FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended November 25, 2001.
or
[ ] 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: 333-67975
ALBECCA INC.
(Exact name of registrant as specified in its charter)
GEORGIA 39-1389732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3900 Steve Reynolds Boulevard, Norcross, Georgia 30093
(Address of principal executive offices) (Zip Code)
(770) 279-5210
(Registrant's telephone number, including area code)
Indicate by checkmark 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 [ ].
1
ALBECCA INC.
INDEX TO FORM 10-Q
Page No.
--------
Part I -- Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of August 26, 2001 (audited) and
November 25, 2001 (unaudited).......................................................... 3
Consolidated Statements of Operations for the three months ended
November 26, 2000 (unaudited) and November 25, 2001 (unaudited)........................ 4
Consolidated Statements of Cash Flows for the three months ended
November 26, 2000 (unaudited) and November 25, 2001 (unaudited)........................ 5
Notes to the Consolidated Financial Statements............................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................................. 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk................................. 18
Part II -- Other Information
Item 6. Exhibits and Reports on Form 8-K........................................................... 19
Signatures............................................................................................... 20
2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALBECCA INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
August 26, November 25,
2001 2001
----------- ------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 19,146 $ 22,824
Accounts receivable, less allowances for doubtful accounts of
$4,602 and $4,669 at August 26, 2001 and November 25, 2001 32,967 38,293
Inventories 50,423 47,555
Other current assets 6,203 7,835
----------- -----------
Total current assets 108,739 116,507
PROPERTY, PLANT AND EQUIPMENT, net 35,097 34,021
OTHER LONG-TERM ASSETS 39,297 38,408
----------- -----------
$ 183,133 $ 188,936
=========== ===========
LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES:
Current maturities of long-term debt $ 5,917 $ 6,046
Accounts payable 17,680 14,717
Accrued liabilities 18,547 24,373
----------- -----------
Total current liabilities 42,144 45,136
----------- -----------
LONG-TERM DEBT, less current maturities 145,240 144,967
----------- -----------
OTHER LONG-TERM LIABILITIES 8,976 8,950
----------- -----------
SHAREHOLDER'S DEFICIT:
Preferred stock -- --
Class A common stock 4 4
Class B common stock 166 166
Additional paid-in capital 7,326 7,326
Accumulated deficit (6,098) (1,354)
Cumulative foreign currency translation adjustment (14,625) (16,259)
----------- -----------
Total shareholder's deficit (13,227) (10,117)
----------- -----------
$ 183,133 $ 188,936
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
3
ALBECCA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
Three months ended
---------------------------------
November 26, November 25,
2000 2001
------------ ------------
Net sales $ 85,041 $ 80,482
Cost of sales 47,904 44,815
----------- -----------
Gross profit 37,137 35,667
Operating expenses 23,683 23,145
----------- -----------
Operating income 13,454 12,522
Interest income (1,576) (1,919)
Interest expense 5,890 5,711
Other loss 361 373
----------- -----------
Income before provision for income taxes,
minority interest and extraordinary gain 8,779 8,357
Provision for income taxes 879 540
Minority interest 31 37
----------- -----------
Income before extraordinary gain 7,869 7,780
Extraordinary gain on repurchase of debt, net of tax 247 --
----------- -----------
Net income $ 8,116 $ 7,780
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
4
ALBECCA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended
---------------------------------
November 26, November 25,
2000 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,116 $ 7,780
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest 31 37
Depreciation and amortization 1,434 1,304
Gain on disposal of property, plant and equipment (65) (10)
Extraordinary gain on repurchase of debt (247) --
Changes in operating assets and liabilities:
Accounts receivable (4,704) (5,933)
Inventories (322) 2,091
Other current assets (2,294) (1,680)
Accounts payable 4,279 (3,019)
Accrued liabilities 2,684 6,374
Other 751 35
----------- -----------
Net cash provided by operating activities 9,663 6,979
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (1,001) (486)
Proceeds from sales of property, plant and equipment 486 16
Changes in other long-term assets (224) (237)
----------- -----------
Net cash used in investing activities (739) (707)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facilities 4,791 3,270
Repayments of revolving credit facilities (5,587) (2,762)
Proceeds from long-term debt 608 85
Repayments of long-term debt (4,845) (395)
Distributions to shareholders (2,300) (3,036)
----------- -----------
Net cash used in financing activities (7,333) (2,838)
----------- -----------
EFFECT OF EXCHANGE RATE ON CASH 803 244
----------- -----------
NET INCREASE IN CASH 2,394 3,678
CASH and cash equivalents, beginning of period 23,321 19,146
----------- -----------
CASH and cash equivalents, end of period $ 25,715 $ 22,824
=========== ===========
SUPPLEMENTAL INFORMATION:
Interest paid $ 549 $ 157
=========== ===========
Income taxes paid $ 774 $ 838
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
5
ALBECCA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. INTERIM FINANCIAL STATEMENT PRESENTATION
The unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information. Accordingly, the unaudited interim
consolidated financial statements do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, all
adjustments (consisting of only normal recurring adjustments) considered
necessary for a fair presentation have been included. On a quarterly basis, the
Company's results may vary. The results of operations for any interim period are
not necessarily indicative of the results of operations to be expected for a
full year. For further information, refer to the consolidated financial
statements and accompanying footnotes included in the Company's Form 10-K for
the fiscal year ended August 26, 2001, as filed with the Securities and Exchange
Commission.
Note 2. USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States 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 reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Note 3. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Albecca
Inc. ("Albecca", the "Company") and its subsidiaries. All significant
intercompany transactions have been eliminated. Minority interest represents
minority shareholders' interest in majority-owned subsidiaries.
Note 4. INCOME TAXES
Albecca is an S corporation and several of its subsidiaries are
classified as either partnerships or single member entities. Each is treated as
a pass-through entity under the Internal Revenue Code. They are not subject to
federal and certain state income taxes. As a result, the related taxable income
is included in the tax returns of the shareholders and members of the respective
companies. The Company makes distributions to its shareholder to pay income tax
obligations as a result of the Company's status as an S corporation. The
provision for income taxes included in the accompanying consolidated financial
statements primarily relates to certain state and foreign income taxes.
Note 5. RESTRUCTURING PLANS
THE NETHERLANDS -- LEVER
As of November 25, 2001, with respect to the Company's closure of its
Lever manufacturing and distribution facility located in Bergambacht, The
Netherlands, none of the original 28 team members remained at the facility.
During the first quarter of fiscal 2002, cash payments of $76,000 were made with
respect to severance costs, resulting in a balance of $84,000 in accrued
liabilities at November 25, 2001. The Company anticipates that The Netherlands
- -- Lever restructuring plan will be completed prior to the end of fiscal 2002.
CANADA -- EDMONTON
As of November 25, 2001, with respect to the Company's closure of one
of its Canadian distribution facilities, located in Edmonton, none of the
original 5 team members remained at the facility. During the first quarter of
fiscal 2002, cash payments relating to lease termination and other exit costs
were made totaling $13,000, resulting in a balance of $93,000 in accrued
liabilities at November 25, 2001. The Company anticipates that the Canada --
Edmonton restructuring plan will be substantially complete prior to the end of
fiscal 2002.
6
ALBECCA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
UNITED KINGDOM -- NORTHAMPTON
As of November 25, 2001, with respect to the Company's closure of its
United Kingdom -- Northampton operation, none of the original 37 team members
remained at the facility and the restructuring plan was substantially complete.
The remaining accrual relates to the Company's continuing obligation under
existing lease commitments for the closed facility and a severance payment that
will be paid during fiscal 2002. Cash payments relating to lease termination
costs of $58,000 were made during the first quarter of fiscal 2002.
NEW ZEALAND
As of November 25, 2001, with respect to the closure of the Company's
distribution operations in New Zealand, none of the 9 original team members
remained at the facility and the restructuring plan was complete. Cash payments
relating to other exit costs of approximately $10,000 were made during the first
quarter of fiscal 2002.
GREECE
As of November 25, 2001, with respect to the closure of the Company's
distribution operations in Greece, none of the original 14 team members remained
at the facility. The Company, through its local counsel, is finalizing the legal
liquidation of its Greek entities. The Company anticipates that the
restructuring plan will be completed prior to the end of the third quarter of
fiscal 2002.
For more descriptive information on the above mentioned restructuring
plans, please see the Company's Form 10-K for the fiscal year ended August 26,
2001, as filed with the Securities and Exchange Commission.
SUMMARY OF PREVIOUS RESTRUCTURING PLANS
The following summary of restructuring plans addresses the status of
the Company's restructuring activities, which were initiated in prior fiscal
years. As of November 25, 2001, these restructuring plans had remaining
financial and/or legal obligations:
As of November 25, 2001, as it relates to the Company's previously
reported restructuring plans, $405,000 of restructuring charges remained in
accrued liabilities representing $89,000 of severance and other termination
costs and $316,000 of lease termination and other exit costs.
A summary of the previously reported restructuring plans and activity
consist of the following estimated accrued future cash/non-cash requirements:
CLOSURE OF UNITED KINGDOM -- NORTHAMPTON:
Severance Lease
Write-down of and other termination
property and termination and other
equipment benefits exit costs Total
-------------- ----------- ------------ -----------
2000 Provision $499,000 $ 298,000 $ 618,000 $ 1,415,000
Non-cash 499,000 -- -- 499,000
-------- --------- --------- -----------
Cash -- 298,000 618,000 916,000
Fiscal 2000 cash activity -- (116,000) (84,000) (200,000)
-------- --------- --------- -----------
Balance as of August 27, 2000 -- 182,000 534,000 716,000
Fiscal 2001 cash activity -- (150,000) (374,000) (524,000)
-------- --------- --------- -----------
Balance as of August 26, 2001 -- 32,000 160,000 192,000
First quarter 2002 cash activity (unaudited) -- -- (58,000) (58,000)
-------- --------- --------- -----------
Balance as of November 25, 2001 (unaudited) $ -- $ 32,000 $ 102,000 $ 134,000
======== ========= ========= ===========
7
ALBECCA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
CLOSURE OF OPERATIONS IN NEW ZEALAND:
Severance
Write-down of and other
property and termination Other
equipment benefits exit costs Total
-------------- ----------- ------------ -----------
1999 Provision $ 75,000 $ 48,000 $ 102,000 $ 225,000
Non-cash 75,000 -- -- 75,000
-------- --------- --------- -----------
Cash -- 48,000 102,000 150,000
Fiscal 1999 cash activity -- (30,000) (75,000) (105,000)
-------- --------- --------- -----------
Balance as of August 29, 1999 -- 18,000 27,000 45,000
Fiscal 2000 cash activity -- (3,000) (3,000) (6,000)
-------- --------- --------- -----------
Balance as of August 27, 2000 -- 15,000 24,000 39,000
2001 reversal of excess provision -- (15,000) (14,000) (29,000)
-------- --------- --------- -----------
Balance as of August 26, 2001 -- -- 10,000 10,000
First quarter 2002 cash activity (unaudited) -- -- (10,000) (10,000)
-------- --------- --------- -----------
Balance as of November 25, 2001 (unaudited) $ -- $ -- $ -- $ --
======== ========= ========= ===========
CLOSURE OF OPERATIONS IN GREECE:
Severance
and other
Write-off of termination Other
goodwill benefits exit costs Total
-------------- ----------- ------------ -----------
1998 Provision $333,000 $ 79,000 $ 104,000 $ 516,000
Non-cash 333,000 -- -- 333,000
-------- --------- --------- -----------
Cash -- 79,000 104,000 183,000
Fiscal 1998 cash activity -- -- -- --
-------- --------- --------- -----------
Balance as of August 30, 1998 -- 79,000 104,000 183,000
1999 provision -- -- 129,000 129,000
Fiscal 1999 cash activity -- (70,000) (129,000) (199,000)
-------- --------- --------- -----------
Balance as of August 29, 1999 -- 9,000 104,000 113,000
Fiscal 2000 cash activity -- -- (4,000) (4,000)
-------- --------- --------- -----------
Balance as of August 27, 2000 -- 9,000 100,000 109,000
Fiscal 2001 cash activity -- (9,000) (6,000) (15,000)
-------- --------- --------- -----------
Balance as of August 26, 2001 -- -- 94,000 94,000
First quarter 2002 cash activity (unaudited) -- -- -- --
-------- --------- --------- -----------
Balance as of November 25, 2001 (unaudited) $ -- $ -- $ 94,000 $ 94,000
======== ========= ========= ===========
Note 6. OTHER LOSS
Other loss primarily represents net realized and unrealized foreign
currency exchange gains and losses on intercompany account balances and certain
other foreign-denominated assets, as well as gains and losses on derivative
instruments as discussed in Note 10.
Note 7. EXTRAORDINARY GAIN
During the three months ended November 26, 2000, the Company
repurchased a portion of its senior subordinated notes with a face value of
$4,000,000. The debt repurchase resulted in an extraordinary gain of $247,000,
net of state income taxes of $6,000. The Company did not repurchase any of its
senior subordinated notes during the three months ended November 25, 2001.
8
ALBECCA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
Note 8. INVENTORIES
Inventories consist of the following (in thousands):
August 26, November 25,
2001 2001
---------- ------------
Raw materials $ 6,218 $ 7,507
Work in process 1,812 1,947
Finished goods 42,393 38,101
--------- ---------
$ 50,423 $ 47,555
========= =========
Note 9. COMPREHENSIVE INCOME
Comprehensive income for the Company is as follows (in thousands):
Three months ended
------------------------------
November 26, November 25,
2000 2001
------------ ------------
Net income, as reported $ 8,116 $ 7,780
Foreign currency translation adjustment (2,908) (1,634)
--------- ---------
Total comprehensive income $ 5,208 $ 6,146
========= =========
Accumulated other comprehensive loss represents foreign currency
translation adjustments of $14,625 and $16,259 at August 26, 2001 and November
25, 2001, respectively.
Note 10. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Effective August 28, 2000, the Company adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), as amended by SFAS No. 137, which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
This statement became effective for all fiscal years beginning after June 15,
2000.
The Statement requires the Company to recognize all derivatives on the
balance sheet at "fair value. If the derivative is a hedge, changes in the fair
value of derivatives are either offset against the change in fair value of
assets, liabilities, or firm commitments through earnings or recognized in
comprehensive income (equity) until the hedged item is recognized in earnings.
The ineffective portion of a derivative's change in fair value is recognized in
earnings. In transition, the Statement required all hedging relationships to be
evaluated and designated anew", resulting in cumulative transition adjustments
to earnings and other comprehensive income (equity). The Company adopted SFAS
133 on August 28, 2000. The adoption was not material to the consolidated
financial statements.
The Company has historically entered into forward exchange contracts to
reduce the foreign currency exchange risks associated with its committed and
anticipated foreign currency denominated purchases. Its U.S. operations purchase
primarily the Euro and its United Kingdom subsidiary primarily enters into U.S.
dollar and Euro forward exchange contracts.
The carrying amount of derivatives at fair value as of November 25,
2001 was a net liability of $48,000. During the three months ended November 25,
2001, a loss of $18,000 was recorded, net of tax, representing the change in
fair value of the derivatives. As of November 25, 2001 the maximum period of
time the Company was hedging its exposure to the variability in future cash
flows for forecasted transactions was approximately six months.
Note 11. COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is involved in certain litigation arising in the ordinary
course of business. In the opinion of management, the ultimate resolution of
these matters will not have a material adverse effect on the Company's financial
position or results of operations.
9
ALBECCA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
Note 12. SUBSEQUENT EVENTS
On December 15, 2001, the sole shareholder of the Company entered into
an agreement to sell all of the issued and outstanding capital stock of the
Company to Berkshire Hathaway Inc., as discussed more fully in Albecca's Form
8-K as filed with the Securities and Exchange Commission on December 21, 2001.
Additionally, the agreement included provisions whereby the shareholder would
also sell to Berkshire Hathaway Inc. the corporate office building currently
leased by the Company. The consummation of the transaction is subject to
regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act
(which approval was received on January 3, 2002) and, to the extent applicable,
similar Canadian and European laws and to other customary conditions. Completion
of the sale is anticipated during the Company's fiscal 2002 second quarter.
Following the sale, Albecca expects its current management to remain in place.
Section 4.13 of the Indenture dated August 11, 1998 among Albecca
Inc. and State Street Bank and Trust, as trustee, related to the Company's
senior subordinated notes states that upon a "Change of Control", as defined,
each holder of notes has the right to require the Company to repurchase all or
any part of the holder's notes at an offer price of 101% of the principal
amount. Following the consummation of the transaction, the Company will notify
holders of the senior subordinated notes of the Change of Control and offer to
repurchase the notes in accordance with the requirements of the Indenture.
Note 13. RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform to the
current period presentation, including amounts related to the Company's
implementation of EITF 00-10, as more fully explained in the Recent Accounting
Pronouncements section of Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Note 14. GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
These condensed consolidating financial statements reflect Albecca Inc.
and Subsidiary Guarantors, which consist of all of the Company's wholly-owned
restricted subsidiaries other than the foreign subsidiaries, as defined under
the Indenture dated August 11, 1998. These nonguarantor foreign subsidiaries are
herein referred to as "Subsidiary Nonguarantors." The subsidiary guarantee of
each Subsidiary Guarantor will be subordinated to the prior payment in full of
all senior debt of such Subsidiary Guarantor. Separate financial statements of
the Subsidiary Guarantors are not presented because the subsidiary guarantees
are joint and several and full and unconditional and the Company believes the
condensed consolidating financial statements presented are more meaningful in
understanding the financial position of the Subsidiary Guarantors and the
separate financial statements are deemed not material to investors.
10
ALBECCA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
CONDENSED CONSOLIDATING BALANCE SHEETS
(in thousands)
November 25, 2001 (unaudited)
----------------------------------------------------------------------
Consolidated
Subsidiary Subsidiary Elimination Consolidated
Albecca Inc. Guarantors Nonguarantors Entries Total
----------- ---------- ------------- ------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 16,250 $ 1,417 $ 5,157 $ -- $ 22,824
Accounts receivable, net -- 22,743 15,550 -- 38,293
Intercompany accounts receivable -- 116,462 1,024 (117,486) --
Inventories -- 25,086 22,469 -- 47,555
Other current assets 2,012 1,861 3,962 -- 7,835
---------- ---------- ---------- ---------- ----------
Total current assets 18,262 167,569 48,162 (117,486) 116,507
PROPERTY, PLANT AND EQUIPMENT, net -- 10,641 23,380 -- 34,021
OTHER LONG-TERM ASSETS 4,072 13,824 20,512 -- 38,408
INVESTMENT IN SUBSIDIARIES 163,292 -- 7,884 (171,176) --
INTERCOMPANY LOANS RECEIVABLE 90,052 -- 358 (90,410) --
---------- ---------- ---------- ---------- ----------
$ 275,678 $ 192,034 $ 100,296 $ (379,072) $ 188,936
========== ========== ========== ========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt $ -- $ 979 $ 5,067 $ -- $ 6,046
Accounts payable -- 7,634 7,083 -- 14,717
Intercompany accounts payable 111,651 785 5,050 (117,486) --
Accrued liabilities 6,055 8,996 9,322 -- 24,373
---------- ---------- ---------- ---------- ----------
Total current liabilities 117,706 18,394 26,522 (117,486) 45,136
---------- ---------- ---------- ---------- ----------
LONG-TERM DEBT, less current maturities 134,930 5,974 4,063 -- 144,967
---------- ---------- ---------- ---------- ----------
INTERCOMPANY LOANS PAYABLE -- 358 90,052 (90,410) --
---------- ---------- ---------- ---------- ----------
OTHER LONG-TERM LIABILITIES 2,380 4,170 2,400 -- 8,950
---------- ---------- ---------- ---------- ----------
SHAREHOLDER'S EQUITY (DEFICIT):
Preferred stock -- -- -- -- --
Class A common stock 4 -- -- -- 4
Class B common stock 166 -- -- -- 166
Additional paid-in capital 7,326 41,825 7,926 (49,751) 7,326
Accumulated earnings (deficit) 13,166 120,960 (14,055) (121,425) (1,354)
Accumulated other comprehensive gain (loss) -- 353 (16,612) -- (16,259)
---------- ---------- ---------- ---------- ----------
Total shareholder's equity (deficit) 20,662 163,138 (22,741) (171,176) (10,117)
---------- ---------- ---------- ---------- ----------
$ 275,678 $ 192,034 $ 100,296 $ (379,072) $ 188,936
========== ========== ========== ========== ==========
11
ALBECCA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
CONDENSED CONSOLIDATING BALANCE SHEETS
(in thousands)
August 26, 2001
----------------------------------------------------------------------
Consolidated
Subsidiary Subsidiary Elimination Consolidated
Albecca Inc. Guarantors Nonguarantors Entries Total
----------- ---------- ------------- ------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,929 $ 1,169 $ 6,048 $ -- $ 19,146
Accounts receivable, net -- 19,364 13,603 -- 32,967
Intercompany accounts receivable -- 109,363 1,025 (110,388) --
Inventories -- 26,679 23,744 -- 50,423
Other current assets 215 1,478 4,510 -- 6,203
---------- ---------- ---------- ---------- ----------
Total current assets 12,144 158,053 48,930 (110,388) 108,739
PROPERTY, PLANT AND EQUIPMENT, net -- 10,752 24,345 -- 35,097
OTHER LONG-TERM ASSETS 4,174 13,684 21,439 -- 39,297
INVESTMENT IN SUBSIDIARIES 151,703 -- 7,884 (159,587) --
INTERCOMPANY LOANS RECEIVABLE 89,819 -- 360 (90,179) --
---------- ---------- ---------- ---------- ----------
$ 257,840 $ 182,489 $ 102,958 $ (360,154) $ 183,133
========== ========== ========== ========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt $ -- $ 888 $ 5,029 $ -- $ 5,917
Accounts payable -- 8,998 8,682 -- 17,680
Intercompany accounts payable 104,238 486 5,664 (110,388) --
Accrued liabilities 723 8,538 9,286 -- 18,547
---------- ---------- ---------- ---------- ----------
Total current liabilities 104,961 18,910 28,661 (110,388) 42,144
---------- ---------- ---------- ---------- ----------
LONG-TERM DEBT, less current maturities 134,930 6,001 4,309 -- 145,240
---------- ---------- ---------- ---------- ----------
INTERCOMPANY LOANS PAYABLE -- 360 89,819 (90,179) --
---------- ---------- ---------- ---------- ----------
OTHER LONG-TERM LIABILITIES 2,031 4,470 2,475 -- 8,976
---------- ---------- ---------- ---------- ----------
SHAREHOLDER'S EQUITY (DEFICIT):
Preferred stock -- -- -- -- --
Class A common stock 4 -- -- -- 4
Class B common stock 166 -- -- -- 166
Additional paid-in capital 7,326 41,825 7,926 (49,751) 7,326
Accumulated earnings (deficit) 8,422 110,550 (15,234) (109,836) (6,098)
Accumulated other comprehensive gain (loss) -- 373 (14,998) -- (14,625)
---------- ---------- ---------- ---------- ----------
Total shareholder's equity (deficit) 15,918 152,748 (22,306) (159,587) (13,227)
---------- ---------- ---------- ---------- ----------
$ 257,840 $ 182,489 $ 102,958 $ (360,154) $ 183,133
========== ========== ========== ========== ==========
12
ALBECCA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)
Three months ended
November 25, 2001 (unaudited)
----------------------------------------------------------------------
Consolidated
Subsidiary Subsidiary Elimination Consolidated
Albecca Inc. Guarantors Nonguarantors Entries Total
----------- ---------- ------------- ------------- ------------
Net sales $ -- $ 53,988 $ 27,766 $ (1,272) $ 80,482
Cost of sales -- 28,162 17,925 (1,272) 44,815
--------- --------- --------- --------- ---------
Gross profit -- 25,826 9,841 -- 35,667
Operating expenses 168 14,970 8,007 -- 23,145
--------- --------- --------- --------- ---------
Operating (loss) income (168) 10,856 1,834 -- 12,522
Interest income (1,830) -- (89) -- (1,919)
Interest expense 5,471 149 91 -- 5,711
Other loss -- 161 212 -- 373
--------- --------- --------- --------- ---------
(Loss) income before provision for income taxes
and minority interest (3,809) 10,546 1,620 -- 8,357
Provision for income taxes -- 136 404 -- 540
Minority interest -- -- 37 -- 37
--------- --------- --------- --------- ---------
(Loss) income before equity in earnings (3,809) 10,410 1,179 -- 7,780
Equity in earnings of subsidiaries 11,589 -- -- (11,589) --
--------- --------- --------- --------- ---------
Net income $ 7,780 $ 10,410 $ 1,179 $ (11,589) $ 7,780
========= ========= ========= ========= =========
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 7,357 $ 617 $ (995) $ -- $ 6,979
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment -- (199) (287) -- (486)
Proceeds from sales of property, plant
and equipment -- 7 9 -- 16
Changes in other long-term assets -- (247) 10 -- (237)
--------- --------- --------- --------- ---------
Net cash used in investing activities -- (439) (268) -- (707)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facilities -- 97 3,173 -- 3,270
Repayments of revolving credit facilities -- -- (2,762) -- (2,762)
Proceeds from long-term debt -- -- 85 -- 85
Repayments of long-term debt -- (27) (368) -- (395)
Distributions to shareholder (3,036) -- -- -- (3,036)
--------- --------- --------- --------- ---------
Net cash (used in) provided by
financing activities (3,036) 70 128 -- (2,838)
--------- --------- --------- --------- ---------
EFFECT OF EXCHANGE RATE ON CASH -- -- 244 -- 244
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH 4,321 248 (891) -- 3,678
Cash and cash equivalents, beginning of period 11,929 1,169 6,048 -- 19,146
--------- --------- --------- --------- ---------
Cash and cash equivalents, end of period $ 16,250 $ 1,417 $ 5,157 $ -- $ 22,824
========= ========= ========= ========= =========
13
ALBECCA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)
Three months ended
November 26, 2000 (unaudited)
----------------------------------------------------------------------
Consolidated
Subsidiary Subsidiary Elimination Consolidated
Albecca Inc. Guarantors Nonguarantors Entries Total
----------- ---------- ------------- ------------- ------------
Net sales $ -- $ 57,725 $ 29,553 $ (2,237) $ 85,041
Cost of sales -- 31,014 19,127 (2,237) 47,904
--------- --------- --------- --------- ---------
Gross profit -- 26,711 10,426 -- 37,137
Operating expenses 18 15,414 8,251 -- 23,683
--------- --------- --------- --------- ---------
Operating (loss) income (18) 11,297 2,175 -- 13,454
Interest income (1,576) -- -- -- (1,576)
Interest expense 5,459 234 197 -- 5,890
Other loss -- -- 361 -- 361
--------- --------- --------- --------- ---------
(Loss) income before provision for income taxes,
minority interest and extraordinary gain (3,901) 11,063 1,617 -- 8,779
Provision for income taxes -- 135 744 -- 879
Minority interest -- -- 31 -- 31
--------- --------- --------- --------- ---------
(Loss) income before extraordinary gain (3,901) 10,928 842 -- 7,869
Extraordinary gain on repurchase of debt, net of tax 247 -- -- -- 247
Equity in earnings of subsidiaries 11,770 -- -- (11,770) --
--------- --------- --------- --------- ---------
Net income (loss) $ 8,116 $ 10,928 $ 842 $ (11,770) $ 8,116
========= ========= ========= ========= =========
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 8,352 $ (1,210) $ 2,521 $ -- $ 9,663
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment -- (281) (720) -- (1,001)
Proceeds from sales of property, plant
and equipment -- 399 87 -- 486
Changes in other long-term assets 97 (208) (113) -- (224)
--------- --------- --------- --------- ---------
Net cash provided by (used in) investing
activities 97 (90) (746) -- (739)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facilities -- 102 4,689 -- 4,791
Repayments of revolving credit facilities -- -- (5,587) -- (5,587)
Proceeds from long-term debt -- 600 8 -- 608
Repayments of long-term debt (3,753) (3) (1,089) -- (4,845)
Distributions to shareholders (2,300) -- -- -- (2,300)
--------- --------- --------- --------- ---------
Net cash (used in) provided by
financing activities (6,053) 699 (1,979) -- (7,333)
--------- --------- --------- --------- ---------
EFFECT OF EXCHANGE RATE ON CASH -- (21) 824 -- 803
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH 2,396 (622) 620 -- 2,394
Cash and cash equivalents, beginning of period 13,745 1,855 7,721 -- 23,321
--------- --------- --------- --------- ---------
Cash and cash equivalents, end of period $ 16,141 $ 1,233 $ 8,341 $ -- $ 25,715
========= ========= ========= ========= =========
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with Albecca's unaudited consolidated financial statements and the related notes
thereto. In this "Management's Discussion and Analysis of Financial Condition
and Results of Operations," all references to the Company's international
operations ("International") include all of Albecca's operations outside of
the U.S.
In July and September 2000, the Emerging Issues Task Force (EITF)
reached a consensus on Issue 00-10 "Accounting for Shipping and Handling Fees
and Costs." EITF Issue 00-10 requires that all amounts billed to a customer in a
sale transaction for shipping and handling be classified as sales, and
recommends that shipping and handling expenses be classified as cost of sales.
As required, the Company implemented EITF 00-10 during the fourth quarter of
fiscal 2001. Prior to implementation, the Company classified most shipping and
handling revenues and costs, on a net basis, in selling and administrative
expense. Accordingly, these costs have been reclassified to sales and cost of
sales for the current period and all prior periods presented as well as for the
purposes of the Management's Discussion and Analysis of Financial Position and
Results of Operations that follows. Costs reclassified to cost of sales for the
purpose of EITF Issue 00-10 include all third party shipping expenses as well as
variable handling costs such as shipping supplies.
The following table sets forth certain consolidated statements of
operations data as a percentage of net sales for the periods indicated:
Three months ended
-------------------------------
November 26, November 25,
2000 2001
------------ ------------
Net sales 100.0% 100.0%
Cost of sales 56.3 55.7
------ ------
Gross profit 43.7 44.3
Operating expenses 27.9 28.8
------ ------
Operating income 15.8 15.5
Interest income (1.8) (2.4)
Interest expense 6.9 7.1
Other loss 0.4 0.4
------ ------
Income before provision for income taxes, minority
interest and extraordinary gain 10.3 10.4
Provision for income taxes 1.0 0.6
Minority interest 0.1 0.1
----- ------
Income before extraordinary gain 9.2 9.7
Extraordinary gain on repurchase of debt, net of tax 0.3 --
------ ------
Net income 9.5% 9.7%
====== ======
NET SALES
For the first quarter ended November 25, 2001, net sales were $80.5
million compared to $85.0 million for the first quarter ended November 26, 2000.
The decrease in net sales for the three months ended November 25, 2001 was
primarily the result of the continued weakness in the U.S. and Canadian
economies, as well as the impact of the events of September 11, 2001. The impact
of currency fluctuations during this period were negligible ($.1 million). U.S.
net sales decreased 6.4% for the three months ended November 25, 2001 from the
comparable period in fiscal 2001, primarily the result of decreased consumer
purchases due to the slowing U.S. economy. However, the rate of the sales
decline decelerated throughout the quarter. U.S. sales were also impacted by
product discontinuation decisions made by the Company. International net sales
decreased 3.2% for the three months ended November 25, 2001 from the comparable
period in fiscal 2001, primarily due to a decrease in sales in Canada.
Management believes that Canadian sales in the first quarter of fiscal 2002
followed the trend of decreased consumer purchases in the U.S. during the same
period as the two economies are closely linked. International sales excluding
Canada remained substantially unchanged for the first quarter of fiscal 2002
compared to the first quarter of fiscal 2001, with sales increases in France and
Japan offset by sales declines in Finland, Korea and Italy.
15
COST OF SALES
Cost of sales was $44.8 million for the three months ended
November 25, 2001 compared to $47.9 million for the three months ended
November 26, 2000. In the U.S., gross profit increased to 48.0% for the three
months ended November 25, 2001 compared to 46.6% for the comparable period in
fiscal 2001. The increase for the quarter was primarily the result of the
continued shift in sales to core, branded products and away from lower margin
products. For the three months ended November 25, 2001, International gross
profit margin decreased slightly to 37.4% compared to 37.9% for the comparable
period in fiscal 2001. This decrease was primarily the result a margin decline
in Finland, Japan and Sweden, partially offset by increasing margins in
France and the UK.
OPERATING EXPENSES
Operating expenses were $23.1 million for the three months ended
November 25, 2001 compared to $23.7 million for the three months ended
November 26, 2000. In the U.S., operating expenses as a percentage of net sales
increased to 28.1% for the three months ended November 25, 2001 compared to
26.7% for the comparable period in fiscal 2001. Management continues to
aggressively pursue cost control measures in the U.S. However, nonrecurring
costs related to the sale of the Company and to management changes during the
first quarter of fiscal 2002 were the primary drivers of the increase in
operating expenses as a percentage of net sales in the U.S. For the three months
ended November 25, 2001, International operating expenses as a percentage of net
sales decreased slightly to 30.1% compared to 30.2% for the comparable period in
fiscal 2001. The decrease in operating expenses as a percentage of sales for the
quarter was primarily attributable to improved efficiency following
restructuring activities in various European locations as well as a focused
effort to control costs internationally.
INTEREST INCOME
Interest income was $1.9 million for the three months ended
November 25, 2001 compared to $1.6 million for the three months ended
November 26, 2000. The increase resulted primarily from the interest income
associated with the Company's acquisition of its senior subordinated notes over
the past 12 months.
INTEREST EXPENSE
Interest expense was $5.7 million for the three months ended November
25, 2001 compared to $5.9 million for the three months ended November 26, 2000.
The decrease in interest expense for the three months ended November 25, 2001 is
primarily due to the Company reducing its total debt.
OTHER LOSS
Other loss primarily represents net realized and unrealized foreign
currency exchange gains and losses on intercompany account balances and certain
other foreign-denominated assets, as well as gains and losses on derivative
instruments as discussed in Note 10 of the notes to consolidated financial
statements.
EXTRAORDINARY GAIN ON REPURCHASE OF DEBT
During the three months ended November 26, 2000, the Company
repurchased a portion of its senior subordinated notes with a face value of $4.0
million. The debt repurchase resulted in an extraordinary gain of $.3 million,
net of state income taxes of $.06 million. The Company did not repurchase any of
its senior subordinated notes during the three months ended November 25, 2001.
NET INCOME
For the reasons set forth above, net income was $7.8 million for the
three months ended November 25, 2001 compared to $8.1 million for the three
months ended November 26, 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of funds have been, and are expected
to continue to be, cash flow from operations and its on-hand cash and cash
equivalents. The Company's principal need for funds historically has been to
finance its working capital (principally inventory and accounts receivable),
capital expenditures, acquisitions and distributions to the Company's
shareholder to pay income taxes as a result of its status as an S corporation.
As of November 25, 2001, the Company had cash and cash equivalents of $22.8
million compared to $19.1 million as of August 26, 2001.
16
Net cash provided by operating activities was $7.0 million for the
three months ended November 25, 2001 compared to $9.7 million for the three
months ended November 26, 2000. The decrease in net cash provided by operating
activities versus the prior comparable period was primarily due to a significant
decrease in accounts payable as a result of the Company's focus on managing its
inventories during a period of slower sales, as well as the seasonal increase in
accounts receivable being slightly higher in the first quarter of fiscal 2002
versus fiscal 2001. These items were partially offset by a reduction in
inventory, as well as an increase in accrued liabilities, largely related to the
timing of payments of certain recurring year-end related items between the two
comparable periods, as well as a decrease in accruals related to the sale of the
Brio business at the end of the first quarter of fiscal 2001 that did not recur
in the first quarter of fiscal 2002. During the quarter, the Company, to
facilitate the relocation of an officer, loaned certain amounts to the officer
under a secured note. The note is anticipated to be repaid prior to the end of
fiscal 2002. Net cash used in investing activities was $.7 million for the three
months ended November 25, 2001 and for the three months ended November 26, 2000.
Net cash used in financing activities decreased to $2.8 million for the three
months ended November 25, 2001 compared to $7.3 million for the three months
ended November 26, 2000, primarily due to a decrease in the amount of its senior
subordinated debt repurchased by the Company during the first three months of
fiscal 2002 compared to the prior comparable period. The Company made no
repurchases of its senior subordinated debt during the three months ended
November 25, 2001 compared to a repurchase of notes with a face value of $4.0
million for the three months ended November 26, 2000.
As of November 25, 2001, the Company had outstanding indebtedness of
approximately $151.0 million, consisting of $134.9 million in principal amount
of the August 1998 senior subordinated debt and $16.1 million of other
indebtedness. At August 26, 2001, the Company had outstanding indebtedness of
approximately $151.2 million, consisting of $134.9 million in principal amount
of the notes and $16.3 million of other indebtedness.
Albecca's ability to make scheduled payments of the principal of, or to
pay the interest or liquidated damages, if any, on, or to refinance its
indebtedness, including the August 1998 senior subordinated debt, or to fund
planned capital or other expenditures, will depend on its future financial or
operating performance, which will be affected by prevailing economic conditions
and financial, business and other factors, many of which are beyond its control.
Based upon the current levels of operations, management believes that cash flow
from operations and available cash and cash equivalents will provide adequate
funds for the Company's foreseeable working capital needs, capital expenditures,
scheduled payments of principal and interest on its indebtedness, including the
senior subordinated debt, and acquisitions. However, there is no certainty that
Albecca's business will generate sufficient cash flow from operations or that
future borrowings will be available in an amount sufficient to enable Albecca to
service its indebtedness, including the senior subordinated debt, or to make
anticipated capital and other expenditures.
RECENT ACCOUNTING PRONOUNCEMENTS
In July and September 2000, the Emerging Issues Task Force (EITF)
reached a consensus on Issue 00-10 "Accounting for Shipping and Handling Fees
and Costs." EITF Issue 00-10 requires that all amounts billed to a customer in a
sale transaction for shipping and handling be classified as sales and recommends
that shipping and handling expenses be classified as cost of sales. As required,
the Company implemented EITF Issue 00-10 during the fourth quarter of fiscal
2001. Prior to implementation, the Company classified most shipping and handling
revenues and costs, on a net basis, in selling and administrative expense.
Accordingly, these costs were reclassified to sales and cost of sales for the
current period and all prior periods presented. Costs reclassified to cost of
sales for the purpose of EITF Issue 00-10 included all third party shipping
expenses as well as variable handling costs such as shipping supplies.
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations", and No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001, eliminating the pooling-of-interests
method. SFAS No. 141 also establishes criteria to be used in identifying
intangible assets to be recognized separately from goodwill in an acquisition.
SFAS No. 142 outlines the methods to be used to account for goodwill and other
intangible assets after their acquisition. Specifically, goodwill and intangible
assets with indefinite useful lives will no longer be amortized, but instead be
tested for impairment annually. Intangible assets with definite useful lives
will be amortized over their estimated useful life, which will no longer be
limited to forty years. The Company intends to implement SFAS No. 142, as
required, on the first day of fiscal 2003. Management is currently evaluating
the effect of this Statement on the Company's financial position and results of
operations.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This Statement addresses financial accounting and
reporting for asset retirement costs of long-lived assets resulting from legal
obligations associated with acquisition, construction or development
transactions. As required, the Company plans to adopt SFAS No. 143 on the first
day of fiscal 2003. The adoption of this Statement is not expected to have a
material impact on the Company's financial position or results of operations.
17
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This Statement supersedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets to be Disposed Of."
This Statement clarifies accounting and reporting for assets held for sale,
scheduled for abandonment or other disposal, and recognition of impairment loss
related to the carrying value of long-lived assets. This Statement is effective
for fiscal years beginning after December 15, 2001. The adoption of this
Statement is not expected to have a material impact on the Company's financial
position or results of operations.
EUROPEAN UNION CURRENCY CONVERSION
On January 1, 1999, eleven member nations of the European Economic and
Monetary Union began using a common currency, the Euro. For a three-year
transition period ending June 30, 2002, both the Euro and each of the currencies
for such member countries will remain in circulation. After June 30, 2002, the
Euro will be the sole legal tender for those countries. The adoption of the Euro
will affect many financial systems and business applications as the commerce of
those countries may be transacted both in the Euro and the existing national
currency during the transition period. Historically, a significant portion of
the Company's revenue has been generated in Europe. Of the countries currently
using the Euro, the Company has subsidiary operations in Austria, Finland,
France, Germany, Italy, and The Netherlands. The Company has assessed the
potential impact of the Euro conversion in a number of areas, particularly on
pricing and other marketing strategies. Although the Company does not currently
expect that the conversion, either during or after the transition period, will
have an adverse effect on its operations or financial condition, there can be no
assurance that it will not have some unexpected adverse impact.
FORWARD LOOKING STATEMENTS
When used in this Form 10-Q and in future filings by the Company with
the Securities and Exchange Commission and in its press releases, and in other
written or oral statements made by the Company's representatives, the words and
phrases "will likely result," "are expected to," "will continue," "is
anticipated," "estimates," "projects," "believes," "plans," "anticipates,"
"intends," "may," or similar expressions, are intended to identify "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements include, without limitation,
the Company's expectations regarding sales, earnings, or other future financial
performance and liquidity, and general statements about future operations and
operating results. Although the Company believes that its expectations are based
on reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors that could cause actual results to
differ from expectations include, without limitation, (i) the timing and expense
associated with, and effects of, cost-reduction and integration initiatives
being implemented by the Company; (ii) general competitive factors and the
overall financial condition of the custom framing industry, the retail industry
and the general economy; (iii) change in retailer or consumer acceptance of the
Company's products; (iv) consolidations and restructurings in the retail
industry causing a decrease in the number of stores that sell the Company's
products; (v) social, political, and economic risks to the Company's foreign
operations and customers; (vi) changes in the laws, regulations, and policies,
including changes in accounting standards, that affect, or will affect, the
Company in the United States and internationally; (vii) shipment delays,
depletion of inventory, service problems; and (viii) changes in product mix to
ones which are less profitable. The Company assumes no responsibility to update
forward-looking statements made herein or elsewhere.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to the Company's disclosures
related to certain market risks as reported under Item 7A, "Quantitative and
Qualitative Disclosures About Market Risk," in the Company's Form 10-K for the
fiscal year ended August 26, 2001, as filed with the Securities and Exchange
Commission.
18
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
NO. DESCRIPTION
- --- -----------
3.1 Amended and Restated Articles of Incorporation of Albecca (incorporated by reference to
Exhibit 3.1 of Albecca's Registration Statement on Form S-4 (No. 333-67975) as filed with the
SEC on November 25, 1998 and declared effective by the SEC on February 12, 1999).
3.2 Amended and Restated Bylaws of Albecca (incorporated by reference to Exhibit 3.2 of Albecca's
Registration Statement on Form S-4 (No. 333-67975) as filed with the SEC on November 25, 1998 and
declared effective by the SEC on February 12, 1999).
4.1 Indenture dated August 11, 1998, among Albecca Inc. and State Street Bank & Trust, as trustee,
relating to the Notes (the "Indenture")(incorporated by reference to Exhibit 4.1 of Albecca's
Registration Statement on Form S-4 (No. 333-67975) as filed with the SEC on November 25, 1998 and
declared effective by the SEC on February 12, 1999).
4.2 Form of 10 3/4% Senior Note due 2008 of Albecca Inc. (the "New Notes")(included as Exhibit A of the
Indenture filed as Exhibit 4.1).
10.2 Description and Form of Agreement for certain executives of the Company.
b. Reports on Form 8-K:
On December 21, 2001, the Company filed a Current Report on Form 8-K
to report an agreement dated December 15, 2001 providing for the sale of all
Albecca's issued and outstanding capital stock to Berkshire Hathaway Inc. by
Albecca's sole shareholder Craig A. Ponzio.
19
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.
ALBECCA INC.
(registrant)
Date: January 9, 2002 By: /s/ Stephen E. McKenzie
---------------- ----------------------------------------
Stephen E. McKenzie
President, Chief Executive Officer
(Principal Executive Officer)
Date: January 9, 2002 By: /s/ R. Bradley Goodson
---------------- ----------------------------------------
R. Bradley Goodson,
Senior Vice President Finance,
Chief Financial Officer
(Principal Financial Officer)
20