<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 27, 1999
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 April 15, 1999 was 6,865,899.
<PAGE>
TRACK 'N TRAIL
FORM 10-Q
QUARTER ENDED MARCH 27, 1999
INDEX
-----
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 27, 1999
and December 26, 1998..............................................................1
Consolidated Statements of Operations for the 13-Weeks
ended March 27, 1999 and March 28, 1998............................................2
Consolidated Statements of Cash Flows for the 13-Weeks
ended March 27, 1999 and March 28, 1998............................................3
Notes to Consolidated Financial Statements........................................4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................................6-9
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................................. 10
SIGNATURES................................................................................................... 11
</TABLE>
<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-week periods ended March 27, 1999 and March 28, 1998 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 fiscal year. The
accompanying consolidated balance sheet as of December 26, 1998 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
loss 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 26, 1998.
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):
<TABLE>
<CAPTION>
Period ended
--------------------------------------
March 27, March 28,
1999 1998
(13 weeks) (13 weeks)
--------------- ---------------
<S> <C> <C>
Income (loss) available to common stockholders for basic
and diluted earnings per share ................................ $ (1,591) $ (848)
--------------- ---------------
--------------- ---------------
Weighted average shares for basic and diluted earnings per
share.......................................................... 6,864 6,842
Loss per share:
Basic........................................................ $ (0.23) $ (0.12)
--------------- ---------------
--------------- ---------------
Diluted...................................................... $ (0.23) $ (0.12)
--------------- ---------------
--------------- ---------------
</TABLE>
4
<PAGE>
For the 13 week periods ended March 27, 1999 and March 28, 1998, 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.
3. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows (in thousands):
<TABLE>
<CAPTION>
Period Ended
------------------------------------------
March 27, March 28,
1999 1998
(13 weeks) (13 weeks)
----------------- ----------------
<S> <C> <C>
Noncash investing and financing transactions:
Receivables recorded for tenant improvement allowances...... $ 346 $ --
--------------- ----------------
--------------- ----------------
</TABLE>
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 and apparel. Pursuant to the reorganization (the "Reorganization")
effected in October 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. In August 1998 the Company acquired Nevin's Eagles Nest, Inc.
("Eagles Nest"), a retailer of premium branded outdoor apparel. The Company
operates in a single business segment. As of March 27, 1999, the Company
operated 138 Track 'n Trail stores, 46 Overland Trading stores, and six
Eagles Nest stores in 36 states.
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 year. The Company's comparable store net sales, exclusive of sales
attributable to the Eagles Nest stores acquired in 1998, increased 1.8% for
the 13 weeks ended March 27, 1999.
RESULTS OF OPERATIONS
The following discussion compares the Company's results of
operations for the 13 weeks ended March 27, 1999 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 27, 1999 COMPARED TO THIRTEEN WEEKS ENDED
MARCH 28, 1998
NET SALES
Net sales increased to $23.3 million for the 13 weeks ended March
27, 1999, representing an increase of $4.4 million, or 23.4% over the $18.9
million in net sales for the comparable period in the prior year. Net sales
for the 34 stores (net of closures) opened subsequent to the first quarter of
fiscal 1998 accounted for $3.1 million of the increase in net sales and the
five Eagles Nest stores acquired in August 1998 contributed $1.2 million in
net sales in the first quarter of fiscal 1999. Additionally, comparable store
net sales for the 13 weeks ended March 27, 1999 increased $303,000, or 1.8%.
GROSS PROFIT
Gross profit was $10.7 million for the 13 weeks ended March 27,
1999, representing an increase of $1.9 million, or 21.0%, over gross profit
for the comparable period in the prior year. Gross profit as a percentage of
net sales decreased to 45.9% for the 13 weeks ended March 27, 1999 from 46.8%
for the comparable period in the prior year. The decrease in gross profit is
the result of sales attributable to the Eagles Nest stores on which margins
are generally lower than the margins on sales attributable to the Track 'n
Trail and Overland Trading stores.
SELLING AND MARKETING EXPENSES
Selling and marketing expenses were $10.9 million for the 13 weeks
ended March 27, 1999, representing an increase of $2.6 million, or 31.8%,
over selling and marketing expenses for the comparable period in the prior
year. Approximately $655,000, or 25.0% of this increase is attributable to
the Eagles Nest stores. The remaining increase is primarily attributable to
operating costs related to operating 33 additional Track 'n Trail and
Overland Trading stores on March 27, 1999 versus March 26, 1998. As a
percentage of net sales, selling and marketing expenses increased to 46.6%
for the 13 weeks ended March 27, 1999 from 43.6% in the comparable period in
the prior year, primarily as a result of incremental fixed store operating
costs associated with a larger base of stores less than one year old, which
historically have a lower initial sales base.
6
<PAGE>
ADMINISTRATIVE AND DISTRIBUTION EXPENSES
Administrative and distribution expenses were $2.4 million for the
13 weeks ended March 27, 1999, representing an increase of $398,000, or
19.9%, over administrative and distribution expenses for 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
continued internal expansion. The addition of the Eagles Nest stores
accounted for $178,000 of the increase in administrative and distribution
expenses. As a percentage of net sales, administrative and distribution
expenses decreased to 10.3% in the 13 weeks ended March 27, 1999 from 10.6%
in the comparable period in the prior year. The decrease as a percentage of
net sales is primarily due to an increase in comparable store net sales and
the dilutive effect on fixed operating costs resulting from the increased
revenue attributable to a larger store base.
INTEREST EXPENSE
Interest expense was $248,000 for the 13 weeks ended March 27, 1999,
representing an increase of $244,000 from the comparable period in the prior
year. Debt incurred in connection with the Eagles Nest acquisition accounted
for $76,000, or 30.7%, of total interest expense. The remainder is
attributable to an increase of the outstanding principal balance of the
Company's credit facility due to the expansion of the Company's store base.
NET LOSS
The Company's net loss for the 13 weeks ended March 27, 1999 was
$1.6 million, representing an increase of $743,000 over a net loss of
$848,000 in the comparable period in 1998. Eagles Nest accounted for $327,000
of the increase in net loss. The remaining increase in net loss is primarily
attributable to incremental fixed store operating costs associated with a
larger store base in a period in which the Company historically experiences
low sales.
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 liquidity requirements relate primarily to the
financing of inventories, build-out of new stores and remodeling of existing
stores.
Net cash used for operating activities for the 13 weeks ended March
27, 1999 was $4.8 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 27, 1999
were $39.9 million compared to $37.0 million at December 26, 1998. 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
increase in inventory between December 26, 1998 and March 27, 1999 relates
primarily to the purchase of spring merchandise and the maintenance of a
larger core inventory made possible by the Company's new and larger
distribution center.
The Company had $22.9 million in working capital as of March 27,
1999 compared to $25.1 million at the end of fiscal 1998, representing a
decrease of $2.2 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.
Capital expenditures (net of non-cash tenant improvement allowances)
were $892,000 for the 13 weeks ended March 27, 1999. Capital expenditures in
the first 13 weeks of 1999 were primarily for the build-out of five new
stores, the build-out of one store to be opened in the second quarter of
1999, and software and hardware upgrades as well as furniture and fixtures
for the Company's new distribution center. The Company estimates capital
expenditures for the remainder of the year to be approximately $400,000 for
the build-out of approximately three additional stores, approximately
$190,000 for the completion of the build-out of two stores opened in 1998,
approximately $670,000 for remodels of existing stores and approximately
$240,000 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
seven underperforming stores in the first quarter of 1999, which coincided
with the end of the lease terms for such stores.
Financing activities provided cash of $4.9 million for the 13 weeks
ended March 27, 1999, and consisted of additional borrowings under the
Company's revolving line of credit to fund working capital requirements.
Management believes that the Company's operating cash flow and
borrowings under its credit facility will be sufficient to complete the
Company's fiscal 1999 store expansion program and to satisfy the Company's
other capital requirements through fiscal 1999. 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.
7
<PAGE>
YEAR 2000
The Year 2000 problem concerns the inability of some computer
programs to recognize a year that begins with "20" instead of the familiar
"19". For computer programs that were written using two digits instead of
four to define the applicable year, they may recognize a date using "00" as
the year 1900 instead of the year 2000. Computer programs which are not Year
2000 compliant may fail or create erroneous results after December 31, 1999
(and in some cases before), causing disruptions of operations, including,
among other things, a temporary inability to process transactions or send and
receive electronic data to or from third parties or engage in similar normal
business activities.
STATE OF READINESS
The Company has developed a Year 2000 plan ("Y2K Plan") with the
objective of having all of its information technology ("IT") systems and
non-IT systems functioning properly with respect to the Year 2000 by December
31, 1999. The Y2K Plan consists of the following phases: 1) assess the Year
2000 compliance of IT and non-IT systems and identify potential problems; 2)
assign priorities to identified Year 2000 problems; 3) remediation; 4) test
IT and non-IT systems; and 5) develop contingency plans, including the
possibility of securing alternate sources of supplies and services,
increasing inventory and supply levels, and adjusting store and office
staffing levels. The Company defines IT systems as all applications,
operating systems and hardware on mainframe, PC or LAN platforms. Non-IT
systems refer to those with embedded software or hardware that may have a
time element. The Company has identified three areas of focus for its Y2K
Plan: corporate headquarters, store sites, and "key" third parties (the
"Third Parties"). Third Parties include suppliers, vendors and service
providers that are deemed to be critical to the Company's business
operations. All phases of the Y2K Plan are being applied to these three areas.
An outside vendor provides the mainframe system software used at the
Company's corporate office. The software contains an operating system and
seven modules. The outside vendor has tested the operating system,
merchandise, accounts payable, sales audit, fixed assets and general ledger
modules and has verified to the Company that such software is Year 2000
compliant. The Company has received Year 2000 compliant upgrade software for
the report writing and electronic data exchange modules, and expects
installation and testing to be complete in second quarter 1999 and third
quarter 1999, respectively. The manufacturer of the mainframe hardware has
tested the hardware and advised the Company that it is Year 2000 compliant.
As of March 27, 1999, the Company had assessed approximately 75% of
the personal computers at the corporate headquarters, of which approximately
50% were found to be non-Year 2000 compliant. The Company expects that
assessment of the remaining personal computers and non-IT systems will be
completed by the end of second quarter 1999. Retrofitting and/or replacement
and subsequent testing of non-compliant systems is scheduled for the third
quarter 1999. The Local Area Network (LAN) software and hardware
manufacturers have advised the Company that the LAN software and hardware
used by the Company is Year 2000 compliant.
The Company utilizes software produced by an outside vendor for its
human resource and payroll functions. In the third quarter of 1998, the
outside vendor upgraded and tested both systems and verified to the Company
that they are Year 2000 compliant.
The Company has identified the systems most critical to ongoing
operations within the corporate headquarters category. Contingency planning
for this category began in third quarter 1998 and is scheduled for completion
in second quarter 1999.
The Company uses Point of Sale (POS) hardware and software provided
by an outside vendor at each of its Track 'n Trail and Overland stores to
record sales transactions. Eagles Nest was converted to the same POS system
in the first quarter of 1999. In the first quarter of 1999, the Company
completed the Year 2000 compliant hardware upgrade for all of its stores.
Additionally, the Company expects to receive a Year 2000 compliant software
upgrade for its POS systems and expects to retrofit all of its stores with
the upgraded software version by the end of the second quarter of 1999. POS
systems for new stores, if any, will be installed with the upgraded version
of the software. Contingency planning for this category began in the first
quarter of 1999 and is expected to be completed by the end of the second
quarter of 1999.
The Company has initiated formal communications with all Third
Parties to determine the extent to which the Company is vulnerable to a Third
Party's failure to remediate its own Year 2000 issues. To the extent that the
Company does not receive adequate assurances, it will develop contingency
plans, with completion of these plans scheduled for the end of second quarter
1999.
COSTS
The Company expects its costs associated with becoming Year 2000
compliant to be approximately $53,000, exclusive of system additions,
upgrades or replacements incurred in the normal course of business and
assuming that implementation of contingency plans will not be necessary. The
Company estimates $21,000 of this amount will have been incurred repairing
software problems and $32,000 will have been incurred in connection with
replacement of problem systems and equipment. Costs incurred through March
27, 1999 have been approximately $15,000. The remaining costs are expected to
be incurred by the end of third quarter 1999. The Company does not separately
track the internal costs incurred for the Y2K Plan. Such costs are
principally related to the payroll of the Company's Management Information
Systems department. The Company's policy is to expense maintenance and
modification costs
8
<PAGE>
and capitalize hardware and software purchases and upgrades. The Company
intends to fund the foregoing from operating cash flow.
RISKS
The failure to correct a material Year 2000 problem could result in
an interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Because of the
range of possible issues and large number of variables involved, it is
impossible to quantify the total potential cost of Year 2000 problems or to
determine the Company's worst-case scenario in the event the Company's Year
2000 remediation efforts or the efforts of those with whom it does business
are not successful. In order to deal with the uncertainty associated with the
Year 2000 problem, the Company is developing contingency plans to address the
possibility that efforts to mitigate the Year 2000 risk are not successful
either in whole or part. These plans will include manual processing of
information for critical information technology systems, increasing store
staffing levels and inventory levels, identifying alternative suppliers and
increasing cash on hand. The contingency plans are expected to be completed
by the end of the second quarter of fiscal 1999, after which the appropriate
implementation training is scheduled to take place. The Company believes
that, upon completion of the Y2K Plan as scheduled, the possibility of
material interruptions of normal operations also should be substantially
lowered. No assurances can be given, however, that the Company will not
suffer material interruptions of normal operations, or that such
interruptions, even after the implementation of any contingency plans, will
not have a material adverse effect on the Company's results of operations,
liquidity and financial condition.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standard (SFAS) No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which requires that all
derivative instruments be recorded on the balance sheet at fair value, and
that changes in the fair value of the derivative instruments be recorded in
net earnings or comprehensive earnings. SFAS 133 must be adopted for fiscal
years beginning after June 15, 1999, with earlier adoption permitted.
Management has determined that adoption of SFAS 133 will not have a material
impact on the Company's consolidated financial statements.
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.
9
<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>
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 27, 1999.
10
<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: April 28, 1999 By:
--------------------------------------
Daniel J. Nahmens
Executive Vice President-Finance and
Chief Financial Officer and
Treasurer (on behalf of the
Registrant and as the Registrant's
Principal Financial and
Accounting Officer)
11
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRACK 'N TRAIL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
----------
<TABLE>
<CAPTION>
MARCH 27, DECEMBER 26,
1999 1998
----------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 675 $ 1,808
Accounts receivable 1,498 2,510
Income taxes receivable -- 130
Inventories 39,916 36,998
Prepaid expenses 499 432
Prepaid income taxes 1,503 --
Deferred income taxes 675 675
----------------- -----------------
Total current assets 44,766 42,553
Fixed assets, net 12,154 11,849
Goodwill, net 4,787 4,852
Deferred income taxes 2,025 2,025
----------------- -----------------
Total assets $ 63,732 $ 61,279
----------------- -----------------
----------------- -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 7,042 $ 1,746
Accounts payable 12,490 12,481
Accrued payroll and bonuses 737 561
Sales tax payable 453 952
Income taxes payable -- 687
Accrued expenses and other liabilities 1,136 1,010
----------------- -----------------
Total current liabilities 21,858 17,437
Deferred rent 1,577 1,540
Long-term debt, net of current portion 9,327 9,764
----------------- -----------------
Total liabilities 32,762 28,741
----------------- -----------------
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; 6,865,899 and 6,851,961 shares issued and
outstanding at March 27, 1999 and December 26, 1998, respectively 69 69
Additional paid-in capital 25,854 25,831
Retained earnings 5,047 6,638
----------------- -----------------
Total stockholders' equity 30,970 32,538
----------------- -----------------
Total liabilities and stockholders' equity $ 63,732 $ 61,279
----------------- -----------------
----------------- -----------------
</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 27, MARCH 28,
1999 1998
(13 WEEKS) (13 WEEKS)
----------------- --------------
<S> <C> <C>
Net sales $ 23,324 $ 18,908
Cost of sales 12,621 10,065
----------------- --------------
Gross profit 10,703 8,843
----------------- --------------
Operating expenses:
Selling and marketing 10,861 8,239
Administrative and distribution 2,405 2,007
----------------- --------------
Total operating expenses 13,266 10,246
----------------- --------------
Operating loss (2,563) (1,403)
Other expense:
Interest expense 248 5
Other, net 4 5
----------------- --------------
Loss before benefit for income taxes (2,815) (1,413)
Income tax benefit 1,224 565
----------------- --------------
Net loss $ (1,591) $ (848)
----------------- --------------
----------------- --------------
Loss per share:
Basic $ (0.23) $ (0.12)
----------------- --------------
----------------- --------------
Diluted $ (0.23) $ (0.12)
----------------- --------------
----------------- --------------
</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 27, MARCH 28,
1999 1998
(13 WEEKS) (13 WEEKS)
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,591) $ (848)
Adjustments to reconcile to cash used for operating activities:
Depreciation and amortization 653 479
Loss on disposal of fixed assets -- 3
Cash provided by (used for) changes in operating assets and liabilities:
Accounts receivable 1,357 863
Income taxes receivable 130 --
Inventories (2,918) 49
Prepaid expenses (67) 30
Prepaid income taxes (1,503) (674)
Accounts payable and other accrued liabilities (189) (802)
Income taxes payable (687) (1,089)
Deferred rent 38 8
----------------- -----------------
Cash used for operating activities (4,777) (1,981)
----------------- -----------------
Cash flows from investing activities:
Purchases of fixed assets (1,238) (759)
----------------- -----------------
Cash used for investing activities (1,238) (759)
----------------- -----------------
Cash flows from financing activities:
Bank line of credit:
Borrowings 16,661 3,290
Repayments (11,785) (2,160)
Other long-term debt:
Repayments (17) (84)
Net proceeds from issuance of common stock 23 20
----------------- -----------------
Cash provided by financing activities 4,882 1,066
----------------- -----------------
Decrease in cash and cash equivalents (1,133) (1,674)
Cash and cash equivalents, beginning of period 1,808 2,383
----------------- -----------------
Cash and cash equivalents, end of period $ 675 $ 709
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-25-1999
<PERIOD-START> DEC-27-1998
<PERIOD-END> MAR-27-1999
<CASH> 675
<SECURITIES> 0
<RECEIVABLES> 1,498
<ALLOWANCES> 0
<INVENTORY> 39,916
<CURRENT-ASSETS> 44,766
<PP&E> 18,441
<DEPRECIATION> 6,287
<TOTAL-ASSETS> 63,732
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0
0
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</TABLE>
