UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
---------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FIRST QUARTER ENDED JANUARY 30, 1999
Commission File Number 0-934
----------------------------
B.B. WALKER COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-0581797
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
414 East Dixie Drive, Asheboro, NC 27203
- ----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (336) 625-1380
--------------
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
--- ---
On March 8, 1999, 1,725,954 shares of the Registrant's voting common stock
with a par value of $1.00 per share were outstanding.
Cover
B.B. WALKER COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) (Audited)
January 30, October 31,
Assets 1999 1998
------ ----------- -----------
Cash $ 1 $ 1
Accounts receivable, less allowance
for doubtful accounts of $637 in
1999 and $557 in 1998 5,598 7,157
Inventories 9,096 9,660
Prepaid expenses 364 446
Deferred income tax benefit, current 1,050 1,050
------- -------
Total current assets 16,109 18,314
Property, plant and equipment, net of
accumulated depreciation and amortization
of $6,570 in 1999 and $6,523 in 1998 1,606 1,622
Other assets 149 144
------- -------
$ 17,864 $ 20,080
======= =======
(Continued)
1
B.B. WALKER COMPANY
CONSOLIDATED BALANCE SHEETS, Continued
(In thousands)
(Unaudited) (Audited)
January 30, October 31,
Liabilities and Shareholders' Equity 1999 1998
------------------------------------ ----------- -----------
Borrowings under finance agreement $ 5,740 $ 6,885
Current portion of long-term obligations 2,483 2,566
Accounts payable, trade 2,896 3,536
Accrued salaries, wages and bonuses 176 367
Other accounts payable and accrued liabilities 630 555
Income taxes payable 193 193
------- -------
Total current liabilities 12,118 14,102
------- -------
Long-term obligations 1,293 1,303
Minority interests in consolidated subsidiary 33 33
Shareholders' equity:
7% cumulative preferred stock, $100 par value,
1,150 shares authorized, 828 shares issued
and outstanding in 1999 and 1998 83 83
Common stock, $1 par value, 6,000,000 shares
authorized, 1,725,954 shares in 1999 and
1,720,954 in 1998 issued and outstanding 1,726 1,721
Capital in excess of par value 2,716 2,717
Retained earnings (deficit) (32) 198
Shareholders' loans (73) (77)
------- -------
Total shareholders' equity 4,420 4,642
------- -------
$ 17,864 $ 20,080
======= =======
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
2
B.B. WALKER COMPANY
CONSOLIDATED STATEMENTS OF LOSS
(In thousands, except per share data)
(Unaudited)
First Quarter
Ended
------------------------
January 30, January 31,
1999 1998
----------- -----------
Net sales $ 6,123 $ 7,732
Interest and other income 117 131
------- -------
Total revenues 6,240 7,863
------- -------
Cost of products sold 4,511 5,792
Selling and administrative expenses 1,677 1,901
Depreciation and amortization 47 74
Interest expense 233 276
------- -------
Total costs and expenses 6,468 8,043
------- -------
Loss before income taxes and
minority interest (228) (180)
Benefit from income taxes - -
Minority interest (1) (1)
------- -------
Net loss (229) (181)
Retained earnings, beginning of quarter 198 129
Dividends on preferred stock (1) (1)
------- -------
Retained earnings, end of quarter $ (32) $ (53)
======= =======
Net loss per share:
Basic $ (.13) $ (.11)
======= =======
Diluted $ (.13) $ (.10)
======= =======
Weighted average common shares outstanding:
Basic 1,722 1,727
======= =======
Diluted 1,771 1,738
======= =======
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
3
B.B. WALKER COMPANY
CONSOLIDATED CASH FLOWS STATEMENTS
(In thousands)
(Unaudited)
First Quarter
Ended
------------------------
January 30, January 31,
1999 1998
----------- -----------
Cash Flows From Operating Activities:
Net loss $ (229) $ (181)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 47 74
(Increase) decrease in:
Accounts receivable, net 1,559 1,548
Inventories 564 376
Prepaid expenses 82 180
Other assets (5) (3)
Increase (decrease) in:
Accounts payable, trade (640) (832)
Accrued salaries, wages and bonuses (191) (218)
Other accounts payable and accrued liabilities 75 257
------- -------
Net cash provided by operating activities 1,262 1,201
------- -------
Cash Flows From Investing Activities:
Capital expenditures (31) (111)
------- -------
Net cash used for
investing activities (31) (111)
------- -------
Cash Flows From Financing Activities:
Net borrowing under finance agreement (1,145) (3,086)
Proceeds from issuance of long-term obligations 10 6
Payment on long-term obligations (103) (194)
Proceeds from issuance of common stock 4 -
Loans to shareholders, net of repayments 4 4
Dividends paid on 7% cumulative preferred stock (1) (1)
------- -------
Net cash used for financing activities (1,231) (1,090)
------- -------
Net change in cash - -
Cash at beginning of year 1 1
------- -------
Cash at end of quarter $ 1 $ 1
======= =======
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
4
B.B. WALKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
- ------
A summary of the Company's significant accounting policies is presented on
page 9 of its 1998 Annual Report to Shareholders. Users of financial
information presented for interim periods are encouraged to refer to the
footnotes contained in the Annual Report to Shareholders when reviewing interim
financial results.
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary for a fair presentation of the
financial results of B.B. Walker Company and Subsidiary (the "Company") for the
interim periods included. All such adjustments are of a normal recurring
nature. The results of operations for the interim periods shown in this report
are not necessarily indicative of the results to be expected for the fiscal
year.
The Company's operations are reported on a fifty-two, fifty-three week fiscal
year that ends on the Saturday closest to October 31. The results for the
first quarters ended January 30, 1999 and January 31, 1998 each include
thirteen weeks of operations.
Note 2
- ------
Basic earnings per share (EPS) is computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding
for the year. In arriving at income available to common shareholders,
preferred stock dividends of $1,449 were deducted in each quarter presented.
Diluted EPS reflects the potential dilution that could occur if dilutive
securities and 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 the earnings of the Company.
Note 3
- ------
Statement of Financial Accounting Standards ("FAS") No. 130, "Reporting
Comprehensive Income" requires that certain items such as foreign currency
translation adjustments, unrealized gains and losses on certain investments in
debt and equity securities, minimum pension liability adjustments, and unearned
compensation expense related to stock issuances to employees be presented as
separate components of stockholders' equity. FAS 130 defines these as items of
other comprehensive income and as such must be reported in a financial
statement that is displayed with the same prominence as other financial
statements. At January 30, 1999, the Company does not have any items of
comprehensive income to
report.
5
B.B. WALKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Note 4
- ------
Long-term obligations consist of the following amounts (in thousands):
(Unaudited) (Audited)
January 30, October 31,
1999 1998
----------- -----------
Notes payable to banks $ 2,013 $ 2,099
Notes payable to governmental authorities 556 567
Promissory notes payable to shareholders 1,207 1,203
------- -------
3,776 3,869
Less portion payable within one year 2,483 2,566
------- -------
$ 1,293 $ 1,303
======= =======
Note 5
- ------
Inventories are composed of the following amounts (in thousands):
(Unaudited) (Audited)
January 30, October 31,
1999 1998
----------- -----------
Finished goods $ 5,567 $ 5,167
Work in process 707 945
Raw materials and supplies 2,822 3,548
------- -------
$ 9,096 $ 9,660
======= =======
Note 6
- ------
In January 1999, the Company entered into a contract to sell its manufacturing
facility in Asheboro, North Carolina, along with an adjacent piece of property.
On February 26, 1999, this contract was cancelled by the purchaser as permitted
under provisions in the contract.
6
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
- ---------------------
The following summarizes the results of operations for the Company for the
first quarter ended January 31, 1998 and February 1, 1997:
Three
Months Ended
-------------------------
January 30, January 31,
1999 1998
----------- -----------
Net sales 100.0% 100.0%
Cost of products sold 73.6% 74.9%
------- -------
Gross margin 26.4% 25.1%
Selling and administrative expenses 27.4% 24.6%
Depreciation and amortization .8% 1.0%
Interest expense 3.8% 3.5%
Interest and other income (1.9%) (1.7%)
------- -------
Loss before income taxes
and minority interest (3.7%) (2.3%)
Benefit from income taxes - -
Minority interest - -
------- -------
Net loss (3.7%) (2.3%)
======= =======
FIRST QUARTER 1999 COMPARED TO FIRST QUARTER 1998
- -------------------------------------------------
Net Sales
- ---------
Net sales for the first quarter of 1999 were $6,123,000, or 20.8% lower than
net sales of $7,732,000 in the first quarter of 1998. The Company's sales
include sales of footwear manufactured and wholesaled by the Company and sales
from the Company's retail outlets. Footwear manufactured and wholesaled by
the Company, which includes branded, private label and institutional sales,
comprised 89.1% of net sales in the first quarter of 1999 and 92.6% of net
sales in the first quarter of 1998. The remaining 10.9% and 7.4% of net sales
in 1999 and 1998, respectively, were sales from the Company's retail outlets.
The decrease in net sales can be attributed to two factors. First, the
Company's western branded business continues to be impacted by a weak western
retail sector. Historically, western footwear has proven to be a cyclical
business. Demand reached a peak in 1993 and 1994 but has declined during the
past four years. With the repositioning of its product lines in recent years,
the Company's sales are more dependent on its western branded business, whose
shipments in the first quarter of 1999 were $638,000, or 16.1%, less than the
first quarter of 1998. Second, shipments of work/outdoor footwear for the
first quarter of 1999 decreased $890,000, or 28.4%, from the first quarter of
1998. The Company's largest customer, a major discount retailer, showed a 9.8%
decrease in shipments from the first quarter of 1998 compared to the same
period in 1999, due to an inventory adjustment period which caused a delay in
orders being placed in early 1999.
7
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
Sales of the Company's branded footwear in the first quarter of 1999 were down
$402,000, or 9.3%, from 1998's first quarter because of the reasons discussed
above. Branded pairs shipped were down 6,484, or 8.1%, in the first quarter
while price per pair was down only 1.4%. The slight decrease in price per pair
can be attributed to product mix. Nearly 80% of the Company's branded net
sales are coming from its western styles that carry a higher price per pair
than its work/outdoor styles.
Private label sales in the first quarter of 1999 were down $1,042,000, or
39.9%, from the first quarter of 1998. The decrease can be attributed to
weaker work/outdoor private label business. Much of this business is
dependent on the timing of orders for several large customers which did not
keep pace with the prior year. Pairs shipped were down 16,164, or 23.8%,
while the price per pair was down 26.8%. The primary reason for this decrease
in price per pair is due to a significant private label order which required
only the finishing procedure by the Company; therefore, the realized price per
pair was lower than usual.
Sales to institutional customers in the first quarter of 1999 were down
$151,000, or 7.8%, from the first quarter of 1998. Much of this business is
solicited through a formal bidding process with governmental entities, and the
results of this division are impacted by the Company's success in bidding on
new business.
Retail sales decreased $45,000, or 7.8%, from the first quarter of the prior
year. The two retail outlets, one in Asheboro, NC and one in Lancaster, PA,
continue to experience increased competition from major discount retailers
surrounding their locations.
Gross Margin
- ------------
The Company's gross margin as a percentage of sales was 26.3% for the first
three months of 1999 and 25.1% for the first three months of 1998. The
Company's gross margin showed a slight increase from the prior year primarily
because of the sources from which net sales were derived. For the first
quarter of 1999, 63.8% of net sales came from branded sales and 25.7% came
from private label sales. For the comparable period in 1998, 54.3% of net
sales were branded sales and 31.9% were private label sales. Since branded
sales carry higher margins, an overall increase was experienced. The
anufacturing division also posted slightly improved operating results due to
production efficiencies resulting from the welt and cement construction
footwear being in separate facilities since late in fiscal year 1998. The
Company's gross margin percentage continues to be impacted by competitive
pressure at the retail level that requires that the Company remain
competitive in the pricing and terms offered.
Selling and Administrative Expenses
- -----------------------------------
Selling and administrative expenses were $1,677,000 for the first quarter of
1999 as compared to $1,901,000 for the first quarter of 1998, an decrease of
$224,000, or 11.8%. This improvement is due to management's continuing
emphasis of controlling costs and improving operations in the selling and
administrative areas.
8
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
Interest Expense
- ----------------
Interest expense in the first quarter of 1999 was $233,000, or $43,000 lower
than interest expense of $276,000 for the first quarter of 1998. This 15.6%
decrease in interest expense for the three month period can be attributed to a
1.0% drop in the interest rate and a lower average balance on outstanding debt.
Average outstanding advances under the revolving finance agreement were
approximately $484,000, or 7.1%, lower in the first quarter of 1999 than in
1998. Other fees incurred for this agreement were approximately the same rate
for each year. Other long-term debt carried lower balances in 1999 when
compared to 1998 as the Company continues to amortize the debt according to
each issue's respective terms. No new material debt was added during the
first quarter.
Depreciation and Amortization
- -----------------------------
Depreciation and amortization in the first quarter of 1999 was $47,000, or
$27,000 less than 1998 expenses of $74,000. With minimal amounts invested in
fixed assets in recent years, depreciation charges on fixed assets that are
becoming fully depreciated are not being replaced, resulting in lower
depreciation expense.
Benefit From Income Taxes
- -------------------------
For the first quarter of both 1999 and 1998, the Company recorded no benefit
from income taxes. The Company evaluated the valuation allowance reserved
against its deferred income tax asset at the end of the first quarter and
determined that the net deferred income tax asset was appropriately recorded
at its net realizable value.
Net Income
- ----------
The Company reported a net loss of $229,000 in the first quarter of 1999 and
$181,000 in the first quarter of 1998. The 26.5% increase in net loss is
attributable to the 26.3% decrease in net sales.
9
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Historically, the Company has funded substantially all of its working capital
and capital expenditure requirements through borrowings under its finance
agreement and other indebtedness. The revolving finance agreement provides
flexibility to the Company as the availability of funds fluctuates with the
seasonal needs of the Company. Generally, the Company's working capital needs
are highest in the fourth fiscal quarter and lowest in the first fiscal
quarter. With its revolving finance agreement, the Company finances its
accounts receivable and inventories, paying interest at a variable rate (prime
plus 1.50%, or 9.25%, at January 30, 1999). The Company had outstanding
advances of $5,740,000 at January 30, 1999 and an additional $1,251,000
available under the agreement.
During the first quarter of 1999, the Company generated $1,262,000 of cash from
operations which was used to reduce the advances under the revolving finance
agreement by $1,145,000. The Company continues to rely on the revolving
finance agreement to provide working capital and management anticipates that
the revolving finance agreement will continue to provide the necessary
liquidity to fund its daily operations going forward.
Under the Company's financing agreement with the bank, the amount available to
be drawn is determined by a formula based on certain percentages of eligible
accounts receivable and inventories. The credit line available under the
agreement is a maximum of $8,000,000. In addition, the sublimit for inventory,
the maximum advances that can be taken against inventory under the revolving
credit agreement, is $4,000,000. The Company must also meet certain
restrictive financial covenants that were amended effective December 29,
1998 and for periods thereafter. The covenants require the satisfaction of
certain financial tests and the maintenance of certain financial ratios as
defined in the agreement. At January 30, 1999, the Company was in compliance
with its restrictive financial covenants.
In addition to the revolving credit facility, the financing agreement also
provided a $3,000,000 term loan that was used to repay an existing mortgage
note payable to a bank that carried a balance of approximately $1,812,000.
The term loan bears interest at the bank's prime rate plus 1.50% (9.25% at
January 30, 1999).
All advances under the revolving credit facility and the term loan are secured
by all accounts receivable, inventories, machinery and equipment of the
Company. In addition, the bank has a first lien on the Asheboro land and
facilities and a subordinated lien on the Somerset facilities.
The Company made only minimal capital expenditures during the past three years.
The Company made significant upgrades to its equipment and facilities in 1993
and 1994. Because of cash flow considerations and restrictions under the
finance agreement, the Company has only been making capital expenditures to
maintain current levels of operations during the past four years. Funding for
capital expenditures, other than the acquisition of the Somerset, Pennsylvania
facility in July 1994, has primarily come from the available balance on the
finance agreement.
Net working capital, which consists primarily of accounts receivable and
inventories less current liabilities, was $3,991,000 at January 30, 1999 and
$7,157,000 at October 31, 1998. The ratio of current assets to current
liabilities increased to 1.54 to 1 at January 30, 1999 compared to 1.46 to 1
at October 31, 1998.
10
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
FINANCIAL CONDITION
- -------------------
Accounts Receivable
- -------------------
Accounts receivable were $5,598,000 at January 30, 1999 compared to $7,157,000
at October 31, 1998, a decrease of $1,559,000. Trade receivables are
historically at their highest point at the end of the fourth quarter because of
the heavy sales volume related to Christmas buying by retailers. This 21.8%
decrease in accounts receivable is also related to the 26.3% decrease in net
sales.
Inventories
- -----------
Inventories were $9,096,000 at January 30, 1999, a decrease of $564,000, or
5.8%, from the inventories held at October 31, 1998 of $9,660,000. Of the
decrease, approximately $238,000 is in work in process and $726,000 is in raw
materials. These were offset by an increase of $400,000 in finished goods.
The Company continues to focus on improving turns in inventory and improving
the efficiency of raw material procurement.
Borrowings Under Finance Agreement
- ----------------------------------
The balance outstanding under the finance agreement was $5,740,000 at January
30, 1999 compared to $6,885,000 at October 31, 1998. The decrease can be
attributed to the cash applied against the outstanding balance from collections
of accounts receivable which were down $1,559,000 in the first quarter of 1999
and better management of inventories.
Potential Sale of Property
- --------------------------
Late in the fourth quarter of 1998, the Company received an attractive offer
to sell all of its approximately 22.3 acres of real property in Asheboro,
North Carolina. This land is in one of the prime commercial sections of
Randolph County. The Company entered into a Contract for Purchase and Sale
of Real Property Located in Asheboro, North Carolina, dated as of January 28,
1999. Under this contract, the purchaser had until February 26, 1999 to cancel
the contract. On February 26, 1999, the contract was cancelled with the
purchaser having no further obligation to the Company. Immediately thereafter,
the Company began negotiating with several other interested parties who had
become aware of the Company's intentions to sell the Asheboro property when the
initial contract became public. It is possible that a new contract will be
entered into in the near future. However, there can be no assurances that the
terms of a new contract will be agreed to or that, even if another contract is
entered into, a sale of the Asheboro property will be consummated.
11
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
Readiness for Year 2000 Compliance
- ----------------------------------
The Company has initiated a program to minimize the risk of potential
disruption from the "Year 2000 ('Y2K') problem." This problem is a result of
computer programs having been written using two digits (rather than four) to
define the applicable year. Any information technology ("IT") systems that
have time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000, which could result in miscalculations and system
failures. The problem also extends to "non-IT" systems; that is, operating
and control systems that rely on embedded chip systems. In addition, like
every other business enterprise, the Company is at risk from Y2K failures on
the part of its major business counterparts, including suppliers,
distributors, and manufacturers, as well as potential failures in public and
private infrastructure services, including electricity, water, gas,
transportation, and communications.
The Company began developing a plan in November 1997 to resolve the Y2K issues
that are reasonably within its control. These efforts are being coordinated
through the Company's data processing department and chaired by the information
systems programming manager ("ISPM"). With respect to the Company's Y2K
efforts, the ISPM reports periodically to the Company's president, who in turn
updates the Audit Committee of the Board of Directors.
In January 1998, the ISPM completed an identification of those IT systems which
would require detailed program changes to be Y2K compliant. An employee
programmer already familiar with the Company's computer system has been
assigned full-time to modify those identified programs. Program changes
and testing are made in a test directory specifically created for the Y2K
modifications so that there are no conflicts with live data. When testing is
completed for a system, files are then converted, and modified programs are
copied to live directories on a weekend when no users are on the system. The
Company's current timetable anticipates completion of all conversions,
necessary testing, and full implementation by June 30, 1999. At this time,
the Company has not deemed it necessary to develop contingency plans for any
of the applications being converted; however, the Company will continue to
assess this and will develop contingency plans for any applications not
converted and operating by June 30, 1999.
With respect to Electronic Data Interchange ("EDI") applications, a Company
manager with extensive computer experience is assessing the Company's impact
from four customers who transmit orders via EDI. All but three of these
customers utilize a third-party EDI service bureau, while the fourth one (the
Company's largest customer) is expected to be changed from being an internal
EDI user to an external user by June 30, 1999. No significant EDI
transmission problems are anticipated.
With regard to non-IT systems, the Company's phone and security systems are
both Y2K compliant. The Company is in the process of assessing personal
computers and manufacturing machines that are not Y2K compliant, especially
those with programs that involve stitching patterns on western boots. Major
suppliers to the Company have been contacted by questionnaire, and the
Company has received confirmations of either Y2K compliance or a timetable
to be compliant from such suppliers. The Company has also contacted its
major customers by questionnaire to assess their status with regard to the
Y2K issue. Contingency plans will be developed for any significant suppliers
or customers that are not Y2K compliant by June 30, 1999, or earlier if the
Company becomes aware that such entities may not be Y2K compliant in a timely
manner.
12
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
It is important to note that the description of the Company's efforts
necessarily involves estimates and projections with respect to activities
required in the future. The required code changes, testing, and implementation
necessary to address the Y2K issue are expected to cost approximately $100,000,
and the Company has incurred approximately $60,000 through January 30, 1999.
The Company estimates that it is approximately 65% complete with the efforts
required to be Y2K compliant. These estimates and projections are subject to
change as work continues.
Even though the Company's Y2K plan should adequately address the Y2K issue,
there can be no assurance that unforeseen difficulties will not arise. If the
Company does not identify and fix all Y2K problems, or if a major supplier or
customer is unable to adequately address its Y2K issue, the Company's results
of operations or financial condition could be materially impacted.
New Accounting Standards
- ------------------------
Statement of Financial Accounting Standards ("FAS") No. 130, "Reporting
Comprehensive Income" requires that certain items such as foreign currency
translation adjustments, unrealized gains and losses on certain investments in
debt and equity securities, minimum pension liability adjustments, and unearned
compensation expense related to stock issuances to employees be presented as
separate components of stockholders' equity. FAS 130 defines these as items of
other comprehensive income and as such must be reported in a financial
statement that is displayed with the same prominence as other financial
statements. At January 30, 1999, the Company does not have any items of
comprehensive income to report.
In June 1997, the FASB issued FAS 131, "Disclosures About Segments of an
Enterprise and Related Information". This Statement changes the way companies
report information about segments of their business in their annual financial
statements and require companies to report selected segment information in
their quarterly reports issued to shareholders. It also requires entity-wide
disclosures about the products and services an entity provides, the material
countries in which it holds assets and reports revenues, and its major
customers. The Statement also requires companies to disclose segment data
based on how management makes decisions about allocating resources to segments
and measuring their performance. FAS 131 is effective for the Company in
fiscal year 1999, but as permitted, this Statement need not be applied to
interim financial statements in the initial year of its application.
Forward-Looking Statements
- --------------------------
The foregoing discussion contains some forward-looking statements about the
Company's financial condition and results of operations, which are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which reflect management's judgment only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements to
reflect events and circumstances that arise after the date hereof.
Factors that might cause actual results to differ materially from these
forward-looking statements include (1) the effects of general economic
conditions, (2) the impact of competitive products and pricing in the footwear
industry, (3) failure to achieve anticipated sales results, (4) management's
ability to accurately predict the effect of cost reductions, (5) management's
ability to accurately predict the adequacy of the Company's financing
arrangement to meet its working capital and capital expenditure requirements,
and (6) failure to enter into a contract for the sale of the Asheboro, North
Carolina property and if entered into, the consummation of the transaction
provided for therein.
13
Part II. OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Filed:
(27) Financial Data Schedule for the first quarter ended
January 30, 1999
(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.
B.B. WALKER COMPANY
Date: March 10, 1999 KENT T. ANDERSON
----------------
Chairman of the Board, Chief
Executive Officer and President
Date: March 10, 1999 CAREY M. DURHAM
---------------
Chief Financial Officer
14
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from B.B.
Walker's Form 10-Q for the first quarter of fiscal 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000104218
<NAME> B.B. WALKER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> 0CT-30-1999
<PERIOD-END> JAN-30-1999
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 6,235
<ALLOWANCES> 637
<INVENTORY> 9,096
<CURRENT-ASSETS> 16,109
<PP&E> 8,176
<DEPRECIATION> 6,570
<TOTAL-ASSETS> 17,864
<CURRENT-LIABILITIES> 12,118
<BONDS> 0
0
83
<COMMON> 1,726
<OTHER-SE> 2,611
<TOTAL-LIABILITY-AND-EQUITY> 17,864
<SALES> 6,123
<TOTAL-REVENUES> 6,240
<CGS> 4,511
<TOTAL-COSTS> 6,235
<OTHER-EXPENSES> 1
<LOSS-PROVISION> 75
<INTEREST-EXPENSE> 233
<INCOME-PRETAX> (229)
<INCOME-TAX> 0
<INCOME-CONTINUING> (229)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (229)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
