-----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, TuB2PvfI09pqEu/uHXOqEJq9Zqzj7PW7k4R74HBpHuUFHyGLgaU8yphs6QzA+Dbv JVpsoTUJalIMYq3UAIIHaw== 0000049401-03-000056.txt : 20031028 0000049401-03-000056.hdr.sgml : 20031028 20031028163220 ACCESSION NUMBER: 0000049401-03-000056 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031028 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031028 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05083 FILM NUMBER: 03961261 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 8-K 1 k8.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 28, 2003 Saucony, Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Massachusetts 000-05083 04-1465840 - ------------------------- ----------------------- -------------------------- (State or other juris- (Commission (IRS Employer diction of incorporation File Number Identification No.) 13 Centennial Drive, Peabody, MA 01960 - ------------------------------------------------------------------------- (Address of principal executive offices)(Zip Code) Registrant's telephone number, including area code: 978-532-9000 Not applicable - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 12. Disclosure of Results of Operations and Financial Condition. On October 28, 2003, Saucony, Inc. announced its financial results for the quarter ended October 3, 2003. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K. The information in this Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing. 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 hereunto duly authorized. Date: October 28, 2003 SAUCONY, INC. By: /s/ Michael Umana ---------------------------------------------- Michael Umana Executive Vice President, Finance Chief Financial Officer (Duly authorized officer and principal financial officer) EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press release dated October 28, 2003 EX-99 4 finan.txt EXHIBIT 99.1 Exhibit 99.1 Company Contact: Michael Umana Saucony, Inc. Chief Financial Officer, Chief Operating Officer/Treasurer (978) 532-9000 (800) 625-8080 For Immediate Release Investor Relations: Chad A. Jacobs/Brendon Frey Integrated Corporate Relations (203) 222-9013 cjacobs@icr-online.com SAUCONY, INC. REPORTS THIRD QUARTER FISCAL 2003 RESULTS |X| Net Income Increased 37% |X| Diluted EPS Increased 32% to $0.34 |X| Raised Fiscal 2003 Sales and EPS Guidance Peabody, Massachusetts - October 28, 2003 -- Saucony, Inc. (NASDAQ: SCNYA and SCNYB) today announced financial results for the third quarter ended October 3, 2003. Net income increased 37% to $2.2 million from $1.6 million in the comparable period of 2002, and diluted earnings per share increased 32% to $0.34, compared to diluted earnings per share of $0.26 for the comparable period in 2002. Net sales for the third quarter were $32.0 million, compared to $33.7 million in the third quarter of 2002. For the nine months ended October 3, 2003, net income increased 58% to $7.0 million from $4.4 million in the comparable period of 2002, and diluted earnings per share increased 54% to $1.11, compared to diluted earnings per share of $0.72 for the comparable period in 2002. Net sales for both periods were $105.0 million. Net income for the nine months ended October 3, 2003, includes a pre-tax benefit of $566,000 recorded in general and administrative expenses as a result of a litigation settlement agreement between the Company and the trustee appointed to oversee the liquidation of assets of a former customer. John H. Fisher, President and Chief Executive Officer, commented, "These results represent our 8th consecutive quarter of meeting or exceeding our expectations and were due, in large part, to our dedicated team driving further improvements in our business processes and effectively executing our long-term strategy. We were particularly pleased with our domestic technical running footwear backlog, as our strategic initiatives have begun to significantly improve our open order backlog trends and position us for future growth." Order Backlog Our backlog of open orders at October 3, 2003 scheduled for delivery within the next five months (October 4, 2003 - February 27, 2004) increased 12% to $43.5 million, compared to $39.0 million at the end of the third quarter of 2002. At October 3, 2003, the open order backlog for delivery in the next 12 months increased 6% to $58.8 million, compared to the October 4, 2002 backlog of $55.4 million. On a constant dollar basis, our open order backlog for delivery in the next 12 months increased 4%. Mr. Fisher continued, "The growing momentum within our domestic technical footwear business has significantly contributed to our double-digit increase in open orders scheduled for delivery over the next five months." Inventory Mr. Fisher remarked, "Our inventory management execution has continued to be exceptional during these challenging times. We believe our quarter ending inventories are high in quality and position us well to take advantage of any increases in the demand for our core products in the fourth quarter of 2003." Net Sales Net sales for the third quarter of 2003 were $32.0 million, compared to $33.7 million in the third quarter of 2002. On a constant dollar basis, net sales were $31.2 million for the third quarter of 2003. Domestic net sales were $22.6 million in the third quarter of 2003, compared to $26.1 million in the third quarter of 2002. International net sales increased 24% to $9.4 million in the third quarter of 2003 compared to $7.6 million in the third quarter of 2002. Saucony brand footwear accounted for approximately 78% of total third quarter 2003 net sales, while a combination of Hind apparel and factory outlet stores net sales accounted for the balance. Net sales for the nine months ended October 3, 2003 remained constant at $105.0 million compared to the comparable period in 2002. On a constant dollar basis, net sales for the first nine months of 2003 were $103.2 million. Domestic net sales were $79.3 million, compared to $81.5 million in the comparable period of 2002. International net sales increased 11.8% to $26.2 million, compared to $23.5 million in the comparable period of 2002. Saucony brand footwear accounted for approximately 83% of total sales during the first nine months of 2003, while a combination of Hind apparel and factory outlet stores net sales accounted for the balance. Gross Margin The Company's gross margin in the third quarter of 2003 increased 490 basis points to 40.6% compared to 35.7% in the third quarter of 2002, due primarily to improved margins on Hind brand apparel, reflecting increased sales of first quality product at higher margins and lower inventory reserve provisions taken in 2003, favorable currency exchange due to the impact of a weaker U.S. dollar against European and Canadian currencies, lower Saucony footwear product costs and improved margins at our factory outlet stores. For the first nine months of 2003, gross margin increased 480 basis points to 39.4% versus to 34.6% in the comparable period of 2002 due primarily to lower Saucony footwear product costs, favorable currency exchange due to the impact of a weaker U.S. dollar against European and Canadian currencies, improved margins on Hind brand apparel, reflecting increased sales of first quality product at higher margins and lower inventory reserve provisions taken in 2003, improved margins at our factory outlet stores and proportionately lower sales of closeout footwear. Selling, General and Administrative Expenses Selling, general and administrative expenses as a percentage of net sales increased to 29.9% in the third quarter of 2003 compared to 27.9% in the third quarter of 2002. In absolute dollars, selling, general and administrative expenses increased 2%, due primarily to increased administrative and selling payroll, increased insurance costs, increased depreciation and increased print media advertising, partially offset by reduced account specific advertising and promotion, reduced incentive compensation, lower employee healthcare costs and reduced variable selling expenses. Selling expenses as a percentage of net sales in the third quarter of 2003 were 13.7% compared to 13.4% in the 2002 period, while general and administrative expenses were 16.2% of net sales compared to 14.5% in the third quarter of 2002. For the nine months ended October 3, 2003, selling, general and administrative expenses as a percentage of net sales increased to 28.8% compared to 27.5% in the comparable period of 2002. In absolute dollars, selling, general and administrative expenses increased 5%, due primarily to increased administrative and selling payroll, increased incentive compensation, increased employee healthcare costs, increased insurance costs, higher professional fees and increased print media advertising, partially offset by lower provisions for bad debt expense, due to the litigation settlement and, to a lesser extent, decreased account specific advertising and promotion, lower depreciation expense and reduced variable selling expenses. Selling expenses as a percentage of net sales in the first nine months of 2003 were 13.5% compared to 13.9% in the comparable period of 2002, while general and administrative expenses were 15.3% of net sales compared to 13.6% in the first nine months of 2002. Net Income Net income for the third quarter of 2003 was $2.2 million, or $0.34 per share on a diluted basis, compared to $1.6 million, or $0.26 per share on a diluted basis, in the third quarter of 2002. For the nine months ended October 3, 2003, net income was $7.0 million, or $1.11 per share on a diluted basis, compared to $4.4 million, or $0.72 per share on a diluted basis for the first nine months of 2002. Mr. Fisher concluded, "We are very pleased with our positive momentum and look forward to a solid fiscal 2003 performance. Over the past several months we have made significant progress, both financially and operationally, and we now move ahead with a firm foundation for growth. We remain committed to further capitalizing on our position in the marketplace." Business Outlook The Company is providing certain forward-looking information in this press release. These statements are based on the Company's current information and expectations, and actual results may differ materially. The Company undertakes no obligation to update this information. Please see the further disclaimer in the last paragraph of this release. The following information replaces our previous guidance. Fourth Quarter and Fiscal Year 2003 The Company expects fully diluted earnings per share to range from $0.08 to $0.10 for the fourth quarter of 2003 and to range from $1.19 to $1.21 for the year. The Company expects fourth quarter net sales to be approximately $30 million. The Company expects net sales for the year to range from $135 million to $136 million. The Company expects gross margins of approximately 37% for the fourth quarter and approximately 39% for the year. The Company expects selling, general and administration expenses of approximately 33% of net sales for the fourth quarter and to be approximately 30% of net sales for the year. Investor Conference Call The Company will provide a web simulcast and rebroadcast of its third quarter earnings release conference call. The live broadcast of the Company's quarterly conference call is scheduled for October 29, 2003, beginning at 8:30 a.m. Eastern Time and will be accessible online at www.companyboardroom.com and under the "Investor Relations" section at www.sauconyinc.com. The online replay will be available shortly after the conference call and will continue to be available through October 29, 2004. _ _ _ _ _ _ _ _ _ _ Saucony, Inc. designs, develops, and markets (i) a broad line of performance-oriented athletic shoes for adults under the Saucony(R) brand name, (ii) athletic apparel under the Hind(R) brand name and (iii) athletic and workplace shoes under the Spot-bilt(R) name. This press release contains forward-looking statements that involve a number of risks and uncertainties. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," "intends," "estimates," and similar expressions are intended to identify forward-looking statements, and all of our statements under "Business Outlook" above are forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are set forth in the Company's Annual Report on Form 10-K under "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Certain Other Factors that May Affect Future Results" ("Certain Factors") filed by Saucony, Inc. with the Securities and Exchange Commission on April 3, 2003, which Certain Factors discussion is incorporated herein by this reference. In particular, there can be no assurance as to the levels of earnings per share, net sales, gross margins, selling, general and administrative expenses and other operating results or growth rates that will be achieved by the Company because such items are materially dependent upon the condition of the domestic and world economies, the impact of foreign regulation and the performance of foreign suppliers, competition from third parties and consumer preferences. All forward-looking statements are made only as of the date of this press release. The Company makes no undertaking to update any of these statements. SAUCONY, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheet
(in thousands) ASSETS October 3, January 3, 2003 2003 (Unaudited) ------------ --------- Current assets: Cash and cash equivalents $ 43,681 $ 34,483 Accounts receivable 19,830 15,496 Inventories 17,874 27,201 Prepaid expenses and other current assets 2,808 3,490 Total current assets 84,193 80,670 Property, plant and equipment, net 5,822 5,714 Other assets 1,104 1,156 Total assets $ 91,119 $ 87,540 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 5,156 8,543 Accrued expenses and other current liabilities 6,527 7,800 Total current liabilities 11,683 16,343 Long-term obligations: Deferred income taxes 2,407 1,859 Minority interest in consolidated subsidiaries 296 642 Stockholders' equity: Common stock, $.33 1/3 par value 2,303 2,273 Additional paid in capital 18,518 17,769 Retained earnings 62,442 55,945 Accumulated other comprehensive loss (11) (870) Common stock held in treasury, at cost (6,423) (6,297) Unearned compensation (96) (124) Total 76,733 68,696 Total liabilities and stockholders' equity $ 91,119 $ 87,540
SAUCONY, INC. AND SUBSIDIARIES Consolidated Statements of Income For the quarter and nine-months ended October 3, 2003 and October 4, 2002
(Unaudited) (Amounts in thousands, except per share data) Quarter Quarter Nine-Months Nine-Months Ended Ended Ended Ended October 3, October 4, October 3, October 4, 2003 2002 2003 2002 ---- ---- ---- ---- Net sales $ 31,978 $ 33,745 $ 105,518 $104,985 Other revenue 94 105 257 202 Total revenue 32,072 33,850 105,775 105,187 Costs and expenses Cost of sales 18,983 21,683 63,899 68,617 Selling expenses 4,396 4,520 14,266 14,587 General and administrative expenses 5,172 4,900 16,127 14,293 Plant closing and other credits -- -- -- (59) Total costs and expenses 28,551 31,103 94,292 97,438 Operating income 3,521 2,747 11,483 7,749 Non-operating income (expense) Interest income 49 94 176 249 Interest expense -- (1) (5) (4) Foreign currency gains (losses) (41) (18) 17 (62) Other 38 (78) 55 (34) Income before income taxes and minority interest 3,567 2,744 11,726 7,898 Provision for income taxes 1,359 1,099 4,577 3,282 Minority interest in income of consolidated subsidiaries 29 58 135 179 Net income $ 2,179 $ 1,587 $ 7,014 $ 4,437 Earnings per common share: Basic $ 0.36 $ 0.26 $ 1.15 $ 0.73 Diluted $ 0.34 $ 0.26 $ 1.11 $ 0.72 Weighted average common shares and equivalents outstanding: Basic 6,124 6,121 6,092 6,102 Diluted 6,420 6,160 6,330 6,173 Cash dividends per share of common stock: Class A common stock $ 0.040 $ -- $ 0.080 $ -- Class B common stock $ 0.044 $ -- $ 0.088 $ --
-----END PRIVACY-ENHANCED MESSAGE-----