-----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, FfqFbjQns2lYZg81T8wFg2U3HNv3EtTtC9i10m2vkojb3WNasK0of/m4HHqbfv7c Dd8loKF5fa9kskr7xMCJaQ== 0000049401-99-000012.txt : 19990518 0000049401-99-000012.hdr.sgml : 19990518 ACCESSION NUMBER: 0000049401-99-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990402 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAUCONY INC CENTRAL INDEX KEY: 0000049401 STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021] IRS NUMBER: 041465840 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05083 FILM NUMBER: 99628084 BUSINESS ADDRESS: STREET 1: 13 CENTENNIAL DR STREET 2: CENTENNIAL INDUSTRIAL PK CITY: PEABODY STATE: MA ZIP: 01961 BUSINESS PHONE: 5085329000 MAIL ADDRESS: STREET 1: 13 CENTENNIAL DRIVE STREET 2: CENTENNIAL INDUSTRIAL PARK CITY: PEABODY STATE: MA ZIP: 01960 FORMER COMPANY: FORMER CONFORMED NAME: HYDE ATHLETIC INDUSTRIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HYDE A R & SONS CO DATE OF NAME CHANGE: 19701030 10-Q 1 10Q QUARTER ENDED APRIL 2, 1999 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) {X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 2, 1999 OR { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission File Number 000-05083 SAUCONY, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-1465840 (State or other jurisdiction of I.R.S. employer identification number) incorporation or organization) 13 Centennial Drive, Peabody, MA 01960 (Address of principal executive offices) 978-532-9000 (Registrant's telephone number (including area code) 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Class Outstanding as of May 7, 1999 Class A Common Stock-$.33 1/3 Par Value 2,679,027 Class B Common Stock-$.33 1/3 Par Value 3,550,205 --------- 6,229,232 SAUCONY, INC. AND SUBSIDIARIES INDEX Part I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of April 2, 1999 and January 1, 1999 Condensed Consolidated Statements of Income for the thirteen weeks ended April 2, 1999 and April 3, 1998 Condensed Consolidated Statements of Stockholders' Equity for the thirteen weeks ended April 2, 1999 and April 3, 1998 Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended April 2, 1999 and April 3, 1998 Notes to Condensed Consolidated Financial Statements -- April 2, 1999 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Signature PART I. FINANCIAL INFORMATION SAUCONY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited) (Amounts in thousands) ASSETS April 2, January 1, 1999 1999 Current assets: Cash and cash equivalents $ 1,598 $ 5,495 Marketable securities 187 179 Accounts receivable 33,585 19,473 Inventories 28,319 31,072 Prepaid expenses and other current assets 3,540 2,923 --------- ---------- Total current assets 67,229 59,142 --------- ---------- Property, plant and equipment, net 8,162 8,123 --------- ---------- Other assets 2,445 2,614 --------- ---------- Total assets $ 77,836 $ 69,879 ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 11,678 $ 7,568 Current maturities of long-term debt 360 324 Accounts payable 3,983 6,244 Accrued expenses and other current liabilities 7,670 4,704 --------- ---------- Total current liabilities 23,691 18,840 --------- ---------- Long-term obligations: Long-term debt 516 559 Deferred income taxes 1,813 1,851 Other long-term obligations 161 157 --------- ---------- Total long-term obligations 2,490 2,567 --------- ---------- Minority interest in consolidated subsidiaries 255 222 --------- ---------- Stockholders' equity: Common stock, $.33 1/3 par value 2,178 2,178 Additional paid in capital 15,923 15,921 Retained earnings 35,693 32,360 Accumulated translation (714) (528) ---------- ----------- Total 53,080 49,931 Less: Common stock held in treasury, at cost (1,665) (1,665) Unearned compensation (15) (16) ---------- ----------- 51,400 48,250 --------- ---------- Total liabilities and stockholders' equity $ 77,836 $ 69,879 ========= ========== See notes to condensed consolidated financial statements
SAUCONY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THIRTEEN WEEKS ENDED APRIL 2, 1999 AND APRIL 3, 1998
(Unaudited) (Amounts in thousands, except per share data) Thirteen Weeks Thirteen Weeks Ended Ended April 2, 1999 April 3, 1998 Net sales $ 42,406 $ 29,624 Other revenue 208 42 --------- ---------- Total revenue 42,614 29,666 --------- ---------- Costs and expenses Cost of sales 26,985 19,651 Selling expenses 5,433 4,423 General and administrative expenses 4,308 3,510 --------- ---------- Total costs and expenses 36,726 27,584 --------- ---------- Operating income 5,888 2,082 Non-operating income (expense) Interest, net (146) (210) Foreign currency 26 (11) Other 24 34 --------- ---------- Income before income taxes and minority interest 5,792 1,895 Provision for income taxes 2,430 898 Minority interest in income of consolidated subsidiaries 29 23 --------- ---------- Net income $ 3,333 $ 974 ========= ========== Per share amounts: Earnings per common share - basic $ 0.54 $ 0.16 ========= ========== Earnings per common share - diluted: $ 0.52 $ 0.16 ========= ========== Weighted average common shares and equivalents outstanding 6,363 6,293 ========= ========== Cash dividends per share of common stock 0 0 ========= ========== See notes to condensed consolidated financial statements
SAUCONY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THIRTEEN WEEKS ENDED APRIL 2, 1999 AND APRIL 3, 1998
(Amounts in thousands, except share data) Common Stock Paid-in Retained Class A Class B Capital Earnings Balance, January 2, 1998 $ 902 $ 1,248 $ 15,652 $ 28,781 Amortization of unearned compensation -- -- -- -- Net income -- -- -- 974 Foreign currency translation adjustments -- -- -- -- -------- -------- -------- --------- Balance, April 3, 1998 $ 902 $ 1,248 $ 15,652 $ 29,755 ======== ======== ======== ========= Balance, January 1, 1999 $ 902 $ 1,276 $ 15,921 $ 32,360 Issuance of common stock, option exercise -- -- 2 -- Amortization of unearned compensation -- -- -- -- Net income -- -- -- 3,333 Foreign currency translation adjustments -- -- -- -- -------- -------- -------- --------- Balance, April 2, 1999 $ 902 $ 1,276 $ 15,923 $ 35,693 ======== ======== ======== ========= Total Treasury Stock Unearned Accumulated Stockholders' Shares Amount Compensation Translation Equity Balance, January 2, 1998 198,400 $ (1,054) $ (40) $ (417) $ 45,072 Amortization of unearned compensation -- -- 8 -- 8 Net income -- -- -- -- 974 Foreign currency translation adjustments -- -- -- (32) (32) -------- -------- ------ -------- ---------- Balance, April 3, 1998 198,400 $ (1,054) $ (32) $ (449) $ 46,022 ======== ========= ======= ======== ========= Balance, January 1, 1999 305,400 $ (1,665) $ (16) $ (528) $ 48,250 Issuance of common stock, option exercise -- -- -- -- 2 Amortization of unearned compensation -- -- 1 -- 1 Net income -- -- -- -- 3,333 Foreign currency translation adjustments -- -- -- (186) (186) -------- -------- ------ -------- ---------- Balance, April 2, 1999 305,400 $ (1,665) $ (15) $ (714) $ 51,400 ======== ========= ======= ======== ========= See notes to condensed consolidated financial statements
SAUCONY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THIRTEEN WEEKS ENDED APRIL 2, 1999 AND APRIL 3, 1998
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (in thousands) (Unaudited) April 2, April 3, 1999 1998 Cash flows from operating activities: Net income $ 3,333 $ 974 -------- --------- Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 462 413 Provision for bad debts and discounts 2,146 1,814 Deferred income tax benefit (617) (490) Other 33 104 Changes in operating assets and liabilities, net effect of acquisitions, dispositions and foreign currency adjustments: Decrease (increase) in assets: Marketable securities (8) (25) Accounts receivable (16,268) (10,565) Inventories 2,377 604 Prepaid expenses and other current assets 24 (351) Increase (decrease) in liabilities: Accounts payable (2,170) (345) Accrued expenses 2,951 2,047 -------- --------- Total adjustments (11,070) (6,794) --------- ---------- Net cash used by operating activities (7,737) (5,820) --------- ---------- Cash flows from investing activities: Purchase of property, plant and equipment (330) (179) Increase in deferred charges, deposits and other (10) (120) Payments for business acquisitions 0 (624) -------- ---------- Net cash used by investing activities (340) (923) --------- ---------- Cash flows from financing activities: Net short-term borrowings 4,210 4,572 Repayment of long-term debt and capital lease obligations (121) (100) Issuances of common stock 2 0 -------- --------- Net cash provided by financing activities 4,091 4,472 Effect of exchange rate changes on cash and cash equivalents 89 (43) -------- ---------- Net decrease in cash and cash equivalents (3,897) (2,314) Cash and equivalents at beginning of period 5,495 4,432 -------- --------- Cash and equivalents at end of period $ 1,598 $ 2,118 ======== ========= Supplemental disclosure of cash flow information: Cash paid during the period for: Income taxes, net of refunds $ 837 $ 106 ======== ========= Interest $ 135 $ 129 ======== ========= Non-cash investing and financing activities: Property purchased under capital leases $ 114 $ 0 ======== ========= See notes to condensed consolidated financial statements
SAUCONY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS APRIL 2, 1999 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation have been included. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes, thereto, included in the Company's Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, for the year ended January 1, 1999. Operating results for thirteen weeks ended April 2, 1999, are not necessarily indicative of the results for the entire year. NOTE 2 - RECLASSIFICATION Certain items in prior years Consolidated Financial Statements have been reclassified to conform to the 1999 presentation. NOTE C - INVENTORIES Inventories at April 2, 1999 and April 3, 1998 consisted of the following (in thousands):
April 2, January 1, 1999 1999 Finished goods $ 23,106 $ 24,194 Work in progress 1,025 834 Raw materials 4,188 6,044 ----------- ----------- $ 28,319 $ 31,072 =========== ===========
NOTE 4 - EARNINGS PER SHARE
(Unaudited) (in thousands, except per share amounts) Thirteen Weeks Ended Thirteen Weeks Ended April 2, 1999 April 3, 1998 --------------------------- -------------------------- Earnings Earnings Earnings Earnings per per per per Common Common Common Common Share - Share - Share - Share - Basic Diluted Basic Diluted Consolidated income $ 3,333 $ 3,333 $ 974 $ 974 ========== ========= ========== ========== Net income available for common shares and assumed conversions 6,229 6,229 6,251 6,251 Weighted average common shares and equivalents outstanding 0 134 0 42 ---------- --------- ---------- ---------- Effect of dilutive securities: Employee stock options 6,229 6,363 6,251 6,293 ========== ========= ========== ========== Earnings per share $ 0.54 $ 0.52 $ 0.16 $ 0.16 ========== ========= ========= ==========
NOTE 5 - STATEMENT OF COMPREHENSIVE INCOME
(in thousands) Thirteen Weeks Thirteen Weeks Ended Ended April 2, 1999 April 3, 1998 Net income $ 3,333 $ 974 Other comprehensive income: Foreign currency translation adjustment (186) (32) Income tax benefit related to other comprehensive expense (137) (12) --------- --------- Other comprehensive income, net of tax (49) (20) --------- --------- Comprehensive income $ 3,284 $ 954 ======== ========
NOTE 6 - OPERATING SEGMENT DATA The Company's operating segments are organized based on the nature of products and consist of the Saucony Segment and Other Products Segment. The determination of the reportable segments for the thirteen weeks ended April 2, 1999 and April 3, 1998, as well as the basis of measurement of segment profit or loss, is consistent with the segment reporting disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1999.
(in thousands) Thirteen Weeks Thirteen Weeks Ended Ended April 2, 1999 April 3, 1998 Revenues: Saucony $ 37,827 $ 25,884 Other products 4,787 3,782 ----------- ----------- $ 42,614 $ 29,666 ----------- ----------- Income (loss) before income taxes: Saucony $ 6,065 $ 2,180 Other products (273) (285) ------------ ------------ $ 5,792 $ 1,895 ----------- -----------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Highlights Percent Increase Net sales 43.1% Gross Profit 54.6% Selling, general and administrative 22.8% $ Change (in thousands) Operating income $ 3,806 Income before tax 3,897 Net income 2,359 Percent of Net Sales 1999 1998 Gross profit 36.4% 33.7% Selling, general and administrative 23.0 26.8 Operating income 13.9 7.0 Income before tax 13.7 6.4 Net income 7.9 3.3 The following table sets forth net sales (in thousands) and as a percentage of total net sales of the Company's segments in the thirteen weeks ended April 2, 1999 and April 3, 1998:
1999 1998 -------------------------- -------------------------- Saucony $ 37,675 88.8% $ 25,851 87.3% Other 4,731 11.2% 3,773 12.7% ----------- --------- ----------- -------- Total $ 42,406 100.0% $ 29,624 100.0% =========== ========= =========== ========
Consolidated Net Sales Net sales increased 43% to $42,406,000 in the thirteen weeks ended April 2, 1999 from $29,624,000 in the thirteen weeks ended April 3, 1998. The impact of foreign exchange rate changes on net sales in the thirteen weeks ended April 2, 1999 was negligible. Saucony Brand Segment Worldwide net sales of branded Saucony footwear and apparel increased 46% to $37,675,000 in the thirteen weeks ended April 2, 1999 from $25,851,000 in the thirteen weeks ended April 3, 1998, primarily due to 83% unit volume growth in the footwear category. Overall average sell price declined 29% in the thirteen weeks ended April 2, 1999 due to a higher proportion of more moderately-priced Jazz Originals in the Company's domestic product mix. Domestic net sales increased 72% to $32,643,000 due primarily to increased unit volumes for Jazz Originals (introduced in the second quarter of 1998), Saucony's core technical footwear models and special make-up footwear. Jazz Original unit volume accounted for 44% of domestic unit volume in the thirteen weeks ended April 2, 1999. International net sales decreased 27% to $5,032,000 due primarily to the discontinuance of operations in Australia and, to a lesser extent, decreased distributor unit volumes, both of which were offset in part by increased unit volumes recorded by the Company in Canada and Western Europe. Other Products Segment Net sales of Other Products increased 25% to $4,731,000 in the thirteen weeks ended April 2, 1999 from $3,773,000 in the thirteen weeks ended April 3, 1998, reflecting significant revenue growth in both bicycle and related products as well as increased sales of the Company's Hind apparel brand. The growth in bicycles and related products revenue is due in large measure to the acquisition of the Merlin business in February 1998 and the subsequent acquisition of Real Design in August 1998. Costs and Expenses The Company's gross profit increased 55% to $15,421,000 in the thirteen weeks ended April 2, 1999 from $9,973,000 in the thirteen weeks ended April 3, 1998 due to higher domestic unit volumes and, to a lesser extent, improved international margins. The Company's gross margin improved to 36.4% in the thirteen weeks ended April 2, 1999 from 33.7% in the thirteen weeks ended April 3, 1998 due to lower levels of product returns and markdowns and decreased foreign sales of non-current models. Selling, general and administrative expenses increased to $9,741,000, or 23.0% of net sales, in the thirteen weeks ended April 2, 1999 from $7,933,000, or 26.8% of net sales, in the thirteen weeks ended April 3, 1998. Selling expenses increased $1,010,000 in the thirteen weeks ended April 2, 1999 due to increased sales commissions and payroll and related expenses. General and administrative expenses increased $798,000 in the thirteen weeks ended April 2, 1999 due to increased staffing, performance-based compensation and increased bad debt expense. Net interest expense decreased 30% to $146,000 in the thirteen weeks ended April 2, 1999, from $210,000 in the thirteen weeks ended April 3, 1998, due to lower average debt levels resulting from the paydown of the Company's senior notes payable in the second quarter of 1998 and, to a lesser extent, lower interest rates. Income Before Tax 1999 1998 ---- ---- Segment Saucony brand $ 6,065 $ 2,180 Other products (273) (285) ---------- ---------- Total $ 5,792 $ 1,895 ========= ========= Consolidated income before tax increased to $5,792,000 in the thirteen weeks ended April 2, 1999 from $1,895,000 in the thirteen weeks ended April 3, 1998 due primarily to increased domestic Saucony Brand income and the improved financial performance of Hind apparel. Income Taxes The provision for income taxes increased to $2,430,000 in the thirteen weeks ended April 2, 1999 from $898,000 in the thirteen weeks ended April 3, 1998 due primarily to increased domestic pre-tax income. The effective tax rate decreased to 41.9% in the thirteen weeks ended April 2, 1999 from 47.4% in the thirteen weeks ended April 3, 1998 due primarily to a deferred tax valuation allowance recorded in the thirteen weeks ended April 3, 1998, relating to foreign operating losses that were not expected to be realized. Net Income Net income was $3,333,000 in the thirteen weeks ended April 2, 1999 compared to net income of $974,000 in the thirteen weeks ended April 3, 1998. Diluted earnings per share were $0.52 in the thirteen weeks ended April 2, 1999 compared to $0.16 in the thirteen weeks ended April 3, 1998. Liquidity and Capital Resources As of April 2, 1999, the Company's cash and cash equivalents totaled $1,598,000, a decrease of $3,897,000 from January 1, 1999. The decrease is due primarily to an increase in accounts receivable of $14,122,000, net of the provision for bad debt and discounts, offset by an increase in accrued liabilities of $2,951,000 and an increase in borrowings against the Company's domestic and foreign credit facilities of $4,210,000. The increase in accounts receivable is due to increased net sales of the Company's Saucony, Hind and bicycle products in the thirteen weeks ended April 2, 1999. The Company's days sales outstanding for its accounts receivable decreased to 72 days in the thirteen weeks ended April 2, 1999 from 85 days in the thirteen weeks ended April 3, 1998 due to a reduction in credit terms and the reduction in receivables held by the Company's Australian subsidiary. Inventories decreased $2,377,000 in the thirteen weeks ended April 2, 1999 due to management of domestic inventory levels. As a consequence of the improved inventory management and the demand for Jazz Originals, the Company's inventory turns ratio increased to 3.6 turns in the thirteen weeks ended April 2, 1999 from 3.4 turns in the thirteen weeks ended April 3, 1998. For the thirteen weeks ended April 2, 1999, the Company used $7,837,000 of net cash from operating activities, expended $330,000 to acquire capital assets and expended $121,000 to reduce long-term debt. Principal factors (other than net income, accounts receivable, provision for bad debts and discounts and inventory) affecting the operating cash flows in the thirteen weeks ended April 2, 1999 included a decrease of $2,170,000 in accounts payable (due to decreased inventory levels) and an increase of $2,951,000 in accrued expenses (due primarily to increased income tax accruals resulting from higher pre-tax earnings and, to a lesser extent, increased variable selling and administrative expenses associated with a higher level of net sales). The liquidity of the Company is contingent upon a number of factors, principally the Company's future operating results. Management believes that the Company's current cash and cash equivalents, credit facilities and internally generated funds are adequate to meet its working capital requirements and to fund its capital investment needs and debt service payments. Year 2000 The Company views its exposure to the Year 2000 problem in three areas: (i) internal computer systems used to manage the Company's business, (ii) microprocessors and other electronic devices included as components of equipment used by the Company ("embedded chips") and (iii) computer systems used by suppliers and customers of the Company. The Company's plan, under the coordination of the Vice President - Management Information Systems, is to resolve its internal Year 2000 problems in these areas following sequential phases of evaluation, updating and testing. In the evaluation phase, the Company reviews the applicable system to identify Year 2000 problems and determines any necessary remediation. The updating and testing phases involve the implementation and testing, respectively, of Year 2000 remediation measures. The Company has interviewed key suppliers to determine their capability to continue providing goods and services. Based on responses from over 80% of those surveyed, the Company believes that these suppliers are either Year 2000 compliant or will be made Year 2000 compliant on a timely basis. Nevertheless, the Company continues to expand its understanding of the Year 2000 problems to its significant business partners based on ongoing surveys and interviews and this process will continue throughout 1999. Contingency plans for supply disruptions are in the process of being formulated and are expected to be completed by third quarter 1999. The Company has also interviewed key customers and all those who utilize Electronic Data Interface (EDI) as the principal means of placing orders. The responses received indicate that most customers are in the process of developing or executing remediation plans to address Year 2000 problems. The Company believes that customers present a potential Year 2000 business risk because of the Company's limited ability to influence their actions or internal processes. The foregoing discussion of the Company's Year 2000 readiness contains forward-looking statements and were derived using numerous assumptions. Despite the Company's belief that its Year 2000 program reduces the risk of an internal compliance failure and is taking an active approach to assess the readiness of its business partners, there can be no assurances that all parties will achieve timely Year 2000 compliance or that such noncompliance will not have a material adverse impact to the Company. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company has performed an analysis to assess the potential effect of reasonably possible near-term changes in inflation and foreign currency exchange rates. The effect of inflation on the Company's results of operations over the past three years has been minimal. The impact of currency fluctuation on the purchase of inventory by the Company from foreign suppliers has been minimal as the transactions were denominated in U.S. dollars. The Company, however, is subject to currency fluctuation risk with respect to the operating results of the Company's foreign subsidiaries and certain foreign currency denominated payables. The Company has entered into certain forward foreign exchange contracts to minimize the transaction currency risk. PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K a. Exhibits 27.0 - Financial Data Schedule 99.1 - Certain Factors That May Affect Future Results, incorporated herein by reference to pages 18-19 of the Company's Annual Report on Form 10-K for the period ended January 1, 1999. Such Form 10-K shall not be deemed to be filed herewith except to the extent that portions thereof are expressly incorporated by reference herein. b. Reports on Form 8-K None. SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Saucony, Inc. Date: May 17, 1999 By: /s/ Terence P. Chin ----------------------- Terence P. Chin Senior Vice President Chief Financial Officer (Duly authorized officer and principal financial officer) EX-27 2 FDS --
5 This schedule contains summary financial information extracted from Saucony, Inc's. Industries, Inc. Form 10-Q for the period ended April 2, 1999 and is qualified in its entirety by reference to such 10-Q. 0000049401 Saucony, Inc. 1000 3-Mos Dec-31-1999 Jan-02-1999 Apr-02-1999 1598 187 33585 1737 28319 67229 18529 10367 77836 23691 516 0 0 2178 49222 77836 42406 42614 26985 26985 9691 525 146 5792 2430 3333 0 0 0 3333 0.54 0.52
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