-----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, CpLODMzJzqr94zd6xNFEehod38XC8a3v5vdbIiu24nwooWVYHD05mNtILAqz2foH gvQgxcb71jEJUBHrGlH27Q== 0000898430-02-001594.txt : 20020425 0000898430-02-001594.hdr.sgml : 20020425 ACCESSION NUMBER: 0000898430-02-001594 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020425 FILER: COMPANY DATA: COMPANY CONFORMED NAME: K SWISS INC CENTRAL INDEX KEY: 0000862480 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 954265988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18490 FILM NUMBER: 02620440 BUSINESS ADDRESS: STREET 1: 31248 OAK CREST DRIVE CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 BUSINESS PHONE: 8187065100 MAIL ADDRESS: STREET 1: 31248 OAK CREST DR CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 10-Q 1 d10q.txt FORM 10-Q 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 period ended March 31, 2002 -------------- 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 0-18490 ------- K-SWISS INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 95-4265988 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 31248 Oak Crest Drive, Westlake Village, CA 91361 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) 818-706-5100 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, 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 (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 ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Shares of common stock outstanding at April 24, 2002: Class A 6,328,343 Class B 2,903,478 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------ K-SWISS INC. CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands)
March 31, December 31, 2002 2001 ------------- ---------------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 64,806 $ 61,579 Accounts receivable, less allowance for doubtful accounts of $1,003 and $993 as of March 31, 2002 and December 31, 2001, respectively 51,475 30,478 Inventories 32,978 43,995 Prepaid expenses and other 1,169 3,014 Deferred taxes 1,408 1,822 ------------- ---------- Total current assets 151,836 140,888 PROPERTY, PLANT AND EQUIPMENT, net 8,018 8,140 OTHER ASSETS Intangible assets 8,297 8,362 Other 3,427 3,409 ------------- ---------- 11,724 11,771 ------------- ---------- $ 171,578 $ 160,799 ============= ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank lines of credit $ 570 $ -- Trade accounts payable 5,512 10,728 Accrued income taxes 4,438 129 Accrued liabilities 15,911 11,077 ------------- ---------- Total current liabilities 26,431 21,934 OTHER LIABILITIES 5,010 6,794 DEFERRED TAXES 7,305 7,712 STOCKHOLDERS' EQUITY Preferred Stock-authorized 2,000,000 shares of $.01 par value; none issued and outstanding -- -- Common Stock: Class A-authorized 18,000,000 shares of $.01 par value; 11,271,433 shares issued, 6,337,401 shares outstanding and 4,934,032 shares held in treasury at March 31, 2002 and 11,228,397 shares issued, 6,344,365 shares outstanding and 4,884,032 shares held in treasury at December 31, 2001 113 112 Class B-authorized 10,000,000 shares of $.01 par value; issued and outstanding 2,903,478 shares at March 31, 2002 and December 31, 2001 29 29 Additional paid-in capital 42,044 41,364 Treasury stock (70,385) (68,686) Retained earnings 161,837 152,308 Accumulated other comprehensive earnings - Foreign currency translation (806) (768) ------------- ---------- 132,832 124,359 ------------- ---------- $ 171,578 $ 160,799 ============= ==========
The accompanying notes are an integral part of these statements. 2 K-SWISS INC. CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS (Amounts in thousands, except per share amounts) (Unaudited)
THREE MONTHS ENDED MARCH 31, ---------------------- 2002 2001 ---- ---- Revenues $ 80,319 $ 68,249 Cost of goods sold 44,640 40,740 -------- -------- Gross profit 35,679 27,509 Selling, general and administrative expenses 19,649 17,188 -------- -------- Operating profit 16,030 10,321 Interest income, net 197 890 -------- -------- Earnings before income taxes 16,227 11,211 Income tax expense 6,559 4,598 -------- -------- NET EARNINGS $ 9,668 $ 6,613 ======== ======== Earnings per common share (Note 4) Basic $ 1.05 $ 0.67 ======== ======== Diluted $ 0.97 $ 0.63 ======== ======== Net Earnings $ 9,668 $ 6,613 Other comprehensive (loss) earnings, net of tax - Foreign currency translation adjustments (38) 18 -------- -------- Comprehensive net earnings $ 9,630 $ 6,631 ======== ========
The accompanying notes are an integral part of these statements. 3 K-SWISS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
THREE MONTHS ENDED MARCH 31, --------------- 2002 2001 ---- ---- Net cash provided by operating activities $ 4,611 $ 4,302 Cash flows from investing activities: Purchase of property, plant and equipment (303) (207) Proceeds from sale of property -- 8 -------- -------- Net cash used in investing activities (303) (199) Cash flows from financing activities: Net borrowings under bank lines of credit 568 26 Purchase of treasury stock (1,699) (1,833) Payment of dividends (139) (149) Proceeds from stock options exercised 225 144 -------- -------- Net cash used in financing activities (1,045) (1,812) Effect of exchange rate changes on cash (36) 23 -------- -------- Net increase in cash and cash equivalents 3,227 2,314 Cash and cash equivalents at beginning of period 61,579 67,350 -------- -------- Cash and cash equivalents at end of period $ 64,806 $ 69,664 ======== ======== Supplemental disclosure of cash flow information: Non-cash investing and financing activities: Income tax benefit of options exercised $ 398 $ 262 Cash paid during the period for: Interest $ 18 $ 26 Income taxes $ 131 $ 27
The accompanying notes are an integral part of these statements. 4 K-SWISS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the consolidated financial position of K-Swiss Inc. (the "Company") as of March 31, 2002 and the results of its operations and its cash flows for the three months ended March 31, 2002 and 2001. The results of operations and cash flows for the three months ended March 31, 2002 are not necessarily indicative of the results to be expected for any other interim period or the full year. These consolidated financial statements should be read in combination with the audited consolidated financial statements and notes thereto for the year ended December 31, 2001. 2. The federal income tax returns of the Company for the years ended 1993, 1995, 1996 and 1998 are currently under examination by the Internal Revenue Service ("IRS"). In August 2000, the IRS issued its final report proposing additional taxes for the years ended 1993, 1995 and 1996 of an aggregate of approximately $4,985,000 plus penalties and interest for these years. Through March 2002, the Company has agreed to certain adjustments for the years ended 1993, 1995 and 1996 resulting in approximately $957,000 of taxes. These tax adjustments did not require the Company to record additional income tax expense as the Company had recorded deferred income taxes on the untaxed portion of unremitted earnings of a foreign subsidiary. Of the remaining balance of the proposed assessments, the Company believes that approximately $1,241,000 of taxes which might become payable as a result of these examinations would not result in additional expense recognized in the financial statements other than interest and penalties, if any, as the Company has recorded deferred income taxes on the untaxed portion of the unremitted earnings of a foreign subsidiary. For the remaining assessed taxes of approximately $2,787,000, for which the Company has not provided deferred income taxes, the Company believes it has meritorious defenses to the IRS challenges although no assurance can be given that the final results of such IRS challenges will not have a material adverse impact on the Company's financial position and results of operations. 3. In June 2001, the Company was notified by counsel representing the trustee appointed to oversee the liquidation of assets of a previous customer of the Company, which filed for bankruptcy protection in 1999, that they are seeking reimbursement of all payments made to the Company during the 90 day period prior to the bankruptcy filing. The aggregate amount of these payments, which the trustee's counsel is claiming to be preferential transfers, is approximately $4,315,000. The Company believes these payments were received in the ordinary course of business and that it has meritorious defenses against the trustee's claim. No provision for this claim has been made in the Company's financial statements as of March 31, 2002. 4. The following is a reconciliation of the number of shares (denominator) used in the basic and diluted earnings per share computations (shares in thousands):
Three Months Ended March 31, -------------------------------------------------- 2002 2001 ----------------------- ----------------------- Per Share Per Share Shares Amount Shares Amount ------ ------ ------ ------ Basic EPS 9,242 $ 1.05 9,933 $ .67 Effect of Dilutive Stock Options 689 (.08) 605 (.04) ------- ------- ------- ------- Diluted EPS 9,931 $ .97 10,538 $ .63 ======= ======= ======= =======
The following options were not included in the computation of diluted EPS because the options' exercise price was greater than the average market price of the common shares:
2002 2001 ----------------------- ----------------------- Options to purchase shares of common stock (in thousands) 1 69 Exercise prices $47.38 $29.63 - $47.38 Expiration dates May 2009 April 2009- September 2009
5 5. The Company's predominant business is the design, development and distribution of athletic footwear. The Company is organized into three geographic regions: the United States, Europe and other international operations. The following tables summarize segment information (in thousands):
Three Months Ended March 31, --------------------------------- 2002 2001 -------- -------- Revenues from unrelated entities: United States $ 69,817 $ 59,395 Europe 5,646 5,367 Other International 4,856 3,487 --------- --------- $ 80,319 $ 68,249 ========= ========= Inter-geographic revenues: United States $ 478 $ 529 Europe 19 25 Other International 1,964 1,317 --------- --------- $ 2,461 $ 1,871 ========= ========= Total revenues: United States $ 70,295 $ 59,924 Europe 5,665 5,392 Other International 6,820 4,804 Less inter-geographic revenues (2,461) (1,871) --------- --------- $ 80,319 $ 68,249 ========= ========= Operating profit (loss): United States $ 18,560 $ 12,828 Europe (754) (322) Other International 711 335 Less corporate expenses and eliminations (2,487) (2,520) --------- --------- $ 16,030 $ 10,321 ========= =========
March 31, December 31, 2002 2001 -------- -------- Identifiable assets: United States $ 85,236 $ 79,875 Europe 16,860 11,886 Other International 30,630 28,290 Corporate assets and eliminations (1) 38,852 40,748 --------- --------- $ 171,578 $ 160,799 ========= =========
(1) Corporate assets include cash and cash equivalents, and intangible assets. During the three months ended March 31, 2002 and 2001, approximately 18% and 16%, respectively, of revenues were made to one customer. 6 6. In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Intangible Assets which supersedes APB Opinion No. 17, Intangible Assets. SFAS 142 eliminates the requirement to amortize goodwill and indefinite-lived intangible assets, addresses the amortization of intangible assets with a defined life and addresses the impairment testing and recognition for goodwill and intangible assets. SFAS 142 applies to goodwill and intangible assets arising from transactions completed before and after the Statement's effective date. The Company has adopted this Standard as of January 1, 2002. In applying SFAS 142, the Company has performed the transitional reassessment and impairment tests required as of January 1, 2002, and determined the goodwill and trademarks have indefinite lives and that there were no impairment on these assets. The Company discontinued amortizing these assets on January 1, 2002. At the time of adoption, the Company had accumulated amortization pertaining to goodwill and trademarks of $2,976,000. The license agreement is considered to have a finite life and is being amortized over the remaining term of the agreement that extends through December 2005. Below is the calculation of reported net earnings adjusted for the effect of amortization expense for the March 31, 2001 period (in thousands): Three Months Ended March 31, ---------------------------- 2002 2001 ---- ---- Reported net earnings $ 9,668 $ 6,613 Addback amortization expense of goodwill and trademarks - 50 ------- ------- Adjusted net earnings $ 9,668 $ 6,663 ======= ======= Adjusted net income per share (basic and diluted) for the three months ended March 31, 2001 would not have differed from the reported net income per share. 7 ITEM 2. - ------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Note Regarding Forward-Looking Statements and Analyst Reports "Forward-looking statements", within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), include certain written and oral statements made, or incorporated by reference, by the Company or its representatives in this report, other reports, filings with the Securities and Exchange Commission ("the S.E.C."), press releases, conferences, or otherwise. Such forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words "believe", "anticipate", "expect", "estimate", "intend", "plan", "project", "will be", "will continue", "will likely result", or any variations of such words with similar meaning. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Investors should carefully review the risk factors set forth in other reports or documents the Company files with the S.E.C., including Forms 10-Q, 10-K and 8-K. Some of the other risks and uncertainties that should be considered include, but are not limited to, the following: international, national and local general economic and market conditions; the size and growth of the overall athletic footwear and apparel markets; the size of the Company's competitors; intense competition among designers, marketers, distributors and sellers of athletic footwear and apparel for consumers and endorsers; market acceptance of the Company's training shoe line; market acceptance of new Limited Edition product; market acceptance of non-performance product in Europe; market acceptance of National Geographic footwear; market acceptance of Royal Elastics footwear; demographic changes; changes in consumer preferences; popularity of particular designs, categories of products, and sports; seasonal and geographic demand for the Company's products; the size, timing and mix of purchases of the Company's products; fluctuations and difficulty in forecasting operating results, including, without limitation, the fact that advance "futures" orders may not be indicative of future revenues due to the changing mix of futures and at-once orders; potential cancellation of future orders; the ability of the Company to continue, manage or forecast its growth and inventories; new product development and commercialization; the ability to secure and protect trademarks, patents, and other intellectual property; performance and reliability of products; customer service; adverse publicity; the loss of significant customers or suppliers; dependence on distributors; business disruptions; increased costs of freight and transportation to meet delivery deadlines; the effects of terrorist actions on business activities, customer orders and cancellations, and the United States and international governments' responses to these terrorist actions; changes in business strategy or development plans; general risks associated with doing business outside the United States, including, without limitation, import duties, tariffs, quotas and political and economic instability; changes in government regulations; liability and other claims asserted against the Company; the ability to attract and retain qualified personnel; and other factors referenced or incorporated by reference in this report and other reports. The Company operates in a very competitive and rapidly changing environment. New risk factors can arise and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Investors should also be aware that while the Company does, from time to time, communicate with securities analysts, it is against the Company's policy to disclose to them any material non-public information or other confidential commercial information. Accordingly, investors should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, the Company has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts or others contain any projections, forecasts or opinions, such reports are not the responsibility of the Company. 8 Results of Operations The following table sets forth, for the periods indicated, the percentage of certain items in the consolidated statements of earnings relative to revenues. THREE MONTHS ENDED MARCH 31, --------------- 2002 2001 ---- ----- Revenues 100.0% 100.0% Cost of goods sold 55.6 59.7 Gross profit 44.4 40.3 Selling, general and administrative expenses 24.4 25.2 Interest income, net 0.2 1.3 Earnings before income taxes 20.2 16.4 Income tax expense 8.2 6.7 Net earnings 12.0 9.7 K-Swiss brand revenues increased to $79,149,000 for the quarter ended March 31, 2002 from $68,249,000 for the quarter ended March 31, 2001, an increase of $10,900,000 or 16.0%. This increase resulted primarily from an increase in the volume of footwear sold to approximately 3,053,000 pair for the quarter ended March 31, 2002 from approximately 2,492,000 pair for the quarter ended March 31, 2001. This increase was partially offset by a decrease in the average wholesale price per pair to $25.20 for the quarter ended March 31, 2002 from $26.51 for the quarter ended March 31, 2001. The increase in the volume of footwear sold was primarily the result of increased sales of the Classic, children's and tennis/court categories of shoes of 16.7%, 37.8% and 24.0%, respectively. In addition, during the quarters ended March 31, 2002 and 2001, approximately 18% and 16% respectively, of revenues were made to one domestic customer. The average wholesale price per pair decreased primarily due to a lower average wholesale price in the Classic category. K-Swiss brand domestic revenues increased 16.7% to $69,307,000 for the quarter ended March 31, 2002 from $59,395,000 for the quarter ended March 31, 2001. K-Swiss brand international revenues increased 11.2% to $9,842,000 for the quarter ended March 31, 2002 from $8,854,000 for the quarter ended March 31, 2001. K-Swiss brand international revenues, as a percentage of total revenues, decreased to 12.4% for the quarter ended March 31, 2002 from 13.0% for the quarter ended March 31, 2001. Royal Elastic brand sales were $1,130,000 and National Geographic brand sales were negligible for the quarter ended March 31, 2002. Overall gross profit margins, as a percentage of revenues, increased to 44.4% for the quarter ended March 31, 2002, from 40.3% for the quarter ended March 31, 2001. Gross profit margins increased primarily due to achievement of target costing objectives. Overall selling, general and administrative expenses increased to $19,649,000 (24.4% of revenues) for the quarter ended March 31, 2002 from $17,188,000 (25.2% of revenues) for the quarter ended March 31, 2001, an increase of $2,461,000 or 14.3%. The increase in these expenses was primarily the result of increases in payroll as a result of an increase in personnel, commissions due to increased revenues and development expenses resulting from an increase in product development activities. Overall net interest income was $197,000 (0.2% of revenues) for the quarter ended March 31, 2002 compared to $890,000 (1.3% of revenues) for the quarter ended March 31, 2001, a decrease of $693,000 or 77.9%. This decrease in net interest income was the result of significantly lower average interest rates as well as lower average balances. The Company's effective tax rate decreased to 40.4% of earnings before income tax from 41.0% for the quarters ended March 31, 2002 and 2001, respectively. Net earnings increased 46.2% to $9,668,000 for the quarter ended March 31, 2002 from $6,613,000 for the quarter ended March 31, 2001. 9 At March 31, 2002 and 2001, domestic futures orders with start ship dates from April through September 2002 and 2001 were approximately $90,756,000 and $82,910,000, respectively, an increase of 9.5%. At March 31, 2002 and 2001, international futures orders with start ship dates from April through September 2002 and 2001 were approximately $14,739,000 and $11,340,000, respectively, an increase of 30.0%. At March 31, 2002 and 2001 total futures orders with start ship dates from April 2002 and 2001 through September 2002 and 2001 were approximately $105,495,000 and $94,250,000, respectively, an increase of 11.9%. The 11.9% increase in total futures orders is comprised of a 18.2% increase in the second quarter 2002 futures orders and a 5.5% increase in the third quarter 2002 futures orders. "Backlog", as of any date, represents orders scheduled to be shipped within the next six months. Backlog does not include orders scheduled to be shipped on or prior to the date of determination of backlog. These orders are not necessarily indicative of revenues for subsequent periods because: (1) the mix of "futures" and "at-once" orders can vary significantly from quarter to quarter and year to year and (2) the rate of customer order cancellations can also vary from quarter to quarter and year to year. Liquidity and Capital Resources The Company experienced net cash inflows of approximately $4,611,000 and $4,302,000 from its operating activities for the quarters ended March 31, 2002 and 2001, respectively. Cash provided by operations for the quarter ended March 31, 2002 increased from the quarter ended March 31, 2001 primarily due to an increase in net earnings, as well as fluctuations in accounts receivable, inventories, and accounts payable and accrued liabilities. The Company had a net outflow of cash from its investing activities for the quarter ended March 31, 2002 and 2001 primarily due to the purchase of property, plant and equipment. The Company had a net outflow of cash from its financing activities for the quarter ended March 31, 2002 primarily due to the purchase of treasury stock, offset by cash proceeds from bank borrowings. In September 2001, the Company announced the completion of its October 1999 $25 million stock repurchase program and a new authorization by the Board of Directors for the Company to repurchase through December 2006 up to an additional $25 million of its Class A Common Stock from time to time on the open market, as market conditions warrant. The Company adopted this program because it believes repurchasing its shares can be a good use of excess cash depending on the Company's array of alternatives. Currently, the Company has made purchases under all stock repurchase programs from August 1996 through April 24, 2002 (the day prior to the filing of this Form 10-Q) of 4,944,032 shares of Class A Common Stock at an aggregate cost totaling approximately $70,825,000. On April 19, 2002, the Company issued a proxy concerning its May 23, 2002 Annual Meeting of Stockholders. One agenda item for the Annual Meeting is a proposal by the Company's Board of Directors to increase the number of authorized shares of Class A Common Stock from 18,000,000 to 36,000,000 shares. On April 25, 2002 the Company announced that in the event the stockholders approve the increase in the authorized shares of Class A Common Stock at the Company's Annual Meeting on May 23, 2002, it is the intention of the Board of Directors to declare a two-for-one stock split at a board meeting to be held immediately after the May 23, 2002 Annual Meeting. In such event, the Board also intends to increase the quarterly cash dividend to $0.01 per common share on an after-split basis. No other material capital commitments exist at March 31, 2002. Depending on the Company's future growth rate, funds may be required by operating activities. With continued use of its revolving credit facility and internally generated funds, the Company believes its present and currently anticipated sources of capital are sufficient to sustain its anticipated capital needs for the remainder of 2002. The Company's working capital increased $6,451,000 to $125,405,000 at March 31, 2002 from $118,954,000 at December 31, 2001. 10 PART II - OTHER INFORMATION ITEM 1: Legal Proceedings. ----------------- None. 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) Exhibits 10 - Amendment to K-Swiss Inc. 401(k) and Profit Sharing Plan (b) Reports on Form 8-K None. 11 SIGNATURES ---------- 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. K-Swiss Inc. Date: April 25, 2002 By: /S/ GEORGE POWLICK ------------------------- George Powlick, Vice President Finance and Chief Financial Officer 12 EXHIBIT INDEX ------------- Exhibit Page - ------- ---- 10 Amendment to K-Swiss Inc. 401(k) and Profit Sharing Plan 13 EX-10 3 dex10.txt AMENDMENT TO 401(K) & PROFIT SHARING PLAN Exhibit 10 Amendment to K-Swiss Inc. 401(k) and Profit Sharing Plan January 23, 2002 Arthur Sido Client Services Account Manager Fidelity Institutional Retirement Services Co. 200 Magellan Way Covington, KY 41015 Subject: K-Swiss 401k and Profit Sharing Plan Amendment Dear Arthur, As of May 21, 2001 please amend Section 1.02(b) of the Adoption Agreement so the term "Employer" includes the following Related Employer (as defined in Section 2.01(a)(26)): E.R.E. Footwear LLC. As of November 13, 2001 please amend Section 1.02(b) of the Adoption Agreement so the term "Employer" includes the following Related Employer (as defined in Section 2.01(a)(26)): Royal Elastics LLC. I am having this amendment approved by the K-Swiss Inc. Board of Directors. Their next meeting will be in February. Please let me know if you need any further information. Sincerely, /s/ Cheryl Kuchinka Cheryl Kuchinka Domestic Controller K-Swiss Inc. 14 Section 1.02 (b) is amended to read as follows: 1.02 EMPLOYER -------- (b) The term "Employer includes the following Related Employer(s) (as defined in Section 2.01(a)(26)): K-Swiss Sales Corp. (as of 1/1/2000) ------------------------------------ E.R.E. Footwear LLC (as of 5/21/2001) ------------------------------------- Royal Elastics LLC (as of 11/13/2001) ------------------------------------- 15 -----END PRIVACY-ENHANCED MESSAGE-----