-----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, HZim+uKC6887X/JL0vWLL9S7V6b/spG0cLk2RCyIzUgnt8Jdp9CkjpB5/E5hOrE+ 51zgqaH+W6XspMBX2HfrLQ== 0000950124-02-003818.txt : 20021216 0000950124-02-003818.hdr.sgml : 20021216 20021216172717 ACCESSION NUMBER: 0000950124-02-003818 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20021216 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GILBERT DANIEL CENTRAL INDEX KEY: 0000941670 IRS NUMBER: 371825647 STATE OF INCORPORATION: MI FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: ROCK FINANCIAL CORP STREET 2: 30600 TELEGRAPH RD., STE. 4000 CITY: BINGHAM FARMS STATE: MI ZIP: 48025 BUSINESS PHONE: 2485408000 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RAWLINGS SPORTING GOODS CO INC CENTRAL INDEX KEY: 0000921915 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 431674348 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43369 FILM NUMBER: 02859238 BUSINESS ADDRESS: STREET 1: 1859 INTERTECH DR CITY: FENTON STATE: MO ZIP: 63026 BUSINESS PHONE: 3143493500 MAIL ADDRESS: STREET 1: 1859 INTERTECH DR CITY: FENTON STATE: MO ZIP: 63026 SC 13D/A 1 k73610sc13dza.txt AMENDMENT NO. 8 TO SCHEDULE 13D ----------------------------------------------- OMB APPROVAL ----------------------------------------------- OMB Number: 3235-0145 Expires: November 30, 2002 Estimated average burden hours per response........................11 -----------------------------------------------
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 8)* Rawlings Sporting Goods Company, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.01 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 754459105 - -------------------------------------------------------------------------------- (CUSIP Number) Daniel Gilbert 20555 Victor Parkway Livonia, Michigan 48152 (734) 805-7575 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 15, 2002 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this Schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. |_| NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER. Page 1 of 9 pages - ------------------------------------------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).................................Daniel Gilbert - ------------------------------------------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a)....................................................................................................|_| (b)....................................................................................................|_| - ------------------------------------------------------------------------------------------------------------------- 3. SEC Use Only.............................................................................................. - ------------------------------------------------------------------------------------------------------------------- 4. Source of Funds (See Instructions)......................................................................PF - ------------------------------------------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)....................|_| - ------------------------------------------------------------------------------------------------------------------- 6. Citizenship or Place of Organization..............................................United States of America - ------------------------------------------------------------------------------------------------------------------- 7. Sole Voting Power.....................................................1,208,600 Number of Shares Bene- ---------------------------------------------------------------------------------------- ficially 8. Shared Voting Power...........................................................0 Owned by Each Reporting ---------------------------------------------------------------------------------------- Person With: 9. Sole Dispositive Power.........................................................1,208,600 ---------------------------------------------------------------------------------------- 10. Shared Dispositive Power......................................................0 - ------------------------------------------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person.....................................1,208,600 - ------------------------------------------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)...................|_| - ------------------------------------------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11)...................................................14.9% - ------------------------------------------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions).............................................................IN - -------------------------------------------------------------------------------------------------------------------
Page 2 of 9 pages The following constitutes Amendment No. 8 ("Amendment No. 8") to the Schedule 13D originally filed by Daniel Gilbert (the "Reporting Person") on January 30, 2002, as amended to date (the "Schedule 13D"). This Amendment No. 8 amends the Schedule 13D as specifically set forth herein. Item 4 of Schedule 13D is hereby amended to add the following: ITEM 4. PURPOSE OF TRANSACTION. On December 15, 2002, the Reporting Person sent a letter to the Chief Executive Officer of Rawlings (a copy of which is attached as Exhibit 99.4), with a copy to Rawlings' directors. In order to protect his substantial investment in Rawlings in light of Rawlings' Board's consideration of what the Reporting Person believes is a risky stock-for-stock transaction with K2 Inc. and based on his due diligence review to date, the Reporting Person increased his offer to acquire Rawlings to $8.50 per share in cash. The transaction would be structured as a tender offer followed by a back-end merger in order to allow Rawlings' shareholders to receive their cash consideration as soon as possible and with no undue market risk. Although his due diligence review to date has been limited, rushed by Rawlings and disappointing, the Reporting Person removed his due diligence condition at this valuation in order to move forward with the transaction. The offer represents a premium of 47% over the average closing price of Rawlings' stock for the twenty trading days ending November 26, 2002, the day before Rawlings' November 27, 2002 announcement that it was considering a transaction. The letter also outlines the specific improvements the Reporting Person believes are necessary to reverse Rawlings' revenue decline, many of which will require the investment of significant time and capital. The Reporting Person also indicated in the letter that he is concerned that the contemplated merger with K2 Inc. will do nothing to effect the necessary improvements and may exacerbate existing problems. The Reporting Person's specific concerns about K2 Inc. include (1) its highly leveraged balance sheet, with limited ability to arrange debt financing from other sources, (2) its recent management changes, (3) its risky operating strategy, including an aggressive consolidation or roll-up strategy, and the resulting potential dilution to Rawlings shareholders, (4) its limited revenue growth since 1997, and (5) its poor operating margins. He also expressed concern about shareholders receiving such a speculative stock in exchange for their investment in Rawlings and his belief that the "premium" Rawlings is promising Rawlings shareholders in the stock-for-stock transaction will be illusory. The letter states the Reporting Person's intention to vote against any such deal with K2 regardless of the performance of its stock in the near term. The Reporting Person's proposal is subject only to the negotiation and execution of a definitive agreement containing customary representations, warranties, covenants and conditions. The conditions would include (1) customary conditions regarding the accuracy of representations and warranties, compliance with covenants, required regulatory approvals (including clearance under the Hart-Scott-Rodino Act) and no material adverse change, (2) a condition that Rawlings' contract with Major League Baseball and the GE debt facility remain in place following the change in control, and (3) a condition that Rawlings remove its newly-adopted poison pill. The Reporting Person would also expect the definitive agreement to provide for a break-up fee equal to 3% of the overall transaction value. Page 3 of 9 pages Subject to market conditions and other factors that the Reporting Person may deem material to his investment decisions, the Reporting Person may, from time to time, acquire additional shares of Common Stock, or rights to purchase shares of Common Stock in the open market, by tender offer, in privately negotiated transactions or otherwise, depending upon the price and availability of such shares or rights. The Reporting Person intends to review on a continuing basis various factors relating to his investment in Rawlings, including Rawlings's business and prospects, the price and availability of Rawlings's securities, subsequent developments affecting Rawlings, other investment and business opportunities available to the Reporting Person, his general investment and trading policies, market conditions or other factors. Based on these factors, the Reporting Person may determine to dispose of some or all of his Common Stock, periodically, by public or private sale (registered or unregistered and with or without the simultaneous sale of newly-issued Common Stock by Rawlings), gift, pledge, expiration of options or otherwise, including, without limitation, sales of Common Stock by the Reporting Person pursuant to Rule 144 under the Securities Act of 1933, as amended, or otherwise. The Reporting Person reserves the right not to acquire Common Stock or not to dispose of all or part of such Common Stock if he determines such acquisition or disposal is not in his best interests at that time. Other than as described above, the Reporting Person does not have any current plans or proposals which relate to, or would result in, (a) any acquisition or disposition by him of securities of Rawlings, (b) any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Rawlings or any of its subsidiaries, (c) any sale or transfer of a material amount of assets of Rawlings or any of its subsidiaries, (d) any change in the present Board of Directors or management of Rawlings, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Board, (e) any material change in Rawlings's present capitalization or dividend policy, (f) any other material change in Rawlings's business or corporate structure, (g) any changes in Rawlings's Certificate of Incorporation or Bylaws or other actions which may impede the acquisition of control of Rawlings by any person, (h) causing a class of securities of Rawlings to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (i) a class of Rawlings's equity securities becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, or (j) any action similar to those enumerated above. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 99.1 Form of UBS PaineWebber Inc. Client Agreement, incorporated by reference to Exhibit 99.1 to the Reporting Person's Schedule 13D with respect to the Common Stock, filed on February 1, 2002. Page 4 of 9 pages 99.2 Form of Goldman, Sachs & Co. Individual Account Agreement, incorporated by reference to Exhibit 99.2 to Amendment No. 4 to the Reporting Person's Schedule 13D with respect to the Common Stock, filed on July 22, 2002. 99.3 Letter, dated December 3, 2002, from the Reporting Person to Stephen M. O'Hara, Chairman of the Board and Chief Executive Officer of Rawlings, incorporated by reference to Exhibit 99.3 to Amendment No. 7 to the Reporting Person's Schedule 13D with respect to the Common Stock, filed on December 3, 2002. 99.4 Letter, dated December 15, 2002, from the Reporting Person to Stephen M. O'Hara, Chairman of the Board and Chief Executive Officer of Rawlings. SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: December 16, 2002 /s/ DANIEL GILBERT ------------------------------------- Daniel Gilbert Page 5 of 9 pages EXHIBIT INDEX Exhibit Number and Description 99.1 Form of UBS PaineWebber Inc. Client Agreement, incorporated by reference to Exhibit 99.1 to the Reporting Person's Schedule 13D with respect to the Common Stock, filed on February 1, 2002. 99.2 Form of Goldman, Sachs & Co. Individual Account Agreement, incorporated by reference to Exhibit 99.2 to Amendment No. 4 to the Reporting Person's Schedule 13D with respect to the Common Stock, filed on July 22, 2002. 99.3 Letter, dated December 3, 2002, from the Reporting Person to Stephen M. O'Hara, Chairman of the Board and Chief Executive Officer of Rawlings, incorporated by reference to Exhibit 99.3 to Amendment No. 7 to the Reporting Person's Schedule 13D with respect to the Common Stock, filed on December 3, 2002. 99.4 Letter, dated December 15, 2002, from the Reporting Person to Stephen M. O'Hara, Chairman of the Board and Chief Executive Officer of Rawlings. Page 6 of 9 pages EX-99.4 3 k73610exv99w4.txt LETTER FROM REPORTING PERSON TO STEPHEN M. O'HARA EXHIBIT 99.4 Daniel Gilbert 20555 Victor Parkway Livonia, Michigan 48152 December 15, 2002 Mr. Stephen M. O'Hara Chairman of the Board and Chief Executive Officer Rawlings Sporting Goods Company, Inc. 1859 Intertech Drive Fenton, Missouri 63026 Dear Mr. O'Hara: In order to protect my substantial investment in Rawlings in light of the Board's consideration of what I believe is a risky stock-for-stock transaction with K2 Inc. and based on my due diligence review to date, I am increasing my offer to acquire Rawlings to $8.50 per share in cash. The transaction will be structured as a tender offer followed by a back-end merger in order to allow Rawlings shareholders to receive their cash consideration as soon as possible and with no undue market risk. Although my diligence review to date has been limited, rushed by the Company and disappointing, I am removing my diligence condition at this valuation in order to move forward with a transaction. This offer represents a premium of 47% over the average closing price of the Company's stock for the twenty trading days ending November 26, 2002, the day before the Company's November 27, 2002 announcement that it was considering a transaction. In my view, Rawlings needs to reverse its revenue decline by making certain specific improvements, including: - Reinvigoration of the brand; - Greater penetration into ancillary markets, such as softball, basketball and football; - Restoration and expansion of an aggressive sales culture, marketing strategies and public relations efforts; - Development of an aggressive licensing strategy; - Initiation of a global marketing strategy, particularly in the Far East and potentially in Latin America and Europe; -2- December 15, 2002 - Development of a cohesive e-commerce strategy; - Establishment of a product development initiative; - Leveraging of the Rawlings brand in apparel markets and memorabilia; - Greater automation in manufacturing and distribution facilities; and - Overall cost structure rationalization. Obviously, many of the above measures will require the investment of significant time and capital. As several members of Rawlings management indicated to me during my two-day visit to St. Louis, as a public company with quarterly earnings pressures and limited resources, management has not had either the time or the resources to effect such measures, a situation which I believe must change. As the Company's largest shareholder holding approximately 15% of the outstanding shares, I am very concerned that the Company's contemplated merger with K2 will do nothing to effect the necessary improvement measures, and in fact may exacerbate the existing problems, because K2 is a company that is still attempting to repair itself. My specific concerns about K2 include: - HIGHLY LEVERAGED BALANCE SHEET - With $90 million of net debt (3.6x EBIT), K2 is not going to have the financial flexibility to make the necessary investment to effect the improvement measures discussed above. Furthermore, as recently as December 31, 2001, K2 was not in compliance with covenants under its debt facilities, which forced the company to enter into new debt arrangements whereby it granted security interests in substantially all of its assets. As disclosed in K2's most recent 10-Q, this makes "K2's ability to arrange debt financing from other sources...limited"; - RECENT MANAGEMENT CHANGES - K2 was forced to bring in new senior management only two months ago; - RISKY OPERATING STRATEGY - It is my understanding from industry sources that K2 is planning an aggressive consolidation or roll-up strategy in the sporting goods industry, a strategy that would make me very concerned as a shareholder in a company that is already highly leveraged, is still in the process of fixing its own operations, and would have to quickly improve Rawlings' operations to justify to its shareholders the anticipated dilutive effects of this transaction. Moreover, if Rawlings shareholders become shareholders of K2 they would undoubtedly be continually diluted as K2 pursued its roll up strategy; - NON-EXISTENT REVENUE GROWTH - From 1997 through the 12 months ending September 30, 2002, K2's revenues have gone from $566 million to $587 million, representing growth of less than 1% annually over a five-year period; and - POOR OPERATING PERFORMANCE - Over that same period, K2's operating margins (EBIT/Revenue) have ranged between 0.2% and 6.5%, and for the 12 months ended September 30, 2002, the margin was only 4.3%, -3- December 15, 2002 essentially consistent with Rawlings'4.4% margin, placing both companies at or near the bottom of the industry average. As the Company's largest shareholder, I do not believe Rawlings shareholders should receive such a speculative stock in exchange for their investment in Rawlings. In my view, the stock-for-stock transaction you are considering with K2 exposes Rawlings shareholders to unnecessary and unacceptable risks. I believe an announcement that K2 has agreed to acquire Rawlings will put significant pressure on K2's stock and ultimately result in the "premium" you are promising Rawlings shareholders to be illusory. My present intention is to vote against any such deal with K2 regardless of the performance of its stock in the near term. The all cash deal I have proposed gives shareholders a substantial premium for their shares and, importantly, the certainty they deserve in this difficult market environment. My proposal is subject only to the negotiation and execution of a definitive merger agreement containing such representations, warranties, covenants and conditions as are customary for an all-cash tender offer followed by a back-end merger. In addition to customary conditions regarding accuracy of representations and warranties, compliance with covenants, required regulatory approvals (including clearance under the Hart-Scott-Rodino Act) and no material adverse change, closing of the transaction will be subject to the following: (i) the Company's contract with Major League Baseball and the GE debt facility will remain in place following the change in control and (ii) the Company's removal of its newly-adopted shareholder rights plan. I would also expect the definitive agreement to provide for a break-up fee equal to 3% of the overall transaction value. I would be happy to meet with you and your Board at your earliest convenience to discuss this proposal in greater detail. I am committed to working with you to negotiate and sign a definitive agreement and to complete this transaction as soon as practicable. On behalf of all Rawlings shareholders, I urge you and the Board to recognize the substantial value of my proposal, especially when compared to a stock-for-stock deal with a small cap, thinly traded company such as K2. Sincerely, Daniel Gilbert cc: Board of Directors, Rawlings Sporting Goods Company, Inc. -----END PRIVACY-ENHANCED MESSAGE-----