-----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, OzueILXLF3W5jZjsBsYET7ZEtZkGIyY6W9nfNgBhYfPwcdGZIvAA+eR+KFvwcZNM VWG+fzEqleV7PMv2VzgCFw== 0000897069-97-000441.txt : 19971111 0000897069-97-000441.hdr.sgml : 19971111 ACCESSION NUMBER: 0000897069-97-000441 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971110 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LACROSSE FOOTWEAR INC CENTRAL INDEX KEY: 0000919443 STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021] IRS NUMBER: 391446816 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23800 FILM NUMBER: 97711440 BUSINESS ADDRESS: STREET 1: 1319 ST ANDREW ST CITY: LACROSSE STATE: WI ZIP: 54603 BUSINESS PHONE: 6087823020 MAIL ADDRESS: STREET 1: 1319 ST ANDREW ST CITY: LA CROSSE STATE: WI ZIP: 54603 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 27, 1997 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 0-238001 LaCrosse Footwear, Inc. (Exact name of Registrant as specified in its charter) Wisconsin 39-1446816 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1319 St. Andrew Street, La Crosse, Wisconsin 54603 (Address of principal executive offices) (Zip Code) (608) 782-3020 (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 ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value, outstanding as of November 1, 1997: 6,667,727 shares LaCrosse Footwear, Inc. Form 10-Q Index For Quarter Ended September 27, 1997 Page PART I. Financial Information Item 1. Condensed Consolidated Balance Sheets 3-4 Condensed Consolidated Statements of Income 5 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-13 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 Exhibit Index 16 PART I FINANCIAL INFORMATION ITEM 1. Financial Statements LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Sept 27, December 31, 1997 1996 (unaudited) CURRENT ASSETS Cash and cash equivalents $290,419 $6,716,183 Accounts receivable, less allowances of $1,496,951 and $1,507,302, respectively 46,450,450 20,705,000 Inventories (2) 42,074,727 31,549,091 Prepaid expenses 2,220,394 1,999,464 Deferred tax assets 1,219,600 2,016,600 ---------- ---------- Total current assets 92,255,590 62,986,338 PROPERTY AND EQUIPMENT, net of depreciation and amortization 13,137,916 12,629,634 INTANGIBLES (3) 15,384,017 15,388,011 OTHER ASSETS 1,438,928 1,282,036 ----------- ---------- Total assets $122,216,451 $92,286,019 =========== ========== The accompanying notes are an integral part of the financial statements. LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (cont'd) Sept 27, December 31, 1997 1996 (unaudited) CURRENT LIABILITIES Current maturities of long-term obligations $2,547,006 $1,850,666 Borrowings under credit agreement 28,650,000 0 Accounts payable 4,850,935 5,754,793 Accrued expenses 7,888,451 6,770,456 Dividends payable 0 733,439 Income taxes payable 555,473 1,066,352 ---------- ---------- Total current liabilities 44,491,865 16,175,706 ACCRUED POSTRETIREMENT BENEFIT COST 1,490,400 1,390,400 LONG-TERM OBLIGATIONS 13,479,888 16,002,200 DEFERRED COMPENSATION 1,425,723 1,589,162 ---------- ---------- Total liabilities 60,887,876 35,157,468 ---------- ---------- MINORITY INTEREST 1,374,971 1,193,304 ---------- ---------- COMMON SHAREHOLDERS' EQUITY Common stock, par value $.01 per share 67,176 67,176 Additional paid-in capital 27,579,147 27,579,128 Retained earnings 32,750,144 28,732,693 Treasury stock (442,863) (443,750) ---------- ---------- Total common shareholders' equity 59,953,604 55,935,247 ----------- ----------- Total liabilities and shareholders' equity $122,216,451 $92,286,019 =========== ========== The accompanying notes are an integral part of the financial statements LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended Nine Months Ended September 27, September 28, September 27, September 28, 1997 1996 1997 1996 Net sales (3) $41,884,450 $35,713,687 $103,003,126 $80,898,915 Cost of goods sold 29,462,251 25,398,449 74,643,212 58,669,554 ---------- ---------- ---------- ---------- Gross profit 12,422,199 10,315,238 28,359,914 22,229,361 ---------- ---------- ---------- ---------- Selling and administrative expenses 7,269,995 6,350,308 20,541,615 17,058,711 ---------- ---------- ---------- ---------- Operating income 5,152,204 3,964,930 7,818,299 5,170,650 Non-operating income (expense) Interest expense (597,206) (552,904) (1,369,241) (1,140,502) Miscellaneous 268,436 43,717 493,890 247,503 ---------- ---------- ---------- ---------- (328,770) (509,187) (875,351) (892,999) Income before income taxes 4,823,434 3,455,743 6,942,948 4,277,651 Provision for income taxes 1,886,457 1,361,564 2,717,310 1,683,537 ---------- ---------- ---------- ---------- Net income before minority interest $2,936,977 $2,094,179 $4,225,638 $2,594,114 ---------- ---------- ---------- ---------- Minority Interest in net income (loss) of subsidiary 3,493 (30,244) 208,188 (103,737) ---------- ---------- ---------- ---------- Net income $2,933,484 $2,124,423 $4,017,450 $2,697,851 ========== ========== ========== ========== Net income available to common shareholders $2,933,484 $2,124,423 $4,017,450 $2,658,837 Earnings per common and common equivalent share $0.44 $0.32 $0.60 $0.40 ====== ====== ====== ====== Weighted average number of common and common equivalent shares outstanding 6,729,727 6,677,277 6,712,736 6,672,843 ========== ========== ========== ========== Dividends declared per preferred share $0.00 $0.00 $0.00 $1.99 ===== ===== ===== =====
The accompanying notes are an integral part of the financial statement LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended September 27, September 28, 1997 1996 Net cash used in operating activities ($22,445,450) ($16,305,446) ----------- ----------- Cash flows from investing activities Purchase of property and equipment (2,397,358) (2,190,263) Purchase of intangibles 0 (1,630,314) Purchase of Rainfair, Inc., net of cash acquired 0 (10,846,861) Purchase of Pro-Trak Corporation, net of cash acquired (7,294,073) 0 Security deposit (450,000) 0 Other 16,624 0 ----------- ----------- Net cash used in investing activities (10,124,807) (14,667,438) Cash flows from financing activities Cash dividends paid (733,439) (668,462) Proceeds from long-term borrowing 0 12,497,849 Principal payments on long-term borrowings (1,746,453) (1,718,589) Proceeds from short-term borrowings 28,650,000 19,505,000 Purchase of redeemable preferred stock 0 (1,957,400) Contribution from minority interest 0 1,250,000 Other (25,615) 0 ---------- ---------- Net cash provided by financing activities 26,144,493 28,908,398 Decrease in cash and cash equivalents (6,425,764) (2,064,486) Cash and cash equivalents: Beginning 6,716,183 3,035,777 ---------- ---------- Ending $290,419 $971,291 ========== ========== Supplemental information--cash payments for: Interest $1,056,581 $887,009 ========== ========== Income taxes $1,781,290 $1,408,545 ========== ========== The accompanying notes are an integral part of the financial statements. LaCrosse Footwear, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements 1. INTERIM FINANCIAL REPORTING The Company reports its quarterly interim financial information based on 13 week periods. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows in accordance with generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and the applicable notes thereto that are included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 2. INVENTORIES Inventories are comprised of the following: September 27, 1997 December 31, 1996 Raw Materials $8,423,353 $7,727,042 Work-in Process 3,379,117 2,580,870 Finished Goods 34,080,386 24,974,308 LIFO Reserve (3,808,129) (3,733,129) ----------- ----------- Total $42,074,727 $31,549,091 =========== =========== 3. ACQUISTIONS RAINFAIR, INC. In May 1996, Craig Leipold, the former principal owner of Rainfair, Inc. and the Company established a new corporation and each purchased one-half of the new corporation's common stock, in each case for $1,250,000, and the Company also purchased all of the new corporation's outstanding preferred stock for $500,000. On May 31, 1996, this 50% owned subsidiary of the Company purchased substantially all of the assets of Rainfair, Inc. for approximately $10.8 million in cash and approximately $1.5 million in liabilities for an aggregate purchase price of approximately $12.3 million. The name of the subsidiary was changed to Rainfair, Inc. in June 1996 after completing the asset purchase. The Company loaned the 50% owned subsidiary approximately $8.0 million to fund the purchase price of the net assets of Rainfair, Inc. which was not funded by the initial capital contributions. The Company used long-term borrowings of approximately $9.5 million as the source of funds to make its initial capital contribution and the loan to the subsidiary. The acquisition was accounted for as a purchase. Accordingly, the purchase price was allocated to assets and liabilities based on their estimated fair values as of the date of acquisition. The approximately $.7 million of the purchase price in excess of the estimated fair value of the net assets is being amortized on a straight-line basis over a 15-year term. The Company's condensed consolidated statements of income for the three months and nine months ended September 27, 1997 include Rainfair's results of operations. The following unaudited pro forma summary represents the consolidated results of operations as if the acquisition of Rainfair, Inc. had occurred at the beginning of the periods presented and does not purport to be indicative of what would have occurred had the acquisition been made as of those dates or of results which may occur in the future:
Three Months Ended Nine Months Ended September 27, September 28, September 27, September 28, 1997 1996 1997 1996 Net Sales $41,884 $35,714 $103,003 $87,049 Net Income 2,933 2,124 4,017 2,777 Net Income Per Common Share $.44 $.32 $.60 $.41
RED BALL, INC. On May 20, 1996, the Company acquired trade accounts receivable, inventories, certain machinery and equipment and trademarks of Red Ball, Inc. for a cash purchase price of approximately $5.0 million which included $.3 million for equipment leased from a third party. The Company spent an additional $.5 million in relocating and staging the inventory and installing the equipment. The total purchase price was allocated to the accounts receivable, inventory, fixed assets and trademarks. The Company used short-term borrowings under its credit agreement to finance the acquisition, which borrowings were subsequently replaced in part by long-term debt. Shipments of RED BALL/R/ products commenced during the third quarter of 1996. In 1995, Red Ball had net sales of approximately $23.0 million which included $3 to $4 million of closeouts. In February 1996, Red Ball, Inc. filed for protection under Chapter 11 of the Bankruptcy Code. The assets were purchased from Red Ball with the approval of the Bankruptcy court. Financial statements were not available for Red Ball for 1995 because it was operated as a division of its parent until the middle of 1995. Management does not believe the historical statements of Red Ball, Inc. are relevant to the future performance of this brand. PRO-TRAK CORPORATION On July 2, 1997, the Company acquired all of the outstanding shares of capital stock of Pro-Trak Corporation, the company that owns and operates under the Lake of the Woods tradename. The purchase price, including the assumption of liabilities, was approximately $7.3 million. The total purchase price, including liabilities assumed, will be allocated to the cash, accounts receivable, inventory, prepaid expenses, fixed assets and goodwill. Pro-Trak Corporation is a Wisconsin corporation with its headquarters in Prentice, Wisconsin. Pro-Trak Corporation sources product from its 100% owned subsidiary in Virginia and several offshore sources. Pro-Trak Corporation reported sales volume of approximately $8.2 million in 1996. The Company anticipates consolidating Pro-Trak's sales, marketing and distribution functions over the next several months. Lake of the Woods is a designer, manufacturer and marketer of branded leather footwear for both the outdoor and occupational segments of the market. The LAKE OF THE WOODS/R/ product line includes a full range of sporting, hiking and work boots including the recently announced CYBER-SYSTEM/R/ (which is designed to provide maximum inner space comfort in the work boot line) and the CYBER-PAC/R/ high performance insulation package in sporting boots. The Company does not anticipate this acquisition will have a material impact on 1997 results. 4. EARNINGS PER SHARE The FASB has issued Statement No. 128, Earnings per Share, which supersedes APB Opinion No. 15. Statement No. 128 requires the presentation of earnings per share by all entities that have common stock or potential common stock outstanding, such as options and convertible securities, that trade in a public market. Those entities that have only common stock outstanding are required to present basic earnings per share amounts. All other entities are required to present basic and diluted per share amounts. Diluted per share amounts assume the conversion, exercise or issuance of all potential common stock instruments unless the effect is to reduce a loss or increase the income per common share from continuing operations. All entities required to present per share amounts must initially apply Statement No. 128 for annual and interim periods ending after December 15, 1997. Earlier application is not permitted. If the Company had applied Statement No. 128 in the accompanying condensed consolidated financial statements, both the basic earnings per share and the diluted earnings per share would have been the same as the earnings per common and common equivalent share which was reported. ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth, for the periods indicated, selected financial information derived from the Company's condensed consolidated financial statements, expressed as a percentage of net sales. The discussion that follows the table should be read in conjunction with the condensed consolidated financial statements.
Percentage of Net Sales Three Months Ended Nine Months Ended September 27, September 28, September 27, September 28, 1997 1996 1997 1996 Net Sales 100.0% 100.0% 100.0% 100.0% Cost of Goods Sold 70.3 71.1 72.5 72.5 ---- ---- ---- ---- Gross Profit 29.7 28.9 27.5 27.5 Selling and Administrative Expenses 17.4 17.8 19.9 21.1 ---- ---- ---- ---- Operating Income 12.3 11.1 7.6 6.4
The Company's business is seasonal with lower revenues historically being generated during the first six months of the year. As a result, revenue for the nine-month period ending September 27, 1997 should not be considered to be indicative of results to be reported for the balance of the fiscal year. Three Months Ended September 27, 1997 Compared to Three Months Ended September 28, 1996 Net Sales Net sales for the three months ended September 27, 1997 increased $6,170,763, or 17%, to $41,884,450 from $35,713,687 for the three months ended September 28, 1996. The growth in net sales was primarily due to the contribution of $2.8 million in net sales by the LAKE OF THE WOODS/R/ brand which was acquired in July 1997 and an increase in net sales of the RED BALL/R/ brand of $2.1 million over last year. DANNER/R/ sales increased approximately $.9 million over last year. The increase in LACROSSE/R/ product sales of approximately 2% during the quarter was largely offset by reduced sales in the rainwear market due to generally mild weather conditions across most of the country. Gross Profit Gross profit for the three months ended September 27, 1997 increased 20% to $12,422,199, or 29.7% of net sales, from $10,315,238 or 28.9% of net sales in the third quarter of 1996. More favorable pricing on key raw materials and higher production levels at the Company's La Crosse, Wisconsin plant were the primary contributions to the improved margin percentage. Selling and Administrative Expenses Selling and administrative expenses in the third quarter of 1997 increased 14%, to $7,269,995, or 17.4% of net sales, from $6,350,308, or 17.8% of net sales in the third quarter of 1996. The increase in operating expenses was primarily a result of the additional expenses incurred to support the LAKE OF THE WOODS/R/ product line and the volume related variable expenses incurred as a result of increased sales. Operating expenses decreased as a percentage of net sales primarily due to the sales growth contributed by the RED BALL/R/ and LAKE OF THE WOODS/R/ products which resulted in leveraging fixed operating expenses. Interest Expense Interest expense for the three months ended September 27, 1997 increased 8% to $597,206 or 1.4% of net sales, from $552,904 or 1.5% of net sales for the three months ended September 28, 1996. Higher average borrowings, primarily as a result of the Pro-Trak acquisition on July 2, 1997, was the primary reason for the increase in interest expense. Income Tax Expense The Company's effective income tax rate was 39.1% in the third quarter of 1997 compared to 39.4% in the third quarter of 1996. Net Income Primarily as a result of the increased net sales, the net income for the third quarter of 1997 increased to $2,933,484 from $2,124,423 in the third quarter of 1996. Nine Months Ended September 27, 1997 Compared to Nine Months Ended September 28, 1996 Net Sales Net sales for the nine months ended September 27, 1997 increased $22,104,211, or 27%, to $103,003,126 from $80,898,915 for the first nine months of 1996. The inclusion of net sales of RAINFAIR/R/ and RED BALL/R/ products, both of which were acquired during the second quarter of 1996, accounted for $14.8 million of increased net sales. Rainfair's sales during the first nine-months of 1997 were impacted by $2.8 million of shipments on a spring order to a major national account. The net sales of the LAKE OF THE WOODS/R/ product line, which was acquired in July 1997, accounted for $2.8 million of the increase in net sales. The balance of the increase was due to increased shipments of LACROSSE/R/ and DANNER/R/ products during the second and third quarters, primarily as a result of the increase in advance orders. Gross Profit Gross profit for the nine months ended September 27, 1997 increased 28% to $28,359,914, or 27.5% of net sales, from $22,229,361 or 27.5% of net sales in the first nine months of 1996. The increase in gross profit was primarily due to the increase in net sales. Selling and Administrative Expenses Selling and administrative expenses in the first nine months of 1997 increased 20%, to $20,541,615, or 19.9% of net sales, from $17,058,711, or 21.1% of net sales in the first nine months of 1996. The increase in operating expenses was primarily the result of including the Rainfair business for all of 1997 versus five months during the first nine months of 1996 and the volume related variable expenses associated with the increased net sales. Operating expenses decreased as a percentage of net sales primarily as the result of the Company's ability to leverage the LaCrosse operating expenses with the additional LACROSSE/R/ product net sales and the volume contributed by the RED BALL/R/ and LAKE OF THE WOODS/R/ product sales. Interest Expense Interest expense for the first nine months of 1997 increased 20% to $1,369,241 or 1.3% of net sales, from $1,140,502 or 1.4% of net sales for the first nine months of 1996. An increase in debt to finance the Rainfair and Pro-Trak acquisitions and the acquisition of certain assets of Red Ball, Inc. was the primary reason for the increase in interest expense during the first nine months of 1997. Income Tax Expense The Company's effective income tax rate was 39.1% in the first nine months of 1997 compared to 39.3% in the first nine months of 1996. Net Income As a result of the increased net sales and lower operating expenses as a percent of net sales, net income for the first nine months of 1997 increased to $4,017,450 from $2,697,851 in the first nine months of 1996. Liquidity and Capital Resources The Company has historically financed its operations with cash generated from operations, long-term lending arrangements and short-term borrowings under an unsecured revolving credit agreement. The Company requires working capital primarily to support fluctuating accounts receivable and inventory levels caused by the Company's seasonal business cycle. The Company invests excess cash balances in short-term investment grade securities or money market investments. Net cash used in operating activities was $22.7 million in the first nine months of 1997 compared to $16.3 million in the first nine months of 1996. Higher receivable and inventory levels to support the increase in sales was the primary reason for the increase in cash used in operating activities. Net cash used in investing activities was $9.8 million in the first nine months of 1997, down approximately $4.9 million from the $14.7 million used in investing activities the first nine months of 1997. The 1996 investing activities included $12.5 million related to the Rainfair, Inc. and Red Ball, Inc. acquisitions while 1997 included $7.3 million related to the Pro-Trak acquisition. Net cash provided by financing activities was $26.1 million during the first nine months of 1997, down $2.8 million from the $28.9 million provided by financing activities the nine months of 1996. In the first nine months of 1997, the Company invested approximately $7.0 million in acquisitions, which was approximately $5.0 million less than the amount invested in the first nine months of 1996. This reduction in acquisitions resulted in reduced bank borrowings which was the primary reason for the decrease in cash provided by financing activities. The Company and Craig Leipold each own 50% of the common shares of Rainfair, Inc., a Company subsidiary. The Company and Leipold recently reached an agreement wherein the Company will purchase all of Leipold's shares in December 1997 for approximately $2.4 million. The Company intends to utilize short-term borrowings under the revolving credit agreement to finance this transaction. PART II Other Information ITEM 6 Exhibits and Reports on Form 8-K (a) Exhibit Number Description (10.1) Amendment Agreement, dated as of August 23, 1997, by and between LaCrosse Footwear, Inc., Rainfair, Inc., and Craig Leipold (27) Financial Data Schedule (EDGAR version only) (b) Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended September 27, 1997 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. LACROSSE FOOTWEAR, INC. (Registrant) Date: November 10, 1997 By: /s/ Patrick K. Gantert Patrick K. Gantert President and Chief Executive Officer Date: November 10, 1997 By: /s/ Robert J. Sullivan Robert J. Sullivan Vice President-Finance and Administration And Chief Financial Officer (Principal Financial Officer) LACROSSE FOOTWEAR, INC. EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q For the Quarterly Period ended September 27, 1997 Exhibit (10.1) Amendment Agreement, dated as of August 23, 1997, by and between LaCrosse Footwear, Inc., Rainfair, Inc. and Craig Leipold. (27) Financial Data Schedule (EDGAR) version only) EX-10.1 2 AMENDMENT AGREEMENT THIS AMENDMENT AGREEMENT, dated as of August 23, 1997, by and between LaCrosse Footwear, Inc., a Wisconsin corporation ("LaCrosse"), Rainfair, Inc., a Wisconsin corporation formerly known as Rainco, Inc. ("Company"), and Craig L. Leipold, an individual resident of Wisconsin ("Leipold"). W I T N E S S E T H: WHEREAS, Leipold currently owns 1,250 shares of the Company's Class B Common Stock; WHEREAS, LaCrosse, the Company and Leipold are parties to that certain Shareholders' Agreement, dated as of May 31, 1996 ("Shareholders' Agreement"); WHEREAS, the Company and Leipold Holding Company are parties to that certain Sublease, dated as of May 31, 1996, as amended ("Sublease"). WHEREAS, LaCrosse, the Company and Leipold are parties to that certain Employment Agreement, dated as of May 31, 1996 ("Employment Agreement"); WHEREAS, pursuant to such Employment Agreement, the Company has granted stock options to Leipold pursuant to separate Stock Option Agreements, dated as of May 31, 1996, and May 31, 1997, respectively (individually a "Stock Option Agreement" and collectively the "Stock Option Agreements"); WHEREAS, the Shareholders' Agreement, the Employment Agreement, the Sublease and the Stock Option Agreements are individually referred to herein as a "Prior Agreement" and collectively as the "Prior Agreements"; and WHEREAS, any capitalized term used in this Amendment Agreement without definition shall have the meaning given it in the Shareholders' Agreement or such other Prior Agreement. NOW, THEREFORE, in consideration of the mutual promises set forth herein, the parties, intending to be legally bound, hereby agree as follows: 1. Exercise of Option; Shareholders' Agreement. The parties agree that LaCrosse is entitled to exercise immediately and does hereby exercise the Option to purchase the 1,250 shares ("Shares") of Class B Common Stock held by Leipold for an aggregate cash purchase price of Two Million Three Hundred Sixty-Four Thousand Five Hundred Sixty-Seven Dollars ($2,364,567) ("Purchase Price"). The Closing for the sale and purchase of the Shares pursuant to the exercise of the Option shall take place on December 1, 1997 ("Closing Date"), in accordance with the procedures outlined in Section 5(f) of the Shareholders' Agreement except that the Purchase Price shall be paid by wire transfer to an account designated by Leipold in writing. At the time of the Closing, the Shareholders' Agreement shall terminate and no longer be effective for any purpose. 2. Resignations of Directors. Concurrently with the Closing, Leipold and Christian Steinmetz shall resign as directors of the Company. 3. Prior Agreements Continue in Full Force and Effect. Except as expressly provided herein, all of the Prior Agreements (other than the Shareholders' Agreement which is dealt with as provided in Paragraph 1 above) shall continue in full force and effect. Without limiting the generality of the foregoing, the Employment Agreement, the Sublease and the Stock Option Agreements shall continue in full force and effect. 4. Release. Each of the parties hereto, on his/its behalf and on behalf of his/its respective heirs, successors, assigns, personal representatives and agents (individually a "Releasing Party" and collectively "Releasing Parties"), does hereby: a. Absolutely and unconditionally release, remise and forever discharge the other parties hereto, each of its subsidiaries, and each of their respective heirs, personal representatives, shareholders, directors, officers, agents, representatives, successors and assigns (individually a "Released Party" and collectively the "Released Parties"), from and against any and all claims, demands, rights and liabilities of any nature and kind whatsoever which any Releasing Party may have as of the date hereof against any Released Party related to the performance, non- performance or termination of the Shareholders' Agreement. All claims, demands, rights and liabilities which a Releasing Party has against any Released Party, whether known or unknown, foreseen or unforeseen, absolute or contingent, are hereby extinguished. b. Covenant and agree not to sue, institute any action or proceeding whatsoever (legal, equitable or otherwise) against, or threaten to sue or to institute any action or proceeding against, any Released Party with respect to any claim, demand, right or liability released in Paragraph 4(a) above. 5. Indemnification. Each of Leipold, on the one hand, and each of LaCrosse and the Company, on the other hand, covenants and agrees to hold the other and each Released Party harmless from and against any loss, cost, damage or expense (including, without limitation, reasonable attorneys' fees) in connection with any breach of this Amendment Agreement. 6. Miscellaneous. Except for the Prior Agreements, this instrument embodies the entire agreement between the parties hereto with respect to the subject matter of this Amendment Agreement, and there have been and are no agreements, representations or warranties between the parties hereto other than those set forth or provided for herein. This Amendment Agreement may not be amended, modified or supplemented other than in a writing signed by all parties hereto. This Amendment Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument. The headings in the Amendment Agreement are inserted for convenience only and shall not constitute a part of this Amendment Agreement. The parties agree that if any provision of this Amendment Agreement shall under any circumstances be deemed invalid or inoperative, this Amendment Agreement shall be construed with the invalid or inoperative provision deleted, and the rights and obligations of the parties shall be construed and enforced accordingly. This Amendment Agreement shall be governed by and construed in accordance with the internal law of the State of Wisconsin. IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be duly executed as of the day and year first above written. /s/ Craig L. Leipold (SEAL) Craig L. Leipold LaCROSSE FOOTWEAR, INC. ("LaCrosse") By: /s/ Patrick K. Gantert Patrick K. Gantert, President RAINFAIR, INC. (the "Company") By: /s/ Craig L. Leipold Craig L. Leipold, President EX-27 3
5 1 9-MOS DEC-31-1997 JAN-01-1997 SEP-27-1997 290,419 0 47,947,401 671,568 42,074,727 92,255,590 32,581,135 19,443,219 122,216,451 44,491,865 13,479,888 0 0 67,176 59,886,428 122,216,451 103,003,126 103,003,126 74,643,212 20,343,175 0 198,440 1,369,241 6,942,948 2,717,310 4,017,450 0 0 0 4,017,450 .60 .60
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