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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB
Annual Report Pursuant to Sec. 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended 12/31/99 Commission File Number 0-774
DANIEL GREEN COMPANY
(Name of Small Business Issuer in its Charter)
MASSACHUSETTS 15-0327010
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
ONE MAIN STREET, DOLGEVILLE NEW YORK 13329
(Address of principal executive offices) (Zip Code)
(315) 429-3131
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $2.50 PAR VALUE PER SHARE
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES (X) NO( )
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB ( ).
State issuer's revenues for its most recent fiscal year.
Net Sales of $14,867,332
Aggregate market value of the voting stock held by non-affiliates of the
registrant:
$6,420,969 as of March 2, 2000
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date:
CLASS ISSUED & OUTSTANDING AT MARCH 2, 2000
COMMON STOCK, $2.50 PAR VALUE 1,566,090 SHARES
List hereunder the following documents, if incorporated by reference, and the
part of the Form 10-KSB into which the document is incorporated:
Annual Report to Stockholders, December 31, 1999 Part II
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Definitive Proxy Statement Dated March 1, 2000 Part III
Transitional Small Business Disclosure Format (check one): YES ( ) NO (X)
Part I
Item 1. Description of Business
The Daniel Green Company and its predecessors (the "Company") have been
engaged in the manufacture or importation and sale of quality leisure footwear
since 1882. The Daniel Green slipper is one of the oldest and best known in the
industry. Materials in Daniel Green slippers include satin, rayon, terrycloth,
nylon, brocade, felt, polyurethane and several types of leather.
The Company operates in only one business segment. In addition, the
Company's internal reporting does not make it practicable to provide information
on net sales earned from different styles of footwear or from different
geographic locations.
Women's slippers and leisure footwear, which normally account for over
80% of the Company's annual sales, retail within a price range varying from
$18.00 to $68.00 while men's slippers are sold at prices ranging between $20.50
to $64.00 a pair. Overall, the Company produces about 120 to 140 styles of
slippers and leisure footwear, many of which change from year to year. The
Company designs most of its own products, having for many years maintained a
style research department. Research and development expenses incurred by the
Company for the last two fiscal years were approximately $125,000 in 1999 and
$168,000 in 1998. The Company owns the trademarks Comfy and Daniel Green and
sells its shoes under the stylized "DG - Daniel Green" label.
Prior to June 30, 1999, a portion of the slippers and leisure footwear
sold by the Company was manufactured in its plants in Dolgeville, New York (more
fully described in Item 2 - Property). During 1997, the Company started to
consolidate its manufacturing operations and in 1998, the Company operated its
entire domestic manufacturing within one facility; excluding warehousing and
importing activity. In the fourth quarter of 1998, the Company's Board of
Directors, President and the new management team adopted and began the
implementation of a formal restructuring plan. Based on the restructuring plan,
the Company ceased its manufacturing operations completely by June 30, 1999. As
a result, the Company's primary business activity, subsequent to closing
manufacturing operations, has been to outsource entirely the production of its
footwear and to distribute the footwear to its customers under the Company's
label and certain private labels.
Prior to the restructuring, the Company had experienced no difficulty
in obtaining the raw materials needed to manufacture its products and does not
expect its foreign manufacturers to have any difficulties in obtaining the raw
materials required for footwear production. The Company does not have a practice
of entering into long-term purchase commitments.
The Company's products are sold directly to retailers through its own
sales force, which covers the entire United States. Approximately 4,500 stores
carry Daniel Green Company slippers and leisure footwear, including most of the
major department stores in the country. Sales to one customer in 1999
represented 12% of net sales. Ten major customers represent 52% of the Company's
business in 1999. Most of these same customers represent 48% of the sales in
1998 and 40% in 1997. Due to the uncertain nature of the retail industry, the
loss of any one or more customer would have a material adverse effect on the
Company's business.
The Company advertises its products through a competitive necessity
advertising program and for many years has built its advertising campaigns
around the trademark Comfy. It avoids granting restricted or exclusive shoe sale
arrangements, believing that distribution of its products requires the greatest
number of outlets. Private label products are sold to a number of customers by
internal management and several companies account for a majority of this
business.
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The Company's business is a seasonal one. By offering specific dating
payment arrangements to its customers, the Company has been able to encourage
retailers to replenish their core stock programs on an earlier basis. However,
even with this dating program, the majority of the Company's sales are generated
during the latter half of the year.
The Company experiences severe competition in the sale of its slippers
from other manufacturers and importers of leisure footwear. It maintains an
active research and development staff, which concentrates on the introduction
and release of new products into the market place. The Company is not aware of
any patent held by others, which might materially affect its ability to compete.
The Company believes that a definite competitive advantage attaches to
its ownership of the registered trademarks Comfy and Daniel Green, which have
been used by the Company for many years.
The Company knows of no material effects that compliance with federal,
state and local provisions regulating the discharge of materials into the
environment may have upon its capital expenditures, earnings and competitive
position.
The Company has enjoyed a good relationship with approximately 50
employees, all of whom are full time. All of the registrant's employees, with
the exception of field sales representatives, are employed in Dolgeville, New
York.
The amount of the Company's backlog orders believed to be firm as of
December 31, 1999 is approximately $617,400, compared with approximately
$1,610,000 and approximately $643,000 as of December 31, 1998 and 1997
respectively. All backlog orders are expected to be filled within the next
fiscal year.
On February 3, 2000, the Company acquired certain assets, consisting
primarily of inventory and trademarks, from L.B. Evans Company, predominantly a
men's slipper company. The purchase price for the assets consisted of $781,000
for the inventory and a royalty of 8% of net invoice cost of products sold for
the next three years with L.B. Evans' brand names (except 4% for Woolrich brand
products).
On February 10, 2000, the Company entered into a definitive stock
purchase agreement to acquire, for approximately $17.8 million, all of the
outstanding shares of Penobscot Shoe Company owned by a related party. The
related party is a major stockholder of the Company and one of its owners is the
Company's Chairman and Chief Executive Officer. The pending acquisition is
subject to regulatory approval and other matters and is expected to close in the
first quarter of 2000.
The transactions described in the two preceding paragraphs are more
fully set forth in the Company's current reports on Form 8-K filed with the
Securities and Exchange Commission dated February 3 and 10, 2000.
Item 2. Description of Properties.
The Company's executive offices and manufacturing facilities are
located in Dolgeville, New York. This site consists of approximately 15 acres of
land on which there is a group of multi-storied buildings containing
approximately 337,000 square feet of floor space. These buildings are
constructed principally of wood and limestone. The principal buildings were
built between 1882 and 1890.
The Company's real property, equipment and other fixed assets are
maintained in good condition and a portion were actively utilized during the
first half of 1999. In 1998, the registrant ceased production in two separate
facilities and substantially vacated these two facilities. A third facility
ceased production and was vacated during 1999. Accordingly, the Company
recognized an expense in 1998 for impaired assets and a liability related to
lease commitments for equipment used in these facilities that expire at various
dates subsequent to their closure dates. The impaired facilities are greater
than fifty years old and have been used exclusively for footwear production by
the Company. In addition, these facilities are
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located in a depressed, rural region of New York State where the likelihood of
business expanding or relocating to this region is remote (see note 8 of the
1999 Financial Statements).
In addition, in the fourth quarter of 1998, the Company determined that
certain software that it used would not be year 2000 compliant. Accordingly, the
Company determined that an impairment loss was required in 1998 based on
management's estimate of the fair value of the software.
All buildings are owned by the Company and, in the opinion of
management, are adequately covered by insurance . The Company uses certain
office equipment under leases which expire in the year 2002.
Item 3. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
During the fourth quarter of the Company's fiscal year, no matter was
submitted to a vote of stockholders.
Part II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.
This information is contained in the 1999 Annual Report to Stockholders
which was previously filed with the Commission, and is incorporated by reference
in this Form 10-KSB Annual Report as Exhibit 13.
Item 6. Management's Discussion and Analysis or Plan of Operations.
This information is contained in the 1999 Annual Report to Stockholders
which was previously filed with the Commission, and is incorporated by reference
in this Form 10-KSB Annual Report as Exhibit 13.
Item 7. Financial Statements.
The required financial statements together with the Report of Deloitte
& Touche LLP dated January 26, 2000, (February 10,2000 as to Note 10) is
contained in the 1999 Annual Report to the Stockholders which was previously
filed with the Commission, and is incorporated by reference in this Form 10-KSB
Annual Report as Exhibit 13.
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.
None
Part III
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Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
This information is contained in the Definitive Proxy Statement dated
March 1, 2000, which has been filed with the Commission, and is incorporated by
reference in this Form 10-KSB Annual Report.
Item 10. Executive Compensation.
This information is contained in the Definitive Proxy Statement dated
March 1, 2000, which has been filed with the Commission, and is incorporated by
reference in this Form 10-KSB Annual Report.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
This information is contained in the Definitive Proxy Statement dated
March 1, 2000, which has been filed with the Commission, and is incorporated by
reference in this Form 10-KSB Annual Report.
Item 12. Certain Relationships and Related Transactions.
This information is contained in the Definitive Proxy Statement dated
March 1, 2000, which has been filed with the Commission, and is incorporated by
reference in this Form 10-KSB Annual Report.
Part IV
Item 13. Exhibits, List and Reports on Form 8-K.
(a). Exhibits
The following exhibits are incorporated by reference:
(13) 1999 Annual Report to Stockholders
Filed with the Commission on March 3, 2000
(24) Power of Attorney
(b). Reports on Form 8-K.
There were no reports filed on Form 8-K for the quarter ended
December 31, 1999.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 23, 2000 By: /s/ Greg A. Tunney
-------------------------------------
Greg A. Tunney,
President and Chief Operating Officer
By: /s/ John E. Brigham
-------------------------------------
John E. Brigham,
Chief Financial Officer and Treasurer
By: /s/ Janet S. Cool
-------------------------------------
Janet S. Cool,
Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in capacities and on the date indicated.
DIRECTORS
/s/ Edward Bloomberg * /s/ Steven DePerrior *
- ------------------------------------ ----------------------------------
Edward Bloomberg Steven DePerrior
/s/ Gregory Harden * /s/ Gary E. Pflugfelder *
- ------------------------------------ ----------------------------------
Gregory Harden Gary E. Pflugfelder
/s/ James R. Riedman * /s/ Greg A. Tunney
- ------------------------------------ ----------------------------------
James R. Riedman Greg A. Tunney
*By: /s/ Greg A. Tunney
-------------------------------------------
Greg A. Tunney, as Attorney-in-Fact
DATE: March 23, 2000
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POWER OF ATTORNEY
The undersigned Directors of DANIEL GREEN COMPANY, do hereby constitute
and appoint James R. Riedman and Greg A. Tunney their true and lawful attorneys
and agents, to execute the Daniel Green Company Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1999, for us and in our names as Directors,
to comply with the Securities Exchange Act of 1934, and the rules, regulations
and requirements of the Securities and Exchange Commission, in connection
therewith.
Dated: March 18, 2000 /s/ Edward Bloomberg
------------------------------------
Edward Bloomberg
Dated: March 13, 2000 /s/ Gregory Harden
------------------------------------
Gregory Harden
Dated: March 10, 2000 /s/ James R. Riedman
------------------------------------
James R. Riedman
Dated: March 13, 2000 /s/ Steven DePerrior
------------------------------------
Steven DePerrior
Dated: March 10, 2000 /s/ Gary E. Pflugfelder
------------------------------------
Gary E. Pflugfelder
Dated: March 13, 2000 /s/ Greg A. Tunney
------------------------------------
Greg A. Tunney
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