-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A9fOMSjiStYK50SgC5p31BYl3082hpIKVo6CeVoovAv0NcMyArakw6mIE3JBCOe0 hFdDFCp5jfkE8Sy+sCQY2Q== 0000874214-96-000004.txt : 19961028 0000874214-96-000004.hdr.sgml : 19961028 ACCESSION NUMBER: 0000874214-96-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960920 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 19960926 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAYLOR ANN STORES CORP CENTRAL INDEX KEY: 0000874214 STANDARD INDUSTRIAL CLASSIFICATION: 5621 IRS NUMBER: 133499319 STATE OF INCORPORATION: DE FISCAL YEAR END: 0202 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10738 FILM NUMBER: 96634967 BUSINESS ADDRESS: STREET 1: 142 WEST 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125413300 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: September 20, 1996 ----------------------------------- (Date of earliest event reported) ANNTAYLOR STORES CORPORATION ANNTAYLOR, INC. - - ---------------------------------- -------------------------------------- (Exact name of registrant as Exact name of registrant as specified in its charter) specified in its charter) Delaware 1-10738 13-3499319 Delaware 1-11980 51-0297083 - - -------- -------- ------------ --------- ------- ---------- (State or (Commission (IRS Employer (State or (Commission (IRS Employer Jurisdic- File Number) Identification Jurisdic- File Number) Identification tion of Number) tion of Number) incorpor- incorpor- ation) ation) _______________________________________________________ 142 West 57th Street New York, New York 10019 (Address, including zip code, of Registrants' principal executive offices) Registrants' telephone number including area code: (212) 541-3300 ============================================================================ 2 ITEM 2. Acquisition of Disposition of Assets ------------------------------------ On September 20, 1996, AnnTaylor Stores Corporation, a Delaware corporation (the "Company"), through its wholly owned subsidiary, AnnTaylor, Inc., a Delaware corporation ("Ann Taylor"), acquired (the "Acquisition") (i) the entire interest of Cygne Designs, Inc. ("Cygne") and its wholly owned subsidiary Cygne Group (F.E.) Limited, a Hong Kong corporation ("CGFE"), in Ann Taylor's direct sourcing joint venture with Cygne, known as CAT US Inc. and C.A.T. (Far East) Limited (together, "CAT") and (ii) the assets (the "Assets") of Cygne's Ann Taylor Woven Division (the "Division") formerly used for sourcing merchandise for Ann Taylor. The Assets include inventory related to the Division ("Inventory") and certain fixed assets and office equipment, primarily located in New York City. As consideration for the Acquisition, (i) the Company issued to Cygne and CGFE an aggregate of 2,348,145 shares of common stock, par value $.0068 per share ("ATSC Common Stock"), of the Company (such shares of ATSC Common Stock having an aggregate market value of $36,000,000 based on the market price of the ATSC Common Stock during the ten trading days ended September 19, 1996), and (ii) Ann Taylor paid to Cygne approximately $3.2 million in cash for the fixed assets of the Division and the Inventory, which amount is subject to post-closing adjustments. In addition, Ann Taylor assumed certain liabilities of Cygne including certain capital lease obligations and the payment of $1.6 million to the former President of CAT with respect to amounts due under his previous employment agreement with CAT, and forgave $7,985,000 of advances made by Ann Taylor to Cygne. In connection with the Acquisition, (i) Cygne received an additional $6,500,000 cash payment from Ann Taylor in settlement of certain accounts receivable, and (ii) the Company and Ann Taylor entered into Consulting Agreements (the "Consulting Agreements") with Cygne and each of Bernard M. Manuel, the Chairman and Chief Executive Officer of Cygne, and Irving Benson, the President of Cygne. Under the Consulting Agreements, Ann Taylor will pay Cygne an aggregate of $450,000 annually for three years in consideration for consulting services to be provided by Messrs. Manuel and Benson. The Company has agreed to register the shares of ATSC Common Stock issued to Cygne and CGFE pursuant to a Stockholders Agreement among the Company, Cygne and CGFE, dated September 20, 1996. The consideration for the Acquisition was determined by arms-length negotiations between Ann Taylor and Cygne. Ann Taylor's source of funds for the cash portion of such consideration was borrowings under its existing line of credit with a syndicate of banks led by Bank of America. As a result of the Acquisition, CAT became an indirect wholly owned subsidiary of the Company and will perform all of Ann Taylor's direct sourcing functions, including those previously provided by the Division, under the name AnnTaylor Global Sourcing, Inc. A copy of a press release issued by the Company on September 23, 1996 with respect to the transaction is attached hereto as Exhibit 1 and is incorporated herein by reference. ============================================================== 3 ITEM 7. Financial Statements and Exhibits ---------------------------------- (a) The financial statements required by Item 7(a) of Form 8-K were filed by the Registrants in their Current Report, dated June 21, 1996. (b) The pro forma financial information required by Item 7(b) of Form 8-K is filed herewith as Exhibit 2 and is incorporated herein by reference. (c) Exhibit No. ----------- 1. Press release issued by the Company on September 23, 1996. 2. Unaudited historical and pro forma combined balance sheets, statements of operations and notes thereto of the Company and the Acquired Businesses. 3. Stock and Asset Purchase Agreement, dated as of June 7, 1996, by and among AnnTaylor Stores Corporation, AnnTaylor, Inc., Cygne Designs, Inc. and Cygne Group (F.E.) Limited. Incorporated by reference to Exhibit 2 to the Registrants' Current Report on Form 8-K filed on June 10, 1996. 4. Amendment to Stock and Asset Purchase Agreement, dated as of August 27, 1996, by and among AnnTaylor Stores Corporation, AnnTaylor, Inc., Cygne Designs, Inc. and Cygne Group (F.E.) Limited. Incorporated by reference to Exhibit 3 to the Registrants' Current Report on Form 8-K, filed on August 30, 1996. ============================================================================= 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ANNTAYLOR STORES CORPORATION Date: September 26, 1996 By: /s/ J. Patrick Spainhour ---------------------- ------------------------------- J. Patrick Spainhour Chairman of the Board and Chief Executive Officer Date: September 26, 1996 By: /s/ Walter J. Parks ----------------------- -------------------------------- Walter J. Parks Senior Vice President - Finance ============================================================================== 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ANNTAYLOR, INC. Date: September 26, 1996 By: /s/ J. Patrick Spainhour ----------------------- ------------------------------- J. Patrick Spainhour Chairman of the Board and Chief Executive Officer Date: September 26, 1996 By: /s/ Walter J. Parks ----------------------- --------------------------------- Walter J. Parks Senior Vice President - Finance ============================================================================== 6 EXHIBIT INDEX Exhibit Number Description -------- ----------- 1 Press release issued by the Company on September 23, 1996. 2 Unaudited historical and pro forma combined balance sheets, statements of operations and notes thereto of the Company and the Acquired Businesses. 3 Stock and Asset Purchase Agreement, dated as of June 7, 1996, by and among AnnTaylor Stores Corporation, AnnTaylor, Inc., Cygne Designs, Inc. and Cygne Group (F.E.) Limited. Incorporated by reference to Exhibit 2 to the Registrants' Current Report on Form 8-K filed on June 10, 1996. 4 Amendment to Stock and Asset Purchase Agreement, dated as of August 27, 1996, by and among AnnTaylor Stores Corporation, AnnTaylor, Inc., Cygne Designs, Inc. and Cygne Group (F.E.) Limited. Incorporated by reference to Exhibit 3 to the Registrants' Current Report on Form 8-K, filed on August 30, 1996. EX-99 2 EXHIBIT 1 ANNTAYLOR ------------ NEWS RELEASE ------------ 142 West 57th Street New York, N.Y. 10019 FOR IMMEDIATE RELEASE - - --------------------- ANN TAYLOR ANNOUNCES CLOSING OF TRANSACTION WITH CYGNE DESIGNS New York, New York, September 23, 1996 -- AnnTaylor ---------------------------------------- Stores Corporation (NYSE: ANN) and its wholly owned subsidiary AnnTaylor, Inc. today announced that, pursuant to their previously announced agreement with Cygne Designs, Inc. ("Cygne") and Cygne's wholly owned subsidiary Cygne Group (F.E.) Limited, the Company consummated the acquisition of Cygne's entire interest in Ann Taylor's direct sourcing joint venture with Cygne known as CAT, and the assets of what is known as the Ann Taylor Woven Division of Cygne, the division of Cygne that was responsible for sourcing merchandise for Ann Taylor. In payment of the purchase price for Cygne's interest in CAT and the Woven Division assets, the Company issued 2,348,145 shares of Company Common Stock and paid Cygne approximately $3,200,000 in cash for inventory and fixed assets, and approximately $6,500,000 in cash in settlement of open accounts payable by Ann Taylor to Cygne for merchandise delivered by Cygne prior to the closing, subject to post- closing adjustments. The Company also assumed certain liabilities related to the operations of the Woven Division. Ann Taylor is one of the country's leading women's specialty retailers, operating 306 stores in 40 states and the District of Columbia. Contact: Investor Marketing/Public Relations: Relations: Walter J. Parks Gina Iaderosa SVP - Finance Director of Marketing & (212) 541-3318 Communications (212) 541-3347 EX-99 3 Exhibit 2 UNAUDITED HISTORICAL AND PRO FORMA COMBINED BALANCE SHEETS, STATEMENTS OF OPERATIONS AND NOTES THERETO The following Unaudited Historical and Pro Forma combined balance sheets, statements of operations and the notes thereto give effect to the acquisition (the "CAT/Cygne Transaction") of the remaining 60% interest of CAT U.S., Inc. ("CAT") and the AnnTaylor Woven Division of Cygne Designs, Inc. ("Division") (collectively, the "Acquired Businesses") by an indirect wholly owned subsidiary of AnnTaylor Stores Corporation (the "Company") under the "purchase" method of accounting, Cygne Designs, Inc. owns the Division and a 60% interest in CAT. These Unaudited Historical and Pro Forma Combined balance sheets, statements of operations and the notes thereto are presented for illustrative purposes only, and therefore are not necessarily indicative of the operating results and financial position that might have been achieved had the CAT/Cygne Transaction occurred as of an earlier date, nor are they necessarily indicative of operating results and financial position that may occur in the future. An Unaudited Historical and Pro Forma Combined Balance Sheet is provided as of August 3, 1996, giving effect to the CAT/Cygne Transaction as though it had been consummated on that date. Unaudited Historical and Pro Forma Combined Statements of Operations are provided for the six months ended August 3, 1996, giving effect to the CAT/Cygne Transaction as though it had occurred at the beginning of such period. The historical six months ended August 3, 1996 information has been derived from the unaudited financial statements of the Company. These financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the unaudited six month period. The data at and for the six months ended August 3, 1996 for the Acquired Businesses have been derived from the unaudited financial statements which, in the opinion of the management of the Acquired Businesses, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the unaudited six month period. - - ------------------------------------------------------------------------------ ANNTAYLOR STORES CORPORATION AND ACQUIRED COMPANIES UNAUDITED HISTORICAL AND PRO FORMA COMBINED FINANCIAL INFORMATION BALANCE SHEETS August 3, 1996 (in thousands) Historical Pro Forma ---------------- ------------------------ Acquired Company Businesses Adjustments Combined ------- ---------- ----------- -------- ASSETS Current Assets: Cash and cash equivalents $1,287 $ 121 $ --- $ 1,408 Accounts receivable, net 64,112 18,057 (18,057)(a) 64,112 Inventories 99,231 14,384 3,985 (b) 117,600 Prepaid and other current assets 24,948 942 (2,537)(a) 23,353 ------- ------- ------- ------- Total current assets 189,578 33,504 (16,609) 206,473 Property and equipment, net 146,377 3,685 --- 150,062 Other assets 12,586 188 (6,198)(c) 6,576 Goodwill, net 308,772 --- 38,571 (d) 347,343 ------- ------ ------ ------- Total assets $657,313 $37,377 $15,764 $710,454 ======= ====== ====== ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 26,276 $ 622 $ --- $ 26,898 Accounts payable 36,112 14,288 (12,609)(a) 37,791 Accrued expenses 26,323 2,418 1,000 (e) 29,741 ------- ------ ------ ------ Total current liabilities 88,711 17,328 (11,609) 94,430 Long-term debt 135,051 422 11,000 (f) 146,473 Other liabilities 9,268 --- --- 9,268 Company-Obligated Manditorily Preferred Securities of AnnTaylor Finance Trust Holding Solely Convertible Debentures 96,042 --- --- 96,042 Stockholders' equity: Common stock 157 --- 16 (g) 173 Additional paid in capital 311,582 --- 35,984 (g) 347,566 Retained earnings and other items 16,502 19,627 (19,627)(g) 16,502 ------- ------- ------- ------- Total stockholders' equity 328,241 19,627 16,373 364,241 ------- ------- ------- ------- Total liabilities and stockholders' equity $657,313 $37,377 $ 15,764 $710,454 ======= ====== ======= ======= See notes to unaudited historical and pro forma combined financial information. =============================================================================== ANN TAYLOR STORES CORPORATION AND ACQUIRED COMPANIES UNAUDITED HISTORICAL AND PRO FORMA STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED AUGUST 3, 1996 (in thousands, except per share amounts) Acquired Company Businesses Adjustments Combined ------- ---------- ----------- ---------- Net sales $372,329 $117,097 $(117,097)(h) $ 372,329 Cost of sales 208,428 101,441 (108,434)(h)(i)(j) 201,435 ------- ------- -------- ------- Gross profit 163,901 15,656 (8,663) 170,894 Selling, general and administrative expense 140,283 9,037 (9,037)(j) 140,283 Amortization of goodwill 4,753 --- 771 (k) 5,524 ------- ------ -------- ------- Operating income 18,865 6,619 (397) 25,087 Interest expense 12,331 390 774 (i) 13,495 Other (income) expense, net (424) --- 760 (l) 336 ------- ------ -------- ------- Income before income taxes 6,958 6,229 (1,931) 11,256 Income tax provision 4,519 2,293 (322)(l)(m) 6,490 ------- ------ ------- ------- Net income $ 2,439 $ 3,936 $ (1,609) $ 4,766 ======= ====== ======== ======= Net income per share $ 0.11 $ 0.19 ======= ======= See notes to unaudited historical and pro forma combined financial information. =============================================================================== NOTES TO UNAUDITED HISTORICAL AND PRO FORMA FINANCIAL STATEMENTS Note 1 - Basis of Presentation - - ------------------------------ The Unaudited Historical and Pro Forma Combined balance sheets, statements of operations and the notes thereto are presented for illustrative purposes only giving effect to the acquisition of the Acquired Businesses by the Company accounted for as a "Purchase", as such term is used under generally accepted accounting principles. The Acquired Businesses' information includes the acquisition by the Company of CAT and the Division. Certain amounts reported in the Acquired Businesses' historical financial information have been reclassified to conform with the Company presentations in the Unaudited Historical and Pro Forma Combined Balance Sheets and Statements of Operations. The Unaudited Historical and Pro Forma balance sheets, statements of operations and the notes thereto giving effect to the acquisition of the Acquired Businesses by the Company have been prepared assuming the Company elected to treat the purchase of the CAT stock as a stock acquisition, which will provide no step up in basis for income tax purposes and the purchase of the Cygne assets as an asset purchase, which will provide for a step up in basis for income tax purposes. Note 2 - Accounting Period - - -------------------------- The pro forma periods for the six months ended August 3, 1996 are the historical financial reporting periods of both the Company and the Acquired Businesses. The Company and the Acquired Businesses have historically reported a 26- week reporting period. Note 3 - Purchase Price Determination - - ------------------------------------- The purchase price of $47.0 million was computed assuming (i) the issuance of 2,348,145 shares of common stock of the Company at a price of $15.331 per share, (ii) cash consideration of $9.4 million, and (iii) the assumption of the obligation to make payment to the president of CAT of approximately $1.6 million becoming due under his existing employment agreement with CAT as a result of the CAT/Cygne Transaction. The cash portion of the purchase price (including the obligation to the president of CAT) will be provided by additional bank borrowings, assumed to be approximately $11.0 million at 8% per annum. The aggregate purchase price includes an amount payable to an executive of CAT pursuant to his employment contract, which requires a payment to him based on the value of the share of CAT being transferred. Note 4 - Pro Forma Adjustments - - ------------------------------ The following items were recorded as adjustments to effect the combination of the Company and the Acquired Businesses. 4(a) Adjustments recorded to reflect (i) the elimination of amounts due to/from the Company and the Acquired Businesses, and (ii) the elimination of advances made to the Division. ============================================================================== NOTES TO UNAUDITED HISTORICAL AND PRO FORMA FINANCIAL STATEMENTS (continued) Note 4 - Pro Forma Adjustments (continued) - - ------------------------------------------- 4(b) Adjustments to reduce the inventories of CAT and the Division to the current fair value, and the elimination of advances made to the Division. 4(c) The elimination of the investment account on the Company's books for the 40% interest in CAT. 4(d) Adjustment recorded to reflect the creation of goodwill representing the excess of purchase price over net assets acquired which results in a $38.6 million adjustment, based on management's estimate and without the performance of any due diligence procedures. Accordingly, such estimate of goodwill is preliminary and subject to change. At this time, the Company has not attributed any value to intangible assets other than goodwill. 4(e) Adjustment to record a liability for an estimate of fees related to the CAT/Cygne Transaction. 4(f) Adjustments to reflect a portion of the purchase price expected to be financed through additional bank borrowings. 4(g) Common stock, additional paid-in capital and retained earnings have been adjusted to eliminate the equity balances of the Acquired Businesses and reflect the common stock and additional paid-in capital for the issuance of 2,348,145 shares of common stock of the Company at an assumed price of $15.331 per share. 4(h) To eliminate sales previously recorded by the Acquired Businesses against the cost of sales previously recorded by the Company. Cost of sales is reduced by the reclassification of certain expenses discussed in Notes 4(i) and 4(j). 4(i) To reclassify interest expense from cost of sales as reported in the Acquired Businesses' historical financial information to interest expense, to conform with the Company's presentations. 4(j) Historically, the Acquired Businesses have classified certain expenses as selling, general and administrative expenses. An adjustment has been recorded to reclassify certain expenses, such as costs of design and procurement, to cost of sales. 4(k) Adjusted to reflect the charge relating to the amortization of goodwill, which represents the excess of purchase price over net assets acquired. Such goodwill will be amortized over a 25 year life. 4(l) The elimination of the equity in earnings of 40% of the net income of CAT by the Company and the related income tax expense. 4(m) The income tax provision represents the assumed effective tax rate for the Acquired Businesses assuming goodwill relative to CAT is non-deductible. -----END PRIVACY-ENHANCED MESSAGE-----