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 SECOND QUARTER ENDED APRIL 29, 2000
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 June 1, 2000, 1,745,954 shares of the Registrant's voting common stock
with a par value of $1.00 per share were outstanding.
Cover
B.B. WALKER COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) (Audited)
April 29, October 30,
Assets 2000 1999
------ ----------- -----------
Cash $ 1 $ 1
Accounts receivable, less allowance
for doubtful accounts of $593 in
2000 and $525 in 1999 5,134 6,471
Inventories 8,387 9,210
Prepaid expenses 405 471
Property held for sale 889 803
Deferred income tax benefit, current 1,039 1,039
------- -------
Total current assets 15,855 17,995
Property, plant and equipment, net of
accumulated depreciation and amortization
of $6,746 in 2000 and $6,690 in 1999 1,383 1,467
Other assets 128 130
------- -------
$ 17,366 $ 19,592
======= =======
(Continued)
1
B.B. WALKER COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS, Continued
(In thousands)
(Unaudited) (Audited)
April 29, October 30,
Liabilities and Shareholders' Equity 2000 1999
------------------------------------ ----------- -----------
Borrowings under finance agreement $ 6,093 $ 7,113
Current portion of long-term obligations 2,533 1,118
Accounts payable, trade 3,341 3,518
Accrued salaries, wages and bonuses 296 368
Other accounts payable and accrued liabilities 421 471
Income taxes payable 182 182
------- -------
Total current liabilities 12,866 12,770
------- -------
Long-term obligations 1,110 2,726
Minority interests in consolidated subsidiary 31 31
Shareholders' equity:
7% cumulative preferred stock, $100 par value,
1,150 shares authorized, 828 shares issued
and outstanding in 2000 and 1999 83 83
Common stock, $1 par value, 6,000,000 shares
authorized, 1,745,954 shares issued and
and outstanding in 2000 and 1999 1,746 1,746
Capital in excess of par value 2,712 2,712
Retained earnings (deficit) (1,115) (400)
Shareholders' loans (67) (76)
------- -------
Total shareholders' equity 3,359 4,065
------- -------
$ 17,366 $ 19,592
======= =======
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
2
B.B. WALKER COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Second Quarter Ended Six Months Ended
-------------------------- --------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 6,053 $ 6,475 $ 11,028 $ 12,598
Interest and other income 11 6 28 123
----------- ----------- ----------- -----------
Total revenues 6,064 6,481 11,056 12,721
----------- ----------- ----------- -----------
Cost of products sold 4,229 4,519 7,790 9,030
Selling and administrative expenses 1,675 1,676 3,237 3,353
Depreciation and amortization 41 48 81 95
Interest expense 235 225 479 458
----------- ----------- ----------- -----------
Total costs and expenses 6,180 6,468 11,767 12,936
----------- ----------- ----------- -----------
Income (loss) before income taxes
and minority interest (116) 13 (711) (215)
Provision for (benefit from) income taxes - - - -
Minority interest - - 1 1
----------- ----------- ----------- -----------
Net income (loss) (116) 13 (712) (216)
Retained earnings (deficit) at beginning of period (997) (32) (400) 198
Dividends on preferred stock (2) (2) (3) (3)
----------- ----------- ----------- -----------
Retained deficit at end of period $ (1,115) $ (21) $ (1,115) $ (21)
=========== =========== =========== ===========
Net income (loss) per share:
Basic $ (.07) $ .01 $ (.41) $ (.13)
=========== =========== =========== ===========
Diluted $ (.07) $ .01 $ (.41) $ (.13)
=========== =========== =========== ===========
Weighted average common shares outstanding:
Basic 1,746 1,726 1,746 1,724
=========== =========== =========== ===========
Diluted 1,746 1,762 1,746 1,724
=========== =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
3
B.B. WALKER COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months
Ended
-----------------------
April 29, May 1,
2000 1999
----------- ----------
Cash Flows From Operating Activities:
Net loss $ (712) $ (216)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 81 95
Gain on sale of property, plant and equipment (17) -
(Increase) decrease in:
Accounts receivable, net 1,337 1,162
Inventories 823 366
Prepaid expenses 66 133
Other assets 2 (30)
Increase (decrease) in:
Accounts payable, trade (177) (663)
Accrued salaries, wages and bonuses (72) (21)
Other accounts payable and accrued liabilities (50) 94
-------- -------
Net cash provided by operating activities 1,281 157
-------- -------
Cash Flows From Investing Activities:
Capital expenditures (2) -
Proceeds from disposal of property,
plant and equipment 22 -
Purchase of property held for sale (86) (763)
-------- --------
Net cash used for investing activities (66) (792)
-------- --------
Cash Flows From Financing Activities:
Net payments under financing agreement (1,020) (371)
Payment on long-term obligations (318) (232)
Proceeds from issuance of short-term obligations 84 437
Proceeds from issuance of long-term obligations 33 31
Proceeds from issuance of common stock - 4
Purchase of subsidiary stock from minority interests - (2)
Repayments of loans to shareholders 9 8
Dividends paid on 7% cumulative preferred stock (3) (3)
-------- --------
Net cash used for financing activities (1,215) (128)
-------- --------
Net change in cash - -
Cash at beginning of year 1 1
-------- --------
Cash at end of second quarter $ 1 $ 1
======== ========
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
4
B.B. WALKER COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
------
A summary of the Company's significant accounting policies is presented on
page 9 of its 1999 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 finan-
cial 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 six months ended April 29, 2000 and May 1, 1999 each include
twenty-six weeks of operations. The second quarters for 2000 and 1999 each
include thirteen weeks of operations.
Note 2
------
Basic earnings per share (EPS) are computed by dividing income (loss)
available to common shareholders by the weighted-average number of common
shares outstanding for the year. In arriving at income (loss) 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 sercurities 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.
Due to the losses for the quarter ended April 29, 2000 and for the six
month periods ended April 29, 2000 and May 1, 1999, the stock options out-
standing would have been antidilutive and were excluded from the calcula-
tion of diluted earnings per share.
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 shareholders' 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 April 29, 2000 and May 1, 1999, the Company
does not have any items of other comprehensive income to report.
5
B.B. WALKER COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Note 4
------
Long-term obligations consist of the following amounts (in thousands):
(Unaudited) (Audited)
April 29, October 30,
2000 1999
----------- -----------
Notes payable to banks $ 2,022 $ 2,160
Notes payable to governmental authorities 500 522
Promissory notes payable to shareholders 1,121 1,162
------- -------
3,643 3,844
Less portion payable within one year 2,533 1,118
------- -------
$ 1,110 $ 2,726
======= =======
Note 5
------
Inventories are composed of the following amounts (in thousands):
(Unaudited) (Audited)
April 29, October 30,
2000 1999
----------- -----------
Finished goods $ 5,355 $ 6,059
Work in process 581 544
Raw materials and supplies 2,451 2,607
------- -------
$ 8,387 $ 9,210
======= =======
Note 6
------
The Company's reportable segments are wholesale and retail sales. Whereas
wholesale sales are made to major chain stores, retail stores, and
governmental entities, retail sales are made directly to the public
from the Company's two retail outlets in Asheboro, NC, and Lancaster, PA.
The segments are managed separately because each business unit requires
different marketing strategies. Segment information for the first six
months of 2000 and 1999 are as follows:
WHOLESALE RETAIL TOTAL
---------------------------------------------
2000 (in 000s)
---------------------------------------------
Net sales $ 10,184 $ 844 $ 11,028
Cost of sales 7,473 497 7,970
Gross profit 2,738 348 3,086
Operation earnings (losses) (664) (48) (712)
Depreciation and amortization 80 1 81
WHOLESALE RETAIL TOTAL
---------------------------------------------
1999 (in 000s)
---------------------------------------------
Net sales $ 11,655 $ 943 $ 12,598
Cost of sales 8,470 560 9,030
Gross profit 3,185 383 3,568
Operation earnings (losses) (218) 2 (216)
Depreciation and amortization 94 1 95
Note 7
------
In February 2000, the Company entered into a contract to sell its manufac-
turing facility in Asheboro, North Carolina, along with an adjacent piece
of property. Management does not expect to have a loss on the sale.
6
B.B. WALKER COMPANY AND SUBSIDIARY
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
second quarters and six months ended April 29, 2000 and May 1, 1999:
Second Six
Quarter Ended Months Ended
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
--------- -------- --------- --------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of products sold 69.9% 69.8% 72.3% 71.7%
------- ------- ------- -------
Gross margin 30.1% 30.2% 27.7% 28.3%
Selling and administrative
expenses 27.7% 25.9% 29.4% 26.6%
Depreciation and amortization .7% .7% .7% .8%
Interest expense 3.9% 3.5% 4.3% 3.6%
Interest and other income (.2%) (.1%) (.2%) (1.0%)
------- ------- ------- -------
Income (loss) before income
taxes and minority interest (.2%) .2% (6.5%) (1.7%)
Provision for income taxes - - - -
Minority interest - - - -
------- ------- ------- -------
Net income (loss) (.2%) .2% (6.5%) (1.7%)
======= ======= ======= =======
Net Sales
---------
For the second quarter of 2000, the Company's net sales were $6,053,000, or
$422,000 (6.5%) lower than net sales of $6,475,000 in the second quarter of
1999. For the six month period ended April 29, 2000, net sales were
$11,028,000, a $1,570,000 (12.5%) decrease from net sales of $12,598,000
in the comparable six month period ended May 1, 1999. The Company's
revenues include sales of footwear both manufactured and purchased by the
Company and sales from the Company's retail outlets. Footwear wholesaled
by the Company, which includes branded, private label and institutional
sales, comprised 92.5% of net sales in the second quarter of 2000 and
92.3% of net sales in the second quarter of 1999. Retail sales made up the
remaining net sales of 7.5% in 2000 and 7.7% in 1999. For the comparable
six month periods, wholesaled footwear comprised 91.7% of net sales in
2000 and 91.8% of net sales in 1999. The remaining net sales of 8.3% in
2000 and 8.2% in 1999 were sales from the Company's retail outlets.
7
B.B. WALKER COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION, Continued
The decrease in net sales can be attributed to two factors. First, import
penetration of 95% into the U.S. footwear market has made it easier to enter
the work shoe market. This increase in low-priced imports has caused a
dramatic adverse effect on the Company's work/outdoor shipments. However,
due to an increased use by the Company of imports from Mexico starting late
in the second quarter of 2000, the Company should start recovering some of
the ground lost in the work shoe market these past two years. The second
quarter of 2000 showed a $16,000, or 0.8%, increase in work/outdoor
shipments over the second quarter of 1999. Second, the Company's
western branded business continues to be impacted by a weak western retail
sector, as shipments in the second quarter of 2000 decreased $237,000, or
6.3%, from the second quarter of 1999. However, increased bookings above
last year's orders at five of our western shows during the second quarter
of 2000 should translate into increased sales in the fall of calendar 2000.
Sales of the Company's branded footwear in the second quarter of 2000 were
down $293,000, or 6.2%, from 1999's second quarter because of the reasons
discussed above. Branded pairs shipped were down 8,489, or 10.0%, in the
second quarter while price per pair was up 6.0%. The increase in price
per pair can be attributed to product mix.
Private label sales in the second quarter of 2000 were down $37,000, or
3.3%, from the second quarter of 1999. The decrease can be attributed to
an overall weaker work/outdoor private label business. The exception was
to the Company's largest customer, a major discount retailer, whose ship-
ments increased 31.0% over last year's second quarter. This allowed
overall private label pairs shipped to be up 367, or 1.3%, in the second
quarter of 2000 versus 1999.
Sales to institutional customers in the second quarter of 2000 were down
$20,000, or 5.2%, from the second quarter of 1999. 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. Unfortunately, there is an increasing trend
toward being underbid by import suppliers on new institutional business.
Retail sales decreased $47,000, or 9.4%, from the second 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.
8
B.B. WALKER COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION, Continued
Gross Margin
------------
For the second quarter of 2000 and 1999, the gross margin was 30.1% and
30.2%, respectively. The Company's gross margin was 27.7% and 28.3% for the
first six months of 2000 and 1999, respectively. This slight 0.6% decrease
from the prior year is due to lower production than budgeted which has not
covered the Company's fixed costs in manufacturing as well as expected. The
gross margin percentage continues to be impacted by competitive pressure at
the retail level which requires that the Company remain competitive in the
pricing and terms offered.
Selling and Administrative Expenses
-----------------------------------
Selling and administrative expenses were $1,675,000 for the second quarter
of 2000 as compared to $1,676,000 for the second quarter of 1999, a
decrease of only $1,000. Year-to-date expenses for 2000 and 1999 are
$3,237,000 and $3,353,000, respectively. Even though there has been a
$116,000 reduction in the first six months of 2000 over 1999, selling and
administrative expenses as a percentage of sales have increased from 26.6%
in 1999 to 29.4% in 2000 since these relatively-fixed expenses are being
compared to year-to-date sales which have declined 12.5% from the previous
year. Management continues to emphasize cost control and operational
efficiency in the selling and administrative areas.
Interest Expense
----------------
Interest expense in the second quarter of 2000 was $235,000, or $10,000
higher than interest expense of $225,000 for the second quarter of 1999.
This 4.4% increase in interest expense for the second quarter can be
attributed to a 1.0% jump in the interest rate over last year. Additional
interest has also been expensed this year on short-term debt to finance the
purchase of adjacent land parcels since the second quarter of last year.
9
B.B. WALKER COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION, Continued
Depreciation and Amortization
-----------------------------
Depreciation and amortization in the second quarter of 2000 was $41,000, or
$7,000 less than 1999 expenses of $48,000. 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 second quarter of both 2000 and 1999, the Company recorded no bene-
fit from income taxes. The Company evaluated the valuation allowance
reserved against its deferred income tax asset at the end of the second
quarter and determined that the net deferred income tax asset was
appropriately recorded at its net realizable value.
Net Income (Loss)
-----------------
The Company reported a loss of $116,000 in the second quarter of 2000
compared to a $13,000 profit in the second quarter of 1999. As discussed
above, the 6.5% decrease in net sales from the second quarter of 1999 has
adversely affected gross margins as lower production than budgeted has not
covered the Company's fixed manufacturing costs.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Historically, the Company has funded substantially all of its working
capital and capital expenditure requirements through borrowings under its
financing agreement and other indebtedness. The revolving financing agree-
ment 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 financing agreement, the
Company finances its accounts receivable and inventories, paying interest at
a variable rate (prime plus 1.50%, or 10.5%, at April 29, 2000). The
Company had outstanding advances of $6,093,000 at April 29, 2000 and an
additional $354,000 available under the agreement. The Company continues
to rely on the revolving financing agreement to provide working capital,
and management anticipates that the revolving financing agreement will
continue to provide the necessary liquidity to fund its daily operations
going forward.
10
B.B. WALKER COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION, Continued
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 entered
into amendments to its credit agreement on December 30, 1999 and on January
26, 2000. The former set the maturity date at December 31, 2000, whereas
the latter amended certain restrictive financial covenants retroactive to
fiscal year ended October 30, 1999 and for periods thereafter. As of April
29, 2000, the Company was not in compliance with three interim debt
covenants but expects to satisfy them if the sale of the Asheboro, NC
property is consummated.
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. At April 29, 2000, the balance of the term loan is
approximately $1,276,000 and bears interest at the bank's prime rate
plus 1.50% (10.5% at April 29, 2000).
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 significant upgrades to its equipment and facilities in
1993 and 1994 but has made only minimal capital expenditures during the
past six years. Because of cash flow considerations and restrictions under
the financing agreement, the Company has made capital expenditures only
to maintain current levels of operations during the past six 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 financing agreement and cash from operations.
Net working capital, which consists primarily of accounts receivable and
inventories less current liabilities, was $2,989,000 at April 29, 2000 and
$5,225,000 at October 30, 1999. The ratio of current assets to current
liabilities was 1.32 to 1 at April 29, 2000 compared to 1.41 to 1 at
October 30, 1999. These calculations are based on special classification
by the bank of the current portion of one long-term debt instrument.
11
B.B. WALKER COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION, Continued
FINANCIAL CONDITION
-------------------
Accounts Receivable
-------------------
Accounts receivable were $5,134,000 at April 29, 2000 compared to $6,471,000
at October 30, 1999. Trade receivables are historically at their highest
point at the end of the fiscal year because of the heavy sales volume
related to Christmas buying by retailers. This 20.7% decrease in accounts
receivable is also related to the 12.5% decrease in year-to-date net sales
and continued stronger collection efforts since a new credit manager took
over this department in mid-February 2000.
Inventories
-----------
Inventories were $8,387,000 at April 29, 2000, a decrease of $823,000, or
8.9%, from the inventories of $9,210,000 held at October 30, 1999. Of this
decrease, approximately $704,000 is finished goods and $156,000 is raw
materials. These were offset somewhat by a $37,000 increase in work in
process. The investment in finished goods and raw materials is down as the
Company has focused on improving the efficiency of materials procurement
and plant utilization. The Company continues to focus on improving
inventory turns.
Borrowings under Finance Agreements
-----------------------------------
The balance outstanding under the financing agreement was $6,093,000 at
April 29, 2000 as compared to $7,113,000 at October 30, 1999, a decrease
of $1,020,000, or 14.3%. The decrease can be attributed to the cash
applied against the outstanding balance from collections of accounts
receivable which were down $1,337,000 in the first six months of 2000
and better management of inventories.
Potential Sale of Property
--------------------------
In December 1999, the Company received an attractive offer to sell all of
its approximately 26 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 on February 4, 2000. Under this con-
tract, the purchaser has until August 2, 2000 to examine the suitability
of the property for its needs. At the end of this 180 day period, the
purchaser may extend the examination period for two additional 90 day
periods. At the end of the examination period, the contract may be
terminated by the purchaser without further obligation to the Company.
Accordingly, there can be no assurances that the sale of the Asheboro,
North Carolina property will be consummated or, if consummated, that such
sale will occur in the Company's fiscal year 2000. While there will be
costs associated with relocating the Asheboro operations, the Company has
taken steps to limit the effects of these matters and does not expect the
relocation to have a material adverse effect on the operations of the
Company.
12
B.B. WALKER COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION, Continued
Year 2000 Issue
---------------
To date, the Company has not experienced any significant business disrup-
tions related to the Year 2000 Issue. The Company incurred approximately
$115,000 addressing the issue and funded the expenditures through cash
flows from operations. Although the Company believes that it success-
fully avoided any significant disruption from the Year 2000 Issue, it
will continue to monitor all critical systems for the appearance of
delayed complications or disruptions, problems encountered through
suppliers, customers and other third parties with whom the Company deals.
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 consummate the sale of the
Asheboro, North Carolina property.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
Because the Company's obligations under the bank credit agreement bear
interest at floating rates, the Company is sensitive to changes in pre-
vailing interest rates. A 10% increase or decrease in market interest
rates would not have a material impact on earnings during the next fiscal
year.
13
PART II. OTHER INFORMATION
---------------------------
Item 2. Changes in Securities:
NONE
Item 4. Submission of Matters to a Vote of Security Holders:
The Forty-Ninth Annual Meeting of the Shareholders of the Company
was held on Monday, March 20, 2000, as set forth in the Notice of
Annual Meeting of Shareholders dated and mailed on February 28,
2000. Of the 1,745,954 shares of common stock issued and
outstanding on the record date, 1,278,147 shares or 73.2% of the
common stock outstanding were represented in person or by proxy at
the meeting. For the issues presented to the shareholders for
their consideration, the results were as follows:
1 - The Board of Directors, in accord with the By-laws, established
the number of Directors at six. The shareholders elected the
six persons nominated by them in the proxy statement mailed
February 28, 2000. All director nominees had served as
directors during the prior year and all were elected by the
shareholders. There were no other nominations for director
presented at the meeting. The six nominees were elected with
results as follows:
Shares Shares Shares Marked
Director For Against Withhold Authority
-------- --------- ------- ------------------
Kent Anderson 1,157,582 - 120,565
George M. Ball 1,161,928 - 116,219
Robert L. Donnell, Jr. 1,146,773 - 131,374
James P. McDermott 1,157,836 - 120,311
Michael C. Miller 1,277,979 - 168
Edna A. Walker 1,278,123 - 24
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Filed:
(27) Financial Data Schedule for the period ended
April 29, 2000
(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 June 8, 2000 KENT T. ANDERSON
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Chairman of the Board, Chief
Executive Officer and President
Date June 8, 2000 CAREY M. DURHAM
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Vice President and
Chief Financial Officer
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