false0001397187 0001397187 2020-06-26
2020-06-26
UNITED
STATES
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
June 26, 2020
Date of
Report (Date of earliest event reported)
lululemon
athletica inc.
(Exact name
of registrant as specified in its charter)
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Delaware
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001-33608
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20-3842867
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(State or
other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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1818 Cornwall
Avenue
Vancouver,
British
Columbia
Canada,
V6J 1C7
(Address of
principal executive offices, including Zip Code)
Registrant's
telephone number, including area code: (604) 732-6124
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading symbol(s)
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Name of each exchange on which registered
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Common Stock, par value
$0.005 per share
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LULU
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Nasdaq Global Select
Market
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Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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☐
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Written communications
pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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☐
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Indicate by check
mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of
1934 (§240.12b-2 of this chapter).
Emerging growth
company ☐
If an emerging
growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
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Item 1.01.
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Entry into a
Material Definitive Agreement.
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On June 26, 2020,
we entered into an Agreement and Plan of Merger with Curiouser
Products Inc., dba MIRROR, in connection with which, subject to the
satisfaction or waiver of certain conditions stated in the
agreement, we will acquire all of the outstanding shares of MIRROR
in an all-cash transaction for an aggregate purchase price of
approximately $500.0 million. The parties to the agreement include
lululemon athletica inc., a Delaware corporation; Snowflake
Acquisition Corp., a Delaware corporation and our wholly-owned
subsidiary; Curiouser Products Inc., a Delaware corporation; and
Shareholder Representative Services LLC, a Colorado limited
liability company, in its capacity as the holder representative.
Under terms of the agreement, the acquisition will be effected
through a merger of Snowflake Acquisition Corp. with and into
MIRROR, with MIRROR surviving the transaction as our wholly-owned
subsidiary.
We expect to pay
the purchase price from our primary sources of liquidity, which
include our current balances of cash and cash equivalents, our
existing $400.0 million revolving credit facility, and a new $300.0
million revolving credit facility described in Item 2.03. The
aggregate purchase price payable in the transaction is subject to
working capital and other adjustments described in the agreement.
Approximately $57 million of the purchase price payable to certain
continuing employees is subject to the continued employment of
those individuals through various vesting dates up to three years
after the transaction closing date.
The transaction
agreement contains customary representations, warranties and
covenants by the parties, including covenants with respect to the
conduct of MIRROR during the period between execution of the
agreement and the closing of the transaction. The agreement also
contains customary indemnities, with respect to which $10.0 million
of the purchase price will be held in escrow to satisfy
certain indemnification obligations of MIRROR and the parties will
jointly share in the cost of a representation and warranty
insurance policy. The transaction is subject to customary closing
conditions and is expected to close in the second quarter of fiscal
2020. The agreement contains certain customary termination rights
for both parties.
The foregoing
description of the transaction agreement does not purport to be
complete and is qualified in its entirety by reference to the full
text of the transaction agreement, a copy of which is filed as
Exhibit 2.1 to this current report and is incorporated by reference
in this Item 1.01.
The transaction
agreement and the above description have been included to provide
investors with information regarding the terms of the transaction
agreement. They are not intended to provide any other factual
information about lululemon or any other parties. The
representations, warranties and covenants contained in the
transaction agreement were made only for purposes of that agreement
and as of the dates specified therein, are solely for the benefit
of the parties to the agreement, and may be subject to limitations
agreed upon by the parties, including being qualified by
confidential disclosures made by each contracting party to the
other for the purposes of allocating contractual risk between them
that differ from those applicable to investors. The
representations, warranties and covenants, or any description
thereof, may not reflect the actual state of facts or condition of
lululemon or any other parties to the agreement. Moreover,
information concerning the subject matter of the representations,
warranties and covenants may change after the date of the
transaction agreement, which subsequent information may or may not
be fully reflected in our public disclosures.
The information
included in Item 2.03 of this current report is incorporated by
reference in this Item 1.01.
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Item 2.03.
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Creation of
a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
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On June 29, 2020,
we entered into a 364-day credit agreement providing for a $300.0
million unsecured revolving credit facility available for our use
for the acquisition of MIRROR described in Item 1.01 and for
general corporate purposes. The credit agreement matures on June
28, 2021. The parties to the credit agreement include lululemon
athletica inc., a Delaware corporation (“LAI”); lululemon athletica
canada inc., a corporation organized under the laws of British
Columbia (“LACI”); Lulu Canadian Holding, Inc., a corporation
organized under the laws of British Columbia (“LCHI”); lululemon
usa inc., a Nevada corporation (“LUI”); each lender from time to
time a party to the credit agreement; and Bank of America, N.A., as
administrative agent and swing line lender.
Borrowings under
the credit facility may be prepaid and commitments may be reduced
or terminated without premium or penalty (other than customary
breakage costs). Subject to the exceptions stated in the credit
agreement, all borrowings under the credit facility are guaranteed
by LAI and LUI, and borrowings made by LACI and LCHI under the
credit facility are guaranteed by LACI and LCHI.
Borrowings made
under the credit facility bear interest at a rate per annum equal
to, at our option, either (1) a rate based on the rates applicable
for deposits on the interbank market for U.S. Dollars or the
applicable currency in which the borrowings are made (“LIBOR”) or
(2) an alternate base rate, plus, in each case, an applicable
margin. The applicable margin is determined by reference to a
pricing grid, based on the ratio of indebtedness to earnings before
interest, tax depreciation, amortization, and rent (“EBITDAR”) and
ranges between 1.50%-2.25% for LIBOR loans and 0.50%-1.25% for
alternate base rate or Canadian prime rate loans. Additionally, a
commitment fee of between 0.25%-0.55%, also determined by reference
to the pricing grid, is payable on the average daily unused amounts
under the credit facility.
The credit
agreement contains negative covenants that, among other things and
subject to certain exceptions, limit the ability of our
subsidiaries to incur indebtedness, incur liens, undergo
fundamental changes, make dispositions of all or substantially all
of their assets, alter their businesses and enter into agreements
limiting subsidiary dividends and distributions.
We are also
required to maintain a consolidated rent-adjusted leverage ratio of
not greater than 3.50:1.00 and we are not permitted to allow the
ratio of consolidated EBITDAR to consolidated interest charges
(plus rent) to be less than 2.00:1.00. The credit agreement also
contains certain customary representations, warranties, affirmative
covenants, and events of default (including, among others, an event
of default upon the occurrence of a change of control). If an event
of default occurs, the credit agreement may be terminated, and the
maturity of any outstanding amounts may be
accelerated.
The foregoing
description of the credit agreement does not purport to be complete
and is qualified in its entirety by reference to the full text of
the credit agreement, which is filed as Exhibit 10.1 to this
current report and is incorporated by reference in this Item
2.03.
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Item 7.01.
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Regulation
FD Disclosure.
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On June 29, 2020,
we issued a press release announcing the execution of the merger
agreement. A copy of the press release is furnished as Exhibit 99.1
to this current report.
We are also
furnishing as Exhibit 99.2 to this current report an investor
presentation relating to the acquisition of MIRROR, which we intend
to use for presentations to investors and others from time to
time.
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Item 9.01.
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Financial
Statements and Exhibits.
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(d)
Exhibits.
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Exhibit
No.
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Description
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2.1
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10.1
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364-Day Credit Agreement,
dated June 29, 2020, among lululemon athletica inc., a Delaware
corporation; lululemon athletica canada inc., a corporation
organized under the laws of British Columbia; Lulu Canadian
Holding, Inc., a corporation organized under the laws of British
Columbia; lululemon usa inc., a Nevada corporation; each lender
from time to time a party to the credit agreement; and Bank of
America, N.A., as administrative agent and swing line
lender
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99.1
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99.2
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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.
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lululemon athletica
inc.
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Dated: June 30,
2020
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/s/ CALVIN
MCDONALD
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Calvin McDonald
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Chief Executive
Officer
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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2.1
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Agreement and Plan of Merger,
dated June 26, 2020, among lululemon athletica inc., a Delaware
corporation; Snowflake Acquisition Corp., a Delaware corporation;
Curiouser Products Inc., a Delaware corporation; and Shareholder
Representative Services LLC, a Colorado limited liability company,
in its capacity as the holder representative
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10.1
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364-Day Credit Agreement,
dated June 29, 2020, among lululemon athletica inc., a Delaware
corporation; lululemon athletica canada inc., a corporation
organized under the laws of British Columbia; Lulu Canadian
Holding, Inc., a corporation organized under the laws of British
Columbia; lululemon usa inc., a Nevada corporation; each lender
from time to time a party to the credit agreement; and Bank of
America, N.A., as administrative agent and swing line
lender
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99.1
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Press release issued on June
29, 2020
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99.2
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Form of investor
presentation
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