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 September 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 SEPTEMBER 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
September 30, 1996 & December 31, 1995 . . . . . 2
Balance Sheets, Liabilities & Stockholders' Equity
September 30, 1996 & December 31, 1995 . . . . . 3
Statements of Operations for the three & nine month
periods ended September 30, 1996 & 1995 . . . . . 4
Statements of Cash Flows for the nine months ended
September 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
Page 1
DANIEL GREEN COMPANY
Balance Sheets
ASSETS
Sept. 30 December 31
1996 1995
(Unaudited) (*)
Current Assets:
Cash $ 11,564 $ 29,762
Accounts Receivable, trade
less allowances for doubtful accounts
(1996 - $243,830 1995 - $275,000) 6,863,103 7,210,427
Income Tax Refund Receivable 326,324 458,887
Inventories, at lower of cost (FIFO) or market:
Raw Materials 2,325,123 2,640,101
Work In Process 1,350,332 782,291
Finished Goods 6,601,647 7,477,851
Total Inventories 10,277,102 10,900,243
Deferred Tax Asset 320,977 320,977
Other Current Assets 25,345 149,585
Total Current Assets 17,824,415 19,069,881
Property:
Real Estate and Water Power, at cost 3,270,968 3,271,468
Machinery, Equipment, & Lasts, at cost 5,446,170 5,415,774
8,717,138 8,687,242
Less: Accumulated Depreciation 6,865,137 6,610,846
Property, net 1,852,001 2,076,396
Other Assets:
Prepaid Pension Expense 2,335,860 2,281,237
Other Assets 129,917 144,447
Total Other Assets 2,465,777 2,425,684
Total Assets $ 22,142,193 $ 23,571,961
(*) Derived from Audited Financial Statements.
Page 2
DANIEL GREEN COMPANY
Balance Sheets
Liabilities & Stockholders' Equity
Sept. 30 December 31
1996 1995
(Unaudited) (*)
Current Liabilities:
Notes Payable, line of credit $ 5,517,084 $ 8,301,730
Notes Payable, current 586,631 591,129
Accounts Payable, trade 1,430,277 311,982
Accrued Salaries & Commissions 86,738 211,808
Accrued Cooperative Advertising 200,000 300,000
Other Accrued Liabilities 128,011 165,794
Capital Lease Obligation, current 27,865 17,115
Total Current Liabilities 7,976,606 9,899,558
Capital Lease Obligations, non-current 3,953 10,916
Notes Payable, non-current 1,812,958 2,295,177
Deferred Tax Liability 1,110,351 1,110,351
Total Liabilities 10,903,868 13,316,002
Stockholder's Equity
Common Stock 3,779,730 2,592,230
Additional Paid in Capital 312,500 0
Retained Earnings 7,146,095 7,663,729
Total Stockholders' Equity 11,238,325 10,255,959
Total Liabilities & Stockholders' Equity $ 22,142,193 $ 23,571,961
(*) Derived from Audited Financial Statements.
Page 3
DANIEL GREEN COMPANY
Statements of Operations
(Unaudited)
For the For the
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30 Sept. 30 Sept. 30
1996 1995 1996 1995
Net Sales $ 7,341,607 $ 6,612,108 $15,125,224 $15,239,187
Costs and Expenses:
Cost of Goods Sold 5,366,797 4,627,187 11,282,725 10,907,906
Selling, General,
& Administrative 1,470,607 1,481,883 4,054,494 4,082,562
Interest Expense 187,255 278,380 622,897 699,499
Total Costs & Expenses 7,024,659 6,387,450 15,960,116 15,689,967
Income (Loss) before
credit for Income Taxes 316,948 224,658 (834,892) (450,780)
(Provision) Credit
for Income Taxes (120,440) (85,979) 317,259 171,296
Net Income (Loss) $196,508 $138,679 ($517,633) ($279,483)
Net Income (Loss)
per Share $0.13 $0.13 ($0.43) ($0.27)
Weighted Average Number
of Shares Outstanding 1,511,892 1,036,892 1,195,225 1,036,892
Page 4
DANIEL GREEN COMPANY
Statements of Cash Flows For the Nine Months Ended
(Unaudited) Sept. 30 Sept. 30
1996 1995
Operating Activities:
Net Loss $ (517,633) $ (279,483)
Adjustments to reconcile net loss to net
cash provided (used) by operating
activities:
Depreciation 254,291 281,407
Amortization 18,402 18,402
Net Pension Credit (54,623) (67,500)
Changes in assets & liabilities:
(increases) decreases in:
Accounts Receivable, trade 347,324 (589,088)
Income Tax Refund Receivable 132,563 (171,296)
Inventories 623,141 (2,978,060)
Other Current Assets 124,240 75,671
Other Assets (3,872) (49,971)
increases (decreases) in:
Accounts Payable, trade 1,118,295 1,154,505
Accrued Salaries (125,070) (78,578)
Income Taxes Payable 0 (402,947)
Other Accrued Liabilities (137,783) (197,495)
Net Cash Provided
(Used) by Operating Activities: 1,779,275 (3,284,434)
Investing Activities:
Purchase of property & equipment (105,405) (405,172)
Disposal of property & equipment 75,509 0
Net Cash Used in Investing Activities: (29,896) (405,172)
Financing Activities:
Net (Payments) Borrowings on
Line of Credit (2,784,646) 4,234,161
Repayments of Notes Payable (486,717) (490,081)
Net Borrowings (Payments)
of Capital Leases 3,786 187
Net Proceeds of Issuance of Common Stock 1,500,000 0
Net Cash (Used) Provided
by Financing Activities (1,767,577) 3,744,267
Net Increase (Decrease) in Cash (18,198) 54,662
Cash at Beginning of Period 29,762 23,551
Cash at End of Period $ 11,564 $ 78,213
Page 5
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 September 30, 1996 and the
results of operations and cash flows for the three and
nine months then ended.
Note 2. The results of operations for the three and nine months
ended September 30, 1996 are not necessarily indicative of the
results to be expected for the full year.
Page 6
DANIEL GREEN COMPANY
Management Discussion & Analysis of Financial Condition
and Results of Operations
1. Liquidity and Capital Resources
For the nine months ended September 30, 1996, the Company provided
cash of $1,779,275 from operations as opposed to usage of $3,284,434 for
the first nine months of 1995. An inventory decrease of $623,141 through
September 1996 as opposed to an increase of $2,978,060 through September of
1995 accounted for the majority of the $5,063,709 difference in cash from
operations from last year. Finished goods have decreased by $876,204 or
11.7% from 12/31/95 levels and by $2,491,915 or 27.4% from 9/30/95 levels.
Finished goods inventory now stands at 587,490 pairs, a decrease of 226,571
pairs (27.8%) from 9/30/95. Raw materials have also decreased, 11.9% from
year end figures and 33.9% from September 1995 figures. Work in process is
$568,041 (72.6%) higher than at December 31, 1995 but only $12,713 (1.0%)
higher than at September 30, 1995. Total domestic production has been
reduced by 414,116 pairs or 35.7% through the first nine months of 1996 as
compared to the first nine months of 1995.
Lower accounts receivables and extended terms on accounts payable
helped to offset the cash used by the increased loss. Receivables were
reduced by $347,324 (4.8%) from the beginning of the year as compared to a
$589,088 increase through the first nine months of 1995. Payables
increased by $1,118,295 from 12/31/95, almost matching the $1,154,505
increase through the first nine months of 1995. Increased cash provided by
operations, a $375,276 (92.6%) 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 $3,267,577 through the first nine
months of 1996. This compares to $3,744,267 of additional borrowings
through the first nine months of 1995.
The Company's current line of credit expires on April 30, 1997. The
Company is currently seeking less expensive debt to replace the current
funding upon or before its expiration.
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.
Page 7
2. Results of Operations
Net sales for the third quarter of 1996 increased by 11.0% to
$7,341,607 from the third quarter of 1995. Pairs shipped decreased by
3,010 (.6%) to 472,357 for the third quarter of this year as compared with
last. Year to date sales figures are slightly behind 1995 by $113,963 or
.7% on 94,563 (8.9%) fewer pairs shipped. Total net shipments through the
first nine months of 1996 equal 969,220 pairs. The improving sales are a
result of a noticeable increase in retail activity through the past few
months. We expect continued improvement in the remainder of the year and
now feel that our annual sales may be very near 1995 levels.
The increased sales and efficient production aided the Company's gross
margin for the quarter . The cost of goods sold (as a percentage of net
sales) was 73.1% for the third quarter of 1996 and ended at 74.6% through
the first nine months of the year. While this is better than earlier in
the year, these figures continue to lag behind 1995's performance. The
cost of goods sold was 70.0% for the third quarter and 71.6% for the year
to date in 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
(26.7%, 27.8%, 11.3% respectively) through the first nine months of 1996 as
compared to the same period of 1995. However, these savings were offset by
the 35.7% reduction in pairs domestically produced. Management feels that
efficient production and the strengthening sales will allow for continued
improvements in the gross margins for the fourth quarter.
Selling, general and administrative expenses fell slightly, by $11,276
(.8%) for the quarter and $28,068 (0.7%) for the year to date from those
periods of 1995. The major areas of increase were from retail expenses and
professional fees, while major savings were found in payroll taxes,
national advertising, freight, and commissions. Interest expenses were
reduced by $91,125 (32.7%) for the third quarter and were $76,602 (11.0%)
lower for the nine months ended September 30, 1996 as opposed to 1995
levels.
The Company produced net income before taxes of $316,948 in the third
quarter of 1996, an increase of $92,290 over that period of 1995. Net
income after taxes of $196,508 equates to $.13 per share, equal to the $.13
net income per share in 1995, however this equation includes the 475,000
additional shares of common stock which was issued earlier in 1996.
Through the first nine months of 1996, the Company lost $834,892
before credit for taxes, an increase of $384,112 over 1995. The net loss
after taxes of $517,633 equates to a $.43 loss per share in 1996 as opposed
to a $.27 loss per share through the first nine months of 1995. Again,
that loss per share figure includes the additional shares for 1996.
Page 8
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
None.
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
Page 9
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