SECURITIES AND EXCHANGE COMMISSION
Washington, DC
Form 10-QSB
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended June 30, 1996 Commission File No. 0-774
DANIEL GREEN COMPANY
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 15-0327010
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
DOLGEVILLE, NEW YORK 13329
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (315) 429-3131
Former name, former address and former fiscal year, if changed
since last report: None.
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 Act of 1934 during the preceding twelve months and (2)
has been subject to the filing requirements for at least the past
90 days. YES X NO
CLASS OUTSTANDING AT JUNE 30, 1996
Common Stock $2.50 par value 1,511,892 Shares
DANIEL GREEN COMPANY
INDEX
Page
Number
Index . . . . . . . . . . . . . . . . . . . . . . . 1
PART I - Financial Statements
Balance Sheets, Assets
June 30, 1996 & December 31, 1995 . . . . . . . 2
Balance Sheets, Liabilities & Stockholders' Equity
June 30, 1996 & December 31, 1995 . . . . . . . 3
Statements of Operations for the three & six month
periods ended June 30, 1996 & 1995 . . . . . . . 4
Statements of Cash Flows for the six months ended
June 30, 1996 & 1995 . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . 6
Management Discussion & Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . 7
PART II - Other Information . . . . . . . . . . . . . 9
DANIEL GREEN COMPANY
Balance Sheets
ASSETS
June 30 December 31
1996 1995
(Unaudited) (*)
Current Assets:
Cash $ 11,512 $ 29,762
Accounts Receivable, trade
less allowances for doubtful accounts
(1996 - $256,360 1995 - $275,000) 4,516,928 7,210,427
Income Tax Refund Receivable 448,103 458,887
Inventories, at lower of cost (FIFO) or market:
Raw Materials 2,091,904 2,640,101
Work In Process 1,061,548 782,291
Finished Goods 8,393,999 7,477,851
Total Inventories 11,547,451 10,900,243
Deferred Tax Asset 320,977 320,977
Other Current Assets 88,766 149,585
Total Current Assets 16,933,737 19,069,881
Property:
Real Estate and Water Power, at cost 3,270,968 3,271,468
Machinery, Equipment, & Lasts, at cost 5,470,459 5,415,774
8,741,427 8,687,242
Less: Accumulated Depreciation 6,810,055 6,610,846
Property, net 1,931,372 2,076,396
Other Assets:
Prepaid Pension Expense 2,317,652 2,281,237
Other Assets 136,051 144,447
Total Other Assets 2,453,703 2,425,684
Total Assets $ 21,318,812 $ 23,571,961
(*) Derived from Audited Financial Statements.
DANIEL GREEN COMPANY
Balance Sheets
Liabilities & Stockholders' Equity
June 30 December 31
1996 1995
(Unaudited) (*)
Current Liabilities:
Notes Payable, line of credit $ 4,938,879 $ 8,301,730
Notes Payable, current 586,479 591,129
Accounts Payable, trade 1,304,193 311,982
Accrued Salaries & Commissions 74,737 211,808
Accrued Cooperative Advertising 100,000 300,000
Other Accrued Liabilities 187,719 165,794
Capital Lease Obligation, current 9,915 17,115
Total Current Liabilities 7,201,922 9,899,558
Capital Lease Obligations, non-current 6,295 10,916
Notes Payable, non-current 1,958,427 2,295,177
Deferred Tax Liability 1,110,351 1,110,351
Total Liabilities 10,276,995 13,316,002
Stockholder's Equity
Common Stock 3,779,730 2,592,230
Additional Paid in Capital 312,500 0
Retained Earnings 6,949,587 7,663,729
Total Stockholders' Equity 11,041,817 10,255,959
Total Liabilities & Stockholders' Equity $ 21,318,812 $ 23,571,961
(*) Derived from Audited Financial Statements.
DANIEL GREEN COMPANY
Statements of Operations
(Unaudited)
For the For the
Three Months Ended Six Months Ended
June 30 June 30 June 30 June 30
1996 1995 1996 1995
Net Sales $ 4,020,072 $ 4,610,074 $ 7,783,617 $ 8,625,480
Costs and Expenses:
Cost of Goods Sold 3,051,121 3,411,868 5,915,928 6,280,720
Selling, General,
& Administrative 1,272,443 1,309,757 2,583,887 2,600,679
Interest Expense 204,679 231,600 435,642 421,119
Total Costs & Expenses 4,528,243 4,953,225 8,935,457 9,302,518
(Loss) before
credit for Income Taxes (508,171) (343,151) (1,151,840) (677,038)
Credit for Income Taxes 193,105 130,398 437,699 257,275
Net (Loss) ($315,066) ($212,753) ($714,141) ($419,763)
Net (Loss) per Share ($0.30) ($0.20) ($0.68) ($0.40)
Weighted Average Number
of Shares Outstanding 1,063,235 1,036,892 1,050,064 1,036,892
DANIEL GREEN COMPANY
Statements of Cash Flows
(Unaudited) For the Six Months Ended
June 30 June 30
1996 1995
Operating Activities:
Net Loss $ (714,141) $ (419,763)
Adjustments to reconcile net loss to net
cash provided (used) by operating
activities:
Depreciation 199,209 187,502
Amortization 12,268 12,268
Net Pension Credit (36,415) (45,000)
Changes in assets & liabilities:
(increases) decreases in:
Accounts Receivable, trade 2,693,499 1,859,672
Income Tax Refund Receivable 10,784 (257,275)
Inventories (647,209) (3,227,297)
Deferred Tax Asset 0 0
Other Current Assets 60,819 32,545
Other Assets (3,872) (52,618)
increases (decreases) in:
Accounts Payable, trade 992,211 549,396
Accrued Salaries (137,071) (85,470)
Income Taxes Payable 0 (402,947)
Other Accrued Liabilities (178,075) (84,274)
Deferred Tax Liability 0 0
Net Cash Pruvided
(Used) by Operating Activities: 2,252,007 (1,933,261)
Investing Activities:
Purchase of property & equipment (54,184) (321,990)
Net Cash Used in Investing Activities: (54,184) (321,990)
Financing Activities:
Net (Payments) Borrowings on
Line of Credit (3,362,851) 2,658,217
Repayments of Notes Payable (341,400) (342,531)
Net Borrowings (Payments)
of Capital Leases (11,822) (15,677)
Net Proceeds of Issuance of Common Stock 1,500,000 0
Net Cash (Used) Provided
by Financing Activities (2,216,073) 2,300,009
Net Increase (Decrease) in Cash (18,250) 44,758
Cash at Beginning of Period 29,762 23,550
Cash at End of Period $ 11,512 $ 68,308
DANIEL GREEN COMPANY
Notes to Financial Statements
Note 1. In the opinion of the Company, the accompanying unaudited
financial statements contain adjustments, all of which
are of a normal and recurring nature, necessary to present
fairly the financial position as of June 30, 1996 and the
results of operations and cash flows for the three and
six months then ended.
Note 2. The results of operations for the three and six months
ended June 30, 1996 are not necessarily indicative of the
results to be expected for the full year.
DANIEL GREEN COMPANY
Management Discussion & Analysis of Financial Condition
and Results of Operations
1. Liquidity and Capital Resources
For the six months ended June 30, 1996, the Company provided cash
of $2,252,007 from operations as opposed to usage of $1,933,261 for
the first six months of 1995. Inventory increases of only $647,209 through
June 1996 as opposed to $3,227,297 through June of 1995 accounted for the
majority of the $4,185,268 difference from last year. Finished goods have
increased by $916,148 or 12.3% from 12/31/95 levels and decreased by
$983,350 or 10.5% from 6/30/95 levels. Finished goods inventory now stands
at 751,318 pairs, a decrease of 99,802 pairs (11.7%) from 6/30/95. Raw
materials have decreased, 20.8% from year end figures and 41.2% from June
1995 figures. Work in process is $279,257 (35.7%) higher than at December
31, 1995 but $198,508 (15.8%) lower than at June 30, 1995. Total domestic
production has been reduced by 312,208 pairs or 39.8% through the first six
months of 1996 as compared to the first six months of 1995.
Increased collections of accounts receivable, and higher accounts
payable levels helped to offset the cash used by the increased loss.
Receivables were reduced by $2,693,499 (37.4%) from the beginning of the
year as compared to a $1,859,672 reduction through the first six months of
1995. Payables increased by $992,211 from 12/31/95 as compared to a
$549,396 increase through the first six months of 1995. Increased cash
provided by operations, a $289,036 (84.2%) reduction in the cash used by
investing activities, and $1.5 million provided by the issuance of
additional common stock led to a net repayment of debt of $3,716,073
through the first six months of 1996. This compares to $2,231,239 of
additional borrowings through the first six months of 1995.
The Company's current line of credit was revised twice in the
second quarter of 1996. Initially, Fleet Bank financed a two year
$6,000,000 line of credit which expired on April 30, 1996. The
first revision extended the term of the original note to May 31, 1996, and
the second revision renewed the line, with some modifications, through
April 30, 1997.
Management is not aware of any known demands, commitments or
events which would materially affect its liquidity. There are no
material expenditures or commitments which would affect capital
resources in a significant way. The Company is currently negotiating with
several financial institutions in an effort to provide lower cost financing
that is currently provided. Cash generated by operations, supplemented by
short-term borrowings, should cover planned requirements.
2. Results of Operations
Net sales for the second quarter of 1996 decreased by 12.8% to
$4,020,072 from the second quarter of 1995. Pairs shipped decreased by
51,687 (15.7%) to 278,094 for the second quarter of this year as compared
with last. Year to date sales figures continue to lag behind 1995 by
$841,863 or 9.8% on 91,553 (15.6%) fewer pairs shipped. Total net
shipments through the first six months of 1996 equal 496,863 pairs. The
reduced sales are a result of the overall poor retail environment that has
existed for the past nine months. While we expect sales to improve in the
remainder of the year, we do expect our annual sales to fall slightly below
last years total.
The slower sales and production have led to a slight increase in the
cost of goods sold. The cost of goods sold (as a percentage of net sales)
was 75.9% for the second quarter of 1996 and ended at 76.0% through
the first six months of the year. That compares with 74.0% and
72.8% for those respective periods of 1995. It should be noted that these
1996 figures compare favorably to most years prior to 1995. Raw material
and import purchases, productive labor costs, and other manufacturing
expenses all decreased (40.0%, 34.5%, 7.1% respectively) through the first
six months of 1996 as compared to the same period of 1995. However, these
savings were offset by the 39.8% reduction in production. Management feels
that the increased volume of sales and production which typically occurs in
the third and fourth quarters will allow the Company to improve its gross
margins by year end.
Selling, general and administrative expenses fell slightly, by $37,314
(2.8%) for the quarter and $16,792 (0.6%) for the year to date from those
periods of 1995. The major areas of increase from retail expenses and
professional fees, while major savings were found in payroll taxes, co-op
advertising, freight, and commissions. Interest expenses were reduced by
$26,921 (11.6%) for the second quarter but were $14,523 (3.4%) higher for
the six months ended June 30, 1996 as opposed to 1995 levels.
The Company incurred a net loss before taxes of $508,171 in
the second quarter of 1996, an increased by $165,020 over that period of
1995. The net loss after taxes of $315,066 equates to $.21 per share as
opposed to a $.20 loss per share in 1995, however this equation includes
the 475,000 additional shares of common stock which was issued during the
quarter.
Through the first six months of 1996, the Company lost $1,151,840
before credit for taxes, an increase of $474,802 over 1995. The net loss
after taxes of $714,141 equates to a $.47 loss per share in 1996 as opposed
to a $.40 loss per share through the first six months of 1995. Again, that
loss per share figure includes the newly issued shares.
The Company's efforts through the remainder of the year will be to
improve its sales and gross margins. Selling, general, and administrative
expenses will be continuously monitored in order to reduce costs wherever
possible. Interest expenses are expected to decrease well below 1995
levels due to the reduced debt.
DANIEL GREEN COMPANY
Part II - Other Information
1. Legal Proceedings - None.
2. Changes in Securities - None.
3. Default upon Senior Securities - None.
4. Submission of matters to a vote of security holders - None.
5. Other Information - None.
6. Exhibits and reports on Form 8K
A) The registrant filed a Form 8-K on July 10, 1996 with respect to
its issuance of 475,000 newly issued shares of Common Stock,
$2.50 par value to Riedman Corporation for cash consideration of
$1,500,000.
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.
DANIEL GREEN COMPANY
Registrant
Date:_________________ ____________________________
Kevin C. Thompson, Treasurer
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