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FORM 10-Q CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Commission File Number: 0-23214

SAMSONITE CORPORATION
(Exact name of registrant as specified in its charter)

(303) 373-2000
(Registrant's telephone number, including area code)

(Former name, if changed since last report)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes o    No ý

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 19,865,573 shares of common stock, par value $0.01 per share, as of June 11, 2003.

FORM 10-Q
CONTENTS

Important Notice:

        This Quarterly Report on Form 10-Q (including documents incorporated by reference herein) contains statements with respect to the Company's expectations or beliefs as to future events. These types of statements are "forward-looking" and are subject to uncertainties. See "Forward-Looking Statements".

PART I—FINANCIAL INFORMATION

SAMSONITE CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Balance Sheets

as of April 30, 2003 and January 31, 2003

(In thousands)

(Continued)

See accompanying notes to consolidated financial statements

SAMSONITE CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Balance Sheets

as of April 30, 2003 and January 31, 2003

(In thousands, except share data)

See accompanying notes to consolidated financial statements

SAMSONITE CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

for the three months ended April 30, 2003 and 2002

(In thousands, except per share data)

See accompanying notes to consolidated financial statements

SAMSONITE CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Statement of Stockholders' Equity (Deficit)

and Comprehensive Loss for the three months ended April 30, 2003

(In thousands, except share amounts)

See accompanying notes to consolidated financial statements

SAMSONITE CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

for the three months ended April 30, 2003 and 2002

(In thousands)

(Continued)

See accompanying notes to consolidated financial statements

SAMSONITE CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

for the three months ended April 30, 2003 and 2002

(In thousands)

See accompanying notes to consolidated financial statements

SAMSONITE CORPORATION AND SUBSIDIARIES

Unaudited Notes to Consolidated Financial Statements

1.     General

A.

Business

        The principal activity of Samsonite Corporation and subsidiaries (the "Company") is the manufacture and distribution of luggage, casual bags, business cases and travel related products throughout the world, primarily under the Samsonite®, and American Tourister® brand names and other owned and licensed brand names. The principal luggage related product customers of the Company are department/specialty retail stores, mass merchants, catalog showrooms and warehouse clubs. The Company also sells its luggage and other travel-related products through its Company-owned stores. In addition, the Company manufactures and distributes or licenses its name for fashion oriented clothing and footwear in Europe, Asia and the United States.

B.

Interim Financial Statements

        The accompanying unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, and which, in the opinion of management, are necessary to a fair statement of the financial position as of April 30, 2003 and results of operations for the three months ended April 30, 2003 and 2002. These unaudited consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003.

C.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

D.

Per Share Data

        The Company computes earnings (loss) per share in accordance with the requirements of Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"). SFAS 128 requires the disclosure of "basic" earnings per share and "diluted" earnings per share. Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding increased for potentially dilutive common shares outstanding during the period. The dilutive effect of stock options, warrants, convertible preferred stock and their equivalents is calculated using the treasury stock method.

        Income (loss) per common share and net income (loss) per share for the three months ended April 30, 2003 and 2002 is computed based on a weighted average number of shares of common stock outstanding during the period of 19,865,573 and 19,853,923, respectively. Basic earnings per share and earnings per share—assuming dilution are the same for the three months ended April 30, 2003 and 2002 because of the antidilutive effect of stock options and awards when there is a net loss to common stockholders. There are options to purchase 1,824,952 and 1,927,846 shares outstanding at April 30, 2003 and 2002, respectively.

E.

Royalty Revenues

        The Company licenses its brand names to certain unrelated third parties as well as certain foreign subsidiaries and joint ventures. Net sales include royalties earned of $4,435,000 and $4,541,000 for the three months ended April 30, 2003 and 2002, respectively.

F.

Derivative Financial Instruments

        The Company accounts for derivative financial instruments in accordance with the requirements of Statement of Financial Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), and its corresponding amendments under SFAS No. 138. SFAS 133 requires the Company to measure all derivatives at fair value and to recognize them in the consolidated balance sheet as an asset or liability, depending on the Company's rights or obligations under the applicable derivative contract. For derivatives designated as fair value hedges, the changes in the fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in fair value of the derivative are reported in other comprehensive income ("OCI") and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in fair value of derivative instruments not designated as hedging instruments and ineffective portions of hedges are recognized in earnings in the current period.

        The Company enters into derivative transactions to hedge interest rates on floating rate debt obligations and forecasted foreign currency transactions. These derivatives are classified as cash flow hedges. The Company also enters into derivative transactions to reduce exposure to the effect of exchange rates on the results of foreign operations (primarily the effect of changes in the euro exchange rate on the results of the Company's significant European operations). These transactions are not allowed hedge accounting treatment under SFAS 133; the Company records these instruments at fair market value and records realized and unrealized gains and losses in Other Income (Expense)—Net.

        Net gains or losses on interest rate hedges are recorded in interest expense when reclassified to earnings. Net gains or losses on hedges of forecasted foreign currency transactions are reclassified to revenues or cost of sales depending on the type of transaction being hedged. Net gains or losses on cash flow hedges are reclassified from other comprehensive income as the underlying hedged transactions occur. At April 30, 2003, cash flow hedges for forecasted foreign currency transactions extend until December 31, 2003. The estimated amount of net losses from interest rate and foreign currency transactions expected to be reclassified into earnings within the next eight months is $1,190,000. The amount ultimately reclassified into earnings is dependent on the effect of changes in interest rates and currency exchange rates over the next eight months.

G.

Stock Based Compensation

        As discussed in Note 1 to the Company's January 31, 2003 financial statements, the Company has adjusted the expected forfeiture rate for all its outstanding options to 100%; therefore, for the three months ended April 30, 2003 there is no pro forma effect on reported net loss for the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation."

2.     Inventories

        Inventories consisted of the following:

3.     Property, Plant and Equipment

        Property, plant and equipment consisted of the following:

4.     Intangible Assets

        Effective February 1, 2002, the Company adopted SFAS 141 and SFAS 142. SFAS 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting. It also specifies the types of acquired intangible assets that are required to be recognized and reported separate from goodwill. SFAS 142 requires that goodwill and certain intangibles no longer be amortized, but instead tested for impairment at least annually. There was no impairment of goodwill upon adoption of SFAS 142.

        Goodwill with a gross book value of $6.2 million ($3.3 million net of accumulated amortization) and the Samsonite and American Tourister tradenames with a gross book value of $107.0 million ($84.1 million net of accumulated amortization) are no longer amortized beginning February 1, 2002. All of the Company's other intangible assets are subject to amortization. There were no significant acquisitions of intangible assets during the three months ended April 30, 2003. Changes in the exchange rate between the U.S. dollar and other foreign currencies, primarily the euro, can affect the reported gross and net book value of the Company's intangible assets. The components of intangible assets, which continue to be amortized, were as follows (in thousands):

        Amortization expense for the net carrying amount of intangible assets at April 30, 2003 is estimated to be $1.0 million for the remainder of fiscal 2004, $1.3 million in fiscal 2005, $1.2 million in fiscal 2006, $1.0 million in fiscal 2007 and $0.9 million in fiscal 2008.

5.     Debt

        Debt consisted of the following:

(a)

The Senior Credit Facility provides for a $70 million credit facility (the "Revolving Credit Facility"), a term loan facility in the amount of $60 million (the "U.S. Term Loan Facility") which was borrowed by Samsonite Corporation, and a term loan facility in the aggregate principal amount of Belgian francs 1,853,750,000 (equivalent to $50 million on the closing date of the facility) (the "European Term Loan Facility"), which was borrowed by Samsonite Europe N.V. The Revolving Credit Facility and European Term Loan Facility originally matured on June 24, 2003. The Company executed an amendment to its senior credit facility which, effective May 29, 2003, extends the maturity date of the facility's revolving credit and European term loans from June 24, 2003 to June 24, 2004. Additionally, the amendment provides that the revolving credit facility amount will be reduced from $70 million to $60 million effective as of June 24, 2003. The amendment provides for a principal payment on the European term loan facility of 7,800,000 euros (equivalent to $8.5 million as of April 30, 2003) in December 2003 with the remainder of the European term loan facility and the balance of the revolving credit facility due in June 2004. The U.S. Term Loan Facility requires principal repayments in each of the first five years of 1.0% of the

original principal balance and a principal repayment of 23.75% and 47.5% of the original principal balance in the sixth and seventh years, respectively, with the remaining unpaid balance due June 24, 2005. As of April 30, 2003, the Company had $4.9 million in letters of credit outstanding under the Senior Credit Facility.

The balances outstanding under the senior credit facility at April 30, 2003 have been reclassified from the January 31, 2003 presentation as current or noncurrent to reflect the May 29, 2003 amendment.

Obligations under the Senior Credit Facility are secured by (i) property of Samsonite Corporation consisting of inventory, accounts receivable, personal property, selected real estate in Denver, Colorado, intellectual property and other intangibles, (ii) substantially all of the assets of Samsonite Company Stores, Inc. and McGregor II, LLC, and (iii) the pledge of stock or other ownership interest owned by Samsonite Corporation and its direct and indirect subsidiaries, as follows: 100% of the capital stock or other ownership interest in Samsonite Company Stores, Inc., C.V. Holdings, Inc., SC Denmark ApS, Samsonite Europe N.V. and McGregor II, LLC; 66% of the voting interest in SC International Holdings C.V.; and 66% of the voting stock in Samsonite Canada, Inc. and Samsonite Latinoamerica, S.A. de C.V. The Pension Benefit Guaranty Corporation ("PBGC") has an equal and ratable lien in the amount of $17.3 million on the assets pledged under the senior credit facility.

The Senior Credit Facility contains financial covenants which require the Company to maintain certain debt to earnings and interest coverage ratios and limitations on capital expenditures. The Senior Credit Facility also contains covenants that, among other things, limit the ability of the Company (subject to negotiated exceptions) to incur additional liens, incur additional indebtedness, make certain kinds of investments, prepay or purchase subordinate indebtedness and preferred stock, make distributions and dividend payments to its stockholders, engage in affiliate transactions, make certain asset dispositions, make acquisitions, and participate in certain mergers.

(b)

The Senior Subordinated Notes (the "Notes") bear interest at 10³/4% and mature on June 15, 2008. The Notes are redeemable at the option of the Company at various redemption prices as specified in the Notes. The indenture under which the Notes were issued contains certain covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries (as defined in the indenture) to incur additional indebtedness, pay dividends and make certain other distributions, issue capital stock of restricted subsidiaries, make certain investments, repurchase stock, create liens, enter into transactions with affiliates, create dividend or other payment restrictions affecting restricted subsidiaries, merge or consolidate, and transfer or sell assets. The covenants are subject to a number of important exceptions.

(c)

Other obligations consist of various notes payable to banks by foreign subsidiaries.

(d)

The Series B Senior Subordinated Notes bear interest at 11¹/8% and have a maturity date of July 15, 2005.

6.     Other Income (Expense)—Net

        Other income (expense)—net consisted of the following:

7.     Employee Stock Options

        The Company has authorized 2,550,000 shares for the granting of options under the 1995 Stock Option and Award Plan and 750,000 shares for the granting of options under the FY 1999 Stock Option and Incentive Award Plan. See Note 10 to the consolidated financial statements included in the 2003 Form 10-K for a description of such plans.

        At April 30, 2003, the Company had outstanding options for a total of 1,824,952 shares at option prices ranging from $2.62 to $10.00 per share. Options for 1,174,829 shares were exercisable at April 30, 2003 at a weighted average exercise price of $7.04 per share. There were no options exercised during the three months ended April 30, 2003.

8.     Segment Information

        The Company's operations consist of the manufacture and distribution of luggage and other travel-related products, the licensing of the Company's brand names and the design and sale of clothing and footwear. Management of the business and evaluation of operating results is organized primarily along geographic lines dividing responsibility for the Company's operations as follows: Europe, The Americas, which include the United States comprised of wholesale and retail operations and "Other Americas" which include Canada and Latin America; Asia, which includes India, China, Singapore, South Korea, Taiwan, Malaysia and Hong Kong, and Other which primarily includes licensing revenues from luggage and non-luggage brand names owned by the Company, and corporate overhead.

        The Company evaluates the performance of its segments based on operating income of the respective business units. Intersegment sales prices are market based. Because the operations of the U.S. Wholesale and Retail segments are closely related, certain intercompany expense allocations between the two segments are not representative of actual costs to operate those segments. Additionally, certain overhead expenses which benefit the U.S. Wholesale and Retail segments are included in other operations.

        Segment information for the three months ended April 30, 2003 and 2002 is as follows:

(a)

Operating income (loss) represents net sales less operating expenses. In computing operating income (loss) none of the following items have been added or deducted: interest income, interest expense, other income—net, income taxes, minority interest and extraordinary items. General corporate expenses and amortization of intangibles are included in other operations.

9.     Litigation, Commitments and Contingencies

        The Company is a party to various legal proceedings and claims in the ordinary course of its business. The Company believes that the outcome of these matters will not have a material adverse affect on its consolidated financial position, results of operations or liquidity.

10.   Amendment of the Senior Credit Facility and Recapitalization

        The Company executed an amendment to its senior credit facility which, effective May 29, 2003, extends the maturity date of the facility's revolving credit and European term loans from June 24, 2003 to June 24, 2004. The amendment provides for a principal payment on the European term loan facility of 7,800,000 euros (equivalent to $8.5 million as of April 30, 2003) in December 2003 with the remainder of the European term loan facility and the balance of the revolving credit facility due in June 2004. Additionally, the amendment provides that the revolving credit facility amount will be reduced from $70 million to $60 million effective as of June 24, 2003. The balances outstanding under the senior credit facility at April 30, 2003 have been reclassified from the January 31, 2003 presentation as current or noncurrent to reflect the May 29, 2003 amendment.

        The Company entered into a recapitalization agreement, dated May 1, 2003, regarding a comprehensive recapitalization and financial restructuring plan. Under the terms of the recapitalization agreement, new investors will purchase 106,000 shares of a new series of the Company's convertible preferred stock with an initial dividend rate of 8% for $106 million. The Company intends to use the proceeds from the sale of the new preferred stock to repay bank debt, to pay fees and expenses incurred in connection with the recapitalization and for working capital. In addition, upon closing of the recapitalization, the Company's existing senior credit facility will be replaced with a new $60 million revolving credit facility.

        As part of the recapitalization, the Company will also retire all of its 281,131 outstanding shares of 13⁷/8% senior redeemable exchangeable preferred stock (which had an aggregate liquidation preference of approximately $339.3 million as of April 30, 2003) in exchange for a combination of up to 54,000 shares of new preferred stock (with an aggregate liquidation preference of $54 million) and (assuming the full amount of new preferred stock is elected to be received by existing preferred stockholders) approximately 205 million shares of common stock.

        The holders of the existing preferred stock will be given a choice to exchange their 13⁷/8% preferred stock for either a combination of new convertible preferred stock and common stock, or a combination of common stock and warrants to purchase shares of common stock at an exercise price of $0.75 per share. The holders of the existing preferred stock choosing common stock and warrants will receive warrants to purchase 276 shares of common stock for each share of existing preferred stock.

        The 160,000 shares of new preferred stock will be initially convertible into an aggregate of 381 million shares of common stock and will vote with the common stock on an as-converted basis on all matters submitted to a vote of common stockholders. The shares of new preferred stock issued to the new investors will represent approximately 42% of the Company's voting stock immediately following the recapitalization. The shares of new preferred stock and common stock issued in the exchange will represent approximately 55% of the Company's outstanding voting stock immediately following the recapitalization. As a result of the recapitalization, the existing common stockholders will be diluted to approximately 3% of the Company's outstanding voting stock. The new investors and their affiliates will control approximately 56% of the outstanding voting stock immediately following the recapitalization.

        The closing of the recapitalization is subject to numerous conditions, including definitive documentation of the resolution of the Pension Benefit Guarantee Corporation matter, the receipt of approval from the holders of a majority of each of the Company's outstanding common stock and outstanding preferred stock, governmental and other third-party approvals, a maximum net debt level, entering into the new credit facility and the absence of a material adverse change.

        Subject to the satisfaction of all conditions, the Company expects the closing of the recapitalization to occur in the third calendar quarter of 2003. However, no assurance can be given that the conditions to closing will be satisfied or that the recapitalization will ultimately be consummated.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Three Months Ended April 30, 2003 ("fiscal 2004" or "current year") Compared to Three Months Ended April 30, 2002 ("fiscal 2003" or "prior year")

        General.    The Company analyzes its net sales and operations by the following divisions: (i) "European" operations which include its European sales, manufacturing and distribution operations whose reporting currency is the euro; (ii) the "Americas" operations which include wholesale and retail sales and distribution operations and corporate headquarters in the United States, and "Other Americas" operations which include operations in Canada and Latin America; (iii) "Asian" operations" which include the sales, manufacturing and distribution operations in India, China, Singapore, South Korea, Hong Kong, Malaysia and Taiwan; and (iv) licensing operations.

        Results of European operations were translated from euros to U.S. dollars in fiscal 2004 and fiscal 2003 at average rates of approximately 1.08 and of .870 U.S. dollars to the euro, respectively. This increase in the value of the euro of approximately 23.7% resulted in increases in reported sales, cost of sales and operating expenses in fiscal 2004 compared to fiscal 2003. The most significant effects from the difference in exchange rates from last year to this year are noted in the following analysis and are referred to as an "exchange rate difference". The Company enters into forward foreign exchange contracts and option contracts to reduce its economic exposure to fluctuations in currency exchange rates (and their effect on translated U.S. dollar reported earnings) for the euro and other foreign currencies. Such instruments are recorded at fair value at the end of each accounting period; realized and unrealized gains and losses are recorded in Other Income (Expense)—Net.

        Net Sales.    Consolidated net sales increased from $160.5 million in fiscal 2003 to $161.9 million in fiscal 2004, an increase of $1.4 million or approximately 1.0%. Fiscal 2004 sales were favorably impacted by the increase in the value of the euro compared to the U.S. dollar. Without the effect of the exchange rate difference, fiscal 2004 sales would have declined by $12.8 million or approximately 8.0%.

        Sales from European operations increased from $66.6 million in fiscal 2003 to $74.2 million in fiscal 2004, an increase of $7.6 million or 11.4%. Expressed in the local European reporting currency (euros), fiscal 2004 sales declined by 10.0%, or the U.S. constant dollar equivalent of $6.6 million, compared to fiscal 2003. The local currency sales decline in Europe is due primarily to a reduction in travel volumes affecting travel related product sales which the Company attributes to the war in Iraq and the spread of Severe Acute Respiratory Syndrome ("SARS") in Asia. These events worsened the effect of an already sluggish economy in certain European countries, particularly Germany. Sales in Germany, Samsonite Europe's largest market, were 9% lower. Sales in most of the other European countries also declined compared to the prior year. Sales of travel products (which comprise over 65% of European sales in fiscal 2004) declined 3.2%, sales of casual bags (which comprise 12.1% of European sales in fiscal 2004) declined 1.3% and sales of Samsonite black label products (which comprise 4.8% of European sales in fiscal 2004) declined 58.3%. Prior year casual bag sales in Europe included the pipeline fill introduction orders for the Company's newly acquired Lacoste trademark license agreement. The decline in Samsonite black label product sales is primarily due to a change in the Company's business strategy whereby apparel product sales are licensed to a third party distributor. Partially offsetting these sales declines was a 3.0% increase in sales of business cases. Sales from Samsonite's company-owned retail stores in Europe increased 13.3% due primarily to an increase is the number of stores and a 6% increase in comparable store sales.

        Sales from the Americas operations declined from $73.4 million in fiscal 2003 to $66.2 million in fiscal 2004, a decline of $7.2 million or 9.8%. U.S. Wholesale sales for the first quarter declined by $5.6 million from the prior year to $34.1 million, U.S. Retail sales declined by $0.3 million to $23.0 million, and sales in the Other Americas operations declined by $1.3 million from the prior year to $9.1 million. U.S. Wholesale sales declined primarily due to lower sales in the traditional channel (department and specialty stores) of 13%, lower sales to warehouse clubs of 51% and lower sales to mass merchants of 25%. Lower sales were caused primarily by a slower economy and reduced travel primarily due to the war in Iraq and spread of the SARS virus. U.S. Retail sales declined slightly from $23.3 million in the prior year to $23.0 million in fiscal 2004. The decline is due primarily to a decline of 11.1% from sales in those stores owned in fiscal 2004 and fiscal 2003, partially offset by an increase in sales due to an increase in the number of stores operated in fiscal 2004. The number of stores operated increased through the acquisition of 22 retail stores from a national specialty luggage retailer in the fourth quarter of fiscal 2003. Other Americas sales declined from $10.5 million in fiscal 2003 to $9.1 million in fiscal 2004, a decline of $1.4 million primarily due to the divesture of the Canadian molding operation in the fourth quarter of fiscal 2004. The Canadian molding operation generated revenues of $1.6 million in the prior year first quarter of fiscal year 2003.

        First quarter sales from Asian operations of $17.2 million were $1.2 million higher than the prior year sales, an increase of 7.6%. Sales in all of the Asian operations posted gains, except for sales of Singapore and Korea, which declined 6% each. Local currency sales of Singapore and Korea declined more significantly by 11.2% and 14.5%, respectively. Asia had very strong sales early in the first quarter which offset weaker sales later in the first quarter. As a result, the negative effect of the war in Iraq, the SARS outbreak and the North Korean political situation on Asia's results of operations will not be fully realized until the second quarter of fiscal 2004.

        Revenues from U.S. licensing operations were $0.1 million lower than the prior year at $4.3 million.

        Gross profit.    Consolidated gross margin increased by 6.2 percentage points, from 38.4% in fiscal 2003 to 44.6% in fiscal 2004. Excluding restructuring expenses recorded in cost of goods sold in the prior year, gross profit margin was 40.0% in fiscal 2003. The Company had higher fiscal 2004 gross margins in all of its operations largely due to lower product sourcing costs and operational costs savings associated with the Company's past restructuring activities.

        Gross margins from European operations increased 2.6 percentage points from the prior year to 41.0% in fiscal 2004. Excluding fiscal 2004 restructuring expenses included in cost of goods sold, gross profit margin was 39.0% in fiscal 2003. Higher European gross margins are due primarily to lower raw material and finished goods purchase costs due to the strengthening of the euro relative to the U.S. dollar.

        Gross margin percentage for the Americas increased by 10.3 percentage points, from 32.7% in fiscal 2003 to 43.0% in fiscal 2004. Adjusted for certain expenses incurred related to the U.S. and Mexico City restructurings, the gross margin percentage was 35.8% in fiscal 2003, or 7.2 percentage points lower than fiscal 2004 results. U.S. Wholesale gross margin percentage increased from 21.5% in the prior year to 35.4% in the current year. The increase in the U.S. Wholesale gross margin percentage is primarily due to lower product costs resulting from the fiscal 2002 restructuring of the Nogales manufacturing operation and the resulting shift from the manufacture of our own softside products in Nogales to sourcing the products from less expensive Asian vendors. Additionally, sourcing costs for products purchased from Asian vendors were lower in fiscal 2004. U.S. Retail gross profit margins increased from 52.3% in fiscal 2003 to 54.7% in fiscal 2004 due primarily to lower selling costs. Gross margins for the Other Americas increased from 31.7% in fiscal 2003 to 42.1% in fiscal 2004. Excluding the Mexico City restructuring expenses recorded in the Other Americas cost of goods sold in fiscal 2003, gross margin percentage was 35.5% in fiscal 2003. The increase in Other Americas gross margin is due primarily to higher gross margins for Canada and Mexico.

        Selling, General and Administrative Expenses ("SG&A").    Consolidated SG&A increased by $5.2 million from fiscal 2003 to fiscal 2004. As a percent of sales, SG&A was 38.0% in fiscal 2004 and 35.1% in fiscal 2003. SG&A increased $4.5 million due to the exchange rate difference. Net of the exchange rate difference, SG&A increased $0.7 million, or 1.2%

        The increase in SG&A is due primarily to increased SG&A for Asia of $1.0 million. SG&A for the Americas, including corporate headquarters, increased $0.2 million, and SG&A for Europe increased $4.1 million. Europe's SG&A declined by $0.4 million, net of the exchange rate difference. Within the Americas, SG&A increased for U.S. Retail by $0.2 million due to an increased number of stores. SG&A for Corporate and U.S. Wholesale combined increased $0.2 million and SG&A for Other Americas operations declined by $0.2 million. SG&A for Asia increased in support of higher sales of Asian operations and higher freight, advertising and marketing expenses.

        Amortization of intangible assets.    Amortization of intangible assets was approximately equal to the prior year at $0.3 million in fiscal 2004.

        Provision for Restructuring Operations and Asset Impairment Charge.    The provision for restructuring of $2.2 million and the asset impairment charge of $0.3 million in the prior fiscal year related to the restructuring of the Company's Mexico City manufacturing facility. The Company eliminated its softside manufacturing in Mexico City and shifted to sourcing softside products from the Far East.

        Operating income (loss).    Operating income increased from $2.5 million in the prior year to $10.4 million in fiscal 2004, an increase of $7.6 million. The increase is a result of the increase in gross profit margins and the resulting increase in gross profit of $10.6 million and the decline in asset impairment and provision for restructuring operations of $2.5 million, partially offset by the increase in SG&A of $5.2 million.

        Interest income.    Interest income includes interest received from the temporary investment of excess cash balances. Interest income was $0.1 million lower than the prior year.

        Interest expense and amortization of debt issue costs.    Interest expense and amortization of debt issue costs was $0.2 million lower than the prior year at $11.8 million. As of April 30, 2003, over 75% of the Company's debt was in fixed rate instruments. Included in interest expense is amortization of debt issue costs and premium of $0.5 million in fiscal 2004 and fiscal 2003.

        Other income (expense), net.    See Note 6 to the consolidated financial statements included elsewhere herein for a comparative analysis of other income—net.

        The Company has entered into certain forward exchange contracts to reduce its economic exposure to changes in exchange rates. The Company estimates the increase in Operating Income from the strengthening of the U.S. dollar versus the euro from the same period in the prior year to be approximately $1.3 million for the three months ended April 30, 2003. Net realized and unrealized losses from forward exchange contracts of $0.4 million are included in Other Income (Expense)—Net in fiscal 2004. Realized losses on contracts closed during fiscal 2004 were $0.4 million. Net realized and unrealized losses from forward exchange contracts of $0.6 million are included in Other Income (Expense)—Net in fiscal 2003. Realized gains on contracts closed during fiscal 2003 were less than $0.1 million.

        Other expense—net declined by $1.5 million due primarily to the increase in gain (loss) on disposition of fixed assets from a loss of $0.1 million in fiscal 2003 to a gain of $2.0 million in fiscal 2004. The gain in fiscal 2004 is due primarily to the sale of the Torhout, Belgium manufacturing facility. The Company ceased manufacturing at this facility in fiscal 2003. The increase in other income from asset sales was partially offset by higher bank loan amendment fees in fiscal 2004 of $0.9 million and an increase in other miscellaneous expenses of $0.6 million.

        Income tax expense.    Income tax expense increased from $1.3 million in fiscal 2003 to $2.2 million in fiscal 2004. The increase in income tax expense is due primarily to the increase in taxable income from European operations compared to the prior year. The relationship between the expected income tax benefit computed by applying the U.S. statutory rate to the pretax income (loss) and recognized actual income tax expense results primarily because of (i) foreign income tax expense provided on foreign earnings, (ii) the effect of providing no tax benefit for U.S. operating losses, and (iii) state and local income taxes.

        Net loss.    The Company had a net loss in fiscal 2004 of $4.0 million compared to a net loss in fiscal 2003 of $12.1 million. The decline in the net loss from the prior year of $8.1 million is caused by the effect of the increase in operating income and decline in interest expense and other expenses, net, partially offset by a decrease in interest income and an increase in income taxes and minority interest in earnings of subsidiaries during fiscal 2004.

        Senior redeemable preferred stock dividends and accretion of preferred stock discount.    This item represents the accrual of cumulative dividends on the Senior Redeemable Preferred Stock and the accretion of the discount over the twelve-year term of the Senior Redeemable Preferred Stock. The increase of $1.5 million in dividends compared to the prior year is due to the compounding effects of the dividend rate on previously issued share dividends.

        Net loss to common stockholders.    This amount represents net loss reduced for dividends payable and the accretion of discount on the Senior Redeemable Preferred Stock and is the amount used to calculate net loss per common share. The net loss of common stockholders declined from $22.3 million in fiscal 2003 to $15.6 million in fiscal 2004; the net loss per common share declined from $1.12 per share in fiscal 2003 to $0.79 per share in fiscal 2004.

Liquidity, Capital Resources, and Recapitalization

        As reflected in the consolidated statements of cash flows included elsewhere herein, cash flows provided by operating activities declined by $12.7 million primarily as a result of the increase in inventory and prepaid expenses and other current assets balances. In the prior year, the Company reduced working capital and increased liquidity in the aftermath of the September 11, 2001 terrorist attacks in the U.S. At April 30, 2003, the Company had current assets in excess of current liabilities of $114.8 million compared to $76.3 million at January 31, 2003, an increase of $38.5 million. The Company executed an amendment to its senior credit facility which, effective May 29, 2003, extends the maturity date of the facility's revolving credit and European term loans from June 24, 2003 to June 24, 2004. The amendment provides for a principal payment on the European term loan facility of 7,800,000 euros (equivalent to $8.5 million as of April 30, 2003) in December 2003 with the remainder of the European term loan facility and the balance of the revolving credit facility due in June 2004. Additionally, the amendment provides that the revolving credit facility amount will be reduced from $70 million to $60 million effective as of June 24, 2003. As of January 31, 2003, the balances outstanding under the European term loan facility and revolving Credit facility were classified as current but have been reclassified as noncurrent at April 30, 2003. Current assets declined by $3.0 million primarily due to decreases in cash of $10.9 million, and receivables of $4.9 million, partially offset by an increase in inventories of $8.0 million, prepaid expenses and other current assets of $4.6 million, and deferred income assets of $0.2 million.

        Long-term obligations (including current installments) increased from $423.2 million at January 31, 2003 to $424.5 million at April 30, 2003, an increase of $1.3 million due primarily to the exchange rate difference. At April 30, 2003, the Company's senior credit facility consists of a term loan arrangement with balances totaling $84.9 million and $10.0 million drawn under the revolving credit portion of the facility. At April 30, 2003, the Company had approximately $4.9 million of outstanding letters of credit under the terms of the revolving credit portion of the facility and undrawn availability of $55.1 million. Additional borrowings under the senior credit facility are subject to the Company's ability to meet and maintain the financial ratios and other operational covenants.

        The Company entered into a recapitalization agreement, dated May 1, 2003, regarding a comprehensive recapitalization and financial restructuring plan. Under the terms of the recapitalization agreement, new investors will purchase 106,000 shares of a new series of the Company's convertible preferred stock with an initial dividend rate of 8% for $106 million. The Company intends to use the proceeds from the sale of the new preferred stock to repay bank debt, to pay fees and expenses incurred in connection with the recapitalization and for working capital. In addition, upon closing of the recapitalization, the Company's existing senior credit facility will be replaced with a new $60 million revolving credit facility.

        As part of the recapitalization, the Company will also retire all of its 281,131 outstanding shares of 13⁷/8% senior redeemable exchangeable preferred stock (which had an aggregate liquidation preference of approximately $339.9 million at April 30, 2003) in exchange for a combination of up to 54,000 shares of new preferred stock (with an aggregate liquidation preference of $54 million) and (assuming the full amount of new preferred stock is elected to be received by existing preferred stockholders) approximately 205 million shares of common stock.

        The holders of the existing preferred stock will be given a choice to exchange their 13⁷/8% preferred stock for either a combination of new convertible preferred stock and common stock, or a combination of common stock and warrants to purchase shares of common stock at an exercise price of $0.75 per share. The holders of the existing preferred stock choosing common stock and warrants will receive warrants to purchase 276 shares of common stock for each share of existing preferred stock.

        The 160,000 shares of new preferred stock will be initially convertible into an aggregate of 381 million shares of common stock and will vote with the common stock on an as-converted basis on all matters submitted to a vote of common stockholders. The shares of new preferred stock issued to the new investors will represent approximately 42% of the Company's voting stock immediately following the recapitalization. The shares of new preferred stock and common stock issued in the exchange will represent approximately 55% of the Company's outstanding voting stock immediately following the recapitalization. As a result of the recapitalization, the existing common stockholders will be diluted to approximately 3% of the Company's outstanding voting stock. The new investors and their affiliates will control approximately 56% of the outstanding voting stock immediately following the recapitalization.

        The closing of the recapitalization is subject to numerous conditions, including definitive documentation of the resolution of the Pension Benefit Guarantee Corporation matter, the receipt of approval from the holders of a majority of each of the Company's outstanding common stock and outstanding preferred stock, governmental and other third-party approvals, a maximum net debt level, entering into the new credit facility and the absence of a material adverse change.

        Subject to the satisfaction of all conditions, the Company expects the closing of the recapitalization to occur in the third calendar quarter of 2003. However, no assurance can be given that the conditions to closing will be satisfied or that the recapitalization will ultimately be consummated.

        The Company's cash flow from operations together with amounts available under its credit facilities were sufficient to fund first quarter fiscal 2004 operations, scheduled payments of principal and interest on indebtedness and capital expenditures. Management of the Company believes that cash flow from future operations and amounts available under its credit facilities will be adequate to fund operating requirements and expansion plans during the next twelve months.

        The Company's principal foreign operations are located in Western Europe, the economies of which are not considered to be highly inflationary. The Company enters into foreign exchange contracts in order to hedge its exposure on certain foreign operations through the use of forward delivery commitments. During the past several years, the Company's most effective protection against foreign currency changes has been the foreign currency denominated debt balances maintained in respect to its foreign operations. No assurance can be given that the Company will be able to offset losses in sales and operating income from negative exchange rate fluctuations through foreign currency forward exchange contracts, options or other instruments which may be available to reduce economic exposure to currency fluctuations. Geographic concentrations of credit risk with respect to trade receivables are not significant as a result of the diverse geographic areas covered by the Company's operations.

Critical Accounting Policies

        The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and our significant accounting policies are summarized in Note 1 to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003 consolidated financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

        The Company's accounting for inventory at the lower of cost or market value, accruals for allowances for doubtful accounts, impairment of long-lived assets, impairment of intangible assets not being amortized, accruals for restructuring activities and U.S. defined benefit pension plan involve accounting policies which are most affected by management's judgment and the use of estimates. These critical accounting policies are discussed in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003.

Effect of Recently Issued Accounting Standards

        In April 2003, the Financial Accounting Standards Board ("FASB") issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 clarifies certain requirements of SFAS No. 133 and amends certain definitions under SFAS No. 133 and other existing pronouncements. The Company does not expect the effect of adopting SFAS No. 149 on the Company's financial statements to be material.

        In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 requires that certain financial instruments that have characteristics of both liabilities and equity that have been presented either entirely as equity or between the liabilities section and the equity section of the balance sheet to be classified as liabilities. SFAS No. 150 requires that any amounts paid or to be paid to holders of such instruments in excess of their initial measurement amount be classified as interest expense. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company has not had sufficient time to fully analyze the effects of SFAS No. 150 on its financial statements.

Forward Looking Statements

        Certain statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and other places in this report constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can often be recognized by words such as "may," "will," "anticipate," "believe," "estimate," "intend," "plan," "expect" and similar expressions. Variations on those or similar words, or the negative of those words, also may indicate forward-looking statements. These forward-looking statements involve numerous assumptions, known and unknown risks, uncertainties and other factors that may cause our actual and future results, performance or achievements of the Company to be materially different from any future estimated results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the impact of the September 11, 2001 events on economic, political and public safety conditions that impact consumer confidence and spending and the possibility of additional terrorist attacks or related events; the spread of the SARS disease or other events which affect travel levels; armed conflicts in the Middle East and other regions; general economic and business conditions, including foreign currency fluctuations; industry capacity; changes in consumer preferences; demographic changes; competition; changes in methods of distribution and technology; changes in political, social and economic conditions and local regulations; general levels of economic growth in emerging market countries; the loss of significant customers; completion of new product developments within anticipated time frames; changes in interest rates; and other factors that are beyond our control.

        We undertake no obligation to update or revise these forward-looking statements as conditions change.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

        The Company's primary market risks include changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and interest rates. The Company's strategies to address market risks and the types of financial instruments entered into to reduce market risks have not changed from those described in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003.

        At April 30, 2003, the Company and its European subsidiary had forward foreign exchange contracts outstanding having a total contract amount of approximately $48.7 million compared to approximately $44.7 million at January 31, 2003. At April 30, 2003, the Company had recorded unrealized gains from forward foreign exchange contracts to reduce foreign currency expense relating to translated earnings of foreign subsidiaries (primarily the translated earnings of European operations which report earnings in euros) and intercompany royalty payments of less than $100,000. The ultimate realization of such amount is subject to fluctuations in the exchange rate of the U.S. dollar against the euro.

        If there were a ten percent adverse change in foreign currency exchange rates relative to all outstanding forward exchange contracts, the loss in earnings from the amount included in results of operations for the three months ended April 30, 2003 would be approximately $4.2 million, before the effect of income taxes. Any hypothetical loss in earnings would be offset by changes in the underlying value of translated earnings or royalty income, to the extent such earnings or income is equal to the amount of currency exposed, or for product purchases by exchange gains.

        The amount of fixed rate long-term debt outstanding has not changed materially from the amount outstanding at January 31, 2003 and continues to be comprised primarily of the Company's outstanding publicly traded senior subordinated notes having a face amount of $323.4 million. At January 31, 2003, the quoted market price of these notes was $84.50 per $100.00 of principal; at April 30, 2003, the quoted market price of these notes was $100.00 per $100.00 of principal.

ITEM 4. CONTROLS AND PROCEDURES

(a)

Evaluation of Disclosure Controls and Procedures.

        The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's reports filed or submitted under the Exchange Act.

(b)

Changes in Internal Control.

        Since the Evaluation Date, there have not been any significant changes in the Company's internal controls or in other factors that could significantly affect such controls.

SAMSONITE CORPORATION

PART II—OTHER INFORMATION

Item 1—Legal Proceedings

        The Company is a party to various legal proceedings and claims in the ordinary course of its business. The Company believes that the outcome of these matters will not have a material adverse affect on its consolidated financial position, results of operations or liquidity.

Item 2—Changes in Securities

        None.

Item 3—Defaults Upon Senior Securities

        None.

Item 4—Submission of Matters to a Vote of Security Holders

        None.

Item 5—Other Information

        None.

Item 6—Exhibits and Reports on Form 8-K

(a)

See Exhibit Index.

(b)

Reports on Form 8-K.
Form 8-K dated May 1, 2003
Item 5. Other Events
Item 7. Financial Statements and Exhibits

Form 8-K dated May 2, 2003
Item 12. Results of Operations and Financial Condition

Form 8-K dated June 2, 2003
Item 5. Other Events
Item 7. Financial Statements and Exhibits

Form 8-K dated June 10, 2003
Item 12. Results of Operations and Financial Condition

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 thereunto duly authorized.

Date: June 13, 2003

CERTIFICATIONS

I, Luc Van Nevel, certify that:

I have reviewed this quarterly report on Form 10-Q of Samsonite Corporation;

Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this quarterly report.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



(b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and



(c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date.

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors:

(a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.

6.

The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 13, 2003

CERTIFICATIONS

I, Richard H Wiley, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Samsonite Corporation;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this quarterly report.

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

(c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date.

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors:

(a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.

6.

The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: June 13, 2003

INDEX TO EXHIBITS

(1)

Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1997 (File No. 0-23214).

(2)

Incorporated by reference from the Registration Statement on Form S-4 (Registration No. 33-95642).

(3)

Incorporated by reference from the Registration Statement on form S-4 (Registration No. 333-61521).

(4)

Incorporated by reference from the Registration Statement on form S-4 (Registration No. 333-61519).

(5)

Incorporated by reference from the Company's Registration Statement on Form 8-A filed June 14, 1994 under the Exchange Act and the Company's Registration Statement on Form 8-A filed May 2, 2003 under the Exchange Act (File No. 0-23214).

(6)

Incorporated by reference from the Company's Form 8-K, dated May 1, 2003.