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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): September 6, 2001
PILLOWTEX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Texas 1-11756 75-2147728
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
4111 Mint Way, Dallas, Texas 75237
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (214) 333-3225
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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The Form 8-K filed by the registrant on September 13, 2001 is hereby amended and
supplemented as follows:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Page Number
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Overview 2
Unaudited Pro Forma Consolidated Statement
of Operations for the Six Months ended
June 30, 2001 3
Unaudited Pro Forma Consolidated Statement
of Operations for the Fiscal Year ended
December 30, 2000 5
Unaudited Pro Forma Consolidated Balance
Sheet at June 30, 2001 7
(c) Exhibits:
Exhibit
Number Exhibit
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2.1 Asset Purchase Agreement, dated as of July 27,
2001, between Beacon Manufacturing Company and
Beacon Acquisition Corporation (incorporated
by reference to Exhibit 2.1 to Pillowtex
Corporation's Current Report on Form 8-K dated
August 23, 2001)
2.2 First Amendment to Asset Purchase Agreement,
dated September 6, 2001, between Beacon
Manufacturing Company and Beacon Acquisition
Corporation (incorporated by reference to
Exhibit 2.2 to Pillowtex Corporation's Current
Report on Form 8-K dated September 13, 2001)
1
PILLOWTEX CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On September 6, 2001, Beacon Manufacturing Company ("Beacon"), a wholly
owned subsidiary of Pillowtex Corporation (the "Company"), sold to Beacon
Acquisition Corporation (the "Purchaser") the majority of the inventory and
fixed assets associated with the Company's Blanket Division for approximately
$13.4 million (the "Sale"). The purchase price consisted of approximately $12.1
million paid in cash (a portion of which was placed in escrow to secure Beacon's
post-closing obligations under the purchase agreement) and a three-year
promissory note in a principal amount of approximately $1.3 million (the
"Promissory Note").
The net cash proceeds of $11.2 million from the Sale were applied to pay
down obligations to the lenders under the Company's prepetition senior debt
facilities. These debt facilities are described in the Notes to Consolidated
Financial Statements included in the Company's quarterly report on Form 10-Q for
the quarter ended June 30, 2001.
The unaudited pro forma consolidated statements of operations on the
following pages are based upon the historical results of operations of the
Company for the six months ended June 30, 2001 and the year ended December 30,
2000. The pro forma adjustments thereto give effect to the Sale as if such sale
had occurred on January 2, 2000 and exclude the non-recurring loss on sale of
discontinued operations.
The unaudited pro forma consolidated balance sheet as of June 30, 2001 is
based upon the historical balance sheet as of June 30, 2001 and includes pro
forma adjustments as if the Sale had occurred on that date. The effect of the
loss on sale of discontinued operations is included in the pro forma balance
sheet.
The unaudited pro forma consolidated statements of operations and the
consolidated balance sheet are intended for informational purposes only and are
not necessarily indicative of the future results of operations had the Sale
occurred on January 2, 2000. These unaudited pro forma consolidated financial
statements and the accompanying notes should be read in conjunction with the
Company's consolidated financial statements and notes thereto included in the
Company's quarterly report on Form 10-Q for the quarter ended June 30, 2001 and
the Company's annual report on Form 10-K for the fiscal year ended December 30,
2000.
2
PILLOWTEX CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Six Months ended June 30, 2001
(Dollars in thousands, except for per share data)
Pro Forma
Adjustments
for
Sale of Blanket
Historical Division Pro Forma
-------------- ---------------- ---------------
Net sales $ 537,253 (21,193)(1) 516,060
Cost of goods sold 537,885 (27,977)(2) 509,908
------------ ---------- -----------
Gross profit (loss) (632) 6,784 6,152
Selling, general and administrative expenses 44,781 (122)(3) 44,659
Impairment of long-lived assets 20,085 - 20,085
Restructuring charge 6,864 (399)(4) 6,465
------------ ---------- -----------
Earnings (loss) from operations (72,362) 7,305 (65,057)
Interest expense 35,376 (639)(5) 34,737
------------ ---------- -----------
Earnings (loss) before reorganization items and
income taxes (107,738) 7,944 (99,794)
Reorganization items 21,165 - 21,165
------------ ---------- -----------
Earnings (loss) before income taxes (128,903) 7,944 (120,959)
Income taxes - - (6) -
------------ ---------- -----------
Net earnings (loss) (128,903) 7,944 (120,959)
Preferred dividends and accretion 7,396 - 7,396
------------ ---------- -----------
Earnings (loss) applicable to common shareholders $ (136,299) 7,944 (128,355)
============ ========== ===========
Loss per common share -
Basic and diluted $ (9.56) (9.01)
============ ===========
Weighted average common shares outstanding -
Basic and diluted 14,251 14,251
============ ===========
See accompanying notes to the unaudited pro forma consolidated statement of
operations for the six months ended June 30, 2001.
3
PILLOWTEX CORPORATION
(DEBTORS-IN-POSSESSION)
Notes to Unaudited Pro Forma Consolidated Statement of Operations
Six Months ended June 30, 2001
(unaudited)
(1) Reflects sales associated with the Blanket Division.
(2) Reflects cost of goods sold associated with the Blanket Division and a $0.2
million reduction in corporate information technology expenses dedicated to
the Blanket Division.
(3) Includes $0.1 million in income from a license agreement under which the
Purchaser has the right to use certain of the Company's licensed
trademarks, representing the minimum amount due for the second year of the
agreement.
(4) Reflects the restructuring charge associated with the Blanket Division's
manufacturing facility in Newton, North Carolina which was closed on June
30, 2001.
(5) Represents a reduction in interest expense of $0.5 million relating to the
repayment of $12.0 million on the Company's prepetition senior debt
facilities with the estimated net proceeds from the Sale at an assumed rate
of 8.9% and $0.1 million of interest income on the Promissory Note at the
stated interest rate of 11%.
(6) A pro forma adjustment to income taxes is not reflected as the increase in
earnings before income taxes resulting from the pro forma adjustments would
be completely offset by a reduction in the deferred tax asset valuation
allowance recorded at June 30, 2001.
4
PILLOWTEX CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year ended December 30, 2000
(Dollars in thousands, except for per share data)
Pro Forma
Adjustments
for
Sale of Blanket
Historical Division Pro Forma
------------- --------------- -------------
Net sales $ 1,349,627 (90,623)(1) 1,259,004
Cost of goods sold 1,349,259 (126,394)(2) 1,222,865
------------- --------------- -------------
Gross profit 368 35,771 36,139
Selling, general and administrative expenses 128,396 (2,374)(3) 126,022
Impairment of long-lived assets 112,711 (88,311)(4) 24,400
------------- --------------- -------------
Earnings (loss) from operations (240,739) 126,456 (114,283)
Interest expense 107,061 (1,418)(5) 105,643
------------- --------------- -------------
Earnings (loss) before reorganization items
and income taxes (347,800) 127,874 (219,926)
Reorganization items 19,368 - 19,368
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Earnings (loss) before income taxes (367,168) 127,874 (239,294)
Income tax expense (benefit) (104,760) 11,911 (6) (92,849)
------------- --------------- -------------
Net earnings (loss) (262,408) 115,963 (146,445)
Preferred dividends and accretion 8,928 - 8,928
------------- --------------- -------------
Earnings (loss) applicable to common
shareholders $ (271,336) 115,963 (155,373)
============= =============== =============
Loss per common share -
Basic and diluted $ (19.04) (10.90)
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Weighted average common shares outstanding -
Basic and diluted 14,252 14,252
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See accompanying notes to the unaudited pro forma consolidated statement of
operations for the year ended December 30, 2000.
5
PILLOWTEX CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
Notes to Unaudited Pro Forma Consolidated Statement of Operations
Year ended December 30, 2000
(unaudited)
(1) Reflects sales associated with the Blanket Division.
(2) Reflects cost of goods sold associated with the Blanket Division,
including a $19.7 million inventory write-down and a $0.3 million
reduction in corporate information technology expenses dedicated to the
Blanket Division. Corporate costs previously allocated to the Blanket
Division of approximately $2.3 million are excluded from the
adjustment.
(3) Includes $0.3 million in rental income for a warehouse that the
Purchaser is leasing from the Company for five months following the
Sale, $0.2 million of income related to a transitional services
agreement, under which the Company will provide technology and
accounting support to the Purchaser for six months following the Sale,
and $1.1 million of amortization expense for the goodwill associated
with the Blanket Division.
(4) Reflects $38.3 million for goodwill and $50.0 million for fixed assets
associated with the Blanket Division.
(5) Represents a reduction in interest expense of $1.3 million relating to
the repayment of $12.0 million on the Company's prepetition senior debt
facilities with the estimated net proceeds from the Sale at an assumed
rate of 10.1% and $0.1 million of interest income on the Promissory
Note at the stated interest rate of 11%.
(6) A reconciliation of income tax benefit computed using the U.S. federal
statutory income tax rate of 35% of loss before income taxes to the
actual income tax benefit is as follows (in thousands):
Expected tax at U.S. statutory rate $ (44,756)
Change in valuation allowance 32,666
Other 179
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$ (11,911)
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6
PILLOWTEX CORPORATION
(DEBTORS-IN-POSSESSION)
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2001
(Dollars in thousands)
Pro Forma
Adjustments for
Sale of Blanket
ASSETS Historical Division Pro Forma
---------------- ----------------- --------------
Current assets:
Cash and cash equivalents $ 24,621 - 24,621
Receivables:
Trade 166,577 (9,387) (1) 157,190
Other 7,439 (56) (1) 7,383
Inventories 244,874 (19,159) (2) 225,715
Assets held for sale 7,074 - 7,074
Prepaid expenses 3,616 (125) (3) 3,491
Net assets of discontinued operations - 12,086 (4) 12,086
------------- ---------- ----------
Total current assets 454,201 (16,641) 437,560
Property, plant and equipment, net 492,843 (7,797) (5) 485,046
Intangible assets, at cost less accumulated amortization 227,219 (117) (6) 227,102
Other assets 29,511 1,894 (7) 31,405
------------- ---------- ----------
Total assets $ 1,203,774 (22,661) 1,181,113
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LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Liabilities not subject to compromise:
Current liabilities:
Accounts payable $ 38,267 (1,831) (1) 36,436
Accrued expenses 52,894 (1,614) (1) 51,280
Current portion of long-term debt in default 678,923 (12,025) (8) 666,898
Long-term debt in default 12,673 - 12,673
------------- ---------- ----------
Total current liabilities 782,757 (15,470) 767,287
Noncurrent liabilities 38,833 - 38,833
------------- ---------- ----------
Total liabilities not subject to compromise 821,590 (15,470) 806,120
Liabilities subject to compromise 491,898 (436) (9) 491,462
------------- ---------- ----------
Total liabilities 1,313,488 (15,906) 1,297,582
Series A redeemable convertible preferred stock 90,225 - 90,225
Shareholders' equity (deficit):
Preferred stock - - -
Common stock 143 - 143
Additional paid-in capital 160,120 - 160,120
Accumulated deficit (358,366) (6,755) (10) (365,121)
Currency translation adjustment (1,836) - (1,836)
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Total shareholders' deficit (199,939) (6,755) (206,694)
Commitments and contingencies
------------- ----------- ----------
Total liabilities and shareholders' deficit $ 1,203,774 (22,661) 1,181,113
============= =========== ==========
See accompanying notes to the unaudited pro forma consolidated
balance sheet.
7
PILLOWTEX CORPORATION
(DEBTORS-IN-POSSESSION)
Notes to Unaudited Pro Forma Consolidated Balance Sheet
June 30, 2001
(unaudited)
(1) Reflects the remaining balances of the Blanket Division retained by the
Company which are reclassified to net assets of discontinued
operations.
(2) Reflects $14.0 million of inventory sold to the Purchaser, a $3.3
million write-down to reflect the remaining inventory at its realizable
value and the reclassification of the remaining $1.8 million inventory
balance to net assets of discontinued operations.
(3) Reflects balances written off upon disposition of the Blanket Division.
(4) Represents remaining assets and liabilities of the Blanket Division
retained by the Company.
(5) Reflects the disposition of $2.9 million in the Sale and the
reclassification of $4.9 million to net assets of discontinued
operations, consisting of the warehouse facility in Mauldin, South
Carolina.
(6) Represents the write-off of a pro rata portion of deferred financing
costs associated with the Company's prepetition senior debt facilities,
which were paid down with proceeds from the Sale.
(7) Reflects $1.3 million for the Promissory Note and $0.6 million of cash
placed in escrow in accordance with the purchase agreement.
(8) Represents the repayment of the Company's prepetition senior debt
facilities with the proceeds from the Sale.
(9) Represents prepetition accrued property taxes paid in conjunction with
the Sale.
(10) Reflects the estimated loss from the Sale and other assets and
liabilities incurred or relieved as a result of the Sale. The net
estimated loss on the Sale as of June 30, 2001 is recorded as an
increase in the accumulated deficit. The final loss will be determined
based on the excess of proceeds received over the actual carrying value
of the Blanket Division's assets relieved as a result of the Sale as of
September 6, 2001 less direct costs associated with the Sale. The
Company currently estimates the loss on the Sale as of September 6,
2001 to range from $4 million to $5 million.
8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
PILLOWTEX CORPORATION
By: /s/ Michael R. Harmon
--------------------------------------
Michael R. Harmon
Executive Vice President and Chief
Financial Officer
Dated: October 15, 2001
9
INDEX TO EXHIBITS
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Exhibit
Number Exhibit
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2.1 Asset Purchase Agreement, dated as of July 27, 2001,
between Beacon Manufacturing Company and Beacon
Acquisition Corporation (incorporated by reference to
Exhibit 2.1 to Pillowtex Corporation's Current Report
on Form 8-K dated August 23, 2001)
2.2 First Amendment to Asset Purchase Agreement, dated
September 6, 2001, between Beacon Manufacturing
Company and Beacon Acquisition Corporation
(incorporated by reference to Exhibit 2.2 to Pillowtex
Corporation's Current Report on Form 8-K dated
September 13, 2001)
10