vest and become exercisable on
April 30, 2000 and an additional 20% become exercisable on each April 30, 2001,
2002, 2003, and 2004. The options granted on March 24, 1999 vest and become
fully exercisable upon a Change in Control, as defined in the option agreement.
Effective as of May 15, 1996, we entered into an agreement with Mr. Sandler
that provides for a stock bonus of 38,889 shares of common stock. The bonus
shares vest and are payable if Mr. Sandler remains continually employed by us
through the earlier of the third anniversary of the date of the Sandler share
bonus agreement and the first anniversary of a Change of Control Event (as
defined in the Sandler share bonus agreement); provided that if Mr. Sandler's
employment is terminated prior to such date (1) by reason of death, (2) by us
other than for Cause or Disability, (each as defined in the Sandler Share Bonus
Agreement), or (3) by the executive for Good Reason, (as defined in the Sandler
share bonus agreement), then notwithstanding such termination of employment,
such bonus shares shall be payable not later than 30 days following such
termination. The Sandler share bonus agreement also provides that if a Change
of Control Event (as defined in the Sandler share bonus agreement) occurs, all
options to purchase common stock granted to Mr. Sandler prior to May 15, 1996
vest and become exercisable on the first anniversary of the date on which such
event occurs (to the extent such options shall not have otherwise vested as of
such first anniversary date), so long as Mr. Sandler remains continually
employed by us through such first anniversary date. In connection with the
completion of the Recapitalization, the Sandler share bonus agreement awarding
the bonus shares was amended to permit the tender of the bonus shares to us. As
a result, we purchased for $40.00 per share 20,026 of the bonus shares from Mr.
Sandler, representing the same percentage of shares accepted in the
Recapitalization from other stockholders. The remainder of the bonus shares are
subject to the original terms of the Sandler share bonus agreement (including
the vesting provisions thereof).
Karlheinz Tretter. We have entered into an employment agreement with Mr.
Tretter, effective as of February 1, 1998. Pursuant to the Tretter agreement,
Mr. Tretter will serve as President of Samsonite GmbH for an indefinite term
and will provide services to various subsidiaries of Samsonite Europe, as
mandated, until January 31, 2002. The Tretter agreement provides for an annual
salary of ECU 300,147 (the equivalent of U.S. $325,000 at February 1, 1998).
Mr. Tretter is also entitled to receive an incentive bonus of up to ECU 177,779
(the equivalent of U.S. $192,500 at February 1, 1998) based on our performance
and Mr. Tretter's completion of certain annual projects prescribed by the
Board. The Tretter agreement provides that if we terminate Mr. Tretter's
employment without Cause, or if Mr. Tretter terminates his employment for Good
Reason (each as defined in the Tretter agreement), then we will be required to
pay Mr. Tretter the greater of (1) the amount of indemnity which might be due
under German local law and (2) the lesser of (a) ECU 462,180 and (b) the amount
of base compensation due under the Tretter agreement from the date of
termination to the expiration date of the Tretter agreement. Unless German
local law changes, this indemnity is expected to exceed that required by German
local law. The Tretter agreement provides that while working for us and for a
period of one year thereafter, Mr. Tretter will not become active for another
company which competes with us in Germany or Member States of the European
Union.
On February 20, 1996, Mr. Tretter was granted options under our 1995 Stock
Option and Incentive Award Plan to purchase 39,448 shares of our common stock
at a price of $2.50 per share (as adjusted for the Recapitalization as
described under "--Equity Compensation"). The options have a six-year term. 20%
of the options vest and become exercisable on the date of grant and 20% vest
and become exercisable on the last day of each fiscal year over a four year
period beginning on January 31, 1997. On October 29, 1996, Mr. Tretter was
granted options under our 1995 Stock Option and Incentive Award Plan to
purchase 28,659 shares of our common stock at a price of $10.00 per share (as
adjusted for the Recapitalization as described under "--Equity Compensation").
The options have a six-year term. One-third of the options vest and become
exercisable beginning January 31, 1997 and an additional one-third vest and
become exercisable on January 31, 1998 and January 31, 1999. Under the Tretter
option agreement, if a Change in Control Event (as defined in the Tretter
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<PAGE>
option agreement) occurs and Mr. Tretter is terminated for any reason other
than for Cause (as defined in the Tretter option agreement), all the options
granted shall immediately vest and become exercisable. On July 15, 1998,
pursuant to the FY 1999 Stock Award Program, Mr. Tretter was awarded options to
purchase 20,000 shares of our common stock at a price of $9.375 per share, the
market value at the date of the grant. The options, which were granted under
our 1995 Stock Option and Incentive Award Plan, have a ten year term. 20% of
the options vest and become exercisable on the date of grant and an additional
20% vest and become exercisable on the first, second, third and fourth
anniversaries of the date of grant. The options granted on July 15, 1998 vest
and become fully exercisable upon a Change in Control, as defined in the option
agreement. On March 24, 1999, pursuant to the FY 1999 Stock Award Program, Mr.
Tretter was awarded options to purchase 20,000 shares of our common stock at a
price of $5.00 per share, the market value at the date of grant. The options,
which were granted out of shares reserved for our 1995 Stock Option and
Incentive Award Plan, have a ten-year term. 20% of the options vest and become
exercisable on April 30, 2000 and an additional 20% become exercisable on each
April 30, 2001, 2002, 2003, and 2004. The options granted on March 24, 1999
vest and become fully exercisable upon a Change in Control, as defined in the
option agreement.
Carlo Zezza. We entered into an employment agreement with Mr. Zezza effective
as of February 1, 1998 and expiring on March 12, 2001. The Zezza agreement
provides for an annual salary of $250,000. Mr. Zezza is also entitled to
receive an incentive bonus of up to $110,000 based on our performance and Mr.
Zezza's completion of certain annual projects prescribed by the Board. The
Zezza agreement provides for participation of Mr. Zezza in all our pension,
welfare, savings, and other benefit and insurance plans on the same basis as
other executive officers. The Zezza agreement provides that if we terminate Mr.
Zezza's employment without Cause, or if Mr. Zezza terminates his employment for
Good Reason (each as defined in the Zezza agreement), then (1) we will be
required to pay Mr. Zezza an amount equal to the lesser of (a) $350,000 or (b)
the amount of the base salary which would have been paid from the date of
termination to the expiration of the Zezza agreement had the Zezza agreement
not been terminated and (2) until Mr. Zezza becomes eligible for coverage under
another employer's benefit plans, we will allow Mr. Zezza to continue to
participate, for the number of months remaining in the term of the Zezza
agreement, in all our benefit plans, provided such participation is permissible
under the general terms and provisions of those plans. The Zezza agreement
provides that during Mr. Zezza's employment with us and for a period of one
year thereafter, Mr. Zezza will not, directly or indirectly, as a principal,
officer, director, employee or in any other capacity whatsoever, without our
prior written consent, engage in, or be or become interested or acquire any
ownership of any kind in, or become associated with, or make loans or advance
property to any person engaged in or about to engage in, any business activity
which is competitive with any of the businesses then engaged in by us in any of
the geographic areas in which such businesses have been conducted by us during
the last twelve months of his employment, provided, however, that these
provisions shall not prevent Mr. Zezza, subsequent to his retirement from
Samsonite on his 65th birthday or such earlier date as mutually agreed upon by
us and Mr. Zezza, from being engaged by any person as a consultant in the
luggage industry so long as (1) certain confidentiality provisions of the Zezza
agreement are not breached and (2) we shall have given our prior written
consent, which shall not be unreasonably withheld.
On March 28, 1996, Mr. Zezza was granted options under our 1995 Stock Option
and Incentive Award Plan to purchase 20,000 shares of our common stock at a
price of $13.875 per share, of which options for 6,000 shares were exercised on
April 2, 1997. The option price for the remaining 14,000 shares was adjusted to
$2.50 for the Recapitalization as described under "--Equity Compensation". The
options have a six-year term. 20% of the options vest and become exercisable on
the date of grant and 20% vest and become exercisable on the last day of each
fiscal year over a four-year period beginning on January 31, 1997. On October
29, 1996, Mr. Zezza was granted options under our 1995 Stock Option and
Incentive Award Plan to purchase 8,598 shares of our common stock at a price of
$10.00 per share (as adjusted for the Recapitalization as described under "--
Equity Compensation"). The options have a ten-year term. 20% of the options
vest and become exercisable on the first anniversary of the date of the grant
and an additional 20% vest and become exercisable on the second, third, fourth
and fifth anniversaries of the date of grant. All the options granted to Mr.
Zezza vest and become exercisable upon a Change in Control, as defined in the
October 29, 1996 option agreement.
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Richard H. Wiley. We entered into an employment agreement with Mr. Wiley
effective as of February 1, 1998 for a four-year term. The Wiley agreement
provides for an annual salary of $200,000 until February 1, 1999 and $250,000
per year thereafter until the end of the term. Mr. Wiley is also entitled to
receive an incentive bonus of up to $110,000 for the year ended February 1,
1999 and $137,500 per year thereafter based on our performance and Mr. Wiley's
completion of certain annual projects prescribed by the Board. The Wiley
agreement provides for participation of Mr. Wiley in all our pension, welfare,
savings, and other benefit and insurance plans on the same basis as other
executive officers. The Wiley agreement provides that if we terminate Mr.
Wiley's employment without Cause, or if Mr. Wiley terminates his employment for
Good Reason (each as defined in the Wiley agreement), then (1) we will be
required to pay Mr. Wiley an amount equal to the lesser of (a) $375,000 or (b)
the amount of the base salary which would have been paid from the date of
termination to the expiration of the Wiley agreement had the Wiley agreement
not been terminated and (2) until Mr. Wiley becomes eligible for coverage under
another employer's benefit plans, we will allow Mr. Wiley to continue to
participate, for the number of months remaining in the term of the Wiley
Agreement, in all our benefit plans, provided such participation is permissible
under the general terms and provisions of those plans. The Wiley agreement
provides that during Mr. Wiley's employment with us and for a period of one
year thereafter, Mr. Wiley will not, directly or indirectly, as a principal,
officer, director, employee or in any other capacity whatsoever, without our
prior written consent, engage in, or be or become interested or acquire any
ownership of any kind in, or become associated with, or make loans or advance
property to any person engaged in or about to engage in, any business activity
which is competitive with any of the businesses then engaged in by us in any of
the geographic areas in which such businesses have been conducted by us during
the last twelve months of his employment.
On March 28, 1996, Mr. Wiley was granted options under our 1995 Stock Option
and Incentive Award Plan to purchase 7,737 shares of our common stock at a
price of $2.50 per share (as adjusted for the Recapitalization as described
under "--Equity Compensation"). The options have a six-year term. 20% of the
options vest and become exercisable on the date of grant and 20% vest and
become exercisable on the last day of each fiscal year over a four-year period
beginning on January 31, 1997. On October 29, 1996, Mr. Wiley was granted
options under our 1995 Stock Option and Incentive Award Plan to purchase 7,029
shares of our common stock at a price of $10.00 per share (as adjusted for the
Recapitalization as described under "--Equity Compensation"). The options have
a ten-year term. 20% of the options vest and become exercisable on the first
anniversary of the date of the grant and an additional 20% vest and become
exercisable on the second, third, fourth and fifth anniversaries of the date of
grant. On July 15, 1998, pursuant to the FY 1999 Stock Award Program, Mr. Wiley
was awarded options to purchase 15,000 shares of our common stock at a price of
$9.375 per share, the market value at the date of grant. The options, which
were granted out of shares reserved for our 1995 Stock Option and Incentive
Award Plan, have a ten-year term. 20% of the options vest and become
exercisable on the date of grant and an additional 20% vest and become
exercisable on the first, second, third and fourth anniversaries of the date of
grant. All the options granted to Mr. Wiley vest and become exercisable upon a
Change in Control, as defined in the option agreements. On March 24, 1999,
pursuant to the FY 1999 Stock Award Program, Mr. Wiley was awarded options to
purchase 25,000 shares of our common stock at a price of $5.00 per share, the
market value at the date of grant. The options, which were granted out of
shares reserved for our 1995 Stock Option and Incentive Award Plan, have a ten-
year term. 20% of the options vest and become exercisable on April 30, 2000 and
an additional 20% become exercisable on each April 30, 2001, 2002, 2003, and
2004. The options granted on March 24, 1999 vest and become fully exercisable
upon a Change in Control, as defined in the option agreement.
Mark A. Korros. We entered into an employment agreement with Mr. Korros,
effective as of June 1, 1998 and expiring on January 31, 2002.
The Korros agreement provides for an annual base salary (currently $225,000
per year) and provides for participation in our incentive bonus plan with a
target bonus of up to 50% of base salary based on our performance. The Korros
agreement provides for the participation of Mr. Korros in all our pension,
welfare, savings, and other benefit and insurance plans on the same basis as
other executive officers. The Korros
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agreement provides that if we terminated Mr. Korros's employment without Cause,
or if Mr. Korros terminated his employment for Good Reason (each as defined in
the Korros agreement), then (1) we would be required to pay Mr. Korros an
amount equal to the lesser of (a) 150% of the current base salary or (b) the
base salary through the expiration date of the Korros agreement and (2) until
Mr. Korros becomes eligible for coverage under another employer's benefit
plans, we would allow Mr. Korros to continue to participate, for the number of
months remaining in the term of the Korros agreement, in all our benefit plans,
provided such participation is permissible under the general terms and
provisions of those plans.
On March 28, 1996, Mr. Korros was granted options under our 1995 Stock Option
and Incentive Award Plan to purchase 11,052 shares of our common stock at a
price of $2.50 per share, as adjusted for the Recapitalization described under
"--Equity Compensation". 20% of the options vest and become exercisable on the
date of the grant and 20% vest and become exercisable on the last day of each
fiscal year over a four-year period beginning on January 31, 1997. On October
29, 1996, Mr. Korros was granted options under our 1995 Stock Option and
Inventive Award Plan to purchase 13,727 shares of our common stock at a price
of $10.00 per share (as adjusted for the Recapitalization as described under
"--Equity Compensation"). The options have a ten-year term. 20% of the options
vest and become exercisable on the first anniversary of the date of grant and
an additional 20% vest and become exercisable on the second, third, fourth, and
fifth anniversaries of the date of grant. Upon a Change of Control (as defined
in the October 29, 1996 option agreement), the options, as well as options
granted on March 28, 1996, vest and become exercisable. On July 15, 1998,
pursuant to the FY 1999 Stock Option and Incentive Award Program, Mr. Korros
was awarded options to purchase 8,000 shares of our common stock at a price of
$9.375 per share, the market value at the date of grant. The options, which
were granted out of shares reserved for our 1995 Stock Option and Incentive
Award Plan, have a ten-year term. 20% of the options vest and become
exercisable on the date of grant and an additional 20% vest and become
exercisable on the first, second, third, and fourth anniversaries of the grant.
On March 24, 1999, pursuant to the FY 1999 Stock Award Program, Mr. Korros was
awarded options to purchase 12,000 shares of our common stock at a price of
$5.00 per share, the market value at the date of grant. The options, which were
granted out of shares reserved for our 1995 Stock Option and Incentive Award
Plan, have a ten-year term. 20% of the options vest and become exercisable on
April 30, 2000 and an additional 20% become exercisable on each April 30, 2001,
2002, 2003, and 2004. The options granted on March 24, 1999 vest and become
fully exercisable upon a Change in Control, as defined in the option agreement.
1995 Stock Option and Incentive Award Plan
Samsonite has reserved 2,550,000 shares for issuance under the 1995 Stock
Option and Award Plan of options as determined by the Compensation Committee of
the board of directors. The 1995 Plan provides for the issuance of a variety of
awards, including tax qualified incentive stock options, nonqualified stock
options, stock appreciation rights, restricted stock awards or other forms of
awards consistent with the purposes of the plan. Incentive stock options must
be issued at exercise prices no less than the fair market value of the common
stock at the date of the grant. Nonqualified options may be granted at exercise
prices at or below the market value, but not at less than 50% of the market
value of the common stock at the date of the grant. Options granted under the
1995 Plan will vest over a period of not more than ten years as determined by
the Compensation Committee.
At January 31, 1999, options for 973,862 shares were outstanding to various
executive officers and other employees under the 1995 Plan at option exercise
prices ranging from $2.50 to $16.00 per share, which prices reflect a reduction
to the exercise price of all options that remained unexercised after the Tender
Offer. As a result of the Recapitalization in fiscal 1999 whereby we purchased
10,500,000 shares of common stock, we determined to allow holders of options to
accept a $12.50 reduction of the option exercise prices or to voluntarily
surrender such options to us and in exchange receive new options to purchase a
reduced number of shares of common stock (which reflects the number of shares
outstanding after the Tender Offer) at exercise prices equal to the post Tender
Offer trading price, with the same proportional vesting schedule as the options
surrendered.
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FY 1999 Stock Option and Incentive Award Plan
We have reserved 750,000 shares for issuance under the FY 1999 Stock Option
and Incentive Award Plan (the "1999 Plan"). The 1999 Plan provides for the
issuance of a variety of awards, including tax qualified incentive stock
options, nonqualified stock options, stock appreciation rights, restricted
stock and restricted stock units. The 1999 Plan is administered by the
Compensation Committee which has full authority to determine, among other
things, the persons to whom awards under the 1999 Plan will be made, the number
of shares of common stock subject to the awards, and the specific terms and
conditions applicable to awards. Stock options granted under the 1999 Plan will
have an exercise period of not more than ten years.
At January 31, 1999, options for 216,400 shares were outstanding pursuant to
the 1999 Plan at an exercise price of $9.375 per share out of shares reserved
for the 1995 Plan. At January 31, 1999, options for a total of 1,219,950 shares
had been granted out of shares reserved for the 1995 Plan pursuant to the terms
of either the 1995 Plan or the 1999 Plan.
Directors' Stock Plan
In fiscal 1996, we adopted the Samsonite Corporation 1996 Directors' Stock
Plan and reserved 200,000 shares of our common stock for issuance under this
plan. Under the plan, each non-employee director may elect to receive common
stock for directors' fees valued at fair market value in lieu of cash. At
January 31, 1999, 22,200 shares of common stock had been issued under this
plan.
Compensation of Directors
Samsonite pays an annual fee to each non-employee director of $25,000.
Directors are reimbursed for all reasonable travel and other expenses of
attending meetings of the board of directors or a committee thereof.
Compensation Committee Interlocks and Insider Participation
No current or former officer of Samsonite served as a member of the
Compensation Committee.
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<PAGE>
Security Ownership of Management and Beneficial
Owners of More than 5% of Our Common Stock
The following table sets forth certain information about persons known to us
to be the beneficial owner of more than 5% of our common stock, and as to the
beneficial ownership of our common stock by each of our directors and executive
officers and all of our directors and executive officers as a group, as of
April 30, 1999. Except as otherwise indicated, to our knowledge the persons
identified below have sole voting and sole investment power with respect to
shares they own of record. The following table does not give effect to the
results of the rights offering. Therefore, the number of shares beneficially
owned by the persons listed below, and possibly their percentage of ownership,
will increase to the extent they exercise the Rights issued to them in the
rights offering. In addition, if no Rights holder exercises its Rights in the
rights offering and once Apollo converts its shares of our convertible
preferred stock, Apollo will beneficially own approximately 59% of the
outstanding shares after it satisfies its obligations in full under the back-
stop agreement.
<TABLE>
<CAPTION>
Number of Shares
Name and Address of Beneficial Owner Beneficially Owned Percent
---------------------------------------------- ------------------ -------
<S> <C> <C>
Apollo Investment Fund, L.P.
c/o Apollo Advisors, L.P.
2 Manhattan Road
Purchase, New York 10577
and
Lion Advisors, L.P............................ 3,557,757(a) 33.86%
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
CIBC Oppenheimer Corp......................... 724,830(b) 6.45
425 Lexington Avenue
New York, NY 10017
Richard R. Nicolosi........................... 577,493(c) 5.28
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239
Mark H. Rachesky.............................. 39,384 *
Mark Capital Partners
335 Madison Avenue, 26th Floor
New York, New York 10017
Luc Van Nevel................................. 90,865(d) *
c/o Samsonite Europe N.V.
Westerring 17
B-9700 Oudenaarde, Belgium
Thomas R. Sandler............................. 87,303(e) *
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239
Karlheinz Tretter............................. 52,514(f) *
c/o Samsonite Europe N.V.
Westerring 17
B-9700 Oudenaarde, Belgium
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name and Address of Beneficial Owner Beneficially Owned Percent
-------------------------------------------- ------------------ -------
<S> <C> <C>
Carlo Zezza................................. 24,723(g) *
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239
Mark Korros................................. 19,323(h) *
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239
Richard H. Wiley............................ 14,292(i) *
c/o Samsonite Corporation
11200 East 45th Avenue
Denver, Colorado 80239
Bernard Attal............................... 2,881 *
1301 Avenue of the Americas, 38th Floor
New York, New York 10019
Leon D. Black............................... 2,826(j) *
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
Robert H. Falk.............................. 2,826(j) *
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
Robert L. Rosen............................. 2,826 *
RLR Partners, L.P.
825 Third Avenue, 40th Floor
New York, New York 10022
Marc J. Rowan............................... 2,826(j) *
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
Stephen J. Solarz........................... 65 *
APCO Associates, Inc.
1615 L Street, N.W., Suite 900
Washington, DC 20036
All Directors and Executive Officers as a
group...................................... 920,147(k) 8.22%
</TABLE>
- --------
*Less than 1.0%
(a) Includes 1,779,234 shares held by Apollo Investment Fund and 1,778,523
shares beneficially held by Lion Advisors on behalf of an investment
account under management over which Lion has exclusive investment, voting
and dispositive power. Lion Advisors is affiliated with Apollo Advisors,
L.P., the general partner of Apollo Investment Fund. Does not give effect
to the issuance of Series Z Convertible Preferred Stock to Apollo in April
1999 that is convertible into 4,235,000 shares of common stock. The
conversion of such shares is subject to certain conditions.
(b) Represents warrants to acquire common stock issued to purchasers of units
consisting of 13 7/8% Senior Preferred Stock and the Warrants, which units
were issued on June 24, 1998.
(c) Includes options to purchase 425,532 shares of our common stock exercisable
as of April 30, 1999.
(d) Includes options to purchase 86,895 shares of our common stock exercisable
as of April 30, 1999.
(e) Includes options to purchase 77,303 shares of our common stock exercisable
as of April 30, 1999.
(f) Includes options to purchase 40,549 shares of our common stock exercisable
as of April 30, 1999.
(g) Includes options to purchase 19,798 shares of our common stock exercisable
as of April 30, 1999.
(h) Includes options to purchase 15,931 shares of our common stock exercisable
as of April 30, 1999.
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<PAGE>
(i) Represents options to purchase 14,292 shares of our common stock
exercisable as of April 30, 1999.
(j) Includes shares issued under the Directors Stock Plan. Does not include
shares held by Apollo Investment Fund or Lion Advisors. Each of Messrs.
Falk and Rowan, two of our directors, together with Mr. Black, another one
of our directors, who is also a director of Apollo Capital Management,
Inc., the general partner of Apollo Advisors, L.P., and of Lion Capital
Management, Inc., the general partner of Lion Advisors, disclaims
beneficial ownership of the securities held by Apollo Investment Fund and
Lion Advisors.
(k) Excludes shares listed above for Apollo Investment Fund and Lion Advisors.
If such shares were included, the aggregate number of shares beneficially
owned by all directors and executive officers as a group would be
4,477,905, representing 40.02%.
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<PAGE>
Description of Our Principal Indebtedness
The following is a summary of the principal terms and provisions of our
Credit Facility and our 10 3/4% Notes Indenture. The following summary is not
complete and it may not contain all of the information important to you. You
should read carefully our Credit Facility and our 10 3/4% Notes Indenture which
are filed as exhibits to the registration statement. See "Where You Can Find
More Information" below.
Credit Facility
On June 24, 1998, we entered into the Credit Facility with Bank of America
National Trust and Savings Association, as administrative agent, and
BankBoston, N.A., as syndication agent. Under the Credit Facility, the lenders
have agreed to provide us with a $100 million revolving credit facility, a term
loan facility in the amount of $60 million to be borrowed by us and a $50
million term loan facility to be borrowed by Samsonite Europe, our wholly-owned
Belgian subsidiary. All references in this prospectus to the "Credit Facility"
include the $100 million Revolving Credit Facility, the $60 million U.S. Term
Loan Facility and the $50 million European Term Loan Facility described above.
We have the option to add additional lenders as parties to our Credit Facility
and to concurrently increase the $100 million Revolving Credit Facility by up
to an additional $50 million. The $100 million Revolving Credit Facility and
the $50 million European Term Loan Facility mature on June 24, 2003. The $50
million U.S. Term Loan Facility requires principal repayments in each of the
first five years equal to 1.0% of the original principal balance and principal
repayments in each of the sixth and seventh years equal to 47.5% of the
original principal balance.
All loans made to us under the $100 million Revolving Credit Facility bear
interest at the higher of the base rate, which is an annual rate of .50% above
the latest Federal Funds Rate and the Bank of America reference rate, or the
Eurodollar rate, plus, in each case,
. the "applicable margin," which currently is an annual rate of 3.75% for
any portion of the $60 million U.S. Term Loan Facility that is a
Eurodollar rate loan;
. 3.25% for any other loan that is a Eurodollar rate loan;
. 2.75% for any portion of the $60 million U.S. Term Loan Facility that is
a base rate loan; and
. 2.25% for any other base rate loans.
The applicable margin on documentary letters of credit is currently an annual
rate of 2.25%. All loans made to Samsonite Europe under the $100 million
Revolving Credit Facility, including foreign standby letters of credit, and the
$50 million European Term Loan Facility bear interest at the Eurodollar rate
plus the applicable margin. The applicable margin may fall depending upon our
financial performance. We must pay a commitment fee which currently is an
annual rate of 0.625% on the unused portion of the $100 million Revolving
Credit Facility. The fees paid on domestic and foreign standby and documentary
letters of credit may fall depending on our financial performance, but will not
exceed an annual rate of 2.25% of the aggregate undrawn face amount of a
foreign or domestic documentary letter of credit.
The obligations under the $60 million U.S. Term Loan Facility and the $100
million Revolving Credit Facility are secured by our inventory, accounts
receivable, personal property, Denver facility, intellectual property and other
intangibles, and 100% of the capital stock of our major domestic subsidiaries
and 66% of the capital stock of Samsonite Europe and other major non-domestic
subsidiaries.
Our Credit Facility contains customary financial and other covenants that,
among other things, limit our ability, with negotiated exceptions, to:
. incur additional liens;
. incur additional indebtedness;
. make some kinds of investments;
. prepay subordinate indebtedness;
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<PAGE>
. make distributions and dividend payments to its stockholders;
. engage in affiliate transactions;
. make asset dispositions;
. make acquisitions; and
. participate in mergers.
At January 31, 1999, we had approximately $135.1 million of indebtedness
outstanding under our Credit Facility. Our Credit Facility requires us to
achieve and maintain certain financial ratios. The banks who lend to us under
our Credit Facility agreed in fiscal 1999 and again in March 1999 to amend
these financial ratios to enable us to comply with them in subsequent quarters.
We provided goals in our business plan to our bank lenders, which formed the
basis for the recent amendments to these financial ratios. If actual results
are poorer than the goals set forth in our business plan in any significant
respect, we would be in violation of the amended and restated financial ratios.
If this happens, we would need to seek a waiver or a further amendment to these
financial ratios. However, if we were unable to reach agreement with our bank
creditors, they would be able to accelerate all the indebtedness we owe them,
making it immediately due and payable.
Under our Credit Facility, if we sell or issue capital stock, equity
interests or any warrants, rights or options to acquire our capital stock or
equity interests, we are obligated to use:
. of the first $75 million in net proceeds, the lesser of:
--40% of such $75 million or
--such $75 million less the amount expended to resolve the litigation
described under the first paragraph under the caption "Business--Legal
Proceedings and Contingent Obligations" and
. of the net proceeds exceeding $75 million, 50% of such amount
to make a prepayment of principal on the amount outstanding under our Credit
Facility.
10 3/4% Notes
We currently have outstanding $350 million aggregate principal amount of our
10:% Notes. The annual rate of interest on the Notes is equal to 10 3/4%. We
pay interest on the 10 3/4% Notes in cash semiannually in arrears on June 15
and December 15 of each year. The 10 3/4% Notes mature on June 15, 2008. We
have the option to redeem the 10 3/4% Notes, in whole or in part, at any time
on or after June 15, 2003, at redemption prices equal to 105.3750%, 103.5833%
and 101.7919% of the principal amount of the Notes during the twelve-month
period beginning June 15, 2003, 2004 and 2005, respectively, and 100% of the
principal amount of the Notes after June 15, 2005, plus any accrued and unpaid
interest on the Notes up to the redemption date. In addition, we have the
option to redeem up to 40% of the $350 million aggregate principal amount of
the originally issued 10 3/4% Notes at any time prior to June 15, 2001, at a
redemption price equal to 110.75% of the principal amount, plus accrued and
unpaid interest on the Notes up to the redemption date, with the net proceeds
of one or more equity offerings. However, we may only redeem the 10 3/4% Notes
with the net proceeds of an equity offering if at least $210 million aggregate
principal amount of Notes remains outstanding immediately after the any
redemption and that any redemption occurs within 90 days after our receipt of
the proceeds of the equity offering. If we undergo a "change of control" under
our 10 3/4% Notes Indenture, each holder of 10 3/4% Notes may require us to
purchase its 10 3/4% Notes at a cash purchase price equal to 101% of the
principal amount, plus accrued and unpaid interest on the Notes up to the
purchase date. In addition, in some cases, we may be obligated if we sell our
assets to use the available asset sale proceeds to make an offer to purchase
the 10 3/4% Notes at a cash purchase price equal to 100% of the principal
amount, plus accrued and unpaid interest on the Notes up to the purchase date.
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<PAGE>
The 10 3/4% Notes are general unsecured obligations of Samsonite and are
subordinated in right of payment, as described in the 10 3/4% Notes Indenture,
to all existing and future senior debt of Samsonite, including indebtedness
under the Credit Facility. The 10 3/4% Notes rank equally in right of payment
with all other existing and future senior subordinated indebtedness of
Samsonite.
The 10 3/4% Notes Indenture contains covenants for the benefit of the holders
of our 10 3/4% Notes that, among other things, restrict our ability and the
ability of our restricted subsidiaries governed by the Indenture to:
. incur additional indebtedness;
. pay dividends and make other distributions;
. issue capital stock of our subsidiaries;
. make investments;
. repurchase stock;
. create liens;
. enter into transactions our affiliates;
. create dividend or other payment restrictions affecting our
subsidiaries;
. merge or consolidate; and
. transfer or sell assets.
These covenants are subject to a number of important negotiated exceptions.
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<PAGE>
Recapitalization
On June 24, 1998, we completed the recapitalization (the
"Recapitalization"). The purpose of the Recapitalization was to return a
significant amount of cash to our stockholders while allowing them to retain
their equity ownership in Samsonite, subject to limited dilution as a result
of the issuance of the warrants described below. The Recapitalization
involved:
. the sale of 175,000 units consisting of 175,000 shares of our 13 7/8%
Senior Preferred Stock and Warrants to purchase 1,959,000 shares of our
common stock;
. the sale of $350 million of our 10 3/4% Notes;
. our entering into, and borrowing $110 million under, our current Credit
Facility;
. the repayment of $185.5 million of their existing indebtedness,
including indebtedness under our prior credit facility; and
. the repurchase pursuant to a tender offer of 10.5 million shares of our
common stock for a total of $420 million (the "Tender Offer").
The following table presents the sources and uses of funds in connection
with the Recapitalization. The following numbers are in millions:
<TABLE>
<S> <C>
Sources:
Credit Facility................................................. $110.0
Proceeds from sale of 10 3/4% Notes............................. 350.0
Proceeds from sale of 13 7/8% Senior Preferred Stock and
Warrants....................................................... 175.0
------
Total......................................................... $635.0
======
Uses:
Tender Offer.................................................... $420.0
Repayment of existing indebtedness.............................. 185.5
Fees and expenses (a)........................................... 25.8
Working capital................................................. 3.7
------
Total......................................................... $635.0
======
</TABLE>
- --------
(a) The fees and expenses listed above include:
. discounts and commissions payable in connection with the offering of the
10 3/4% Notes and the 13 7/8% Senior Preferred Stock and the Warrants,
. fees payable in connection with the Credit Facility, and
. investment banking, legal, accounting, printing and other miscellaneous
fees and expenses in connection with the Recapitalization.
----------------
For a description of our 13 7/8% Senior Preferred Stock, our Warrants, our
Credit Facility and our 10 3/4% Notes, see "Description of Our Principal
Indebtedness" and "Description of Our Capital Stock."
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<PAGE>
Description of Our Capital Stock
Our Authorized Capital Stock
We are authorized to issue up to 60,000,000 shares of our common stock and
2,000,000 shares of our preferred stock. The following is a summary of the
principal terms of our capital stock and of relevant provisions of our Charter
and By-Laws. The following summary is not complete and may not contain all of
the information important to you. You should read carefully the full text of
our Charter, By-Laws and the Certificate of Designation governing our 13 7/8%
Senior Preferred Stock, which are included as exhibits to the registration
statement and can be obtained as described under "Where You Can Find More
Information" below.
Description of Our Common Stock
As of April 30, 1999, there were 10,508,457 shares of our common stock
issued. The holders of our common stock are entitled to one vote for each share
held on the appropriate record date for all matters submitted to a stockholder
vote. Holders of our common stock are entitled to receive, on a pro rata basis,
dividends declared on the common stock by our board of directors, out of
legally available funds, unless any outstanding preferred stock has a
preference over the common stock for these dividends. In the event of a
liquidation, dissolution or winding up of Samsonite, holders of our common
stock would be entitled to share on a pro rata basis in all of our assets which
are available for distribution and remaining after payment of our liabilities
and the liquidation preference of our outstanding preferred stock. Holders of
our common stock have no rights to purchase additional shares of common stock
if we issue additional shares of capital stock and they have no rights to
convert their common stock into any other securities. In addition, the holders
of our common stock have no redemption rights. As of the date of this
prospectus, all of the outstanding shares of our common stock are fully paid
and holders of our shares of common stock are not required to make additional
capital contributions.
Description of Our Warrants
Our Warrants entitle the holders thereof to purchase an aggregate of
1,959,000 shares of our common stock at an exercise price of $13.02 per share
of common stock. The Warrants are currently exercisable and, unless exercised,
will automatically expire on June 15, 2010. The Warrants are detachable and
separately transferable from our 13 7/8% Senior Preferred Stock, subject to
compliance with applicable federal and state securities laws. The Warrants and
the common stock issuable upon exercise of the Warrants have not been
registered under the Securities Act of 1933 and are subject to transfer
restrictions. Holders of at least 25% of the shares of common stock issuable
upon exercise of the Warrants are currently entitled to require us to effect
two registrations under the Securities Act of 1933 for the resale of these
shares. We have the ability to delay or postpone the registration or the sale
of these shares under a registration statement during specific periods of time
called "blackout periods." Upon any demand by the holders of Warrants, we are
required to prepare, file and cause to be effective within 150 days of their
demand, a shelf registration statement covering the shares of common stock
requested to be registered. In lieu of filing and using our best efforts to
have a shelf registration statement declared effective, we may offer to
purchase all of the shares of common stock to which the registration statement
relates. In addition, holders of common stock issuable upon exercise of the
Warrants have the right to include their securities in any registration
statement relating to any of our common equity securities filed under the
Securities Act of 1933 for our own account or for the account of any of our
securityholders, subject to some exceptions and conditions. We have agreed to
pay the costs of these registrations, other than underwriting discounts and
commissions on shares sold by selling stockholder.
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Description of Our Preferred Stock
Our board of directors has the authority, in its sole discretion, to issue
preferred stock in one or more classes or Series and to fix the designations,
powers, preferences and rights of the shares of each class or Series, including
dividend rates, conversion rights, voting rights, terms of redemption and
liquidation preference and the number of shares constituting each class or
Series. We currently have two series of preferred stock outstanding,
. our 13 7/8% Senior Preferred Stock issued on June 24, 1998 and
. our Series Z Convertible Preferred Stock issued in April 1999.
As of March 15, 1999, we had outstanding 193,200 shares of our 13 7/8% Senior
Preferred Stock with an aggregate liquidation preference of approximately
$193.2 million. In April 1999, we issued 1,000 shares of our Series Z
Convertible Preferred Stock with a total liquidation preference of $10.
Our 13 7/8% Senior Preferred Stock
Dividend Rights. Holders of our 13 7/8% Senior Preferred Stock are entitled
to receive dividends declared by our board of directors on the 13 7/8% Senior
Preferred Stock, out of legally available funds, at an annual rate equal to 13
7/8% of the liquidation preference per share of 13 7/8% Senior Preferred Stock.
Dividends are payable quarterly in arrears on each March 15, June 15, September
15 and December 15. We have the option of paying dividends on any dividend
payment date occurring on or prior to June 15, 2003, either in cash or by
issuing additional shares of our 13 7/8% Senior Preferred Stock with a
liquidation preference equal to the amount of dividends that would otherwise be
paid in cash. After June 15, 2003, we must pay all dividends on our 13 7/8%
Senior Preferred Stock in cash. If any dividend payable on any dividend payment
date after June 15, 2003 is not paid in full in cash, or if, at any time, any
of the events described in clauses (2) through (6) below occurs, the annual
dividend rate will be increased by 2% from:
. the dividend payment date in respect of any unpaid cash dividend or
. during the time any voting rights triggering event causes the annual
dividend rate to increase.
Our Credit Facility and 10 3/4% Notes Indenture each contain additional
limitations on our ability to pay cash dividends on our 13 7/8% Senior
Preferred Stock.
Voting Rights. Holders of our 13 7/8% Senior Preferred Stock have no voting
rights with respect to general corporate matters, except as provided by
Delaware law or as specifically provided for in the Certificate of Designation.
The Certificate of Designation provides that if:
(1) we fail to pay cash dividends on our 13 7/8% Senior Preferred Stock
after June 15, 2003, for two or more quarterly dividend periods,
whether or not the failure occurs in consecutive quarters;
(2) we fail to redeem our 13 7/8% Senior Preferred Stock on or before its
redemption date;
(3) we fail to make an offer to purchase our 13 7/8% Senior Preferred Stock
in the event of a change of control or fail to purchase shares of 13
7/8% Senior Preferred Stock validly tendered in a change of control
offer;
(4) a dividend default, as described in (1) above continues for 60 or more
days after we receive notice of the default from at least 25% of the
holders of our 13 7/8% Senior Preferred Stock then outstanding;
(5) we fail to pay the principal amount of any of our outstanding
indebtedness which equals an aggregate of $50 million or more at its
stated maturity, or any of our outstanding indebtedness which equals to
an aggregate $50 million has been accelerated, and the default or
acceleration is not remedied or cured for 30 days; or
(6) we fail to make any scheduled payment of principal or interest on any
of our outstanding indebtedness which equals an aggregate of $50
million or more, and the default is not remedied or cured for more than
180-days from the date of the scheduled payment,
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then the holders of a majority of the then outstanding shares of 13 7/8% Senior
Preferred Stock, voting separately and as a class, will have the right to elect
the lesser of:
. two directors and
. a number of directors equal to 25% of the total number of members of the
board of directors, until any of the above failures is remedied or
cured.
Each of the "voting rights triggering events" described generally in clauses
(1) through (6) above is more completely and specifically described in the
Certificate of Designation.
Restrictive Covenants Governing Our 13 7/8% Senior Preferred Stock. The
Certificate of Designation governing our 13 7/8% Senior Preferred Stock
contains restrictive covenants that, among other things, limit our ability of
and the ability of our subsidiaries to:
. incur additional indebtedness;
. pay dividends and make other distributions;
. make investments;
. enter into transactions with our affiliates; or
. merge or consolidate.
These covenants are subject to a number of important negotiated exceptions.
Mandatory and Optional Redemption. We are required, with some conditions, to
redeem all of our 13 7/8% Senior Preferred Stock outstanding on June 15, 2010,
at a redemption price equal to 100% of its liquidation preference, plus, all
accumulated and unpaid dividends up to the redemption date. We may redeem our
13 7/8% Senior Preferred Stock, in whole or in part, at any time, on or after
June 15, 2001, at 110%, 108%, 106%, 104%, 102% and 101% of its liquidation
preference during the twelve-month period commencing on or before June 15,
2001, 2002, 2003, 2004, 2005 and 2006, respectively, and 100% of its
liquidation preference after June 15, 2006, plus all accumulated and unpaid
dividends up to the redemption date.
In addition, we have the option to redeem up to an aggregate of 35% of the
shares of our 13 7/8% Senior Preferred Stock, whether the shares were initially
issued or issued as a dividend payment, at any time prior to June 15, 2001, at
a redemption price equal to 113.875% of their liquidation preference, plus all
accumulated and unpaid dividends up to the redemption date, with the net
proceeds of one or more equity offerings. However, at least $113.75 million
aggregate liquidation preference of our 13 7/8% Senior Preferred Stock must be
outstanding immediately after any redemption. In addition, any redemption of
our 13 7/8% Senior Preferred Stock must occur within 90 days after our receipt
of proceeds from the equity offering.
Upon a change of control of Samsonite, each holder of our 13 7/8% Senior
Preferred Stock will be entitled to require us to purchase its 13 7/8% Senior
Preferred Stock at a cash purchase price equal to 101% of its liquidation
preference, plus all accumulated and unpaid dividends up to the purchase date.
Rights upon liquidation, dissolution or winding-up of Samsonite. With respect
to its dividend rights and its rights upon our liquidation, dissolution or
winding-up, our 13 7/8% Senior Preferred Stock ranks as our most senior class
or Series of issued and outstanding preferred stock. We may not issue shares of
any other class or Series of common stock or preferred stock ranking, with
respect to dividend rights and rights upon liquidation, dissolution or winding-
up of Samsonite, senior to or on the same level with our 13 7/8% Senior
Preferred Stock, unless we receive the approval of the holders of at least two-
thirds of the outstanding 13 7/8% Senior Preferred Stock.
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Option to Exchange Our 13 7/8% Senior Preferred Stock for Debentures. We have
the option, on any dividend payment date, to (1) exchange, in whole or in part,
on a pro rata basis, the then outstanding shares of our 13 7/8% Senior
Preferred Stock for junior subordinated debentures due 2010 of Samsonite or (2)
exchange all of the outstanding shares of our 13 7/8% Senior Preferred Stock
for senior debentures due 2010 of a holding company of Samsonite. However,
immediately after giving effect to any partial exchange of our 13 7/8% Senior
Preferred Stock for Samsonite Junior Debentures, there must be:
. shares of 13 7/8% Senior Preferred Stock outstanding with an aggregate
liquidation preference of $75 million or more and
. an aggregate principal amount of $75 million or more of our Samsonite
Junior Debentures outstanding.
The 10 3/4% Notes Indenture and the Credit Facility restrict our ability to
exchange our 13 7/8% Senior Preferred Stock for debentures. The debentures, if
issued, will bear interest at the same rate as the dividend rate on our 13 7/8%
Senior Preferred Stock and will contain covenants substantially identical to
our 13 7/8% Senior Preferred Stock. The Samsonite Junior Debentures, if issued,
will rank subordinate in right of payment to all other senior debt of Samsonite
to the extent set forth in the 10 3/4% Notes Indenture. The Samsonite Holdings
Debentures will constitute general unsecured obligations of Samsonite Holdings
Inc.
Our Series Z Convertible Preferred Stock
The Series Z Convertible Preferred Stock was issued to Apollo in connection
with its bridge investment. The Series Z Convertible Preferred Stock is
intended to be the economic equivalent of the underlying shares of common
stock. As described below, we have the right to redeem the Series Z Convertible
Preferred Stock in exchange for common stock and we intend to exercise this
right upon completion of the rights offering, subject to prior compliance with
applicable antitrust laws. Apollo has agreed to certain limitations with
respect to voting on the common stock issuable upon conversion of the Series Z
Convertible Preferred Stock. See "The Rights Offering--Apollo Bridge Investment
and Back-Stop Agreement."
Ranking. The Series Z Convertible Preferred Stock ranks
. junior to our 13 7/8% Senior Preferred Stock as to both dividends and
distributions upon liquidation,
. senior to our common stock as described above with respect to
distributions upon liquidation and
. equal to our common stock as to dividends.
Optional and Mandatory Conversion. Each of the 1,000 shares of Series Z
Convertible Preferred Stock is currently convertible at any time, or from time
to time, at the option of the holders of our Series Z Convertible Preferred
Stock, into 4,235 shares of our common stock, subject to adjustment. However, a
holder of our shares of Series Z Convertible Preferred Stock may not convert
its shares of Series Z Convertible Preferred Stock into shares of Common Stock
before the later of
. the expiration of any applicable waiting period under U.S. and foreign
antitrust laws and
.the completion or abandonment of the rights offering.
In addition, subject to prior compliance with applicable U.S. and foreign
antitrust laws, at any time after the completion or abandonment of the rights
offering, all shares of Series Z Convertible Preferred Stock transferred to any
third party not affiliated with the holder of the shares of Series Z
Convertible Preferred Stock, will automatically convert into common stock at
the rate per share set forth above.
Dividends. Holders of shares of the Series Z Convertible Preferred Stock will
receive the amount of dividends per share of Series Z Convertible Preferred
Stock that are payable in respect of the amount of shares of common stock into
which that share of Series Z Convertible Preferred Stock is convertible.
However, the holders of shares of Series Z Convertible Preferred Stock will not
be entitled to receive:
. any dividends on our common stock consisting of our common stock
(instead, there will be an anti-dilution adjustment to the conversion
rate) and
. the rights to be distributed to holders of our common stock in this
rights offering.
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Mandatory Redemption. Subject to prior compliance with applicable U.S. and
foreign antitrust laws, we have the option to redeem the shares of Series Z
Convertible Preferred Stock, at any time, after the rights offering is
completed or abandoned, or from time to time, in whole or in part, in exchange
for Common Stock at the conversion rate then in effect.
Rights upon liquidation, dissolution or winding-up of Samsonite. With respect
to rights upon our liquidation, dissolution or winding up, our Series Z
Convertible Preferred Stock, after any payment or distribution of our assets to
satisfy the liquidation preference of the holders of our 13 7/8% Senior
Preferred Stock, the holders of our Series Z Convertible Preferred Stock shall
be entitled to receive $.01 per share of Series Z Convertible Preferred Stock,
prior to any distribution to the holders of our Common Stock. After receiving
such a payment, the holders of our Series Z Preferred Stock shall share any
distributions equally with the holders of our common stock based on the number
of shares of our common stock into which the Series Z Convertible Preferred
Stock is convertible.
Anti-dilution Adjustments. If we
. pay a dividend or make any other distribution on our common stock
payable in shares of our common stock,
. subdivide or combine our outstanding shares of common stock into a
greater or smaller number of shares, or
. issue or distribute any equity securities by reclassification of our
common stock (other than any issuance constituting a dividend in which
the holders of shares of our Series Z Convertible Preferred Stock
participate pursuant to their rights to receive dividends set forth
above),
the conversion price of the shares of Series Z Convertible Preferred Stock will
be adjusted so that the holders of the shares of Series Z Convertible Preferred
Stock will be entitled to receive the same number of shares of our common stock
that they would have been entitled to receive after the events described above
have occurred, had the holder of those shares of our Series Z Convertible
Preferred Stock converted those shares into our common stock before the
occurrence of the events set forth above.
If we consolidate or merge with another entity and, as a result of the merger
or consolidation, we change our shares of common stock into the same or a
different number of shares of the same or another class or classes of our stock
or securities or another entity or any other property or assets, then the
holders of Series Z Convertible Preferred Stock will have the right to receive
the shares of our common stock, securities or other property or assets, as
applicable, as may be issued or payable with respect to or in exchange for the
number of shares of our common stock that would otherwise have been received by
such holders had they converted their shares of Series Z Convertible Preferred
Stock immediately prior to the effective date of the merger or consolidation.
Voting Rights. The holders of shares of our Series Z Convertible Preferred
Stock will have no voting rights, except as required by law or by the
applicable rules of any securities exchange or automated quotation system upon
which Series Z Convertible Preferred Stock may be listed or admitted to
trading.
Upon any consolidation, merger, reclassification or similar transaction, as a
result of which:
. the Series Z Convertible Preferred Stock would be converted into
anything other than the shares of our Common Stock into which the Series
Z Convertible Preferred Stock would have been converted had the
conversion taken place prior to the effective date of the consolidation,
merger, reclassification or similar transaction or
. the terms of our common stock underlying the Series Z Convertible
Preferred Stock would be amended or altered
then the holders of a majority of the outstanding shares of the Series Z
Convertible Preferred Stock, voting as a separate single class, shall have the
right to approve that consolidation, merger, reclassification or similar
transaction.
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Without the approval of the holders of at least 66 2/3% of the shares of the
Series Z Convertible Preferred Stock, voting or consenting, as the case may be,
as one class, we cannot:
. change the certificate of designations governing the Series Z
Convertible Preferred Stock in any manner that adversely affects the
rights of holders of the Series Z Convertible Preferred Stock;
. change the voting rights with respect to the Series Z Convertible
Preferred Stock or reduce the number of shares of Series Z Convertible
Preferred Stock whose holders must consent to an amendment, supplement
or waiver;
. reduce the liquidation preference of or alter the number of shares of
Common Stock issuable upon the mandatory redemption of the Series Z
Convertible Preferred Stock;
. reduce the rate of or change the time for payment of dividends on any
share of Series Z Convertible Preferred Stock;
. waive the consequences of any failure to pay dividends on the Series Z
Convertible Preferred Stock;
. make any share of Series Z Convertible Preferred Stock payable in any
form other than that stated in the certificate of designations governing
the Series Z Convertible Preferred Stock;
. make any change in the provisions of the certificate of designations
relating to waivers of the rights of holders of the Series Z Convertible
Preferred Stock to receive the liquidation preference and dividends on
the Series Z Convertible Preferred Stock; or
. make any change in the foregoing amendment and waiver provisions.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our common stock and 13 7/8% Senior
Preferred Stock is Boston EquiServe.
Our Charter and By-Laws Contain Provisions which May Discourage a Third-Party
Take-over
Our Charter and By-laws contain provisions that could make it more difficult
to acquire Samsonite by means of a tender offer, a proxy contest or otherwise.
Classified Board of Directors and Related Provisions. Our Charter divides the
board of directors into three classes, designated Class I, Class II and Class
III, which are as nearly equal in number as possible. Class I directors, who
will serve for a term ending with the annual meeting of stockholders to be held
in 1999, currently consist of three directors. Class II directors, who will
serve for a term ending with the annual meeting of stockholders to be held in
2000, currently consist of two directors. Class III directors, who will serve
for a term ending with the annual meeting of stockholders to be held in 2001,
currently consist of four directors. A director may be removed by the
stockholders, but only for cause, and only by the affirmative vote of the
holders of a majority of the total number of votes entitled to be cast by all
holders of Samsonite voting stock, including the common stock and any class or
Series of preferred stock entitled to vote on all general matters submitted to
Samsonite's stockholders, voting as a single class.
The purpose of our classified board is to promote conditions of continuity
and stability in the composition of our board of directors and in the policies
it formulates. However, a classified board may deter mergers, tender offers or
other takeover attempts which some or a majority of our stockholders may find
in their best interest, since it would take two annual meetings of stockholders
to elect a majority of the board of directors. Similarly, a classified board
structure would delay stockholders who do not like the policies of the board of
directors from removing a majority of the board of directors at a single annual
meeting.
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Advance Notice Provisions for Shareholder Nominations and Shareholder
Proposals. The By-Laws establish an advance notice procedure for stockholders
to make nominations of candidates for election as directors, or bring other
business before an annual stockholder meeting.
The advance notice procedure provides that only persons who are nominated by
our board of directors or by a Samsonite stockholder who has given timely
written notice to our secretary prior to the meeting at which directors are to
be elected, will be eligible for election as directors of Samsonite. The
advance notice procedure provides that the only business which may be conducted
at an annual meeting is business which has been:
. specified in the notice of the annual meeting given by our board of
directors or one of its authorized committees,
. brought before the annual meeting by our board of directors or one of
its authorized committees, or
. brought before the annual meeting by a Samsonite stockholder who has
given timely written notice to our secretary of its intention to bring
the business before the annual meeting.
Under the advance notice procedure for our annual meetings, in order for a
stockholder notice to be timely, it must be received by Samsonite not later
than 60 days and not earlier than 90 days before the first anniversary of the
preceding year's annual meeting.
If the date of the annual meeting is advanced by more than 30 days or delayed
by more than 60 days from the first anniversary of the preceding year's annual
meeting, shareholder notices must be received by Samsonite not earlier than 90
days before the annual meeting and not later than the close of business on the
later of:
. 60 days before the date of the annual meeting, or
. 10 days after the first public announcement of the revised date of the
annual meeting.
Under the advance notice procedure, for a stockholder's director nomination
at a special meeting to be timely, the notice must be received by Samsonite not
earlier than 90 days before the special meeting and not later than the close of
business on the later of (a) 60 days before the special meeting or (b) 10 days
after the date of the first public announcement of the date of the special
meeting.
In addition, under the advance notice procedure, a stockholder's notice to
Samsonite proposing to nominate a director or conduct business at an annual
meeting must contain the information specified in our Charter.
If the board of directors determines that a person was not properly nominated
for director, or other business was not properly brought before the meeting, in
accordance with the advance notice procedure, the person will not be eligible
for election as a director, or the business will not be conducted at the
meeting, as the case may be.
Our Preferred Stock Rights Plan
The Preferred Stock Rights. On May 12, 1998, we declared a dividend
distribution of one preferred stock right for each outstanding share of its
common stock to stockholders of record at the close of business on May 20,
1998, the record date for the preferred stock right distribution. Each
Preferred Stock Right entitles its holder to purchase from Samsonite one-
thousandth of a share of our Series B junior participating preferred stock, par
value $0.01 per share, at a cash purchase price of $70, which may be adjusted.
For a complete description of the terms and provisions of our Preferred Stock
Rights, you should carefully read the Preferred Stock Rights Agreement between
Samsonite and BankBoston, N.A., as preferred stock rights agent, which is
included as an exhibit to the registration statement containing this
prospectus.
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Preferred Stock Rights Will Separate from the Common Stock Certificates Upon
a Distribution Date. Initially, the Preferred Stock Rights will be attached to
all outstanding common stock certificates and no separate Preferred Stock
Rights certificates will be distributed. The Preferred Stock Rights will
separate from the common stock on a distribution date occurring upon the
earlier of:
. 10 business days following a public announcement that a person has
become an "acquiring person," as defined below, or
. 10 business days, or
. a later date if the board of directors elects, following the
commencement of a tender offer or exchange offer that would result in a
person or group becoming an acquiring person.
For purposes of our Preferred Stock Rights Plan, an "acquiring person" means
any person who or which, together with its affiliates and associates, acquires
beneficial ownership of 15% or more of our shares of common stock then
outstanding, but excludes the following persons or entities:
(1) Samsonite;
(2) any of our subsidiaries;
(3) any of our employee benefit plans or any employee plans of our
subsidiaries;
(4) any person or entity organized, appointed or established by us under
the terms of any employee benefit plan;
(5) any person who owned 15% or more of outstanding common stock prior to
the execution of our Preferred Stock Rights Plan who was excepted or
"grandfathered";
(6) any person, together with its affiliates and associates, whose
percentage beneficial ownership increased to more than 15% of the
outstanding shares of our common stock as a result of any repurchase of
our common stock, as long as that person, together with its affiliates
and associates,
. did not acquire any shares of our common stock after the public
announcement of our repurchase under the Tender Offer, and
. does not acquire any additional shares of our common stock
following any other repurchase of our common stock if our repurchase
would result in that person, together with its affiliates and
associates, owning more than 15% of our outstanding common stock.
Until the distribution date,
. the Preferred Stock Rights will be evidenced by our common stock
certificates and will be transferred only with our common stock
certificates,
. new common stock certificates issued after the record date will state
that the common stock is governed by the provisions of the Preferred
Stock Rights Agreement, and
. the surrender of any common stock certificates for transfer will also
constitute the transfer of the Preferred Stock Rights with the shares of
common stock represented by the surrendered certificate.
Samsonite Will Not Issue Fractional Preferred Stock Rights. Under the
Preferred Stock Rights Agreement, Samsonite reserves the right to require that
only whole shares of our Series B Preferred Stock will be issued upon exercise
of the Preferred Stock Rights.
Distribution of Preferred Stock Rights. The Preferred Stock Rights are not
exercisable until they are distributed and will expire at 5:00 p.m., New York
City time, on May 31, 2000, unless they are redeemed or extended before the
expiration date by the board of directors as described below.
As soon as practicable after the distribution date, we will mail Preferred
Stock Rights certificates to record holders of our common stock as of the close
of business on the distribution date. After the distribution date, only the
separate Preferred Stock Rights certificates will represent the Preferred Stock
Rights. Only shares of our common stock issued prior to the distribution date
will be issued with Preferred Stock Rights, unless our board of directors
decides otherwise.
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Exercise of Your Preferred Stock Rights. If a person becomes an acquiring
person, each holder of a Preferred Stock Right, except for the acquiring
person, will have the right following the acquiring person's stock acquisition
to exercise the holder's Preferred Stock Rights and receive shares of our
common stock, or, in some circumstances, cash, property or other securities of
Samsonite, having a value equal to two times the exercise price of the
Preferred Stock Right.
Following the stock acquisition date, all Preferred Stock Rights that are,
or, under specific circumstances described in the Preferred Stock Rights
Agreement, were, beneficially owned by any acquiring person will be null and
void. However, Preferred Stock Rights are not exercisable until the Preferred
Stock Rights are no longer redeemable by our board of directors, as described
below.
For example, at an exercise price of $70 per Preferred Stock Right, each
Preferred Stock Right not owned by an acquiring person following the stock
acquisition date would entitle its holder to purchase $140 worth of our common
stock, or other consideration in some circumstances, for $70. Assuming that our
common stock had a per share value of $35 at the time of the acquisitions
event, each holder of a valid Preferred Stock Right, other than the acquiring
person, would be entitled to purchase four shares of our common stock for $70.
Right to Receive Shares of Stock in an Acquiring Company. If at any time
following the stock acquisition date, (1) Samsonite is acquired in a merger or
business combination, but excluding any offer by Samsonite to repurchase its
capital stock as described above in the definition of an acquiring person, or
(ii) 50% or more of Samsonite's assets, cash flow or earning power is sold or
transferred, each holder of a Preferred Stock Right, except for voided
Preferred Stock Rights held by an acquiring person, who exercises his or her
rights will receive, common stock of the acquiring company with a value equal
to two times the exercise price of the Preferred Stock Right.
Samsonite's Optional Redemption of the Preferred Stock Rights. Samsonite has
the option until 10 business days after a stock acquisition date to redeem all,
and only all, of the Preferred Stock Rights, at a redemption price of $.005 per
Preferred Stock Right payable in cash, common stock or any other consideration
which our board of directors finds appropriate. Immediately upon a decision of
our board to redeem the Preferred Stock Rights, they will terminate and the
only remaining right of the holders of Preferred Stock Rights will be to
receive the $.005 redemption price.
Potential United States Federal Income Tax Consequences. Until a Preferred
Stock Right is exercised, its holder will have no rights as a shareholder of
Samsonite, including the right to vote or receive dividends. While the
distribution of the Preferred Stock Rights will not be taxable to Samsonite or
our stockholders, our stockholders may, depending upon the circumstances,
recognize taxable income if they exercise their Preferred Stock Rights for
common stock, or other consideration, of Samsonite or for common stock of an
acquiring company.
Amendments by the Samsonite Board of Directors. Any of the provisions of the
Preferred Stock Rights Agreement may be amended by our board of directors
before the distribution of Preferred Stock Rights. After the distribution date,
the provisions of the Preferred Stock Rights Agreement may be amended by the
board of directors in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Preferred Stock Rights, or to
shorten or lengthen any time period under the Preferred Stock Rights Agreement.
However, no amendment to lengthen a time period affecting redemption of the
Preferred Stock Rights may be made at a time when the Preferred Stock Rights
after the period for redemption has expired and the Preferred Stock Rights are
no longer redeemable.
Amendments to our Preferred Stock Rights Plan. On April 7, 1999, we entered
into the amendment to the Preferred Stock Rights Plan with the preferred stock
rights agent so that the bridge investment, the rights offering, including the
back-stop agreement, and the transactions contemplated by the investment
agreement would not trigger the provisions of our Preferred Stock Rights Plan.
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The following is a summary of the amendments to our Preferred Stock Rights
Plan:
. The expiration date of the Preferred Stock Rights Plan was extended from
May 31, 2000 to May 31, 2002.
. The term "exempted person" was amended to allow Apollo Advisors, L.P.,
and its affiliates and associates, including Lion to acquire a
percentage of the outstanding shares of our common stock equal to:
--from and after April 7, 1999, but prior to the closing of Apollo's
back-stop obligations, 2% plus the percentage of the outstanding
shares of common stock beneficially owned by Apollo at the time of
any calculation to determine whether Apollo is an "acquiring
person", treating for this purpose the shares to be purchased at
the closing of Apollo's back-stop obligations as not beneficially
owned by Apollo, and
--after the closing of the back-stop obligations, 2% plus the
percentage of the outstanding shares of common stock beneficially
owned by Apollo immediately after the back-stop closing.
. The term "exempted person" was amended to allow Artemis, including its
affiliates and associates, to acquire a percentage of the outstanding
shares of our common stock equal to 2% plus the quotient obtained by
dividing:
--the number of shares of common stock which Artemis or any of its
affiliates or associates has the right to acquire, or acquires, at
any time or which otherwise may be distributed to Artemis or to any
of its affiliates or associates, in either case by reason of
(1)the termination of the managed account between Artemis and Lion,
or
(2)the terms of any partnership agreement or other agreement
between Artemis or any of its affiliates and associates and
Apollo or any of its affiliates or associates by
--the number of shares of common stock outstanding at the time of
any calculation to determine whether Artemis is an "acquiring
person".
. The term "acquiring person" was amended to allow any person, together
with that person's affiliates and associates, whose percentage
beneficial ownership of the outstanding shares of common stock is
increased by reason any repurchase of common stock by us to acquire up
to but not exceeding 1% of the then outstanding shares of common stock
following the public announcement of any such repurchase by us.
The Preferred Stock Rights may discourage a third party take-over of
Samsonite. The Preferred Stock Rights will cause substantial dilution to any
person or group that attempts to acquire Samsonite on terms not approved by our
board of directors. However, the Preferred Stock Rights should not interfere
with any merger or other business combination approved by the board of
directors since the Preferred Stock Rights may be redeemed by Samsonite at any
time until 10 business days following the acquisition date.
Delaware Statutory Provisions which Govern Transactions with Our Affiliates
Section 203 of the Delaware General Corporation Law prohibits transactions
between a Delaware corporation and an "interested shareholder," which is
defined as a person who, together with its affiliates and/or associates,
beneficially owns, directly or indirectly, 15% or more of the outstanding
voting shares of a Delaware corporation. This provision prohibits business
combinations, defined broadly to include mergers, consolidations, sales or
other dispositions of assets having an aggregate value in excess of 10% of the
consolidated assets of the corporation, and those transactions that would
increase the interested shareholder's proportionate share ownership in the
corporation, between an interested shareholder and a corporation for a period
of three years after the date the interested shareholder acquired its stock,
unless (1) the business combination is approved by the corporation's board of
directors prior to the date the interested shareholder acquired shares, (2) the
interested shareholder acquired at least 85% of the voting stock of the
corporation in
86
<PAGE>
the transaction in which it became an interested shareholder or (3) the
business combination is approved by a majority of the board of directors and by
the affirmative vote of two-thirds of the votes entitled to be cast by
disinterested stockholders at an annual or special meeting. A Delaware
corporation, under its charter or by-laws provisions, may elect not to be
governed by Section 203 and its election becomes effective one year after its
adoption. In our Charter, we have elected not to be governed by Section 203.
Certain United States Federal Income Tax Consequences
The following is a general discussion of certain United States federal income
tax consequences of the receipt of Rights in the rights offering and the
ownership, exercise and disposition of the Rights to United States holders, as
defined below. This discussion is based on the Code, Treasury regulations
promulgated thereunder, and administrative and judicial interpretations
thereof, all as in effect as of the date hereof and all of which are subject to
change, possibly with retroactive effect. This discussion does not address all
aspects of United States federal income taxation that may be applicable to
investors in light of their particular circumstances or to investors subject to
special treatment under the United States federal income tax laws, including,
but not limited to, banks, dealers in securities, life insurance companies, tax
exempt organizations or foreign taxpayers. This discussion also does not
address any aspect of state, local or foreign income or other tax laws. This
discussion is limited to United States holders which hold our common stock as a
capital asset. For purposes of this discussion, a "United States holder" is a
holder that is, for United States federal income tax purposes,
. a citizen or resident of the United States,
. a corporation or partnership created or organized in or under the laws
of the United States or any political subdivision thereof,
. an estate the income of which is subject to United States federal income
taxation regardless of its source, or
. a trust if a United States court is able to exercise primary supervision
over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the
trust.
Each stockholder should consult its tax advisor as to the particular tax
consequences to such stockholder of the receipt of Rights in the rights
offering and the ownership, exercise and disposition of the Rights, including
the applicability of any federal estate or gift tax laws or any state, local or
foreign tax laws, any changes in applicable tax laws and any pending or
proposed legislation or regulations.
Receipt of the Rights
A stockholder will not recognize taxable income for United States federal
income tax purposes in connection with the receipt of Rights in the rights
offering.
Tax Basis and Holding Period of the Rights
Except as provided in the following sentence, the tax basis of the Rights
received by a stockholder in the rights offering will be zero. If either (1)
the fair market value of the Rights on the date such Rights are distributed is
equal to at least 15% of the fair market value on such date of the common stock
with respect to which they are received or (2) the stockholder elects, in its
United States federal income tax return for the taxable year in which the
Rights are received, to allocate part of the tax basis of such common stock to
the Rights, then upon exercise or transfer of the Rights, the stockholder's tax
basis in such common stock will be allocated between the common stock and the
Rights in proportion to their respective fair market values on the date the
Rights are distributed. A stockholder's holding period for the Rights received
in the rights offering will include the stockholder's holding period for the
common stock with respect to which the Rights were received.
87
<PAGE>
Sale or Taxable Disposition of the Rights
A stockholder which sells, exchanges or otherwise disposes of Rights received
in the rights offering will recognize capital gain or loss equal to the
difference between (1) the amount of cash and the fair market value of any
property received and (2) such stockholder's tax basis (if any) in the Rights
disposed. Any such capital gain or loss will be long-term capital gain or loss
if such holder's holding period for the Rights exceeds one year at the time of
disposition.
Expiration of the Rights
A stockholder which allows Rights received in the rights offering to expire
will not recognize any gain or loss, and the tax basis of the common stock, if
any, owned by such holder with respect to which such Rights were distributed
will be equal to the tax basis of such common stock immediately before the
receipt of the Rights in the rights offering.
Exercise of the Rights; Tax Basis and Holding Period of the Shares
A stockholder will not recognize any gain or loss upon the exercise of Rights
received in the rights offering. The tax basis of the shares of common stock
acquired through exercise of the Rights will equal the sum of the subscription
price for the shares and the holder's tax basis, if any, in the Rights as
described above. The holding period for the shares of common stock acquired
through exercise of the Rights will begin on the date the Rights are exercised.
Legal Matters
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, is acting as
legal counsel to Samsonite.
Experts
The consolidated financial statements of Samsonite Corporation and
subsidiaries as of January 31, 1999 and 1998, and for each of the years in the
three-year period ended January 31, 1999, and the related financial statement
schedule have been included herein and in the registration statement of which
this prospectus is a part, in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.
Where Can You Find More Information
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may read, or copy,
any document we file at the public reference room maintained by the SEC at 450
Fifth Street, N. W., Washington, D.C. 20549, and at the following regional
offices of the SEC: New York Regional Office, Seven World Trade Center, 13th
Floor, New York, New York 10048; and Chicago Regional Office, Citicorp Center,
5000 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this
information can be obtained by mail from the SEC's Public Reference Branch at
450 Fifth Street, N.W., Washington, D.C. 20549. In addition, our filings with
the SEC are also available to the public on the SEC's internet Web site at
http://www.sec.gov. Our common stock is listed on Nasdaq, and our reports,
proxy statements and other information concerning us may also be read and
copied at the offices of the Nasdaq Stock Market, Reports Section, at 1735 K
Street, Washington, D.C. 20006.
We have filed with the SEC a registration statement on Form S-1 under the
Securities Act of 1933 with respect to the Rights offered in this rights
offering and the shares of our common stock to be issued upon exercise of the
Rights. This prospectus does not contain all of the information set forth in
the registration statement and its exhibits and schedules. Statements made by
us in this prospectus as to the contents of any
88
<PAGE>
contract, agreement or other document referred to in this prospectus are not
necessarily complete. For a more complete description of these contacts,
agreements or other documents, you should carefully read the exhibits to the
registration statement.
The registration statement, together with its exhibits and schedules, which
we filed with the SEC, may also be reviewed and copied at the public reference
facilities of the SEC located at the addresses set forth above. Please call the
SEC at 1-800-SEC-0330 for further information on its public reference
facilities.
89
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Financial Statements:
Independent Auditors' Report.............................................. F-2
Consolidated Balance Sheets as of January 31, 1999 and 1998............... F-3
Consolidated Statements of Operations for each of the years in the three-
year period ended
January 31, 1999......................................................... F-4
Consolidated Statements of Stockholders' Equity (Deficit) for each of the
years in the three-year period ended January 31, 1999.................... F-5
Consolidated Statements of Cash Flows for each of the years in the three-
year period ended
January 31, 1999......................................................... F-7
Notes to Consolidated Financial Statements................................ F-9
Schedule:
Schedule II--Valuation and Qualifying Accounts............................ F-34
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Samsonite Corporation:
We have audited the accompanying consolidated financial statements of
Samsonite Corporation and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Samsonite
Corporation and subsidiaries as of January 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the years in the three-
year period ended January 31, 1999, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG LLP
Denver, Colorado
March 22, 1999, except as to
notes 15 and 19, which are as of April 9, 1999
F-2
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31, 1999 and 1998
(In thousands)
<TABLE>
<CAPTION>
January 31,
----------------
ASSETS 1999 1998
------ -------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents...................................... $ 41,932 3,134
Trade receivables, net of allowances for doubtful accounts of
$7,065 and $8,766............................................. 78,329 99,620
Notes and other receivables.................................... 11,614 10,129
Inventories (note 5) .......................................... 187,567 172,665
Deferred income tax assets (note 12)........................... 2,491 31,623
Prepaid expenses and other current assets ..................... 14,452 13,873
Assets held for sale .......................................... 112 11,471
-------- -------
Total current assets ........................................ 336,497 342,515
Investments in affiliates ....................................... 518 2,425
Property, plant and equipment, net (note 6) ..................... 149,641 142,351
Intangible assets, less accumulated amortization of $46,786
and $41,043 (notes 3 and 7)..................................... 114,248 116,908
Other assets and long-term receivables, net of allowances for
doubtful accounts of $521 and $706.............................. 20,531 5,850
-------- -------
$621,435 610,049
======== =======
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<S> <C> <C>
Current liabilities:
Short-term debt (note 8)................................ $ 8,409 5,640
Current installments of long-term obligations (note 9)
....................................................... 6,923 6,977
Accounts payable........................................ 48,375 49,221
Accrued interest expense................................ 5,982 1,223
Accrued compensation and employee benefits ............. 18,897 17,228
Other accrued expenses (note 15) ....................... 73,662 66,917
-------- --------
Total current liabilities ............................ 162,248 147,206
Long-term obligations, less current installments (notes 2,
9 and 14) ............................................... 496,173 172,246
Deferred income tax liabilities (note 12)................. 17,046 15,730
Other noncurrent liabilities (note 13).................... 53,919 59,838
-------- --------
Total liabilities .................................... 729,386 395,020
-------- --------
Minority interests in consolidated subsidiaries .......... 9,166 6,143
Senior redeemable preferred stock (aggregate liquidation
preference of $186,723) (note 10)........................ 178,329 --
Stockholders' equity (deficit) (notes 9, 10, 11 and 19):
Preferred stock ........................................ -- --
Common stock............................................ 210 204
Additional paid-in capital ............................. 436,351 418,462
Accumulated deficit .................................... (299,581) (195,171)
Accumulated other comprehensive income.................. (12,426) (14,449)
Unearned compensation--restricted shares ............... -- (160)
-------- --------
124,554 208,886
Treasury stock, at cost (10,500,000 shares) (note 2) ... (420,000) --
-------- --------
Total stockholders' equity (deficit) ................. (295,446) 208,886
-------- --------
Commitments and contingencies (notes 9, 11, 13 and 15)
$621,435 610,049
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended January 31,
---------------------------
1999 1998 1997
--------- ------- -------
<S> <C> <C> <C>
Net sales......................................... $ 697,421 736,875 741,138
Cost of goods sold................................ 413,124 424,349 449,333
--------- ------- -------
Gross profit.................................. 284,297 312,526 291,805
Selling, general and administrative expenses ..... 263,892 234,257 233,761
Amortization of intangible assets ................ 5,633 7,101 31,837
Provision for restructuring operations (note 4) .. 6,598 1,866 10,670
--------- ------- -------
Operating income.............................. 8,174 69,302 15,537
Other income (expense):
Interest income ................................ 2,453 2,574 1,419
Interest expense and amortization of debt issue
costs and premium ............................. (39,954) (19,918) (35,670)
Other income (expense)--net (notes 15 and 16) .. (25,351) 28,294 18,821
--------- ------- -------
Income (loss) before income taxes, minority
interest, and extraordinary item ............ (54,678) 80,252 107
Income tax expense (note 12) ..................... (26,800) (23,088) (10,389)
Minority interest in earnings of subsidiaries..... (840) (287) (1,041)
--------- ------- -------
Income (loss) before extraordinary item ...... (82,318) 56,877 (11,323)
Extraordinary item--loss on extinguishment of
debt,
net of income tax benefit of $3,959 and $9,930
(notes 2 and 9) ............................... (6,460) (16,178) --
--------- ------- -------
Net income (loss) ............................ (88,778) 40,699 (11,323)
Senior redeemable preferred stock dividends and
accretion of senior redeemable preferred stock
discount (note 10) .............................. (15,632) -- --
--------- ------- -------
Net income (loss) to common stockholders...... $(104,410) 40,699 (11,323)
========= ======= =======
Income (loss) per common share--basic:
Income (loss) before extraordinary item ...... $ (6.79) 2.81 (.71)
Extraordinary item ........................... (0.45) (.80) --
--------- ------- -------
Net income (loss) per share................. $ (7.24) 2.01 (.71)
========= ======= =======
Income (loss) per common share--assuming dilution:
Income (loss) before extraordinary item....... $ (6.79) 2.70 (.71)
Extraordinary item ........................... (0.45) (.77) --
--------- ------- -------
Net income (loss) per share................. $ (7.24) 1.93 (.71)
========= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Accumu-
lated Unearned
other Compre- compen- Note
Additional compre- Accumu- hensive sation receivable
Preferred Common paid-in hensive lated income restricted from Treasury
stock(1) stock(2) capital income deficit (loss) shares officer stock
--------- -------- ---------- ------- -------- ------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 31,
1996................... $-- 159 261,842 (2,338) (224,547) -- (10,000) --
Net loss............... -- -- -- -- (11,323) (11,323) -- -- --
Foreign currency
translation
adjustment............ -- -- -- (2,999) -- (2,999) -- -- --
-------
Comprehensive income
(loss).............. -- -- -- -- -- (14,322) -- -- --
=======
Issuance of 55,000
shares of common
stock to an officer
for cash (note 11).... -- -- 1,004 -- -- -- -- --
Stock award of 60,000
shares of restricted
common stock to an
officer (note 11)..... -- 1 1,094 -- -- (1,095) -- --
Issuance of 513 shares
to directors for
services (note 11).... -- -- 19 -- -- -- -- --
Amortization of
restricted stock
award to compensation
expense (note 11)..... -- -- -- -- -- 388 -- --
Compensation expense
accrued for stock
bonus awards
(note 11)............. -- -- 503 -- -- -- -- --
Exercise of employee
stock options and
related income tax
benefits (note 11).... -- -- 591 -- -- -- -- --
Reclassification of
accrued compensation
for stock options
exercised............. -- -- 1,699 -- -- -- -- --
Payment of note
receivable
(note 11)............. -- -- -- -- -- -- 10,000 --
---- --- ------- ------- -------- ------ ------- ---
Balance, January 31,
1997................... -- 160 266,752 (5,337) (235,870) (707) -- --
Net income............. -- -- -- -- 40,699 40,699 -- -- --
Foreign currency
translation
adjustment............ -- -- -- (9,112) -- (9,112) -- -- --
-------
Comprehensive income
(loss).............. -- -- -- -- -- 31,587 -- -- --
=======
Issuance of 3,300,000
shares of common
stock in public
offering, net of
offering costs and
underwriting discount
of $8,303 (note 19)... -- 33 130,209 -- -- -- -- --
Issuance of 4,032
shares to directors
for services
(note 11)............. -- -- 174 -- -- -- -- --
Issuance of 1,033,203
shares for exercise
of employee stock
options and related
income tax benefits,
net of 889,450 shares
exchanged (notes 11
and 19)............... -- 11 20,617 -- -- -- -- --
Amortization of
restricted stock
award to compensation
expense (note 11)..... -- -- -- -- -- 547 -- --
Compensation expense
accrued for stock
bonus awards
(note 11)............. -- -- 710 -- -- -- -- --
---- --- ------- ------- -------- ------ ------- ---
Balance, January 31,
1998................... $-- 204 418,462 (14,449) (195,171) (160) -- --
</TABLE>
(Continued)
F-5
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)--(Continued)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Accumu-
lated Unearned
other Compre- compen- Note
Additional compre- Accumu- hensive sation receivable
Preferred Common paid-in hensive lated income restricted from Treasury
stock(1) Stock(2) capital income deficit (loss) shares officer Stock
--------- -------- ---------- ------- -------- ------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss............... $-- -- -- -- (88,778) (88,778) -- -- --
Foreign currency trans-
lation adjustment..... -- -- -- 2,023 -- 2,023 -- -- --
-------
Comprehensive income
(loss)................. -- -- -- -- -- (86,755) -- -- --
=======
Issuance of 17,655
shares to directors
for services
(note 11)............. -- 1 169 -- -- -- -- --
Issuance of 494,649
shares for exercise of
employee stock options
and 116,667 shares for
stock bonus awards
(note 11)............. -- 5 7,705 -- -- -- -- --
Amortization of re-
stricted stock award
to compensation ex-
pense (note 11)....... -- -- -- -- -- 160 -- --
Compensation expense
accrued for stock bo-
nus awards (note 11).. -- -- 473 -- -- -- -- --
Compensation expense
for stock options
(note 11)............. -- -- 3,722 -- -- -- -- --
Common stock warrants
issued with redeemable
preferred stock (note
10)................... -- -- 5,820 -- -- -- -- --
Preferred stock divi-
dends and accretion of
discount (note 10).... -- -- -- -- (15,632) -- -- --
Purchase of 10,500,000
shares for treasury
(note 2).............. -- -- -- -- -- -- -- (420,000)
---- --- ------- ------- -------- --- --- --------
Balance, January 31,
1999................... $-- 210 436,351 (12,426) (299,581) -- -- (420,000)
==== === ======= ======= ======== === === ========
</TABLE>
- --------
(1) $.01 par value; 2,000,000 shares authorized; 186,723 redeemable shares
issued and outstanding at January 31, 1999.
(2) $.01 par value; 60,000,000 shares authorized; 21,000,039, 20,371,068 and
16,033,833 shares issued at January 31, 1999, 1998 and 1997, respectively
and 10,500,039, 20,371,068 and 16,033,833 outstanding at January 31, 1999,
1998 and 1997, respectively.
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Year ended January 31,
--------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................ $(88,778) 40,699 (11,323)
Adjustments to reconcile net income (loss) to net
cash provided
by (used in) operating activities:
Nonoperating loss (gain) items:
Loss on extinguishment of debt............... 6,460 16,178 --
Loss (gain) on disposition of assets held for
sale
and fixed assets, net....................... (3,243) 377 62
Depreciation and amortization of property,
plant and equipment........................... 21,421 21,493 22,052
Amortization of debt issue costs and premium... 1,336 888 1,932
Amortization of intangible assets.............. 5,633 7,101 31,837
Amortization of stock awards and stock issued
for services.................................. 1,112 1,431 910
Deferred income tax expense.................... 33,393 4,750 1,365
Adjustment of liability for PBGC claims........ -- -- (11,100)
Adjustment of allowances for contingencies from
previous operations........................... -- (5,299) --
Adjustment of reserves related to prior years'
tax provisions................................ -- (12,700) --
Compensation expense for adjustment of stock
options....................................... 3,722 -- --
Net provision for doubtful accounts............ 396 4,341 2,815
Net provision for restructuring operations..... 6,598 1,866 10,670
Changes in operating assets and liabilities:
Trade and other receivables.................. 21,299 (13,177) (17,850)
Inventories.................................. (11,579) (35,686) (19,335)
Other current assets......................... (745) (440) 3,431
Accounts payable and accrued liabilities..... 2,882 (8,696) 9,027
Other adjustments--net......................... (968) (4,915) 853
-------- ------- -------
Net cash provided by (used in) operating
activities.................................. (1,061) 18,211 25,346
-------- ------- -------
Cash flows provided by (used in) investing
activities:
Proceeds from sale of assets held for sale,
property and equipment and other asset.......... 17,608 1,625 2,323
Purchases of property, plant and equipment:
By Company and wholly-owned subsidiaries....... (24,827) (30,189) (25,465)
By less than 100% owned subsidiaries........... (1,852) (6,124) (5,628)
Acquisition of foreign distributorships.......... (2,451) (2,547) --
Other............................................ (4,125) (707) 11,753
-------- ------- -------
Net cash used in investing activities........ $(15,647) (37,942) (17,017)
-------- ------- -------
</TABLE>
(continued)
F-7
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
(In thousands)
<TABLE>
<CAPTION>
Year ended January 31,
----------------------------
1999 1998 1997
--------- -------- -------
<S> <C> <C> <C>
Cash flows provided by (used in) financing
activities:
Net borrowings (payments) of senior credit
facility....................................... $ 33,948 53,628 (8,000)
Proceeds from issuance of senior subordinated
notes.......................................... 350,000 -- --
Proceeds from issuance of senior preferred
stock.......................................... 175,000 -- --
Issuance costs for senior subordinated notes,
senior redeemable preferred stock and senior
credit facility................................ (23,583) (467) --
Purchase of treasury stock...................... (420,000) -- --
Retirement of Series B Notes, including redemp-
tion
premiums....................................... (60,781) (154,755) --
Proceeds from long-term obligations--other...... 381,021 4,657 26,206
Payments of long-term obligations--other........ (393,914) (25,980) (35,901)
Proceeds from (payments of) short-term debt--
net............................................ (385) 4,096 (7,231)
Proceeds from public stock offering, net of
offering costs................................. -- 130,242 --
Proceeds from sale of common stock and exercise
of stock options............................... 7,401 7,012 1,327
Payment of note receivable from officer......... -- -- 10,000
Other, net...................................... 2,905 2,621 1,907
--------- -------- -------
Net cash provided by (used in) financing
activities................................. 51,612 21,054 (11,692)
--------- -------- -------
Effect of exchange rate changes on cash and cash
equivalents...................................... 3,894 (7,532) (2,473)
--------- -------- -------
Net increase (decrease) in cash and cash
equivalents................................ 38,798 (6,209) (5,836)
Cash and cash equivalents, beginning of year...... 3,134 9,343 15,179
--------- -------- -------
Cash and cash equivalents, end of year............ $ 41,932 3,134 9,343
========= ======== =======
Supplemental disclosures of cash flow information:
Cash paid during the year for interest.......... $ 33,822 20,451 33,194
========= ======== =======
Cash paid during the year for income taxes,
net............................................ $ 8,719 8,733 3,210
========= ======== =======
</TABLE>
Noncash transactions:
During the years ended January 31, 1999, 1998, and 1997, property
and equipment were acquired under capital lease financing
transactions aggregating $1,141, $924, and $1,281, respectively.
Other noncash transactions are described in notes 3, 10, 11, 15, and 16.
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1999 and 1998
(1) Summary of Significant Accounting Policies
(a) General Business
Samsonite Corporation 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. Samsonite
Corporation and subsidiaries (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 also sells its luggage and other
travel-related products through its 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 (the "Effective Date"), Astrum completed a comprehensive financial
reorganization which reduced debt and annual interest expense (the
"Reorganization").
The Reorganization 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 accompanying consolidated financial statements include the
ongoing impact of the fresh-start reporting, the most significant of which
included the recording of Reorganization Value in Excess of Identifiable
Assets. Reorganization Value in Excess of Identifiable Assets was amortized
over a three-year period which ended in June 1996.
(c) Principles of Consolidation
The consolidated financial statements include the financial statements of
Samsonite Corporation and its wholly-owned and majority-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation. The Company's foreign subsidiaries generally have December 31
year ends.
Minority interests consist of other stockholders' ownership interests in
majority-owned subsidiaries of the Company.
(d) Use of Estimates
The preparation of consolidated 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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ significantly from those
estimates.
(e) Cash Equivalents
The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
F-9
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(f) Inventories
The Company values inventories at the lower of cost, using the first-in,
first-out ("FIFO") method, or market.
(g) Investments in Affiliates
Investments in affiliates for which the Company owns 20% to 50% are
accounted for under the equity method.
At January 31, 1999, investments in affiliates primarily represent the
Company's investment in Chia Tai Samsonite (H.K.) Ltd., a 50% owned joint
venture formed to manufacture and distribute luggage in China.
(h) Property, Plant and Equipment
Property, plant and equipment acquired subsequent to the adoption of fresh-
start reporting are stated at cost. In connection with the adoption of fresh-
start reporting at June 30, 1993, the Company was required to adjust property,
plant and equipment to fair value. Assets under capital leases are stated at
the present value of the future minimum lease payments. Improvements which
extend the life of an asset are capitalized. Maintenance and repair costs are
expensed as incurred.
Depreciation and amortization are provided on the straight-line method over
the estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Buildings................................................ 24 to 65 years
Machinery, equipment and other........................... 2 to 20 years
</TABLE>
(i) Intangible Assets
As a result of adopting fresh-start reporting in 1993, the Company recorded
Reorganization Value in Excess of Identifiable Assets which became fully
amortized in June of 1996. Tradenames, licenses, patents and other intangibles
were recorded at fair value based upon independent appraisals. These assets
are amortized on a straight-line basis over their estimated useful lives which
are primarily as follows:
<TABLE>
<S> <C>
Tradenames............................................... 20 to 40 years
Licenses, patents and other.............................. 2 to 20 years
</TABLE>
The Company accounts for these intangible assets at the lower of amortized
cost or fair value. On an ongoing basis, the Company reviews the valuation and
amortization of intangible assets, taking into consideration any events or
circumstances which may have diminished the recorded value.
(j) Debt Issuance Costs
Costs incurred in connection with the issuance of new debt instruments are
deferred and included in other assets. Such costs are amortized over the term
of the related debt obligation.
(k) Per Share Data
The Company computes earnings (loss) per share in accordance with the
requirements of Statement of Financial Account Standards No. 128, Earnings Per
Share ("SFAS 128"). SFAS 128 requires the disclosure of "basic" earnings per
share and "diluted" earnings per share. Basic earnings per share is computed
by dividing income available to common stockholders by the weighted average
number of common shares outstanding. Diluted earnings per share is computed by
dividing income available to common stockholders by the weighted average
number of common shares outstanding increased for potentially dilutive common
shares outstanding
F-10
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
during the period. The dilutive effect of stock options, warrants, and their
equivalents is calculated using the treasury stock method.
Loss before extraordinary item per common share and net loss per common share
for the years ended January 31, 1999 and 1997 is computed based on a weighted
average number of shares of common stock outstanding during the period of
14,416,857 and 15,971,157, respectively. Basic earnings per common share and
earnings per common share--assuming dilution are the same for the years ended
January 31, 1999 and 1997 because of the antidilutive effect of stock options
and awards when there is a net loss from operations.
The following table presents a reconciliation of the numerators and
denominators of basic earnings per common share and earnings per common share--
assuming dilution for the year ended January 31, 1998:
<TABLE>
<CAPTION>
Per Share
Income Shares Amount
----------- ---------- ---------
<S> <C> <C> <C>
Earnings per common share--basic:
Income before extraordinary item available
to common
stockholders............................... $56,877,000 20,235,802 $2.81
=====
Add dilutive effect of stock options and
awards..................................... -- 850,783
----------- ----------
Earnings per common share--assuming dilution:
Income before extraordinary item available
to common stockholders plus assumed
conversions................................ $56,877,000 21,086,585 $2.70
=========== ========== =====
</TABLE>
(l) Income Taxes
The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes ("SFAS 109"). SFAS 109 requires recognition of deferred tax assets and
liabilities for operating loss and tax credit carryforwards and the estimated
future tax consequences attributable to temporary differences between the
financial statement carrying amount of existing assets and liabilities and
their respective tax bases. Measurement of deferred tax assets and liabilities
is based upon enacted tax rates expected to apply to taxable income in the
years in which carryforwards and temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Deferred tax assets are reduced by a valuation allowance for the portion of
such assets for which it is more likely than not the amount will not be
realized. Deferred tax assets and liabilities are classified as current or
noncurrent based on the classification of the underlying asset or liability
giving rise to the temporary difference or the expected date of utilization of
carryforwards.
(m) Self-Insurance
The Company maintains self-insurance programs for certain workers'
compensation risks up to $300,000 per individual claim. The Company purchases
excess workers' compensation coverage for individual claims in excess of
$300,000.
(n) Foreign Exchange Risk and Financial Instruments
The accounts of the Company's foreign subsidiaries and affiliates are
generally measured using the local currency as the functional currency. For
those operations, assets and liabilities are translated into U.S. dollars at
period-end exchange rates. Income and expense accounts are translated at
average monthly exchange rates. Net exchange gains or losses resulting from
such translation are excluded from results of operations and
F-11
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
accumulated as a separate component of stockholders' equity. Gains and losses
from foreign currency transactions are included in other income (expense). See
note 16.
The Company enters into foreign exchange contracts in order to reduce its
economic exposure to fluctuations in currency exchange rates on certain foreign
operations and royalty agreements through the use of forward delivery
commitments. Generally, open forward delivery commitments are marked to market
at the end of each accounting period and corresponding gains and losses are
recognized in other income (expense). See note 16.
With respect to trade receivables, concentration of credit risk is limited
due to the diversity in the Company's customer base and geographic areas
covered by the Company's operations. In certain European countries, the Company
receives negotiable trade acceptances as payment for goods with maturities from
60 to 90 days from the date of issuance. These instruments are generally
discounted to banks with recourse. At January 31, 1999, approximately
$15,188,000 of such instruments had been discounted and, by the terms of their
maturity dates, were uncollected by the holders. Any probable bad debt losses
for trade receivables or acceptances have been reserved for in the allowance
for doubtful accounts.
(o) Accounting for Long-lived Assets
The Company accounts for long-lived assets in accordance with the provisions
of Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
("SFAS 121"). SFAS 121 requires impairment losses to be recorded on long-lived
assets, and certain identifiable intangible assets, used in operations when
indicators of impairment are present and the undiscounted future cash flows
(without interest charges) estimated to be generated by such assets are less
than the assets' carrying amount. Impairment is measured by the excess of the
assets' carrying amount over fair value. SFAS 121 also requires that long-lived
assets and certain identifiable intangibles that are expected to be disposed of
be reported at the lower of the carrying amount or fair value less costs to
sell.
(p) Comprehensive Income
Effective February 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS 130"). SFAS
130 requires that, as a part of a full set of financial statements, entities
must present other comprehensive income, which represents total non-stockholder
changes in equity. The accumulated balance of foreign currency translation
adjustments, excluded from net income, is presented in the consolidated balance
sheets as "accumulated other comprehensive income."
(q) Revenue Recognition
Revenues from wholesale product sales are recognized at the time of shipment,
and provisions are made for markdown allowances, returns and discounts at the
time product sales are recognized. Revenues from retail sales are recognized at
the point-of-sale to consumers.
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 $16,450,000, $19,925,000, and $20,548,000 for the years
ended January 31, 1999, 1998, and 1997, respectively. Royalty revenues in
fiscal 1998 and 1997 include approximately $2,200,000 and $3,900,000,
respectively, from the sale of apparel trademarks in certain foreign countries.
(r) Stock Based Compensation
In fiscal 1998, the Company adopted Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("SFAS 123"). As
permitted under this standard, the Company has elected to
F-12
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
follow Accounting Principles Board Opinion No. 25 Accounting for Stock Issued
to Employees ("APB 25"), in accounting for its stock options and other stock-
based employee awards. Pro forma information regarding net income and earnings
per common share, as calculated under the provisions of SFAS 123, is disclosed
in note 11.
(s) Reclassifications
Certain reclassifications were made to the consolidated financial statements
for prior periods to conform to the January 31, 1999 presentation.
(2) Recapitalization
On June 24, 1998, the Company completed a recapitalization of the Company
(the "Recapitalization") involving the repurchase pursuant to a tender offer
for 10.5 million shares of the Company's common stock at a purchase price of
$40.00 per share ($420 million in the aggregate) and the refinancing of certain
existing indebtedness. The Company financed the Recapitalization through the
sale of $350 million of 10 3/4% senior subordinated notes, $175 million of 13
7/8% senior redeemable preferred stock and warrants, and a new bank senior
credit facility.
On January 7, 1998, the Company announced it had engaged a financial advisor
to assist in the process of exploring various strategic alternatives designed
to enhance shareholder value. This process ultimately resulted in the
Recapitalization plan. In addition to the charges discussed below, the Company
recorded charges (included in selling, general and administrative expenses) of
approximately $4.8 million during the year ended January 31, 1999 for
financial, legal and other expenses associated with the Recapitalization and
the process of exploring alternative plans which were not ultimately
consummated. As described in note 11, the Company also recorded a $4.3 million
charge to compensation expense during the year ended January 31, 1999 in
connection with adjustments and modifications made to outstanding employee
stock options.
During the year ended January 31, 1999, the Company completed a tender offer
and retired $52,269,000 principal amount of 11 1/8% Series B Subordinated Notes
(the "Series B Notes") representing 99% of the outstanding Series B Notes. The
Company paid a redemption premium and incurred other expenses totaling
approximately $8,512,000 to complete the tender offer. These costs, along with
$1,527,000 of deferred financing costs, were charged to expense and classified
as an extraordinary item, net of tax effects, in the accompanying statement of
operations for the year ended January 31, 1999. Also, in connection with the
Recapitalization, deferred financing costs related to the refinanced senior
credit facility of $380,000 were charged to expense and classified as an
extraordinary item, net of tax effects, in the accompanying statement of
operations for the year ended January 31, 1999.
(3) Purchases of Foreign Distributorships
During the year ended January 31, 1999, the Company, through a 51% owned
joint venture, acquired two distributors in Argentina and Uruguay. The joint
venture paid and recorded goodwill of $2,451,000 for the purchase of the
distributorships, and recorded a liability for the estimated additional
purchase price due of approximately $1,267,000.
During the year ended January 31, 1998, the Company formed a subsidiary,
Samsonite Korea Limited ("SKL"), which was owned 71% by the Company and 29% by
the Company's former distributor in South Korea. The Company contributed
$832,000 to SKL for its equity interest. SKL acquired the inventory, fixed
assets, and other assets of the distributorship and recorded approximately
$200,000 of goodwill. By agreement with its joint venture partner, the Company
acquired an additional 9% interest in SKL on October 1, 1998 for $8,000.
F-13
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
During the year ended January 31, 1998, the Company formed a 100% owned
subsidiary, Samsonite Hong Kong Limited ("HKL"), which purchased the assets of
the Company's former Hong Kong distributor. The Company made investments or
advances to HKL of $1,715,000 for the purchase of inventory, fixed assets, and
other assets from the former Hong Kong distributor. Approximately $439,000 of
goodwill was recorded as a result of the purchase.
(4) Provision for Restructuring Operations
Fiscal 1999
The Company recorded a pretax restructuring provision in fiscal 1999 of
approximately $2,608,000 in connection with the Torhout, Belgium restructuring
primarily related to termination and severance costs for the elimination of
approximately 111 positions. Through January 31, 1999, approximately $1,900,000
has been charged against this accrual for such restructuring expenses.
Additionally, during fiscal 1999, a pre-tax charge of approximately $5,606,000
(of which approximately $2,200,000 is non-cash) was recorded in connection with
the U.S. Wholesale restructuring primarily related to termination and severance
costs for the elimination of approximately 227 positions and costs related to
the disposal of molding and other equipment representing excess capacity.
Through January 31, 1999, approximately $3,500,000 has been charged against
this accrual for such restructuring expenses. During the fourth quarter of
fiscal 1999, certain excess restructuring reserves of $1,616,000 were reversed
including $538,000 of excess accruals related to the fiscal 1997 reserve and
excess reserves of $1,078,000 related to the fiscal 1999 U.S. Wholesale
restructuring. The reversal of excess reserves was necessary because certain
expenses contemplated in the restructurings did not materialize.
Fiscal 1998
The Company recorded a pretax restructuring provision in fiscal 1998 of
$3,589,000 and adjusted for excess fiscal 1997 restructuring accruals by
$1,723,000, resulting in a net expense for restructuring operations in fiscal
1998 of $1,866,000. The fiscal 1998 restructuring provision was provided
primarily for costs associated with the involuntary termination of 180
manufacturing positions in Mexico and twenty management positions in the U.S.
and is comprised of estimated cash expenditures of $3,283,000 and non-cash
charges of $306,000. Through January 31, 1999, $3.1 million of costs had been
charged against the accrual.
Fiscal 1997
The Company recorded a restructuring provision of $10,670,000 in fiscal 1997
as a result of a restructuring program to consolidate functions and operations
in North America, Europe, and the Far East, and to reduce or eliminate certain
other operations.
The restructuring plan included further consolidation of hardside luggage
production to Samsonite's largest U.S. facility located in Denver, Colorado
from other locations in the Americas, as well as consolidation of many
administrative and control functions to Denver. The plan included the
elimination of as many as 450 positions worldwide, including approximately 150
manufacturing positions and approximately 300 managerial, office and clerical
positions. The restructuring provision consisted primarily of costs associated
with involuntary employee terminations and was comprised of cash expenses of
$9,670,000 and non-cash expenses of $1,000,000, both on a pretax basis. Through
January 31, 1999, approximately $8,409,000 had been charged against the accrual
for restructuring expenses. Approximately $538,000 and $1,723,000 was
determined to be overaccrued and was credited to expense in fiscal years 1999
and 1998, respectively. At January 31, 1999 no amounts remain accrued for this
restructuring provision.
F-14
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(5) Inventories
Inventories consisted of the following:
<TABLE>
<CAPTION>
January 31,
----------------
1999 1998
-------- -------
(In thousands)
<S> <C> <C>
Raw materials and supplies............................... $ 47,014 47,814
Work in process.......................................... 8,059 10,476
Finished goods........................................... 132,494 114,375
-------- -------
$187,567 172,665
======== =======
</TABLE>
(6) Property, Plant and Equipment
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
January 31,
-----------------
1999 1998
-------- -------
(In thousands)
<S> <C> <C>
Land................................................... $ 12,555 12,266
Buildings.............................................. 71,517 60,524
Machinery, equipment and other......................... 141,306 133,778
-------- -------
225,378 206,568
Less accumulated depreciation and amortization......... (75,737) (64,217)
-------- -------
$149,641 142,351
======== =======
</TABLE>
Property, plant and equipment includes property and equipment under capital
leases as follows:
<TABLE>
<CAPTION>
January 31,
---------------
1999 1998
------- -------
(In thousands)
<S> <C> <C>
Buildings................................................. $ 4,452 4,178
Machinery, equipment and other............................ 4,518 2,707
------- -------
8,970 6,885
Less accumulated amortization............................. (1,424) (1,388)
------- -------
$7,546 5,497
======= =======
</TABLE>
(7) Intangible Assets
The following is a summary of intangible assets, net of accumulated
amortization:
<TABLE>
<CAPTION>
January 31,
----------------
1999 1998
-------- -------
(In thousands)
<S> <C> <C>
Tradenames............................................... $105,059 108,556
Licenses, patents and other.............................. 9,189 8,352
-------- -------
$114,248 116,908
======== =======
</TABLE>
F-15
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(8) Short-term Debt
As of January 31, 1999 and 1998, the Company had $8,409,000 and $5,640,000 of
short-term debt outstanding under foreign lines of credit, respectively. As of
January 31, 1999, the weighted average interest rate on foreign short-term
borrowings was 10.9%. The European subsidiaries had unused available borrowings
on foreign lines of credit and other foreign borrowing arrangements totaling
approximately $79.3 million as of January 31, 1999, which are generally
restricted for working capital purposes; however, the terms of the Company's
Senior Credit Facility and Senior Subordinated Notes limit additional amounts
which could be borrowed under such credit facilities.
Other foreign subsidiaries had approximately $2.5 million available under
bank credit lines at January 31, 1999.
(9) Long-term Obligations
Long-term obligations represent long-term debt and capital lease obligations
as follows:
<TABLE>
<CAPTION>
January 31,
-----------------
1999 1998
-------- -------
(In thousands)
<S> <C> <C>
Senior Credit Facility (a)............................. $135,074 102,533
Senior Subordinated Notes (b).......................... 350,000 --
Other obligations (c).................................. 11,688 19,587
Capital lease obligations (d).......................... 5,802 4,302
Series B Notes (e)..................................... 532 52,801
-------- -------
503,096 179,223
Less current installments.............................. (6,923) (6,977)
-------- -------
$496,173 172,246
======== =======
</TABLE>
(a) Senior Credit Facility
On June 24, 1998, the Company entered into a new senior credit facility (the
"Senior Credit Facility"). The Senior Credit Facility provides for a $100
million credit facility (the "Revolving Credit Facility"), a term loan facility
in the amount of $60 million (the "U.S. Term Loan Facility") which was borrowed
by Samsonite Corporation, and a term loan facility in the aggregate principal
amount of Belgian francs 1,853,750,000, (equivalent to $50 million on the
closing date of the facility) (the "European Term Loan Facility"), which was
borrowed by Samsonite Europe N.V. The Company has the option in certain
circumstances to add additional lenders as parties to the Senior Credit
Facility in order to increase the Revolving Credit Facility by up to an
additional $50 million. The Revolving Credit Facility and the European Term
Loan Facility mature on June 24, 2003. The U.S. Term Loan Facility requires
principal repayments in each of the first five years of 1.0% of the original
principal balance and principal repayments in each of the sixth and seventh
years of 47.5% of the original principal balance. Borrowings under the Senior
Credit Facility accrue interest at rates adjusted periodically depending on the
Company's financial performance as measured each fiscal quarter and interest
rate market conditions. In addition, the Company is required to pay a
commitment fee of .625% on the unused portion of the Revolving Credit Facility.
The obligations under the U.S. Term Loan Facility and the Revolving Credit
Facility are secured by inventory, accounts receivable, personal property,
intellectual property and other intangibles of Samsonite Corporation, 100% of
the capital stock of Samsonite Corporation's major domestic subsidiaries, and
66% of the capital stock of Samsonite Europe N.V. and other major non-domestic
subsidiaries. In connection with the
F-16
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
waiver and amendment discussed below, the Company agreed to execute and deliver
to the lenders under the Senior Credit Facility a mortgage on its real estate
in Denver, Colorado.
The Senior Credit Facility contains financial covenants which require the
Company to maintain certain debt to earnings and interest coverage ratios and
limitations on capital expenditures. The Senior Credit Facility also contains
covenants that, among other things, limit the ability of the Company (subject
to negotiated exceptions) to incur additional liens, incur additional
indebtedness, make certain kinds of investments, prepay or purchase subordinate
indebtedness and preferred stock, make distributions and dividend payments to
its stockholders, engage in affiliate transactions, make certain asset
dispositions, make acquisitions, and participate in certain mergers. At January
31, 1999, compliance with the interest coverage ratio was waived by the lenders
under the Senior Credit Facility. Effective March 22, 1999, the Senior Credit
Facility was amended to provide the Company with additional margin to operate
under the financial covenants. As of January 31, 1999, the Company had $6.3
million in letters of credit outstanding under the Senior Credit Facility.
As a result of entering into an amended and restated bank senior credit
facility in fiscal 1998, which had significantly different terms and conditions
than a previous facility, the Company charged to expense the balance of
deferred financing costs relating to the previous facility totaling $3,989,000
and paid prepayment penalties of $279,000. These charges are recorded as part
of the extraordinary item from loss on extinguishment of debt, net of tax
effects, in the accompanying consolidated statement of operations for the year
ended January 31, 1998.
(b) Senior Subordinated Notes
On June 24, 1998, the Company issued and sold $350,000,000 principal amount
of 10 3/4% Senior Subordinated Notes due 2008 (the "10 3/4% Notes").
Interest on the 10 3/4% Notes is payable in cash semiannually in arrears on
June 15 and December 15 of each year, commencing December 15, 1998. The 10 3/4%
Notes mature on June 15, 2008 and are redeemable at the option of the Company
in whole or in part, at any time on or after June 15, 2003, at redemption
prices ranging from 100.00% to 105.375% of the principal amount depending on
the redemption date, plus accrued interest. In addition, the Company, at its
option, may redeem in the aggregate up to 40% of the principal amount of the 10
3/4% Notes originally issued at any time and from time to time prior to June
15, 2001, at a redemption price equal to 110.75% of the principal amount
thereof, plus accrued interest, with the proceeds of one or more equity
offerings, provided that at least $210 million aggregate principal amount of 10
3/4% Notes remains outstanding immediately after the occurrence of any such
redemption.
The indenture under which the 10 3/4% Notes were issued contains certain
covenants that, among other things, restrict the ability of the Company and its
restricted subsidiaries (as defined in the indenture) to incur additional
indebtedness, pay dividends and make certain other distributions, issue capital
stock of restricted subsidiaries, make certain investments, repurchase stock,
create liens, enter into transactions with affiliates, create dividend or other
payment restrictions affecting restricted subsidiaries, merge or consolidate,
and transfer or sell assets. The covenants are subject to a number of important
exceptions.
(c) Other Obligations
As of January 31, 1999, other obligations consist of various notes payable to
banks by foreign subsidiaries. The obligations bear interest at varying rates
and mature through 2002.
F-17
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(d) Leases
Future minimum payments under noncancelable capital leases, which relate
primarily to property and equipment, and noncancelable operating leases, which
relate primarily to retail floor space rental, at January 31, 1999 were as
follows:
<TABLE>
<CAPTION>
Capital Operating
leases leases
------- ---------
(In thousands)
<S> <C> <C>
Year ending January 31:
2000................................................... $ 2,081 15,156
2001................................................... 1,758 12,990
2002................................................... 1,445 10,603
2003................................................... 693 7,260
2004................................................... 412 3,739
Thereafter............................................. 642 5,205
------- ------
Total minimum lease payments......................... 7,031 54,953
======
Less amount representing interest........................ (1,227)
-------
Present value of net minimum capital lease payments...... 5,804
Less current installments of minimum capital lease
payments................................................ (1,658)
-------
Long-term obligations under capital leases, excluding
current installments.................................... $ 4,146
=======
</TABLE>
Rental expense under cancelable and noncancelable operating leases pertaining
to continuing operations consisted of the following:
<TABLE>
<CAPTION>
Year ended January
31,
---------------------
1999 1998 1997
------- ------ ------
(In thousands)
<S> <C> <C> <C>
Minimum rentals....................................... $14,699 10,421 10,723
Contingent rentals.................................... 1,432 1,358 714
------- ------ ------
$16,131 11,779 11,437
======= ====== ======
</TABLE>
Aggregate maturities of long-term obligations at January 31, 1999 were as
follows (in thousands):
<TABLE>
<S> <C>
Year ending January 31:
2000.......................................................... $ 5,265
2001.......................................................... 4,713
2002.......................................................... 2,102
2003.......................................................... 1,713
2004.......................................................... 90,218
Thereafter.................................................... 393,281
--------
497,292
Obligations under capital leases.............................. 5,804
--------
Total $503,096
========
</TABLE>
F-18
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(e) Series B Notes
Interest at 11 1/8% per annum on the Series B Notes is payable semiannually
with principal due July 15, 2005. The Series B Notes may be redeemed after July
15, 2000 with the payment of certain redemption premiums; however, up to one-
third of the outstanding Series B Notes were allowed to be redeemed (at a
premium) before July 15, 1998, from the proceeds of the first two public equity
offerings the Company may have completed after the issuance of the Series B
Notes. As described in note 2, the Company completed a tender offer and retired
$52,269,000 principal amount of the Series B Notes representing 99% of the
outstanding Series B Notes.
As described in note 19, the Company completed a public equity offering on
February 11, 1997 and used a portion of the offering proceeds to redeem Series
B Notes and repurchase Series B Notes in the market. Additional Series B Notes
were purchased using bank borrowings. A total of $137,199,000 principal amount
of Series B Notes were retired during the year ended January 31, 1998.
Redemption premiums of $17,277,000 paid in connection with the retirement of
the notes and deferred financing costs of $4,563,000 were charged to expense
and classified as part of the extraordinary item from loss on extinguishment of
debt, net of tax effects, in the accompanying consolidated statement of
operations for the year ended January 31, 1998.
In connection with retirements of the Series B Notes, the indenture under
which the notes were issued was amended to eliminate substantially all the
covenants contained in the original indenture.
(10) Senior Redeemable Preferred Stock
On June 24, 1998, the Company issued and sold 175,000 units consisting of
$175,000,000 aggregate liquidation preference of its 13 7/8% Senior Redeemable
Exchangeable Preferred Stock, liquidation preference $1,000 per share (the
"Senior Redeemable Preferred Stock") and warrants to acquire an aggregate of
1,959,000 shares of the Company's common stock at an exercise price of $13.02
per share, subject to antidilution adjustments.
The Senior Redeemable Preferred Stock was issued as part of the financing
necessary to effect the Recapitalization described in note 2. The Senior
Redeemable Preferred Stock is recorded at its liquidation preference discounted
for unaccreted issuance costs and the value assigned to the warrants. The
preferred stock discount is being accreted by charging accumulated deficit over
the twelve-year term of the Senior Redeemable Preferred Stock.
Holders of the Senior Redeemable Preferred Stock are entitled to receive,
when, as and if declared by the Board of Directors of the Company out of funds
legally available therefor, dividends on the Senior Redeemable Preferred Stock
at a rate per annum of 13 7/8% of the liquidation preference per share of
Senior Redeemable Preferred Stock, payable quarterly in arrears on each March
15, June 15, September 15 and December 15 commencing September 15, 1998. All
dividends are cumulative, whether or not earned or declared, on a daily basis
from June 24, 1998 and compound on a quarterly basis. Dividends may be paid, at
the Company's option, on any dividend payment date occurring on or prior to
June 15, 2003, either in cash or by the issuance of additional shares of Senior
Redeemable Preferred Stock with a liquidation preference equal to the amount of
such dividends; thereafter, dividends will be payable in cash. Dividends on the
Senior Redeemable Preferred Stock are accrued monthly to the liquidation
preference amount by charges to accumulated deficit for dividends expected to
be paid by issuing additional shares of Senior Redeemable Preferred Stock. The
dividend rate on the Senior Redeemable Preferred Stock is subject to increase
by 2% upon the occurrence of certain events including the failure to pay
dividends in cash after June 15, 2003 and failure to comply with certain
covenants and conditions. The Company's Senior Credit Facility and the
indenture under its Notes, contain limitations on the Company's ability to pay
cash dividends on the Senior Redeemable Preferred Stock.
F-19
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company is required to redeem all of the Senior Redeemable Preferred
Stock outstanding on June 15, 2010, at a redemption price equal to 100% of the
liquidation preference thereof, plus, without duplication, all accumulated and
unpaid dividends to the redemption date. The Senior Redeemable Preferred Stock
is redeemable at the option of the Company in whole or in part, at any time and
from time to time on or after June 15, 2001, at redemption prices ranging from
110% of the liquidation preference to 100% of the liquidation preference
depending on the redemption date.
The Senior Redeemable Preferred Stock is exchangeable at the option of the
Company at any time for junior subordinated debentures of the Company or, at
the option of the Company, debentures of a holding company of the Company (in
either case, the "Exchange Debentures"), with an interest rate equal to the
dividend rate on the Senior Redeemable Preferred Stock, payable in cash or in
additional Exchange Debentures at the option of the issuer thereof until the
fifth anniversary of the issuance of the Senior Redeemable Preferred Stock and
in cash thereafter. The Senior Redeemable Preferred Stock and the Exchange
Debentures, if issued, will be redeemable at the option of the holders thereof
upon a change of control of the Company at a redemption price of 101% of
liquidation preference or principal amount, as the case may be, plus all
accumulated and unpaid dividends or interest thereon, as the case may be, to
the redemption date. The Senior Redeemable Preferred Stock contains, and the
Exchange Debentures, if issued, will contain, certain covenants that, among
other things, limit the Company's ability to incur additional indebtedness, pay
dividends and make certain other distributions, enter into transactions with
affiliates or merge or consolidate.
(11) Employee Stock Options and Awards
At January 31, 1999, the Company has outstanding options under its 1995 Stock
Option and Incentive Award Plan and under an employment agreement (now expired)
with its former chief executive officer. As described in note 1(r), the Company
applies APB 25 in accounting for stock options and awards. Accordingly, no
compensation cost has been recognized for stock options granted at exercise
prices equal to or above fair market value at the date of grant. No performance
based options were issued during the three years ended January 31, 1999.
In connection with the Recapitalization, the Company determined to adjust all
options that remained unexercised after the Recapitalization by reducing the
exercise price of each option by $12.50, but not to less than 25% of the
average trading price of the Company's common stock for a ten-day period
following the completion of the Recapitalization which was $10.00 per share. If
the $12.50 adjustment resulted in the exercise price of an option being reduced
to less than 25% of such average trading price or $2.50, the option holder had
the right to receive cash in lieu of further reduction of the option price when
such options become exercisable. As an alternative to accepting a $12.50
reduction in option price, the Company allowed holders of options to
voluntarily surrender their options to the Company and in exchange receive new
options to purchase a reduced number (approximately 42.7% fewer) of shares of
Company common stock at $10.00 per share with the same proportional vesting
schedule and performance criteria, if any, as the options surrendered. As a
result of the $12.50 reduction in option prices for certain of the outstanding
options, the Company recorded a charge to compensation expense during the year
ended January 31, 1999 pursuant to APB 25 of approximately $4.3 million for the
difference between the aggregate adjusted option prices and the post-
Recapitalization trading price of $10.00 per share. Approximately $0.6 million
of such compensation expense was paid in cash to option holders in lieu of
reducing option prices to less than 25% of the post-Recapitalization trading
price. Because of the adjustments to option prices in connection with the
Recapitalization and the compensation expense recorded under APB 25, the
Company reflected a credit in its pro forma compensation expense using the fair
value method under SFAS 123 for the year ended January 31, 1999.
F-20
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Had the Company determined compensation cost for the stock options pursuant
to the fair value based accounting method consistent with the provisions of
SFAS 123, pro forma net income (loss) per common share would have been as
follows:
<TABLE>
<CAPTION>
Year ended January 31,
-------------------------
1999 1998 1997
--------- ------ -------
(In thousands, except
per share amounts)
<S> <C> <C> <C>
Net income (loss) to common stockholders:
As reported........................................ $(104,410) 40,699 (11,323)
========= ====== =======
Pro forma.......................................... $(103,112) 38,343 (12,922)
========= ====== =======
Net income (loss) to common stockholders
per share--basic:
As reported........................................ $ (7.24) 2.01 (0.71)
========= ====== =======
Pro forma.......................................... $ (7.15) 1.89 (0.81)
========= ====== =======
Net income (loss) to common stockholders
per share--assuming dilution:
As reported........................................ $ (7.24) 1.93 (0.71)
========= ====== =======
Pro forma.......................................... $ (7.15) 1.82 (0.81)
========= ====== =======
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions used for
grants in the three years ended January 31, 1999: no dividend yield for any
year; expected volatility of 39% for fiscal 1999, 29% for fiscal 1998 and 28%
for fiscal 1997; weighted-average risk-free interest rate of 4.8% for fiscal
1999, 5.5% for fiscal 1998 and 6.2% for fiscal 1997; and weighted average
expected lives of 4.3 years for fiscal 1999, 4.3 years for fiscal 1998, and 3.5
years for fiscal 1997.
Pro forma net income (loss) reflects only options granted in the four years
ended January 31, 1999. Therefore, the full impact of calculating compensation
cost for stock options under SFAS 123 is not reflected in the pro forma net
income (loss) amounts presented because compensation cost is reflected over
option vesting periods (ranging from 2 to 5 years) and compensation cost for
options granted prior to February 1, 1995 is not considered.
Directors' Stock Plan
In fiscal 1996, the Company adopted the Samsonite Corporation 1996 Directors'
Stock Plan (the "Plan") and reserved 200,000 shares of its common stock for
issuance under the Plan. Under the Plan, each non-employee director may elect
to receive common stock for directors' fees valued at fair market value in lieu
of cash. At January 31, 1999, 22,200 shares of common stock had been issued
under the Plan.
1995 and 1999 Stock Option and Incentive Award Plans
The 1995 Stock Option and Incentive Award Plan (as Amended in 1996) ("the
1995 Plan") reserves 2,550,000 shares for the issuance of options as determined
by the compensation committee of the Board of Directors. The 1995 Plan provides
for the issuance of a variety of awards, including tax qualified incentive
stock options, nonqualified stock options, stock appreciation rights,
restricted stock awards or other forms of awards consistent with the purposes
of the 1995 Plan. Incentive stock options must be issued at exercise prices no
less than the market value of the common stock at the date of the grant.
Nonqualified stock options may be
F-21
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
granted at option prices at or below the market value, but not at less than 50%
of the market value of the common stock at the date of the grant. Options
granted under the 1995 Plan may vest over a period of not more than ten years
as determined by the compensation committee. At January 31, 1999, all awards
under the 1995 Plan were nonqualified stock options.
On July 15, 1998, the Board of Directors of the Company adopted the FY 1999
Stock Option and Incentive Award Plan (the "1999 Plan"), which was approved by
the Company's stockholders on August 28, 1998. The 1999 Plan has 750,000 shares
reserved for the issuance of a variety of awards, including tax qualified
incentive stock options, nonqualified stock options, stock appreciation rights,
restricted stock awards or other forms of awards consistent with the purposes
of the 1999 Plan. As of January 31, 1999, no awards have been made out of
shares reserved for the 1999 Plan.
Former Chief Executive Officers' Employment Agreements
Pursuant to the employment contract effective May 15, 1996 with the former
Chief Executive Officer, Richard R. Nicolosi, the Company granted Mr. Nicolosi
options to purchase 425,532 shares of common stock at an exercise price of
$18.25 per share. The exercise price for all of Mr. Nicolosi's options was
reduced to $5.75 per share in connection with the Recapitalization. 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 accelerating vesting. The options have a five-year term. All of the
Series A and Series B Options have vested.
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") which have all vested. The
Company recognized compensation expense for the market value ($18.25 per share)
of the shares at the date of grant over the two-year vesting period.
Additionally, on June 6, 1996, the Company sold and issued to Mr. Nicolosi
55,000 shares of common stock at the market value of $18.25 per share, or an
aggregate purchase price of $1,003,750.
Pursuant to an employment agreement with another former chief executive
officer dated April 13, 1995, certain options previously granted were canceled
and options to purchase 653,668 shares of common stock (granted June 8, 1993 at
market value) became fully vested and exercisable at $11.87 per share, as
adjusted by the terms of the option agreement for the spinoff of the water
treatment business. Under the employment agreement, the executive was also
granted options for 500,000 shares of common stock at $24.85 per share and
1,000,000 shares of common stock at $32.85 per share, as adjusted by the terms
of the option agreement for the spinoff of the water treatment business.
Options for 300,000 of such shares lapsed. The remaining options for 1,200,000
shares of common stock became fully exercisable upon the cessation of the
executive's employment as of May 15, 1996. On February 11, 1997, the executive
exercised all outstanding options for a total of 1,853,668 shares. The exercise
price was paid by the return of 889,450 shares of common stock owned by the
executive to the Company and cash of $6,622,139. See note 19.
Also under the employment agreement, the Company sold 425,532 shares of
common stock to the executive for a $10 million promissory note which was
presented in the accompanying consolidated financial statements as a reduction
of stockholders' equity until it was repaid in full on October 11, 1996. The
note bore interest at 8 1/8% per annum and the Company agreed to pay the
executive additional compensation equal to the interest due on the note.
Other Options and Stock Awards
In October 1996, a former officer exercised options to purchase 17,500 shares
granted under an individual stock option agreement at an exercise price of
$11.14 per share.
F-22
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Effective May 15, 1996, the Company entered into agreements ("Share Bonus
Agreements") with three executive officers to provide stock bonuses to each of
them of 38,889 shares of common stock ("Bonus Shares"), 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 shares are also
issuable in the event of certain types of terminations. Bonus Shares were
issued to one executive subsequent to his termination of employment on February
1, 1998 and the remaining compensation expense related to his shares was
recognized at that time. The Company is recognizing compensation expense equal
to the market value of the shares at May 15, 1996 ($18.25 per share) over the
vesting period for the two remaining executives. In connection with the
completion of the Recapitalization, the Share Bonus Agreements for the
remaining two executives were amended to permit the tender of Bonus Shares to
the Company. As a result, the Company purchased 20,026 of the Bonus Shares from
each of the two executive officers, representing the same percentage of shares
accepted in the Recapitalization from other stockholders. The remainder of the
outstanding Bonus Shares are subject to the original terms of the Share Bonus
Agreements, including the vesting provisions thereof.
Stock Option Summary
A summary of stock option transactions follows:
<TABLE>
<CAPTION>
Year ended January 31,
---------------------------------------------------------------
1999 1998 1997
-------------------- --------------------- --------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year..... 2,565,050 $26.27 4,579,072 $24.79 2,171,168 $24.51
Granted.............................. 218,000 $ 9.38 213,953 $40.16 2,754,142 $25.52
Exercised:
By former Chief Executive Officer.. -- (1,853,668) $23.73 --
By others.......................... (494,649) $14.97 (68,985) $12.82 (28,870) $11.18
Forfeited............................ (194,753) $22.52 (305,322) $32.27 (317,368) $30.47
Adjustments for Recapitalization (see
note 2)............................. (477,854) -- --
--------- ---------- ---------
Outstanding at end of year........... 1,615,794 $ 7.39 2,565,050 $26.27 4,579,072 $24.79
========= ====== ========== ====== ========= ======
Options exercisable at end of year... 981,419 $ 6.40 897,192 $21.82 2,176,945 $22.67
========= ====== ========== ====== ========= ======
Weighted-average fair value of
options granted during the year..... $ 3.60 $ 13.17 $ 7.59
========= ========== =========
</TABLE>
The following table summarizes information about stock options outstanding at
January 31,1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------- ---------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
--------------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$2.50 to $8.50.......... 824,612 3.2 years $4.94 687,329 $4.88
$9.38 to $16.00......... 791,182 8.0 years $9.94 294,090 $9.97
</TABLE>
F-23
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(12) Income Taxes
Income tax expense (benefit) attributable to income (loss) from operations
consists of:
<TABLE>
<CAPTION>
Current Deferred Total
-------- -------- -------
(In thousands)
<S> <C> <C> <C>
Year ended January 31, 1999:
U.S. federal................................. $(13,829) 29,944 16,115
Foreign...................................... 7,995 1,876 9,871
U.S. state and local......................... (759) 1,573 814
-------- ------ -------
$ (6,593) 33,393 26,800
======== ====== =======
Year ended January 31, 1998:
U.S. federal................................. $ 9,068 4,246 13,314
Foreign...................................... 7,841 (1,108) 6,733
U.S. state and local......................... 1,429 1,612 3,041
-------- ------ -------
$18,338 4,750 23,088
======== ====== =======
Year ended January 31, 1997:
U.S. federal................................. $ 923 1,408 2,331
Foreign...................................... 7,443 (249) 7,194
U.S. state and local......................... 658 206 864
-------- ------ -------
$ 9,024 1,365 10,389
======== ====== =======
Components of income (loss) from operations before income taxes, minority
interest, and extraordinary item are as follows:
<CAPTION>
Year ended January 31,
--------------------------
1999 1998 1997
-------- -------- -------
(In thousands)
<S> <C> <C> <C>
United States.................................. $(75,539) 63,633 (10,408)
Other nations.................................. 20,861 16,619 10,515
-------- ------ -------
Total...................................... $(54,678) 80,252 107
======== ====== =======
</TABLE>
F-24
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Income tax expense (benefit) attributable to income (loss) from operations
differed from the amounts computed by applying the U.S. federal income tax rate
of 35% for fiscal 1999 and 1998, and 34% for fiscal 1997 as a result of the
following:
<TABLE>
<CAPTION>
Year ended January 31,
------------------------
1999 1998 1997
-------- ------ ------
(In thousands)
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)............ $(19,137) 28,088 36
Increase (decrease) in taxes resulting from:
Foreign tax credits, net of valuation allowance.... -- (3,337) --
Increase (reduction) in valuation allowance........ 44,077 (646) --
Tax rate differential on foreign earnings.......... 2,570 916 3,320
Amortization of intangibles........................ -- -- 7,746
State income taxes, net of federal benefit......... 529 1,977 570
Deemed dividends from foreign subsidiary........... 15,901 1,057 --
Adjustment of reserves related to prior year's tax
provisions........................................ (17,100) (4,445) --
Other, net......................................... (40) (522) (1,283)
-------- ------ ------
Income tax expense................................... $ 26,800 23,088 10,389
======== ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the net deferred tax asset are presented below:
<TABLE>
<CAPTION>
January 31,
------------------
1999 1998
--------- -------
(In thousands)
<S> <C> <C>
Deferred tax assets:
Accounts receivable valuation allowances................. $ 3,934 5,550
Inventory costs capitalized for tax purposes............. 1,614 931
Other accruals and reserves accrued for financial
reporting purposes...................................... 37,129 38,088
Post-retirement benefits accrued for financial reporting
purposes................................................ 6,472 6,338
Foreign tax credit carryforwards......................... 26,787 8,820
Net operating loss and minimum tax carryforwards......... 67,643 53,111
--------- -------
Total gross deferred tax assets........................ 143,579 112,838
Less valuation allowance................................. (101,502) (34,888)
--------- -------
Deferred tax assets, net of valuation allowance...... 42,077 77,950
--------- -------
Deferred tax liabilities:
Plant, equipment and intangibles, due to differences as a
result of fresh start................................... 43,350 45,484
Plant and equipment, due to differences in depreciation
methods................................................. 9,993 10,037
Other accruals and reserves.............................. 3,289 6,536
--------- -------
Total gross deferred tax liabilities................... 56,632 62,057
--------- -------
Net deferred tax asset (liability)................... $ (14,555) 15,893
========= =======
</TABLE>
F-25
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The components of the net current deferred tax asset and net noncurrent
deferred tax liability were as follows:
<TABLE>
<CAPTION>
January 31,
--------------------
1999 1998
-------- ------
(In thousands)
<S> <C> <C> <C>
Net current deferred tax asset:
U.S. federal............................................. $ -- 27,341
Foreign.................................................. 2,491 2,222
U.S. state and local..................................... -- 2,060
-------- ------
2,491 31,623
-------- ------
Net noncurrent deferred tax liability:
U.S. federal............................................. -- 1,045
Foreign.................................................. 17,046 13,886
U.S. state and local..................................... -- 799
-------- ------
17,046 15,730
-------- ------
Net deferred tax asset (liability)....................... $(14,555) 15,893
======== ======
</TABLE>
The valuation allowance for deferred tax assets was increased from
$34,888,000 at January 31, 1998 to $101,502,000 at January 31, 1999. The
increase in the valuation allowance is primarily based on an assessment of the
likelihood of the realization of net U.S. deferred tax assets in view of (i)
the current year net operating loss for book and tax purposes, (ii) expiration
dates for tax net operating losses incurred in prior years, and (iii) the
Company's forecasts of future taxable income taking into account the increased
level of ongoing interest expense as a result of the Recapitalization. The
valuation allowance was increased from $33,961,000 at January 31, 1997 to
$34,888,000 at January 31, 1998 primarily to allow for potential unused foreign
tax credit carryforwards, unused net operating losses, and unused future
deductions. If the Company should recognize a tax benefit for pre-
reorganization net operating losses, for which a valuation allowance had been
established, it would be applied to reduce intangible assets until exhausted
and then to increase additional paid-in capital.
At January 31, 1999, the Company has net operating loss carryforwards of
approximately $173,129,000 million for federal income tax purposes, expiring at
various dates through 2012. As a result of the reorganization in 1993, the
Company had a change in ownership as defined by Section 382 of the Internal
Revenue Code. Consequently, utilization of the net operating loss carryforwards
is subject to an annual limitation of $17,200,000 per year, as adjusted for
unused yearly limitations.
Deferred income taxes have been provided on undistributed earnings of foreign
subsidiaries to the extent that management plans to remit these earnings in the
future. Undistributed earnings of foreign subsidiaries and affiliates that are
permanently invested, and for which no deferred taxes have been provided,
amounted to approximately $71,860,000 and $81,660,000 as of January 31, 1999
and 1998, respectively.
F-26
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(13) Pension and Other Employee Benefits
Certain subsidiaries of the Company have pension plans which provide
retirement benefits for eligible employees, generally measured by length of
service, compensation and other factors. The following tables provide combined
information relevant to the Company's pension and other employee benefit plans:
<TABLE>
<CAPTION>
Post Retirement
Pension Benefits Benefits
----------------- ----------------
Fiscal Year Ended January 31,
-----------------------------------
1999 1998 1999 1998
-------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C>
Change in Benefit Obligation
Benefit obligation at beginning of
year............................... $191,718 86,063 10,620 10,285
Service cost........................ 1,950 2,290 526 465
Interest cost....................... 13,498 6,350 792 715
Plan participants' contributions.... -- -- 333 309
Amendments.......................... -- -- -- --
Actuarial (gain)/loss............... 10,018 3,327 2,991 (316)
Merger of assumed pension plans..... -- 101,305 -- --
Benefits paid....................... (18,994) (6,437) (760) (833)
Curtailments........................ (591) (1,146) -- --
Special termination benefits........ 1,737 -- -- --
Translation adjustment.............. 308 (34) (10) (5)
-------- ------- ------- -------
Benefit obligations at end of
year............................. 199,644 191,718 14,492 10,620
-------- ------- ------- -------
Change in Plan Assets
Fair value of plan assets at
beginning of year.................. 207,352 110,902 -- --
Actual return on plan assets........ 47,297 27,917 -- --
Acquisition......................... 43 74,569 -- --
Employer contribution............... 133 1,119 418 515
Plan participants' contributions.... -- -- 333 309
Translation adjustment.............. -- 128 -- --
Benefits paid....................... (20,560) (7,283) (751) (824)
-------- ------- ------- -------
Fair value of plan assets at end
of year.......................... 234,265 207,352 -- --
-------- ------- ------- -------
Funded status....................... 34,621 15,634 (14,492) (10,620)
Unrecognized net obligation gain.... -- (262) -- --
Unrecognized net actuarial gain..... (61,779) (42,748) (2,860) (6,195)
Unrecognized prior service cost..... 1,258 933 -- --
-------- ------- ------- -------
Prepaid (accrued) benefit cost.... $(25,900) (26,443) (17,352) (16,815)
======== ======= ======= =======
Weighted Average Assumptions
Discount rate....................... 7.0% 7.3% 7.0% 7.3%
Expected return on plan assets...... 8.5% 8.5% N/A N/A
Rate of compensation increase....... 3.5% 3.5% N/A N/A
</TABLE>
For post-retirement benefit measurement purposes, a 9% annual rate of
increase in the per capita cost of covered health care benefits was assumed for
fiscal 1999. The rate was assumed to decrease gradually to 5.5% for fiscal 2005
and remain at that level thereafter.
F-27
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Pension Post-
Benefits retirement Benefits
--------------- --------------------
Fiscal Year Ended January 31,
-------------------------------------
1999 1998 1999 1998
------- ------ --------- ---------
(In thousands)
<S> <C> <C> <C> <C>
Components of Net Periodic Benefit Costs
Service cost.......................... $ 1,934 2,332 527 465
Interest cost......................... 13,451 6,460 782 701
Expected return on plan assets........ (15,657) (8,450) -- --
Amortization of prior service cost.... 102 107 -- --
Recognized net actuarial loss......... (1,515) (905) (330) (372)
Recognized curtailment (gain)/loss.... (539) (1,113) -- --
Recognized termination benefit
(gain)/loss.......................... 1,737 -- -- --
------- ------ --------- ---------
Total net periodic benefit cost
(income)........................... $ (487) (1,569) 979 794
======= ====== ========= =========
</TABLE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the post-retirement health care plans. A one-percentage-point
change in assumed health care cost trend rates would have the following
effects:
<TABLE>
<CAPTION>
1% Point 1% Point
Increase Decrease
-------- --------
(In thousands)
<S> <C> <C>
Effect on total of service and interest cost
components.......................................... $ 186 (145)
Effect on post-retirement benefit obligation......... $1,513 (1,258)
</TABLE>
For pension plans with accumulated obligations in excess of plan assets, the
projected benefit obligation, accumulated benefit obligation and fair value of
plan assets were $34,903,000, $34,186,000 and $32,669,000 as of January 31,
1999 and $31,289,000, $31,035,000 and $28,712,000 as of January 31, 1998.
Plan assets are primarily invested in cash equivalents, equity securities and
fixed income instruments.
The Company sponsors defined contribution plans, qualified under Section
401(k) of the Internal Revenue Code, which are offered to certain groups of
employees of substantially all U.S. operations. Expense related to continuing
operations of these plans was $797,000, $792,000 and $1,237,000 for the years
ended January 31, 1999, 1998 and 1997, respectively. The plans do not have
significant liabilities other than benefit obligations.
(14) Disclosures About Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
Cash and Cash Equivalents, Trade Receivables, Accounts Payable, Short-term
Debt, and Accrued Expenses
The carrying amount approximates fair value because of the short maturity or
duration of these instruments.
Senior Subordinated Notes
The Company estimates that the fair value of the 10 3/4% Notes at January 31,
1999 approximates $280,000,000 based on recent interdealer transactions which
were priced at approximately $80.00 per $100.00 of principal.
F-28
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Senior Credit Facility and Other Long-term Obligations
The carrying value approximates the fair value of these instruments, which
primarily have floating interest rates that are fixed for periods not exceeding
six months.
Foreign Currency Forward Delivery Contracts
The fair value of foreign currency forward delivery contracts (see note 1n)
is estimated by reference to market quotations received from banks. At January
31, 1999 and 1998, the contract value of foreign currency forward delivery
agreements outstanding was approximately $73,990,000 and $26,357,000,
respectively. The settlement value of these instruments was at that date
approximately $75,647,000 and $24,963,000, respectively.
Limitations
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
(15) Litigation, Commitments and Contingencies
Litigation
The Company and certain related parties have been the subject of various
purported shareholder class action lawsuits and a purported derivative action
filed between March 13, 1998 and March 9, 1999 in various courts, including
Colorado State District Court, City and County of Denver; United States
District Court for the District of Colorado; and the Delaware Court of Chancery
(together, the "Shareholder Litigation"). On April 9, 1999, the Company entered
into an insurance agreement with a major insurance carrier whereby the carrier
assumed responsibility for the defense and ultimate resolution of the
Shareholder Litigation. In connection with the insurance agreement, the Company
entered into certain agreements and releases and agreed to make a cash premium
payment, net of potential future reimbursements, to the insurer ranging from an
estimated minimum payment of $7.0 million to a maximum payment of $17.5 million
depending on the ultimate cost to defend and resolve the pending litigation.
The Company is responsible for paying all legal defense costs prior to the
effective date of the insurance agreement, but expects that substantially all
costs incurred subsequent to the effective date to defend and resolve the
Shareholder Litigation will be covered by the insurance agreement. The Company
believes that substantially all costs it will incur to defend and resolve the
litigation have been accrued in the accompanying consolidated financial
statements as of January 31, 1999.
Contingent Liability with Respect to the Old Notes
The reorganization plan provides for payment in full of 100% of the allowed
claim of the holders of certain old notes ("Old Notes") of E-II Holdings, Inc.
(predecessor to Astrum), including approximately $16.4 million of interest on
overdue installments of interest accruing prior to the commencement of Astrum's
bankruptcy case. Various parties have challenged the allowability of the claim
on the basis that interest on overdue installments of interest is not permitted
under applicable non-bankruptcy law. The Company provided for this contingent
liability in its consolidated financial statements when it emerged from
bankruptcy in the amount of $16.4 million.
During fiscal 1997, $4.0 million of such claims were settled for $0.2
million, resulting in the recording of $3.8 million of other nonoperating
income from the favorable settlement of this claim. The holders of the claim
were Apollo Investment Fund, L.P. ("Apollo") and an affiliate of Apollo. At
January 31, 1997, Apollo and its affiliates owned 45.75% of the Company's
issued and outstanding common stock. During fiscal 1998, the Company recorded
other income of $2,060,000 from the favorable settlement of $2,139,000 of such
claims.
F-29
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
As a result of a change in New York law in fiscal 1998, which adversely
affected the Company's ability to favorably settle the remaining claims, the
Company has entered into a non-binding agreement-in-principle to settle the
remaining amount of these claims for approximately $9.4 million. At January 31,
1999, other accrued expenses include $10.3 million provided for these remaining
claims. The Company expects final settlement to occur in the first half of
fiscal 2000.
Union Agreements
Union membership in the Company's European manufacturing plants varies from
country to country and is not officially known; however, it is probable that
most of the workers are affiliated with a union. Most European union contracts
have a one-year term. In the United States, 500 production employees are
unionized under a contract which next expires on April 9, 1999.
Other
In addition, the Company is a party to various other legal proceedings and
claims in the ordinary course of business; the Company believes that the
outcome of these other pending matters will not have a material adverse affect
on its consolidated financial position, results of operations or liquidity.
(16) Other Income (Expense), Net
Other income (expense), net consisted of the following:
<TABLE>
<CAPTION>
Year ended January 31,
--------------------------------
1999 1998 1997
--------- -------------- ------
(In thousands)
<S> <C> <C> <C>
Net realized gains from foreign currency
forward delivery contracts.................. $ 1,420 6,463 2,829
Unrealized gain (loss) from foreign currency
forward delivery contracts.................. (1,212) -- --
Gain (loss) on disposition of assets held for
sale and fixed assets, net.................. 3,243 (377) (62)
Equity in loss of unconsolidated affiliate... (1,875) (547) (33)
Accrued costs related to shareholder litiga-
tion (note 15), favorable
adjustments to accruals and allowances re-
lated to previous operations and accrual for
taxes recorded in connection with the Reor-
ganization referred to in note 1(b)......... (23,200) 24,909 15,431
Other, net................................... (3,727) (2,154) 656
--------- ------ ------
$ (25,351) 28,294 18,821
========= ====== ======
</TABLE>
F-30
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(17) Quarterly Financial Information (Unaudited)
The following is a summary of the unaudited quarterly financial information:
<TABLE>
<CAPTION>
Three months ended
-------------------------------------------
July
April 30, 31, October 31, January 31,
1998 1998 1998 1999(a)
--------- ------- ----------- -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net sales.............................. $ 156,676 163,662 199,079 178,004
========= ======= ======= =======
Gross profit........................... $ 59,403 64,128 86,592 74,174
========= ======= ======= =======
Income (loss) before extraordinary
item.................................. $ (4,703) (27,097) 2,966 (53,484)
========= ======= ======= =======
Net income (loss)...................... $ (10,927) (27,333) 2,966 (53,484)
========= ======= ======= =======
Net loss to common stockholders........ $ (10,927) (29,912) (3,415) (60,156)
========= ======= ======= =======
Income (loss) per share attributable to
common stockholders--basic and
assuming dilution:
Income (loss) before extraordinary
item................................ $ (0.23) (1.81) (0.33) (5.76)
========= ======= ======= =======
Net income (loss).................... $ (0.54) (1.82) (0.33) (5.76)
========= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Three months ended
----------------------------------------
April July
30, 31, October 31, January 31,
1997 1997 1997 1998
-------- ------- ----------- -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net sales............................. $169,562 179,545 211,104 176,664
======== ======= ======= =======
Gross profit.......................... $ 70,269 78,228 89,859 74,170
======== ======= ======= =======
Income before extraordinary item...... $ 8,499 20,291 23,519 4,568
======== ======= ======= =======
Net income............................ $ 1,866 17,301 16,955 4,577
======== ======= ======= =======
Income per share attributable to com-
mon
stockholders--basic:
Continuing operations before
extraordinary item................. $ .43 1.00 1.15 .22
======== ======= ======= =======
Net income.......................... $ .09 .85 .83 .22
======== ======= ======= =======
Income per share attributable to com-
mon
stockholders--assuming dilution:
Income before extraordinary item.... $ .41 .96 1.11 .22
======== ======= ======= =======
Net income.......................... $ .09 .82 .80 .22
======== ======= ======= =======
</TABLE>
- --------
(a) In the fourth quarter of fiscal 1999, the Company revised its estimate of
the likelihood of the realizability of deferred tax assets related to U.S.
operations. As a result, the valuation allowance for deferred tax assets
was increased and accruals for tax reserves were reduced resulting in an
net fourth quarter charge to income tax expense of approximately $16.7
million.
F-31
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(18) Information Concerning Business Segments
During the year ended January 31, 1999, the Company adopted SFAS No. 131,
Disclosure About Segments of an Enterprise and Related Information, which
changes the way the Company reports information about its operating segments.
Certain information for 1998 and 1997 has been reclassified from the prior
year's presentation in order to conform to the 1999 presentation.
The Company has one line of business: the manufacture and distribution of
luggage and other travel-related products. Management of the business and
evaluation of operating results is organized primarily along geographic lines
dividing responsibility for the Company's operations as follows: The Americas,
which include the United States comprised of wholesale and retail operations,
Canada, Latin America, and South America; Europe; Asia, which includes India,
China, Singapore, South Korea, Taiwan and Hong Kong; and Other which primarily
includes licensing revenues from non-luggage brand names owned by the Company,
royalties from the Japanese luggage licensee and corporate overhead.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies (see note 1). The Company
evaluates the performance of its segments based on operating income of the
respective business units. Intersegment sales prices are market based.
Segment information for the years ended January 31, 1999, 1998 and 1997 is as
follows:
<TABLE>
<CAPTION>
U.S. U.S. Other Other
1999 Europe Wholesale Retail Americas Asia Operations Eliminations Totals
- ---- -------- --------- ------- -------- ------ ---------- ------------ -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues from external
customers.............. $304,986 179,577 128,595 45,588 22,902 15,773 -- 697,421
Intersegment revenues... $ 2,040 55,772 -- 6,330 9,068 -- (73,210) --
Operating income (loss)
(a).................... $ 39,709 (32,403) 9,319 236 484 (13,893) 4,722 8,174
Total assets............ $185,226 131,547 33,004 48,737 26,581 295,656 (99,316) 621,435
Capital expenditures.... $ 10,062 9,841 3,289 1,038 2,323 126 -- 26,679
Depreciation and
amortization........... $ 11,933 7,396 1,975 1,065 1,554 6,720 (3,589) 27,054
<CAPTION>
1998
- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues from external
customers.............. $277,155 269,766 108,896 40,653 21,881 18,524 -- 736,875
Intersegment revenues... $ 7,486 38,422 -- 9,914 11,181 -- (67,003) --
Operating income (loss)
(a).................... $ 35,627 30,701 6,838 (2,312) (342) (2,759) 1,549 69,302
Total assets............ $171,710 161,343 42,683 71,983 34,568 698,665 (570,903) 610,049
Capital expenditures.... $ 18,650 4,616 4,849 1,328 6,271 599 -- 36,313
Depreciation and
amortization........... $ 11,600 7,651 1,239 864 941 9,962 (3,663) 28,594
<CAPTION>
1997
- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues from external
customers.............. $280,788 292,297 78,499 43,364 26,244 19,946 -- 741,138
Intersegment revenues... $ 5,053 5,202 -- 4,482 1,966 -- (16,703) --
Operating income
(loss)(a).............. $ 27,723 14,037 4,880 314 2,604 (42,165) 8,144 15,537
Total assets............ $184,819 149,671 21,767 62,468 15,214 690,097 (531,378) 592,658
Capital expenditures $ 9,215 10,189 2,138 1,848 4,297 3,406 -- 31,093
Depreciation and
amortization........... $ 15,416 8,187 685 972 86 32,763 (4,220) 53,889
</TABLE>
- --------
(a) Operating income (loss) represents net sales less operating expenses. In
computing operating income (loss) none of the following items have been
added or deducted: interest income, interest expense, other--net, income
taxes, minority interest, and extraordinary items. General corporate
expenses and amortization of reorganization value in excess of identifiable
assets are included in other operations.
The Company enters into foreign exchange contracts in order to reduce its
exposure to fluctuations in currency exchange rates (primarily the Belgian
franc) on certain foreign operations and royalty agreements through the use
of forward delivery commitments. For the years ended January 31, 1999, 1998
and 1997, the Company had net gains (losses) from such transactions of
$208,000, $6,463,000 and $2,829,000, respectively, which are included in
nonoperating income (see note 16).
F-32
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Long-lived assets relating to the Company's operations by geographic area is as
follows:
<TABLE>
<CAPTION>
January 31,
----------------
1999 1998
-------- -------
(In thousands)
<S> <C> <C>
United States............................................ $ 67,402 65,187
Belgium.................................................. 44,923 40,293
Other Europe............................................. 19,554 19,623
Other.................................................... 17,762 17,248
-------- -------
$149,641 142,351
======== =======
</TABLE>
(19) Stock Sales
On April 9, 1999, the Company announced that it plans to commence a $75
million rights offering to its stockholders to strengthen its capitalization.
Under the terms of the rights offering, the Company would distribute, on a pro
rata basis, to all of its common stockholders of record as of a date to be
determined, transferable rights to purchase additional shares of common stock.
It is currently contemplated that the rights will be exercisable at a price of
$6.00 per share. Affiliates of Apollo Investment Fund, L.P. ("Apollo"),
Samsonite's largest stockholder, have agreed to purchase their full pro rata
share of the common shares offered in the rights offering and to "backstop" the
rights offering by purchasing additional common shares not purchased by other
stockholders, subject to a maximum aggregate subscription by Apollo of $37.5
million.
Apollo has funded in advance its pro rata subscription amount by purchasing
$25.4 million of non-voting convertible junior preferred stock. The preferred
stock purchased by Apollo has an initial conversion rate that equates to $6.00
per share and is the economic equivalent of 4,235,000 shares of common stock.
Subject to SEC clearance and further Board action, Samsonite intends to
commence the common stock rights offering during the second quarter of 1999.
The rights offering will be made only by means of a prospectus.
On February 11, 1997, the Company completed the sale of 3,300,000 shares of
its common stock in a public offering and received net cash proceeds therefrom
of approximately $130,242,000. In addition, the former CEO (see note 11)
exercised options for 1,853,668 common shares and sold these shares in the
public offering. The Company received approximately $6,600,000 in cash from the
exercise of these options.
F-33
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- -------- ---------- ------------ --------- ------------- --------
Balance
Balance at at End
Beginning of
Description of Period Additions(a) Transfers Deductions(b) Period
- ----------- ---------- ------------ --------- ------------- --------
<S> <C> <C> <C> <C> <C>
Year Ended January 31,
1999
Allowance for Trade
Receivables............ $ 8,766 396 -- (2,097) 7,065
Allowance for Long-Term
Assets................. 706 -- -- (185) 521
------- ----- --- ------ ------
Total................... $ 9,472 396 -- (2,282) 7,586
======= ===== === ====== ======
Year Ended January 31,
1998
Allowance for Trade
Receivables............ $ 7,431 4,341 -- (3,006) 8,766
Allowance for Long-Term
Assets................. 5,556 -- -- (4,850) 706
------- ----- --- ------ ------
Total................... $12,987 4,341 -- (7,856) 9,472
======= ===== === ====== ======
Year Ended January 31,
1997
Allowance for Trade
Receivables............ $ 8,152 2,815 -- (3,536) 7,431
Allowance for Long-Term
Assets................. 10,104 -- -- (4,548) 5,556
------- ----- --- ------ ------
Total................... $18,256 2,815 -- (8,084) 12,987
======= ===== === ====== ======
</TABLE>
- --------
Notes:
(a)Amounts charged to costs and expenses.
(b) Bad debt write-offs and charges to allowances, net of other adjustments,
reclassifications and exchange rate changes.
F-34
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
You may rely on the information contained in this prospectus. We have not
authorized anyone to provide information different from that contained in this
prospectus. This prospectus is not an offer to sell or a solicitation of an
offer to buy these securities in any state where the offer or sale is not
permitted. This prospectus is not an offer to sell or a solicitation of an
offer to buy these securities in any circumstance under which the offer or
solicitation is not permitted. The information contained in this prospectus is
correct only as of the date of this prospectus, regardless of the time of the
delivery of this prospectus or any sale of these securities.
----------------
Shares
Samsonite Corporation
Common Stock
----------------
Prospectus
----------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
SEC registration fee............................................ $13,786
Printing and engraving expenses................................. *
Accountants' fees and expenses.................................. *
Attorneys' fees and expenses.................................... *
Miscellaneous................................................... *
-------
Total......................................................... $ *
=======
</TABLE>
- --------
* To be included by amendment.
Samsonite will pay all of such expenses. All of the foregoing expenses are
estimated except the SEC registration fee and the NASD filing fee.
Item 14. Indemnification of Directors and Officers.
Certificates of Incorporation and By-Laws
Samsonite's Amended and Restated Certificate of Incorporation provides that
each person who is or was or had agreed to become a director or officer of
Samsonite, or each such person who is or was serving or who had agreed to serve
at the request of the Board of Directors of Samsonite as an employee or agent
of Samsonite or as director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (including the heirs,
executors, administrators or estate of such person), will be indemnified by
Samsonite, in accordance with Samsonite's By-Laws, to the full extent permitted
from time to time by the Delaware General Corporation Law (the "DGCL"), as the
same exists or may hereafter be amended or any other applicable laws as
presently or hereafter in effect. Samsonite's Amended and Restated Certificate
of Incorporation also specifically authorizes Samsonite to enter into
agreements with any person which provide for indemnification greater or
different from that provided by Samsonite's Amended and Restated Certificate of
Incorporation.
Samsonite's By-Laws provide that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he or she is a person of whom he or
she is the legal representative is or was a director, officer or employee of
Samsonite or is or was serving at the request of Samsonite as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise including service with respect to employee
benefit plans, whether the basis of such Proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, will be
indemnified and held harmless by Samsonite to the fullest extent authorized by
the DGCL as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits Samsonite to
provide broader indemnification rights than said law permitted Samsonite to
provide prior to such amendment), against all expense, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, ERISA,
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification will continue as to a person who has ceased to be a director,
officer, employee or agent and will inure to the benefit of his or her heirs,
executors and administrators; provided, however, that except as described in
the next paragraph with respect to Proceedings seeking to enforce rights to
indemnification, Samsonite will indemnify any such person seeking
indemnification in connection with a Proceeding (or part thereof) initiated by
such person only if such Proceeding (or part thereof) was authorized by the
Board of Directors of Samsonite.
II-1
<PAGE>
Pursuant to Samsonite's By-Laws, if a claim described in the preceding
paragraph is not paid in full by Samsonite within thirty days after a written
claim has been received by Samsonite, the claimant may at any time thereafter
bring suit against Samsonite to recover the unpaid amount of the claim, and, if
successful in whole or in part, the claimant will be entitled to be paid also
the expense of prosecuting such claim. Samsonite's By-Laws provide that it will
be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any Proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to Samsonite) that the claimant has not met the standards of conduct
which make it permissible under the DGCL for Samsonite to indemnify the
claimant for the amount claimed, but the burden of proving such defense will be
on Samsonite. Neither the failure of Samsonite (including its Board of
Directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by Samsonite (including its Board of Directors, independent legal
counsel or stockholders) that the claimant has not met such applicable standard
of conduct, will be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct. Samsonite's By-Laws
provide that following any "change in control" of Samsonite of the type
required to be reported under Item 1 of Form 8-K promulgated under the
Securities Exchange Act of 1934, as amended, any determination as to
entitlement to indemnification will be made by independent legal counsel
selected by the claimant, which independent legal counsel will be retained by
the Board of Directors on behalf of Samsonite.
Samsonite's By-Laws provide that the right to indemnification and the payment
of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in Samsonite's By-Laws will not be exclusive of any other
right which any person may have or may hereafter acquire under any statute,
provision of Samsonite's Amended and Restated Certificate of Incorporation,
Samsonite's By-Laws, agreement, vote of stockholders or disinterested directors
or otherwise. Samsonite's By-Laws permit Samsonite to maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
Samsonite or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not Samsonite
would have the power to indemnify such person against such expense, liability
or loss under the DGCL. In addition, Samsonite's By-Laws authorize Samsonite,
to the extent authorized from time to time by Samsonite's Board of Directors,
to grant rights to indemnification, and rights to be paid by Samsonite the
expenses incurred in defending any Proceeding in advance of its final
disposition, to any agent of Samsonite to the fullest extent of the provisions
of Samsonite's By-Laws with respect to the indemnification and advancement of
expenses of directors, officers and employees of Samsonite.
Samsonite's By-Laws provide that the right to indemnification conferred
therein will be a contract right and will include the right to be paid by
Samsonite the expenses incurred in defending any such Proceeding in advance of
its final disposition; provided, however, that if the DGCL requires, the
payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a Proceeding, will be made only upon delivery to
Samsonite of an undertaking by or on behalf of such director or officer, to
repay all amounts so advanced if it is ultimately determined that such director
or officer is not entitled to be indemnified under Samsonite's By-Laws or
otherwise.
Indemnification Agreements.
Samsonite has entered into indemnification agreements with certain of
Samsonite's directors and officers. The indemnification agreements require,
among other things, Samsonite to indemnify the officers and directors to the
fullest extent permitted by law, and to advance to such directors and officers
all related expenses, subject to reimbursement if it is subsequently determined
that indemnification is not permitted. Samsonite will also indemnify and
advance all expenses incurred by such directors and officers seeking to enforce
their rights under the indemnification agreements, and cover directors and
officers under Samsonite's directors' and officers' liability insurance.
Although such indemnification agreements will offer substantially the same
scope of
II-2
<PAGE>
coverage afforded by provisions in Samsonite's Amended and Restated Certificate
of Incorporation and Samsonite's By-Laws, they provide greater assurance to
directors and officers that indemnification will be available because, as a
contract, it cannot be modified unilaterally in the future by the Board of
Directors of Samsonite or by the stockholders to eliminate the rights provided
therein. Indemnification for officers of Samsonite is or will be provided for
in their respective employment agreements.
Item 15. Recent Sales of Unregistered Securities.
On June 18, 1998, Samsonite issued and sold an aggregate of 175,000 Units
consisting of 175,000 shares of its 13 7/8% Senior Redeemable Exchangeable
Preferred Stock and Warrants to purchase 1,959,000 shares of Samsonite's common
stock to CIBC Oppenheimer Corp. The total purchase price for the Units was
$169.8 million. The sale of the Units was made in reliance on the exemption
from registration contained in Section 4(2) of the Securities Act of 1933 (the
"Securities Act"). Following this sale, resales were permitted (i) to Qualified
Institutional Buyers (as defined in Rule 144A under Securities Act) and (ii)
outside the United States in compliance with Regulation S under the Securities
Act.
On August 24, 1998, Samsonite issued and sold $350 million aggregate
principal amount of its 10 3/4% Senior Subordinated Notes due 2008 to CIBC
Oppenheimer, BancAmerica Robertson Stephens, BancBoston Securities Inc. and
Goldman, Sachs & Co. This sale of the 10 3/4% Senior Subordinated Notes was
made in reliance on the exemption from registration contained in Section 4(2)
of the Securities Act. Following this sale, resales were permitted (i) to
Qualified Institutional Buyers (as defined in Rule 144A under the Securities
Act) and (ii) outside the United States in compliance with Regulation S under
the Securities Act.
In April 1999, Samsonite issued and sold 1,000 shares of its Series Z
Convertible Preferred Stock to Apollo Investment Fund, L.P. This sale of Series
Z Convertible Preferred Stock was made in reliance on the exemption from
registration contained in Section 4(2) of the Securities Act.
II-3
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.1 Distribution Agreement dated as of July 14, 1995, between Samsonite
and Culligan Water Technologies, Inc. (incorporated by reference
from the Registration Statement on Form S-4 (Registration Number
33-95642)).
2.2 Tax Sharing Agreement dated as of July 14, 1995, between Samsonite
and Culligan Water Technologies, Inc. (incorporated by reference
from the Registration Statement on Form S-4 (Registration Number
33-95642)).
2.3 Samsonite's Second Amended Plan of Reorganization Under Chapter 11
of the Bankruptcy Code, dated February 17, 1993 (the "Plan")
(incorporated by reference from the Application for Qualification
of Indenture on Form T-3 (File No. 22-24448)).
2.4 Modification of the Plan, dated May 21, 1993 (incorporated by
reference from Registration Statement on Form S-1 (Registration No.
33-71224)).
2.5 Notice to holders of Senior Subordinated Notes regarding the Stock
Elections described in the Plan (incorporated by reference from the
Registration Statement on Form S-1 (Registration
No. 33-71224)).
2.6 Order of the United States Bankruptcy Court for the Southern
District of New York, dated May 25, 1993, confirming the Plan and
authorizing and directing certain actions in connection therewith
(incorporated by reference from the Registration Statement on Form
S-1 (Registration No. 33-71224)).
3.1 Amended and Restated Certificate of Incorporation of Samsonite
(incorporated by reference from Samsonite's Annual Report on Form
10-K for the fiscal year ended January 31, 1996 (File
No. 0-23214)).
3.2 Certificate of Ownership and Merger, dated July 14, 1995
(incorporated by reference from the Registration Statement on Form
S-4 (Registration Number 33-95642)).
3.3 By-Laws of Samsonite (incorporated by reference from Samsonite's
Annual Report on Form 10-K for the fiscal year ended January 31,
1996 (File No. 0-23214)).
4.1 Indenture, dated as of July 14, 1995, between Samsonite and United
States Trust Company (incorporated by reference from the
Registration Statement on Form S-4 (Registration Number 33-95642)).
4.2 Specimen of Notes described in the Indenture (incorporated by
reference from the Registration Statement on Form S-4 (Registration
Number 33-95642)).
4.3 Rights Agreement, dated as of May 12, 1998, between Samsonite and
BankBoston, N.A., as Rights Agent, including the Form of
Certificate of Designation, Preferences and Rights setting forth
the terms of the Series B Junior Participating Preferred Stock, par
value $0.01 per share, as Exhibit A, the Form of Rights Certificate
as Exhibit B and the Summary of Rights to Purchase Series B Junior
Participating Preferred Stock as Exhibit C (incorporated by
reference from the Registration Statement on Form 8-A filed May 13,
1998 under the Securities and Exchange Act of 1934 (File No. 0-
23214)).
4.4 Amendment to Rights Agreement, dated April 7, 1999.*
4.5 Indenture, dated as of June 24, 1998, between Samsonite and United
States Trust Company (incorporated by reference from the
Registration Statement on Form S-4 (Registration
No. 333-61521)).
4.6 Indenture, in respect of the 13 7/8% Junior Subordinated Debentures
due 2010 of Samsonite, dated as of June 24, 1998, between Samsonite
and United States Trust Company of New York (incorporated by
reference from the Registration Statement on Form S-4 (Registration
No. 333-61519).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
4.7 Form of Indenture, in respect of the 13f% Senior Debentures due 2010
of Samsonite Holdings, Inc. ("Holdings") to be dated as of the
Exchange Date, between Holdings and United States Trust Company of
New York (incorporated by reference from the Registration Statement
on Form S-4 (Registration No. 333-61519).
4.8 Form of Rights Certificate to Subscribe for Shares of Common Stock
of Samsonite.*
5 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*
10.1 Second Amended and Restated Multicurrency Revolving Credit and Term
Loan Agreement, dated as of June 24, 1998, between Samsonite,
Samsonite Europe N.V. and Bank of America National Trust and Savings
Association, BankBoston N.A. and various other lending institutions,
Bank of America National Trust and Savings Association, as
Administrative Agent, BancBoston, N.A., as Syndication Agent,
Canadian Imperial Bank of Commerce, as Documentation Agent and
BancAmerica Robertson Stephens and BancBoston Securities Inc., as
Arrangers (incorporated by reference from the Registration Statement
on Form S-4 (Registration No. 333-61521)).
10.2 First Amendment to the Second Amended and Restated Multicurrency
Revolving Credit and Term Loan Agreement, dated as of October 1,
1998, between Samsonite, Samsonite Europe N.V. and various other
lending institutions (incorporated by reference from Samsonite's
Quarterly Report on Form 10-Q for the three months ended October 31,
1998 (File No. 0-23214)).
10.3 Second Amendment and Waiver to the Second Amended and Restated
Multicurrency Revolving Credit and Term Loan Agreement, dated as of
January 29, 1999 between the Company, Samsonite Europe N.V., and
various other lending institutions (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1999 (File No. 0-23214)).
10.4 Third Amendment and Waiver to the Second Amended and Restated
Multicurrency Revolving Credit and Term Loan Agreement, dated as of
March 22, 1999, between Samsonite, Samsonite Europe N.V., and
various other lending institutions.*
10.5 Stock Option Agreement dated as of May 15, 1996, between Samsonite
and Richard R. Nicolosi (incorporated by reference from the
Registration Statement on Form S-8 filed June 7, 1996 (File No. 333-
05467)).
10.6 Form of Indemnification Agreement entered into or to be entered into
by Samsonite with its directors (incorporated by reference from the
Registration Statement on Form S-1 (Registration No. 33-71224)).
10.7 Employment Agreement, dated as of February 1, 1998, between
Samsonite and Thomas R. Sandler (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998 (File No. 0-23214)).
10.8 Consulting Agreement, dated as of February 1, 1998, between
Samsonite Europe N.V. and Luc Van Nevel (incorporated by reference
from Samsonite's Annual Report on Form 10-K for the fiscal year
ended January 31, 1998 (File No. 0-23214)).
10.9 Executive Management Agreement, dated February 1, 1998, between
Samsonite and Luc Van Nevel (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998 (File No. 0-23214)).
10.10 Employment Agreement, dated as of February 1, 1998, between
Samsonite GmbH and Karlheinz Tretter (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998 (File No. 0-23214)).
10.11 Overall Agreement, dated as of February 1, 1998, between Samsonite
and Karlheinz Tretter (incorporated by reference from Samsonite's
Annual Report on Form 10-K for the fiscal year ended January 31,
1998 (File No. 0-23214)).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.12 Samsonite Corporation 1995 Stock Option and Incentive Award Plan (as
Amended in 1996) (incorporated by reference from the Proxy Statement
filed May 23, 1996).
10.13 Samsonite Corporation 1995 Stock Option and Award Plan, Second
Amendment (incorporated by reference from the Registration Statement
on Form S-8 filed January 30, 1997 (File No. 333-20775)).
10.14 Stock Option Agreement, dated as of February 20, 1996, between
Samsonite and Thomas J. Leonard (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1996 (File No. 0-23214)).
10.15 Stock Option Agreement, dated as of February 20, 1996, between
Samsonite and Thomas R. Sandler (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1996 (File No. 0-23214)).
10.16 Stock Option Agreement, dated as of February 20, 1996, between
Samsonite and Karlheinz Tretter (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1996 (File No. 0-23214)).
10.17 Employment Agreement, dated as of May 15, 1996, between Samsonite
and Richard R. Nicolosi (incorporated by reference from Samsonite's
Quarterly Report on Form 10-Q for the three months ended April 30,
1996 (File No. 0-23214)).
10.18 Amendment to Employment Agreement, dated as of May 2, 1997, between
Samsonite and Richard R. Nicolosi (incorporated by reference from
Samsonite's Quarterly Report on Form 10-Q for the three months ended
April 30, 1997 (File No. 0-23214)).
10.19 Registration Rights Agreement, dated as of May 15, 1996, between
Samsonite and Richard R. Nicolosi (incorporated by reference from
Samsonite's Quarterly Report on Form 10-Q for the three months ended
April 30, 1996 (File No. 0-23214)).
10.20 Stock Sale Agreement, dated as of May 16, 1996, between Samsonite
and Richard R. Nicolosi (incorporated by reference from Samsonite's
Quarterly Report on Form 10-Q for the three months ended April 30,
1996 (File No. 0-23214)).
10.21 Form of Agreement, made as of May 15, 1996, between Samsonite and
each of Thomas J. Leonard, Luc Van Nevel, and Thomas R. Sandler,
each agreement with respect to 38,889 shares of the Common Stock of
Samsonite, par value $.01 per share (incorporated by reference from
Samsonite's Quarterly Report on Form 10-Q for the three months ended
April 30, 1996 (File No. 0-23214)).
10.22 Form of Stock Option Agreement for Awards under the 1995 Stock
Option and Incentive Award Plan (as Amended in 1996) (incorporated
by reference from the Registration Statement on Form S-8 filed June
7, 1996 (File No. 333-05467)).
10.23 Samsonite Corporation Directors Stock Plan (incorporated by
reference from the Proxy Statement filed May 23, 1996).
10.24 Final Settlement Agreement, made as of June 20, 1996, among
Samsonite, the Pension Benefit Guaranty Corporation, and others
named therein (including exhibits thereto), with respect to the
Schenley Pension Plan (incorporated by reference from Samsonite's
Quarterly Report on Form 10-Q for the three months ended July 31,
1996 (File No. 0-23214)).
10.25 Final Settlement Agreement, made as of June 20, 1996, among
Samsonite, the Pension Benefit Guaranty Corporation, and others
named therein (including exhibits thereto), with respect to the
McCrory Pension Plan (incorporated by reference from Samsonite's
Quarterly Report on Form 10-Q for the three months ended July 31,
1996 (File No. 0-23214)).
10.26 Purchase Agreement, dated as of June 13, 1996, between Samsonite and
Artemis America Partnership and Apollo Investment Fund, L.P.
(incorporated by reference from Samsonite's Quarterly Report on Form
10-Q for the three months ended July 31, 1996 (File No. 0-23214)).
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.27 Stock Option Agreement, dated as of October 29, 1996, between
Samsonite and Thomas R. Sandler (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1997 (File No. 0-23214)).
10.28 Stock Option Agreement, dated as of October 29, 1996, between
Samsonite and Karlheinz Tretter (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1997 (File No. 0-23214)).
10.29 Stock Option Agreement dated as of September 16, 1996, between
Samsonite and Robert P. Baird, Jr. (incorporated by reference from
Samsonite's Quarterly Report on Form 10-Q for the three months ended
October 31, 1996 (File No. 0-23214)).
10.30 Stock Option Agreement dated as of August 5, 1996, between Samsonite
and James E. Barch (incorporated by reference from Samsonite's
Quarterly Report on Form 10-Q for the three months ended October 31,
1996 (File No. 0-23214)).
10.31 Stock Option Agreement dated as of August 21, 1996, between
Samsonite and Gary D. Ervick (incorporated by reference from
Samsonite's Quarterly Report on Form 10-Q for the three months ended
October 31, 1996 (File No. 0-23214)).
10.32 Employment Agreement, effective as of February 1, 1998, between
Samsonite and Richard H. Wiley (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998 (File No. 0-23214)).
10.33 Employment Agreement, effective as of February 1, 1998, between
Samsonite and Carlo Zezza (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998 (File No. 0-23214)).
10.34 Trademark Purchase and Assignment Agreement, dated as of October 31,
1997, between Samsonite's subsidiary, McGregor L.L.C. and McGregor
International Licensing N.V. (incorporated by reference from
Samsonite's Quarterly Report on Form 10-Q for the three months ended
October 31, 1997 (File No. 0-23214)).
10.35 Trademark Option Agreement, dated as of October 31, 1997, between
Samsonite's subsidiary, McGregor L.L.C. and McGregor International
Licensing N.V. (incorporated by reference from Samsonite's Quarterly
Report on Form 10-Q for the three months ended October 31, 1997
(File No. 0-23214)).
10.36 Nonqualified Stock Option Agreement dated as of July 15, 1998
between the Company and Luc Van Nevel (incorporated by reference
from Samsonite's Quarterly Report on Form 10-Q for the three months
ended July 31, 1998 (File No. 0-23214)).
10.37 Nonqualified Stock Option Agreement dated as of July 15, 1998
between the Company and Thomas R. Sandler (incorporated by reference
from Samsonite's Quarterly Report on Form 10-Q for the three months
ended July 31, 1998 (File No. 0-23214)).
10.38 Nonqualified Stock Option Agreement dated as of July 15, 1998
between the Company and Karlheinz Tretter (incorporated by reference
from Samsonite's Quarterly Report on Form 10-Q for the three months
ended July 31, 1998 (File No. 0-23214)).
10.39 Nonqualified Stock Option Agreement dated as of July 15, 1998
between the Company and Richard H. Wiley (incorporated by reference
from Samsonite's Quarterly Report on Form 10-Q for the three months
ended July 31, 1998 (File No. 0-23214)).
10.40 Nonqualified Stock Option Agreement dated July 15, 1998 between
Samsonite and D. Michael Clayton (incorporated by reference from
Samsonite's Quarterly Report on Form 10-Q for the three months ended
July 31, 1998 (File No. 0-23214)).
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.41 Registration Rights Agreement, dated as of June 24, 1998, by and
among Samsonite, CIBC Oppenheimer Corp., BancAmerica Robertson
Stephens, BancBoston Securities Inc. and Goldman Sachs & Co.
(incorporated by reference from the Registration Statement on Form
S-4 (Registration No. 333-61521)).
10.42 Certificate of Designation of the Powers, Preferences and Relative,
Participating, Option and other Special Rights of 13 7/8% Senior
Redeemable Exchangeable Preferred Stock and Qualifications,
Limitations and Restrictions thereof (incorporated by reference from
the Registration Statement on Form S-4 (Registration No. 333-61519).
10.43 Certificate of Correction to the Certificate of Designation of the
Powers, Preferences and Relative, Participating, Option and other
Special Rights of 13 7/8% Senior Redeemable Exchangeable Preferred
Stock and Qualification, Limitations and Restrictions thereof
(incorporated by reference from the Registration Statement on Form
S-4 (Registration No. 333-61519).
10.44 Registration Rights Agreement, in respect of the 13 7/8% Senior
Redeemable Exchangeable Preferred Stock, dated as of June 24, 1998,
between Samsonite and CIBC Oppenheimer Corp (incorporated by
reference from Samsonite's Quarterly Report on Form 10-Q for the
three months ended July 31, 1998 (File No. 0-23214)).
10.45 Agreement, made as of June 11, 1998, between the Company and Luc Van
Nevel (incorporated by reference from the Registration Statement on
Form S-4 (Registration No. 333-61521)).
10.46 Agreement, made as of June 11, 1998, between the Company and Thomas
R. Sandler (incorporated by reference from the Registration
Statement on Form S-4 (Registration No. 333-91521)).
10.47 Warrant Agreement, dated as of June 24, 1998, between the Company
and BankBoston, N.A. (incorporated by reference from Samsonite's
Quarterly Report on Form 10-Q for the three months ended July 31,
1998 (File. No 0-23214)).
10.48 Common Stock Registration Rights Agreement, dated as of June 24,
1998, between the Company and CIBC Oppenheimer Corp. (incorporated
by reference from Samsonite's Quarterly Report on Form 10-Q for the
three months ended July 31, 1998 (File. No 0-23214)).
10.49 First amendment to Warrant Agreement, dated as of August 17, 1998,
between the Company and BankBoston, N.A. (incorporated by reference
from Samsonite's Quarterly Report on Form 10-Q for the three months
ended July 31, 1998 (File. No 0-23214)).
10.50 FY 1999 Stock Option and Incentive Award Plan (incorporated by
reference from the Proxy Statement filed August 6, 1998).
10.51 Investment Agreement between Samsonite and Apollo Investment Fund,
L.P., dated as of April 7, 1999.*
10.52 Certificate of the Designations, Powers, Preferences and Rights or
Series Z Convertible Preferred Stock of Samsonite.*
10.53 Registration Rights Agreement, dated as of April 7, 1999, between
Samsonite and Apollo Investment Fund, L.P.*
21 Subsidiaries of Samsonite (incorporated by reference from
Samsonite's Annual Report on Form 10-K for the fiscal year ended
January 31, 1999 (File No. 0-23214)).
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1).*
23.2 Consent of KPMG LLP.
24 Power of Attorney (included on signature page).
27 Financial Data Schedule.
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
E
xhibit
Number Description
------ -----------
<C> <S>
99.1 Form of Instructions for Use of Samsonite Rights Certificates.
99.2 Form of Notice of Guaranteed Delivery for Subscription Rights.
99.3 Announcement of Rights Offering Distributed to Record and Beneficial
Holders on , 1999.*
99.4 Form of Letter to Stockholders Who Are Record Holders.
99.5 Form of Letter to Stockholders Who Are Beneficial Holders.
99.6 Form of Letter to Clients of Stockholders Who Are Beneficial Holders.
99.7 Form of Nominee Holder Certification Form.
99.8 Substitute Form W-9 for Use with the Rights Offering.
99.9 Form of Beneficial Owner Election Form.
99.10 Form of Subscription and Information Agent Agreement, dated , 1999,
by and between Samsonite
and .*
</TABLE>
- --------
* To be filed by amendment
Item 17. Undertakings
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a directors, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant, will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in Denver, Colorado on May 19, 1999.
SAMSONITE CORPORATION
/s/ Richard H. Wiley
By:
----------------------------------
Name: Richard H. Wiley
Title:Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes by his signature hereon
and appoints Steven Armstrong and Richard H. Wiley his true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement (or any other registration
statement for the same offering that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granted unto said attorney-in-fact and agents, each acting
along, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, each acting along,
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Luc Van Nevel President Chief Executive May 19, 1999
______________________________________ Officer and Director
Luc Van Nevel (principal executive
officer)
______________________________________ Director
Bernard Attal
/s/ Leon D. Black Director May 19, 1999
______________________________________
Leon D. Black
/s/ Robert H. Falk Director May 19, 1999
______________________________________
Robert H. Falk
/s/ Richard R. Nicolosi Director May 19, 1999
______________________________________
Richard R. Nicolosi
______________________________________ Director
Mark H. Rachesky
______________________________________ Director
Robert L. Rosen
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Marc J. Rowan Director May 19, 1999
______________________________________
Marc J. Rowan
/s/ Stephen J. Solarz Director May 19, 1999
______________________________________
Stephen J. Solarz
/s/ Richard H. Wiley Chief Financial Officer May 19, 1999
______________________________________ (principal financial and
</TABLE> Richard H. Wiley accounting officer)
II-11
<PAGE>
Exhibit 23.2
Consent of KPMG LLP
The Board of Directors
Samsonite Corporation:
We consent to the use of our report dated March 22, 1999, except as to Notes 15
and 19, which are as of April 9, 1999, relating to the consolidated balance
sheets of Samsonite Corporation and subsidiaries as of January 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for each of the years in the three-year period
ended January 31, 1999 and the related financial statement schedule included in
the registration statement by reference, and to the reference to our firm under
the heading "Experts" in the prospectus.
KPMG LLP
Denver, Colorado
May 14, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED JANUARY 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 41,932
<SECURITIES> 0
<RECEIVABLES> 85,394
<ALLOWANCES> 7,065
<INVENTORY> 187,567
<CURRENT-ASSETS> 336,497
<PP&E> 225,378
<DEPRECIATION> 75,737
<TOTAL-ASSETS> 621,435
<CURRENT-LIABILITIES> 162,248
<BONDS> 496,173
178,329
0
<COMMON> 210
<OTHER-SE> (295,656)
<TOTAL-LIABILITY-AND-EQUITY> 621,435
<SALES> 697,421
<TOTAL-REVENUES> 697,421
<CGS> 413,124
<TOTAL-COSTS> 413,124
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 396
<INTEREST-EXPENSE> 39,954
<INCOME-PRETAX> (54,678)
<INCOME-TAX> 26,800
<INCOME-CONTINUING> (82,318)
<DISCONTINUED> 0
<EXTRAORDINARY> (6,460)
<CHANGES> 0
<NET-INCOME> (88,778)<F1>
<EPS-PRIMARY> (7.24)
<EPS-DILUTED> (7.24)
<FN>
<F1>NET INCOME (LOSS) IS SHOWN BEFORE SENIOR REDEEMABLE PREFERRED STOCK
DIVIDENDS AND ACCRETION OF SENIOR PREFERRED STOCK DISCOUNT OF $15,632.
</FN>
</TABLE>
<PAGE>
Exhibit 99.1
INSTRUCTIONS AS TO USE OF
SAMSONITE CORPORATION
RIGHTS CERTIFICATES
CONSULT THE SUBSCRIPTION AND INFORMATION AGENT, YOUR BANK OR BROKER
AS TO ANY QUESTIONS
The following instructions relate to a rights offering (the "Rights
Offering") by Samsonite Corporation, a Delaware corporation (the "Samsonite"),
to the holders of record ("Recordholders") of its Common Stock, par value $.01
per share (the "Common Stock"), as described in Samsonite's Prospectus dated
, 1999 (the "Prospectus"). Recordholders of Common Stock at the close of
business on , 1999 (the "Record Date") are receiving transferable
subscription Rights (the "Rights") to subscribe for and purchase shares of its
Common Stock (the "Underlying Shares"). An aggregate of Underlying Shares
(as defined below) are being offered by the Prospectus. Each Recordholder will
receive Rights for each share of Common Stock owned of record as of the
close of business on the Record Date. The Rights will expire, if not exercised,
at 5:00 p.m., New York City time, on , 1999, unless extended in the sole
discretion of Samsonite (as it may be extended, the "Expiration Date"). After
the Expiration Date, unexercised Rights will be null and void. Samsonite will
not be obligated to honor any purported exercise of Rights received by (the
"Subscription and Information Agent") after 5:00 p.m., New York City time, on
the Expiration Date, regardless of when the documents relating to such exercise
were sent, except pursuant to the Guaranteed Delivery Procedures described
below. Samsonite may extend the Expiration Date by giving oral or written
notice to the Subscription and Information Agent on or before the Expiration
Date, followed by a press release no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. The
Rights will be evidenced by transferable Rights certificates (the "Rights
Certificates").
Each Right allows the holder thereof to subscribe (the "Basic Subscription
Privilege") at the cash price of $ per share (the "Subscription Price") for
one share of Common Stock. In addition, Rights holders which exercise their
Basic Subscription Privilege in full will be eligible to subscribe (the "Over-
Subscription Privilege") at the same cash price of $ per share for shares of
Common Stock that are not otherwise purchased pursuant to the exercise of
Rights (the "Excess Shares"), subject to availability and proration as
described below. Shares of Common Stock will be available for purchase pursuant
to the Over-Subscription Privilege only to the extent that any Underlying
Shares are not subscribed for pursuant to the Basic Subscription Privilege. The
Excess Shares will be allocated pro rata (subject to the elimination of
fractional shares) among those Rights holders who exercise the Over-
Subscription Privilege, in proportion, not to the number of shares requested
pursuant to the Over-Subscription Privilege, but to the number of shares each
beneficial holder exercising the Over-Subscription Privilege has purchased
pursuant to the Basic Subscription Privilege; provided, however, that if such
pro rata allocation results in any Rights holder being allocated a greater
number of Excess Shares than such holder subscribed for pursuant to the
exercise of such holder's Over-Subscription Privilege, then such holder will be
allocated only such number of Excess Shares as such holder subscribed for and
the remaining Excess Shares will be allocated among all other holders
exercising the Over-Subscription Privilege on the same pro rata basis outlined
above. Such proration will be repeated until all Excess Shares have been
allocated to the full extent of the Over-Subscription Privilege. See "The
Rights Offering--Subscription Privileges" in the Prospectus.
No fractional Rights or cash in lieu thereof will be issued or paid. Instead,
the number of Rights distributed will be rounded to the nearest whole number,
with such adjustments as may be necessary to ensure that if all Rights are
exercised, the gross proceeds to Samsonite from the Rights Offering will equal
$75 million.
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The number of Rights to which you are entitled is printed on the face of your
Rights Certificate. You should indicate your wishes with regard to the
exercise, transfer or sale of your Rights by completing the appropriate form or
forms on your Rights Certificate and returning the certificate to the
Subscription and Information Agent in the envelope provided.
YOUR RIGHTS CERTIFICATES, OR NOTICE OF GUARANTEED DELIVERY, AND SUBSCRIPTION
PRICE PAYMENT, INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE
SUBSCRIPTION AND INFORMATION AGENT, ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE. ONCE A HOLDER OF RIGHTS HAS EXERCISED THE BASIC
SUBSCRIPTION PRIVILEGE OR THE OVER-SUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY
NOT BE REVOKED. RIGHTS NOT EXERCISED PRIOR TO THE EXPIRATION DATE OF THE RIGHTS
OFFERING WILL EXPIRE.
1. Method of Subscription--Exercise of Rights
To exercise Rights, complete Form 1 of your Rights Certificate and send the
properly completed and executed Rights Certificate evidencing such Rights with
any signatures required to be guaranteed so guaranteed, together with payment
in full of the Subscription Price for each Underlying Share subscribed for
pursuant to the Basic Subscription Privilege and the Over-Subscription
Privilege, to the Subscription and Information Agent, on or prior to 5:00 p.m.,
New York City time, on the Expiration Date. Payment of the Subscription Price
will be held in a segregated account to be maintained by the Subscription and
Information Agent. All payments must be made in U.S. dollars for the full
number of Underlying Shares being subscribed for (a) by check or bank draft
drawn upon a U.S. bank or postal or express money order payable to , as
Subscription and Information Agent, or (b) by wire transfer of same-day funds,
to the account maintained by the Subscription and Information Agent for
purposes of accepting subscriptions in the rights offering at ABA No. ,
further credit to , ATTN: , (the "Subscription Account"). Any wire
transfer should clearly indicate the identity of the subscriber who is paying
the Subscription Price by the wire transfer. Payments will be deemed to have
been received by the Subscription and Information Agent only upon (i) clearance
of any uncertified check, (ii) receipt by the Subscription and Information
Agent of any certified check or bank draft drawn upon a U.S. bank or of any
postal or express money order or (iii) receipt of collected funds in the
Subscription Account designated above. If paying by uncertified personal check,
please note that the funds paid thereby may take at least five business days to
clear. Accordingly, Rights holders who wish to pay the Subscription Price by
means of uncertified personal check are urged to make payment sufficiently in
advance of the Expiration Date to ensure that such payment is received and
clears by such date and are urged to consider payment by means of certified or
cashier's check, money order or wire transfer of funds.
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The Rights Certificate and payment of the Subscription Price, or, if
applicable, Notices of Guaranteed Delivery (as defined below) must be delivered
to the Subscription and Information Agent by one of the methods described
below:
By Mail: By Hand: By Overnight Courier:
Telephone Number for Confirmation:
Telephone Number for Information:
Delivery to an address other than those above does not constitute valid
delivery.
You may also transfer your Rights Certificate to your bank or broker in
accordance with the procedures specified in Section 3(a) below, by making
arrangements for the delivery of funds on your behalf and requesting such bank
or broker to exercise the Rights Certificate on your behalf. Alternatively, you
may cause a written guarantee substantially in the form of Exhibit A to these
instructions (the "Notice of Guaranteed Delivery"), from a member firm of a
registered national securities exchange or a member of the National Association
of Securities Dealers, Inc., or from a commercial bank or trust company having
an office or correspondent in the United States or from a bank, stockbroker,
savings and loan association or credit union with membership in an approved
signature guarantee medallion program, pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934, as amended, (each, an "Eligible Institution"),
to be received by the Subscription and Information Agent on or prior to the
Expiration Date together with payment in full of the applicable Subscription
Price. Such Notice of Guaranteed Delivery must state your name, the number of
Rights represented by the Rights Certificate or Rights Certificates held by
you, the number of Underlying Shares being subscribed for pursuant to the Basic
Subscription Privilege and the number of Underlying Shares, if any, being
subscribed for pursuant to the Over-Subscription Privilege, and will guarantee
the delivery to the Subscription and Information Agent of any properly
completed and executed Rights Certificate or Rights Certificates evidencing
such Rights within three (3) business days following the date of the Notice of
Guaranteed Delivery. If this procedure is followed, the properly completed
Rights Certificate or Rights Certificates evidencing the Rights being
exercised, with any signatures required to be guaranteed so guaranteed, must be
received by the Subscription and Information Agent within three (3) business
days following the date of the Notice of Guaranteed Delivery. The Notice of
Guaranteed Delivery may be delivered to the Subscription and Information Agent
in the same manner as Rights Certificates at the address set forth above, or
may be transmitted to the Subscription and Information Agent by facsimile
transmission (Telecopy No.: or ). Additional copies of the Notice of
Guaranteed Delivery may be obtained upon request from the Subscription and
Information Agent at the address, or by calling the telephone number, set forth
above.
Banks, brokers and other nominee holders of Rights who exercise the Basic
Subscription Privilege and the Over-Subscription Privilege on behalf of
beneficial owners of Rights will be required to certify to the Subscription and
Information Agent and Samsonite, in connection with the exercise of the Over-
Subscription Privilege, as to the aggregate number of Rights that have been
exercised, and the number of Underlying Shares that are being subscribed for
pursuant to the Over-Subscription Privilege, by each beneficial owner of Rights
(including such nominee itself) on whose behalf such nominee holder is acting.
If more Excess Shares are subscribed for pursuant to the Over-Subscription
Privilege than are available for sale, Excess Shares will be allocated, as
described above, among beneficial owners exercising the Over-Subscription
Privilege in proportion to such owners' exercise of Rights pursuant to the
Basic Subscription Privilege.
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If you exercise less than all of the Rights evidenced by your Rights
Certificate by so indicating in Form 1 of your Rights Certificate, the
Subscription and Information Agent either (i) will issue to you a new Rights
Certificate evidencing the unexercised Rights or (ii) if you so indicate in
Form 2 of your Rights Certificate, will transfer the unexercised Rights in
accordance with your instructions. A new Rights Certificate will be issued to
you or transferred according to your instructions upon the partial exercise of
Rights only if the Subscription and Information Agent receives a properly
endorsed Rights Certificate no later than the fourth business day prior to the
Expiration Date. After such time and date no new Rights Certificates will be
issued. Accordingly, after such time and date if you exercise less than all of
your Rights you will lose the power to exercise your remaining Rights. A new
Rights Certificate will be sent by first class mail to you if the Subscription
and Information Agent receives your properly completed Rights Certificate by
11:00 a.m., New York City time, on , 1999. Unless you make arrangements
with the Subscription and Information Agent, a new Rights Certificate received
by the Subscription and Information Agent after 11:00 a.m., New York City time,
on , 1999 will be held for pick-up at the Subscription and Information
Agent's hand delivery address provided above. All deliveries of newly issued
Rights Certificates will be at your own risk.
If the aggregate Subscription Price paid by you is insufficient to purchase
the number of Underlying Shares subscribed for, or if no number of Underlying
Shares to be purchased is specified, then you will be deemed to have exercised
the Basic Subscription Privilege to purchase Underlying Shares to the full
extent of the payment tendered. If the aggregate Subscription Price paid by you
exceeds the amount necessary to purchase the number of Underlying Shares for
which you have indicated an intention to subscribe (such excess being the
"Subscription Excess"), then you will be deemed to have exercised the Over-
Subscription Privilege to the full extent of the excess payment tendered, to
purchase, to the extent available, that number of whole shares of Common Stock
equal to the quotient obtained by dividing the Subscription Excess by the
Subscription Price. Any remaining amount shall be returned to you by mail
without interest or deduction as soon as practicable after the Expiration Date
and after all prorations and adjustments contemplated by the terms of the
rights offering have been effected.
2. Issuance of Common Stock.
The following deliveries and payments will be made to the address shown on
the face of your Rights Certificate unless you provide instructions to the
contrary in Form 3 of your Rights Certificate.
(a) Basic Subscription Privilege. As soon as practicable after the Expiration
Date and the valid exercise of Rights, the Subscription and Information Agent
will mail to each exercising Rights holder certificates representing shares of
Common Stock purchased pursuant to the Basic Subscription Privilege.
(b) Over-Subscription Privilege. As soon as practicable after the Expiration
Date and after all prorations and adjustments contemplated by the terms of the
rights offering have been effected, the Subscription and Information Agent will
mail to each Rights holder who validly exercises the Over-Subscription
Privilege certificates representing the number of shares of Common Stock, if
any, allocated to such Rights holder pursuant to the Over-Subscription
Privilege. See "The Rights Offering--Subscription Privileges--Over-Subscription
Privilege" in the Prospectus.
(c) Excess Cash Payments. As soon as practicable after the Expiration Date
and after all prorations and adjustments contemplated by the terms of the
rights offering have been effected, the Subscription and Information Agent will
mail to each Rights holder who exercises the Over-Subscription Privilege any
excess amount, without interest or deduction, received in payment of the
Subscription Price for Excess Shares that are subscribed for by such Rights
holder but not allocated to such Rights holder pursuant to the Over-
Subscription Privilege.
3. Sale or Transfer of Rights.
(a) Sale of Rights Through a Bank or Broker. To sell all Rights evidenced by
a Rights Certificate through your bank or broker, so indicate on Form 2 and
deliver your properly completed and executed Rights Certificate to your bank or
broker. Your Rights Certificate should be delivered to your bank or broker
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in ample time for it to be exercised. If Form 2 is completed without
designating a transferee, the Subscription and Information Agent may
thereafter treat the bearer of the Rights Certificate as the absolute owner of
all of the Rights evidenced by such Rights Certificate for all purposes, and
the Subscription and Information Agent shall not be affected by any notice to
the contrary. Because your bank or broker cannot issue Rights Certificates, if
you wish to sell less than all of the Rights evidenced by a Rights
Certificate, either you or your bank or broker must instruct the Subscription
and Information Agent as to the action to be taken with respect to the Rights
not sold, or you or your bank or broker must first have your Rights
Certificate divided into Rights Certificates of appropriate denominations by
following the instructions in Section 4 of these instructions. The Rights
Certificates evidencing the number of Rights you intend to sell can then be
transferred by your bank or broker in accordance with the instructions in this
Section 3(a).
(b) Transfer of Rights to a Designated Transferee. To transfer all of your
Rights to a transferee other than a bank or broker, you must complete Form 2
in its entirety, execute the Rights Certificate and have your signature
guaranteed by an Eligible Institution. A Rights Certificate that has been
properly transferred in its entirety may be exercised by a new holder without
having a new Rights Certificate issued. In order to exercise, or otherwise
take action with respect to, such a transferred Rights Certificate, the new
holder should deliver the Rights Certificate, together with payment of the
applicable Subscription Price (with respect to the exercise of both the Basic
Subscription Privilege and the Over-Subscription Privilege) and complete
separate instructions signed by the new holder, to the Subscription and
Information Agent in ample time to permit the Subscription and Information
Agent to take the desired action. Because only the Subscription and
Information Agent can issue Rights Certificates, if you wish to transfer less
than all of the Rights evidenced by your Rights Certificate to a designated
transferee, you must instruct the Subscription and Information Agent as to the
action to be taken with respect to the Rights not sold or transferred, or you
must divide your Rights Certificate into Rights Certificates of appropriate
smaller denominations by following the instructions in Section 4 below. The
Rights Certificate evidencing the number of Rights you intend to transfer can
then be transferred by following the instructions in this Section 3(b).
Rights holders wishing to transfer a portion of their Rights (but not
fractional Rights) should allow a sufficient amount of time prior to the
Expiration Date for (i) the transfer instructions to be received and processed
by the Subscription and Information Agent, (ii) a new Rights Certificate to be
issued and transmitted to the transferee or transferees with respect to
transferred Rights and to the transferor with respect to retained Rights, if
any, and (iii) the Rights evidenced by such new Rights Certificates to be
exercised or sold by the recipients thereof. Neither Samsonite nor the
Subscription and Information Agent shall have any liability to a transferee or
transferor of Rights if Rights Certificates are not received in time for
exercise or sale prior to the Expiration Date.
Samsonite will pay all fees and expenses of the Subscription and Information
Agent and has also agreed to indemnify the Subscription and Information Agent
from certain liabilities which it may incur in connection with the rights
offering. All commissions, fees and other expenses (including brokerage
commissions and transfer taxes) incurred in connection with the purchase, sale
or exercise of Rights will be for the account of the transferor of the Rights,
and none of such commissions, fees or expenses will be paid by Samsonite or
the Subscription and Information Agent.
4. Division of Rights Certificate Into Smaller Denominations.
To have a Rights Certificate divided into smaller denominations, send your
Rights Certificate, together with complete separate instructions (including
specification of the denominations into which you wish your Rights to be
divided) signed by you, to the Subscription and Information Agent, allowing a
sufficient amount of time for new Rights Certificates to be issued and
returned so that they can be used prior to the Expiration Date. Alternatively,
you may ask a bank or broker to effect such actions on your behalf. Your
signature must be guaranteed by an Eligible Institution if any of the new
Rights Certificates are to be issued in a name other than
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that in which the old Rights Certificate was issued. Rights Certificates may
not be divided into fractional Rights, and any instruction to do so will be
rejected. As a result of delays in the mail, the time of the transmittal, the
necessary processing time and other factors, you or your transferee may not
receive such new Rights Certificates in time to enable the Rights holder to
complete a sale or exercise by the Expiration Date. Neither Samsonite nor the
Subscription and Information Agent will be liable to either a transferor or
transferee for any such delays.
5. Execution.
(a) Execution by Registered Holder. The signature on the Rights Certificate
must correspond with the name of the registered holder exactly as it appears on
the face of the Rights Certificate without any alteration or change whatsoever.
Persons who sign the Rights Certificate in a representative or other fiduciary
capacity must indicate their capacity when signing and, unless waived by the
Subscription and Information Agent in its sole and absolute discretion, must
present to the Subscription and Information Agent satisfactory evidence of
their authority to so act.
(b) Execution by Person Other than Registered Holder. If the Rights
Certificate is executed by a person other than the holder named on the face of
the Rights Certificate, proper evidence of authority of the person executing
the Rights Certificate must accompany the same unless, for good cause, the
Subscription and Information Agent dispenses with proof of authority.
(c) Signature Guarantees. Your signature must be guaranteed by an Eligible
Institution if (i) you wish to transfer your Rights, as specified in Section
3(b) above, to a transferee other than a bank or broker, (ii) if you wish a new
Rights Certificate to be issued in a name other than that in which the old
Rights Certificate was issued, as specified in Section 4 above, or (iii) if you
specify special payment or delivery instructions pursuant to Form 3.
6. Method of Delivery.
The method of delivery of Rights Certificates and payment of the Subscription
Price to the Subscription and Information Agent will be at the election and
risk of the Rights holder, but, if sent by mail, it is recommended that such
certificates and payments be sent by registered mail, properly insured, with
return receipt requested, and that a sufficient number of days be allowed to
ensure delivery to the Subscription and Information Agent and the clearance of
payment prior to 5:00 p.m., New York City time, on the Expiration Date. Because
uncertified personal checks may take at least five business days to clear, you
are strongly urged to pay, or arrange for payment, by means of certified or
cashier's check, money order or wire transfer of funds.
7. Special Provisions Relating to the Delivery of Rights Through the Depository
Trust Company.
In the case of Rights that are held of record through the Depository Trust
Company (the "Book-Entry Transfer Facility"), exercises of the Basic
Subscription Privilege and the Over-Subscription Privilege may be effected by
instructing the Book-Entry Transfer Facility to transfer Rights from the Book-
Entry Transfer Facility account of such holder to the Book-Entry Transfer
Facility account of the Subscription and Information Agent, together with
certification as to the aggregate number of Rights exercised and the number of
Underlying Shares thereby subscribed for pursuant to the Basic Subscription
Privilege and the Over-Subscription Privilege by each beneficial owner of
Rights on whose behalf such nominee is acting, and payment of the Subscription
Price for each share of Common Stock subscribed for pursuant to the Basic
Subscription Privilege and the Over-Subscription Privilege.
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8. Substitute Form W-9.
Each Rights holder who elects to exercise Rights should provide the
Subscription and Information Agent with a correct Taxpayer Identification
Number (TIN) on Substitute Form W-9, a copy of which is included as Exhibit B
hereto. Additional copies of Substitute Form W-9 may be obtained upon request
from the Subscription and Information Agent at the address or by calling the
telephone number indicated above. Failure to provide the information on the
form may subject such holder to a $50.00 penalty for each such failure and to
31% federal income tax backup withholding with respect to dividends that may be
paid by Samsonite on shares of Common Stock purchased upon the exercise of
Rights (for those holders exercising Rights).
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Exhibit A
Notice of Guaranteed Delivery
for
Rights Certificates
Issued by
SAMSONITE CORPORATION
This form, or one substantially equivalent hereto, must be used to exercise
Rights pursuant to the Rights Offering described in the Prospectus dated ,
1999 (the "Prospectus") of Samsonite Corporation, a Delaware corporation
("Samsonite"), if a holder of Rights cannot deliver the certificate(s)
evidencing the Rights (the "Rights Certificate(s)"), to the Subscription and
Information Agent listed below (the "Subscription and Information Agent") at or
prior to 5:00 p.m., New York City time, on , 1999, unless such time is
extended by Samsonite as described in the Prospectus (as it may be extended,
the "Expiration Date"). Such form must be delivered by hand or sent by
telegram, facsimile transmission, first class mail or overnight courier to the
Subscription and Information Agent, and must be received by the Subscription
and Information Agent on or prior to the Expiration Date. See "The Rights
Offering--Method of Subscription--Exercise of Rights" in the Prospectus.
Payment of the Subscription Price of $ per share for each share of
Samsonite's Common Stock subscribed for upon exercise of such Rights must be
received by the Subscription and Information Agent in the manner specified in
the Prospectus at or prior to 5:00 p.m., New York City time, on the Expiration
Date even if the Rights Certificate(s) evidencing such Rights is (are) being
delivered pursuant to the Guaranteed Delivery Procedures thereof. See "The
Rights Offering--Method of Subscription--Exercise of Rights" in the Prospectus.
The Subscription and Information Agent is:
If by Mail or Telegram: If by Hand: If by Overnight Courier:
Confirm by Telephone: Facsimile Transmission Telephone Number for
Information:
or
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
A-1
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Ladies and Gentlemen:
The undersigned hereby represents that the undersigned is the holder of
Rights Certificate(s) representing Rights and that such Rights
Certificate(s) cannot be delivered to the Subscription and Information Agent
at or before 5:00 p.m., New York City time, on the Expiration Date. Upon the
terms and subject to the conditions set forth in the Prospectus, receipt of
which is hereby acknowledged, the undersigned hereby elects to exercise (i)
the Basic Subscription Privilege to subscribe for share(s) of Common Stock
with respect to each of Rights represented by such Rights Certificate(s)
and (ii) the Over-Subscription Privilege relating to such Rights, to the
extent that shares of Common Stock that are not otherwise purchased pursuant
to the exercise of Rights (the "Excess Shares") are available therefor, for an
aggregate of up to Excess Shares, subject to availability and proration.
The undersigned understands that payment of the Subscription Price of $ per
share for each share of Common Stock subscribed for pursuant to the Basic
Subscription Privilege and Over-Subscription Privilege must be received by the
Subscription and Information Agent at or before 5:00 p.m., New York City time,
on the Expiration Date and represents that such payment, in the aggregate
amount of $ either (check appropriate box):
[_]is being delivered to the Subscription and Information Agent herewith
or
[_]has been delivered separately to the Subscription and Information
Agent
in the manner set forth below (check appropriate box and complete information
relating thereto):
[_]Wire transfer of funds
--Name of transferor institution:
----------------------------------------------------
--Date of transfer:
----------------------------------------------------
--Confirmation number (if available):
----------------------------------------------------
[_]Uncertified check (Payment by uncertified check will not be deemed to
have been received by the Subscription and Information Agent until such
check has cleared. Holders paying by such means are urged to make
payment sufficiently in advance of the Expiration Date to ensure that
such payment clears by such date.)
[_]Certified check
[_]Bank draft (cashier's check)
[_]Money order
--Name of maker:
----------------------------------------------------
--Date of check, draft or money order:
----------------------------------------------------
--Check, draft or money order number:
----------------------------------------------------
--Bank on which check is drawn or issuer of money order:
----------------------------------------------------
Signature(s) ________________________ Address _____________________________
- ------------------------------------- -------------------------------------
Name(s) _______________________________________________________________________
(Please type or print)
Area code and Tel. no(s) ____________ Rights Certificate No(s). (if
available) __________________________
A-2
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GUARANTEE OF DELIVERY
(Not To Be Used For Rights Certificate Signature Guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United States,
or a bank, stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program, pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, guarantees
that the undersigned will deliver to the Subscription and Information Agent the
certificates representing the Rights being exercised hereby, with any required
signature guarantee and any other required documents, all within three (3)
business days after the date hereof.
- ------------------------------------- Dated:
--------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
(Address) (Name of Firm)
- ------------------------------------- -------------------------------------
(Area Code and Telephone Number) (Authorized Signature)
The institution which completes this form must communicate the guarantee to
the Subscription and Information Agent and must deliver the Rights
Certificate(s) to the Subscription and Information Agent within the time period
shown in this prospectus. Failure to do so could result in a financial loss to
such institution.
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EXHIBIT B
IMPORTANT TAX INFORMATION
This tax information is provided in connection with the Prospectus of
Samsonite Corporation dated , 1999 (the "Prospectus"). Capitalized terms
used in this prospectus but not otherwise defined in this prospectus shall have
the meanings assigned to such terms in the Prospectus.
Under the United States federal income tax laws, dividend payments that may
be made by Samsonite on shares of Common Stock issued upon the exercise of
Rights may be subject to backup withholding. Generally such payments will be
subject to backup withholding unless the holder (i) is exempt from backup
withholding or (ii) furnishes the payer with its correct taxpayer
identification number (TIN) and certifies that the number provided is correct
and further certifies that such holder is not subject to backup withholding as
a result of a failure to report all interest or dividend income. Each Rights
holder that exercises Rights and wants to avoid backup withholding should
provide the Subscription and Information Agent, as Samsonite's agent in respect
of exercised Rights (the "requester"), with such holder's correct taxpayer
identification number (or with a certification that such holder is awaiting a
taxpayer identification number) and with a certification that such holder is
not subject to backup withholding by completing Substitute Form W-9 below.
Certain holders (including, among others, all corporations and certain
foreign individuals) are exempt from these backup withholding and reporting
requirements. In general, in order for a foreign individual to qualify as an
exempt recipient, that holder must submit a statement, signed under the
penalties of perjury, attesting to that individual's exempt status. Such
statements may be obtained from the Subscription and Information Agent. Exempt
holders, while not required to file Substitute Form W-9, should file Substitute
Form W-9 to avoid possible erroneous backup withholding. See the enclosed
Guidelines for Request for Taxpayer Identification Number and Certification on
Substitute Form W-9 for additional instructions.
If backup withholding applies, Samsonite or the Subscription and Information
Agent, as the case may be, will be required to withhold 31% of any such
dividend payments made to a holder of Common Stock. Backup withholding is not
an additional tax. Rather, the amount of backup withholding is treated, like
any other withheld amounts, as an advance payment of the person's tax
liability, and the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
Purpose of Substitute Form W-9
To prevent backup withholding on dividend payments that may be made on shares
of Common Stock issued upon the exercise of Rights, a Rights holder that
exercises Rights is required to notify the Subscription and Information Agent
of such holder's correct taxpayer identification number by completing
Substitute Form W-9 below and certifying on Substitute Form W-9 that the
taxpayer identification number provided is correct (or that such holder is
awaiting a taxpayer identification number). In addition, the holder is required
to certify on Substitute Form W-9 that it is (i) exempt from backup
withholding, or (ii) not subject to backup withholding due to prior under
reporting of interest or dividend income, or (iii) the Internal Revenue Service
(the "IRS") has notified it that it is no longer subject to backup withholding.
What Number to Give the Subscription and Information Agent
A Rights holder that exercises Rights is required to give the Subscription
and Information Agent the taxpayer identification number of the record owner of
the shares of Common Stock issued upon the exercise of the Rights. If such
record owner is an individual, the taxpayer identification number is the
taxpayer's social security number. For most other entities, the taxpayer
identification number is the employer identification number. If the shares of
Common Stock issued upon the exercise of the Rights are in more than one name
or are not in the name of the actual owner, consult the enclosed Guidelines for
Request for Taxpayer Identification Number and Certification on Substitute Form
W-9 for additional guidelines on what number to report. If the Subscription and
Information Agent is not provided with the correct taxpayer identification
number in connection with such payments, the holder may be subject to a $50.00
penalty imposed by the IRS.
B-1
<PAGE>
REQUESTER'S NAME:
Give Form to the Requester. Do NOT send to the IRS.
- -------------------------------------------------------------------------------
Name (If a joint account or you changed your name, see enclosed Guidelines.)
- -------------------------------------------------------------------------------
Business name, if different from above.
- -------------------------------------------------------------------------------
Check appropriate box: [_] Individual/Sole Proprietor [_] Corporation [_]
Partnership [_] Other
- -------------------------------------------------------------------------------
Address (number, street, and apt. or suite no.)
- -------------------------------------------------------------------------------
City, state, and ZIP code
- -------------------------------------------------------------------------------
Social Security Number
Part I--TAXPAYER
IDENTIFICATION NUMBER
(TIN).
----------------------
SUBSTITUTE
Form W-9
Department of Employer Identification
the Treasury Enter your TIN in the Number
Internal appropriate box. For most ----------------------
Revenue individuals, this is your Note: If the account
Service social security number is in more than one
(SSN). For most other name, see the chart
entities, it is your in the enclosed
employer identification Guidelines to
number (EIN). If you do not determine what number
have a number, see How to to give.
Get a TIN in the enclosed
Guidelines.
Payer's Request for Taxpayer Identification Number (TIN)
Part II--For Payees Exempt From Backup Withholding
(See the enclosed Guidelines)
--------------------------------------------------------
--------------------------------------------------------
Part III--Certification
Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct
taxpayer identification number (or I am waiting for a
number to be issued to me), and
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding; or (b) I
have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding
as a result of a failure to report all interest or
dividends; or (c) the IRS has notified me that I am
no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because you
have failed to report all interest and dividends on
your tax return. However, if after being notified by
the IRS that you were subject to backup withholding
you received another notification from the IRS that
you are no longer subject to backup withholding, do
not cross out item (2).
The Internal Revenue Service does not require your
consent to any provision of this document other than
the certifications required to avoid backup
withholding.
SIGNATURE ____________________________ DATE ___ , 1998
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU. PLEASE REVIEW ENCLOSED GUIDELINES FOR REQUEST
FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
B-2
<PAGE>
GUIDELINES FOR REQUEST FOR TAXPAYER IDENTIFICATION
NUMBER AND CERTIFICATION ON SUBSTITUTE FORM W-9
What Name and Number to Give the Requester
Name
If you are an individual, you must generally enter the name shown on your
Social Security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security
Administration of the name change, enter your first name, the last name shown
on your Social Security card, and your new last name. If the account is in
joint names, list first and then circle the name of the person or entity whose
number you enter in Part I of the form.
Sole Proprietor--You must enter your individual name as shown on your Social
Security card. You may enter your business, trade or "doing business as" name
on the business name line.
Other Entities--Enter the business name as shown on required federal income
tax documents. This name should match the name shown on the charter or other
legal document creating the entity. You may enter any business, trade or
"doing business as" name on the business name line.
Taxpayer Identification Number (TIN)
You must enter your taxpayer identification number in the appropriate box.
If you are a resident alien and you do not have and are not eligible to get a
Social Security number, your taxpayer identification number is your IRS
individual taxpayer identification number (ITIN). Enter it in the Social
Security number box. If you do not have an individual taxpayer identification
number, see How to Get a TIN below. If you are a sole proprietor and you have
an employer identification number, you may enter either your Social Security
number or employer identification number. However, using your employer
identification number may result in unnecessary notices to the requester.
Social Security numbers (SSN's) have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers (EIN's) have nine digits
separated by only one hyphen: i.e. 00-0000000.
The table below will help determine the number to give the requester.
- -------------------------------------- --------------------------------------
<TABLE>
<CAPTION>
Give Name and
For this type of account: SSN of:
- ------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-
savings trust (grantor is trustee(1)
also trustee)
b. The so-called trust account The actual
that is not a legal or owner(1)
valid trust under state law
5. Sole proprietorship The owner(3)
6. A valid trust, estate, or Legal entity(4)
pension trust
</TABLE>
<TABLE>
<CAPTION>
Give Name and
For this type of account: SSN of:
------
<S> <C>
7. Corporation The corporation
8. Association, club, The organization
religious, charitable,
educational or other tax-
exempt organization
9. Partnership The partnership
10. A broker or registered The broker or
nominee nominee
11. Account with the The public
Department of Agriculture entity
in the name of a public
entity (such as a state
or local government,
school district, or
prison) that receives
agricultural program
paymentsments
------
</TABLE>
- --------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a Social Security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your Social Security
number or employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
Note: If no name is circled when more than one name is listed, the number
will be considered to be that of the first name listed.
B-3
<PAGE>
GUIDELINES FOR REQUEST FOR TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
How to Get a TIN
If you do not have a taxpayer identification number, apply for one
immediately. To apply for a Social Security number, get Form SS-5, Application
for a Social Security Number Card, from your local Social Security
Administration office. Get Form W-7 to apply for an individual taxpayer
identification number or Form SS-4, Application for Employer Identification
Number, to apply for an employer identification number. You can get Forms W-7
and SS-4 from the IRS.
If you do not have a taxpayer identification number, write "Applied For" in
the space for the taxpayer identification number, sign and date the form, and
give it to the requester. For interest and dividend payments and certain
payments made with respect to readily tradable instruments, you will generally
have 60 days to get a taxpayer identification number and give it to the
requester. Other payments are subject to backup withholding.
Note: Writing "Applied For" means that you have already applied for a
taxpayer identification number or that you intend to apply for one soon.
Exemption From Backup Withholding
Payees Exempt from Backup Withholding
Individuals (including sole proprietors) are NOT exempt from backup
withholding. For interest and dividends, the following payees are exempt from
backup withholding:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), an individual retirement
account (IRA), or a custodial account under section 403(b)(7) of the Code
if the account satisfies the requirements of section 401(f)(2) of the Code.
. The United States or any agency or instrumentalities.
. A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
. A foreign government or any of its political subdivisions, agencies or
instrumentalities.
. An international organization or any of its agencies or instrumentalities.
. A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a) of the Code.
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
. A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
. A trust exempt from tax under section 664 of the Code or described in
section 4947 of the Code.
Payments Exempt From Backup Withholding
Dividends and patronage dividends that generally are exempt from backup
withholding include:
. Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made by ESOP pursuant to section 404(k) of the Code.
Interest payments that are generally exempt from backup withholding include:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044,
6045, 6049, 6050A and 6050N of the Code, and their regulations.
If you are exempt from backup withholding, you should still complete and
file Substitute Form W-9 to avoid possible erroneous backup withholding. Enter
your correct taxpayer identification number in Part I, write "Exempt" in Part
II, and sign and date the form and return it to the requester.
If you are a nonresident alien or a foreign entity not subject to backup
withholding, give the requester a completed Form W-8, Certificate of Foreign
Status.
Privacy Act Notice
Section 6109 of the Code requires you to give your correct taxpayer
identification number to persons who must file information returns with the
IRS to report interest, dividends and certain other income paid to you. The
IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. The IRS may also provide this information to the
Department of Justice for civil and criminal litigation and to cities, states,
and the District of Columbia to carry out their tax laws. You must provide
your taxpayer identification number whether or not you are required to file a
tax return. Payers must generally withhold 31% of taxable interest, dividends
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
Penalties
(1) Failure to Furnish Taxpayer Identification Number. If you fail to furnish
your correct taxpayer identification number to a requester, you are subject to
a penalty of $50.00 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. If you
make a false statement with no reasonable basis which results in no backup
withholding, you are subject to a $500.00 penalty.
(3) Criminal Penalty for Falsifying Information. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
B-4
<PAGE>
Exhibit 99.2
Notice of Guaranteed Delivery
for
Rights Certificates
Issued by
SAMSONITE CORPORATION
This form, or one substantially equivalent hereto, must be used to exercise
Rights pursuant to the Rights Offering described in the Prospectus dated ,
1999 (the "Prospectus") of Samsonite Corporation, a Delaware corporation
("Samsonite"), if a holder of Rights cannot deliver the certificate(s)
evidencing the Rights (the "Rights Certificate(s)"), to the Subscription and
Information Agent listed below (the "Subscription and Information Agent") at or
prior to 5:00 p.m., New York City time, on , 1999, unless such time is
extended by Samsonite as described in the Prospectus (as it may be extended,
the "Expiration Date"). Such form must be delivered by hand or sent by
telegram, facsimile transmission, first class mail or overnight courier to the
Subscription and Information Agent, and must be received by the Subscription
and Information Agent on or prior to the Expiration Date. See "The Rights
Offering--Method of Subscription--Exercise of Rights" in the Prospectus.
Payment of the Subscription Price of $ per share for each share of
Samsonite's Common Stock subscribed for upon exercise of such Rights must be
received by the Subscription and Information Agent in the manner specified in
the Prospectus at or prior to 5:00 p.m., New York City time, on the Expiration
Date even if the Rights Certificate(s) evidencing such Rights is (are) being
delivered pursuant to the Guaranteed Delivery Procedures thereof. See "The
Rights Offering--Method of Subscription--Exercise of Rights" in the Prospectus.
The Subscription and Information Agent is:
If by Mail or Telegram: If by Hand: If by Overnight Courier:
Confirm by Telephone: Facsimile Transmission: Telephone Number for
Information:
or
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby represents that the undersigned is the holder of
Rights Certificate(s) representing Rights and that such Rights
Certificate(s) cannot be delivered to the Subscription and Information Agent
at or before 5:00 p.m., New York City time, on the Expiration Date. Upon the
terms and subject to the conditions set forth in the Prospectus, receipt of
which is hereby acknowledged, the undersigned hereby elects to exercise (i)
the Basic Subscription Privilege to subscribe for share(s) of Common Stock
with respect to each of Rights represented by such Rights Certificate(s)
and (ii) the Over-Subscription Privilege relating to such Rights, to the
extent that shares of Common Stock that are not otherwise purchased pursuant
to the exercise of Rights (the "Excess Shares") are available therefor, for an
aggregate of up to Excess Shares, subject to availability and proration.
The undersigned understands that payment of the Subscription Price of $ per
share for each share of Common Stock subscribed for pursuant to the Basic
Subscription Privilege and Over-Subscription Privilege must be received by the
Subscription and Information Agent at or before 5:00 p.m., New York City time,
on the Expiration Date and represents that such payment, in the aggregate
amount of $ either (check appropriate box):
[_]is being delivered to the Subscription and Information Agent herewith
or
[_]has been delivered separately to the Subscription and Information
Agent
in the manner set forth below (check appropriate box and complete information
relating thereto):
[_]Wire transfer of funds
--Name of transferor institution:
----------------------------------------------------
--Date of transfer:
----------------------------------------------------
--Confirmation number (if available):
----------------------------------------------------
[_]Uncertified check (Payment by uncertified check will not be deemed to
have been received by the Subscription and Information Agent until such
check has cleared. Holders paying by such means are urged to make
payment sufficiently in advance of the Expiration Date to ensure that
such payment clears by such date.)
[_]Certified check
[_]Bank draft (cashier's check)
[_]Money order
--Name of maker:
----------------------------------------------------
--Date of check, draft or money order:
----------------------------------------------------
--Check, draft or money order number:
----------------------------------------------------
--Bank on which check is drawn or issuer of money order:
----------------------------------------------------
Signature(s) ________________________ Address _____________________________
- ------------------------------------- -------------------------------------
Name(s) _______________________________________________________________________
(Please type or print)
Area code and Tel. no(s) ____________ Rights Certificate No(s). (if
available) __________________________
2
<PAGE>
GUARANTEE OF DELIVERY
(Not To Be Used For Rights Certificate Signature Guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United States,
or a bank, stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program, pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, guarantees
that the undersigned will deliver to the Subscription and Information Agent the
certificates representing the Rights being exercised hereby, with any required
signature guarantee and any other required documents, all within three (3)
business days after the date hereof.
- ------------------------------------- Dated: ______________________________
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
(Address) (Name of Firm)
- ------------------------------------- -------------------------------------
(Area Code and Telephone Number) (Authorized Signature)
The institution which completes this form must communicate the guarantee to
the Subscription and Information Agent and must deliver the Rights
Certificate(s) to the Subscription and Information Agent within the time period
shown in this prospectus. Failure to do so could result in a financial loss to
such institution.
3
<PAGE>
Exhibit 99.4
SAMSONITE CORPORATION
Shares of Common Stock
Offered Pursuant to Rights
Distributed to Stockholders
of Samsonite Corporation
, 1999
Dear Stockholder:
This notice is being distributed by Samsonite Corporation ("Samsonite") to
all holders of record ("Recordholders") of shares of its Common Stock, par
value $.01 per share (the "Common Stock"), at the close of business on ,
1999 (the "Record Date"), in connection with a distribution in a rights
offering (the "Rights Offering") of transferable subscription Rights (the
"Rights") to subscribe for and purchase shares of its Common Stock. The Rights
and Common Stock are described in Samsonite's Prospectus dated , 1999 (the
"Prospectus").
In the Rights Offering, Samsonite is offering an aggregate of shares of
its Common Stock, as described in the Prospectus.
The Rights will expire, if not exercised, at 5:00 p.m., New York City time,
on , 1999, unless extended in the sole discretion of Samsonite (as it may
be extended, the "Expiration Date").
In the Rights Offering, each Recordholder will receive Rights for each
share of Common Stock owned of record as of the close of business on the
Record Date. No fractional Rights or cash in lieu thereof will be issued or
paid. Instead, the number of Rights distributed will be rounded to the nearest
whole number, with such adjustments as may be necessary to ensure that if all
Rights are exercised, the gross proceeds to Samsonite from the Rights Offering
will equal $75 million.
Each Right allows the holder thereof to subscribe (the "Basic Subscription
Privilege") at the cash price of $ per share (the "Subscription Price") for
one share of Common Stock.
In addition, Rights holders which exercise their Basic Subscription Privilege
also will be eligible to subscribe (the "Over-Subscription Privilege") at the
same cash price of $ per share for shares of Common Stock that are offered
but not otherwise purchased in the Rights Offering, subject to availability and
proration.
The Rights will be evidenced by transferable Rights certificates (the "Rights
Certificates") and will be transferable until the close of business on the last
trading day prior to the Expiration Date, at which time they will cease to have
value.
1
<PAGE>
Enclosed are copies of the following documents:
1. Prospectus;
2. Rights Certificate;
3. Instructions as to Use of Samsonite Corporation Rights Certificates
(including a Notice of Guaranteed Delivery for Rights Certificates Issued
by Samsonite Corporation and Guidelines for Request for Taxpayer
Identification Number and Certification on Substitute Form W-9); and
4. A return envelope addressed to , the Subscription and
Information Agent.
Your prompt action is requested. To exercise Rights, you should properly
complete and sign the Rights Certificate (or the Notice of Guaranteed Delivery
if you are following the Guaranteed Delivery Procedures) and forward it, with
payment of the Subscription Price in full for each share of Common Stock
subscribed for pursuant to the Basic Subscription Privilege and Over-
Subscription Privilege, to the Subscription and Information Agent, as indicated
in the Prospectus. The Subscription and Information Agent must receive the
Rights Certificate or Notice of Guaranteed Delivery with payment of the
Subscription Price, including final clearance of any checks, prior to 5:00
p.m., New York City time, on the Expiration Date. A Rights holder cannot revoke
the exercise of its Rights. Rights not exercised prior to the Expiration Date
will expire.
Additional copies of the enclosed materials may be obtained from the
Subscription and Information Agent. The Subscription and Information Agent's
telephone number is .
Very truly yours,
Samsonite Corporation
2
<PAGE>
Exhibit 99.5
SAMSONITE CORPORATION
Shares of Common Stock
Offered Pursuant to Rights
Distributed to Stockholders
of Samsonite Corporation
ToSecurities Dealers, Commercial Banks,
Trust Companies and Other Nominees:
This letter is being distributed to securities dealers, commercial banks,
trust companies and other nominees in connection with the rights offering (the
"Rights Offering") by Samsonite Corporation ("Samsonite") of shares of its
Common Stock (as such term is defined below), pursuant to transferable
subscription Rights (the "Rights") distributed to all holders of record
("Recordholders") of shares of Samsonite's Common Stock, par value $.001 per
share (the "Common Stock"), at the close of business on , 1999 (the
"Record Date"). The Rights and Common Stock are described in Samsonite's
Prospectus dated , 1999 (the "Prospectus").
In the Rights Offering, Samsonite is offering an aggregate of shares of
its Common Stock, as described in the Prospectus.
The Rights will expire, if not exercised, at 5:00 p.m., New York City time,
on , 1999, unless extended for in the sole discretion of Samsonite (as it
may be extended, the "Expiration Date").
Each Right allows the holder thereof to subscribe (the "Basic Subscription
Privilege") at the cash price of $ per share (the "Subscription Price") for
one share of Common Stock.
In addition, Rights holders which exercise their Basic Subscription Privilege
also will be eligible to subscribe (the "Over-Subscription Privilege") at the
same cash price of $ per share for shares of Common Stock that are offered
but not otherwise purchased in the Rights Offering, subject to availability and
proration.
The Rights are evidenced by a transferable Rights certificate (a "Rights
Certificate") registered in your name or the name of your nominee. Each
beneficial owner of shares of Common Stock registered in your name or the name
of your nominee is entitled to Rights for each share of Common Stock owned
by such beneficial owner as of the close of business on the Record Date. No
fractional Rights or cash in lieu thereof will be issued or paid. Instead, the
number of Rights distributed will be rounded to the nearest whole number, with
such adjustments as may be necessary to ensure that if all Rights are
exercised, the gross proceeds to Samsonite from the Rights Offering will equal
$75 million. The Rights will be transferable until the close of business on the
last trading day prior to the Expiration Date, at which time they will cease to
have value.
We are asking persons who hold shares of Common Stock beneficially and who
have received the Rights distributable with respect to those shares through a
broker, dealer, commercial bank, trust company or other
1
<PAGE>
nominee, as well as persons who hold certificates of Common Stock directly and
prefer to have such institutions effect transactions relating to the Rights on
their behalf, to contact the appropriate institution or nominee and request it
to effect the transactions for them. In addition, we are asking beneficial
owners who wish to obtain a separate Rights Certificate to contact the
appropriate nominee as soon as possible and request that a separate Rights
Certificate be issued.
If you exercise the Over-Subscription Privilege on behalf of beneficial
owners of Rights, you will be required to certify to the Subscription and
Information Agent and Samsonite, in connection with the exercise of the Over-
Subscription Privilege, as to the aggregate number of Rights that have been
exercised pursuant to the Basic Subscription Privilege, whether the Basic
Subscription Privilege of each beneficial owner of Rights on whose behalf you
are acting has been exercised in full, and the number of shares of Common
Stock being subscribed for pursuant to the Over-Subscription Privilege by each
beneficial owner of Rights on whose behalf you are acting.
All commissions, fees and other expenses (including brokerage commissions
and transfer taxes), other than fees and expenses of the Subscription and
Information Agent, incurred in connection with the purchase, sale or exercise
of the Rights will be for the account of the transferor of the Rights, and
none of such commissions, fees or expenses will be paid by Samsonite or the
Subscription and Information Agent.
Enclosed are copies of the following documents:
1. Prospectus;
2. Instruction as to Use of Samsonite Corporation Rights Certificates
(including a Notice of Guaranteed Delivery for Rights Certificates Issued
by Samsonite Corporation and Guidelines for Request for Taxpayer
Identification Number and Certification on Substitute Form W-9);
3. A form of letter which may be sent to your clients for whose
accounts you hold shares of Common Stock registered in your name or the
name of your nominee, with an attached form of instruction;
4. Notice of Guaranteed Delivery for Rights Certificates Issued by
Samsonite Corporation; and
5. A return envelope addressed to , the Subscription and
Information Agent.
Your prompt action is requested. To exercise Rights, you should deliver the
properly completed and signed Rights Certificate (or the Notice of Guaranteed
Delivery if you are following the Guaranteed Delivery Procedures), with
payment of the Subscription Price in full for each share of Common Stock
subscribed for, to the Subscription and Information Agent, as indicated in the
Prospectus. The Subscription and Information Agent must receive the Rights
Certificate or Notice of Guaranteed Delivery with payment of the Subscription
Price, including final clearance of any checks, prior to 5:00 p.m., New York
City time, on the Expiration Date. A Rights holder cannot revoke the exercise
of its Rights. Rights not exercised prior to the Expiration Date will expire.
Additional copies of the enclosed materials may be obtained from the
Subscription and Information Agent. The Subscription and Information Agent's
telephone number is .
Very truly yours,
Samsonite Corporation
NOTHING IN THIS PROSPECTUS OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF SAMSONITE CORPORATION, THE SUBSCRIPTION AND
INFORMATION AGENT OR ANY OTHER PERSON MAKING OR DEEMED TO BE MAKING OFFERS OF
THE SECURITIES ISSUABLE UPON VALID EXERCISE OF THE RIGHTS, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT
TO THE OFFERING EXCEPT FOR STATEMENTS MADE IN THE PROSPECTUS.
2
<PAGE>
Exhibit 99.6
SAMSONITE CORPORATION
Shares of Common Stock
Offered Pursuant to Rights
Distributed to Stockholders of
Samsonite Corporation
To Our Clients:
Enclosed for your consideration are a Prospectus, dated , 1999 (the
"Prospectus"), and the "Instructions as to Use of Samsonite Corporation Rights
Certificates" relating to the offering (the "Rights Offering") by Samsonite
Corporation ("Samsonite") of shares of its Common Stock (as defined below)
pursuant to transferable subscription Rights (the "Rights") distributed to all
holders of record of shares of its Common Stock, par value $.01 per share (the
"Common Stock"), at the close of business on , 1999 (the "Record Date"). The
Rights and Common Stock are described in Samsonite's Prospectus.
In the Rights Offering, Samsonite is offering an aggregate of shares of
its Common Stock, as described in the Prospectus.
The Rights will expire, if not exercised, at 5:00 p.m., New York City time,
on , 1999, unless extended in the sole discretion of Samsonite (as it may
be extended, the "Expiration Date").
As described in the accompanying Prospectus, you will receive Rights for
each share of Common Stock carried by us in your account as of the Record Date.
No fractional Rights or cash in lieu thereof will be issued or paid. Instead,
the number of Rights distributed will be rounded to the nearest whole number,
with such adjustments as may be necessary to ensure that if all Rights are
exercised, the gross proceeds to Samsonite will equal $75 million.
Each Right will allow you to subscribe (the "Basic Subscription Privilege")
at the cash price of $ per share (the "Subscription Price") for one share of
Common Stock.
In addition, Rights holders which exercise their Basic Subscription Privilege
also will be eligible to subscribe (the "Over-Subscription Privilege") at the
same cash subscription price of $ per share for shares of Common Stock that
are offered but not otherwise purchased in the rights offering (the "Excess
Shares"). If an insufficient number of Excess Shares is available to satisfy
fully all over-subscriptions, each Rights holder exercising the Over-
Subscription Privilege will receive a pro rata portion of the Excess Shares
available based upon the number of shares of Common Stock it subscribed for
pursuant to the Basic Subscription Privilege.
The Rights will be evidenced by transferable Rights certificates and will be
transferable until the close of business on the last trading day prior to the
Expiration Date, at which time they will cease to have value.
THE MATERIALS ENCLOSED ARE BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF
COMMON STOCK CARRIED BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME.
EXERCISES AND SALES OF RIGHTS MAY BE MADE BY ONLY US AS THE RECORD OWNER
1
<PAGE>
AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we request instructions as to
whether you wish us to elect to subscribe for any shares of Common Stock, or
sell any Rights, to which you are entitled pursuant to the terms and subject to
the conditions set forth in the enclosed Prospectus. However, we urge you to
read the document carefully before instructing us to exercise or sell Rights.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to exercise or sell Rights on your behalf in accordance with the
provisions of the Rights Offering. The Rights Offering will expire at 5:00
p.m., New York City time, on the Expiration Date. Once you have exercised the
Basic Subscription Privilege or the Over-Subscription Privilege, such exercise
may not be revoked.
If you wish to have us, on your behalf, exercise the Rights for any shares of
Common Stock to which you are entitled, or sell such Rights, please so instruct
us by completing, executing and returning to us the instruction form on the
reverse side of this letter.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE RIGHTS OFFERING
SHOULD BE DIRECTED TO , THE SUBSCRIPTION AND INFORMATION AGENT, AT THE
FOLLOWING TELEPHONE NUMBER: .
2
<PAGE>
BENEFICIAL OWNER ELECTION FORM
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
materials referred to therein relating to the offering of shares of common
stock (the "Common Stock") of Samsonite Corporation ("Samsonite").
This will instruct you whether to exercise or sell Rights to purchase shares
of Samsonite's Common Stock distributed with respect to the shares of
Samsonite's Common Stock held by you for the account of the undersigned,
pursuant to the terms and subject to the conditions set forth in the Prospectus
and the related "Instructions as to Use of Samsonite Corporation Rights
Certificates."
Box 1. [_]Please DO NOT EXERCISE RIGHTS for shares of Common Stock.
Box 2. [_]Please EXERCISE RIGHTS for shares of Common Stock as set forth
below.
Box 3. [_]Please SELL RIGHTS and remit the net proceeds to the undersigned.
<TABLE>
<CAPTION>
Number of Subscription
Rights Price Payment
--------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Basic Subscription Priv-
ilege: x $ = $ (Line 1)
Over-Subscription Privi-
lege: x $ = $ (Line 2)
Total Payment Required = $ (Sum of Lines 1
and 2; must
equal total of
amounts in
Boxes 3 and 4.)
</TABLE>
Box 4. [_]Payment in the following amount is enclosed $ .
Box 5. [_]Please deduct payment from the following account maintained by you
as follows:
--------------------- ---------------------
Type of Account Account No.
Amount to be deducted: $
-------------------------------
-------------------------------
Signature(s)
Please type or print name(s) below:
-------------------------------
-------------------------------
Date: , 1999
3
<PAGE>
Exhibit 99.7
SAMSONITE CORPORATION
NOMINEE HOLDER CERTIFICATION
The undersigned, a bank, broker, trustee, depositary or other nominee of
Rights ("Rights") to purchase shares of common stock ("Common Stock") of
Samsonite Corporation ("Samsonite") pursuant to the Rights Offering described
and provided for in Samsonite's prospectus dated, 1999, (the
"Prospectus"), hereby certifies to Samsonite and to as Subscription and
Information Agent for such rights offering, that (1) the undersigned has
exercised, on behalf of the beneficial owners thereof (which may include the
undersigned), the number of Rights specified below pursuant to the Basic
Subscription Privilege (as defined in the Prospectus) on behalf of beneficial
owners of Rights who have subscribed for the purchase of additional shares of
Common Stock pursuant to the Over-Subscription Privilege (as defined in the
Prospectus), listing separately below each such exercised Basic Subscription
Privilege and the corresponding Over-Subscription Privilege (without
identifying any such beneficial owner), and (2) each such beneficial owner's
Basic Subscription Privilege has been exercised in full:
Number of Shares Owned Rights Exercised Number of Shares
on the Record Date Pursuant to Basic Subscribed For Pursuant
- ------------------------- Subscription Privilege to Over-Subscription
1. ______________________ _________________________ Privilege
2. ______________________ _________________________ _________________________
3. ______________________ _________________________ _________________________
4. ______________________ _________________________ _________________________
5. ______________________ _________________________ _________________________
6. ______________________ _________________________ _________________________
7. ______________________ _________________________ _________________________
8. ______________________ _________________________ _________________________
9. ______________________ _________________________ _________________________
_________________________ _________________________
Provide the following information if applicable: _________________________
- -------------------------------------
Depository Trust Company ("DTC")
Participant Number
[PARTICIPANT]
By: _________________________________
Name:
Title:
- -------------------------------------
DTC Basic Subscription Confirmation
Number(s)
1
<PAGE>
Exhibit 99.8
IMPORTANT TAX INFORMATION
This tax information is provided in connection with the Samsonite
Corporation dated , 1999 (the "Prospectus"). Capitalized terms used in
this prospectus but not otherwise defined in this prospectus shall have the
meanings assigned to such terms in the Prospectus.
Under the United States federal income tax laws, dividend payments that may
be made by Samsonite on shares of Common Stock issued upon the exercise of
Rights may be subject to backup withholding. Generally such payments will be
subject to backup withholding unless the holder (i) is exempt from backup
withholding or (ii) furnishes the payer with its correct taxpayer
identification number (TIN) and certifies that the number provided is correct
and further certifies that such holder is not subject to backup withholding as
a result of a failure to report all interest or dividend income. Each Rights
holder that exercises Rights and wants to avoid backup withholding should
provide the Subscription and Information Agent, as Samsonite's agent in
respect of exercised Rights (the "requester"), with such holder's correct
taxpayer identification number (or with a certification that such holder is
awaiting a taxpayer identification number) and with a certification that such
holder is not subject to backup withholding by completing Substitute Form W-9
below.
Certain holders (including, among others, all corporations and certain
foreign individuals) are exempt from these backup withholding and reporting
requirements. In general, in order for a foreign individual to qualify as an
exempt recipient, that holder must submit a statement, signed under the
penalties of perjury, attesting to that individual's exempt status. Such
statements may be obtained from the Subscription and Information Agent. Exempt
holders, while not required to file Substitute Form W-9, should file
Substitute Form W-9 to avoid possible erroneous backup withholding. See the
enclosed Guidelines for Request for Taxpayer Identification Number and
Certification on Substitute Form W-9 for additional instructions.
If backup withholding applies, Samsonite or the Subscription and Information
Agent, as the case may be, will be required to withhold 31% of any such
dividend payments made to a holder of Common Stock. Backup withholding is not
an additional tax. Rather, the amount of backup withholding is treated, like
any other withheld amounts, as an advance payment of the person's tax
liability, and the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
Purpose of Substitute Form W-9
To prevent backup withholding on dividend payments that may be made on
shares of Common Stock issued upon the exercise of Rights, a Rights holder
that exercises Rights is required to notify the Subscription and Information
Agent of such holder's correct taxpayer identification number by completing
Substitute Form W-9 below and certifying on Substitute Form W-9 that the
taxpayer identification number provided is correct (or that such Rights holder
is awaiting a taxpayer identification number). In addition, the holder is
required to certify on Substitute Form W-9 that it is (i) exempt from backup
withholding, or (ii) not subject to backup withholding due to prior under
reporting of interest or dividend income, or (iii) the Internal Revenue
Service (the "IRS") has notified it that it is no longer subject to backup
withholding.
What Number to Give the Subscription and Information Agent
The Rights holder that exercises Rights is required to give the Subscription
and Information Agent the taxpayer identification number of the record owner
of the shares of Common Stock issued upon the exercise of the Rights. If such
record owner is an individual, the taxpayer identification number is the
taxpayer's social security number. For most other entities, the taxpayer
identification number is the employer identification number. If the shares of
Common Stock issued upon the exercise of the Rights are in more than one name
or are not in the name of the actual owner, consult the enclosed Guidelines
for Request for Taxpayer Identification Number and Certification on Substitute
Form W-9 for additional guidelines on what number to report. If the
Subscription and Information Agent is not provided with the correct taxpayer
identification number in connection with such payments, the holder may be
subject to a $50.00 penalty imposed by the IRS.
1
<PAGE>
REQUESTER'S NAME:
Give Form to the Requester. Do NOT send to the IRS.
- -------------------------------------------------------------------------------
Name (If a joint account or you changed your name, see enclosed
Guidelines.)
- -------------------------------------------------------------------------------
Business name, if different from above.
- -------------------------------------------------------------------------------
Check appropriate box: [_] Individual/Sole
Proprietor [_] Corporation [_] Partnership [_] Other
- -------------------------------------------------------------------------------
Address (number, street, and apt. or suite no.)
- -------------------------------------------------------------------------------
City, state, and ZIP code
Part I--TAXPAYER Social Security Number
IDENTIFICATION NUMBER
(TIN).
-----------------------
SUBSTITUTE
Form W-9 Employer identification
Department of Enter your TIN in the number
the Treasury appropriate box. For most
Internal individuals, this is your
Revenue social security number
Service (SSN). For most other
entities, it is your
employer identification
number (EIN). If you do not
have a number, see How to
Get a TIN in the enclosed
Guidelines.
----------------------
Note: If the account is
in more than one name,
see the chart in the
enclosed Guidelines to
determine what number
to give.
Payer's Request for Taxpayer Identification Number (TIN)
--------------------------------------------------------
Part II--For Payees Exempt From Backup Withholding
(See the enclosed Guidelines)
-----------------------------------------------------
-------------------
--------------------------------------------------------
Part III--Certification
Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct
taxpayer identification number (or I am waiting for a
number to be issued to me), and
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding; or (b) I
have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding
as a result of a failure to report all interest or
dividends; or (c) the IRS has notified me that I am
no longer subject to backup withholding.
Certification Instructions--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because you
have failed to report all interest and dividends on
your tax return. However, if after being notified by
the IRS that you were subject to backup withholding
you received another notification from the IRS that
you are no longer subject to backup withholding, do
not cross out item (2).
The Internal Revenue Service does not require your
consent to any provision of this document other than
the certifications required to avoid backup
withholding.
SIGNATURE ____________________________ DATE __________
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY PAYMENTS MADE TO YOU. PLEASE REVIEW ENCLOSED GUIDELINES FOR REQUEST
FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
2
<PAGE>
GUIDELINES FOR REQUEST FOR TAXPAYER IDENTIFICATION
NUMBER AND CERTIFICATION ON SUBSTITUTE FORM W-9
What Name and Number to Give the Requester
Name
If you are an individual, you must generally enter the name shown on your
Social Security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, enter your first name, the last name shown on your Social
Security card, and your new last name. If the account is in joint names, list
first and then circle the name of the person or entity whose number you enter
in Part I of the form.
Sole Proprietor--You must enter your individual name as shown on your Social
Security card. You may enter your business, trade or "doing business as" name
on the business name line.
Other Entities--Enter the business name as shown on required federal income
tax documents. This name should match the name shown on the charter or other
legal document creating the entity. You may enter any business, trade or "doing
business as" name on the business name line.
Taxpayer Identification Number (TIN)
You must enter your taxpayer identification number in the appropriate box. If
you are a resident alien and you do not have and are not eligible to get a
Social Security number, your taxpayer identification number is your IRS
individual taxpayer identification number (ITIN). Enter it in the Social
Security number box. If you do not have an individual taxpayer identification
number, see How to Get a TIN below. If you are a sole proprietor and you have
an employer identification number, you may enter either your Social Security
number or employer identification number. However, using your employer
identification number may result in unnecessary notices to the requester.
Social Security numbers (SSN's) have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers (EIN's) have nine digits
separated by only one hyphen: i.e. 00-0000000.
The table below will help determine the number to give the requester.
- -------------------------------------- --------------------------------------
<TABLE>
<CAPTION>
Give Name
For this type of account: and SSN of:
- ------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-
savings trust (grantor is trustee(1)
also trustee)
b. The so-called trust account The actual
that is not a legal or owner(1)
valid trust under state law
5. Sole proprietorship The owner(3)
- ------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Give Name
For this type of account: and SSN of:
------
<S> <C>
6. A valid trust, estate, or Legal entity(4)
pension trust
7. Corporation The corporation
8. Association, club, The organization
religious, charitable,
educational or other tax-
exempt organization
9. Partnership The partnership
10. A broker or registered The broker or
nominee nominee
11. Account with the The public
Department of Agriculture entity
in the name of a public
entity (such as a state
or local government,
school district, or
prison) that receives
agricultural program
payments
------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a Social Security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security number or
employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
Note: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR REQUEST FOR TAXPAYER IDENTIFICATION
NUMBER AND CERTIFICATION ON SUBSTITUTE FORM W-9
Page 2
How to Get a TIN
If you do not have a taxpayer identification number, apply for one
immediately. To apply for a Social Security number, get Form SS-5, Application
for a Social Security Number Card, from your local Social Security
Administration office. Get Form W-7 to apply for an individual taxpayer
identification number or Form SS-4, Application for Employer Identification
Number, to apply for an employer identification number. You can get Forms W-7
and SS-4 from the IRS.
If you do not have a taxpayer identification number, write "Applied For" in
the space for the taxpayer identification number, sign and date the form, and
give it to the requester. For interest and dividend payments and certain
payments made with respect to readily tradable instruments, you will generally
have 60 days to get a taxpayer identification number and give it to the
requester. Other payments are subject to backup withholding.
Note: Writing "Applied For" means that you have already applied for a
taxpayer identification number or that you intend to apply for one soon.
Exemption From Backup Withholding
Payees Exempt From Backup Withholding
Individuals (including sole proprietors) are NOT exempt from backup
withholding.
For interest and dividends, the following payees are exempt from backup
withholding:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), an individual retirement
account (IRA), or a custodial account under section 403(b)(7) of the Code
if the account satisfies the requirements of section 401(f)(2) of the Code.
. The United States or any of its agencies or instrumentalities.
. A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
. A foreign government or any of its political subdivisions, agencies or
instrumentalities.
. An international organization or any of its agencies or instrumentalities.
. A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a) of the Code.
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
. A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
. A trust exempt from tax under section 664 of the Code or described in
section 4947 of the Code.
Payments Exempt From Backup Withholding
Dividends and patronage dividends that generally are exempt from backup
withholding include:
. Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Payments made by an ESOP pursuant to section 404(k) of the Code.
Interest payments that are generally exempt from backup withholding include:
. Payments of interest on obligations issued by individuals. Note, however,
that such a payment may be subject to backup withholding if this interest
is $600 or more and is paid in the course of the payer's trade or business,
and you have not provided your correct taxpayer identification number or
you have provided an incorrect taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
. Payments described in section 6049(b)(5) of the Code to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044,
6045, 6049, 6050A and 6050N of the Code, and their regulations.
If you are exempt from backup withholding, you should still complete and file
Substitute Form W-9 to avoid possible erroneous backup withholding. Enter your
correct taxpayer identification number in Part I, write "Exempt" in Part II,
and sign and date the form and return it to the requester.
If you are a nonresident alien or a foreign entity not subject to backup
withholding, give the requester a completed Form W-8, Certificate of Foreign
Status.
Privacy Act Notice.--Section 6109 of the Code requires you to give your
correct taxpayer identification number to persons who must file information
returns with the IRS to report interest, dividends and certain other income
paid to you. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. The IRS may also provide this
information to the Department of Justice for civil and criminal litigation and
to cities, states, and the District of Columbia to carry out their tax laws.
You must provide your taxpayer identification number whether or not you are
required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividends and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
(1) Failure to Furnish Taxpayer Identification Number.--If you fail to furnish
your correct taxpayer identification number to a requester, you are subject to
a penalty of $50.00 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no backup
withholding, you are subject to a $500.00 penalty.
(3) Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
Exhibit 99.9
BENEFICIAL OWNER ELECTION FORM
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
materials referred to therein relating to the offering of shares of common
stock (the "Common Stock") of Samsonite Corporation ("Samsonite").
This will instruct you whether to exercise or sell Rights to purchase shares
of Samsonite's Common Stock distributed with respect to the shares of
Samsonite's Common Stock held by you for the account of the undersigned,
pursuant to the terms and subject to the conditions set forth in the Prospectus
and the related "Instructions as to Use of Samsonite Corporation Rights
Certificates."
Box 1. [_]Please DO NOT EXERCISE RIGHTS for shares of Common Stock.
Box 2. [_]Please EXERCISE RIGHTS for shares of Common Stock as set forth
below.
Box 3. [_]Please SELL RIGHTS and remit the net proceeds to the undersigned.
<TABLE>
<CAPTION>
Number of Subscription
Rights Price Payment
--------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Basic Subscription Priv-
ilege: x $ = $ (Line 1)
Over-Subscription Privi-
lege: x $ = $ (Line 2)
Total Payment Required = $ (Sum of Lines 1
and 2; must
equal total of
amounts in
Boxes 3 and 4.)
</TABLE>
Box 4. [_]Payment in the following amount is enclosed $ .
Box 5. [_]Please deduct payment from the following account maintained by you
as follows:
--------------------- ---------------------
Type of Account Account No.
Amount to be deducted: $
-------------------------------
-------------------------------
Signature(s)
Please type or print name(s) below:
-------------------------------
-------------------------------
Date: , 1999
1
