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 March 31, 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 MARCH 31, 1996
Common Stock $2.50 par value 1,036,892
DANIEL GREEN COMPANY
INDEX
Page
Number
Index . . . . . . . . . . . . . . . . . . . . . . . 1
PART I - Financial Information
Balance Sheets, Assets
March 31, 1996 & December 31, 1995 . . . . . . . 2
Balance Sheets, Liabilities & Stockholders' Equity
March 31, 1996 & December 31, 1995 . . . . . . . 3
Statements of Operations for the three months ended
March 31, 1996 and March 31, 1995 . . . . . . . 4
Statements of Cash Flows for the three months ended
March 31, 1996 and March 31, 1995 . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . 6
Management Discussion & Analysis of Financial Conditions
and Results of Operations . . . . . . . . . . . . 7
PART II - Other Information . . . . . . . . . . . . . 9
DANIEL GREEN COMPANY
Balance Sheets
ASSETS
March 31 December 31
1996 1995
(Unaudited) (*)
Current Assets:
Cash $ 28,312 $ 29,762
Accounts Receivable, trade
less allowances for doubtful accounts
(1996 - $278,742 1995 - $275,000) 5,383,015 7,210,427
Income Tax Refund Receivable 703,481 458,887
Inventories, at lower of cost (FIFO) or market:
Raw Materials 2,288,586 2,640,101
Work In Process 893,349 782,291
Finished Goods 7,447,141 7,477,851
Total Inventories 10,629,076 10,900,243
Deferred Tax Asset 320,976 320,976
Other Current Assets 68,552 149,586
Total Current Assets 17,133,412 19,069,881
Property:
Real Estate and Water Power, at cost 3,270,968 3,271,468
Machinery, Equipment, & Lasts, at cost 5,434,144 5,415,774
8,705,112 8,687,242
Less: Accumulated Depreciation 6,704,191 6,610,846
Property, net 2,000,921 2,076,396
Other Assets:
Prepaid Pension Expense 2,296,237 2,281,237
Other Assets 142,185 144,447
Total Other Assets 2,438,422 2,425,684
Total Assets $ 21,572,755 $ 23,571,961
(*) Derived from audited financial statements.
See notes to financial statements.
DANIEL GREEN COMPANY
Balance Sheets
Liabilities & Stockholders' Equity
March 31 December 31
1996 1995
(Unaudited) (*)
Current Liabilities:
Notes Payable, line of credit $ 6,575,529 $ 8,301,730
Notes Payable, current 591,401 591,129
Accounts Payable, trade 986,308 311,982
Accrued Salaries & Commissions 69,838 211,808
Accrued Cooperative Advertising 106,898 300,000
Other Accrued Liabilities 154,139 165,794
Income Taxes Payable 0 0
Capital Lease Obligation, current 13,189 17,115
Total Current Liabilities 8,497,302 9,899,558
Capital Lease Obligations, non-current 8,615 10,916
Notes Payable, non-current 2,099,604 2,295,177
Deferred Tax Liability 1,110,351 1,110,351
Total Liabilities 11,715,872 13,316,002
Stockholder's Equity
Common Stock 2,592,230 2,592,230
Retained Earnings 7,264,653 7,663,729
Total Stockholders' Equity 9,856,883 10,255,959
Total Liabilities & Stockholders' Equity $ 21,572,755 $ 23,571,961
(*) Derived from audited financial statements.
See notes to financial statements.
DANIEL GREEN COMPANY
Statements of Operations
(Unaudited)
For the Three Months Ended
March 31 March 31
1996 1995
Net Sales $ 3,763,545 $ 4,015,406
Costs and Expenses:
Cost of Goods Sold 2,864,807 2,868,852
Selling, General, & Administrative 1,311,444 1,290,922
Interest Expense 230,963 189,519
Total Costs and Expenses 4,407,214 4,349,293
Loss before credit for Income Taxes (643,669) (333,887)
Credit for Income Taxes 244,594 126,877
Net Loss ($399,075) ($207,010)
Net Loss per Share ($0.38) ($0.20)
Shares Outstanding 1,036,892 1,036,892
See notes to financial statements.
DANIEL GREEN COMPANY
Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31 March 31
1996 1995
Operating Activities:
Net Loss $ (399,075) $ (207,010)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation 93,345 93,557
Amortization 6,134 6,134
Net Pension Credit (15,000) (22,500)
Changes in assets & liabilities:
(increases) decreases in:
Accounts Receivable, trade 1,827,412 1,710,747
Income Tax Refund Receivable (244,594) (126,877)
Inventories 271,167 (1,211,587)
Other Current Assets 81 033 26,348
Other Assets (3,872) (20,364)
increases (decreases) in:
Accounts Payable, trade 674,326 760,333
Accrued Salaries (141,970) (85,747)
Income Taxes Payable 0 (402,947)
Other Accrued Liabilities (204,756) (153,590)
Net Cash Provided by Operating Activities 1,944,150 366,497
Investing Activities:
Purchase of property & equipment (17,870) (183,483)
Net Cash Used in Investing Activities (17,870) (183,483)
Financing Activities:
Net (Payments) Borrowings
on Line of Credit (1,726,201) 68,183
Borrowings of Notes Payable 0 0
Repayments of Notes Payable (195,300) (195,043)
Principal payments under Capital Leases (6,229) (12,434)
Net Cash Used in Financing Activities (1,927,730) (139,294)
Net Increase (Decrease) in Cash (1,450) 43,720
Cash at Beginning of Period 29,762 23,551
Cash at End of Period $ 28,312 $ 67,271
See notes to financial statements.
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 March 31,
1996 and the results of operations and cash flows for the
three months then ended.
Note 2. The results of operations for the three months ended
March 31, 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 quarter ended March 31, 1996 the Company provided cash
of $1,944,150 from operations. This compares with $366,496
provided in the first quarter of 1995. Although the Company
experienced a higher first quarter loss than in 1995 ($399,075 vs.
$207,010), lower inventory levels enabled it to dramatically
increase the cash from operation. Inventories were reduced by
$271,167 from year end levels as opposed to a $1,211,587 increase
in inventories in the first quarter of last year. As opposed to
the first quarter of 1995, finished goods fell by $569,203 (7.1%),
work in process by $165,309 (15.6%) and raw materials by $818,679
(26.3%) for a total of $1,553,191 or 12.7%. Pairage in finished
goods fell to 673,333 from 723,292 in March of 1995. The Company
realizes that this reduction must continue throughout the year in
order to improve cash flows as required. Production was 189,049 in
the first quarter, a reduction of 185,298 pairs or 49.5% as
compared with the first quarter of 1995. Receivables were also
reduced by $116,665 more than in the first quarter of 1995, adding
to the positive first quarter cash flows from operations.
The majority of the cash provided by operations was used to
repay debt. $1,927,730 was used for financing in the first quarter
of 1996, as opposed to $139,294 being used to pay debt in the first
quarter of 1995. $17,870 was invested in property and equipment
through March of this year, compared to $183,483 in the first
quarter of last year.
The Company currently has a one year $7,500,000 line of credit
with Fleet Bank. This commitment expires April 30, 1997. The
Company was not in compliance with all loan covenants as of March
31, 1996, and a waiver of that violation has been requested.
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. Cash generated by operations,
supplemented by short-term borrowings, should cover planned
requirements.
2. Results of Operations
Net sales for the first quarter were $251,861 less than in
1995, which is a 6.3% reduction. The Company believes that this
reduction is due mainly to a poor retailing period in the fourth
quarter of 1995. Many major customers have higher than usual
inventories which caused the reduction in orders to be shipped in
the first quarter of 1996.
The cost of goods sold decreased by $4,045 in the first
quarter. However, the cost of goods sold was 76.1% of net sales as
opposed to 71.4% in 1995. The increase was primarily a result of
higher per pair overhead costs due to the reduced production and
sales.
Selling, general, and administrative expenses rose by $20,521
or 1.6% in the first three months of 1996. This is equivalent of
34.8% of net sales in 1996 as compared to 32.1% in 1995. Increases
were seen in professional fees, shipping fees, depreciation, and
health insurance.
Interest expense rose by $41,444 or 21.9%. The increase was
due to higher borrowing levels so far this year.
The Company incurred a net loss before taxes of $643,669,
which was $309,781 more than 1995. The net loss after taxes was
$399,075, or $192,065 more than in 1995.
The Company believes that these early results reflect the
decision to downsize its workforce and make a sizable decrease in
its domestic production outputs. The higher overhead costs have
caused an increase in its costs of goods sold but, with the
increased import pairage and their improved margins, these
increases should be absorbed by year end. However, since most of
these shipments will not occur until the late third and fourth
quarters of the year, the real impact of these changes will not be
realized until year end.
A major improvement has been seen on the Company's balance
sheet. The line of credit has been reduced by $1.7 million from
its January 1 balance, while it rose by $68,000 during the same
period of 1995. This has been the result of large reductions in
inventory which caused the positive cash flows. These reductions
have outpaced the Company's projections thus far. The Company will
continue towards its goals of dramatically reducing inventory and
debt by year end.
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.
At the Annual Meeting of Stockholders held March 29, 1996,
stockholders present in person and by proxy voted upon one
proposal other than the election of Directors:
1) that the shareholders elect the firm of Deloitte & Touche
as the Company's independent auditors (Proposal II,
listed on the Proxy Statement dated March 5, 1996).
Of the total shares outstanding, 868,554 or 83.8% voted
on Proposal II as follows: 830,451 or 95.6% For
33,946 or 3.9% Against
4,157 or .5% Abstain
0 or 0.0% No Vote
5. Other Information - None.
6. Exhibits and Reports on Form 8K
A) The registrant filed a Current Report on Form 8-K on
February 27, 1996, with respect to a Rights Agreement
dated February 9, 1996 with the First National Bank of
Boston as Rights Agent and the registrant's declaration,
pursuant to the Rights Agreement, of a dividend of one
Right per outstanding share of common stock to holders of
record as of February 29, 1996.
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
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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