| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended June 26, 2004 |
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 incorporation or organization) | (I.R.S. Employer Identification No.) | |
18550 NE Riverside Parkway Portland, Oregon 97230 |
||
| (Address of principal executive offices) (Zip Code) | ||
(503) 766-1010 |
|---|
| (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 by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes No X
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 July 30, 2004: 5,890,724 shares
LaCrosse Footwear, Inc.
Form 10-Q Index
For the Quarter Ended June 26, 2004
| Page | ||||
|---|---|---|---|---|
| PART I | Financial Information | |||
Item 1. |
Condensed Consolidated Balance Sheets | 3 | ||
Condensed Consolidated Statements of Operations |
4 | |||
Condensed Consolidated Statements of Cash Flows |
5 | |||
Notes to Condensed Consolidated Financial Statements |
6 | |||
Item 2. |
Management's Discussion and Analysis of Financial Condition | |||
| and Results of Operations | 11 | |||
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 18 | ||
Item 4. |
Controls and Procedures | 18 | ||
PART II |
Other Information | |||
Item 1. |
Legal Proceedings | 19 | ||
Item 4. |
Submission of Matters to a Vote of Security Holders | 19 | ||
Item 6. |
Exhibits and Reports on Form 8-K | 20 | ||
Signatures |
21 | |||
Exhibit Index |
22 | |||
2
LACROSSE FOOTWEAR, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED
BALANCE SHEETS
(In thousands, except share and per share data)
| June 26, 2004 |
December 31, 2003 |
|||||||
|---|---|---|---|---|---|---|---|---|
| Assets | (Unaudited) | |||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | -- | $ | -- | ||||
| Trade accounts receivable, net | 12,358 | 13,412 | ||||||
| Inventories (2) | 21,629 | 24,042 | ||||||
| Prepaid expenses, deferred tax assets and other | 1,616 | 1,415 | ||||||
| Total current assets | 35,603 | 38,869 | ||||||
Property and equipment, net | 4,350 | 4,644 | ||||||
| Goodwill | 10,753 | 10,753 | ||||||
| Other assets | 1,040 | 975 | ||||||
| Total assets | $ | 51,746 | $ | 55,241 | ||||
Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Current maturities of long-term obligations | $ | -- | $ | 2,219 | ||||
| Notes payable, bank (7) | 3,423 | 5,319 | ||||||
| Accounts payable | 2,795 | 2,727 | ||||||
| Accrued expenses (1) (5) | 2,416 | 2,851 | ||||||
| Total current liabilities | 8,634 | 13,116 | ||||||
Compensation and benefits (6) | 3,459 | 3,501 | ||||||
| Deferred tax liability | 865 | 748 | ||||||
| Total liabilities | 12,958 | 17,365 | ||||||
Shareholders' Equity: | ||||||||
| Common stock, par value $.01 per share, authorized | ||||||||
| 50,000,000 shares; issued 6,717,627 shares | 67 | 67 | ||||||
| Additional paid-in capital | 26,346 | 26,430 | ||||||
| Accumulated other comprehensive loss | (1,215 | ) | (1,215 | ) | ||||
| Retained earnings | 18,259 | 17,401 | ||||||
| Less cost of 826,923 and 842,454 shares of treasury stock | (4,669 | ) | (4,807 | ) | ||||
| Total shareholders' equity | 38,788 | 37,876 | ||||||
| Total liabilities and shareholders' equity | $ | 51,746 | $ | 55,241 | ||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
3
LACROSSE FOOTWEAR, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(Unaudited)
| Quarter Ended |
First Half Ended |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 26, 2004 |
June 28, 2003 |
June 26, 2004 |
June 28, 2003 |
|||||||||||
Net sales |
$ | 18,600 | $ | 18,588 | $ | 42,326 | $ | 38,462 | ||||||
| Cost of goods sold | 12,630 | 12,981 | 29,123 | 26,869 | ||||||||||
| Gross profit | 5,970 | 5,607 | 13,203 | 11,593 | ||||||||||
Selling and administrative expenses | 6,057 | 5,410 | 12,054 | 11,739 | ||||||||||
| Operating income (loss) | (87 | ) | 197 | 1,149 | (146 | ) | ||||||||
Non-operating income (expense): | ||||||||||||||
| Interest expense | (125 | ) | (229 | ) | (289 | ) | (520 | ) | ||||||
| Miscellaneous | (25 | ) | 36 | (2 | ) | 21 | ||||||||
| (150 | ) | (193 | ) | (291 | ) | (499 | ) | |||||||
| Income (loss) before income taxes | (237 | ) | 4 | 858 | (645 | ) | ||||||||
Provision for income taxes (3) | -- | -- | -- | -- | ||||||||||
| Net income (loss) | $ | (237 | ) | $ | 4 | $ | 858 | $ | (645 | ) | ||||
Net income (loss) per common share: | ||||||||||||||
| Basic | $ | (0.04 | ) | $ | -- | $ | 0.15 | $ | (0.11 | ) | ||||
| Diluted | $ | (0.04 | ) | $ | -- | $ | 0.14 | $ | (0.11 | ) | ||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 5,886 | 5,874 | 5,882 | 5,874 | ||||||||||
| Diluted | 5,886 | 5,892 | 6,065 | 5,874 | ||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
4
LACROSSE FOOTWEAR, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| First Half Ended |
||||||||
|---|---|---|---|---|---|---|---|---|
| June 26, 2004 |
June 28, 2003 |
|||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | 858 | $ | (645 | ) | |||
| Adjustments to reconcile net income (loss) to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depreciation and amortization | 791 | 855 | ||||||
| Other | 87 | 117 | ||||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts receivable | 1,054 | 2,839 | ||||||
| Inventories | 2,413 | (1,573 | ) | |||||
| Refundable income taxes | -- | 2,888 | ||||||
| Accounts payable | 68 | (1,410 | ) | |||||
| Accrued expenses and other | (558 | ) | (1,033 | ) | ||||
| Net cash provided by operating activities | 4,713 | 2,038 | ||||||
Cash flows from investing activities | ||||||||
| Capital expenditures | (519 | ) | (589 | ) | ||||
| Proceeds from sale of property and equipment | 75 | 23 | ||||||
| Other | -- | 1 | ||||||
| Net cash used in investing activities | (444 | ) | (565 | ) | ||||
Cash flows from financing activities | ||||||||
| Net payments on short-term borrowings | (1,896 | ) | (67 | ) | ||||
| Principal payments on long-term obligations | (2,219 | ) | (1,406 | ) | ||||
| Payment of deferred financing costs | (208 | ) | -- | |||||
| Proceeds from exercise of stock options | 54 | -- | ||||||
| Net cash used in financing activities | (4,269 | ) | (1,473 | ) | ||||
Net increase (decrease) in cash and cash equivalents | -- | -- | ||||||
Cash and cash equivalents: | ||||||||
| Beginning | -- | -- | ||||||
| Ending | $ | -- | $ | -- | ||||
Supplemental information | ||||||||
| Cash payments (refunds) of: | ||||||||
| Interest | $ | 341 | $ | 726 | ||||
| Income taxes | $ | -- | $ | (2,888 | ) | |||
The accompanying notes are an integral part of the condensed consolidated financial statements.
5
| 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| a. | Basis of Presentation and Use of Estimates |
| LaCrosse Footwear, Inc. is referred to as “we”, “us”, “our” or “Company” in this report. We have prepared these unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we have condensed or omitted certain information and footnote disclosures. In our opinion, these financial statements include all normal recurring adjustments necessary to present fairly the results for the interim periods shown. |
| Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions which affect the amounts of assets, liabilities, revenue and expenses we have reported and our disclosure of contingent assets and liabilities at the date of the financial statements. The results of the interim periods are not necessarily indicative of the results for the full year. You should read these condensed consolidated financial statements in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2003. |
| We report our quarterly interim financial information based on 13-week periods. |
| b. | Principles of Consolidation |
| The consolidated financial statements include the accounts of LaCrosse Footwear, Inc. and our wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. |
| c. | Revenue Recognition |
| Revenue is recognized at the time products are shipped to customers. Revenue is recorded net of estimated discounts and returns. Amounts billed to customers relating to shipping and handling are classified as revenue. Costs incurred for shipping and handling are classified as cost of goods sold. |
| d. | Product Warranties |
| Our standard warranties require us to repair or replace defective products at no cost to the consumer. We estimate the costs that may be incurred under our basic limited warranty and record a liability in the amount of such costs at the time product revenue is recognized. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of the recorded warranty liabilities and adjust the amounts as necessary. We utilize historical trends and information received from customers to assist in determining the appropriate loss reserve levels. |
6
| Changes in our warranty liability during the quarters and first half ended June 26, 2004 and June 28, 2003 are as follows: |
| (In thousands) |
| For the Quarter Ended |
For the First Half Ended |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 26, 2004 |
June 28, 2003 |
June 26, 2004 |
June 28, 2003 |
|||||||||||
| Balance, beginning | $ | 802 | $ | 996 | $ | 852 | $ | 999 | ||||||
| Accruals for products sold | 328 | 464 | 915 | 1,124 | ||||||||||
| Costs incurred | (330 | ) | (464 | ) | (967 | ) | (1,127 | ) | ||||||
| Balance, ending | $ | 800 | $ | 996 | $ | 800 | $ | 996 | ||||||
| e. | Net Income (Loss) Per Common Share |
| Basic earnings per common share excludes all dilution and is computed using the weighted average number of common shares outstanding during the period. The diluted earnings per common share calculation assumes that all stock options or other arrangements to issue common stock (common stock equivalents) were exercised or converted into common stock at the beginning of the period, unless their effect would be anti-dilutive. |
| f. | Employee Stock-Based Compensation |
| At June 26, 2004, we had stock-based employee compensation plans, which are described in more detail in Note 4 to these condensed consolidated financial statements. We account for those plans under the recognition and measurement principles of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and have adopted the disclosure-only provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” and SFAS No. 148, ” Accounting for Stock-Based Compensation – Transition and Disclosure.” No stock-based employee compensation cost is reflected in the condensed consolidated statements of operations, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the grant date. The following table illustrates the effect on net income (loss) and net income (loss) per common share if we had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation. |
| (In Thousands, except for per share data) |
| For the Quarter Ended |
For the First Half Ended |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 26, 2004 |
June 28, 2003 |
June 26, 2004 |
June 28, 2003 |
|||||||||||
| Net income (loss) - as reported | $ | (237 | ) | $ | 4 | $ | 858 | $ | (645 | ) | ||||
| Deduct: Total stock-based employee | ||||||||||||||
| compensation expense determined under | ||||||||||||||
| the fair value based method for all awards | (111 | ) | (43 | ) | (216 | ) | (84 | ) | ||||||
| Pro forma net income (loss) | $ | (348 | ) | $ | (39 | ) | $ | 642 | $ | (729 | ) | |||
| Income (loss) per common share: | ||||||||||||||
| Basic – as reported | $ | (0.04 | ) | $ | -- | $ | 0.15 | $ | (0.11 | ) | ||||
| Diluted – as reported | $ | (0.04 | ) | $ | -- | $ | 0.14 | $ | (0.11 | ) | ||||
| Basic – pro forma | $ | (0.06 | ) | $ | (0.01 | ) | $ | 0.11 | $ | (0.12 | ) | |||
| Diluted – pro forma | $ | (0.06 | ) | $ | (0.01 | ) | $ | 0.11 | $ | (0.12 | ) | |||
| The above pro forma effects on net income (loss) and net income (loss) per common share are not likely to be representative of the effects on reported net income (loss) for future years because options vest over several years and additional awards generally are made each year. |
| g. | Recently Issued Accounting Standards |
| In December 2003, the FASB revised SFAS No. 132, “Employers Disclosures about Pensions and Other Postretirement Benefits”. The revisions include requiring public companies to include additional disclosures regarding descriptions of the types of plan assets, investment strategies, measurement dates, plan obligations, cash flows, and components of net periodic benefit cost recognized in interim periods. The June 26, 2004 condensed consolidated financial statements and related notes include the enhanced interim disclosures (See Note 6). |
7
| 2. | INVENTORIES |
| Inventories are comprised of the following: |
| (In thousands) |
| June 26, 2004 |
December 31, 2003 |
|||||||
|---|---|---|---|---|---|---|---|---|
| Raw materials | $ | 1,898 | ||||||