________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
(AMENDMENT NO. 1)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 4, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-11202
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AUTHENTIC FITNESS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
DELAWARE 95-4268251
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
6040 BANDINI BLVD.
COMMERCE, CALIFORNIA 90040
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
(213) 726-1262
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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COPIES OF ALL COMMUNICATIONS TO:
AUTHENTIC FITNESS CORPORATION
90 PARK AVENUE
26TH FLOOR
NEW YORK, NEW YORK 10016
ATTENTION: GENERAL COUNSEL
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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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
The number of shares outstanding of the registrant's Common Stock as of
January 31, 1997 is: 22,389,730.
________________________________________________________________________________
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AUTHENTIC FITNESS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
JANUARY 4, JULY 6,
1997 1996
------------ --------
(UNAUDITED)
(IN THOUSANDS OF
DOLLARS)
ASSETS
Current assets:
Cash............................................................................... $ 948 $ 1,499
Accounts receivable -- net......................................................... 88,580 75,274
Accounts receivable from affiliates................................................ 4,603 4,004
Inventories:
Finished goods................................................................ 53,183 45,960
Raw materials and work in process............................................. 30,817 18,817
------------ --------
Total inventories........................................................ 84,000 64,777
Other current assets............................................................... 11,837 19,710
------------ --------
Total current assets..................................................... 189,968 165,264
------------ --------
Property, plant and equipment, (net of accumulated depreciation of $14,075 and $11,062,
respectively)......................................................................... 52,010 42,786
Intangibles and other assets -- net..................................................... 73,939 73,416
------------ --------
$315,917 $281,466
------------ --------
------------ --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowing under revolving credit facility.......................................... $ 98,432 $ 68,214
Current portion of long-term debt.................................................. 2,847 2,844
Accounts payable and accrued liabilities........................................... 40,674 29,701
Accounts payable to affiliates..................................................... 14,857 14,132
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Total current liabilities................................................ 156,810 114,891
------------ --------
Long-term debt.......................................................................... 49,436 49,432
Deferred income taxes................................................................... 420 420
Stockholders' equity:
Common Stock; $.001 par value...................................................... 21 21
Capital in excess of par value..................................................... 159,239 159,239
Cumulative translation adjustment.................................................. (732) (723)
Retained earnings (deficit)........................................................ (49,277) (41,814)
------------ --------
Total stockholders' equity............................................... 109,251 116,723
------------ --------
$315,917 $281,466
------------ --------
------------ --------
This Statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
1
AUTHENTIC FITNESS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
SECOND QUARTER ENDED SIX MONTHS ENDED
-------------------------- --------------------------
JANUARY 4, DECEMBER 30, JANUARY 4, DECEMBER 30,
1997 1995 1997 1995
---------- ------------ ---------- ------------
(UNAUDITED)
(IN THOUSANDS OF DOLLARS EXCEPT SHARE DATE)
Net revenues............................................... $ 70,443 $ 77,298 $ 109,108 $120,206
Cost of goods sold......................................... 43,871 53,838 71,333 79,368
---------- ------------ ---------- ------------
Gross profit............................................... 26,572 23,460 37,775 40,838
Selling, general and administrative expenses............... 18,467 22,629 38,479 34,410
---------- ------------ ---------- ------------
Income (loss) before interest and income taxes............. 8,105 831 (704) 6,428
Interest expense........................................... 3,468 2,686 6,200 4,923
---------- ------------ ---------- ------------
Income (loss) before income taxes.......................... 4,637 (1,855) (6,904) 1,505
Provision (benefit) for income taxes....................... -- (691) -- 494
---------- ------------ ---------- ------------
Net income (loss)........................... $ 4,637 $ (1,164) (6,904) $ 1,011
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Net income (loss) per share................. $ 0.21 $ (0.06) $ (0.31) $ 0.05
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Weighted average number of common shares outstanding....... 22,416 20,006 22,234 22,032
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Related parties transactions included in the Consolidated
Condensed Statements of Operations:
Product sales......................................... $ 7,952 $ 26 $ 12,904 $ 3,189
Purchases of goods and services....................... 1,272 1,767 2,579 3,210
Royalties paid and accrued............................ 1,287 1,372 2,135 2,387
Interest expense...................................... 1,453 335 1,862 335
This Statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
2
AUTHENTIC FITNESS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
SIX MONTHS ENDED
-------------------------------------
JANUARY 4, 1997 DECEMBER 30, 1995
---------------- -----------------
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
Cash flows from operating activities:
Net income (loss)...................................................... $ (6,904) $ 1,011
Non-cash items included in net income:
Depreciation and amortization..................................... 4,276 3,948
Change in deferred taxes.......................................... -- (4,261)
Other............................................................. 1,601 1,362
Income taxes........................................................... 6,690 (3,002)
Other changes in operating accounts.................................... (16,530) (42,348)
---------------- -----------------
Net cash used in operating activities........................ (10,867) (43,290)
Cash flows from investing activities:
Purchases of equipment and other long-term assets...................... (12,197) (10,447)
Other, net............................................................. (1,940) (1,988)
---------------- -----------------
Net cash used in investing activities........................ (14,137) (12,435)
Cash flows from financing activities:
Borrowings under revolving credit facility............................. (19,782) 55,477
Net proceeds from the sale of common stock and exercise of options..... 5 51,277
Purchase of Series A Warrant........................................... -- (36,484)
Issuance of long-term debt............................................. 50,274 37,500
Dividends paid......................................................... (559) (223)
Payment of deferred financing fees..................................... (5,219) (1,094)
Proceeds from capitalized lease obligations............................ -- 1,000
Repayments of debt..................................................... (266) (51,659)
---------------- -----------------
Net cash provided by financing activities.................... 24,453 55,794
---------------- -----------------
Net change in cash.......................................................... (551) 69
Cash at beginning period.................................................... 1,499 772
---------------- -----------------
Cash at end of period....................................................... $ 948 $ 841
---------------- -----------------
---------------- -----------------
Other changes in operating accounts:
Accounts receivable.................................................... $(10,188) $ (7,743)
Inventories............................................................ (19,223) (23,566)
Other current assets................................................... 1,183 (12,164)
Accounts payable and accrued liabilities............................... 11,698 1,125
---------------- -----------------
$(16,530) $ (42,348)
---------------- -----------------
---------------- -----------------
This Statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
3
AUTHENTIC FITNESS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The accompanying consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles and
Securities and Exchange Commission rules and regulations for interim financial
information. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Company, the accompanying
consolidated condensed financial statements contain all of the adjustments (all
of which were of a normal recurring nature, except as noted below) necessary to
present fairly the financial position of the Company as of January 4, 1997, as
well as its results of operations and cash flows for the periods ended January
4, 1997, and December 30, 1995, except that the results of operations for the
quarter and six months ended December 30, 1995, reflect certain reserves
(including adjustments) which were recorded in the fourth quarter of fiscal
1996. Such reserves and adjustments reduced gross profit as originally reported
by $6.7 million, pretax income as originally reported by $10.9 million and net
income as originally reported by $6.7 million. Operating results for interim
periods may not be indicative of results for the full fiscal year. The
Consolidated Condensed Balance Sheet at July 5, 1996, has been derived from the
audited Consolidated Balance Sheet included in the Company's Form 10-K for the
year then ended. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended July 6, 1996.
2. Certain amounts for prior periods have been reclassified to be
comparable with the current period presentation.
3. On September 6, 1996, the Company entered into a $200 Million Credit
Agreement (the '$200 Million Credit Agreement') with GE Capital, The Bank of
Nova Scotia, Union Bank of California and Societe Generale, which replaced the
Company's previous $250 Million Credit Agreement. The decrease in the total
amount of the loan commitment reflects the Company's decision not exercise its
option to purchase the remaining portion of the Series A Warrant representing
approximately 1.8 million shares at $24 per share. The $200 Million Credit
Agreement has a term of five years and provides for a term loan (the 'Term
Loan') in the amount of $50 million and a revolving loan facility (the
'Revolving Loan') in the amount of $150 million. Borrowing under the $200
Million Credit Agreement accrues interest at the lenders base rate or at LIBOR
plus 1.5% (approximately 7.2% at October 5, 1996). The Company is also required
to pay a commitment fee on the unused portion of the Revolving Loan equal to
.50% per annum on the average daily unused revolving loan commitment. In
addition, the $200 Million Credit Agreement allows the Company to repurchase up
to $10 million of its own common stock after March 31, 1997, under certain
conditions. The Term Loan is payable in nine semi-annual installments commencing
on June 30, 1997 and a final installment of $7,500,000 due September 1, 2001.
4. During the first quarter of fiscal 1997 GE Capital exercised the Series
A Warrant and acquired 1,809,109 shares of the Company's common stock.
5. As of July 6, 1996, the Company has approximately $3.5 million of net
operating loss carryforwards ($1.2 million of income tax benefit) available to
offset future provisions for income taxes for financial reporting purposes. The
Company incurred a net loss in fiscal 1996 and has incurred a cumulative net
loss through the first six months of fiscal 1997, and as a result, will not
record future benefits from its net operating loss carryforward until the
Company realizes cumulative net income for the current fiscal year, which is
expected to occur in the third quarter of fiscal 1997.
6. On January 1, 1997, one of the Company's three distribution centers,
located in Sparks, Nevada, was flooded destroying certain inventory owned by the
Company. The Company is insured for such losses as well as for profits lost due
to business interruption. As of January 4, 1997, the Company had recorded a
$15.7 million receivable from its insurance carrier related to this claim
representing $12.7 million for the value of inventory damaged in the flood and
$2.9 million of lost profit on $8.6 million of orders that were ready to ship
prior to incurring damage caused by the flood.
4
AUTHENTIC FITNESS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
7. During the second quarter of fiscal 1997, the Company realized a gain of
approximately $3 million from the sale of certain barter assets to the issuing
barter company. The barter assets had an original face value of $12.3 million of
which approximately $2.8 million had been utilized by the Company through
December 1996 and an adjusted net book value of approximately $5.5 million. The
Company received $8.5 million from the sale. The sale of the barter asset was
negotiated by certain officers and directors of the Company who also serve as
officers and directors of Warnaco. While this is the Company's only significant
transaction with the barter company, Warnaco has engaged in transactions for
amounts significantly in excess of the Company's transaction with the issuing
barter company during the relevant period. Warnaco has done and continues to do
business with the barter company.
5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
STATEMENT OF OPERATIONS (SELECTED DATA)
SECOND QUARTER ENDED SIX MONTHS ENDED
-------------------------- --------------------------
JANUARY 4, DECEMBER 30, JANUARY 4, DECEMBER 30,
1997 1995 1997 1995
---------- ------------ ---------- ------------
(AMOUNTS IN MILLIONS OF DOLLARS)
Net revenues.................................... $ 70.4 $ 77.3 $109.1 $120.2
Cost of goods sold.............................. 43.9 53.8 71.3 79.4
---------- ------ ---------- ------------
Gross profit.................................... 26.6 23.5 37.8 40.8
Percent to net revenue..................... 37.7% 30.3% 34.6% 34.0%
Selling, general and administrative expenses.... 18.5 22.6 38.5 34.4
---------- ------ ---------- ------------
Income (loss) before interest and income
taxes......................................... 8.1 0.8 (0.7) 6.4
Interest expense................................ 3.5 2.7 6.2 4.9
Provision for income taxes...................... -- (0.7) -- 0.5
---------- ------ ---------- ------------
Income (loss) before extraordinary items........ $ 4.6 $ (1.2) $ (6.9) $ 1.0
---------- ------ ---------- ------------
---------- ------ ---------- ------------
Net revenues for the second quarter of fiscal 1997 were $70.4 million
compared to $77.3 million in the second quarter of fiscal 1996. Net revenues
were negatively impacted by $8.6 million for orders that were ready to be
shipped just prior to the flood. (See Note 6 of Notes to Consolidated Condensed
Financial Statements). The impact of the lost shipments was offset by insurance
claim revenue of $2.9 million. Net revenues for the second quarter of fiscal
1996 also includes $3.3 million of net revenue related to the insured value of
damaged inventory partially offset by incremental reserves for potential future
sales returns and allowances. Net revenues for fiscal 1996 include $2.8 million
of net revenues from the discontinued outlet stores and skiwear businesses and
$2.0 million of Herman's shipments. Speedo Division net revenues for the second
quarter of fiscal 1997 were $36.6 million, compared to last year's net revenues
of $41.8 million. The decrease in Speedo net revenues is primarily attributable
to the impact of the flood, lost Herman's orders and the loss of net revenues
attributable to the discontinued outlet stores. Designer swimwear division net
revenues for the second quarter of fiscal 1997 were $17.3 million, 14.2% below
last year of $20.2 million primarily due to the timing of certain Catalina
shipments to Wal-Mart. Net revenues for the Authentic Fitness Retail Stores for
the second quarter of fiscal 1997 increased 25.6% to $12.7 million from $10.1
million in the second quarter of fiscal 1996. The Company currently has 144
stores, an increase of 30 stores from the end of the first quarter of fiscal
1997. Net revenues for the first six months of fiscal 1997 were $109.1 million
compared to $120.2 million reported in the first six months of fiscal 1996. The
decrease in net revenues for the first half is primarily attributable to the
loss of revenue due to the flood of $8.6 million, discontinuance of the outlet
store and skiwear businesses of $8.4 million, the timing of certain designer
swimwear shipments to Wal-Mart and the loss of net revenues attributable to
Herman's of $4.6 million partially offset by the increase in Authentic Fitness
Retail Stores net revenues of $5.4 million.
Gross profit for the second quarter of fiscal 1997 increased slightly to
$26.6 million from the $23.5 million reported in the second quarter of fiscal
1996. Gross profit for the first six months of fiscal 1997 decreased to $37.8
million from $40.8 million in the first six months of fiscal 1996. Gross profit
for both the quarter and first six months of fiscal 1996 includes $6.7 million
of additional reserves (including adjustments) related to inventory. The
decrease in gross profit for the six months of fiscal 1997 primarily reflects
the lower sales volume noted above and the final markdowns of excess inventory
resulting from the impact of the Herman's liquidation. Gross profit as a
percentage of net revenues increased to 37.7% in the second quarter of fiscal
1997 compared to 30.3% in the second quarter of fiscal 1996. Gross profit as a
percentage of net revenues for the first six months of fiscal 1997 was 34.6%,
slightly higher than the 34.0% reported last year.
Selling, general and administrative expenses decreased to $18.5 million
(26.8% of net revenues) in the second quarter of fiscal 1997 from $22.6 million
(29.2% of net revenues) in the second quarter of fiscal 1996. Selling, general
and administrative expenses increased to $38.5 million (35.7% of net
6
revenues) in the first six months of fiscal 1997 from $34.4 million (28.6% of
net revenues) in the first six months of fiscal 1996. Selling, general and
administrative expenses for the second quarter of fiscal 1996 includes
approximately $4.2 million of additional reserves (including adjustments),
primarily related to accounts receivable. Without these additional charges,
selling, general and administrative expenses are approximately equal to last
year for the quarter. Selling, general and administrative expenses for the
second quarter of fiscal 1997 includes approximately $3 million of gain from the
realization of certain barter assets with an adjusted net book value of
approximately $5.5 million acquired in the second quarter of fiscal 1996. The
barter assets had an original face value of approximately $12.3 million of which
approximately $2.8 million had been utilized through December 1996. The Company
received $8.5 million from the sale. The sale of the barter assets was
negotiated by certain officers and directors of the Company who also serve as
officers and directors of Warnaco. While this is the Company's only significant
transaction with the barter company, Warnaco has engaged in transactions for
amounts significantly in excess of the Company's transaction with the issuing
barter company during the relevant period. Warnaco has done, and continues to do
business with the issuing barter company. The increase in selling, general and
administrative expenses for the six months primarily reflects approximately $5.6
million of additional advertising expenses incurred in the first quarter of
fiscal 1997 related to the Olympics and Inner-City Games, the higher mix of
Retail division sales which require a higher level of selling and administrative
expenses than the wholesale divisions, higher depreciation and amortization
expenses of $0.2 million and $1.0 million of severance costs related to a
reduction in work force that is expected to save the Company approximately $3
million per year.
Income (loss) before interest and income taxes was $8.1 million in the
second quarter of fiscal 1997 an increase of $7.3 million compared to the $0.8
million reported in fiscal 1996. Income (loss) before interest and income taxes
for the first six months of fiscal 1996 was $(0.7) million compared to $6.4
million in the comparable fiscal 1996 period. Income before interest and income
taxes for the second quarter and first six months of fiscal 1996 include $10.9
million of additional reserves (including adjustments), as noted above.
Interest expense was $3.5 million in the second quarter of fiscal 1997
compared to $2.7 million in the second quarter of fiscal 1996. Interest expense
for the first six months of fiscal 1997 was $6.2 million compared to $4.9
million in the first six months of fiscal 1996. The increase in interest expense
compared to last year for both the quarter and the first six months resulted
primarily from borrowing to support the expansion of the Company's Authentic
Fitness Retail Stores.
The Company did not record an income tax provision or benefit for the
quarter or the first six months of fiscal 1997. The Company expects its
effective income tax rate to be approximately 36% for fiscal 1997, equal to the
rate for the first six months of fiscal 1996.The Company incurred a net loss in
fiscal 1996 and has incurred a cumulative net loss through the first six months
of fiscal 1997, and as a result, will not record future benefits from its net
operating loss carryforward until the Company realizes cumulative net income for
the current fiscal year, which is expected to occur in the third quarter of
fiscal 1997.
Net income for the second quarter of fiscal 1997 was $4.6 million compared
to a net loss of $1.2 million in the second quarter of fiscal 1996. The improved
net income reflects the higher gross profit and lower selling, general and
administrative expenses. Net loss for the first six months of fiscal 1997 was
$6.9 million compared to net income of $1.0 million in fiscal 1996. The net loss
for the six months reflects lower gross profit, higher selling, general and
administrative expenses and higher interest expense, all as noted above.
CAPITAL RESOURCES AND LIQUIDITY
On August 16, 1995, consistent with the Company's goal of providing
increased shareholder value, the Company declared its first quarterly cash
dividend of 1.25[c] per share, equivalent of an annual rate of 5[c] per share.
The Company has since declared six successive quarterly cash dividends of
1.25[c] per share. The Company believes that the payment of a regular quarterly
cash dividend helps broaden the Company's shareholder base.
On September 6, 1996, the Company entered into a $200 million Credit
Agreement (the '$200 Million Credit Agreement') with GE Capital, The Bank of
Nova Scotia, Union Bank of California and Societe Generale which replaced the
Company's previous $250 Million Credit Agreement. The decrease in the total
amount of the Credit Agreement commitment reflects the Company's intent not to
exercise
7
their option to repurchase the remaining portion of the Series A Warrant from GE
Capital representing 1.8 million shares at $24 per share. The $200 Million
Credit Agreement has a term of five years and provides for a term loan (the
'Term Loan') in the amount of $50 million and a revolving loan facility in the
amount of $150 million (the 'Revolving Loan'). Borrowing under the $200 Million
Credit Agreement accrues interest at the lenders base rate or at LIBOR plus
1.5%. In addition, the agreement allows the Company to repurchase up to $10
million of its own common stock after March 1, 1997, under certain conditions.
The outstanding balance on the Company's Revolving Loan at February 12, 1997 was
approximately $98 million and the outstanding balance under the Term Loan was
$50 million.
The Company plans to expand its channels of distribution and provide growth
in its operations by opening additional Speedo'r' Authentic Fitness'r' retail
stores. The Company currently has 144 stores open (including 20 stores in
Bally's Health and Fitness Centers). The cost of leasehold improvements,
fixtures and the additional working capital associated with the opening of an
average new store is expected to be approximately $250,000, which is
approximately equal to the average for fiscal 1997.
The Company's liquidity requirements arise primarily from its debt service
requirements and the funding of the Company's working capital needs, primarily
inventory and accounts receivable. The Company's borrowing requirements are
seasonal, with peak working capital needs arising at the end of the third
quarter and beginning of the fourth quarter of the fiscal year. The Company
typically generates nearly all of its operating cash flow in the fourth quarter
of the fiscal year reflecting third and fourth quarter shipments and the sale of
inventory built during the first half of the fiscal year. The Company meets its
seasonal working capital needs by utilizing amounts available under its
revolving line of credit. The Company has amended and increased its lines of
credit several times in the last two years, primarily to support the growth in
its swimwear divisions and to fund the growth of its swimwear divisions and to
fund the rapid rollout of the Authentic Fitness Retail Stores.
Net cash used in operating activities was $10.9 million in the first six
months of fiscal 1997 compared to a use of $43.3 million in the first six months
of fiscal 1996. The improvement in cash flow from operations reflects (i)
improved accounts receivable (after the flood claims) and inventory primarily
due to the Company's decision to exit the outlet store and skiwear businesses,
(ii) lower prepaid expenses of $12.3 million due to the increased spending last
year leading up to the Olympic Games, (iii) improved accounts payable and
accrued liabilities of $11.5 million primarily reflecting the timing of certain
payments for goods purchased offshore.
Cash used in investing activities for the first six months of fiscal 1997
was $14.1 million compared to $12.4 million in fiscal 1996. Capital expenditures
were $12.2 million in the first six months of fiscal 1997 compared to $10.4
million in the first six months of fiscal 1996. Capital expenditures are
primarily related to the opening of the Company's Authentic Fitness Retail
Stores.
Cash flow from financing activities was $24.5 million in the first six
months of fiscal 1997 compared to $55.8 million in fiscal 1996. Total debt
increased by $30.2 million in fiscal 1997 compared to $42.3 million in fiscal
1996 (not including the issuance of the Bridge Loan) reflecting the seasonal
usage of working capital as discussed above. In fiscal 1996 the Company sold
2,500,000 shares of its common stock which generated approximately $50 million
of cash proceeds to the Company. In addition, in fiscal 1996 the Company
purchased one-half of the Series A Warrant from GE Capital for $36.5 million.
The Company utilized proceeds from the issuance of the Bridge Loan to complete
the Series A Warrant purchase.
The Company believes that funds available under its current $200 Million
Credit Agreement, as noted above, combined with cash flow to be generated from
future operations will be sufficient for the operations of the Company,
including debt service, dividend payments and costs associated with the
expansion of its Authentic Fitness Retail Division for at least the next twelve
months. Although the Company believes that its current credit agreement and cash
flow to be generated from future operations will also be sufficient for its
long-term operations (periods beyond the next twelve months) circumstances may
arise that would require the Company to seek additional financing. In those
circumstances the Company expects to evaluate additional sources of funds, for
example, sales of additional common stock and expanded or additional bank credit
facilities.
8
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
11.1 -- Earnings per share.
27.0 -- Financial Data Schedule
(b) Reports on Form 8-K.
None.
9
SIGNATURES
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.
AUTHENTIC FITNESS CORPORATION
Date: March 24, 1997 By: /s/ WALLIS H. BROOKS
.....................................
WALLIS H. BROOKS
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER,
PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as...............'r'
10