SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 15, 1998
TULTEX CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 1-8016 54-0367896
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(State or other jurisdiction Commission File IRS Employer
of incorporation) Number Identification No.
101 Commonwealth Boulevard, P. O. Box 5191, Martinsville, Virginia 24115
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 540-632-2961
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 15, 1998, Tultex Corporation (the "Company") completed the sale of
substantially all the assets and business of LogoAthletic, Inc. and
LogoAthletic/Headwear, Inc., its licensed apparel subsidiaries, to TKS
Acquisition Inc. ("TKS"), a new company headed by Thomas K. Shine, President and
CEO of LogoAthletic. Mr. Shine will continue in his position as CEO of the new
company. The new company's investors include Puma AG, Simon Investors, McDonald
& Company Securities, The Indianapolis Motor Speedway and other private
investors.
Consideration to the Company is approximately $96.0 million in cash and $12.5
million in subordinated notes of TKS due five years after the closing.
Additional cash payments may be received by the Company if TKS reaches certain
sales targets during the next two years. As part of the transaction, the Company
repurchased $6.0 million of its outstanding preferred stock owned by investors
in TKS.
A cash payment of $83.0 million was received by the Company at closing. This
payment, net of the repurchase of the $6.0 million of preferred stock, was
applied against the Company's revolving credit facility as required by the
borrowing agreement. The approximately $13.0 million of estimated cash proceeds,
which represents adjustments for working capital prior to the closing, are
expected to be received within 60 days of closing and will also be applied
against this credit facility.
2
As part of the agreement between the Company and TKS, the Company will
manufacture and deliver to TKS, fleece and T-shirt products at predetermined
prices through April 30, 1999. Any products manufactured by the Company and
delivered to TKS after April 30, 1999 will be at mutually agreed upon prices.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
Not Applicable
(b) Pro forma financial information.
The accompanying unaudited pro forma consolidated balance sheet as of
April 4, 1998, gives effect to the sale as if the transaction had been
consummated on April 4, 1998. The accompanying unaudited pro forma consolidated
statement of operations for the year ended January 3, 1998, and the three months
ended April 4, 1998, give effect to the sale as if the transaction had been
consummated on December 29, 1996.
The unaudited pro forma consolidated financial statements should be read
in conjunction with the historical financial statements of the Company. The
unaudited pro forma consolidated financial statements do not purport to be
indicative of the financial position of the Company had the sale occurred on
April 4, 1998. Nor do the unaudited pro forma financial statements purport to be
indicative of the results of operations that actually would have occurred had
the sale been consummated on December 29, 1996, or to project the Company's
financial position or results of operations for any future period.
3
Tultex Corporation
Unaudited Pro Forma Consolidated Balance Sheet ($000's omitted)
April 4, 1998
Tultex Pro Forma Tultex
Historical Adjustments (1) Pro Forma
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Assets
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Current Assets:
Cash $949 $ - $949
Accounts Receivable - Net 92,747 (21,141) 71,606
Inventories 241,505 (59,016) 182,489
Prepaid Expenses 9,209 (1,834) 7,375
Income Taxes Refundable 7,847 6,359 14,206
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Total Current Assets 352,257 (75,632) 276,625
Property, Plant and Equipment,
Net of Depreciation 141,527 (8,239) 133,288
Intangible Assets 46,323 (22,878) 23,445
Other Assets 14,107 10,943 25,050
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Total Assets $554,214 $(95,806) $458,408
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Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities:
Notes Payable to Banks $5,000 $ - $5,000
Current Maturities of Long-Term
Debt 498 (13) 485
Accounts Payable 26,438 (3,324) 23,114
Accrued Expenses 12,345 (190) 12,155
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Total Current Liabilities 44,281 (3,527) 40,754
Long-Term Debt, Less Current
Maturities 307,672 (75,659) 232,013
Deferred Income Taxes 11,278 - 11,278
Other Liabilities 3,783 (675) 3,108
Stockholders' Equity:
5% Cumulative Preferred Stock 198 - 198
Series B, $7.50 Cumulative
Convertible Preferred Stock 7,500 (6,000) 1,500
Series C, 4.5% Cumulative
Convertible Preferred Stock 333 - 333
Common Stock 29,885 - 29,885
Capital in Excess of Par Value 6,920 - 6,920
Retained Earnings 142,940 (9,945) 132,995
Unearned Stock Compensation (118) - (118)
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187,658 (15,945) 171,713
Less Notes Receivable -
Stockholders 458 - 458
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Total Stockholders' Equity 187,200 (15,945) 171,255
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Total Liabilities and
Stockholders' Equity $554,214 $(95,806) $458,408
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See Notes to Unaudited Pro Forma Financial Statements
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Tultex Corporation
Unaudited Pro Forma Consolidated Statement of Operations ($000's omitted)
Year Ending January 3, 1998
Tultex Pro Forma Tultex
Historical Adjustments Pro Forma
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Net Sales and Other Income $ 650,628 $(175,828)(2),(3) $474,800
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Costs and Expenses:
Cost of Products Sold 508,998 (118,039)(2),(3) 390,959
Depreciation 20,614 (1,932) (2) 18,682
Selling, General and
Administrative 101,352 (51,574) (2) 49,778
Interest 27,611 (6,966) (4) 20,645
Interest Income - (1,144) (5) (1,144)
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Total Costs and Expenses 658,575 (179,655) 478,920
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Income (Loss) Before Income Taxes (7,947) 3,827 (4,120)
Provision (Benefit) for Income
Taxes (3,099) 1,493 (6) (1,606)
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Net Income (Loss) (4,848) 2,334 (2,514)
Preferred Dividend Requirement (810) 450 (7) (360)
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Balance Applicable to Common
Stock $(5,658) $2,784 $(2,874)
========== ========== ==========
Net Income (Loss) Per Common
Share:
Basic $(.19) $.09 $(.10)
Diluted (.19) .09 (.10)
Weighted Average Number of
Common Shares
Outstanding - Basic and Diluted 29,782,946 29,782,946 29,782,946
See Notes to Unaudited Pro Forma Financial Statements
5
Tultex Corporation
Unaudited Pro Forma Consolidated Statement of Operations ($000's omitted)
Three Months Ending April 4, 1998
Tultex Pro Forma Tultex
Historical Adjustments Pro Forma
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Net Sales and Other Income $100,273 $(24,728)(2),(3) $75,545
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Costs and Expenses:
Cost of Products Sold 75,806 (16,196) (2),(3) 59,610
Depreciation 5,148 (489) (2) 4,659
Selling, General and
Administrative 23,616 (10,500) (2) 13,116
Interest 6,908 (1,545) (4) 5,363
Interest Income - (292) (5) (292)
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Total Costs and Expenses 111,478 (29,022) 82,456
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Income (Loss) Before Income Taxes (11,205) 4,294 (6,911)
Provision (Benefit) for Income
Taxes (4,370) 1,675 (6) (2,695)
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Net Income (Loss) (6,835) 2,619 (4,216)
Preferred Dividend Requirement (147) 113 (7) (34)
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Balance Applicable to Common
Stock $(6,982) $2,732 $(4,250)
========== ========== ==========
Net Income (Loss) Per Common
Share:
Basic $(.23) $.09 $(.14)
Diluted (.23) .09 (.14)
Weighted Average Number of
Common Shares
Outstanding - Basic and Diluted 29,881,290 29,881,290 29,881,290
See Notes to Unaudited Pro Forma Financial Statements
6
Notes to Unaudited Pro Forma Financial Statements
1. Reflects the elimination of substantially all the assets of LogoAthletic Inc.
and LogoAthletic/Headwear Inc., the redemption of $6,000,000 of preferred
stock, the loss on sale net of the resulting tax benefit, the recording of a
$12,500,000 note receivable from TKS Acquisition at a stated interest rate of
7.2%, discounted to $11,000,000 to reflect an estimated market interest rate
of 10.3% for similar debt instruments, and the application of net proceeds
towards the reduction in revolving debt.
2. Reflects the elimination of the operations of LogoAthletic Inc. and
LogoAthletic/Headwear Inc. from the consolidated statement of operations of
the Company for the year ending January 3, 1998 and the three months ending
April 4, 1998, assuming the sale occurred at the beginning of fiscal 1997.
3. Includes sales to LogoAthletic Inc. and LogoAthletic/Headwear Inc. of
$25,569,000 for fiscal 1997 and $3,555,000 for the three months ended April
4, 1998 and cost of sales of $20,455,000 for fiscal 1997 and $2,844,000 for
the three months ended April 4, 1998. The Company and TKS have entered into a
supply agreement whereby TKS will buy fleece and T-shirt products from the
Company at predetermined prices through April 30, 1999. Any products
purchased by TKS from the Company after April 30, 1999 will be at mutually
agreed upon prices.
4. Represents the reduction in interest expense based on application of the net
proceeds against the revolving debt as required by the Company's revolving
credit facility.
5. Includes interest income of $1,144,000 for fiscal 1997and interest income of
$292,000 for the three months ended April 4, 1998, on the $12,500,000 of
notes received from the sale.
6. Represents taxes at the Company's 39% tax rate.
7. Represents the reduction in dividend payments for fiscal 1997 and the three
months ended April 4, 1998 as a result of the repurchase of $6,000,000 of
Preferred Stock with the proceeds from the sale.
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(c) Exhibits
Exhibit Number Description
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2.1 Asset Purchase Agreement dated June 12,1998 between
Tultex Corporation and TKS Acquisition, Inc. (Certain
exhibits and schedules have been omitted in accordance
with Item 601 (b) (2) of Regulation S-K. A copy of such
exhibits and schedules shall be furnished supplementally
to the Securities and Exchange Commission upon request.)
2. 2 Exhibit 2.3 (i) of the Asset Purchase Agreement,
$5,000,000 Subordinated Promissory Note
2. 3 Exhibit 2.3 (ii) of the Asset Purchase Agreement,
$5,000,000 Convertible Subordinated Promissory Note
2. 4 Exhibit 2.3 (iii) of the Asset Purchase Agreement,
$2,500,000 Subordinated Promissory Note
2. 5 Exhibit 6.7 (e) of the Asset Purchase Agreement
"Supply Agreement"
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 hereunto duly authorized.
Tultex Corporation
Date: July 29, 1998 (Registrant)
By: /s/ S. H. Wood
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Suzanne H. Wood
Vice President and Chief Financial Officer