LOS ANGELES--(BUSINESS WIRE)--American Apparel Inc. (Amex: APP) has announced further details regarding the 2.71 million common shares to be issued to its employees under the 2007 Performance Equity Plan approved by shareholders on December 12, 2007. These shares are being allocated and issued pursuant to the terms of the Amended and Restated Agreement and Plan of Reorganization.
The 2.71 million shares will be issued directly to, or for the benefit of, employees promptly after an effective registration statement on Form S-8 is filed with respect to these shares. This filing is expected to take place in mid-February. The value of this stock grant is approximately $39 million based on American Apparel’s closing stock price of $14.45 on January 2, 2008. As disclosed in Endeavor Acquisition Corp.’s press release of November 8, 2007, and based on the assumptions therein, the shares amount to approximately 4.0 percent of the company’s pro forma fully-diluted shares outstanding.
Subject to some exceptions, it is expected that each active, full-time employee of American Apparel on the date of grant, including management, factory workers, retail employees, or otherwise, employed with the company for over one year, will receive approximately 250 shares of stock for each year of employment through December 14, 2007. This equates to roughly one share of stock for each workday. As an example, an employee who has worked for four years would receive approximately 1,000 shares of stock, currently worth about $14,450. Pro rata portions will issued for fractional years of service, and part-time employees will receive fewer shares for their time of service. It is currently anticipated that about 4,000 employees of American Apparel worldwide are eligible and will receive shares under this program.
Subject to board approval, it is expected that these shares will be granted without vesting restrictions. These shares will be subject to taxation upon grant, based on the value of the stock as of the grant date. The company is, however, currently exploring various options for tax deferral which may be available to employees at the time of the stock grant. There can be no assurance that tax deferral will be available, nor what the stock price of American Apparel will be as of the grant date.
After this stock grant, there will be 5 million shares available for future grant to employees under the 2007 Performance Equity Plan. For those employees who have been with the company for less than one year, American Apparel’s management plans to propose an additional stock program which will be subject to board approval.
Dov Charney, American Apparel’s CEO, stated: “Since starting American Apparel, it has always been my dream to have the employees own a part of the company. Placing nearly $40 million of stock into the hands of our employees is an important milestone in the history of American Apparel. This employee stock program, which I believe is unique for the apparel industry, serves as recognition for the contribution our employees have made to the company, and provides them with a direct economic stake in our future success.”
About American Apparel
American Apparel is a vertically-integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los Angeles, California. As of December 31, 2007, American Apparel employed over 6,700 people and operated over 180 retail stores in 13 countries, including the United States, Canada, Mexico, United Kingdom, France, Germany, Italy, the Netherlands, Sweden, Switzerland, Israel, Japan and South Korea. American Apparel also operates a leading wholesale business that supplies t-shirts and other casual wear to distributors and screen printers. In addition to its retail stores and wholesale operations, American Apparel operates an online retail e-commerce website at www.americanapparelstore.com.
Safe Harbor Statement
Certain statements in this press release and oral statements relating thereto made from time to time by representatives of the company may constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, predictions and guidance relating to the company's future financial or business performance, strategies, expectation, customer demand for our products and new store openings. In some cases, you can identify forward-looking statements by words or phrases such as “trend,” “potential,” “opportunity,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.
These forward-looking statements are based on management's current expectations but they involve a number of risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, which include, without limitation, those described in Endeavor Acquisition Corp.’s definitive proxy statement as filed with the Securities and Exchange Commission on November 28, 2007 under Schedule 14A and available at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements speak only as of the date on which they are made and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.