-----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, RcoOZb3BIdT9l910FykETqBLtmNyrRof25VWFDdCTB7La942RDcrJEPT4crfWoiC MsZurbi+HZpgXaG5PvDBvw== 0000897069-97-000215.txt : 19970514 0000897069-97-000215.hdr.sgml : 19970514 ACCESSION NUMBER: 0000897069-97-000215 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970513 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: 1934 Act SEC FILE NUMBER: 000-23800 FILM NUMBER: 97602409 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 LACROSSE FOOTWEAR INC. FORM 10-Q 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 March 29, 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 April 15, 1997: 6,667,727 shares LaCrosse Footwear, Inc. Form 10-Q Index For Quarter Ended March 29, 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 10-12 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 Exhibit Index 15 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 29, December 31, 1997 1996 (unaudited) CURRENT ASSETS Cash and cash equivalents $2,172,798 $6,716,183 Accounts receivable, less allowances of $1,372,023 and $1,507,302 respectively 21,686,726 20,705,000 Inventories (2) 35,412,808 31,549,091 Prepaid expenses 2,015,219 1,999,464 Deferred tax assets 1,896,600 2,016,600 ---------- ---------- Total current assets 63,184,151 62,986,338 PROPERTY AND EQUIPMENT, net of depreciation and amortization 12,252,013 12,629,634 INTANGIBLES (4) 15,218,378 15,388,011 OTHER ASSETS 1,083,927 1,282,036 ---------- ---------- Total assets $91,738,469 $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) March 29, December 31, 1997 1996 (unaudited) CURRENT LIABILITIES Current maturities of long-term obligations $1,747,000 $1,850,666 Accounts payable 5,955,659 5,754,793 Accrued expenses 6,957,669 6,770,456 Dividends payable 0 733,439 Income taxes payable 310,609 1,066,352 ---------- ---------- Total current liabilities 14,970,937 16,175,706 ACCRUED POSTRETIREMENT BENEFIT COST 1,440,400 1,390,400 LONG-TERM OBLIGATIONS 15,999,525 16,002,200 DEFERRED COMPENSATION 1,433,901 1,589,162 ---------- ---------- Total liabilities 33,844,763 35,157,468 ---------- ---------- MINORITY INTEREST 1,413,381 1,193,304 ---------- ---------- COMMON SHAREHOLDERS' EQUITY Common stock, par value $.01 per share 67,176 67,176 Additional paid-in capital 27,579,128 27,579,128 Retained earnings 29,277,771 28,732,693 Treasury stock (443,750) (443,750) ---------- ---------- Total common shareholders' equity 56,480,325 55,935,247 ---------- ---------- Total liabilities and shareholders' equity $91,738,469 $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 March 29, March 30, 1997 1996 Net sales $32,698,478 $22,130,971 Cost of goods sold 24,412,018 16,323,933 ---------- ---------- Gross profit 8,286,460 5,807,038 Selling and administrative expenses 6,721,557 5,252,663 ---------- ---------- Operating income 1,564,903 554,375 Non-operating income (expense) Interest expense (393,941) (180,185) Miscellaneous 87,517 112,590 ---------- ---------- (306,424) (67,595) Income before income taxes 1,258,479 486,780 Provision for income taxes 493,324 189,847 ---------- ---------- Net income before minority interest 765,155 296,933 ---------- ---------- Minority interest in net income of subsidiary (220,077) 0 ---------- ---------- Net income $545,078 $296,933 ========== ========== Net income available to common shareholders $545,078 $267,572 ========== ========== Earnings per common and common equivalent share $0.08 $0.04 ========== ========== Weighted average number of common and common equivalent shares outstanding 6,691,895 6,676,543 ========== ========== Dividends declared per preferred share $0.00 $1.50 ========== ========== The accompanying notes are an integral part of the financial statements. LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended March 29, March 30, 1997 1996 Net cash used in operating activities $(3,329,337) ($1,473,664) ---------- ----------- Cash flows from investing activities Purchase of property and equipment (466,903) (705,552) Other 13,110 0 ---------- ----------- Net cash used in investing activities (453,793) (705,552) ---------- ----------- Cash flows from financing activities Cash dividends paid (733,439) (633,947) Proceeds from short-term borrowings 0 817,000 Principal payments on short-term borrowings 0 (817,000) Payments on long-term debt (26,816) 0 ---------- ----------- Net cash used in financing activities (760,255) (633,947) ---------- ----------- Decrease in cash and cash equivalents (4,543,385) (2,813,163) Cash and cash equivalents: Beginning 6,716,183 3,035,777 ---------- ----------- Ending $2,172,798 $222,614 ========== =========== Supplemental information---cash payments for: Interest $129,295 $9,343 ========== ========== Income taxes $890,117 $572,568 ========== ========== 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: March 29, 1997 December 31, 1996 Raw Materials $ 8,491,097 $ 7,727,042 Work-in Process 2,415,365 2,580,870 Finished Goods 28,129,475 24,974,308 LIFO Reserve (3,623,129) (3,733,129) ---------- ---------- Total $35,412,808 $31,549,091 ========== ========== 3. STOCK INCENTIVE PLANS In December 1993, the Board of Directors and shareholders adopted the LaCrosse Footwear, Inc. 1993 Employee Stock Incentive Plan (the "1993 Plan") pursuant to which options for up to 250,000 shares of common stock may be granted to officers and other key employees of the Company. In November 1996, the Board of Directors adopted the LaCrosse Footwear, Inc. 1997 Employee Stock Incentive Plan (the "1997 Plan"), subject to approval by the shareholders at the Company's 1997 annual meeting, pursuant to which options for up to 300,000 shares of common stock may be granted to officers and other key employees of the Company. Effective January 2, 1997 the Company's Board of Directors granted options to purchase 43,500 shares of common stock under the 1993 Plan and the 1997 Plan. The exercise price for these options is $10.875 per share, the mean between the highest and lowest reported selling prices of the common stock on The Nasdaq Stock Market on December 31, 1996. Because the options vest in equal increments over a five-year period, none of such options will be exercisable until January 1998. 4. ACQUISITIONS 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 has been accounted for as a purchase. Accordingly, the purchase price is being 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 ended March 29, 1997 includes 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 March March 29, March 30, 1997 1996 (in thousands, except per share amounts) Net Sales $32,698 $26,573 Net Income 545 313 Net Income Per Common Share $.08 $.04 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 has been 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 the first quarter of 1997, net sales of Red Ball products were approximately $2.0 million. 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. 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 March 29, March 30, 1997 1996 Net Sales 100.0% 100.0% Cost of Goods Sold 74.7 73.8 ----- ----- Gross Profit 25.3 26.2 Selling and Administrative Expenses 20.5 23.7 ----- ----- Operating Income 4.8% 2.5% 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 three-month period ending March 29, 1997 should not be considered to be indicative of results to be reported for the balance of the fiscal year. Three Months Ended March 29, 1997 Compared to Three Months Ended March 30, 1996 Net Sales Net sales for the three months ended March 29, 1997 increased $10,567,507, or 48%, to $32,698,478 from $22,130,971 for the first three months of 1996. The growth in net sales was primarily due to the contribution of the Rainfair, Inc. subsidiary and the RED BALL/R/ product line which contributed $7.9 million and $2.0 million, respectively, to net sales during the quarter. Rainfair's sales were impacted by $2.5 million of shipments on a spring order to a major national account. LACROSSE/R/ product net sales during the quarter were even with 1996, while DANNER/R/ product shipments increased 16%, the result of strong demand for DANNER/R/ hiking and work boots. Gross Profit Gross profit for the three months ended March 29, 1997 increased 43% to $8,286,460, or 25.3% of net sales, from $5,807,038 or 26.2% of net sales in the first quarter of 1996. Lower margins on the Rainfair business, impacted by lower margins on a $2.5 million national account shipment, were the primary reason for the decline. Selling and Administrative Expense Selling and administrative expenses in the first quarter of 1997 increased 28%, to $6,721,557, or 20.5% of net sales, from $5,252,663, or 23.7% of net sales in the first quarter of 1996. The increase in operating expenses was primarily a result of the additional expenses incurred to operate the Rainfair, Inc. subsidiary and the expenses associated with sales of the RED BALL/R/ product line. Operating expenses decreased as a percentage of net sales primarily as the result of a lower level of expenses associated with sales of the Rainfair subsidiary, partially as a result of the shipment of a $2.5 million order to a national account, and the ability to leverage the LaCrosse operating expenses with the additional volume contributed by Red Ball. Interest Expense Interest expense for the three months ended March 29, 1997 increased 119% to $393,941 or 1.2% of net sales, from $180,185 or .8% of net sales for the three months ended March 30, 1996. The increase in long-term obligations, primarily as a result of the $12.5 million borrowed to finance the investment in the Rainfair, Inc. subsidiary and the acquisition of certain assets of Red Ball, Inc., was the primary reason for the increase in interest expense. Income Tax Expense The Company's effective income tax rate was 39.2% in the first quarter of 1997 compared to 39.0% in the first quarter of 1996. Net Income As a result of the increased sales, the net income for the first quarter of 1997 increased to $545,078 from $296,933 in the first quarter 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 $3.3 million in the first quarter of 1997 compared to $1.5 million in the first quarter of 1996. A $3.9 million increase in inventories in the first quarter of 1997 compared to a $2.0 million increase in the first quarter of 1996 was the primary reason for the higher level of cash used in operating activities in the first quarter of 1997 compared to 1996. Higher production levels for LACROSSE/R/ inventories, mainly as a result of lower inventories at the beginning of 1997 compared to 1996, coupled with increases in inventories to support RED BALL/R/ product shipments, were the primary reasons for the increase in inventories. Net cash used in investing activities was $454,000 in the first quarter of 1997 compared to $706,000 in the first quarter of 1996. Reduced expenditures for property and equipment in the first quarter of 1997, primarily due to timing, was the reason for the reduction. Net cash used in financing activities increased to $760,000 in the first quarter of 1997 compared to $634,000 in the first quarter of 1996. An increase in the common stock dividend and a payment on a capitalized lease which was terminated during the quarter accounted for the increase. PART II - Other Information ITEM 6 Exhibits and Reports on Form 8-K (a) Exhibit Number Description (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 March 29, 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: May 12, 1997 By:/s/ Patrick K. Gantert Patrick K. Gantert President and Chief Executive Officer Date: May 12, 1997 By:/s/ Robert J. Sullivan Robert J. Sullivan Vice President-Finance and Administration (Principal Financial Officer) LACROSSE FOOTWEAR, INC. EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q for the Quarterly Period ended March 29, 1997 Exhibit (27) Financial Data Schedule (EDGAR version only) EX-27 2 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LACROSSE FOOTWEAR, INC. AS OF AND FOR THE THREE MONTHS ENDED MARCH 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS DEC-31-1997 JAN-01-1997 MAR-29-1997 2,172,798 0 23,058,749 644,281 35,412,808 63,184,151 30,143,662 17,891,649 91,738,469 14,970,937 15,999,525 0 0 67,176 56,413,149 91,738,469 32,698,478 32,698,478 24,412,018 6,647,652 0 73,905 393,941 1,258,479 493,324 545,078 0 0 0 545,078 .08 .08
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