-----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, Hg1L4m8nuj2OyoagDQ2TeEKPNIe6LPY96nYfvFoo9lhePBbwGojLwg97GA8fPoYX bSSVlMCRSNya5AvTag7Fgg== 0000927025-97-000002.txt : 19970110 0000927025-97-000002.hdr.sgml : 19970110 ACCESSION NUMBER: 0000927025-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970109 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAWLINGS SPORTING GOODS CO INC CENTRAL INDEX KEY: 0000921915 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 431674348 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24450 FILM NUMBER: 97503179 BUSINESS ADDRESS: STREET 1: 1859 INTERTECH DR CITY: FENTON STATE: MO ZIP: 63026 BUSINESS PHONE: 3143493500 MAIL ADDRESS: STREET 1: 1859 INTERTECH DR CITY: FENTON STATE: MO ZIP: 63026 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 November 30, 1996 Commission file number 0-24450 RAWLINGS SPORTING GOODS COMPANY, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 43-1674348 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 1859 Intertech Drive, Fenton, Missouri 63026 (Address of Principal Executive Offices) (Zip Code) (314) 349-3500 (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 Number of shares outstanding of the issuer's Common Stock, par value $0.01 per share, as of December 16, 1996: 7,705,721 shares. Part I. FINANCIAL INFORMATION Item 1. Financial Statements Rawlings Sporting Goods Company, Inc. and Subsidiaries Consolidated Statements of Income (Amounts in thousands, except per share data) (Unaudited) Three Months Ended November 30, 1996 1995 Net revenues.............................. $ 28,259 $ 35,451 Cost of goods sold........................ 19,441 24,528 Gross profit............................ 8,818 10,923 Selling, general and administrative expenses.................................. 8,142 8,456 Operating income........................ 676 2,467 Interest expense, net..................... 738 902 Other expense, net........................ 30 102 Income (loss) before income taxes....... (92) 1,463 Provision (benefit) for income taxes..................................... (34) 573 Net income (loss)....................... $ (58) $ 890 Average number of common shares outstanding............................... 7,701 7,664 Net income (loss) per common share........ $ (0.01) $ 0.12 The accompanying notes are an integral part of these consolidated statements. Rawlings Sporting Goods Company, Inc. and Subsidiaries Consolidated Balance Sheets (Amounts in thousands, except share data) (Unaudited) November 30, August 31, 1996 1996 Assets Current Assets: Cash and cash equivalents....... $ 926 $ 789 Accounts receivable, net of allowance of $1,484 and $1,498 respectively.................... 34,001 30,090 Inventories..................... 37,118 32,415 Prepaid expenses................ 798 1,472 Deferred income taxes........... 3,161 3,162 Total current assets.......... 76,004 67,928 Property, plant and equipment, net 7,747 7,860 Other assets...................... 661 698 Deferred income taxes............. 25,938 25,766 Total assets.................. $ 110,350 $ 102,252 Liabilities and Stockholders' Equity Current liabilities: Accounts payable................ $ 6,989 $ 9,119 Accrued liabilities............. 9,590 8,461 Total current liabilities..... 16,579 17,580 Long-term debt.................... 47,800 38,700 Other long-term liabilities....... 11,508 11,508 Total liabilities............. 75,887 67,788 Stockholders' equity: Preferred stock, none issued.... - - Common stock, 7,703,435 and 7,697,527 shares issued and outstanding, respectively.................. 77 77 Additional paid-in capital...... 25,877 25,820 Retained earnings............... 8,509 8,567 Stockholders' equity............ 34,463 34,464 Total liabilities and stockholders' equity........................ $ 110,350 $ 102,252 The accompanying notes are an integral part of these consolidated balance sheets. Rawlings Sporting Goods Company, Inc. and Subsidiaries Consolidated Statements of Cash Flow (Amounts in thousands) (Unaudited) Three Months Ended November 30, 1996 1995 Cash flows from operating activities: Net income (loss)........................ $ (58) $ 890 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization.......... 303 262 Deferred income taxes.................. (171) 569 Changes in operating assets and liabilities: Accounts receivable, net............... (3,911) (10,962) Inventories............................ (4,703) (1,953) Prepaid expenses....................... 674 416 Other assets........................... (9) (48) Accounts payable....................... (2,130) 1,178 Accrued liabilities and other.......... 1,129 340 Net cash used in operating activities...... (8,876) (9,308) Cash flows from investing activities: Capital expenditures..................... (144) (247) Cash flows from financing activities: Net borrowings of long-term debt......... 9,100 8,300 Payment from former parent related to purchase price settlement................ - 275 Issuance of common stock................. 57 141 Net cash provided by financing activities................................. 9,157 8,716 Net increase (decrease) in cash and cash equivalents................................ 137 (839) Cash and cash equivalents, beginning of period.............................. 789 1,337 Cash and cash equivalents, end of period..................................... $ 926 $ 498 The accompanying notes are an integral part of these consolidated statements. Rawlings Sporting Goods Company, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1: Summary of Significant Accounting Policies. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report for the year ended August 31, 1996. In the opinion of management, all adjustments consisting only of normal recurring adjustments considered necessary for a fair presentation of financial position and results of operations have been included therein. The results for the three months ended November 30, 1996 are not necessarily indicative of the results that may be expected for a full fiscal year. Note 2: Inventories Inventories consisted of the following (in thousands): November 30, August 31, 1996 1996 Raw materials $ 5,164 $ 5,624 Work in process 1,995 1,899 Finished goods 29,959 24,892 $37,118 $32,415 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition RESULTS OF OPERATIONS Quarter Ended November 30, 1996 Compared with Quarter Ended November 30, 1995 Net revenues in the quarter ended November 30, 1996 were $28,259,000 or 20.3 percent below the same quarter last year. Decreased net revenues of baseball-related products, primarily baseballs and baseball gloves, and basketballs were primarily responsible for the decrease. The decrease in net revenues from baseballs is primarily the result of the Cal Ripken, Jr. commemorative baseball contributing significantly to net revenues in the quarter ended November 30, 1995 with no comparable product in the quarter ended November 30, 1996. Lower net revenues of baseball gloves resulted from a continued trend toward later shipments to retailers and a major warehouse club exiting the baseball category. Net revenues from basketballs declined primarily as a result of overall weakness in the basketball category at retail. The settlement of the Major League Baseball labor situation and other factors have resulted in retailers being optimistic regarding the spring selling season for baseball-related products. The Company believes it is well positioned to take advantage of an improved spring selling season in baseball-related products. The Company's gross profit was $8,818,000, or 19.3 percent below gross profit of $10,923,000 in the comparable prior year period. The gross profit margin was 31.2 percent, 0.4 margin points higher than the comparable prior year period. Higher gross margins in apparel were primarily responsible for the increase. Selling, general and administrative (SG&A) expenses were $8,142,000 or 3.7 percent lower than SG&A expenses of $8,456,000 in the comparable prior year period. Lower royalties and commissions were primarily responsible for the decrease. SG&A expenses were 28.8 percent of net revenues, up 4.9 points from the comparable prior year quarter. The high level of fixed SG&A expenses combined with the lower net revenues were primarily responsible for the increase in SG&A expenses as a percent of net revenues. Interest expense for the quarter was $738,000, 18.2 percent lower than interest expense of $902,000 in the comparable quarter last year. Lower average borrowings and lower average interest rates were responsible for the decrease. SEASONALITY Net revenues of baseball equipment and related team uniforms are highly seasonal. Customers historically have placed orders with the Company for baseball-related products beginning in July for shipment beginning in October (pre-season orders). These pre-season orders from customers historically represented approximately 75 percent to 80 percent of the customers' anticipated needs for the entire baseball season. The amount of these pre-season orders historically determined the Company's net revenues and profitability between October 1 and March 31. The Company then receives additional orders (fill-in orders) which depend upon customers' actual sales of products during the baseball season (sell-through). Fill-in orders are typically received by the Company between February and May. These orders historically represented approximately 20 percent to 25 percent of the Company's sales of baseball-related products during a particular season. Pre-season orders for certain baseball-related products from certain customers are not required to be paid until early spring. These extended terms increase the risk of collectability related to accounts receivable. In fiscal 1996 and 1997, customers have begun placing their pre-season orders later and a larger percentage of orders are fill-in orders. In addition, with an increasing number of customers on automatic replenishment systems more and more orders are received on a ship-at-once basis. This change has resulted in shipments to the customer closer to the time the products are actually sold. This trend has and may continue to have the effect of shifting the seasonality and quarterly results of the Company with higher inventory and debt levels required to meet orders for immediate delivery. The sell-through of baseball-related products also affects the amount of inventory held by customers at the end of the season which is carried over by the customer for sale in the next baseball season. Customers typically adjust their pre-season orders for the next baseball season to account for the level of inventory carried over from the preceding baseball season. Football equipment and related team uniforms are both shipped by the Company and sold by retailers primarily in the period between March 1 and September 30. Basketballs and related team uniforms generally are shipped and sold throughout the year. Because the Company's sales of baseball-related products exceed those of its other products, Rawlings' business is seasonal, with its highest net revenues and profitability recognized between November 1 and April 30. Except for the historical information contained herein, the matters outlined in the management's discussion and analysis are forward looking statements that involve risks and uncertainties, including quarterly fluctuation in results, retail sell rates for the Company's products which may result in more or less orders than those anticipated and the impact of competitive products and pricing. In addition, other risks and uncertainties are detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended August 31, 1996. LIQUIDITY AND CAPITAL RESOURCES Working capital increased $9,077,000 for the three months ended November 30, 1996, primarily the result of the seasonal increase in accounts receivable and inventories. Cash flows used in operating activities for the quarter ended November 30, 1996 were $8,876,000, or 4.6 percent lower than the $9,308,000 used in the comparable prior year period. The decrease is primarily the result of a smaller build in accounts receivable partially offset by a larger build in inventories. Capital expenditures were $144,000 for the quarter ended November 30, 1996 compared to $247,000 in the comparable prior year period. With the planned expansion of the Costa Rica facility and other equipment purchases the Company expects capital expenditures of approximately $2,500,000 in fiscal 1997. The Company had net borrowings for seasonal working capital needs of $9,100,000 in the quarter ended November 30, 1996. This resulted in total debt at November 30, 1996 of $47,800,000, $4,400,000, or 8.4 percent, below total debt as of November 30, 1995 and $9,600,000, or 16.7 percent, below the total debt as of November 30, 1994. Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K None. 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. RAWLINGS SPORTING GOODS COMPANY, INC. Date: January 9, 1997 /s/ CARL J. SHIELDS Carl J. Shields Chairman, CEO and President Date: January 9, 1997 /s/ PAUL E. MARTIN Paul E. Martin Chief Financial Officer (Principal Accounting Officer) EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF RAWLINGS SPORTING GOODS COMPANY, INC. CONTAINED IN ITS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS AUG-31-1997 NOV-30-1996 926 0 35,485 1,484 37,118 76,004 20,571 12,824 110,350 16,579 59,308 0 0 77 34,386 110,350 28,259 28,259 19,441 19,441 8,142 0 738 (92) (34) (58) 0 0 0 (58) (.01) (.01)
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