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SEC FILE NUMBER
0-16482
CUSIP NUMBER
749412
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12B-25
NOTIFICATION OF LATE FILING
(Check One): [ ]Form 10-K [ ]Form 11-K [ ]Form 20-F [X]Form 10-Q [ ]Form N-SAR
For Period Ended: June 28, 1997
----------------
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
For the Transition Period Ended:_____________________________
Read Attached Instruction Sheet Before Preparing Form. Please
Print or Type. NOTHING IN THIS FORM SHALL BE CONSTRUED TO IMPLY THAT THE
COMMISSION HAS VERIFIED ANY INFORMATION CONTAINED HEREIN.
- -------------------------------------------------------------------------------
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I -- REGISTRANT INFORMATION
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Full Name of Registrant
RDM Sports Group, Inc.
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Former Name if Applicable
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Address of Principle Executive Office (Street and Number)
267 Highway 74 North, Suite 5, Peachtree City, Georgia 30269
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City, State and Zip Code
PART II -- RULES 12B-25(B) AND (C)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b- 25(b), the following
should be completed. (Check box if appropriate)
[X] (a) The reasons described in reasonable detail in Part III of this
form could not be eliminated without unreasonable effort or
expense;
[X] (b) The subject annual report, semi-annual report, transition report
on Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion thereof,
will be filed on or before the fifteenth calendar day following
the prescribed due date; or the subject quarterly report of
transition report on Form 10-Q, or portion thereof will be filed
on or before the fifth calendar day following the prescribed due
date; and
[X] (c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
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PART III -- NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 11-K, 10-Q, N-SAR,
or the transition report or portion thereof, could not be filed within the
prescribed time period.
SEE ATTACHMENT A.
(ATTACH EXTRA SHEETS IF NEEDED)
SEC 1344 (6/94)
PART IV -- OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Charles E. Sanders (404) 586-9000
---------------------------------- -------------- ------------------
(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of
the Securities Exchange Act of 1934 or Section 30 of the Investment
Company Act of 1940 during the preceding 12 months or for such shorter
period that the registrant was required to file such report(s) been
filed? If answer is no, identify report(s). [X] Yes [ ] No
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(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last year will be reflected by
the earnings statements to be included in the subject report or portion
thereof? [X] Yes [ ] No
If so, attach an explanation of the anticipated change, both
narratively and quantitatively, and, if appropriate, state the reasons
why a reasonable estimate of the results cannot be made.
SEE ATTACHMENT A.
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RDM Sports Group, Inc.
---------------------------------------------
(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date August 14, 1997 By /s/ Charles E. Sanders
------------------------- --------------------------------------
Charles E. Sanders, Vice President and
Secretary (Principal Accounting Officer)
INSTRUCTION: The form may be signed by an executive officer of the registrant or
by any other duly authorized representative. The name and title of the person
signing the form shall be typed or printed beneath the signature. If the
statement is signed on behalf of the registrant by an authorized representative
(other than an executive officer), evidence of the representative's authority to
sign on behalf of the registrant shall be filed with the form.
ATTENTION
INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL
VIOLATIONS (SEE 18 U.S.C. 1001).
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GENERAL INSTRUCTIONS
1. This form is required by Rule 12b-25 (17 CFR 240.12b-25) of the General
Rules and Regulations under the Securities Exchange Act of 1934.
2. One signed original and four conformed copies of this form and
amendments thereto must be completed and filed with the Securities and
Exchange Commission, Washington, D.C. 20549, in accordance with Rule
0-3 of the General Rules and Regulations under the Act. The information
contained in or filed with the form will be made a matter of public
record in the Commission files.
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3. A manually signed copy of the form and amendments thereto shall be
filed with each national securities exchange on which any class of
securities of the registrant is registered.
4. Amendments to the notifications must also be filed on form 12b-25 but
need not restate information that has been correctly furnished. The
form shall be clearly identified as an amended notification.
5. Electronic Filers. This form shall not be used by electronic filers
unable to timely file a report solely due to electronic difficulties.
Filers unable to submit a report within the time period prescribed due
to difficulties in electronic filing should comply with either Rule 201
or Rule 202 of Regulation S-T (ss. 232.201 or ss. 232.202 of this
chapter) or apply for an adjustment in filing date pursuant to Rule
13(b) of Regulation S-T (ss. 232.13(b) of this chapter).
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ATTACHMENT A
The annual report of RDM Sports Group( the "Company") on Form 10-Q
cannot be timely filed and, without unreasonable effort and expense, the Company
represents that the reasons for its inability to timely file its Form 10-Q could
not be eliminated without unreasonable effort or expense. The reasons for such
inabilities are set forth below.
The Company is engaged in negotiations to obtain additional financing
from a third party. The ability or the failure of the Company to obtain such
additional financing will have a material impact on Management's Discussion and
Analysis of the Company's liquidity and capital resources. The outcome of such
negotiations is expected to be known within the extension period provided by
Rule 12b-25.
RDM SPORTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 28, December 31,
1997 1996
---------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,348 $ 32,141
Cash in escrow 1,085 2,615
Accounts and notes receivable, net 46,701 59,835
Inventories 51,486 70,550
Prepaid expenses and other assets 5,143 2,189
Deferred income taxes 11,797 11,987
---------- ------------
Total current assets 119,560 179,317
Property, plant and equipment: 57,485 56,823
Less-Accumulated depreciation and amortization 16,497 14,130
---------- ------------
Net property, plant and equipment 40,988 42,693
Deferred income taxes 18,297 18,297
Cash in escrow 10,158 10,158
Deferred financing and acquisition charges 16,392 16,554
Goodwill and other intangible assets, net 20,603 20,929
Long-term trade receivables 146 509
Other assets 4,697 4,755
---------- ------------
Total assets $ 230,841 $ 293,212
========== ============
</TABLE>
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RDM SPORTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Current Liabilities:
Revolving lines of credit $ --- $ 74,906
Current portion of long-term debt 3,004 558
Current portion of long-term liabilities 23 486
Accounts payable 51,367 46,552
Accrued expenses 29,584 41,098
-------- --------
Total current liabilities 83,978 163,600
Long-term Liabilities:
Revolving lines of credit 22,108 --
Long-term debt 77,983 55,339
Other long-term liabilities 1,014 1,035
Environmental liabilities 20,008 19,998
-------- --------
Total long-term liabilities 121,113 76,372
Stockholders' Equity:
Preferred stock -- --
Common stock 537 537
Additional paid-in capital 103,233 100,983
Retained (loss) earnings (65,580) (35,154)
Deferred compensation (1,856) (2,216)
Net unrealized (loss) gain on equity securities (21) (347)
-------- --------
36,313 63,803
Treasury stock, at cost (10,563) (10,563)
-------- --------
Total stockholders' equity 25,750 53,240
-------- --------
Total liabilities and stockholders' equity $230,841 $293,212
======== ========
</TABLE>
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RDM SPORTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 28, 1997 JUNE 30, 1996 JUNE 28, 1997 JUNE 30, 1996
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net Sales $ 39,988 $ 104,338 $ 95,505 $ 233,752
Cost of sales 41,820 93,375 93,957 206,567
-------- --------- -------- ---------
Gross (loss) profit (1,832) 10,963 1,548 27,185
Selling, general and administrative expenses 11,597 12,005 20,094 28,422
Other (income) expense, net:
Interest expense 3,032 6,595 6,056 14,558
Gain on sale of subsidiary -- -- -- (20,151)
Other, net 1,187 705 2,223 1,405
-------- --------- -------- ---------
4,219 7,300 8,279 (4,188)
-------- --------- -------- ---------
(Loss) earnings before income taxes
(benefit) expense and extraordinary item (17,648) (8,342) (26,825) 2,951
Income tax expense benefit) 689 (3,209) 753 3,454
-------- --------- -------- ---------
(Loss) before extraordinary item (18,337) (5,133) (27,578) (503)
Extraordinary loss, net of tax 2,805 -- 2,805 --
-------- --------- -------- ---------
Net (loss) $(21,142) $ (5,133) $(30,383) $ (503)
======== ========= ======== =========
(Loss) per common share, primary and Fully
diluted:
(Loss) before extraordinary item $ (0.36) (0.10) (0.55) (0.01)
Extraordinary loss) (0.06) -- (0.06) --
-------- --------- -------- ---------
Net (loss) $ (0.42) $ (0.10) (0.61) (0.01)
======== ========= ======== =========
Weighted average common shares 50,653 49,177 49,819 48,866
outstanding and common stock
equivalents:
Primary and fully diluted
</TABLE>
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RDM SPORTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 28, JUNE 30,
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $(30,383) $ (503)
Adjustments to reconcile net (loss) to net cash used in operating activities:
Depreciation and amortization 4,201 7,920
Amortization of deferred compensation 360 343
Loss (Gain) on sale of marketable securities 325 (568)
Gain (loss) on sale of property, plant and equipment (110) 199
Gain on sale of subsidiaries -- (20,151)
Loss on extinguishment of debt 2,305 --
Change in assets and liabilities:
Accounts receivable 13,111 71,497
Inventories 19,064 (5,154)
Prepaid expenses and other assets (2,955) (4,211)
Cash in escrow 1,530 (13,761)
Other assets 495 (2,594)
Accounts payable 4,818 (36,500)
Accrued expenses (12,238) (9,942)
Income taxes 724 2,677
Deferred income taxes 189 (693)
Other long-term liabilities (11) (170)
-------- ---------
Net Cash provided by (used in) operating activities 1,425 (11,611)
-------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (1,110) (5,325)
Acquisitions -- (1,175)
Purchase of marketable securities (169) --
Proceeds from sale of marketable securities -- 1,537
Proceeds from sale of property, plant and equipment 260 514
Proceeds from sale of subsidiaries -- 120,000
-------- ---------
Net cash used in investing activities (997) 115,551
-------- ---------
Cash flows from financing activities:
Net change in revolving lines of credit (22,670) (104,845)
Proceeds from issuance of long term debt 50,974 --
Principal payments of long term debt (600) (1,244)
</TABLE>
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RDM SPORTS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 28, JUNE 30,
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Retirement of debt (53,626) ---
Debt refinancing cost incurred (3,234) (442)
Cumulative translation adjustments (43) (320)
Proceeds from exercise of stock warrants --- ---
-------- --------
Net cash (used) provided by financing activities (29,199) (106,851)
-------- --------
Net decrease in cash and cash equivalents (28,793) (2,911)
Cash and cash equivalents, beginning of period 32,141 8,417
-------- --------
Cash and cash equivalents, end of period $ 3,348 $ 5,506
======== ========
</TABLE>
Net sales ("sales") decreased $64.4 million or 62% and $138.2 million or
59% in the second quarter and first six months of 1997, respectively, compared
to the second quarter and first six months of 1996. This decrease was
attributable, in part, to the sale of the Company's bicycle and snow products to
Brunswick Corporation ("Brunswick") on September 6, 1996 (the "Second Brunswick
Transaction") and to a lesser extent, the sale of the Company's
Nelson/Weather-Rite, Inc. ("Nelson/Weather-Rite") camping products subsidiary on
March 8, 1996 (the "First Brunswick Transaction"). During the second quarter and
first six months of 1996, the Company's bicycle and snow products and camping
operations had sales of $46.5 million and $103.5 million, respectively. Sales of
the Company's remaining operating units decreased $17.9 million or 17% and $34.7
million or 15% in the second quarter and first six months of 1997, respectively,
compared to sales of such operations in the same periods in 1996. Such decrease
was primarily attributable to continued weaknesses in sales of the Company's
fitness products and weakness in sales of swingsets along with decreases in
sports hosiery sales based on the Company's decision to de-emphasize its sports
hosiery operations market. In addition, the Company's business is seasonal and
sales of fitness products historically are lower in the second quarter of the
year. There can be no assurance that sales of fitness products in the third
quarter and the remainder of the year will not be adversely affected by
continued weakness in such market as well as operational difficulties
attributable to the Company's financial condition.
Gross profit decreased $12.8 million or 117% and $25.6 million or 94% in
the second quarter and first six months of 1997, respectively, compared to the
same period of 1996 primarily resulting from lower sales volume and
manufacturing variances and under-utilization of the Company's fitness
manufacturing facilities. The Company recorded gross losses in an amount equal
to 5% of sales in the second quarter of 1997 and gross profits, expressed as a
percent of sales, of 2% in the first six months of 1997 versus gross profits,
expressed as a percent of sales, of 11% and 12%, respectively, for the same
periods in 1996. Gross profit margins for the Company's fitness business were
negatively impacted due to reduced sales volume and increased fixed costs as a
percent of sales due to underutilization of production capability at the
Company's fitness manufacturing facility. The Company has consolidated all
fitness operations into its Opelika, Alabama facility and is continuing its
streamlining of manufacturing processes and quality initiatives. These efforts
which include better production planning, improved inventory control, and
manufacturing process throughput and efficiency improvements are intended to
provide long-term benefits in reducing costs and optimizing the utilization of
the Company's fitness manufacturing facility. However, the implementation of
these actions are not expected to have a significant positive impact on gross
profits until late 1997, if at all, when the Company's new line of fitness
products are introduced. The expected benefits of such actions also may be fully
or partially offset by higher fixed costs associated with underutilization of
such facility.
<PAGE> 9
Expressed as a percent of sales, selling, general, and administrative
("SG&A") expenses were 29% and 21% for the second quarter and first six months
of 1997, respectively, versus 12% and 12% for the same periods in 1996. SG&A
expenses decreased $40,000 and $8.3 million in the second quarter and first six
months of 1997, respectively, versus the same periods in 1996. SG&A expense
reductions relating to the sale of the Company's camping and bicycle and snow
toy products businesses and reductions in volume related expenses, such as
commission expenses, were offset by continued historically high product warranty
costs in the Company's fitness business. Expressed as a percentage of sales,
product warranty costs were 13% and 8% of sales in the second quarter and first
six months of 1997, respectively, versus 5% and 4% of sales in the same periods
in 1996. Such increase was attributable to increased reserves for potential
product warranty claims associated with sales of fitness products for current
and prior quarters. Such product warranty costs related primarily to quality
issues in fitness products produced in previous periods at the Company's
Opelika, Alabama facility as well as to fitness products formerly produced at
the Company's former Tyler, Texas and Olney, Illinois facilities. The Company
has implemented various quality assurance measures in its fitness operations
including: improved product engineering; extensive piloting and testing of new
product introductions; reductions in the number of products offered; the exiting
of the opening price point treadmill business, which traditionally has had a
higher than normal product warranty rate; and the implementation of additional
quality assurance measures; and product simplification which may result in lower
product warranty costs for its new fitness products scheduled to be introduced
in the second-half of 1997. No assurances can be given that warranty expenses,
as a percentage of sales, will decline in the future due to the Company's
quality control efforts, and the effect of such actions are not expected to be
realized, if at all, until late 1997.
Interest expense for the three and six months ended June 28, 1997 was $3.0
million and $6.0 million, respectively, decreases of $3.6 million and $8.5
million from the same periods in 1996. The reduction in interest expense is due
to lower amounts outstanding on the Company's revolving lines of credit as a
result of the First and Second Brunswick Transactions and the reduction in the
Company's outstanding indebtedness, resulting from the purchase and retirement
of all but $2.1 million of its outstanding 11.75% Senior Subordinated Notes in
September 1996.
The Company recorded a $2.8 million extraordinary loss for debt
extinguishment costs related to replacement of the Company's former Bank Credit
Agreement with its current Loan Facility.
The Company recorded tax expense of $753,000 in the first six months of
1997 compared to $3.5 million recorded in the same period in 1996. The 1997 tax
expense represents an effective rate of (3.0)%. This compares to the effective
rate of 117% recognized in the first six months of 1996 which was attributable
to the Federal and State tax expense recorded as part of the sale of the
Company's camping business. In 1997, the Company established valuation
allowances against all current year net operating loss carry-forwards ("NOL's")
and established tax reserves related to the estimated settlement amount of a
foreign tax matter.
