-----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, WtNVZg32BVSHMIoRkRIsyl7EL+37Ah9LotXyS5VZy7BhOmUVgIXSGtAnC/dODgnq WkoFrMpQdLiJlBvB30QbPA== 0000897069-98-000282.txt : 19980512 0000897069-98-000282.hdr.sgml : 19980512 ACCESSION NUMBER: 0000897069-98-000282 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980328 FILED AS OF DATE: 19980511 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: 98615264 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 28, 1998 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, LaCrosse, 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, 1998: 6,669,427 shares LaCrosse Footwear, Inc. Form 10-Q Index For Quarter Ended March 28, 1998 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 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 Exhibit Index 14 PART I FINANCIAL INFORMATION ITEM 1. Financial Statements LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 28, 1998 December 31, (unaudited) 1997 CURRENT ASSETS Cash and cash equivalents $247,758 $426,165 Accounts receivable, less allowances of $1,510,467 and $1,677,116, respectively 24,957,216 27,390,134 Inventories (2) 46,253,034 39,073,368 Prepaid expenses 2,328,831 2,537,648 Deferred tax assets 2,283,500 2,131,500 ------------ ------------ Total current assets 76,070,339 71,558,815 PROPERTY AND EQUIPMENT, net of depreciation and amortization 13,386,924 13,275,445 INTANGIBLES (4) 16,089,235 15,430,341 OTHER ASSETS 1,530,920 1,654,919 ------------ ------------ Total assets $107,077,418 $101,919,520 ============ ============ The accompanying notes are an integral part of the financial statements. LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (cont'd) March 28, 1998 December 31, (unaudited) 1997 CURRENT LIABILITIES Current maturities of long-term obligations $2,549,000 $3,349,000 Borrowings under credit agreement 14,165,000 4,000,000 Accounts payable 5,834,603 6,384,876 Accrued expenses 6,831,113 7,031,115 Dividends payable 0 866,805 Income taxes payable 205,745 1,513,674 ------------ ------------ Total current liabilities 29,585,461 23,145,470 ACCRUED POSTRETIREMENT BENEFIT COST 1,414,451 1,364,401 LONG-TERM OBLIGATIONS 12,496,358 12,499,035 DEFERRED COMPENSATION 1,527,754 1,556,275 ------------ ------------ Total liabilities 45,024,024 38,565,181 ------------ ------------ MINORITY INTEREST 0 1,505,879 ------------ ------------ COMMON SHAREHOLDERS' EQUITY Common stock, par value $.01 per share 67,176 67,176 Additional paid-in capital 27,580,355 27,579,147 Retained earnings 34,833,638 34,645,000 Treasury stock (427,775) (442,863) ------------ ------------ Total common shareholders' equity 62,053,394 61,848,460 ------------ ------------ Total liabilities and shareholders' equity $107,077,418 $101,919,520 ============ ============ 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 28, March 29, 1998 1997 Net sales (4) $29,935,896 $32,698,478 Cost of goods sold 22,168,466 24,412,018 ----------- ----------- Gross profit 7,767,430 8,286,460 Selling and administrative expenses 7,134,172 6,721,557 ----------- ----------- Operating income 633,258 1,564,903 Non-operating income (expense) Interest expense (410,600) (393,941) Miscellaneous 87,601 87,517 ----------- ----------- (322,999) (306,424) ----------- ----------- Income before income taxes 310,259 1,258,479 Provision for income taxes 121,621 493,324 ----------- ----------- Net income before minority interest $188,638 $765,155 ----------- ----------- Minority interest in net income of subsidiary 0 (220,077) ----------- ----------- Net income $188,638 $545,078 =========== =========== Basic earnings per share $0.03 $0.08 =========== =========== Diluted earnings per share $0.03 $0.08 =========== =========== Weighted average shares outstanding: Basic earnings per share 6,668,684 6,667,627 Diluted earnings per share 6,705,751 6,691,895 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 28, March 29, 1998 1997 Net cash used in operating activities ($5,345,399) ($3,329,337) ----------- ----------- Cash flows from investing activities Purchase of property and equipment (980,257) (466,903) Purchase of minority interest-Rainfair, Inc. (2,364,567) 0 Other 0 13,110 ----------- ----------- Net cash used in investing activities (3,344,824) (453,793) Cash flows from financing activities Cash dividends paid (866,805) (733,439) Proceeds from short-term borrowings 10,165,000 0 Principal payments on long-term obligations (800,000) 0 Other 13,621 (26,816) ----------- ----------- Net cash provided by (used in) financing activities 8,511,816 (760,255) Decrease in cash and cash equivalents (178,407) (4,543,385) Cash and cash equivalents: Beginning 426,165 6,716,183 ----------- ----------- Ending $247,758 $2,172,798 =========== =========== Supplemental information--cash payments for: Interest $271,610 $129,295 =========== =========== Income taxes $1,438,637 $890,117 =========== =========== 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, 1997. 2. INVENTORIES Inventories are comprised of the following: March 28, 1998 December 31, 1997 Raw Materials $9,435,904 $8,217,160 Work-in Process 2,492,183 1,966,916 Finished Goods 37,522,888 32,007,233 LIFO Reserve (3,197,941) (3,117,941) ----------- ----------- Total $46,253,034 $39,073,368 =========== =========== The finished goods inventory values at December 31, 1997 and March 28, 1998 are net of reserves to cover losses incurred in the disposition of slow moving, markdown and obsolete inventory. During March 1998, the Company decided to rationalize the RED BALL/R/ and LAKE OF THE WOODS/R/ product lines, which will result in somewhat higher levels of markdown inventory in the second half of 1998. However, any additional markdown expense associated with the rationalization is not expected to be material at this time. 3. STOCK INCENTIVE PLANS In November 1996, the Board of Directors adopted, and in June 1997 the shareholders of the Company approved, the LaCrosse Footwear, Inc. 1997 Employee Stock Incentive Plan (the "1997 Plan"), 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. The Company also has in effect the LaCrosse Footwear, Inc. 1993 Employee Stock Incentive Plan, pursuant to which options for approximately 232,000 shares of common stock (out of a maximum of 250,000) have been granted to, or executed by, officers and other key employees of the Company. Effective January 2, 1998 the Company's Board of Directors granted options to purchase approximately 50,000 shares of common stock under the 1997 Plan. The exercise price for these options is $14.25 per share, the mean between the highest and lowest reported selling prices of the common stock on The Nasdaq Stock Market on December 31, 1997. Because the options vest in equal increments over a five-year period, none of such options will be exercisable until January 1999. 4. ACQUISITIONS In July 1997, the Company acquired all of the outstanding shares of capital stock of Pro-Trak Corporation, which operates under the Lake of the Woods tradename. The purchase price, including the assumption of liabilities, was approximately $7.3 million. The acquisition has been accounted for as a purchase. Accordingly, the purchase price has been allocated to assets and liabilities based on their estimated fair value as of the date of acquisition. The Company's condensed consolidated statement of income for the three months ended March 28, 1998 includes the sales of LAKE OF THE WOODS/R/ products. The following unaudited pro forma summary represents the consolidated results of operations as if the acquisition of Pro-Trak Corporation 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 28, March 29, 1998 1997 (in thousands, except per share amounts) Net Sales $29,936 $34,328 Net Income $189 $608 Basic Earnings Per Share $.03 $.09 Diluted Earnings Per Share $.03 $.09 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 28, March 29, 1998 1997 Net Sales 100.0% 100.0% Cost of Goods Sold 74.1 74.7 ------ ------ Gross Profit 25.9 25.3 Selling and Administrative Expenses 23.8 20.5 ------ ------ Operating Income 2.1% 4.8% 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 28, 1998 should not be considered to be indicative of results to be reported for the balance of the fiscal year. Three Months Ended March 28, 1998 Compared to Three Months Ended March 29, 1997 Net Sales Net sales for the three months ended March 28, 1998 decreased $2,762,582, or 8%, to $29,935,896 from $32,698,478 for the first three months of 1997. The reduction in net sales was largely the result of a $2.5 million rainwear shipment to a large national chain which occurred in the first quarter of 1997 but is not expected to occur until the second and third quarters of 1998. Otherwise, the continued growth in DANNER/R/ brand sales and the addition of $1.6 million of sales from the LAKE OF THE WOODS/R/ brand acquired in July 1997 were largely offset by a weather- related decline in "fill-in" order demand for LACROSSE/R/ and RED BALL/R/ cold weather products. Gross Profit Gross profit for the three months ended March 28, 1998 decreased 6% to $7,767,430, or 25.9% of net sales, from $8,286,460, or 25.3% of net sales, in the first quarter of 1997. While gross profit did decrease $519,000 during the quarter, primarily as a result of lower sales, gross profit as a percent of net sales increased from 25.3% to 25.9%. The increase in gross profit as a percent of net sales was primarily the result of changes in product mix (i) for sales through the Rainfair, Inc. subsidiary and (ii) of the DANNER/R/ brand sales. Selling and Administrative Expenses Selling and administrative expenses in the first quarter of 1998 increased 6%, to $7,134,172, or 23.8% of net sales, from $6,721,557, or 20.5% of net sales in the first quarter of 1997. The increase in operating expenses for the first quarter of 1998 compared to the first quarter of 1997 is mainly due to a planned increase in sales and marketing (advertising) expense in support of the growth of the DANNER/R/ brand and the continued development of the RED BALL/R/ brand. As a percent of net sales, the ratio for the first quarter of 1997 was favorably impacted by the $2.5 million rainwear shipment to a large national retail chain account which is not expected to occur until the second and third quarters of 1998. Interest Expense Interest expense for the three months ended March 28, 1998 increased 4% to $410,600 or 1.4% of net sales, from $393,941 or 1.2% of net sales for the three months ended March 29, 1997. The increase was the result of higher average borrowings to support increased working capital which was partially offset by lower effective interest rates. Income Tax Expense The Company's effective income tax rate was 39.2% in the first quarter of 1998, the same as the first quarter of 1997. Net Income As a result of the decreased sales and the higher operating expenses, net income for the first quarter of 1998 decreased to $188,638 from $545,078 in the first quarter of 1997. 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 $5.3 million in the first quarter of 1998 compared to $3.3 million in the first quarter of 1997. A $7.2 million increase in inventories in the first quarter of 1998 compared to a $3.9 million increase in inventories during the first quarter of 1997 was the primary reason for the higher level of cash used in operating activities in the first quarter of 1998 compared to 1997. Lower than planned sales in December 1997 and the first quarter of 1998 were the primary reason for the increase in inventories. Production levels and purchases have been reduced, which should result in inventory levels being close to last year's levels by the fourth quarter of 1998. Net cash used in investing activities was $3.3 million in the first quarter of 1998 compared to $.5 million in the first quarter of 1997. The primary reason for the increase in cash used in investing activities was the January 1998 purchase of all Rainfair, Inc. common stock held by the former principal owner for approximately $2.4 million, which made Rainfair, Inc. a 100% owned subsidiary of the Company. This purchase was financed with borrowings from the revolving line of credit. Net cash provided by financing activities was $8.5 million in the first quarter of 1998 compared to a usage of $.8 million in the first quarter of 1997. Borrowings of approximately $10.2 million under the revolving line of credit to finance increases in working capital and the Rainfair, Inc. common stock purchase were partially offset by a $.8 million payment of quarterly term loan payments due in March 1998 and June 1998. 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 during the quarter ended March 28, 1998 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 8, 1998 By: /s/ Patrick K. Gantert Patrick K. Gantert President and Chief Executive Officer Date: May 8, 1998 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 March 28, 1998 Exhibit (27) Financial Data Schedule (EDGAR version only) EX-27 2 LACROSSE FOOTWEAR, INC. FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LACROSSE FOOTWEAR, INC. AS OF AND FOR THE PERIOD ENDED MARCH 28, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS DEC-31-1998 JAN-01-1998 MAR-28-1998 247,758 0 26,221,683 740,354 46,253,034 76,070,339 34,554,629 21,167,705 107,077,418 29,585,461 12,496,358 0 0 67,176 62,413,993 107,077,418 29,935,896 29,935,896 22,168,466 7,055,678 0 78,494 410,600 310,259 121,621 188,638 0 0 0 188,638 .03 .03
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