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SAMSONITE CORP/FL
10-Q, 2000-12-15
LEATHER & LEATHER PRODUCTS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2000

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                                                 to                                  

Commission File Number: 0-23214           

SAMSONITE CORPORATION
(Exact name of registrant as specified in its charter)

Delaware               (State or other jurisdiction of incorporation or organization)		36-3511556    (I.R.S. Employer Identification No.)
11200 East 45th Avenue, Denver, CO (Address of principal executive offices)		80239      (Zip Code)

                            (303) 373-2000                       
(Registrant's telephone number, including area code)

                                           
(Former name, if changed since last report)

           Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.

    X       Yes                     No

            Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 19,774,713 shares of common stock, par value $.01 per share, as of December 8, 2000.

 

FORM 10-Q

CONTENTS

		Page Number
PART I -  FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheets as of October 31, 2000 and January 31, 2000	1
	Unaudited Consolidated Statements of Operations for the three months ended October 31, 2000 and 1999	3
	Unaudited Consolidated Statements of Operations for the nine months ended October 31, 2000 and 1999	4
	Unaudited Consolidated Statement of Stockholders' Equity (Deficit) for the nine months ended October 31, 2000	5
	Unaudited Consolidated Statements of Cash Flows for the nine months ended October 31, 2000 and 1999	6
	Unaudited Notes to Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
PART II -    OTHER INFORMATION
	Item 1:  Legal Proceedings	24
	Item 2:  Changes in Securities	24
	Item 3:  Defaults upon Senior Securities	24
	Item 4:  Submission of Matters to a Vote of Security Holders	24
	Item 5:  Other Information	24
	Item 6:  Exhibits and Reports on Form 8-K	25
	Signature	26
	Index to Exhibits	27

 

Assets				October 31, 2000		January 31, 2000
Current assets:
	Cash and cash equivalents			$  24,205		16,705
	Trade receivables, net of allowances for doubtful accounts of $5,355 and $5,489			77,015		75,261
	Notes and other receivables			15,231		10,438
	Inventories (Note 2)			161,645		171,769
	Prepaid expenses and other current assets			21,800		18,593
		Total current assets		299,896		292,766
Property, plant and equipment, net (Note 3)				131,226		141,254
Intangible assets, less accumulated amortization of $55,643 and $52,178 (Note 4)				106,108		109,007
Other assets and long-term receivables, net of allowances for doubtful   accounts of $521				16,990		17,553
				$554,220		560,580

Liabilities and Stockholders’ Equity (Deficit)				October 31, 2000			January 31, 2000
Current liabilities:
	Short-term debt (Note 5)			$    12,169			7,108
	Current installments of long-term obligations (Note 5)			2,787			5,379
	Accounts payable			48,008			46,950
	Accrued liabilities			80,506			74,278
		Total current liabilities		143,470			133,715
Long-term obligations, less current installments (Note 5)				427,324			427,094
Deferred income tax liabilities				13,719			15,695
Other noncurrent liabilities				41,498			48,425
		Total liabilities		626,011			624,929
Minority interests in consolidated subsidiaries				10,848			10,009
Senior redeemable preferred stock, aggregate liquidation preference of $241,265  and $217,805; 237,062 and 190,034 shares issued and outstanding				231,354			207,125
Stockholders’ equity (deficit) (Notes 5 and 7):
	Preferred stock ($.01 par value; 2,000,000 shares authorized)			—			—
	Common stock ($.01 par value; 60,000,000 shares authorized; 30,259,145 and  30,218,672 shares issued; 19,759,145 and 19,718,672 shares outstanding)			303			302
	Additional paid-in capital			490,084			489,963
	Accumulated deficit			(355,281	)		(330,219	)
	Accumulated other comprehensive loss			(29,099	)		(21,529	)
				106,007			138,517
	Treasury stock, at cost (10,500,000 shares)			(420,000	)		(420,000	)
		Total stockholders’ equity (deficit)		(313,993	)		(281,483	)
Commitments and contingencies (Notes 1C, 5, 7 and 9)
				$ 554,220			560,580

			Three Months Ended October 31,
			2000			1999
Net sales (Note 1E)			$202,529			208,227
Cost of goods sold			119,572			121,081
	Gross profit		82,957			87,146
Selling, general and administrative expenses			66,260			67,963
Amortization of intangible assets			1,103			1,444
	Operating income		15,594			17,739
Other income (expense):
	Interest income		298			525
	Interest expense and amortization of debt issue costs and premium		(12,504	)		(12,951	)
	Other income (expense) — net (Note 6)		1,503			(1,608	)
	Income before income taxes and minority interest		4,891			3,705
Income tax expense			(2,872	)		(3,308	)
Minority interest in earnings of subsidiaries			(1,020	)		(928	)
	Net income (loss)		999			(531	)
Senior redeemable preferred stock dividends and accretion of senior redeemable      preferred stock discount			(8,344	)		(7,314	)
	Net loss to common stockholders		$ (7,345	)		(7,845	)
	Net loss per share — basic and diluted		$   (0.37	)		(0.75	)

			Nine Months Ended October 31,
			2000			1999
Net sales (Note 1E)			$590,754			$579,491
Cost of goods sold			346,582			336,603
	Gross profit		244,172			242,888
Selling, general and administrative expenses			196,782			196,235
Amortization of intangible assets			3,479			4,224
	Operating income		43,911			42,429
Other income (expense):
	Interest income		918			1,523
	Interest expense and amortization of debt issue costs and premium		(37,058	)		(39,800	)
	Other income — net (Note 6)		2,690			1,482
	Income (loss) before income taxes and minority interest		10,461			5,634
Income tax expense			(8,883	)		(9,103	)
Minority interest in earnings of subsidiaries			(2,411	)		(1,359	)
	Net loss		(833	)		(4,828	)
Senior redeemable preferred stock dividends and accretion of senior redeemable      preferred stock discount			(24,229	)		(21,238	)
	Net loss to common stockholders		(25,062	)		(26,066	)
	Net loss per share — basic and diluted		$    (1.27	)		(2.48	)

					Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Def icit				Comprehensive Loss				Treasury Stock
Balance, February 1, 2000		$			—		302		489,963		(21,529	)		(330,219	)				—			(420,000	)
Net loss					—		—		—		—			(833	)				(833	)		—
Foreign currency translation adjustment					—		—		—		(7,570	)		—					(7,570	)		—
	Comprehensive loss				—		—		—		—			—				$	(8,403	)		—
Issuance of 28,465 shares to directors for services					—		1		91		—			—								—
Exercise of 12,008 shares for exercise of employee stock options (Note 7)					—		—		30		—			—								—
Senior redeemable preferred stock dividends and accretion of senior redeemable preferred stock discount					—		—		—		—			(24,229	)							—
Balance, October 31, 2000		$			—		303		490,084		(29,099	)		(355,281	)							(420,000	)

 

					Nine Months Ended October 31,
					2000			1999
Cash flows provided by operating activities:
	Net loss				$    (833	)		(4,828	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization of property, plant and equipment			16,100			15,904
		Pension plan gains, net			(5,621	)		(3,052	)
		Amortization of intangible assets			3,479			4,224
		Amortization of debt issue costs and premium			1,563			1,584
		Provision for doubtful accounts			1,483			3,357
		Amortization of stock awards and stock issued for services			92			240
		Compensation expense for adjustment of stock options			30			497
		Changes in operating assets and liabilities:
			Trade and other receivables		(7,185	)		(15,585	)
			Inventories		11,606			20,455
			Prepaid expenses and other current assets		(2,984	)		(1,696	)
			Accounts payable and accrued liabilities		7,124			1,718
		Other adjustments — net			(539	)		868
Net cash provided by operating activities					$ 24,315			23,686

See accompanying notes to consolidated financial statements

6

				Nine Months Ended October 31,
				2000			1999
Cash flows provided by (used in) investing activities:
	Purchases of property, plant and equipment			$(12,776	)		(15,572	)
	Proceeds from sale of assets held for sale and property and equipment			566			1,510
	Acquisition of interest in joint venture, net of cash acquired			117			—
	Other, net			(1,822	)		(1,541	)
		Net cash used in investing activities		(13,915	)		(15,603	)
Cash flows provided by (used in) financing activities:
	Net borrowings of short-term obligations			2,061			796
	Net borrowings (payments) on long-term obligations			2,739			(28,834	)
	Proceeds from issuance of preferred stock			—			25,410
	Proceeds from exercise of employee stock options			—			19
	Issuance costs of senior subordinated notes, senior preferred stock, and senior credit  facility			—			(362	)
	Other, net			1,237			457
		Net cash provided by (used in) financing activities		6,037			(2,514	)
Effect of exchange rate changes on cash and cash equivalents				(8,937	)		(7,475	)
		Net increase (decrease) in cash and cash equivalents		7,500			(1,906	)
Cash and cash equivalents, beginning of period				16,705			41,932
Cash and cash equivalents, end of period				$ 24,205			40,026
Supplemental disclosures of cash flow information:
	Cash paid during the period for interest			$ 26,789			28,047
	Cash paid during the period for income taxes			$   4,513			8,965

SAMSONITE CORPORATION AND SUBSIDIARIES
Unaudited Notes to Consolidated Financial Statements

1.	General
	A.	Business
		The principal activity of Samsonite Corporation and subsidiaries (the "Company") is the manufacture and distribution of luggage, casual bags, business cases and travel related products throughout the world, primarily under the Samsonite, American Tourister, and Lark brand names. The principal luggage related product customers of the Company are department/specialty retail stores, mass merchants, catalog showrooms and warehouse clubs. The Company also sells its luggage and related products through its Company-owned stores. In addition, the Company manufactures and distributes fashion oriented clothing and footwear in Europe, Asia and the United States and also operates a custom injection molding operation in Canada.
	B.	Interim Financial Statements
		The accompanying unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, and which, in the opinion of management, are necessary for a fair statement of the financial position as of October 31, 2000 and results of operations for the three and nine month periods ended October 31, 2000 and 1999. These unaudited consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2000.
	C.	Use of Estimates
		The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.
	D.	Per Share Data
		The Company computes earnings (loss) per share in accordance with the requirements of Statement of Financial Accounting 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 during the period. The dilutive effect of stock options, warrants, convertible preferred stock and their equivalents is calculated using the treasury stock method.
		Net loss per common share for the three months ended October 31, 2000 and 1999 and the nine months ended October 31, 2000 and 1999 is computed based on a weighted average number of shares of common stock outstanding during the period of 19,753,276, 10,512,114, 19,737,642 and 10,518,428 , respectively. Basic earnings per share and earnings per share - assuming dilution are the same for the three and nine month periods ended October 31, 2000 and 1999 because of the antidilutive effect of common stock equivalents when there is a net loss to common stockholders.

8

	E.	Royalty Revenues
		The Company licenses its brand names to certain unrelated third parties as well as certain of its foreign subsidiaries and joint ventures. Net sales include royalties earned of $12,930,000 and $12,336,000 for the nine months ended October 31, 2000 and 1999, respectively, and $4,403,000 and $4,357,000 for the three months ended October 31, 2000 and 1999, respectively.
	F.	Reclassifications
		Certain reclassifications were made to the consolidated financial statements for prior periods to conform to the October 31, 2000 presentation.
	G.	Acquisition of Interest in Joint Venture
		On June 27, 2000, the Company acquired from its joint venture partner, its 50% interest in Chai Tai Samsonite (H.K.) Ltd. ("Chai Tai"), a joint venture formed to manufacture and distribute luggage in China, for $500,000. Prior to the acquisition, the Company owned 50% of the joint venture and accounted for it under the equity method. Upon the acquisition, the financial statements of Chai Tai are consolidated with the Company's.

2.	Inventories
	Inventories consisted of the following :
			October 31, 2000			January 31, 2000
				(In thousands)
		Raw Materials	$	33,091		37,964
		Work in Process		6,309		6,338
		Finished Goods		122,245		127,467
			$	161,645		171,769

 

3.	Property, Plant and Equipment
	Property, plant and equipment consisted of the following:
			October 31, 2000			January 31, 2000
				(In thousands)
		Land	$	11,262		11,547
		Buildings		67,765		69,913
		Machinery, equipment and other		146,549		147,539
				225,576		228,999
		Less accumulated amortization and depreciation	$	(94,350)		(87,745)
			$	131,226		141,254

 

9

 

4.	Intangible Assets
	Intangible assets, net of accumulated amortization, consisted of the following:
			October 31, 2000			January 31, 2000
				(In thousands)
		Trademarks	$	98,938		101,561
		Licenses, patents and other		7,170		7,446
			$	106,108		109,007

 

5.	Debt
	Debt consisted of the following:
				October 31, 2000			January 31, 2000
					(In thousands)
		Senior Credit Facility (a)
			Term loan	$	78,643		83,354
			Revolving credit		6,230		—
		Senior Subordinated Notes (b)			338,050		338,050
		Other obligations (c)			16,246		13,827
		Capital lease obligations			2,579		3,818
		Series B Senior Subordinated Notes (d)			532		532
			Total debt		442,280		439,581
		Less short-term debt and current installments of           long-term obligations			(14,956)		(12,487)
		Long-term obligations less current installments		$	427,324		427,094

 

(a)

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 lenders as parties to the Senior Credit Facility in order to increase the Revolving Credit Facility by up to an additional $50 million. As of October 31, 2000, the Company had $6.5 million in letters of credit outstanding under the Senior Credit Facility. The amount available for borrowing under the Senior Credit Facility at October 31, 2000 was $87.3 million. At October 31, 2000, the Company had an outstanding variable to fixed interest rate swap agreement with a notional amount of $25.0 million, a fixed pay rate of 6.14%, and a variable receive rate of 6.71%. The swap agreement dated November 8, 1999 has a two-year term and can be canceled by the payor of the variable rate after one year. The rate the Company receives reprices every three months. The swap agreement terminated on November 8, 2000. At October 31, 2000, the Company also had an outstanding variable to fixed rate swap agreement with a notional amount of 1,400,000,000 Belgian francs ($30,604,000 at October 31, 2000), a pay rate of 5.01% and a receive rate of 4.784%. The swap agreement dated May 17, 2000 has a three-year term. The rate the Company receives reprices every three months.

10

		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 the Company, 100% of the capital stock of the Company's major domestic subsidiaries, 66% of the stock of Samsonite Europe N.V. and other major non-domestic subsidiaries and a mortgage on the Company's real estate in Denver, Colorado. The Senior Credit Facility contains financial covenants that require the Company to maintain certain debt to earnings and interest coverage ratios and places limitations on capital expenditures. The Senior Credit Facility also contains covenants that, among other things, limit the ability of the Company (subject to 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.
	(b)	The Senior Subordinated Notes (the "Notes") bear interest at 10¾% and mature on June 15, 2008. The Notes are redeemable at the option of the Company at various redemption prices specified in the Notes. The indenture under which the 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 consist of various notes payable (including short-term notes) to banks by foreign subsidiaries aggregating $13.6 million and $2.6 million of secured financing arrangements with foreign banks.
	(d)	The Series B Senior Subordinated Notes (the "Series B Notes") bear interest at 11 1 /8% and have a maturity date of July 15, 2005.

 

6.	Other Income (Expense) - Net
	Other income (expense) - net consisted of the following:
		Three months ended October 31,					Nine months ended October 31,
		2000			1999		2000		1999
		(In thousands)
	Net gain (loss) from foreign currency forward        delivery contracts	$	2,126		(479	)	5,372		5,287
	Equity in earnings (loss) of unconsolidated affiliate		—		(187	)	52		(384	)
	Foreign currency transaction loss, net		(690	)	(322	)	(2,106	)	(1,516	)
	Gain (loss) on disposition of fixed assets, net		(155	)	(10	)	(72	)	(42	)
	Other, net		222		(610	)	(556	)	(1,863	)
		$	1,503		(1,608	)	2,690		1,482

11

7.	Employee Stock Options
	The Company has authorized 2,550,000 shares for the granting of options under its 1995 Stock Option and Award Plan and 750,000 shares for the granting of options under its FY 1999 Stock Option and Incentive Award Plan. See Note 11 to the consolidated financial statements included in the January 31, 2000 Form 10-K for a description of such plans. At October 31, 2000, the Company had outstanding options for a total of 2,086,931 shares at exercise prices ranging from $2.50 to $10.00 per share. Options for 987,518 shares were exercisable at October 31, 2000 at a weighted average exercise price of $7.01 per share. Options for 12,008 shares under the 1995 Stock Option and Award Plan were exercised at an average exercise price of $2.50 per share during the nine months ended October 31, 2000.
8.	Segment Information
	Effective for 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 October 31, 1999 has been reclassified from the prior year's presentation in order to conform to the October 31, 2000 presentation. The Company's principal line of business is the manufacture and distribution of luggage, casual bags, business cases and related products. Management of this 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 a Japanese luggage licensee and corporate overhead. In addition, the Company manufactures and distributes fashion oriented clothing and footwear in Europe, Asia and the United States and operates a custom inspection molding operation in Canada which is included in the geographic information presented. 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 nine-month and three-month periods ended October 31, 2000 and 1999 is as follows:

 

	Nine months ended October 31,
	2000	Europe			U.S. Wholesale		US Retail		Other Americas		Asia		Other Operations		Eliminations		Totals
		(In thousands)
	Revenues from external customers	$	238,929		161,001		97,396		42,767		37,941		12,720		—		590,754
	Intersegment revenues	$	3,369		38,822		—		21		2,148		—		(44,360	)	—
	Operating income (loss) (a)	$	32,575		(1,793	)	3,499		2,882		5,946		822		(20	)	43,911
	Total assets	$	181,043		132,499		29,915		51,893		29,787		227,747		(98,664	)	554,220
	1999
	Revenues from external customers	$	243,623		166,346		96,812		36,309		24,548		11,853		—		579,491
	Intersegment revenues	$	3,210		43,562		—		274		1,071		—		(48,117	)	—
	Operating income (loss) (a)	$	36,418		2,637		4,052		1,549		3,355		47		(5,629	)	42,429
	Total assets	$	184,013		174,414		32,787		47,005		20,011		235,098		(94,998	)	598,330

12

	Three months ended October 31,
	2000	Europe			U.S. Wholesale		U.S. Retail		Other Americas		Asia		Other Operations		Eliminations		Totals
		(In thousands)
	Revenues from external customers	$	82,815		53,158		32,841		15,212		14,153		4,643		(293	)	202,529
	Intersegment revenues	$	1,224		12,719		—		1		819		—		(14,763	)	—
	Operating income (loss) (a)	$	10,926		(3,541	)	1,127		1,179		2,326		3,954		(377	)	15,594
	Total assets	$	181,043		132,499		29,915		51,893		29,787		227,747		(98,664	)	554,220
	1999
	Revenues from external customers	$	85,857		62,894		33,430		12,803		9,110		4,410		(277	)	208,227
	Intersegment revenues	$	1,685		13,203		—		25		211		—		(15,124	)	—
	Operating income (loss) (a)	$	12,656		2,863		1,384		739		1,283		4,548		(5,734	)	17,739
	Total assets	$	184,013		174,414		32,787		47,005		20,011		235,098		(94,998	)	598,330

	(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 income - net, income taxes, minority interest and extraordinary items. General corporate expenses and amortization of intangible 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 nine months ended October 31, 2000 and 1999, the Company had net gains (losses) from such transactions of $5,372,000 and $5,287,000, respectively, which are included in nonoperating income. For the three months ended October 31, 2000 and 1999, the Company had net gains (losses) from such transactions of $2,126,000 and $(479,000), respectively.
9.	Litigation, Commitments and Contingencies
	The Company and some of its officers, directors and shareholders were named in shareholder class action lawsuits and a derivative action lawsuit filed between March 13, 1998 and March 9, 1999 in various courts, including Colorado State District Court and the United States District Court for the District of Colorado (collectively, the "Colorado Litigations"); and the Delaware Court of Chancery (the "Delaware Litigation"). On April 9, 1999, the Company signed an agreement with a major insurance company that provides comprehensive insurance coverage for the defense and resolution of all of these litigations. Substantially all of its costs to defend and resolve these litigations were recorded in the consolidated financial statements as of January 31, 1999. The Delaware Litigation was dismissed and the dismissal was affirmed on appeal. On April 27, 2000, the Company and the other defendants in the Colorado Litigations signed a definitive settlement agreement with the plaintiffs that provides for a complete resolution of the Colorado Litigations. The settlement provides that all defendants and related parties, including Samsonite and its officers, directors and shareholders, will be fully released from all claims that were asserted or could have been asserted in the Colorado Litigations (in which the federal securities complaint has been amended to include the claims asserted in the Delaware Litigation). All amounts to be paid pursuant to the settlement will be paid entirely by Samsonite's insurance carrier. Upon notice to the members of the putative class and shareholders of the Company, the Colorado federal court held a hearing on the fairness of the settlement for July 25, 2000. At that hearing, the court determined that the settlement is fair and reasonable to the class members and entered a judgment approving the settlement and dismissing the Colorado Litigations with prejudice. Subsequently, the Colorado state court entered a judgment dismissing the shareholder class action lawsuits pending in that court. Both judgments have become final. 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.

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ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Three Months Ended October 31, 2000 ("fiscal 2001" or "current year") Compared to Three Months Ended October 31, 1999 ("fiscal 2000" or " prior year")

General. The Company analyzes its net sales and operations by the following categories: (i) "European operations" which include eastern and western European country sales, manufacturing and distribution operations whose reporting currency is the Belgian franc; (ii) "the Americas operations" which include wholesale and retail sales, manufacturing and distribution operations in the United States, "Other Americas" which includes operations in Canada and Latin America, and corporate headquarters; (iii) "Asian operations" which include the sales, manufacturing and distribution operations in India, China, Singapore, South Korea, Hong Kong and Taiwan, and (iv) licensing operations.

Results of European operations were translated from Belgian francs to U.S. dollars in fiscal 2001 and fiscal 2000 at average rates of approximately 44.32 and 38.10 francs to the U.S. dollar, respectively. This weakening of the Belgian franc in relation to the U.S. dollar of approximately 14% resulted in decreases in reported sales, cost of sales, SG&A expenses and operating earnings in fiscal 2001 compared to fiscal 2000. The most significant effects from the difference in exchange rates from last year to this year are noted in the following analysis and are 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. During fiscal 2001, the Company had net gains from such instruments of $2.1 million. Realized gains on contracts closed during the third quarter of fiscal 2001 were $1.9 million. During fiscal 2000, the Company had net loss on such instruments of $0.5 million. Realized gains on contracts closed during the third quarter of fiscal 2000 were $1.4 million. The Company estimates the reduction in reported operating income because of the exchange rate difference from the strengthening of the U.S. dollar versus the Belgian franc from the same quarter in the prior year to be approximately $1.8 million for the three months ended October 31, 2000.

Net Sales. Consolidated net sales decreased from $208.2 million in fiscal 2000 to $202.5 million in fiscal 2001, a decrease of $5.7 million, or 2.7%. Fiscal 2001 sales were negatively impacted by the decline in the value of the Belgian franc compared to the US dollar. Without the effect of the exchange rate difference, fiscal 2001 sales would have increased by $7.9 million, or approximately 3.8%.

Sales from European operations decreased from $85.9 million in fiscal 2000 to $82.8 million in fiscal 2001, a decrease of $3.1 million. However, expressed in the local European reporting currency (Belgian francs), fiscal 2001 sales increased by 12.2%, or the US constant dollar equivalent of $10.5 million, compared to fiscal 2000. Local currency sales of softside product improved by approximately 19% from the prior year while hardside product sales decreased by approximately 7%. Europe's local currency sales increases were in spite of sales price increases (which we do not believe has negatively affected volumes) and the interruption of transportation systems caused by social protest which have negatively affected trade in many European countries. In reaction to higher oil related material costs and higher costs related to the weakening of the Belgian franc in relation to the US Dollar, the Company instituted a price increase averaging approximately 2% during August 2000 in Europe.

Sales from the Americas operations decreased from $109.1 million in fiscal 2000 to $101.2 million in fiscal 2001, a decrease of $7.9 million, or 7.2%. US Wholesale sales for the third quarter decreased by $9.7 million, or 15% from the prior year, US Retail division sales decreased by $0.6 million, or 2% from the prior year, and sales in the Other Americas operations increased by $2.4 million, or 19% from the prior year. US Wholesale sales decreased from $62.9 million in the prior year to $53.2 million in fiscal 2001. The decline in US Wholesale sales

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is the result of higher discounts and markdowns on discontinued products due to an increase in price-based sales promotions by our competition. In addition, the Company accelerated the discontinuance and closeout of the Silhouette 6 product line, our single largest product line in the United States, to prepare for the introduction of Silhouette 7 later this year. Sales to the warehouse club distribution channel in the United States were lower than in the prior year. Sales in the US Retail division decreased slightly from $33.4 million to $32.8 million in fiscal 2001, or 2%. Comparable store sales in the US Retail division declined 5% from the same quarter in the prior year due to lower consumer traffic in the outlet malls and promotional price discounting in other retail channels. The total number of retail stores open at October 31, 2000 of 213 is unchanged from the number open at October 31, 1999. Sales in Canada increased from $4.4 million in fiscal 2000 to $5.7 million in fiscal 2001, or 30%. Sales in Mexico increased from $5.7 million in fiscal 2000 to $6.2 million in fiscal 2001, or 9% and sales in other Latin American countries increased from $2.8 million in fiscal 2000 to $3.4 million in fiscal 2001, or 22%.

Third quarter sales for the Asian operations were $5.0 million higher than the prior year sales, which is a 56% increase over the prior year third quarter. The dramatic increase in Asian sales is the combined result of the strong positioning of the Samsonite brand and an economic recovery in the region.

Revenues from licensing operations increased from $4.1 million in the prior year to $4.4 million in fiscal 2001. The increase is due primarily to an increase in royalty revenues from Samsonite and American Tourister label licensees.

Gross profit. Consolidated gross profit for fiscal 2001 decreased from fiscal 2000 by $4.2 million. Consolidated gross margin as a percentage of sales decreased by 0.9 margin points, from 41.9% in fiscal 2000 to 41.0% in fiscal 2001.

Gross margins from European operations decreased 1.4 percentage points from the prior year to 41.1% in fiscal 2001. The decrease in European gross profit margins is due primarily to higher prices on purchased softside products caused by the strength of the US dollar, higher petroleum based material costs and increased sales of products which carry lower gross profit margins. The interruption in Europe of transportation systems due to social protest also negatively affected gross profit margins by causing inefficiencies in production scheduling. During the third quarter the Company adopted sales price increases on European products to partially counter product and material cost increases. However, the Company expects that European gross margins will continue to be negatively affected by higher product and material costs through at least the remainder of the year.

Gross margins for the Americas decreased by 2.6 percentage points, from 39.4% in fiscal 2000 to 36.8% in fiscal 2001. US Wholesale gross profit margins decreased from 33.8% in the prior year to 27.8% in the current year due to price discounts, markdowns on discontinued product sales and lower total sales volumes. US Retail gross profit margins for the quarter declined by 1.4 percentage points from 52.1% in fiscal 2000 to 50.7% in fiscal 2001. US Retail gross margins continue to be negatively affected by promotional pricing activities caused by discounting in other retail distribution channels.

Partially offsetting the declines in other regions, gross margins for the Other Americas and Asia increased by 3.9 and 5.1 percentage points, respectively, due primarily to the impact of increased sales volumes.

Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A decreased by $1.7 million from fiscal 2000 to fiscal 2001. As a percent of sales, SG&A was 32.7% in fiscal 2001 compared to 32.6% in fiscal 2000.

SG&A for the Americas, including the Corporate division, decreased by $2.9 million. Within the Americas, SG&A for US Retail decreased by $0.5 million. SG&A for Corporate and US Wholesale decreased $3.4 million due primarily to the increase in pension income and lower compensation expense in the current year. SG&A for Other Americas operations increased by $1.0 million in support of higher sales volumes for that region. European SG&A decreased by $0.7 million. Excluding the effect of exchange rate changes, Europe's SG&A increased by

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$3.0 million, or 13% in local currency due to a 12% increase in sales volumes and additional costs to support new product lines and expanding retail operations. SG&A for Asia was $1.9 million higher than the prior year in support of their sales volume growth, and SG&A for licensing was approximately equal to the prior year.

Amortization of intangible assets. Amortization of intangible assets was lower from prior year by $0.3 million due to certain intangibles becoming fully amortized.

Operating income. Operating income declined from $17.7 million in fiscal 2000 to $15.6 million in fiscal 2001, a decrease of $2.1 million. The decline is the net result of lower sales volume and gross profit, net of declines in SG&A of $1.7 million and amortization of intangibles of $0.3 million.

Interest income. Interest income includes interest received from the temporary investment of excess cash balances. Interest income decreased by $0.2 million compared to the prior year.

Interest expense and amortization of debt issue costs. Interest expense and amortization of debt issue costs decreased from $13.0 million in fiscal 2000 to $12.5 million in fiscal 2001. The decline in interest expense is due primarily to a decline in debt levels since the prior year which is partially offset by higher interest rates in the current year. Included in interest expense is the amortization of debt issue costs of $0.5 million in both fiscal 2001 and fiscal 2000.

Other income (expense) - net. See Note 6 to the consolidated financial statements included elsewhere herein for a comparative analysis of other income (expense) - net. Other income (expense) changed from expense of $1.6 million in fiscal 2000, to income of $1.5 million in fiscal 2001. The increase in other income from the prior year is due to an increase in gains from foreign currency forward delivery contracts of $2.6 million and a reduction in other expenses of $0.5 million.

The Company enters into forward exchange contracts to reduce its exposures to changes in exchange rates. The Company estimates the reduction in operating income because of the exchange rate effect from the strengthening of the US dollar versus the Belgian franc from the same quarter in the prior year to be approximately $1.8 million for the three months ended October 31, 2000. Other income for the third quarter of fiscal 2001 includes a net gain from foreign currency forward delivery contracts of $2.1 million. Realized gains on contracts closed during the third quarter of fiscal 2001 were $1.9 million. In the third quarter of fiscal 2000, such transactions resulted in a loss of $0.5 million. Realized gains on contracts closed during the third quarter of fiscal 2000 were $1.4 million. The net gain (loss) recorded for such contracts for the three months ended October 31, 2000 and 1999 results primarily from forward exchange contracts entered to reduce economic exposure to fluctuations in currency exchange rates for the Belgian franc. The ultimate realization of gains (losses) from such contracts is subject to fluctuations in the exchange rate of the US dollar against the Belgian franc until the contracts are closed.

Income tax expense. Income tax expense decreased from $3.3 million in fiscal 2000 to $2.9 million in fiscal 2001. The decrease is due primarily to lower European pretax earnings and the decrease in the reported amount of European taxes due to the exchange rate effect. The relationship between the expected income tax benefit computed by applying the US statutory rate to the pretax loss and actual income tax expense recognized results primarily because of (i) foreign income tax expense provided on foreign earnings, (ii) valuation allowances provided on US deferred tax assets, and (iii) state and local income taxes.

Net loss. The Company had net income in fiscal 2001 of $1.0 million compared to a net loss in fiscal 2000 of $0.5 million. The change in the net income (loss) from the prior year of $1.5 million is caused by the effect of the decrease in operating income and interest income and the increase in minority interest which was more than offset by the increase in other income and the decrease in interest and income tax expense.

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Senior redeemable preferred stock dividends and accretion of preferred stock discount. This item represents the accrual of cumulative dividends on the Senior Redeemable Preferred Stock issued in connection with the 1998 recapitalization and the accretion of the discount over the twelve-year term of the Senior Redeemable Preferred Stock. The increase over prior year is due to the compounding effect of cumulative dividends accrued since the stock was issued in June 1998.

Net loss to common stockholders. This amount represents net loss after dividends payable and the accretion of discount on the Senior Redeemable Preferred Stock and is the amount used to calculate net loss per common share.

Nine Months Ended October 31, 2000 ("fiscal 2001" or "current year") Compared to Nine Months Ended October 31, 1999 ("fiscal 2000" or "prior year")

General. Results of European operations were translated from Belgian francs to US dollars in fiscal 2001 and fiscal 2000 at average rates of approximately 43.02 and 37.55 francs to the US dollar, respectively. This weakening of the Belgian franc in relation to the US dollar of approximately 13% resulted in decreases in reported sales, cost of sales, SG&A expenses and operating earnings in fiscal 2001 compared to fiscal 2000. The most significant effects from the difference in exchange rates from last year to this year are noted in the following analysis and are 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. During fiscal 2001, the Company had net gains from such instruments of $5.4 million; during fiscal 2000, the Company had net gains on such instruments of $5.3 million. Realized gains from contracts closed during fiscal 2001 and 2000 were $3.1 million and $2.6 million, respectively. The Company estimates the reduction in operating income from the strengthening of the US dollar versus the Belgian franc from the same period in the prior year to be approximately $4.7 million for the nine months ended October 31, 2000.

Net Sales. Consolidated net sales increased from $579.5 million in fiscal 2000 to $590.8 million in fiscal 2001, an increase of $11.3 million, or 1.9%. Fiscal 2001 sales were unfavorably impacted by the increase in the value of the US dollar compared to the Belgian franc. Without the effect of the exchange rate difference, fiscal 2001 sales would have increased by $46.1 million, or approximately 8%.

Sales from European operations decreased from $243.6 million in fiscal 2000 to $238.9 million in fiscal 2001, a decrease of $4.7 million. Expressed in the local European reporting currency (Belgian francs), fiscal 2001 sales increased by 12.4%, or the US constant dollar equivalent of $30.1 million, compared to fiscal 2000. Sales of softside product improved by approximately 19% from prior year while hardside product sales decreased by approximately 5%. Europe's local currency sales increases continue to be strong. However, continued inflationary pressure in Europe could result in more European interest rate hikes and result in lower consumer spending which would negatively affect future European revenues. In reaction to higher oil related material costs and higher costs related to the weakening of the Belgian franc in relation to the US dollar, the Company instituted a price increase averaging approximately 2% in August 2000 in Europe.

Sales from the Americas operations increased from $299.5 million in fiscal 2000 to $301.2 million in fiscal 2001, an increase of $1.7 million. US Wholesale sales for the current year decreased by $5.3 million from the prior year, US Retail sales increased by $0.6 million, and sales in the Other Americas operations increased by $6.4 million from the prior year. US Wholesale sales decreased from $166.3 million in the prior year to $161.0 million in fiscal 2001. The decline in US Wholesale sales is the result of higher discounts and markdowns on discontinued products due to an increase in price-based sales promotions by our competition. In addition, the Company accelerated the discontinuance and closeout of the Silhouette 6 product line, our single largest product line in the United States, to prepare for the introduction of Silhouette 7 later this year. Sales to the warehouse club distribution channel in the United States were 45% lower than in the prior year. Sales to the traditional channel

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which includes sales of exclusive label product to department stores were 4% lower than in the prior year. However, sales to mass merchant type retailers and other non-traditional luggage retailers increased 15% over the prior year. Sales in the US Retail division increased from $96.8 million in the prior year to $97.4 million in fiscal 2001. However, comparable store sales in the US Retail division declined 3.7% from the same period in the prior year. US Retail comparable store sales continue to be negatively affected by promotional price discounting in other retail channels and decreased outlet mall traffic. Within the Other Americas division, sales in Canada increased $2.1 million, or 15%; sales in Mexico increased $2.2 million, or 14%; and sales in other Latin American countries increased $2.1 million, or 30%.

Sales for the Asian operations were $13.4 million higher than the prior year, which is a 55% increase. The dramatic increase in Asian sales is due to the combination of the strong positioning of the Samsonite brand and the economic recovery in the region.

Revenues from licensing operations increased $0.9 million over the prior year to $12.7 million in fiscal 2001. The increase is due to an increase in revenues from our Japanese luggage licensee and from Samsonite and American Tourister label licensees.

Gross profit. Consolidated gross profit for fiscal 2001 increased from fiscal 2000 by $1.3 million. Consolidated gross margin decreased by 0.6 margin points, from 41.9% in fiscal 2000 to 41.3% in fiscal 2001.

Gross margins from European operations decreased 0.4 percentage points from 41.5% in the prior year to 41.1% in fiscal 2001. The decrease in European gross profit margins is due primarily to higher oil prices, higher prices on purchased softside products caused by the strength of the US dollar, higher petroleum based material costs and increased sales of products which carry lower gross profit margins, offset by lower fixed manufacturing costs. During the third quarter, the Company adopted sales price increases on European products to partially counter product and material cost increases. However, the Company expects that European gross margins will continue to be negatively affected by higher product and material costs through at least the remainder of the year.

Gross margins for the Americas decreased by 1.0 percentage points, from 40.0% in fiscal 2000 to 39.0% in fiscal 2001. This was primarily due to US Wholesale gross profit margin which decreased from 34.5% in the prior year to 31.5% in the current year due to higher discounts and markdowns on discontinued product sales and lower total sales volumes. The US Wholesale business continues to be negatively affected by major competitor closeouts and price competition in the department and specialty store channels. US Retail gross margins were lower at 51.7% in fiscal 2001 compared to 51.9% in fiscal 2000.

Partially offsetting the declines in other regions, gross margins for the Other Americas and Asia increased by 3.9 and 1.3 percentage points, respectively, due primarily to the impact of increased sales volumes.

Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A increased by $0.5 million from fiscal 2000 to fiscal 2001. As a percent of sales, SG&A was 33.3% in fiscal 2001 and 33.9% in fiscal 2000.

SG&A for the Americas, including the Corporate division, decreased $4.2 million. Within the Americas, SG&A for Corporate and US Wholesale combined decreased $7.4 million due primarily to the reduction of accrued pension costs and accrued performance incentive compensation at Corporate and the reduction of inventory reserves, lower dealer advertising, and lower general and administrative costs in the US Wholesale division. SG&A for US Retail increased by $0.7 million due primarily to increased rent and payroll costs. SG&A for Other Americas increased by $2.5 million primarily due to increased sales volumes. SG&A for Europe increased $1.0 million. Excluding the effect of exchange rate changes, Europe's SG&A increased by $10.6 million, or 16% in local currency due to a 12% increase in sales volumes and additional costs to support the Samsonite Black Label Travel Wear product line, expanding retail operations, and the distribution of the Hedgren product line. SG&A for Asia was $3.8 million higher than the prior year in support of their sales volume growth, and SG&A for licensing operations was $0.1 million lower than the prior year.

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Amortization of intangible assets. Amortization of intangible assets was lower than the prior year by $0.7 million because certain intangibles became fully amortized.

Operating income. Operating income improved from $42.4 million in fiscal 2000 to $43.9 million in fiscal 2001, an increase of $1.5 million. The increase is a result of the increased sales volume and resulting increase in gross profit of $1.3 million and lower amortization of intangibles expense of $0.7 million, offset by an increase in SG&A of $0.5 million.

Interest income. Interest income includes interest received from the temporary investment of excess cash balances. Interest income decreased by $0.6 million compared to the prior year.

Interest expense and amortization of debt issue costs. Interest expense and amortization of debt issue costs decreased from $39.8 million in fiscal 2000 to $37.1 million in fiscal 2001 representing a decrease of 6.8%. The decline in interest expense is due primarily to a decline in debt levels since the prior year which is partially offset by higher interest rates in the current year. Included in interest expense is amortization of debt issue costs of $1.6 million in fiscal 2001 and fiscal 2000.

Other income - net. See Note 6 to the consolidated financial statements included elsewhere herein for a comparative analysis of other income - net. Other income - net increased by $1.2 million from $1.5 million in fiscal 2000 to $2.7 million in fiscal 2001. The increase in other income is due primarily to the reduction in legal and bank amendment fees of $1.0 million incurred in the prior year, higher equity in earnings of affiliate of $0.4 million in the current year and a reduction in other miscellaneous expenses of $0.4 million, partially offset by an increase in transactional exchange losses of $0.6 million compared to the prior year.

The Company enters into 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 $4.7 million and $0.6 million for the nine months ended October 31, 2000 and 1999, respectively. Other income for fiscal 2001 includes income from forward exchange contracts of $5.4 million. Realized gains on contracts closed during the nine month period were $3.1 million. In fiscal 2000, such transactions resulted in a gain of $5.3 million, including a realized gain of $2.6 million. The income recorded for the nine months ended October 31, 2000 and October 31, 1999 results primarily from forward exchange contracts entered to reduce economic exposure to fluctuations in currency exchange rates for the Belgian franc. The ultimate realization of this amount is subject to fluctuations in the exchange rate of the U.S. dollar against the Belgian franc when the contracts are closed.

Income tax expense. Income tax expense decreased from $9.1 million in fiscal 2000 to $8.9 million in fiscal 2001. The decrease in current year taxes is due primarily to lower European pretax earnings and the decrease in the reported amount of European taxes due to the exchange rate effect. The relationship between the expected income tax benefit computed by applying the U.S. statutory rate to the pretax loss and actual income tax expense recognized results primarily because of (i) foreign income tax expense provided on foreign earnings, (ii) valuation allowances provided on deferred tax assets, and (iii) state and local income taxes. A deferred tax benefit has not been provided for U.S. operating losses.

Net loss. The Company had a net loss in fiscal 2001 of $0.8 million compared to a net loss in fiscal 2000 of $4.8 million. The decrease in the net loss from the prior year of $4.0 million is caused by the effect of the increases in operating and other income and a decrease in interest and income tax expense, offset by the decrease in interest income and increase in minority interest during fiscal 2001.

Senior redeemable preferred stock dividends and accretion of preferred stock discount. This item represents the accrual of cumulative dividends on the Senior Redeemable Preferred Stock issued in connection with the fiscal 1999 recapitalization and the accretion of the discount over the twelve-year term of the Senior Redeemable Preferred Stock.

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Net loss to common stockholders. This amount represents net loss after dividends payable and the accretion of discount on the Senior Redeemable Preferred Stock and is the amount used to calculate net loss per common share.

Liquidity and Capital Resources

Cash flows provided by operating activities as reflected on the consolidated statements of cash flows included elsewhere herein increased by $0.6 million compared with the prior year. At October 31, 2000, the Company had current assets in excess of current liabilities of $156.4 million compared to $159.1 million at January 31, 2000, a decrease of $2.7 million. Current assets increased by $7.1 million, primarily due to increases in trade and other receivables of $6.5 million, cash of $7.5 million and prepaid expenses and other current assets of $3.2 million, net of decreases in inventories of $10.1 million. The Company uses an internal measurement referred to as "consolidated net working capital efficiency" to evaluate periodic operating performance. The Company calculates consolidated net working capital efficiency using the average accounts receivable, notes receivable and inventory balances, net of accounts payable for a rolling twelve month period, divided by net outside sales for the same rolling twelve month period. The Company's consolidated net working capital efficiency has improved from 32.8% for the twelve month period ended October 31, 1999 to 27.1% for the twelve month period ended October 31, 2000.

Long-term obligations (including current installments) decreased from $432.5 million at January 31, 2000 to $430.1 million at October 31, 2000, a decrease of $2.4 million. At October 31, 2000, the Company's Senior Credit Facility consists of a term loan arrangement with balances totaling $78.6 million, revolving credit line advances of $6.2 million, and undrawn availability of $87.3 under the revolving credit portion of the facility. At October 31, 2000, the Company had approximately $6.5 million of outstanding letters of credit under the terms of the revolving credit portion of the facility. Additional borrowings under the Senior Credit Facility could be limited by the Company's ability to meet and maintain the financial ratios required under the Senior Credit Facility after giving effect to any additional borrowings.

The Company's cash flow from operations together with amounts available under its credit facilities were sufficient to fund fiscal 2001 operations, scheduled payments of principal and interest on indebtedness, income taxes and capital expenditures. Management of the Company believes that cash flow from future operations and amounts available under its credit facilities will be adequate to fund operating requirements and expansion plans during the next 12 months.

The Company's principal foreign operations are located in Western Europe, the economies of which are not considered to be highly inflationary. The Company enters into foreign exchange contracts in order to reduce its exposure on certain foreign operations through the use of forward delivery commitments. To the extent the company maintains foreign currency denominated debt balances in respect to its foreign operations, the Company's exposure to foreign currency changes to reduced. As of October 31, 2000, the value of the Euro currency has declined approximately 27% since its adoption. No assurance can be given that the Company will be able to offset losses in sales and operating income from negative exchange rate fluctuations from the Euro or other currencies through foreign currency forward exchange contracts, options or other instruments which may be available to reduce economic exposure to currency fluctuations. As of October 31, 2000, the Company has not entered into any forward exchange contracts to hedge foreign currency exposure beyond the end of the current fiscal year. Geographic concentrations of credit risk with respect to trade receivables are not considered significant as a result of the diverse geographic areas covered by the Company's operations.

The Company believes that disclosure of its Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") provides useful information regarding the Company's ability to incur and service debt, but that it should not be considered a substitute for operating income or cash flow from operations determined in accordance with generally accepted accounting principles. Other companies may calculate EBITDA in a different manner than the Company. EBITDA does not take into consideration substantial costs and cash flows of doing business, such as interest expense, income taxes, depreciation, and amortization, 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 the Company because those funds are required for debt service, capital expenditures to replace fixed assets, working capital, and other commitments and contingencies. EBITDA is not an accounting term and is not used in generally accepted accounting principles. EBITDA, as calculated by the Company, also excludes extraordinary items, discontinued operations, and minority interest in earnings of subsidiaries. The Company's EBITDA for nine months ended October 31, 2000 and 1999 and the three months ended October 31, 2000 and 1999 was $66.2 million, $64.0 million, $23.1 million and $22.6 million, respectively. However, these amounts include various items of income (expense), including gain (loss) on disposition of fixed assets, net, and other items, net, which together aggregate $0.4 million and $1.4 million for the nine months ended October 31, 2000 and 1999, respectively, and $0.4 million and $3.0 million for the three months ended October 31, 2000 and 1999, 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 was $66.6 million and $65.4 million for the nine months ended October 31, 2000, and 1999 and $23.5 million and $25.6 million for the three months ended October 31, 2000 and 1999.

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 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 sales are within these eleven countries. The Euro conversion has a significant impact on the Company's 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.

The Company believes 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. Additionally, if 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. Because of the weakness in the Euro since its adoption, the Company does not expect this to occur within the next fiscal year.

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, the Company does not believe that potential increased competition and price transparency as a result of the Euro will have an adverse effect on the Company's sales or results of operations.

Samsonite Europe currently intends to continue using the Belgian franc as its functional currency for financial reporting purposes until its fiscal year beginning January 1, 2001. As of December 31, 1998, Samsonite Europe's information systems were 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 were necessary to convert the functional currency to the Euro. Those modifications have been  

accomplished. Most of the system modifications have been accomplished using internal staffing with minimal incremental costs. The Company estimates that it has incurred incremental costs of approximately $100,000 to 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 years beginning after June 15, 2000. 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. The Company does not believe that the implementation of this standard will have a material impact on its financial condition or statements of operations.

In March 2000, the Financial Accounting Standard Board ("FASB") issued FASB Interpretation No. 44 "Accounting for Certain Transactions Involving Stock Compensation" - an interpretation of APB Opinion No. 25 ("FIN 44"). This opinion provides guidance on the accounting for certain stock option transactions and subsequent amendments to stock option transactions. FIN 44 is effective July 1, 2000, but certain provisions cover specific events that occur after either December 15, 1998 or January 12, 2000. To the extent that FIN 44 covers events occurring during the period from December 15, 1998 and January 12, 2000, but before July 1, 2000, the effects of applying this Interpretation are to be recognized on a prospective basis. The Company has determined that the implementation of this interpretation will not have a material impact on its financial position or results of operations.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101, "Revenue Recognition" (SAB 101), which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. Subsequently, the SEC released SAB 101B, which delayed the implementation date of SAB 101 for registrants with fiscal years beginning between December 16, 1999 and March 15, 2000. The Company has determined that the impact on its financial position or results of operations will not be material.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

The Company's primary market risks include changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and interest rates. The Company's strategies to address market risks and the types of financial instruments entered into to hedge market risks are described in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2000.

At October 31, 2000, the Company and its European subsidiary had forward foreign exchange contracts outstanding having a total contract amount of approximately $37.7 million compared to approximately $35.0 million at January 31, 2000.

If there were a ten percent adverse change in foreign currency exchange rates relative to all outstanding forward exchange contracts, the loss in earnings from the amount included in results of operations for the nine month period ended October 31, 2000 would be approximately $3.5 million, before the effect of income taxes. Any hypothetical loss in earnings would be offset by changes in the underlying value of translated earnings or royalty income, to the extent such earnings or income is equal to the amount hedged, or for product purchases by exchange gains.

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The amount of fixed rate long-term debt outstanding has not changed materially from the amount outstanding at January 31, 2000 and continues to be comprised primarily of the Company's outstanding publicly traded senior subordinated notes having a face amount of $338.1 million. At January 31, 2000, the quoted market price of these notes was $85 per $100 of principal; at October 31, 2000, the quoted market price of these notes was $77 per $100 of principal.

At October 31, 2000, the Company had an outstanding variable to fixed interest rate swap agreement with a notional amount of $25.0 million, a pay rate of 6.14%, and a receive rate of 6.71%. The swap agreement dated November 8, 1999 has a two-year term and can be canceled by the payor of the variable rate after one year. The rate the Company receives reprices every three months. The swap agreement terminated on November 8, 2000.

At October 31, 2000, the Company also had an outstanding variable to fixed rate swap agreement with a notional amount of 1,400,000,000 Belgian francs ($30,604,000 at October 31, 2000), a pay rate of 5.01% and a receive rate of 4.784%. The swap agreement dated May 17, 2000 has a three-year term. The rate the Company receives reprices every three months.

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SAMSONITE CORPORATION

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

The Company and some of its officers, directors and shareholders were named in shareholder class action lawsuits and a derivative action lawsuit filed between March 13, 1998 and March 9, 1999 in various courts, including Colorado State District Court and the United States District Court for the District of Colorado (collectively, the "Colorado Litigations"); and the Delaware Court of Chancery (the "Delaware Litigation"). On April 9, 1999, the Company signed an agreement with a major insurance company that provides comprehensive insurance coverage for the defense and resolution of all of these litigations. Substantially all of its costs to defend and resolve these litigations were recorded in the consolidated financial statements as of January 31, 1999. The Delaware Litigation was dismissed and the dismissal was affirmed on appeal.

On April 27, 2000, the Company and the other defendants in the Colorado Litigations signed a definitive settlement agreement with the plaintiffs that provides for a complete resolution of the Colorado Litigations. The settlement provides that all defendants and related parties, including Samsonite and its officers, directors and shareholders, will be fully released from all claims that were asserted or could have been asserted in the Colorado Litigations (in which the federal securities complaint has been amended to include the claims asserted in the Delaware Litigation). All amounts to be paid pursuant to the settlement will be paid entirely by Samsonite's insurance carrier. Upon notice to the members of the putative class and shareholders of the Company, the Colorado federal court held a hearing on the fairness of the settlement for July 25, 2000. At that hearing, the court determined that the settlement is fair and reasonable to the class members and entered a judgment approving the settlement and dismissing the Colorado Litigations with prejudice. Subsequently, the Colorado state court entered a judgment dismissing the shareholder class action lawsuits pending in that court. Both judgments have become final.

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.

Item 2 - Changes in Securities

None.

Item 3 - Defaults Upon Senior Securities

None.

Item 4 - Submission of Matters to a Vote of Security Holders

None.

Item 5 - Other Information

None.

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  Item 6 - Exhibits and Reports on Form 8-K

(a)          See Exhibit Index.
(b)          Reports on Form 8-K.
                     None.

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SIGNATURE

          Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SAMSONITE CORPORATION
	(Registrant)
	By	/s/   Richard H. Wiley
		Name: Richard H. Wiley
		Title:   Chief Financial Officer, Treasurer
		and Secretary
Date:  December 14, 2000

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 INDEX TO EXHIBITS

Exhibit		Description
3.1		Amended and Restated Certificate of Incorporation of the Company.1
3.2		Certificate of Ownership and Merger dated July 14, 1995.2
3.3		By-Laws of the Company.1
4.1		Indenture, dated as of June 24, 1998, between the Company and United States Trust Company of New York.3
4.2		Certificate of Designation of the Powers, Preferences and Relative, Participating, Option and other Special Rights of 137 /8 % Senior Redeemable Exchangeable Preferred Stock and Qualifications, Limitations and Restrictions thereof.4
4.3		Certificate of Correction to the Certificate of Designation of the Powers, Preferences and Relative, Participating, Option and other Special Rights of 137 /8 % Senior Redeemable Exchangeable Preferred Stock and Qualifications, Limitations and Restrictions thereof.4
4.4		Indenture, in respect of the 137 /8 % Junior Subordinated Debentures due 2010 of the Company, dated as of June 24, 1998, between the Company and United States Trust Company of New York.4
4.5		Form of Indenture, in respect of the 137 /8 % Senior Debentures due 2010 of Samsonite Holdings, Inc., to be dated as of the Exchange Date, between Samsonite Holdings Inc. and United States Trust Company of New York.4
4.6		Rights Agreement, dated as of May 12, 1998, between the Company 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.5
4.7		First Amendment, dated as of April 7, 1999, to Rights Agreement, dated as of May 12, 1998, between Samsonite and BankBoston, N.A., as Rights Agent.6
4.8		Second Amendment to the Rights Agreement, dated as of July 13, 1999, between Samsonite and BankBoston, N.A., as Rights Agent.7
4.9		Third Amendment of the Rights Agreement, dated as of September 27, 1999, between Samsonite and BankBoston, N.A.8
10.1		Stock Option Agreement, dated as of October 23, 2000, between the Company and L. C. Ross.

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Exhibit	Description
27	Financial Data Schedule.

1		Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1997 (File No. 0-23214).
2		Incorporated by reference from the Registration Statement on Form S-4 (Registration No. 33-95642).
3		Incorporated by reference from the Registration Statement on form S-4 (Registration No. 333-61521).
4		Incorporated by reference from the Registration Statement on form S-4 (Registration No. 333-61519).
5		Incorporated by reference from the Company's Registration Statement on Form 8-A filed June 14, 1994 under the Exchange Act and the Company's Registration Statement on Form 8-A filed May 13, 1998 under the Exchange Act (File No. 0-23214).
6		Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended April 30, 1999.
7		Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 1999.
8		Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended October 31, 1999.

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