<PAGE>
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 0-22359
TRACK 'N TRAIL
(Exact name of registrant as specified in its charter)
DELAWARE 91-1778085
(State or other jurisdiction of I.R.S. Employer Identification Number
incorporation or organization)
4961-A WINDPLAY DRIVE, EL DORADO HILLS, CALIFORNIA 95762
(Address of principal executive offices) (zip code)
(916) 933-4525
(Registrant's telephone number, including area code)
Indicate by a 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
--- ---
The number of shares of the Registrant's Common Stock, $0.01 par value,
outstanding as of May 1, 1998 was 6,842,644.
<PAGE>
TRACK 'N TRAIL
FORM 10-Q
QUARTER ENDED MARCH 28, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 28, 1998
and December 27, 1997 . . . . . . . . . . . . . . . . . . . .1
Consolidated Statements of Operations for the 13-Weeks
ended March 28, 1998 and March 29, 1997. . . . . . . . . . .2
Consolidated Statements of Cash Flows for the 13-Weeks
ended March 28, 1998 and March 29, 1997 . . . . . . . . . . .3
Notes to Consolidated Financial Statements. . . . . . . . .4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . .6-8
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . .9
SIGNATURES. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRACK 'N TRAIL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
---------
<TABLE>
<CAPTION>
MARCH 28, DECEMBER 27,
1998 1997
ASSETS ------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 709 $ 2,383
Accounts receivable 676 1,540
Inventories 27,803 27,852
Prepaid expenses 282 311
Prepaid income taxes 674 --
Deferred income taxes 317 317
------------ ------------
Total current assets 30,461 32,403
Fixed assets, net 7,603 7,284
Goodwill, net 3,043 3,084
Deferred income taxes 1,362 1,362
------------ ------------
Total Assets $ 42,469 $ 44,133
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit $ 1,129 $ --
Current maturities of long-term debt 64 116
Accounts payable 6,547 6,958
Accrued payroll and bonuses 591 668
Sales tax payable 430 874
Income taxes payable -- 1,089
Accrued expenses and other liabilities 933 802
------------ ------------
Total current liabilities 9,694 10,507
Deferred rent 1,431 1,424
Long-term debt, net of current maturities 88 120
------------ ------------
Total liabilities 11,213 12,051
------------ ------------
Stockholders' equity:
Preferred stock, $0.01 par value; 2,000,000 shares
authorized; no shares issued or outstanding -- --
Common stock, $0.01 par value; 20,000,000 shares
authorized; 6,842,644 and 6,839,811 shares issued and
outstanding at March 28, 1998 and December 27, 1997 68 68
Additional paid-in capital 25,793 25,772
Retained earnings 5,395 6,242
------------ ------------
Total stockholders' equity 31,256 32,082
------------ ------------
Total liabilities and stockholders' equity $ 42,469 $ 44,133
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
---------
<TABLE>
<CAPTION>
PERIOD ENDED
---------------------------
MARCH 28, MARCH 29,
1998 1997
(13 WEEKS) (13 WEEKS)
------------ ------------
<S> <C> <C>
Net sales $ 18,908 $ 16,867
Cost of sales 10,065 8,857
------------ ------------
Gross profit 8,843 8,010
------------ ------------
Operating expenses:
Selling and marketing 8,239 7,194
Administrative and distribution 2,007 1,780
------------ ------------
Total operating expenses 10,246 8,974
------------ ------------
Operating loss (1,403) (964)
Other (income) expense:
Interest 5 289
Other, net 5 (10)
------------ ------------
Loss before income taxes (1,413) (1,243)
Income tax benefit 565 416
------------ ------------
Net loss $ (848) $ (827)
------------ ------------
------------ ------------
Historical earnings (loss) per share:
Basic $ (0.12) $ (0.20)
------------ ------------
------------ ------------
Diluted $ (0.12) $ (0.20)
------------ ------------
------------ ------------
Pro forma income data (unaudited):
Historical loss before income taxes $ (1,243)
Pro forma income tax benefit(Note 1) 497
------------
Pro forma net loss $ (746)
------------
------------
Pro forma earnings (loss) per share:
Basic $ (0.18)
------------
------------
Diluted $ (0.16)
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
---------
<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1998 1997
(13 WEEKS) (13 WEEKS)
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (848) $ (827)
Adjustments to reconcile to cash used for operating activities:
Depreciation and amortization 479 411
Loss (gain) on disposal of fixed assets 3 (10)
Compensation recorded in connection
with stock option plans -- 4
Deferred income taxes -- (114)
Cash provided by (used for) changes in operating assets
and liabilities:
Accounts receivable 863 327
Inventories 49 (4,648)
Prepaid expenses 30 (492)
Prepaid income taxes (674) (297)
Accounts payable and other accrued liabilities (802) 1,704
Income taxes payable (1,089) (476)
Deferred rent 8 5
------------ ------------
Cash used for operating activities (1,981) (4,413)
------------ ------------
Cash flows from investing activities:
Purchases of fixed assets (759) (438)
Proceeds from sale of fixed assets -- 21
------------ ------------
Cash used for investing activities (759) (417)
------------ ------------
Cash flows from financing activities:
Bank line of credit:
Borrowings 3,290 12,280
Repayments (2,160) (6,020)
Long-term debt:
Borrowings -- --
Repayments (84) (258)
Payment of distributions to stockholders -- (1,529)
Proceeds from issuance of Common Stock 20 --
------------ ------------
Cash provided by financing activities 1,066 4,473
------------ ------------
Decrease in cash and cash equivalents (1,674) (357)
Cash and cash equivalents, beginning of period 2,383 977
------------ ------------
Cash and cash equivalents, end of period $ 709 $ 620
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
TRACK 'N TRAIL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
INTERIM RESULTS
The accompanying consolidated financial statements for the thirteen-weeks
ended March 28, 1998 and March 29, 1997 have been prepared in accordance with
generally accepted accounting principles, ("GAAP") and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. These financial statements have not
been audited by independent public accountants, but include all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial condition,
results of operations and cash flows for such periods. However, these results
are not necessarily indicative of results for any other interim period or for
the full year. The accompanying consolidated balance sheet as of December 27,
1997 has been derived from the audited financial statements, but does not
include all disclosures required by GAAP. The Company has historically
experienced significant quarterly fluctuations due to seasonality in operating
results and it expects that these fluctuations in sales, expenses, and net
income or losses will continue.
The financial statements and related disclosures have been prepared with
the presumption that users of the interim financial information have read or
have access to the audited financial statements for the preceding fiscal year.
Accordingly, these financial statements should be read in conjunction with the
audited financial statements and the related notes thereto incorporated by
reference from the Company's Annual Report on Form 10-K for the fiscal year
ended December 27, 1997.
PRO FORMA INFORMATION
Pro forma net income has been computed for periods during which a portion
of the Company's income was subject to S corporation taxes to include a
provision for income taxes at an effective tax rate of 40% representing
management's estimate of the effective tax rate as if the Company had been a C
corporation for all such periods.
2. EARNINGS PER SHARE
Earnings per share ("EPS") is calculated under the provisions of Statement
of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE. SFAS No.
128 requires dual presentation of basic and diluted earnings per share by
entities with complex capital structures. Basic EPS excludes dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock,
or resulted in the issuance of common stock, that then shared in earnings of the
entity.
A reconciliation of the numerators and denominators of the basic and
diluted earnings per share computations under SFAS No. 128 is as follows (in
thousands, except per share information):
HISTORICAL EARNINGS PER SHARE
<TABLE>
<CAPTION>
March 28, March 29,
1998 1997
(13 weeks) (13 weeks)
--------- ---------
<S> <C> <C>
Income available to common stockholders (net loss) for basic
and diluted earnings per share. . . . . . . . . . . . . . . . . . $ (848) $ (827)
--------- ---------
--------- ---------
Shares for basic and diluted earnings per share . . . . . . . . . 6,842 4,108
--------- ---------
--------- ---------
Basic earnings (loss) per share . . . . . . . . . . . . . . . . . $ (0.12) $ (0.20)
--------- ---------
--------- ---------
Diluted earnings (loss) per share . . . . . . . . . . . . . . . . $ (0.12) $ (0.20)
--------- ---------
--------- ---------
</TABLE>
4
<PAGE>
2. EARNINGS PER SHARE (continued)
PRO FORMA EARNINGS PER SHARE
<TABLE>
<CAPTION>
March 29,
1997
(13 weeks)
----------
<S> <C>
Income available to common stockholders (pro forma net loss) for
basic and diluted earnings per share. . . . . . . . . . . . . . . $ (746)
----------
----------
Shares for basic earnings per share . . . . . . . . . . . . . . . 4,108
Distribution Shares . . . . . . . . . . . . . . . . . . . . 678
----------
Shares for diluted earnings per share . . . . . . . . . . . . . . 4,786
----------
----------
Basic earnings (loss) per share . . . . . . . . . . . . . . . . . $ (0.18)
----------
----------
Diluted earnings (loss) per share . . . . . . . . . . . . . . . . $ (0.16)
----------
----------
</TABLE>
In connection with the application of the provisions of SFAS No. 128,
historical and pro forma diluted earnings (loss) per share for the 13 weeks
ended March 29, 1997 previously reported as $(0.19) and $(0.15), respectively,
in the unaudited quarterly financial data shown in the Company's 1997 Annual
Report on Form 10-K have been restated to $(0.20) and $(0.16), respectively.
All warrants and options outstanding were not dilutive and, accordingly,
were not included in the weighted average number of common and common equivalent
shares outstanding.
5
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT. In
addition to historical information, this Management's Discussion and Analysis
includes certain forward-looking statements regarding events and financial
trends which may affect the Company's future operating results and financial
position. Such statements are subject to risks and uncertainties that could
cause the Company's actual results and financial position to differ materially.
Factors that could cause or contribute to such differences include those
discussed below. These and other risks and uncertainties related to the
business are described in detail in the Company's Annual Report on Form 10-K
under the heading "Risk Factors". Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
OVERVIEW
Track 'n Trail, a Delaware corporation (together with its subsidiaries,
unless the context otherwise requires, the "Company"), is one of the largest
full-service specialty retailers in the United States focusing on a broad range
of high-quality branded casual, outdoor and adventure footwear. As of March 28,
1998, the Company operated 113 Track 'n Trail stores and 38 Overland Trading
stores in 28 states.
Pursuant to a reorganization (the "Reorganization"), effected shortly
prior to the consummation of the Company's initial public offering (the
"Offering") on October 16, 1997, the Company acquired the businesses conducted
by its subsidiaries, Track 'n Trail, a California corporation (Track 'n
Trail-California), and Overland Management Corporation ("Overland"). The
Reorganization was accounted for in a manner similar to a pooling of interests.
Comparable store sales are commonly used as a performance measurement by
retail companies. The Company defines comparable stores as those stores that
were open for the full fiscal period and for the full prior fiscal period. The
Company's comparable store net sales grew 0.1% in the first 13 weeks of fiscal
1998.
Track 'n Trail-California was treated as an S corporation for federal and
certain state income tax purposes from June 28, 1992, until its S corporation
status terminated as a result of the Reorganization on October 7, 1997 (the
"Termination Date"). As a result, the earnings of Track 'n Trail-California
during such period were taxed, with certain exceptions, directly to the
stockholders of Track 'n Trail-California rather than to Track 'n
Trail-California. Thereafter, Track 'n Trail-California has been subject to
state and federal income taxes as a C corporation, and all references to fiscal
1997 net income in this Management's Discussion and Analysis are presented as if
Track 'n Trail-California had been subject to income taxes at a combined state
and federal income tax rate of 40%.
RESULTS OF OPERATIONS
The following discussions compare the Company's results of operations for
the 13 weeks ended March 28, 1998 with its results for the comparable period in
the prior year. The results achieved in this period are not necessarily
indicative of results to be achieved in future periods. The following
comparative information should be read in conjunction with the Consolidated
Financial Statements and accompanying notes for each period discussed, as well
as the information presented in all other sections of this Management's
Discussion and Analysis.
THIRTEEN WEEKS ENDED MARCH 28, 1998 COMPARED TO THIRTEEN WEEKS ENDED MARCH 29,
1997
NET SALES
Net sales were $18.9 million for the 13 weeks ended March 28, 1998, an
increase of $2 million, or 12.1%, over the $16.9 million in net sales for the
comparable period in the prior year. The increase in net sales of $2 million is
primarily attributable to 22 stores opened in fiscal 1997 and three opened in
the first 13 weeks of fiscal 1998. The Company expects to open approximately 32
additional stores (29 net of store closures) during the remainder of fiscal
1998, the bulk of which are scheduled for the end of the second quarter or the
latter half of the fiscal year. Accordingly, the Company does not anticipate
future store openings to have any material impact upon results of operations
until the third quarter.
6
<PAGE>
GROSS PROFIT
Gross profit was $8.8 million for the 13 weeks ended March 28, 1998, an
increase of $833,000, or 10.4%, over the comparable period in the prior year.
Gross profit as a percentage of net sales decreased to 46.8% for the 13 weeks
ended March 28, 1998 from 47.5% in the comparable period in the prior year.
Markdowns taken to liquidate winter goods had a negative impact on gross profit
as a percent of net sales for the 13 weeks ended March 28, 1998.
SELLING AND MARKETING EXPENSES
Selling and marketing expenses were $8.2 million for the 13 weeks ended
March 28, 1998, an increase of $1 million, or 14.5%, over the $7.2 million
recorded in the comparable period in the prior year. The increase is primarily
attributable to 22 stores opened in fiscal 1997 and three stores opened in the
first 13 weeks of fiscal 1998, none of which were open for the full comparable
period in the prior year, offset by two store closures in the first 13 weeks of
fiscal 1998. As a percentage of net sales, selling and marketing expenses
increased to 43.6% in the 13 weeks ended March 28, 1998 from 42.7% in the
comparable period in the prior year, primarily attributable to operating costs
associated with new stores which historically have a lower initial sales base.
ADMINISTRATIVE AND DISTRIBUTION EXPENSES
Administrative and distribution expenses were $2 million for the 13 weeks
ended March 28, 1998, an increase of $227,000, or 12.8%, over the comparable
period in the prior year. This increase is primarily attributable to increases
in staffing and associated expenses as a result of the Company's expansion and
becoming a public company. As a percentage of net sales, administrative and
distribution expenses remained the same (10.6%) as in the comparable period in
the prior year.
INTEREST EXPENSE
Interest expense decreased to $5,000, or less than 0.1% of net sales, for
the 13 weeks ended March 28, 1998, from $289,000, or 1.7% of net sales, in the
comparable period in 1997. This $284,000 decrease was primarily attributable to
repayment of the debt incurred in connection with the acquisition of Overland
and reduction of the outstanding principal balance of the Company's credit
facility from the proceeds from the Offering.
NET INCOME
The Company's net loss for the 13 weeks ended March 28, 1998 was $848,000,
an increase of $102,000 over the net loss of $746,000 in the comparable period
in 1997. The increase in net loss is primarily attributable to fixed operating
costs associated with a larger store base, in a historically low sales period.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations from internally generated cash
flow, borrowings under its revolving line of credit, and equity financing. The
Company's capital requirements relate primarily to the build-out of new stores,
remodeling of existing stores and financing of inventories.
The Company had $20.8 million in working capital as of March 28, 1998
compared to $21.9 million at the end of fiscal 1997, a decrease of $1.1 million.
The Company's working capital needs historically have been seasonal and
typically peak in the second and fourth quarters. The peak in the second
quarter is due to the incurrence of operating losses in the first quarter and
increased inventory purchased for the spring selling season. Working capital
needs peak in the fourth quarter due to increases in inventory in advance of the
holiday selling season and payments coming due for back-to-school merchandise.
In addition, the Company requires incremental working capital to stock each new
store upon opening.
7
<PAGE>
Capital expenditures were $759,000 for the 13 weeks ended March 28, 1998.
Capital expenditures in the first 13 weeks of 1998 were primarily for the
build-out of three new stores, the completion of three of the stores opened in
1997, and construction on stores being remodeled as well as the build-out of two
new stores to be opened in the second quarter of 1998. The Company estimates
capital expenditures for the remainder of the year to be $3.1 million for the
build-out of approximately 32 new stores, $80,000 for the completion of the
build-out of a store opened in 1997, $700,000 for remodels and $400,000 for
software and hardware upgrades.
The Company reviews the operating performance of its stores on an ongoing
basis to determine which stores, if any, to close. The Company closed two
stores in the first quarter of 1998 and anticipates closing three additional
stores in 1998.
Net cash used for operating activities for the 13 weeks ended March 28,
1998 was $2 million. Net cash used for or provided by operating activities has
historically been driven by net income levels combined with fluctuations in
inventory and accounts payable. Inventories at March 28, 1998 were $27.8
million compared to $27.9 million at December 27, 1997. The Company's average
store inventories vary throughout the year and increase in advance of the peak
selling periods of back-to-school and Christmas. The minimal change in
inventory between December 27, 1997 and March 28, 1998 relates to a slightly
higher than normal year end inventory level. This was primarily due to
advantageous purchases from key vendors and early deliveries of spring
merchandise received prior to December 27, 1997.
Financing activities provided cash of $1.1 million for the 13 weeks ended
March 28, 1998, attributable to additional borrowings under the Company's
revolving line of credit to fund working capital requirements. Cash was also
used from financing activities for the early retirement of long-term debt.
Management believes that the Company's operating cash flow and borrowings
under its credit facility will be sufficient to complete the Company's fiscal
1998 store expansion program and to satisfy the Company's other capital
requirements through fiscal 1998. The Company's capital requirements may vary
significantly from those anticipated depending upon such factors as operating
results, the number and timing of new store openings, and the number and size of
any potential future acquisitions.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company anticipates that its operating results will fluctuate as a
result of a number of factors, including the number and timing of store openings
and closures, seasonality, changes in pricing or promotion policies by the
Company, its competitors or its suppliers, the availability and cost of
merchandise and consumer acceptance of the products sold by the Company. The
availability and cost of merchandise may, in turn, fluctuate due to a number of
factors including changes in the Company's relationships with major suppliers,
the Company's access to private label manufacturing capacity, foreign currency
fluctuations and other risks associated with importing private label products
from foreign countries.
8
<PAGE>
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ------- --------------------------------------------------------------
<S> <C>
3.1* Amended and Restated Certificate of Incorporation
3.2* Amended and Restated Bylaws
4.1* Form of Common Stock Certificate
10.1 1998 Bonus Plan
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended March 28,
1998.
- ------------------------------
* Incorporated by reference to the correspondingly numbered exhibits in the
Registrant's Registration Statement on Form S-1 (File No. 333-23195).
9
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
TRACK 'N TRAIL
Date: May 1, 1998 By: /s/Daniel J. Nahmens
----------------------------------
Daniel J. Nahmens
Vice President-Finance and
Chief Financial Officer and
Treasurer (on behalf of the
Registrant and as the Registrant's
Principal Financial and
Accounting Officer)
10
<PAGE>
EXHIBIT 10.1
TRACK 'N TRAIL
1998 BONUS PLAN
<PAGE>
APPROVED: /S/ DAVID L. SUECHTING, JR DATE: 3/4/98
--------------------------- --------
1998 PRESIDENT'S BONUS PROGRAM
WE ARE PLEASED TO ANNOUNCE THE 1998 BONUS PLAN FOR YOU, FOR THE PERIOD ENDING
DECEMBER 26, 1998. YOUR BONUS EARNINGS WILL BE BASED UPON FIVE AREAS OF TOTAL
COMPANY PERFORMANCE AS FOLLOWS:
1) PROFITABILITY
-$50,000 FOR ATTAINING PLAN EPS OF $.67 $50,000
-$10,000 FOR EACH $.01 OF EPS OVER $.67 $10,000/$.01
2) STORE WAGES - PLAN 11.10%
-$7,500 FOR ATTAINING WAGE PLAN OF 11.10% $7,500
-$750 FOR EACH .01% BELOW PLAN $750/.01%
3) COMP STORE SALES - PLAN 3.00%
-$7,500 FOR ATTAINING COMP STORE SALES OF 3.00% $7,500
-$1,000 FOR EACH .10% OVER PLAN $1,000/.10%
4) INVENTORY CONTROL - PLAN 0.50%
-$7,500 FOR ATTAINING PLAN OF .50% $7,500
-$750 FOR EACH .01% UNDER RETAIL SHRINK PLAN $750/.01%
5) GROSS PROFIT MARGIN - PLAN 48.53%
-$7,500 FOR ATTAINING PLAN OF 48.53% $7,500
-$750 FOR EACH .01% OVER PLAN $750/.01%
EXAMPLE:
----------------------------
COMPANY ACHIEVES $.69 IN EPS
<TABLE>
<CAPTION>
MEET ALL EXCEED ALL
GOALS GOALS
-------- ----------
<S> <C> <C>
1)ATTAINING $.67 EPS 50,000 $50,000
$.02 INCREASE IN EPS 20,000
2)ATTAIN STORE WAGE PLAN OF 11.10% 7,500 7,500
STORE WAGES @ .05% IMPROVEMENT 3,750
3)ATTAIN COMP STORE GAIN OF 3.00% 7,500 7,500
COMP STORE SALES @ .3% IMPROVEMENT 3,000
4)ATTAIN INVENTORY CONTROL OF .50% 7,500 7,500
INVENTORY CONTROL @ .03% IMPROVEMENT 2,250
5)ATTAIN GROSS PROFIT MARGIN GOAL: 48.53% 7,500 7,500
GROSS PROFIT MARGIN .10% IMPROVEMENT 7,500
--------------------
$80,000 $116,500
--------------------
--------------------
</TABLE>
THE BONUS PAYOUT FOR FISCAL 1998 WILL OCCUR ON OR BEFORE 3/15/99, FOR EACH
PARTICIPANT THAT WAS EMPLOYED AS OF 12/26/98.
<PAGE>
THE BONUS PAYOUT CAN NOT EXCEED 150% OF PARTICIPANT'S BASE SALARY FOR 1998.
THIS BONUS PLAN IS EFFECTIVE FOR FISCAL 1998 ONLY, AND THE COMPANY RESERVES
THE RIGHT TO ELIMINATE OR CHANGE THE BONUS PROGRAM FOR FUTURE PERIODS.
<PAGE>
APPROVED: /S/ DAVID L. SUECHTING, JR DATE: 3/4/98
--------------------------- --------
1998 CHIEF FINANCIAL OFFICER'S BONUS PROGRAM
WE ARE PLEASED TO ANNOUNCE THE 1998 BONUS PLAN FOR YOU, FOR THE PERIOD
ENDINGDECEMBER 26, 1998. YOUR BONUS EARNINGS WILL BE BASED UPON FIVE AREAS OF
TOTAL COMPANY PERFORMANCE AS FOLLOWS:
1) PROFITABILITY
-$30,000 FOR ATTAINING PLAN EPS OF $.67 $30,000
-$10,000 FOR EACH $.01 OF EPS OVER $.67 $10,000/$.01
2) STORE WAGES - PLAN 11.10%
-$7,500 FOR ATTAINING WAGE PLAN OF 11.10% $7,500
-$750 FOR EACH .01% BELOW PLAN $750/.01%
3) COMP STORE SALES - PLAN 3.00%
-$7,500 FOR ATTAINING COMP STORE SALES OF 3.00% $7,500
-$1,000 FOR EACH .10% OVER PLAN $1,000/.10%
4) INVENTORY CONTROL - PLAN 0.50%
-$7,500 FOR ATTAINING PLAN OF .50% $7,500
-$750 FOR EACH .01% UNDER RETAIL SHRINK PLAN $750/.01%
5) GROSS PROFIT MARGIN - PLAN 48.53%
-$7,500 FOR ATTAINING PLAN OF 48.53% $7,500
-$750 FOR EACH .01% OVER PLAN $750/.01%
EXAMPLE:
----------------------------
COMPANY ACHIEVES $.69 IN EPS
<TABLE>
<CAPTION>
MEET ALL EXCEED ALL
GOALS GOALS
-------- ----------
<S> <C> <C>
1)ATTAINING $.67 EPS 30,000 $30,000
$.02 INCREASE IN EPS 20,000
2)ATTAIN STORE WAGE PLAN OF 11.10% 5,000 5,000
STORE WAGES @ .05% IMPROVEMENT 3,750
3)ATTAIN COMP STORE GAIN OF 3.00% 5,000 5,000
COMP STORE SALES @ .3% IMPROVEMENT 3,000
4)ATTAIN INVENTORY CONTROL OF .50% 5,000 5,000
INVENTORY CONTROL @ .03% IMPROVEMENT 2,250
5)ATTAIN GROSS PROFIT MARGIN GOAL: 48.53% 5,000 5,000
GROSS PROFIT MARGIN .10% IMPROVEMENT 7,500
--------------------
$50,000 $86,500
--------------------
--------------------
</TABLE>
THE BONUS PAYOUT FOR FISCAL 1998 WILL OCCUR ON OR BEFORE 3/15/99, FOR EACH
PARTICIPANT THAT WAS EMPLOYED AS OF 12/26/98.
<PAGE>
THE BONUS PAYOUT CAN NOT EXCEED 150% OF PARTICIPANT'S BASE SALARY FOR 1998.
THIS BONUS PLAN IS EFFECTIVE FOR FISCAL 1998 ONLY, AND THE COMPANY RESERVES THE
RIGHT TO ELIMINATE OR CHANGE THE BONUS PROGRAM FOR FUTURE PERIODS.
<PAGE>
APPROVED: /S/ DAVID L. SUECHTING, JR DATE: 3/4/98
--------------------------- --------
1998 EXECUTIVE VICE-PRESIDENT OF MERCHANDISING'S BONUS PROGRAM
WE ARE PLEASED TO ANNOUNCE THE 1998 BONUS PLAN FOR YOU, FOR THE PERIOD
ENDINGDECEMBER 26, 1998. YOUR BONUS EARNINGS WILL BE BASED UPON THREE AREAS OF
TOTAL COMPANY PERFORMANCE AS FOLLOWS:
1) PROFITABILITY
-$20,000 FOR ATTAINING PLAN EPS OF $.67 $20,000
-$6,000 FOR EACH $.01 OF EPS OVER $.67 $6,000/$.01
2) COMP STORE SALES GAIN - PLAN 3.00%
-$10,000 FOR ATTAINING PLAN $10,000
-$3,000 FOR EACH .10% OVER PLAN $3,000/.10%
3) GROSS PROFIT MARGIN - PLAN 48.53%
-$10,000 FOR ATTAINING PLAN $10,000
-$1,000 FOR EACH .01% OVER PLAN $1,000/.01%
4) INVENTORY TURN-PLAN (CONSOLIDATED TNT/OTC) 1.69
-$10,000 FOR ATTAINING PLAN $10,000
-$1,000 FOR EACH .01 OVER PLAN $1,000/.01
EXAMPLE:
----------------------------
COMPANY ACHIEVES $.69 IN EPS
<TABLE>
<CAPTION>
MEET ALL EXCEED ALL
GOALS GOALS
-------- ----------
<S> <C> <C>
1)ATTAINING $.67 EPS 20,000 20,000
$.02 INCREASE IN EPS 12,000
2)ACHIEVE COMP STORE SALES OF 3.00% 10,000 10,000
COMP STORE SALES @ .3% IMPROVEMENT 9,000
3)ACHIEVE GROSS PROFIT MARGIN OF 48.53% 10,000 10,000
GROSS PROFIT MARGIN .10% IMPROVEMENT 10,000
4)ACHIEVE INVENTORY TURN 1.69 TIMES 10,000 10,000
.01 INVENTORY TURN IMPROVEMENT 1,000
--------------------
50,000 82,000
--------------------
--------------------
</TABLE>
THE BONUS PAYOUT FOR FISCAL 1998 WILL OCCUR ON OR BEFORE 3/15/99, FOR EACH
PARTICIPANT THAT WAS EMPLOYED AS OF 12/26/98.
THE BONUS PAYOUT CAN NOT EXCEED 150% OF PARTICIPANT'S BASE SALARY FOR 1998.
THIS BONUS PLAN IS EFFECTIVE FOR FISCAL 1998 ONLY, AND THE COMPANY RESERVES THE
RIGHT TO ELIMINATE OR CHANGE THE BONUS PROGRAM FOR FUTURE PERIODS.
<PAGE>
APPROVED: /S/ DAVID L. SUECHTING, JR DATE: 3/4/98
--------------------------- --------
1998 VICE-PRESIDENT STORES BONUS PROGRAM
WE ARE PLEASED TO ANNOUNCE THE 1998 BONUS PLAN FOR YOU, FOR THE PERIOD
ENDINGDECEMBER 26, 1998. YOUR BONUS EARNINGS WILL BE BASED UPON FIVE AREAS OF
TOTAL COMPANY PERFORMANCE AS FOLLOWS:
1) PROFITABILITY
-$10,000 FOR ATTAINING PLAN EPS OF $.67 $10,000
-$2,500 FOR EACH $.01 OF EPS OVER $.67 $2,500/$.01
2) STORE WAGES - PLAN 11.10%
-$10,000 FOR ATTAINING PLAN $10,000
-$1,500 FOR EACH .01% BELOW PLAN $1,500/.01%
3) COMP STORE SALES % - PLAN 3.00%
-$10,000 FOR ATTAINING PLAN $10,000
-$2,000 FOR EACH .10% OVER PLAN $2,000/.10%
4) INVENTORY CONTROL - RETAIL SHRINK PLAN 0.50%
-$10,000 FOR ATTAINING PLAN $10,000
-$2,000 FOR EACH .01% UNDER PLAN $2,000/.01%
5) AVERAGE NEW STORE VOLUME - YTD RUN RATE $600,000
-$10,000 FOR ATTAINING AVERAGE AT 12/26/98 $10,000
-$750 FOR EACH $1,000 IN EXCESS OF PLAN RUN RATE $750/$1,000
EXAMPLE:
----------------------------
COMPANY ACHIEVES $.69 IN EPS
<TABLE>
<CAPTION>
MEET ALL EXCEED ALL
GOALS GOALS
-------- ----------
<S> <C> <C>
1)ATTAINING $.67 EPS 10,000 $10,000
$.02 INCREASE IN EPS 5,000
2)ATTAIN STORE WAGE PLAN OF 11.10% 10,000 10,000
STORE WAGE IMPROVEMENT OF .05% 7,500
3)ATTAIN COMP STORE PLAN OF 3.00% 10,000 10,000
COMP STORE IMPROVEMENT OF .30% 6,000
4)ATTAIN INVENTORY CONTROL OF .40% 10,000 10,000
INVENTORY CONTROL IMPROVEMENT .03% 6,000
5)ATTAIN AVE. NEW STORE RUN RATE -600,000 10,000 10,000
RUN RATE IMPR. $10,000 ($610,000) 7,500
--------------------
BONUS PAYOUT 50,000 82,000
--------------------
--------------------
</TABLE>
THE BONUS PAYOUT FOR FISCAL 1998 WILL OCCUR ON OR BEFORE 3/15/99, FOR EACH
PARTICIPANT THAT WAS EMPLOYED AS OF 12/26/98.
<PAGE>
THE BONUS PAYOUT CAN NOT EXCEED 150% OF PARTICIPANT'S BASE SALARY FOR 1998.
THIS BONUS PLAN IS EFFECTIVE FOR FISCAL 1998 ONLY, AND THE COMPANY RESERVE STHE
RIGHT TO ELIMINATE OR CHANGE THE BONUS PROGRAM FOR FUTURE PERIODS.
<PAGE>
APPROVED: /S/ DAVID L. SUECHTING, JR DATE: 3/4/98
--------------------------- --------
1998 VICE-PRESIDENT REAL ESTATE'S BONUS PROGRAM
WE ARE PLEASED TO ANNOUNCE THE 1998 BONUS PLAN FOR YOU, FOR THE PERIOD
ENDINGDECEMBER 26, 1998. YOUR BONUS EARNINGS WILL BE BASED UPON FOUR AREAS OF
TOTAL COMPANY PERFORMANCE AS FOLLOWS:
1) PROFITABILITY
-$10,000 FOR ATTAINING PLAN EPS OF $.67 $10,000
-$2,500 FOR EACH $.01 OF EPS OVER $.67 $2,500/$.01
2) TIMELY STORE OPENINGS
CONSTRUCTION WILL BE CONSIDERED TIMELY IF THE TOTAL "OPEN" WEEKS FOR THE
PROJECTS IDENTIFIED ON THE ATTACHED PAGE MEETS OR EXCEEDS A TOTAL OF 1161
WEEKS.
THE SUM OF THE ACTUAL DAYS OPEN IN THE FISCAL YEAR WILL BE TOTALED AND
DIVIDED BY 7 TO DETERMINE BONUS "WEEKS" STORE OPENINGS WILL FOLLOW THE FISCAL
CALENDAR, (I.E. AN APRIL STORE OPENING WILL COMMENCE ON MARCH 29TH) STORES
OPEN IN EXCESS OF THE ATTACHED SCHEDULE WILL BE ADDED TO THE ACTUAL WEEKS
OPEN FOR BONUS CALCULATIONS. REMODELS ARE NOT INCLUDED. STORE RELOCATIONS
ARE NOT CONSIDERED STORE OPENINGS (I.E. #56) HOWEVER, SINCE THE SUNRISE
RELOCATION WAS NOT BUDGETED, CREDIT WILL BE GIVEN FOR WEEKS OPEN IN THE NEW
SPACE THAT EXCEED THE WEEKS BUDGETED AS OPEN IN THE OLD SPACE.
-$10,000 FOR ATTAINING "OPEN" WEEKS OF 1,161 $10,000
-$225 FOR EACH ADDITIONAL WEEK OPEN ABOVE $225
3) CONSTRUCTION BUDGET MET - $10,000
THE CONSTRUCTION BUDGET WILL BE CONSIDERED MET IF TOTAL CAPITALIZED
COSTS FALL AT OR BELOW $4,175,000. IN THE EVENT THAT NOT ALL STORES
ARE BUILT, THE CFO WILL REMOVE THE BUDGET FROM THE STORES NOT
BUILT. STORES CONSTRUCTED IN EXCESS OF THE PLAN OF 42 WILL BE
ADDED TO THE CAPITAL BUDGET AT $95,000 FOR TNT STORES AND $105,000
FOR OTC STORES, ASSUMING THEY ARE A FULL BUILD-OUT (EXCLUDING TEMPS).
WAREHOUSE STORES AND OTHER SPECIAL CONCEPTS ARE DIFFICULT TO
BUDGET AT THIS POINT AND WILL PURPOSELY BE EXCLUDED FOR BONUS PURPOSES.
THE CALCULATIONS WILL BE PERFORMED BY THE CFO, AND ALL DECISIONS REST
SOLEY WITH THE COMPANY. AS A NOTE, REMODELS HAVE BEEN EXCLUDED
FROM THE ATTACHED LIST AND WILL NOT FACTOR INTO THE BONUS
CALCULATIONS.
<PAGE>
CONSTRUCTION BUDGET SAVINGS
PARTICIPANT WILL EARN 5% OF THE SAVINGS BY WHICH THEY FALL UNDER THE
FINAL CAPITAL BUDGET. CONTRIBUTIONS FROM THE LANDLORD WHICH ARE
SPECIFICALLY TENANT IMPROVEMENT ALLOWANCES (CONTRIBUTIONS TO THE
CONSTRUCTION COSTS) WILL BE DEDUCTED FROM THE TOTAL COST TO ARRIVE
AT THE ACTUAL COST FOR BONUS PURPOSES. "FREE" RENT OR ANY OTHER
MONIES RECEIVED WHICH ARE NOT SPECIFICALLY CONSTRUCTION MONIES (AS
DETERMINED BY ACCOUNTING PRINCIPLES) WILL NOT BE CONSIDERED FOR THIS
REDUCTION. CONSTRUCTION QUALITY MUST BE COMPLETED WITHIN THE
SPECIFICATIONS AS APPROVED BY THE PRESIDENT.
4) AVERAGE NEW STORE SALES-$600,000
PARTICIPANT WILL RECIEVE $10,000 IF THE AVERAGE OF THE NEW STORES ADDED IN
1998, MEETS OR EXCEEDS A RUNNING RATE AT DECEMBER 26, 1998 OF AT LEAST
$600,000, AS DETERMINED BY THE NEW STORE REPORT PREPARED BY THE FINANCE
DEPARTMENT. PARTICIPANT WILL RECEIVE AN ADDITIONAL $500 FOR EVERY $1,000 IN
ADDITIONAL VOLUME ACHIEVED IN EXCESS OF THE $600,000 AVERAGE NEW STORE SALES
BUDGET.
NOTE: THERE ARE MANY VARIABLES IN THIS BONUS PROGRAM WHICH MAY BE DIFFICULT TO
PREDICT OR ADDRESS AT THIS TIME. DUE TO THIS REASON, THE CFO WILL RESOLVE
ISSUES AS NECESSARY WHICH ARE NOT DIRECTLY ADDRESSED THROUGH THE ORIGINAL INTENT
OF THE PLAN. ALL DECISIONS ARE FINAL AND REST SOLEY WITH THE CFO OR PRESIDENT.
EXAMPLE:
----------------------------
COMPANY ACHIEVES $.69 IN EPS
<TABLE>
<CAPTION>
MEET ALL EXCEED ALL
GOALS GOALS
-------- ----------
<S> <C> <C>
1)ATTAINING $.67 EPS 10,000 10,000
$.02 INCREASE IN EPS 5,000
2)TIMELY STORE OPENINGS 15,000 15,000
ADDITIONAL STORE WEEKS-50 11,250
3)CAPITAL CONSTRUCTION BUDGET MET 10,000 10,000
PROJECT SAVINGS OF $200,000 10,000
4)AVERAGE NEW STORE SALES GOAL MET 15,000 15,000
AVERAGE STORE SALES OF $610,000 ACHIEVED 5,000
--------------------
BONUS PAYOUT 50,000 81,250
--------------------
--------------------
</TABLE>
THE BONUS PAYOUT FOR FISCAL 1998 WILL OCCUR ON OR BEFORE 3/15/99, FOR EACH
PARTICIPANT THAT WAS EMPLOYED AS OF 12/26/98.
THE BONUS PAYOUT CAN NOT EXCEED 150% OF PARTICIPANT'S BASE SALARY FOR 1998.
THIS BONUS PLAN IS EFFECTIVE FOR FISCAL 1998 ONLY, AND THE COMPANY RESERVES THE
RIGHT TO ELIMINATE OR CHANGE THE BONUS PROGRAM FOR FUTURE PERIODS.
<PAGE>
1998 VICE-PRESIDENT REAL ESTATE'S BONUS PROGRAM
<TABLE>
<CAPTION>
ACTUAL
BONUS DAYS BETTER/ CONSTRUCTION
STORE WEEKS-CONTROLLABLE WEEKS OPEN (WORSE) BUDGET
************************ ------- ------- ------- ------------
<S> <C> <C> <C> <C>
TRACK 'N TRAIL
1 MARCH (2/22) 44 ________ ________ 95,000
2 MARCH (PALISADES) (2/22) 44 ________ ________ 130,000
3 APRIL (3/29) 39 ________ ________ 95,000
4 APRIL (3/29) 39 ________ ________ 95,000
5 MAY (4/26) 35 ________ ________ 95,000
6 MAY (4/26) 35 ________ ________ 95,000
7 JUNE (5/24) 31 ________ ________ 95,000
8 JUNE (5/24) 31 ________ ________ 95,000
9 JUNE (5/24) 31 ________ ________ 95,000
10 JUNE (5/24) 31 ________ ________ 95,000
11 JUNE (5/24) 31 ________ ________ 95,000
12 JULY (6/28) 26 ________ ________ 95,000
13 JULY (6/28) 26 ________ ________ 95,000
14 JULY (6/28) 26 ________ ________ 95,000
15 JULY (6/28) 26 ________ ________ 95,000
16 JULY (6/28) 26 ________ ________ 95,000
17 AUGUST (7/26) 22 ________ ________ 95,000
18 AUGUST (7/26) 22 ________ ________ 95,000
19 AUGUST (7/26) 22 ________ ________ 95,000
20 AUGUST (7/26) 22 ________ ________ 95,000
21 AUGUST (7/26) 22 ________ ________ 95,000
22 AUGUST (7/26) 22 ________ ________ 95,000
23 AUGUST (7/26) 22 ________ ________ 95,000
24 SEPTEMBER (8/23) 18 ________ ________ 95,000
25 SEPTEMBER (8/23) 18 ________ ________ 95,000
26 SEPTEMBER (8/23) 18 ________ ________ 95,000
27 SEPTEMBER (8/23) 18 ________ ________ 95,000
OTHER NEW STORES
OTHER NEW STORES
-----------------------------------------------------------
TRACK 'N TRAIL 747 ________ ________ 2,600,000
-----------------------------------------------------------
OVERLAND
1 APRIL (3/29) 39 ________ ________ 105,000
2 APRIL (3/29) 39 ________ ________ 105,000
3 APRIL (3/29) 39 ________ ________ 105,000
4 APRIL (3/29) 39 ________ ________ 105,000
5 MAY (4/26) 35 ________ ________ 105,000
6 MAY (4/26) 35 ________ ________ 105,000
7 JULY (6/28) 26 ________ ________ 105,000
8 JULY (6/28) 26 ________ ________ 105,000
9 JULY (6/28) 26 ________ ________ 105,000
10 AUGUST (7/26) 22 ________ ________ 105,000
11 AUGUST (7/26) 22 ________ ________ 105,000
12 AUGUST (7/26) 22 ________ ________ 105,000
13 SEPTEMBER (8/23) 18 ________ ________ 105,000
14 OCTOBER (9/27) 13 ________ ________ 105,000
15 OCTOBER (9/27) 13 ________ ________ 105,000
OTHER NEW STORES
<PAGE>
-----------------------------------------------------------
OVERLAND TRADING 414 ________ ________ 1,575,000
-----------------------------------------------------------
TOTAL BONUS WEEKS/CAP X 1,161 ________ ________ 4,175,000
-----------------------------------------------------------
-----------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> MAR-28-1998
<CASH> 709
<SECURITIES> 0
<RECEIVABLES> 676
<ALLOWANCES> 0
<INVENTORY> 27,803
<CURRENT-ASSETS> 30,461
<PP&E> 13,668
<DEPRECIATION> 6,065
<TOTAL-ASSETS> 42,469
<CURRENT-LIABILITIES> 9,694
<BONDS> 0
0
0
<COMMON> 68
<OTHER-SE> 31,188
<TOTAL-LIABILITY-AND-EQUITY> 42,469
<SALES> 18,908
<TOTAL-REVENUES> 18,908
<CGS> 10,065
<TOTAL-COSTS> 8,239
<OTHER-EXPENSES> 2,012
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> (1,413)
<INCOME-TAX> (565)
<INCOME-CONTINUING> (848)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (848)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
