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, 1997 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, 1997
Common Stock $2.50 par value 1,511,892
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DANIEL GREEN COMPANY
INDEX
Page
Number
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PART I - Financial Information
Balance Sheets, Assets
March 31, 1997 & December 31, 1996 . . . . . . .. . . 2
Balance Sheets, Liabilities & Stockholders' Equity
March 31, 1997 & December 31, 1996 . . .. . .3
Statements of Operations for the three months ended
March 31, 1997 and March 31, 1996 . . . . . . .. . . 4
Statements of Cash Flows for the three months ended
March 31, 1997 and March 31, 1996 . . . . . . . . . .5
Notes to Financial Statements . . . . . . . . . . . . . . . . . .6
Management Discussion & Analysis of Financial Conditions
and Results of Operations . . . . . . . . . . . . . . .7
PART II - Other Information . . . . . . . . . . . . . . . . . .9
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DANIEL GREEN COMPANY
Balance Sheets
ASSETS
March 31 December 31
1997 1996
(Unaudited) (*)
Current Assets:
Cash $ 12,464 $ 13,213
Accounts Receivable, trade
less allowances for doubtful accounts
(1997 - $218,425 1996 - $200,000) 4,557,621 6,582,081
Income Tax Refund Receivable 372,506 157,704
Inventories, at lower of cost (FIFO) or market:
Raw Materials 2,227,984 2,026,140
Work In Process 1,583,617 1,351,945
Finished Goods 5,837,638 5,075,618
----------- -----------
Total Inventories 9,649,239 8,453,703
Other Current Assets 65,752 69,479
----------- -----------
Total Current Assets 14,657,582 15,276,180
Property, plant & equipment:
Real Estate and Water Power, at cost 3,271,558 3,270,968
Machinery, Equipment, & Lasts, at cost 5,429,969 5,427,718
8,701,527 8,687,242
Less: Accumulated Depreciation 6,987,996 6,900,371
Property, plant & equipment, net 1,713,531 1,798,315
Other Assets:
Prepaid Pension Expense 2,375,369 2,375,369
Other Assets 113,794 114,963
----------- -----------
Total Other Assets 2,489,163 2,490,332
----------- -----------
Total Assets $18,860,276 $19,564,827
=========== ===========
(*) Derived from audited financial statements.
See notes to financial statements.
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DANIEL GREEN COMPANY
Balance Sheets
Liabilities & Stockholders' Equity
March 31 December 31
1997 1996
(Unaudited) (*)
Current Liabilities:
Notes Payable, line of credit $ 4,189,894 $ 4,537,856
Notes Payable, current 396,466 591,979
Accounts Payable, trade 854,476 480,130
Accrued Salaries & Commissions 72,471 209,427
Accrued Cooperative Advertising 268,952 307,909
Other Accrued Liabilities 116,857 119,123
Deferred income tax liability 258,193 258,193
Capital Lease Obligation, current 14,973 23,480
----------- -----------
Total Current Liabilities 6,172,282 6,528,097
Notes Payable, non-current 1,708,240 1,708,240
Deferred Tax Liability 262,716 262,716
----------- -----------
Total Liabilities 8,143,238 8,499,053
----------- -----------
Stockholders' Equity
Common Stock 3,779,730 3,779,730
Paid-in-excess of par value 312,500 312,500
Retained Earnings 6,624,808 6,973,544
----------- -----------
Total Stockholders' Equity 10,717,038 11,065,774
----------- -----------
Total Liabilities & Stockholders' Equity $18,860,276 $19,564,827
=========== ===========
(*) Derived from audited financial statements.
See notes to financial statements.
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DANIEL GREEN COMPANY
Statements of Operations
(Unaudited)
For the Three Months Ended
March 31 March 31
1997 1996
----------- ----------
Net Sales $ 3,819,009 $ 3,763,545
Costs and Expenses:
Cost of Goods Sold 2,947,249 2,864,807
Selling, General, & Administrative 1,293,387 1,311,444
Interest Expense 140,852 230,963
----------- -----------
Total Costs and Expenses 4,381,488 4,407,214
----------- -----------
Loss before credit for Income Taxes (562,479) (643,669)
Credit for Income Taxes 213,742 244,594
----------- -----------
Net Loss ($ 348,737) ($ 399,075)
=========== ===========
Net Loss per Share ($ 0.23) ($ 0.38)
=========== ===========
Shares Outstanding 1,511,892 1,036,892
See notes to financial statements.
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DANIEL GREEN COMPANY
Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31 March 31
1997 1996
------------ ------------
Operating Activities:
Net Loss $ (348,737) $ (399,075)
Adjustments to reconcile net loss to net
cash provided by operating
activities:
Depreciation 87,625 93,345
Amortization 6,134 6,134
Net Pension Credit 0 (15,000)
Changes in assets & liabilities:
(increases) decreases in:
Accounts Receivable, trade 2,024,460 1,827,412
Income Tax Refund Receivable (214,802) (244,594)
Inventories (1,195,536) 271,167
Other Current Assets 3,727 81,033
Other Assets (4,965) (3,872)
increases (decreases) in:
Accounts Payable, trade 374,346 674,326
Accrued Salaries (136,956) (141,970)
Accrued Cooperative Advertising (38,957) 0
Deferred tax liability 0 0
Other Accrued Liabilities (2,265) (204,756)
----------- -----------
Net Cash Provided by Operating Activities 554,074 1,944,150
Investing Activities:
Purchase of property & equipment (2,841) (17,870)
----------- -----------
Net Cash Used in Investing Activities (2,841) (17,870)
Financing Activities:
Net Payments on Line of Credit 347,962 (1,726,201)
Repayments of Notes Payable (195,513) (195,300)
Principal payments under Capital Leases (8,507) (6,229)
Net Cash Used in Financing Activities (551,982) (1,927,730)
Net Decrease in Cash (749) (1,450)
Cash at Beginning of Period 13,213 29,762
----------- -----------
Cash at End of Period $ 12,464 $ 28,312
=========== ===========
See notes to financial statements
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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,
1997 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, 1997 are not necessarily indicative of the results to be
expected for the full year.
Note 3. In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings
per Share," which is effective for financial statements for
both interim and annual periods ending after December 15,
1997. This new standard requires dual presentation of basic
and diluted earnings per share (EPS) on the face of the earnings
statement and requires a reconciliation of the numerators and
denominators of basic and diluted EPS calculations. The
Company's current EPS calculation conforms to basic EPS.
Diluted EPS will not be materially different from basic EPS
since the issuance of common shares upon exercise of
outstanding stock options would not be materially dilutive.
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DANIEL GREEN COMPANY
Management Discussion & Analysis of Financial Condition
and Results of Operations
1. Liquidity and Capital Resources
For the quarter ended March 31, 1997, net cash flows from operating
activities were $444,000 as compared to $1,944,150 for the first quarter in
1996. The primary reason for this change and reduction is the higher inventory
levels in 1997. Higher inventory purchases were made by the Company in order to
support several months of production in manufacturing facilities located outside
of the United States. Since December 31, 1996, inventories went up by $1,195,536
or 14.1% and the biggest increase took place in finished goods. Production of
footware started earlier this year compared to 1996, which also added to higher
stock levels. First quarter production in 1997 was 36% higher than in 1996.
The majority of cash provided by operations was used to repay debt.
During the first quarter of 1997, repayments of notes payable and on the line of
credit amounted to $543,475 as compared to $1,921,501 paid out in 1996. The
Company continues to minimize its spending levels for machinery and equipment.
The Company entered into a new credit arrangement with KeyBank National
Association on April 14, 1997. The agreement provides the Company with: an
$8,000,000 revolving line of credit; a $1,000,000 equipment line of credit and a
$2,100,000 mortgage/term loan. The credit facility is for a three year period
and will bear interest at LIBOR plus 2.25%.
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.
Subsequent to December 31, 1996, the Company elected to terminate its
defined benefit pension plan and implement a defined contribution 401(k) savings
plan. The Company has not completed its analysis of the financial statement
effect of terminating the plan, but, upon completion, it is expected to have a
positive effect on the Company's financial position and results of operations.
In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," which will be effective during the fourth quarter of 1997. SFAS No. 128
will require the Company in its fourth quarter and in its annual report to
restate all previously reported earnings per share information to conform with
the new pronouncement's requirements. The Company anticipates that earnings per
share calculated in conformity with SFAS No. 128 will not differ materially from
current figures because the issuance of common shares upon the exercise of
outstanding stock options would not be materially dilutive.
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Page 9
2. Results of Operations
Net sales for the first quarter were slightly ahead of last year by
$55,464 or 1%. Sales of slippers and casual footware was down, while sales of
private label and close-out styles were higher in comparison to last year.
Cost of goods for the quarter increased by $82,442 or 2% over the first
quarter of 1996. This increase reflects the higher manufacturing costs
associated with the shipments of private label footware.
Selling, general and administrative expenses (SG&A) decreased by
$18,056 or 1% over last year. In relationship to net sales for the quarter, SG&A
expenses also decreased by 1% in comparison to 1996.
There was a significant reduction in interest expense for the quarter
over last year which amounted to a decrease of $90,111 or 39%. This change
reflects lower borrowing levels.
The Company incurred a net loss before taxes of $562,479 which was
$81,190 less than in 1996. The net loss after taxes was $348,737 or $50,338 less
than in 1996.
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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 27, 1997, 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 7, 1997).
Of the total shares outstanding, 1,252,477 or 83% voted
on Proposal II as follows: 1,220,232 or 97.4% For
23,950 or 1.9% Against
8,295 or .6% Abstain
0 or .0% No Vote
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: May 11, 1997 /s/ Stanley W. Kabot
--------------------
Stanley W. Kabot,
Chief Financial Officer,
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<CASH> 12,464
<SECURITIES> 0
<RECEIVABLES> 4,557,621
<ALLOWANCES> 218,425
<INVENTORY> 9,649,239
<CURRENT-ASSETS> 14,657,582
<PP&E> 8,701,527
<DEPRECIATION> 6,987,996
<TOTAL-ASSETS> 18,860,276
<CURRENT-LIABILITIES> 6,172,282
<BONDS> 1,970,956
0
0
<COMMON> 3,779,730
<OTHER-SE> 6,937,308
<TOTAL-LIABILITY-AND-EQUITY> 18,860,276
<SALES> 3,819,009
<TOTAL-REVENUES> 3,819,009
<CGS> 2,947,249
<TOTAL-COSTS> 2,947,249
<OTHER-EXPENSES> 1,278,387
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 140,852
<INCOME-PRETAX> (562,479)
<INCOME-TAX> 213,742
<INCOME-CONTINUING> (348,737)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (348,737)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
