<PAGE> 1
<TABLE>
GENESCO
(Logo)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(Mark One) FORM 10-Q
[X] Quarterly Report Pursuant To
Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended
April 30, 1994
[ ] Transition Report Pursuant To
Section 13 or 15(d) of the
Securities Exchange Act of 1934
Securities and Exchange Commission
Washington, D.C. 20549
Commission File No. 1-3083
----------------------------------------------------------------
GENESCO INC.
A Tennessee Corporation
I.R.S. No. 62-0211340
Genesco Park
1415 Murfreesboro Road
Nashville, Tennessee 37217-2895
Telephone 615/367-7000
----------------------------------------------------------------
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 such shorter period that the registrant was required to file
such reports with the Commission) and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
------ -----
</TABLE>
- - ---------------------------------------------------------------
Common Shares Outstanding June 3, 1994 - 24,797,449
<PAGE> 2
<TABLE>
<CAPTION>
INDEX
-------------------------------------------------------------------------------------------------------------------------
Page
-------------------------------------------------------------------------------------------------------------------------
<S> <C>
Part 1 - Financial Information 3
-------------------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheet - April 30, 1994, January 31, 1994 and
April 30, 1993 3
-------------------------------------------------------------------------------------------------------------------------
Consolidated Earnings - Three Months Ended
April 30, 1994 and 1993 4
-------------------------------------------------------------------------------------------------------------------------
Consolidated Cash Flows - Three Months Ended
April 30, 1994 and 1993 5
-------------------------------------------------------------------------------------------------------------------------
Consolidated Shareholders' Equity - Year Ended
January 31, 1994 and Three Months Ended April 30, 1994 6
-------------------------------------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements 7
-------------------------------------------------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and
Results of Operations 15
-------------------------------------------------------------------------------------------------------------------------
Part II - Other Information 23
-------------------------------------------------------------------------------------------------------------------------
Signature 24
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheet
In Thousands
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
April 30, January 31, April 30,
1994 1994 1993
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments $ 4,135 $ 3,625 $ 2,900
Accounts receivable 75,621 66,006 78,552
Inventories 158,544 155,120 166,477
Other current assets 6,753 5,839 6,677
---------------------------------------------------------------------------------------------------------------------
Total current assets 245,053 230,590 254,606
---------------------------------------------------------------------------------------------------------------------
Plant, equipment and capital leases 42,080 42,909 46,469
Goodwill and other intangibles 18,513 18,590 19,998
Other non-current assets 16,939 17,297 19,106
---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $322,585 $309,386 $340,179
=====================================================================================================================
---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Notes payable $ 1,832 $ 69 $ 1,670
Current payments on capital leases 2,402 2,365 1,818
Accounts payable and accrued liabilities 65,886 68,062 56,504
---------------------------------------------------------------------------------------------------------------------
Total current liabilities 70,120 70,496 59,992
---------------------------------------------------------------------------------------------------------------------
Long-term debt 106,000 90,000 77,000
Capital leases 12,233 12,888 12,627
Other long-term liabilities 38,325 37,279 31,268
Contingent liabilities - - -
SHAREHOLDERS' EQUITY:
Non-redeemable preferred stock 7,979 8,064 8,235
Common shareholders' equity:
Par value of issued shares 24,797 24,793 24,452
Additional paid-in capital 121,630 121,634 119,900
Retained earnings (deficit) (26,063) (23,241) 28,190
Minimum pension liability (9,964) (9,964) -0-
Treasury shares, at cost (17,857) (17,857) (17,857)
Foreign currency translation adjustments (4,615) (4,706) (3,628)
---------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 95,907 98,723 159,292
---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $322,585 $309,386 $340,179
=====================================================================================================================
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
3
<PAGE> 4
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Consolidated Earnings
Three Months Ended April 30
In Thousands
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
1994 1993
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $130,632 $128,384
Cost of sales 87,291 81,681
Selling and administrative expenses 43,421 45,030
-------------------------------------------------------------------------------------------------------------
Earnings (loss) from operations before
other income and expenses (80) 1,673
-------------------------------------------------------------------------------------------------------------
Other expenses (income):
Interest expense 2,806 2,391
Other income (354) (27)
--------------------------------------------------------------------------------------------------------------
Total other expenses, net 2,452 2,364
-------------------------------------------------------------------------------------------------------------
Loss before income taxes and cumulative effect
of change in accounting principle (2,532) (691)
Income taxes 141 51
-------------------------------------------------------------------------------------------------------------
Loss before cumulative effect of change in
accounting principle (2,673) (742)
Cumulative effect of change in accounting for
postretirement benefits -0- (2,273)
-------------------------------------------------------------------------------------------------------------
NET LOSS $ (2,673) $ (3,015)
=============================================================================================================
Loss per common share:
Before cumulative effect of change in
accounting principle $ (.11) $ (.03)
Postretirement benefits $ .00 $ (.10)
Net loss $ (.11) $ (.13)
==============================================================================================================
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
4
<PAGE> 5
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Consolidated Cash Flows
Three Months Ended April 30
In Thousands
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
1994 1993
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net loss $ (2,673) $ (3,015)
Noncash charges to earnings:
Depreciation and amortization 2,493 2,519
Postretirement benefits -0- 2,273
Provision for losses on accounts receivable 417 572
Other 63 168
-------------------------------------------------------------------------------------------------------------------
Net cash provided by operations before
working capital and other changes 300 2,517
Effect on cash of changes in working
capital and other assets and liabilities:
Accounts receivable (10,081) (7,381)
Inventories (3,424) (14,936)
Other current assets (914) 126
Accounts payable and accrued liabilities (2,177) (9,285)
Other assets and liabilities 1,310 1,177
-------------------------------------------------------------------------------------------------------------------
Net cash used in operations (14,986) (27,782)
-------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Capital expenditures (1,564) (1,646)
Proceeds from disposal of plant and equipment 156 15
-------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,408) (1,631)
-------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Long-term borrowings -0- 75,000
Net borrowings (repayments) under
revolving credit agreement 16,000 (20,000)
Net change in short-term borrowings 1,763 1,670
Payments of long-term debt -0- (32,000)
Payments on capital leases (617) (456)
Exercise of options and warrants 6 5,919
Deferred note expense -0- (2,550)
Dividends paid -0- (77)
Other (248) (10)
-------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 16,904 27,496
-------------------------------------------------------------------------------------------------------------------
NET CASH FLOW 510 (1,917)
Cash and short-term investments at beginning of period 3,625 4,817
-------------------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 4,135 $ 2,900
===================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Net cash paid (received) for:
Interest $ 4,529 $ 868
Income taxes (269) 48
===================================================================================================================
The accompanying Notes are an integral part of these Financial Statements.
</TABLE>
5
<PAGE> 6
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Consolidated Shareholders' Equity
In Thousands
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Foreign Minimum Total
Total Retained Currency Pension Share-
Preferred Common Paid-In Earnings Treasury Translation Liability holders'
Stock Stock Capital (Deficit) Stock Adjustments Adjustment Equity
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance January 31, 1993 $ 8,305 $ 23,658 $114,706 $ 31,283 $(17,857) $ (5,044) $ -0- $155,051
------------------------------------------------------------------------------------------------------------------------------
Exercise of options and warrants -0- 1,132 6,743 -0- -0- -0- -0- 7,875
Translation adjustment -0- -0- -0- -0- -0- 338 -0- 338
Net loss -0- -0- -0- (54,292) -0- -0- -0- (54,292)
Preferred dividends -0- -0- -0- (232) -0- -0- -0- (232)
Minimum pension liability adjustment -0- -0- -0- -0- -0- -0- (9,964) (9,964)
Other (241) 3 185 -0- -0- -0- -0- (53)
------------------------------------------------------------------------------------------------------------------------------
Balance January 31, 1994 $ 8,064 $ 24,793 $121,634 $(23,241) $(17,857) $ (4,706) $ (9,964) $ 98,723
------------------------------------------------------------------------------------------------------------------------------
Exercise of options -0- 2 4 -0- -0- -0- -0- 6
Translation adjustment -0- -0- -0- -0- -0- 91 -0- 91
Net loss -0- -0- -0- (2,673) -0- -0- -0- (2,673)
Other (85) 2 (8) (149) -0- -0- -0- (240)
------------------------------------------------------------------------------------------------------------------------------
Balance April 30, 1994 $ 7,979 $ 24,797 $121,630 $(26,063) $(17,857) $ (4,615) $ (9,964) $ 95,907
==============================================================================================================================
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
6
<PAGE> 7
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM STATEMENTS
The consolidated financial statements contained in this report are
unaudited but reflect all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of the results
for the interim periods of the fiscal year ending January 31, 1995
("Fiscal 1995") and of the fiscal year ended January 31, 1994 ("Fiscal
1994"). The results of operations for any interim period are not
necessarily indicative of results for the full year. The financial
statements should be read in conjunction with the financial statements
and notes thereto included in the annual report on Form 10-K.
BASIS OF CONSOLIDATION
All subsidiaries are included in the consolidated financial statements.
All significant intercompany transactions and accounts have been
eliminated.
CASH AND SHORT-TERM INVESTMENTS
There were no short-term investments at January 31, 1994 or April 30,
1994. Short-term investments are highly-liquid debt instruments having
an original maturity of three months or less.
INVENTORIES
Inventories of wholesaling and manufacturing companies are stated at the
lower of cost or market, determined principally by the first-in,
first-out method. Retail inventories are determined by the retail
method.
PLANT, EQUIPMENT AND CAPITAL LEASES
Plant, equipment and capital leases are recorded at cost and depreciated
or amortized over the estimated useful life of related assets.
Depreciation and amortization expense is computed principally by the
straight-line method.
GOODWILL AND OTHER INTANGIBLES
Goodwill and other intangibles consist primarily of the excess of
purchase price over fair value of net assets acquired in acquisitions.
Goodwill is being amortized on a straight-line basis over 40 years. The
Company periodically assesses the realizability of intangible assets
taking into consideration such factors as expected cash flows and
operating strategies.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign operations are translated at the
exchange rate on the balance sheet date. Income and expenses are
translated at the average exchange rates prevailing during the period.
Unrealized translation adjustments are reported as a separate component
of shareholders' equity.
7
<PAGE> 8
GENESCO Inc.
and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
HEDGING CONTRACTS
In order to reduce exposure to foreign currency exchange rate
fluctuations in connection with inventory purchase commitments, the
Company enters into foreign currency forward exchange contracts. At
January 31, 1994 and April 30, 1994, the Company had approximately $7.1
million and $7.8 million, respectively, of such contracts outstanding.
Gains and losses arising from these contracts offset gains and losses
from the underlying hedged transactions. The Company continually
monitors the credit quality of the major national and regional financial
institutions with whom it enters into such contracts.
POSTRETIREMENT BENEFITS
Substantially all full-time employees are covered by pension plans. For
its defined benefit plan, the Company funds at least the minimum amount
required by the Employee Retirement Income Security Act. The Company
expenses the multiemployer plan contributions required to be funded under
collective bargaining agreements.
The Company implemented Statement of Financial Accounting Standards
(SFAS) 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" in the first quarter of Fiscal 1994. This statement
requires accrual of postretirement benefits such as life insurance and
health care over the period the employee provides services to the
Company.
ENVIRONMENTAL COSTS
Environmental expenditures relating to current operations are expensed
or capitalized as appropriate. Expenditures relating to an existing
condition caused by past operations, and which do not contribute to
current or future revenue generation, are expensed. Liabilities are
recorded when environmental assessments and/or remedial efforts are
probable and the costs can be reasonably estimated and are evaluated
independently of any future claims for recovery. Generally, the timing
of these accruals coincides with completion of a feasibility study or
the Company's commitment to a formal plan of action.
INCOME TAXES
Income taxes are accounted for in accordance with SFAS 109, "Accounting
for Income Taxes". SFAS 109, which superseded SFAS 96, was adopted in
the first quarter of Fiscal 1994. SFAS 109 adoption had no effect on
earnings and only resulted in reclassifications of the deferred tax
assets in the balance sheet. Deferred income taxes are provided for the
timing differences between reported earnings and taxable income.
8
<PAGE> 9
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 2
BUSINESS ACQUISITION
LAMAR MANUFACTURING COMPANY
On August 12, 1993, GCO Apparel Corporation, a newly formed subsidiary
of the Company, acquired all of the men's clothing manufacturing assets
and assumed certain liabilities of LaMar Manufacturing Company, a
manufacturer of moderately priced tailored clothing. The purchase price
was approximately $11.8 million. The purchase price included $10.9
million of cash and $900,000 of deferred payments that will be completed
by August 1995. In addition, the Company paid acquisition expenses of
approximately $500,000. The acquisition was financed through revolving
credit borrowings.
NOTE 3
ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
IN THOUSANDS 1994 1994
----------------------------------------------------------------
<S> <C> <C>
Trade accounts receivable $ 76,719 $ 67,174
Miscellaneous receivables 3,135 3,406
----------------------------------------------------------------
Total receivables 79,854 70,580
Allowance for bad debts (2,169) (2,065)
Other allowances (2,064) (2,509)
----------------------------------------------------------------
NET ACCOUNTS RECEIVABLE $ 75,621 $ 66,006
================================================================
</TABLE>
On April 30, 1994, approximately 4% of the Company's trade receivables
are from retailers who have been acquired in leveraged buy-out
transactions. The Company closely monitors these receivables.
NOTE 4
INVENTORIES
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
IN THOUSANDS 1994 1994
----------------------------------------------------------------
<S> <C> <C>
Raw materials $ 20,794 $ 21,305
Work in process 12,779 15,786
Finished goods 75,064 71,981
Retail merchandise 49,907 46,048
----------------------------------------------------------------
TOTAL INVENTORIES $158,544 $155,120
================================================================
</TABLE>
9
<PAGE> 10
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 5
PLANT, EQUIPMENT AND CAPITAL LEASES, NET
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
IN THOUSANDS 1994 1994
----------------------------------------------------------------------------
<S> <C> <C>
Plant and equipment:
Land $ 486 $ 485
Buildings and building equipment 5,551 5,830
Machinery, furniture and fixtures 43,993 45,105
Construction in progress 2,155 1,550
Improvements to leased property 41,815 43,474
Capital leases:
Land 592 592
Buildings 11,134 11,203
Machinery, furniture and fixtures 10,213 10,324
----------------------------------------------------------------------------
Plant, equipment and capital leases, at cost 115,939 118,563
Accumulated depreciation and amortization:
Plant and equipment (62,926) (64,642)
Capital leases (10,933) (11,012)
----------------------------------------------------------------------------
Net Plant, Equipment and Capital Leases $ 42,080 $ 42,909
============================================================================
</TABLE>
10
<PAGE> 11
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 6
LEGAL PROCEEDINGS
The Company is subject to several administrative orders issued by the
Tennessee Department of Environment and Conservation directing the
Company to implement plans designed to remedy possible ground water
contamination and to manage source area material which was generated by
a divested operating division and which was deposited on a site in a
rural area near Nashville, Tennessee. Substantially all source material
and ground water remedial actions have been implemented. The Company
believes that it has fully provided for the costs to be incurred with
respect to these remedial actions.
In addition to the administrative proceedings described above, the
Company was named as a defendant in nine civil actions originally filed
on behalf of 29 individuals who reside or own property in the vicinity
of the site described above. The plaintiffs alleged that the Company is
liable for creating a nuisance and a hazardous condition and for
negligence based upon the alleged violation of several state and federal
environmental statutes. The plaintiffs sought recovery for personal
injuries and property damages totalling $17.6 million, punitive damages
totalling $19.5 million and certain costs and expenses, including
attorneys' fees. The Company has concluded settlement agreements with
20 individual plaintiffs, providing for payments by the Company
aggregating approximately $550,000 and the purchase of a residence at an
appraised value of approximately $170,000. The claims dismissed
pursuant to the settlement agreements involve approximately $9.1 million
in alleged compensatory damages and $13.1 million in punitive damages.
In light of the settlements already reached, management believes that
resolution of the remaining actions will not have a material adverse
effect on either the Company's results of future operations or on its
financial condition.
The Company is also a defendant in two separate civil actions filed by
the State of New York; one against the City of Gloversville, New York,
and 33 other private defendants; and the other against the City of
Johnstown, New York, and 14 other private defendants. In addition,
third party complaints and cross claims have been filed against numerous
other entities, including the Company, in both actions. These actions
arise out of the alleged disposal of certain hazardous material directly
or indirectly in municipal landfills. The complaints in both cases
allege the defendants, together with other contributors to the municipal
landfills, are liable under a federal environmental statute and certain
common law theories for the costs of investigating and performing
remedial actions required to be taken with respect to the landfills and
damages to the natural resources.
The environmental authorities have issued decisions selecting plans of
remediation with respect to the Johnstown and Gloversville sites which
have estimated costs of $16.5 million and $28.3 million, respectively.
11
<PAGE> 12
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 6
LEGAL PROCEEDINGS, CONTINUED
The Company has filed answers to the complaints in both the Johnstown
and Gloversville cases denying liability and asserting numerous
defenses. The Company has established a provision in the amount of
$1,000,000 to cover its estimated share of future remediation costs,
including a $500,000 charge in the third quarter ended October 31, 1993.
Because of uncertainties related to the ability or willingness of the
other defendants, including the municipalities involved, to pay a
portion of such costs, the availability of State funding to pay a
portion of such costs, the insurance coverage available to the various
defendants, the applicability of joint and several liability and the
basis for contribution claims among the defendants, management is
presently unable to predict the outcome or to estimate the extent of any
additional liability the Company may incur with respect to either of the
Johnstown or Gloversville actions.
The Company has entered into a stipulation of settlement with the United
States Department of Justice and the United States Environmental
Protection Agency ("EPA") dismissing a civil action against the Company
for alleged violations of the federal Clean Water Act and the
pre-treatment standards for leather tanning and finishing adopted
thereunder in connection with wastewater discharges from a facility of
the Company into the Muskegon County Wastewater Management System sewage
treatment system at Whitehall, Michigan. The stipulation of settlement
was approved by the court on December 16, 1993 and the Company has paid
a civil penalty of $550,000 to resolve all claims asserted in the
complaint.
On January 7, 1993, 23 former holders of the Company's series 2, 3 and 4
subordinated serial preferred stock filed a civil action against the
Company and certain officers, in the United States District Court for
the Southern District of New York (the "U.S. District Court Action").
The plaintiffs allege that the defendants misrepresented and failed to
disclose material facts to representatives of the plaintiffs in
connection with exchange offers which were made by the Company to the
plaintiffs and other holders of the Company's series 1, 2, 3 and 4
subordinated serial preferred stock from June 23, 1988 to August 1,
1988. The plaintiffs contend that had they been aware of the
misrepresentations and omissions, they would not have agreed to exchange
their shares pursuant to the exchange offers. The plaintiffs allege
breach of fiduciary duty and fraudulent and negligent misrepresentations
and seek damages in excess of $10 million, costs, attorneys' fees,
interest and punitive damages in an unspecified amount. By order dated
December 2, 1993, the U.S. District Court denied a motion for judgement
on the pleadings filed on behalf of all defendants. The Company and the
individual defendants intend to vigorously defend the U.S. District
Court Action. The Company is unable to predict if the U.S. District
Court Action will have a material adverse effect on the Company's
results of operations or financial condition.
12
<PAGE> 13
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 6
LEGAL PROCEEDINGS, CONTINUED
The U.S. District Court Action is based, in part, on a judicial
determination on July 29, 1992 of the fair value of the Company's series
2 and 3 subordinated serial preferred stock in an appraisal action in the
Chancery Court for Davidson County, Tennessee (the "Chancery Court
Action"). The Chancery Court Action was commenced after certain
preferred shareholders dissented from certain charter amendments approved
by shareholders on February 4, 1988 and demanded the fair value of their
shares. The Chancery Court determined that the fair values of a share of
series 2 was $131.32 and of a share of the series 3 was $193.11 (which
amounts are in excess of the mandatory redemption and liquidation values
of a share of series 2 subordinated serial preferred stock and of the
optional redemption and liquidation values of a share of series 3
subordinated serial preferred stock), compared with $91 a share for the
series 2 and $46 a share for the series 3 previously paid by the Company
as the fair value of such shares. The Chancery Court ordered the Company
to pay to Jacob Landis, the only shareholder who prosecuted his
dissenter's rights, the additional sum of $358,062 plus interest at 10%
from July 29, 1992, attorneys' fees and costs to be determined in further
proceedings. The Company appealed the Chancery Court's decision, and on
September 1, 1993 the Tennessee Court of Appeals affirmed the Chancery
Court's decision and remanded the case to the Chancellor for further
proceedings. The Company filed a petition to the Tennessee Supreme Court
to review the case, which the court denied on January 31, 1994. The
Company paid the amount of the judgement plus accrued interest on
February 4, 1994. The dissenting shareholder has filed an application
with the Chancery Court for legal fees and expenses of approximately
$800,000. The Company believes the amount is excessive and that such
expenses are unjustified and is opposing the application.
On May 13, 1993 the landlord of a building in New York City in which the
Company was the sole tenant filed a civil action in the Supreme Court of
the State of New York claiming that the Company breached the lease for
the premises and negligently allowed the premises to deteriorate. The
complaint seeks compensatory damages of $2.5 million and punitive damages
of $5 million. On June 8, 1993 the Company removed the action to the
United States District Court for the Southern District of New York.
At various times in 1990 and 1991 (i) the Canadian Department of National
Revenue, Taxation (the "Department"), the Alberta Corporate Tax
Administration and the Ontario Ministry of Revenue made tax reassessments
relating to the deductibility of interest expense incurred by one of the
Company's Canadian subsidiaries on funds borrowed from the Company and
(ii) the Department made tax reassessments relating to non-resident
withholding tax with respect to the payment by that subsidiary of its
loan from the Company and with respect to interest on loans by that
subsidiary to the Company. These reassessments, which the Company has
calculated to be approximately Canadian $18.7 million including interest
(approximately U.S. $14.1 million) at January 31, 1994, were made
against Agnew Group, Inc., the corporate successor to the purchaser of
the Company's Canadian operations (the "Taxpayer").
13
<PAGE> 14
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 6
LEGAL PROCEEDINGS, CONTINUED
The Taxpayer has made indemnification claims with respect to all such
reassessments pursuant to the indemnification provisions in the stock
purchase agreement dated as of January 23, 1987 relating to the sale of
the Company's Canadian operations, and the Company has assumed the
defense of the Taxpayer. On behalf of the Taxpayer, the Company has
filed notices of objections to all of the reassessments and has appealed
the confirmation by the Minister of National Revenue of the Federal
interest deductibility reassessments by filing a statement of claim in
the Federal Court of Canada. The Provincial reassessments will be held
in abeyance pending the outcome of the Federal Court action. The Company
has also filed notices of objection to the withholding tax reassessments
on behalf of the Taxpayer.
Any liability which is finally determined to be owing by the Company as a
result of the indemnification provisions of the share purchase agreement
is subject to an offset of up to Canadian $5,000,000 pursuant to a loan
agreement dated February 6, 1987 among the Company, the purchaser and a
former stockholder of the purchaser.
On February 4, 1994 the Taxpayer filed for protection under the Companies
Creditors Arrangement Act and is seeking approval of a plan of compromise
or arrangement with its creditors. Resolution of the Department's tax
claims is a condition to any such plan.
The Company has entered into a settlement agreement, dated as of May 4,
1994, with the Taxpayer and the Department and has deposited, in full
satisfaction of the Department's and the Taxpayer's claims against it,
$1.8 million (Canadian) with an escrow agent pending the entry by the
Canadian Treasury Board of a Remission Order approving the terms of the
settlement agreement. On May 10, 1994, the Ontario Court (General
Division) approved the Taxpayer's plan of compromise or arrangement
subject to the settlement agreement. The Company had previously made a
provision for its liability to the Taxpayer in an amount greater than its
payment under the settlement agreement. If the Remission Order has not
been entered by August 31, 1994, the settlement agreement will have no
effect and the Company's payment will be returned to it.
14
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SIGNIFICANT DEVELOPMENTS
Restructuring Charge
Certain events and changes in operating strategies in the fourth quarter
of the fiscal year ended January 31, 1994 ("Fiscal 1994") lead to a
decision to restructure certain of the Company's operations and a
reassessment of the recoverability of certain assets. As a result, the
Company recorded a charge of $29.4 million, for which no tax benefit is
currently available. This charge reflected estimated costs of closing
certain manufacturing facilities, effecting permanent work force
reductions and closing 58 retail stores. The provision included $15.8
million in asset write-downs and $13.6 million of future consolidation
costs, of which approximately $12 million is expected to be incurred in
the fiscal year ending January 31, 1995 ("Fiscal 1995"). The
restructuring involves the elimination of approximately 1,200 jobs (20%
of the Company's total work force in Fiscal 1994). The Company expects
to fully implement the restructuring plan in Fiscal 1995. During the
first quarter ended April 30, 1994, the Company closed a footwear plant,
completed the closing of 27 retail stores and paid approximately $2.8
million of the consolidation costs.
International Trade Developments
Manufacturers in China have become major suppliers to Genesco and other
footwear companies in the United States. In Fiscal 1995 the Company
expects to import footwear products from China having a total cost in the
range of $40 to $45 million. In June 1994 the President of the United
States recommended the continuation of China's most favored nation's
status for bilateral trade purposes. Failure of Congress to follow the
President's recommendation and continue to grant most favored nation's
treatment to China would raise duties and significantly increase the cost
of footwear and other products imported from China into the United
States. It could also materially affect the Company's ability to source
those products from other countries, because the Company would have to
compete with other footwear companies, some of whom buy substantially
greater quantities and have substantially greater resources, for
productive capacity in other low-labor cost countries.
RESULTS OF OPERATIONS - FIRST QUARTER FISCAL 1995 vs 1994
The Company's net sales in the first quarter ended April 30, 1994
increased 1.8% from the previous year. Total gross margin for the
quarter decreased 7.2% and declined from 36.4% to 33.2% as a percentage
of sales. Selling and administrative expenses decreased 3.6% and
decreased as a percentage of sales from 35.1% to 33.2%. The pretax loss
in the first quarter ended April 30, 1994 was $2.5 million, compared to
a pretax loss of $700,000 in the quarter ended April 30, 1993. The
Company reported a net loss of $2.7 million ($0.11 per share) in the
first quarter ended April 30, 1994 compared to a net loss of $3.0
million ($.13 per share) last year. Last year's net loss includes a
$2.3 million ($.10 per share) loss from the cumulative effect of changes
in the method of accounting for postretirement benefits due to the
implementation of Statement of Financial Accounting Standards No. 106.
15
<PAGE> 16
Footwear Retail
<TABLE>
<CAPTION>
Three Months
Ended April 30,
------------------
1994 1993 % Change
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Sales $47,772 $48,545 (1.6%)
Operating Income $ 1,308 $ 848 54.2%
Operating Margin 2.7% 1.7%
</TABLE>
Despite an increase in comparable store sales of approximately 2%, net
sales from footwear retail operations declined 1.6% in the quarter ended
April 30, 1994 compared to the previous year due to the operation of 6%
fewer stores in the first quarter ended April 30, 1994. The decrease in
net sales is attributable to a $1.2 million decline in accessory sales.
The average price per pair decreased approximately 3%, but unit sales
increased approximately 5%. Gross margin as a percentage of sales
decreased slightly from 51.7% to 51.6%. Operating expenses decreased
1.8%, primarily due to operation of fewer stores, and decreased slightly
as a percentage of sales from 49.9% to 49.8%. Operating income in the
fiscal year ending January 31, 1995 does not include operating losses of
the retail stores included in the Company's restructuring. Operating
income in the first quarter ended April 30, 1993, adjusted to exclude
results of the 58 stores included in the restructuring, was $1,469,000.
Current operating income of $1,308,000 in the first quarter this year
was lower than last year's adjusted operating income due to slightly
lower margin as a percentage of sales.
Footwear Wholesale & Manufacturing
<TABLE>
<CAPTION>
Three Months
Ended April 30,
-----------------
1994 1993 % Change
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . $52,449 $54,698 (4.1%)
Operating Income . . . . . . . . . . . $ 1,925 $ 3,275 (41.2%)
Operating Margin . . . . . . . . . . . 3.7% 6.0%
</TABLE>
Net sales from footwear wholesale and manufacturing operations were $2.2
million (4.1%) lower in the quarter ended April 30, 1994 than in the
previous year, reflecting primarily lower sales of the Company's boot
products. Sales of children shoes and tanned leather also declined.
Gross margin as a percentage of sales decreased from 28.0% to 25.8%,
primarily due to volume-related manufacturing variances and price
reductions to stimulate sales.
A sharp decline in the sale of boots lead to a decision in the latter
part of Fiscal 1994 to curtail the production of boots. The lower volume
of boots manufactured resulted in underabsorption of overhead and
negative manufacturing variances despite the reduction in manufacturing
capacity in the first quarter. See "Significant Developments-
Restructuring Charge" above. Record boot sales in the first quarter
last year resulted in positive manufacturing variances in the Company's
boot plants.
16
<PAGE> 17
Operating expenses decreased 3.8% but increased slightly as a percentage
of sales from 22.2% to 22.3%, primarily because of increased co-op
advertising and royalty expenses.
The decline in operating income is due to the decreased boot sales.
Tailored Clothing
<TABLE>
<CAPTION>
Three Months
Ended April 30,
-----------------
1994 1993 % Change
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . $30,411 $25,141 21.0%
Operating Income . . . . . . . . . . . $ (139) $ 1,186 -
Operating Margin . . . . . . . . . . . . (0.5%) 4.7%
</TABLE>
Net sales from tailored clothing operations increased 21.0%. Net sales,
excluding those of GCO Apparel Corporation ("GCO Apparel") which began
operations in August 1993, declined by 1.4%.
Gross margin decreased 17% and declined as a percentage of sales from
24.9% to 17.0%. This decline was the result of industry-wide conditions
and events described below which occurred in Fiscal 1993 and Fiscal
1994.
The United States market for tailored clothing has been shrinking,
reflecting a long-term shift in consumer preferences toward more casual
apparel, and the market share of lower-cost foreign and domestic,
non-union manufacturers has been increasing at the expense of
traditional domestic manufacturers like Greif. In addition, changes
have occurred in the traditional channels of distribution for tailored
clothing as a result of the consolidation (frequently in leveraged
buyouts) of department stores, the declining number of independent men's
specialty stores and the growth of off-price clothing merchants. All of
these factors have led to increased demands by retailers for
lower-priced clothing and promotional pricing.
In Fiscal 1993 and Fiscal 1994, the Greif Companies division ("Greif")
implemented a plan to reduce its manufacturing costs to become more
competitive. Greif reduced its manufacturing capacity through a
reduction in employment and made changes in product specifications to
lower labor and material costs. The products manufactured to the new
specifications, which were shipped for the spring 1993 season, were not
well-received by Greif's customers and led to higher than normal
returns, allowances and discounts. Greif has made improvements in the
quality of its products for spring 1994 despite having accepted orders
based on lower-cost product specifications.
In the fourth quarter of Fiscal 1994 Greif was notified that its
licenses for two Ralph Lauren brands of traditionally-styled clothing
would not be renewed after the fall 1994 season and would be
manufactured by a foreign manufacturer and sold at lower price points.
17
<PAGE> 18
In addition to the factors described above, tailored clothing gross
margin was adversely affected by the inclusion of GCO Apparel's low
margin cut, make and trim operations which was acquired in August 1993
and was adversely affected by the shipment in the first quarter of
lower-margin products that were produced at Greif in anticipation of a
work stoppage in the third quarter of Fiscal 1994.
Operating expenses increased 2% but decreased as a percentage of sales
from 20.1% to 16.9%. The increase in operating expenses is due to the
inclusion of GCO Apparel's operating expenses. The reduction in
operating income is attributable to lower Greif sales and lower gross
margins.
As a result of continuing price pressures, the loss after the fall 1994
season of the Ralph Lauren brands and a decline in orders for the spring
and fall 1994 seasons for Greif's other branded tailored clothing
products, Greif does not expect to be profitable in Fiscal 1995. The
Company believes that Greif must be able to manufacture and market
high-quality branded products to up-scale retailers of better men's
apparel in order to generate sufficient gross margin to operate
profitably. Greif has redesigned and is attempting to market its Perry
Ellis and Perry Ellis Portfolio brands and its other branded products in
this manner for the spring 1995 season. Greif recently launched a newly
designed line of traditionally-styled clothing under the Metropolis
brand to replace the Ralph Lauren brands for the spring 1995 season.
The plant closure actions provided for in the restructuring charge in
the fourth quarter of Fiscal 1994 are expected to be taken in the third
quarter of Fiscal 1995.
Any reduction in employment of employees covered by collective
bargaining agreements beyond that anticipated in the restructuring plan
provided for in Fiscal 1994 could result in the incurrence of withdrawal
liability for Greif's portion of accumulated benefits in excess of the
assets of the multiemployer pension plan applicable to Greif's covered
employees. The maximum liability, and the corresponding maximum charge
to earnings, that would result from a permanent cessation of Greif's
obligation to contribute to the multiemployer plan or a cessation of all
operations covered by collective bargaining agreements would be
approximately $15.7 million in Fiscal 1995. A 70% decline in Greif's
contributions to the multiemployer plan or the permanent cessation of
the obligation to contribute to the plan with respect to a facility
could constitute a "partial withdrawal" and result in recognition of a
portion of the withdrawal liability calculated on the basis of the
decline in hours worked. The period over which any such withdrawal
liability would have to be paid is based on the average number of
historical hours worked and the contribution rate per hour but cannot
exceed 20 years. The employment of fewer covered employees in
connection with a further reduction in the scope of Greif's operations
or the sale of all or a substantial portion of its business and assets
could result in the recognition of withdrawal liability. Any such sale
could also result in a failure to realize the full value of assets
employed in Greif's business and the recognition of certain lesser
liabilities not included in the restructuring provision.
Corporate and Interest Expenses
Corporate and other expenses were $2.8 million compared to $3.6 million
for the same period last year, a decrease of 22%. The decrease in
corporate expenses is due to lower compensation expenses due to the
layoffs related to the restructuring and other staff reductions that
occurred after the first quarter in Fiscal 1994 and due to the accrual
of $312,000 for bonuses in the first quarter of last year that were not
accrued this year.
Interest expense increased $415,000, or 17%, from the first quarter of
last year because of an increase in average outstanding indebtedness and
higher average interest rates.
18
<PAGE> 19
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth certain financial data at the dates
indicated. All dollar amounts are in millions.
<TABLE>
<CAPTION>
April 30,
------------------
1994 1993
------ ------
<S> <C> <C>
Cash and short-term investments . . . . . . . . . . . . . . $ 4.1 $ 2.9
Working capital . . . . . . . . . . . . . . . . . . . . . . $174.9 $194.6
Long-term debt (includes current
maturities) . . . . . . . . . . . . . . . . . . . . . . $106.0 $ 77.0
Current ratio . . . . . . . . . . . . . . . . . . . . . . . 3.5x 4.2x
</TABLE>
Working Capital
The Company's business is somewhat seasonal, with the Company's
investment in inventory and accounts receivable reaching peaks in the
spring and fall of each year. Cash flow from operations is generated
principally in the fourth quarter of each fiscal year.
Cash used by operating activities was $15.0 million in the first three
months of Fiscal 1995 compared to $27.8 million used by operating
activities last year. The $12.8 million improvement in cash flow from
operating activities between the first quarter of Fiscal 1995 and the
first quarter of Fiscal 1994 reflects reduced retail inventory from
store closings and better inventory management and changes in accounts
payable levels from changes in buying patterns.
A $3.4 million increase in inventories from January 31, 1994 levels was
due primarily to planned seasonal increases, while the $7.9 million
decrease in inventories compared with April 30, 1993 reflects lower
retail inventory from store closings and the Company's tighter inventory
controls.
Accounts receivable at April 30, 1994 increased $9.6 million compared to
January 31, 1994, primarily from increased footwear wholesale and
tailored clothing sales. Accounts receivable at April 30, 1994 was $2.9
million less than at April 30, 1993, primarily due to change in the
sales mix.
Cash provided (or used) due to changes in accounts payable and accrued
liabilities at April 30, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
Three Months Ended April 30,
----------------------------
(In Thousands) 1994 1993
------- -------
<S> <C> <C>
Accounts payable . . . . . . . . . . . . $ 3,498 $(4,340)
Accrued liabilities . . . . . . . . . . (5,675) (4,945)
------- -------
$(2,177) $(9,285)
======= =======
</TABLE>
The fluctuations in accounts payable are due to changes in buying
patterns (i.e., changes in the timing of purchases and shipments),
payment terms negotiated with individual vendors and changes in
inventory levels.
19
<PAGE> 20
Revolving credit agreement borrowings increased by $16 million during the
three months ended April 30, 1994 to finance seasonal working capital
increases, to finance operations and to fund approximately $2.8 million
of costs associated with the Company's restructuring. Revolving credit
agreement borrowings declined by $20 million during the three months
ended April 30, 1993 due to the $75 million financing completed February
1, 1993.
Capital Expenditures and Acquisitions
Total capital expenditures in Fiscal 1995 are expected to be
approximately $10.6 million. These include expected retail expenditures
of $5.0 million to open approximately 24 new retail stores and to
complete 37 major store renovations. Capital expenditures for wholesale
and manufacturing operations and other purposes are expected to be
approximately $5.6 million.
On August 12, 1993, GCO Apparel acquired all of the men's clothing
manufacturing assets and assumed certain liabilities of LaMar. See Note
2 to the Consolidated Financial Statements. The purchase price was
approximately $11.8 million, including $10.9 million of cash and $900,000
of deferred payments to be completed by August 1995. The acquisition was
financed through revolving credit borrowings.
Future Capital Needs
The Company expects that cash provided by operations will be sufficient
to fund all of its capital expenditures during Fiscal 1995 and to
temporarily pay down all of its revolving credit indebtedness under its
$100 million credit facility at January 31, 1995. The substantial
improvement in cash flow planned for Fiscal 1995 is based upon expected
improved operating results and lower working capital needs resulting
from better footwear inventory management and substantial liquidation of
working capital invested in the Ralph Lauren tailored clothing business.
See "Results of Operations - First Quarter Fiscal 1995 vs 1994. -
Tailored Clothing." Approximately $12 million of consolidation costs
that are expected to be incurred in Fiscal 1995 are expected to be
offset by cash inflows from liquidation of assets employed in
restructured operations.
The Company believes it will be able to comply with the financial
covenants contained in its revolving credit agreement, as amended on
January 31, 1994, and that the commitments under that agreement will be
adequate to meet the Company's credit needs for Fiscal 1995. There were
$42.4 million of loans and letters of credit outstanding at April 30,
1994.
The restricted payments covenant contained in the Company's revolving
credit agreement prohibits the Company from declaring dividends on the
Company's capital stock. The aggregate annual dividend requirements on
the Company's Subordinated Serial Preferred Stock, $2.30 Series 1, $4.75
Series 3 and $4.75 Series 4, and on its $1.50 Subordinated Cumulative
Preferred Stock, is $302,000. The Company is unable to predict when
dividends may be reinstated.
20
<PAGE> 21
On April 8, 1993 the Company entered into a letter of credit agreement,
which was amended on January 31, 1994 and April 5, 1994, with a foreign
bank, under which up to $10,000,000 in letters of credit are available
for issuance to the Company's suppliers in connection with the
importation of foreign goods. The Agreement provides for the issuance
through October 6, 1994 of letters of credit payable for periods not
exceeding 180 days. At April 30, 1994, there was $8.4 million of credit
available under this letter of credit agreement.
The Company's English subsidiary, Mitre U.K., has a credit facility with
a credit limit equal to the lesser of (i) 5.0 million pounds sterling
(approximately U.S. $7.5 million at April 30, 1994) or (ii) the
aggregate of 75 percent of the value of current receivables and 50
percent of the value of inventory of Mitre U.K. The facility, which is
guaranteed up to 4.3 million pounds sterling by the Company, permits
borrowings for working capital of up to 2.0 million pounds sterling,
the issuance of letters of credit of up to 3.5 million pounds sterling
and the issuance of guarantee bonds and indemnities of up to 500,000
pounds sterling. This credit facility expires on September 14, 1994.
On August 2, 1993 the Company entered into a credit facility with a
United States bank under which it may borrow up to $2,000,000. This
facility expires on June 30, 1994.
On September 29, 1993 the Company entered into a credit facility with a
foreign bank under which it may borrow up to $15,000,000 at the bank's
discretion. This facility, which is payable on demand, expires on August
31, 1994. At April 30, 1994, there was $15,000,000 of credit available
under this credit facility.
On April 27, 1994, Standard & Poor's announced that it had lowered the
rating of the 10 3/8% Notes to B+ from BB- and that, until the Company
can demonstrate improved performance on a consistent basis, the rating
will be subject to further downgrade. On June 6, 1994, Moody's
announced that it had lowered its rating of the Notes to B1 from Ba3.
According to Standard & Poor's, a debt instrument rated B has a greater
vulnerability to default than debt rated BB, but currently has the
capacity to meet interest and principal payments. Standard & Poor's
modifier + indicates that the 10 3/8% Notes are at the upper end of the
broad ratings category. According to Moody's, the assurance of interest
and principal payments or of maintenance of other terms of the contract
over any long period of time may be small with respect to a debt
instrument rated B. The Moody's modifier indicates that the security
ranks in the higher end of its rating category. Ratings are not a
recommendation to purchase, hold or sell long-term debt of the Company,
inasmuch as ratings do not comment as to market price or suitability
for particular investors and may be subject to revision or withdrawal
at any time by the assigning rating agency.
21
<PAGE> 22
BACKLOG
On April 30, 1994 the Company's wholesale operations (which accounted
for 60% of sales in Fiscal 1994) had a backlog of orders, including
unconfirmed customer purchase orders, amounting to approximately $88.8
million, compared to approximately $105.6 million on April 30, 1993. Of
these amounts, approximately $49.7 million and $58.3 million,
respectively, were for footwear and approximately $39.1 million and
$47.3 million, respectively, were for men's apparel. The backlog of
orders is somewhat seasonal, reaching a peak for footwear in the spring
and for tailored clothing in the summer. Tailored clothing and footwear
operations maintain in-stock programs for selected anticipated high
volume styles, but customer orders for tailored clothing are generally
received several months in advance of shipping dates.
The order backlog in dollars on April 30, 1994 for footwear wholesale
products, which includes tanned leather, was 15% lower than on April 30,
1993. This decrease is attributable to decreases in the order backlog
for the Company's boot and athletic products. The majority of orders
for footwear and tanned leather is for delivery within 90 days.
Therefore, the footwear wholesale products backlog at any one time is
not necessarily indicative of a corresponding change in future sales
for an extended period of time.
Tailored clothing backlog in dollars on April 30, 1994, consisting
primarily of spring 1994 and fall 1994 orders, was 17% lower than on
April 30, 1993. Tailored clothing backlog does not include sales
anticipated under GCO Apparel's cut, make and trim agreement. The
Company believes that the decrease in tailored clothing backlog is
attributable to (i) general market conditions throughout the tailored
clothing industry, (ii) product quality problems in Fiscal 1994 arising
out of the Company's efforts to redesign and manufacture certain
products to meet retailer demands for lower-cost, branded products,
(iii) the Company's decision to reduce sales to off-price retailers and
(iv) retailer concerns regarding the pricing of the Chaps by Ralph
Lauren line by the new licensee. The Company expects the lower level
of demand for its tailored clothing products to continue through Fiscal
1995.
22
<PAGE> 23
PART II - OTHER INFORMATION
_________________________________________________________________________
ITEM 1. LEGAL PROCEEDINGS
The Company has entered into a settlement agreement dated as of May 4,
1994 with the corporate successor to the purchaser of the Company's
Canadian operations (the Taxpayer") and with the Canadian Department of
National Revenue (the "Department") in connection with tax reassessments
by the Department for which the Taxpayer had made indemnification claims
against the Company. On February 4, 1994 the Taxpayer filed for
protection under the Companies Creditors Arrangement Act and sought
approval of a plan of compromise or arrangement with its creditors. On
May 10, 1994, the Ontario Court (General Division) approved the
Taxpayer's plan of compromise or arrangement, subject to the settlement
agreement. Pursuant to the settlement agreement, the Company has
deposited, in full satisfaction of the Taxpayer's and the Department's
claims, $1.8 million (Canadian) with an escrow agent, pending entry by
the Canadian Treasury Board of a Remission Order approving the terms of
the settlement agreement. The Company had previously made a provision
for its liability to the Taxpayer in an amount greater than its payment
under the settlement agreement. If the Remission Order has not been
entered by August 31, 1994, the settlement agreement will have no effect
and the Company's payment will be returned to it.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
At April 30, 1994 Genesco was in arrears with respect to dividends
payable on the following classes of preferred stock:
<TABLE>
<CAPTION>
Arrearage
-----------------------------------
Date Dividends Beginning This End of
Class of Stock Paid to of Quarter Quarter Quarter
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$2.30 Series 1 October 31, 1993 $ 21,438 $ 21,438 $ 42,876
$4.75 Series 3 October 31, 1993 23,313 23,313 46,626
$4.75 Series 4 October 31, 1993 19,489 19,489 38,978
$1.50 Subordinated Cumulative
Preferred October 31, 1993 11,219 11,219 22,438
----------------------------------------------------------------------------
Totals $ 75,459 $ 75,459 $150,918
============================================================================
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
(11) Computation of earnings per common and common share equivalent.
REPORTS ON FORM 8-k
None
23
<PAGE> 24
SIGNATURE
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.
Genesco Inc.
/s/ Robert E. Brosky
--------------------
Robert E. Brosky
Controller and Chief Accounting Officer
June 13, 1994
24
<PAGE> 1
GENESCO INC. EXHIBIT 11
AND CONSOLIDATED SUBSIDIARIES
Earnings Per Common and
Common Share Equivalent
Three Months Ended April 30
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
1994 1993
------------------ ------------------
IN THOUSANDS EARNINGS SHARES EARNINGS SHARES
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary loss per share
Loss before cumulative effect
of change in accounting principle $(2,673) $ (742)
Preferred dividend requirements 75 78
-------------------------------------------------------------------------------------------------------------------
Loss before cumulative effect
of change in accounting principle applicable
to common stock and average common shares
outstanding $(2,748) 24,307 $ (820) 23,902
Employees preferred and stock options deemed
to be a common stock equivalent -0- -0-
-------------------------------------------------------------------------------------------------------------------
Total loss before cumulative effect of change in
accounting principle $(2,748) 24,307 $ (820) 23,902
PER SHARE $ (.11) $ (.03)
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Net loss $(2,673) $(3,015)
Preferred dividend requirements 75 78
-------------------------------------------------------------------------------------------------------------------
Net loss applicable to common stock
and average common shares outstanding $(2,748) 24,307 $(3,093) 23,902
Employees preferred and stock options deemed
to be a common stock equivalent -0- -0-
-------------------------------------------------------------------------------------------------------------------
Total net loss $(2,748) 24,307 $(3,093) 23,902
PER SHARE $ (.11) $ (.13)
===================================================================================================================
Fully diluted loss per share
Loss before cumulatve effect of
change in accounting principle applicable
to common stock and average common shares
outstanding $(2,748) 24,307 $ (820) 23,902
Senior securities the conversion of which
would dilute earnings per share -0- -0-
-------------------------------------------------------------------------------------------------------------------
Total loss before cumulative effect of change in
accounting principle $(2,748) 24,307 $ (820) 23,902
PER SHARE $ (.11) $ (.03)
===================================================================================================================
Net loss applicable to common stock
and average common shares outstanding $(2,748) 24,307 $(3,093) 23,902
Senior securities the conversion of which
would dilute earnings per share -0- -0-
-------------------------------------------------------------------------------------------------------------------
Total net loss $(2,748) 24,307 $(3,093) 23,902
PER SHARE $ (.11) $ (.13)
===================================================================================================================
</TABLE>
All figures in thousands except amount per share.
