UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________
Commission file number: 0-238001
LACROSSE FOOTWEAR, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1446816
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1319 St. Andrew Street
La Crosse, Wisconsin 54603
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (608) 782-3020
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Common Stock, $.01 par value
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 Exchange Act
of 1934 during the preceding 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 __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K. [_]
Aggregate market value of the voting stock held by nonaffiliates of the
registrant at February 27, 1998:
$37,634,668.
Number of shares of the registrant's common stock outstanding at
February 27, 1998: 6,669,427 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended
December 31, 1997 (incorporated by reference into Parts I, II and IV)
Portions of the Proxy Statement for 1998 Annual Meeting of Shareholders
(to be filed with the Commission under Regulation 14A within 120 days
after the end of the registrant's fiscal year and, upon such filing, to be
incorporated by reference into Part III)
<PAGE>
PART I
Item 1. Business
General
LaCrosse Footwear, Inc. ("LaCrosse" or the "Company") is a
leader in the design, development, marketing and manufacturing of premium
quality protective footwear and clothing for the sporting, occupational
and recreational markets. The Company markets its products primarily
under the LACROSSE/R/, RED BALL/R/, LAKE OF THE WOODS/R/, RAINFAIR/R/ and
DANNER/R/ brands through an employee sales force and, to a lesser extent,
through selected distributors and independent representatives. It also
manufactures private label footwear, footwear components and protective
clothing. LaCrosse's products are characterized by innovative design,
performance features and durability, and are relatively unaffected by
changing fashion trends.
Historically, LaCrosse has produced footwear primarily of rubber
or vinyl, some of which includes leather or fabric uppers. In March 1994,
the Company acquired the business of Danner Shoe Manufacturing Co.
("Danner"), a producer of premium quality leather footwear for the
sporting and occupational markets, which is sold primarily under the
DANNER/R/ brand. To broaden the base of business in the protective
clothing area, in May 1996, a 50%-owned subsidiary of the Company
purchased the assets of Rainfair, Inc. ("Rainfair") of Racine, Wisconsin.
Rainfair designs and markets rainwear and other protective clothing
generally for the occupational markets, which are sold primarily under the
RAINFAIR/R/ brand. Operations of Rainfair have been included in the
Company's financial statements since the date of acquisition. In January
1998, the Company acquired the remaining 50% of Rainfair that it did not
own, thereby making it a 100%-owned subsidiary. Also in May 1996, the
Company acquired certain operating assets and trademarks of Red Ball, Inc.
("Red Ball"). Red Ball historically sold products which competed in many
of the same product categories as the LACROSSE/R/ brand. In July 1997,
the Company acquired all of the outstanding shares of Pro-Trak
Corporation, the company that operated under the Lake of the Woods
tradename. Lake of the Woods is a designer, manufacturer and marketer of
branded leather footwear for both the outdoor and occupational segments of
the market.
The Company was incorporated in Wisconsin in 1983 but traces its
history to 1897 when La Crosse Rubber Mills Company was founded. Current
management purchased LaCrosse's predecessor from the heirs of the founding
family and other shareholders in 1982.
Strategy
The Company's business strategy is to continue to (i) build,
position and capitalize on the strength of established brands, (ii) extend
its offerings of footwear, rainwear and other complementary products under
the established brands and (iii) expand and enhance its strong
distribution network of sales representatives, customer service and retail
and industrial customers.
Brand Positioning
Within the retail channels of distribution, the Company markets
footwear and rainwear under the well-established DANNER/R/, LACROSSE/R/,
RED BALL/R/ and LAKE OF THE WOODS/R/ brands. Each brand is positioned
differently in the marketplace in order to capitalize on differences in
end user expectations for performance. The DANNER/R/ brand represents the
highest level of performance, with a select line of high quality, feature
driven leather footwear products at premium prices. The LACROSSE/R/ brand
has a more extensive product line including rubber, vinyl and leather
footwear and rainwear, distributed to a broad base of independent
retailers. The RED BALL/R/ and LAKE OF THE WOODS/R/ brands offer a more
narrow line of lower price and performance footwear directed to a broad
consumer market.
The Company sells products through the industrial distributor
channel principally under the LACROSSE/R/ and RAINFAIR/R/ brands. The
brands are positioned as complementary, with the LACROSSE/R/ brand
including a full performance range of rubber and vinyl footwear, while the
RAINFAIR/R/ brand includes an extensive line of rainwear and protective
clothing.
Products
The Company's brand product offering includes these major
categories:
Rubber/Vinyl Footwear
The Company's rubber/vinyl footwear line is the most extensive
of the product categories with product offerings covering the sporting,
recreational and occupational markets. The Company markets rubber/vinyl
footwear mainly under the LACROSSE/R/ and RED BALL/R/ brands. The product
line ranges from low cost vinyl-molded products to high performance, hand-
crafted rubber products directed to specific occupational market niches.
In addition, the Company is a leader in rubber/vinyl bottom,
leather/fabric upper footwear for extreme cold and other high performance
applications. A rubber bottom boot with a leather or fabric upper
combines the waterproofness and flexibility of rubber footwear with the
fit and support of a laced leather boot.
Leather Footwear
The Company markets leather footwear under three brand names,
DANNER/R/, LACROSSE/R/ and LAKE OF THE WOODS/R/. The DANNER/R/ products
consist of premium quality sporting, occupational and recreational boots
available in numerous styles and usually featuring the stitch-down
manufacturing process which provides outstanding built-in comfort for the
owner. Danner was the first footwear manufacturer to include a
waterproof, breathable GORE-TEX/R/ bootie in leather boots, and it
continues to include that bootie in over 90% of its products. The
LACROSSE/R/ brand markets a focused line of indoor and outdoor work boots
appealing to consumers who desire durability and comfort. The LAKE OF THE
WOODS/R/ brand markets a broad line of utility, steel toe and sporting
boots and recreational hikers.
Rainwear and Protective Clothing
Rainwear and footwear are complementary products in many
occupational and outdoor environments. Rainfair offers a broad line of
quality rainwear and protective clothing appealing to those workers in
utility, construction, chemical processing, law enforcement and other
groups traditionally purchasing through industrial distributors. While
most of the garments are developed for general workwear, a number are
constructed for specific applications such as acid environments and flame
environments. The RAINFAIR/R/ brand is recognized in the industry for its
durability, quality and heritage. In recent years, the brand name has
been extended to include other protective garments such as aprons and
extreme cold weather clothing. Recently, a limited line of occupational
and sporting rainwear was introduced under the LACROSSE/R/ brand.
LaCrosse also sells footwear accessories such as liners, wader
suspenders and socks. During 1997, the Company offered approximately 450
styles of footwear and rainwear.
Product Design and Development
The Company's product design and development ideas originate
within the Company and through communication with its customers and
suppliers based upon perceived customer or consumer needs or new
technological developments in footwear, rainwear and materials.
Consumers, sales personnel and suppliers provide information to the
Company's marketing division, which interacts with product development
during the development and testing of new product. New product needs
generally can be related to functional or technical characteristics which
are addressed by the Company's pattern, design and chemistry lab staffs.
The final aesthetics of the product are determined by marketing personnel,
at times in conjunction with outside design consultants. Once a product
design is approved for production, responsibility shifts to manufacturing
for pattern development and commercialization.
Customers, Sales and Distribution
The Company markets its brands and associated products through
two separate channels of distribution: retail and industrial.
Within the retail market, the LACROSSE/R/ brand is marketed
through a sales force comprised of 17 Company-employed sales people and
four independent sales representative groups. The LaCrosse sales force
currently represents the DANNER/R/ brand in all but six territories, which
are handled by two Danner sales people and independent sales
representatives. The RED BALL/R/ and LAKE OF THE WOODS/R/ brands are
marketed jointly through independent sales representatives. A national
account sales team complements the sales activities for the brands.
The Company's industrial products are distributed through the
LaCrosse Rainfair Safety Products Division using a combination of Company
employed field sales persons, independent representatives and a national
account team.
The Company's products are sold directly to more than 6,000
accounts, including sporting goods/outdoor retailers, general merchandise
and independent shoe stores, wholesalers, industrial distributors, catalog
operations and the United States government. The Company's customer base
is also diversified as to size and location of customer and markets
served. As a result, the Company is not dependent upon a few customers,
and adverse economic conditions or mild or dry weather conditions in a
specific region are less likely to have a material effect on the Company's
results of operations.
The Company operates three factory outlet stores whose primary
purpose is disposal of slow moving, factory seconds and obsolete
merchandise. Two of these stores are located at the manufacturing
facilities in La Crosse, Wisconsin and Portland, Oregon. The Company also
derives royalty income from Danner Japan Ltd., a Japanese joint venture in
which the Company has a 10% ownership interest, on Danner Japan Ltd.'s
distribution of products in Japan under the DANNER/R/ brand that are
manufactured by others overseas.
Advertising and Promotion
Because a majority of the Company's marketing expenditures are
for promotional materials, cooperative advertising and point-of-sale
advertising designed to assist dealers and distributors in the sale of the
Company's products, the Company is able to customize advertising and
marketing for each of its brands in each of its distribution channels.
The Company's marketing strategy allows it to emphasize those features of
its products that have special appeal to the applicable targeted consumer.
The Company advertises and promotes its products through a
variety of methods including national and regional print advertising,
public relations, point-of-sale displays, catalogs and packaging.
Manufacturing
The Company produces the majority of its rubber, leather and
vinyl products in its United States manufacturing facilities in La Crosse,
Wisconsin, Portland, Oregon, Victoria, Virginia and Claremont, New
Hampshire. Liners are produced at the Company's Hillsboro, Wisconsin
facility. The Hillsboro facility also manufactures a line of waders with
nylon uppers and rubber or vinyl boot bottoms, using a heat-sealing
process. Leather tops for the LACROSSE/R/ brand rubber bottom/leather top
pac boots and some DANNER/R/ products are produced at the Company's
Clintonville, Wisconsin facility.
The Company manufactures a majority of its footwear in the
United States because the Company believes it is able to maintain better
control over quality, inventory production scheduling and inventory
levels. "Made in the USA" is prominently displayed in the Company's
advertising, promotion and marketing materials for the LACROSSE/R/ and
DANNER/R/ brands.
The RAINFAIR/R/, RED BALL/R/ and LAKE OF THE WOODS/R/ brands,
which the Company started distributing during 1996 and 1997, source a
substantial portion of their product offshore, primarily in the Dominican
Republic and Pacific Rim. The Company intends to continue to outsource
these products. The Company believes that there are adequate sources of
supply for these imported products.
Suppliers
The Company's three principal raw materials used in the
production of the Company's products, based upon dollar value, are
leather, crude rubber and oil-based vinyl compounds for vinyl footwear and
rainwear products. While the Company saw price increases during 1995 for
all three of these raw materials, prices have since stabilized at lower
levels and the Company has no reason to believe that all three of these
raw materials will not continue to be available at competitive prices.
The Company also uses technical components in the Company's products
including THINSULATE/R/, GORE-TEX/R/, CORDURA/R/, DRI-LEX/R/, POLARTEC/R/
and VIBRAM/R/. No interruption in the supply of any of these components
is anticipated.
The Company purchases GORE-TEX/R/ waterproof fabric directly
from W.L. Gore & Associates ("Gore"), for both LaCrosse and Danner
footwear. Gore has traditionally been Danner's single largest supplier,
in terms of dollars spent on raw materials. Approximately 90% of Danner's
footwear, in terms of number of pairs produced, incorporates GORE-TEX/R/
waterproof fabric. Agreements with Gore may be terminated by either party
upon 90 days' written notice. The Company considers its relationships
with Gore to be good. Effective January 1, 1997, the majority of Danner's
GORE-TEX/R/ footwear is guaranteed to be waterproof for one year from the
date of purchase compared to two years previously.
Quality Assurance
The Company's quality control programs are important to its
reputation for manufacturing superior footwear.
The Company's La Crosse, Wisconsin plant has a chemistry lab
which is responsible for incoming raw material and in-process quality
testing. All crude rubber is tested to assure that each batch meets the
high values specified by the Company for range of plasticity and rate of
cure, both of which have a direct relationship to the ultimate quality of
the product. Fabrics are sample tested to meet LaCrosse's requirements
for strength and weight. Incoming leather skins are inspected for color,
brand and weight.
The Company's Danner operation tests 100% of all GORE-TEX/R/
bootie liners for leaks prior to sewing them into boots. At least 30% of
all completed waterproof boots are filled with water for testing. Leather
is tested for lasting ability, tear strength, finish and thickness.
Backlog
At December 31, 1997, the Company had unfilled orders from its
customers in the amount of approximately $14.2 million compared to $15.8
million at December 31, 1996. The decrease in backlog is primarily the
result of the mild weather in December 1997 and the timing on certain
rainwear orders. All orders at December 31, 1997 are expected to be
filled during 1998. Because a major portion of the Company's orders are
placed in January through July for delivery in June through October, the
Company's backlog is lowest during the fourth quarter and peaks during the
second quarter. Factors other than seasonality, such as pending large
national account orders or United States government orders, could have a
significant impact on the Company's backlog. Therefore, backlog at any
one point in time may not be indicative of future results. Generally,
orders may be cancelled by customers prior to shipment without penalty.
Competition
The various categories of the protective footwear, rainwear and
protective clothing markets in which the Company operates are highly
competitive. The Company competes with numerous other manufacturers, many
of whom have substantially greater financial, distribution and marketing
resources than the Company. Because the Company has a broad product line,
its competition varies by product category. The Company has two to three
major domestic competitors in most of its rubber and vinyl product lines,
at least four major competitors in connection with the Company's sporting
footwear, at least six major competitors in connection with hiking boots
and at least four major competitors in connection with its occupational
footwear, rainwear and protective clothing. The Company also faces
competition from offshore manufacturers, particularly in the occupational
and children's markets.
LaCrosse believes it maintains a competitive position compared
to its competitors through its attention to quality and the delivery of
value, its position as an innovator in common product segments, its above-
average record of delivering products on a timely basis, its strong
customer relationships and, in some cases, the breadth of its product
line. Some of the Company's competitors compete mainly on the basis of
price.
Offshore manufacturers face significantly lower labor costs to
produce rubber and vinyl products. However, shipping costs and times,
requirements for short runs on some items, and unpredictable weather
patterns that would force offshore manufacturers or their distributors to
store large inventories in the United States to be able to meet sudden
increases in demand are some disadvantages the offshore manufacturers
face. Further, because the manufacturing process for vinyl footwear
products is much less labor intensive than for rubber footwear, lower
offshore labor rates are less of a competitive advantage in the production
of vinyl footwear. Moreover, the Company's vinyl footwear products enable
the Company to compete more effectively against offshore manufacturers of
rubber footwear.
Leather boot manufacturers and suppliers, some of which have
strong brand name recognition in the markets they serve, are the major
competitors of the Company's Danner product line. These competitors
manufacture domestically and/or import products from offshore. Danner
products effectively compete with domestically produced products, but are
generally at a price disadvantage against lower cost imported products,
because offshore manufacturers generally pay significantly lower labor
costs. Danner focuses on the premium quality, premium price segment of
the market in which product function, design, comfort and quality,
continued technological improvements, brand awareness, timeliness of
product delivery and product pricing are all important. The Company
believes, by attention to these factors, the Danner protective footwear
line has maintained a strong competitive position in its current market
niches. The LAKE OF THE WOODS/R/ brand, because of its market position,
sources product both domestically and from offshore. Therefore, it
competes with other distributors with products sourced from offshore
locations.
Employees
As of December 31, 1997, the Company had approximately 1,520
employees, all located in the United States. Approximately 575 of the
Company's employees at the La Crosse, Wisconsin facility are represented
by the United Steel Workers of America under a three-year collective
bargaining agreement which expires in October 1998, approximately 150 of
the Company's employees at the Portland, Oregon facility are represented
by the United Food & Commercial Workers Union under a collective
bargaining agreement which expires in January 1999 and approximately 55
of the Company's employees at the Racine, Wisconsin facility are
represented by the International Ladies Garment Workers Union under a
collective bargaining agreement which expires in July 2000. The Company
has approximately 450 employees at manufacturing facilities located
outside of La Crosse, Wisconsin, Portland, Oregon and Racine, Wisconsin.
None of these employees are represented by a union. The Company considers
its employee relations to be good.
Trademarks and Trade Names; Patents
The Company owns United States federal registrations for several
of its marks, including LACROSSE/R/, DANNER/R/, RED BALL/R/, LAKE OF THE
WOODS/R/, RAINFAIR/R/, LACROSSE and stylized Indianhead design that serve
as the Company's logo, RAINFAIR and stylized horse design that serve as
Rainfair's logo, ALLTEMP/R/, DURALITE/R/, FIRETECH/R/, FLY-LITE/R/, ICE
KING/R/, ICECUBE/R/, ICEMAN/R/, TERRAIN KING/R/, AIRTHOTIC/R/, CROSS-
HIKER/R/, THERMONATOR/R/ and RED BALL JETS/R/. LaCrosse also has
registrations for the "L" shape design associated with the lacing system
on the Alltemp Boot Systems, and the stylized Indianhead design associated
with the Company's logo. In addition, the Company owns registrations in
Canada for its marks ALLTEMP/R/, ICEMAN/R/, AIRBOB/R/ and stylized
Indianhead design and in Mexico for its mark LACROSSE and stylized
Indianhead design. The Company generally attempts to register a trademark
relating to a product's name only where the Company intends to heavily
promote the product or where the Company expects to sell the product in
large volumes. The Company defends its trademarks and trade names against
infringement to the fullest extent practicable under the law. Other than
registrations relating to the LACROSSE/R/, DANNER/R/, RED BALL/R/, LAKE OF
THE WOODS/R/ and RAINFAIR/R/ names, the Company does not believe any
trademark is material to its business.
The Company pays a royalty on sales of products carrying the
DANNER/R/ name equal to 0.5% of the price of products sold that applies to
net sales in excess of $4.0 million annually. The royalty agreement
expires December 31, 1998.
The Company is not aware of any material conflicts concerning
its marks or its use of marks owned by other companies.
The Company owns several patents that improve its competitive
position in the marketplace, including patents for a cold cement process
for affixing varying outsole compositions to a rubber upper; a method of
manufacture for attaching a nylon upper to a rubber bottom; a rubber
footwear product in which a heel counter is trapped or embedded within the
rubber boot to improve the support provided to the wearer's foot; the
DANNER BOB/R/ outsole; a neoprene wader upper with an expandable chest;
and a patent for its AIRTHOTIC/R/, which is a ventilated arch support that
fits under the heel.
Seasonality
As has traditionally been the case, the Company's sales in 1997
were higher in the last two quarters of the year than in the first two
quarters. The Company expects this sales trend to continue. Additional
information about the seasonality of the Company's business is contained
under "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Overview" on page 9 of the Company's 1997 Annual
Report to Shareholders and such information is hereby incorporated herein
by reference.
Foreign Operations and Export Sales
Other than the Company's 10% equity interest in Danner Japan,
Ltd., the Company does not have any foreign operations. International
sales accounted for less than 5% of the Company's net sales in 1997.
Environmental Matters
The Company and the industry in which it competes are subject to
environmental laws and regulations concerning emissions to the air,
discharges to waterways and the generation, handling, storage,
transportation, treatment and disposal of waste materials. The Company's
policy is to comply with all applicable environmental, health and safety
laws and regulations. These laws and regulations are constantly evolving
and it is difficult to predict accurately the effect they will have on the
Company in the future. Compliance with applicable environmental
regulations and controls has not had, nor are they expected to have in
1998, any material impact on the capital expenditures, earnings or
competitive position of the Company.
Executive Officers of the Registrant
The following table sets forth certain information, as of
March 15, 1998, regarding the executive officers of the Company.
Name Age Position
George W. Schneider 75 Chairman of the Board and Director
Frank J. Uhler, Jr. 67 Vice Chairman of the Board and Director
Patrick K. Gantert 48 President, Chief Executive Officer and
Director
Eric E. Merk, Sr. 55 Vice President - Danner and Director
Wayne L. Berger 51 Vice President - Purchasing
Stephen F. Bonner 44 Vice President - Claremont Operations
Kenneth F. Ducke 54 Treasurer and Assistant Secretary
Joseph F. Fahey 43 Vice President - Retail Sales and
Marketing
D. Keith Fell 46 Vice President - Operations
Peter V. Fiorini 60 Vice President - Industrial Sales
David F. Flaschberger 39 Vice President - Human Resources
David R. Llewellyn 60 Vice President - Marketing and Business
Development
Robert G. Rinehart, Jr. 45 Vice President - Product Development
Joseph P. Schneider 38 Vice President of the Company and
President and Chief Operating Officer
of Danner
Robert J. Sullivan 51 Vice President - Finance and
Administration and Chief Financial
Officer
John A. Tadewald 59 Vice President - Engineering
George W. Schneider was elected to the Board of Directors of the
Company's predecessor in 1968 and was the principal investor and
motivating force behind the management buyout of the Company's predecessor
in 1982. Since 1982, Mr. Schneider also has served as Chairman of the
Board of the Company.
Frank J. Uhler, Jr., has served as Vice Chairman of the Board of
the Company since December 31, 1994 and as a director since he joined the
Company in June 1978. From June 1978 until 1982, Mr. Uhler served as
President and from 1982 until December 31, 1994 he served as President and
Chief Executive Officer of the Company. Along with Mr. George W.
Schneider, Mr. Uhler was the other principal member of the management
group that acquired the Company's predecessor in 1982.
Patrick K. Gantert has served as President, Chief Executive
Officer and as a director of the Company since December 31, 1994. Prior
thereto, Mr. Gantert served as Executive Vice President and Chief
Operating Officer of the Company since August 1993 and as Executive Vice
President since June 1992. From March 1985, when he joined the Company,
until June 1992, Mr. Gantert was Vice President-Finance.
Eric E. Merk, Sr. has served as Vice President - Danner and as a
director of the Company since the March 1994 completion of the Danner
acquisition. On January 2, 1998, Mr. Merk was elected Vice Chairman of
the Board and Chief Executive Officer of Danner. Prior to joining the
Company, Mr. Merk was a significant shareholder and President of Danner
since purchasing Danner in 1983.
Wayne L. Berger joined the Company in 1974 and has held various
positions in finance and administration since that time. In June 1988,
Mr. Berger was elected Vice President - Purchasing.
Stephen F. Bonner joined the Company in 1983 and has held
various positions in manufacturing since that time. In June 1991, Mr.
Bonner was elected Vice President - Claremont Operations.
Kenneth F. Ducke joined the Company in 1974 and has held various
positions in finance and administration since that time. In 1982, Mr.
Ducke was elected Treasurer and Assistant Secretary.
Joseph F. Fahey has served as Vice President - Retail Sales and
Marketing since he joined the Company in October 1996. From 1993 until
1996, Mr. Fahey served as Vice President of Sales and Marketing for Stihl,
Incorporated, a manufacturer of premium hand-held power equipment and from
1989 through 1993, Mr. Fahey was the Manager of Dealer Development and
Research for the Power Equipment Division of American Honda Motor Company.
D. Keith Fell has served as Vice President - Operations since he
joined the Company in March 1996. From May 1994 until August 1995, Mr.
Fell was Vice President of Manufacturing for Traco, Inc., a manufacturer
of commercial windows and doors, from October 1993 until May 1994, he was
Vice President of Manufacturing for Hedstrom Corporation, a manufacturer
of outdoor play equipment, and from September 1990 until October 1993, Mr.
Fell was Director of Manufacturing for Hedstrom.
Peter V. Fiorini has served as Vice President - Industrial Sales
since he joined the Company in July 1991. From 1975 until joining the
Company, Mr. Fiorini was general manager of the Ranger Rubber Company
division of Endicott Johnson Shoe Company, Inc.
David F. Flaschberger joined the Company in May 1993 as Human
Resources Manager. He served in such capacity until November 1995, when
he was elected Vice President - Human Resources. From 1990 until joining
the Company, Mr. Flaschberger was the Director of Human Resources of The
Company Store, Inc., a direct mail marketer and manufacturer of down-
filled bedding products.
David R. Llewellyn has served as Vice President - Marketing and
Business Development since he joined the Company in April 1994. From 1989
until joining the Company, Mr. Llewellyn was an independent marketing and
business consultant.
Robert G. Rinehart, Jr. joined the Company in January 1990 as a
territory salesperson. In July 1991, Mr. Rinehart was appointed as the
National Accounts Manager. He served in such capacity until October 1992,
when he was appointed Senior Marketing Manager, and in March 1994 he was
elected Vice President - Product Development.
Joseph P. Schneider joined the Company in 1985 as a territory
sales manager and in January 1990 was appointed as the National Accounts
Manager. From May 1991 until January 1993, Mr. Schneider served as the
National Sales Manager and from January 1993 until June 1996 he was Vice
President - Retail Sales. In June 1996, Mr. Schneider was elected as a
Vice President of the Company and as Executive Vice President and Chief
Operating Officer of Danner, and on January 2, 1998, he was elected
President and Chief Operating Officer of Danner.
Robert J. Sullivan joined the Company in November 1992 as
Manager of Finance and Administration, was elected Vice President -
Finance and Administration in March 1994 and was given the additional
title of Chief Financial Officer in March 1997. From 1987 until joining
the Company, Mr. Sullivan was Vice President-Finance of Skipperliner
Industries, Inc., a manufacturer of houseboats.
John A. Tadewald has served as Vice President - Engineering
since he joined the Company in October 1987. From 1963 until joining the
Company, Mr. Tadewald held engineering positions with several industrial
companies.
Joseph P. Schneider is the son of George W. Schneider. None of
the other directors or executive officers are related to each other. The
term of office of each of the executive officers expires at the annual
meeting of directors.
Item 2. Properties
The following table sets forth certain information, as of
December 31, 1997, relating to the Company's principal facilities.
Properties
Owned Approximate
or Floor Area in
Location Leased Square Feet Principal Uses
La Crosse, WI Leased(1) 212,000(1) Principal sales, marketing
and executive offices and
warehouse space
La Crosse, WI Owned 400,000 Manufacture rubber boots
La Crosse, WI Leased(2) 264,000 Main warehouse and
distribution facility
La Crosse, WI Owned 11,000 Retail outlet store
Clintonville, WI Owned 42,500 Manufacture leather
components and construct
rubber boots
Clintonville, WI Leased 4,000 Warehouse and raw material
storage
Hillsboro, WI Leased(3) 40,000 Manufacture component parts
Kenosha, WI Leased 3,000 Retail outlet store
Claremont, NH Owned 150,000 Manufacture vinyl
injection-molded products
Claremont, NH Leased(4) 68,000 Warehouse and distribution
facility
Portland, OR Leased(5) 36,000 Manufacture DANNER/R/
products, offices, retail
outlet store and warehouse
space
Portland, OR Leased(6) 16,000 Warehouse and distribution
facility
Prentice, WI Leased(7) 24,000 Warehouse and distribution
facility
Racine, WI Leased(8) 104,700 Manufacturing, warehousing
and offices for Rainfair
Victoria, VA Leased(9) 38,000 Manufacture leather
footwear
_________________________
(1) The lease for this 212,000 square foot building adjacent to the
Company's manufacturing plant in La Crosse, Wisconsin expires in
2007. Approximately 50% of this building is currently sublet to the
former owner. Of the portion occupied by the Company, 6,600 square
feet is used for office space and the balance is used for warehouse
space.
(2) The lease for 183,000 square feet of this facility expires in 2000.
The Company leases the balance of the space on short-term leases.
(3) There are two facilities leased by the Company in Hillsboro,
Wisconsin with approximately 40,000 square feet.
(4) The lease of this facility expires in 2000. This space is leased in
a facility adjacent to the Company's manufacturing plant in
Claremont, New Hampshire.
(5) The lease for this facility expires in March 2004, but the Company
has the option to extend the term for up to an additional ten years.
The lease includes approximately one acre of adjacent vacant property
that could be used for expansion. Eric E. Merk, Sr., a director,
executive officer and shareholder of the Company, is affiliated with
the lessor of this facility.
(6) The lease for this facility expires in December 2000.
(7) The lease for this facility expires in 1998.
(8) The lease for this facility was entered into in May 1996 and expires
in May 2001.
(9) The lease for this facility expires in 1999.
Based on present plans, management believes that the Company's
current facilities will be adequate to meet the Company's anticipated
needs for production of LaCrosse products for at least the next two years.
Once the manufacturing facilities have reached capacity, the Company can
expand further by leasing or purchasing facilities or by outsourcing some
components.
Item 3. Legal Proceedings
In November 1993, the Company, in order to preserve its legal
rights, instituted litigation against the United States Government in the
United States Court of Federal Claims ("USCFC") seeking a refund of
amounts previously paid to the Internal Revenue Service ("IRS") relating
to the Company's treatment of its LIFO inventory stemming from the
Company's 1982 leveraged buyout. If the Government prevails in this
litigation, the IRS has indicated an intention to assess the Company for
additional tax, penalties, interest and other amounts for prior periods as
a result of recalculating the Company's LIFO inventory reserve. The
Company is not currently in a position to predict the outcome of the USCFC
litigation. The Company received a favorable preliminary decision, dated
April 25, 1997, from the USCFC. However, a decision by the U.S. Federal
Circuit Court of Appeals in another case (Kohler Co. vs. United States,
Case No. 96-5043, September 17, 1997) supports one of the principal
positions taken by the IRS and the Government in the USCFC litigation.
The Company believes that its total current exposure to the IRS with
respect to this matter is not material to the Company's financial position
or results of operations.
From time to time, the Company, in the normal course of
business, is also involved in various other claims and legal actions
arising out of its operations. The Company does not believe that the
ultimate disposition of any currently pending claims or actions would have
a material adverse effect on the Company or its financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of shareholders during the
quarter ended December 31, 1997.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The portions of page 24 which describe the market for and
dividends declared on the Company's Common Stock and Note 5 of Notes to
Consolidated Financial Statements which describe restrictions on dividends
and which are contained in the Company's 1997 Annual Report to
Shareholders are hereby incorporated herein by reference in response to
this Item.
Item 6. Selected Financial Data
The information set forth in the table on page 8 of the
Company's 1997 Annual Report to Shareholders under the caption "Five Year
Summary of Selected Financial Data" is hereby incorporated herein by
reference in response to this Item.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information set forth on pages 9 through 12 in the Company's
1997 Annual Report to Shareholders under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
is hereby incorporated herein by reference in response to this Item.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
The consolidated statements of income, shareholders' equity and
cash flows for each of the years in the three-year period ended
December 31, 1997, and the related consolidated balance sheets of the
Company as of December 31, 1997 and 1996, together with the related notes
thereto and the independent auditor's report, and the Company's unaudited
quarterly results of operations for the two-year period ended December 31,
1997, all set forth on pages 13 through 24 of the Company's 1997 Annual
Report to Shareholders, are hereby incorporated herein by reference in
response to this Item.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item with respect to directors
and Section 16 compliance is included under the captions "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance",
respectively, in the Company's definitive Proxy Statement for its 1998
Annual Meeting of Shareholders ("Proxy Statement") and is hereby
incorporated herein by reference. Information with respect to the
executive officers of the Company appears in Part I, pages 9 through 12,
of this Annual Report on Form 10-K.
Item 11. Executive Compensation
The information required by this Item is included under the
captions "Board of Directors-Director Compensation" and "Executive
Compensation" in the Proxy Statement and is hereby incorporated herein by
reference; provided, however, that the subsection entitled "Executive
Compensation-Report on Executive Compensation" shall not be deemed to be
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is included under the
caption "Principal Shareholders" in the Proxy Statement and is hereby
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is included under the
captions "Certain Transactions" and "Executive Compensation-Compensation
Committee Interlocks and Insider Participation" in the Proxy Statement and
is hereby incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial statements - The financial statements listed in
the accompanying index to financial statements and
financial statement schedules are incorporated by reference
in this Annual Report on Form 10-K.
2. Financial statement schedules - The financial statement
schedules listed in the accompanying index to financial
statements and financial statement schedules are filed as
part of this Annual Report on Form 10-K.
3. Exhibits - The exhibits listed in the accompanying index to
exhibits are filed as part of this Annual Report on Form
10-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 1997.
<PAGE>
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, on
this 27th day of March, 1998.
LACROSSE FOOTWEAR, INC.
By /s/ Patrick K. Gantert
Patrick K. Gantert
President and Chief Executive Officer
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 the capacities and on the dates indicated.
Signature Title Date
/s/ George W. Schneider Chairman of the Board and March 27, 1998
George W. Schneider Director
/s/ Patrick K. Gantert President, Chief Executive March 27, 1998
Patrick K. Gantert Officer and Director
(Principal Executive
Officer)
/s/ Robert J. Sullivan Vice President-Finance and March 27, 1998
Robert J. Sullivan Administration and Chief
Financial Officer (Principal
Financial and Accounting
Officer)
/s/ Frank J. Uhler, Jr. Vice Chairman of the Board March 27, 1998
Frank J. Uhler, Jr. and Director
/s/ Eric E. Merk, Sr. Vice President-Danner and March 27, 1998
Eric E. Merk, Sr. Director
/s/ Craig L. Leipold Director March 27, 1998
Craig L. Leipold
/s/ Richard A. Rosenthal Director March 27, 1998
Richard A. Rosenthal
/s/ Luke E. Sims Director March 27, 1998
Luke E. Sims
John D. Whitcombe Director
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULE
Page
Annual Report
Form 10-K to Shareholders
Consolidated Balance Sheets at December 31,
1997 and 1996 - 13
Consolidated Statements of Income for each
of the three years in the period ended
December 31, 1997 - 14
Consolidated Statements of Shareholders'
Equity for each of the three years in the
period ended December 31, 1997 - 15
Consolidated Statements of Cash Flows for
each of the three years in the period ended
December 31, 1997 - 16
Notes to Consolidated Financial Statements - 17-23
Independent Auditor's Report - 23
Independent Auditor's Report on Financial
Statement Schedule 21 -
Financial Statement Schedule:
II - Valuation and Qualifying
Accounts 22-23 -
All other financial statement schedules are omitted since the required
information is not present or is not present in amounts sufficient to
require submission of the schedules, or because the information required
is included in the consolidated financial statements and notes thereto.
<PAGE>
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders
LaCrosse Footwear, Inc.
La Crosse, Wisconsin
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The consolidated
supplemental schedule II is presented for purposes of complying with the
Securities and Exchange Commission's rules and is a part of the basic
consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in our audits of the basic consolidated
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic consolidated financial statements taken
as a whole.
McGLADREY & PULLEN, LLP
La Crosse, Wisconsin
February 6, 1998
<PAGE>
<TABLE>
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>
Additions
Balance at Balance
Beginning Charged To Costs Charged To at End
Description of Period and Expenses Other Accounts Deductions of Period
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Accounts receivable allowances:
Allowance for returns $ 239,000 $ 762,470 $ -- $ 721,470 $ 280,000
Allowance for cash discounts 112,000 644,486 -- 642,486 114,000
Allowance for doubtful accounts 337,000 168,068 -- 123,368 381,700
Allowance for uncollectible interest 30,374 85,729 -- 78,543 37,560
------------ ------------ ---------- ----------- ----------
Total $ 718,374 $ 1,660,753 $ -- $ 1,565,867 $ 813,260
============ ============ ========== =========== ==========
Inventory allowances:
Allowance for obsolescence $ 400,000 $ 718,224 $ -- $ 304,796 $ 813,428
============ ============ ========== =========== ==========
Warranty allowance:
Allowance for warranties $ 787,000 $ 856,706 $ -- $ 803,706 $ 840,000
============ ============ ========== =========== ==========
Year ended December 31, 1996:
Accounts receivable allowances:
Allowance for returns $ 280,000 $ 1,234,556 $ -- $ 947,556 $ 567,000
Allowance for cash discounts 114,000 90,496 -- 15,496 189,000
Allowance for doubtful accounts 381,700 167,655 335,000 178,855 705,500
Allowance for uncollectible interest 37,560 92,268 -- 84,026 45,802
------------ ------------ ---------- ----------- ----------
Total $ 813,260 $ 1,584,975 $ 335,000 $1,225,933 $1,507,302
============ ============ ========== =========== ==========
Inventory allowances:
Allowance for obsolescence $ 813,428 $ 272,904 $ 350,000 $ 235,332 $1,201,000
============ ============ ========== =========== ==========
Warranty allowance:
Allowance for warranties $ 840,000 $ 1,057,730 $ -- $ 972,730 $ 925,000
============ ============ ========== =========== ==========
Year ended December 31, 1997:
Accounts receivable allowances:
Allowance for returns $ 567,000 $ 1,142,866 $ 280,700 $1,152,866 $ 837,700
Allowance for cash discounts 189,000 63,345 65,000 217,345 100,000
Allowance for doubtful accounts 705,500 161,524 -- 292,069 574,955
Allowance for uncollectible interest 45,802 106,290 -- 95,631 56,461
------------ ------------ ---------- ----------- ----------
Total $ 1,507,302 $ 1,474,025 $ 345,700 $1,757,911 $1,569,116
============ ============ ========== =========== ==========
Inventory allowances:
Allowance for obsolescence $ 1,201,000 $ 586,560 $ -- $ 561,140 $1,226,420
============ ============ ========== =========== ==========
Warranty allowance:
Allowance for warranties $ 925,000 $ 769,322 $ -- $1,084,197 $ 610,125
============ ============ ========== =========== ==========
The accounts receivable and inventory allowances above were deducted from the applicable asset account.
</TABLE>
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page
Number Exhibit Description Number
(2.1) Asset Purchase Agreement, dated as of February --
11, 1994, between LaCrosse Footwear, Inc. and
Danner Shoe Manufacturing Co. [Incorporated by
reference to Exhibit (2) to LaCrosse Footwear,
Inc.'s Form S-1 Registration Statement
(Registration No. 33-75534)]
(2.2) Asset Purchase Agreement, dated May 16, 1996, by --
and among Rainco, Inc., LaCrosse Footwear, Inc.,
Rainfair, Inc. and Craig L. Leipold
[Incorporated by reference to Exhibit (2.1) to
LaCrosse Footwear, Inc.'s Current Report on Form
8-K dated May 31, 1996 and filed June 14, 1996]
(3.1) Restated Articles of Incorporation of LaCrosse --
Footwear, Inc. [Incorporated by reference to
Exhibit (3.0) to LaCrosse Footwear, Inc.'s Form
S-1 Registration Statement (Registration No. 33-
75534)]
(3.2) By-Laws of LaCrosse Footwear, Inc., as amended to --
date [Incorporated by reference to Exhibit (3.2)
to LaCrosse Footwear, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1994]
(4.1) Credit Agreement, dated as of May 31, 1996, by --
and among LaCrosse Footwear, Inc., Firstar Bank
Milwaukee, N.A., The Northern Trust Company,
Harris Trust and Savings Bank and Firstar Bank
Milwaukee, N.A., as Agent for the Banks
[Incorporated by reference to Exhibit (4.1) to
LaCrosse Footwear, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 29, 1996]
(4.2) Note Purchase Agreement, dated as of June 1, --
1990, between LaCrosse Footwear, Inc. and
Teachers Insurance and Annuity Association of
America [Incorporated by reference to Exhibit
(10.1) to LaCrosse Footwear, Inc.'s Form S-1
Registration Statement (Registration No. 33-75534)]
(4.3) Amendment to Note Purchase Agreement, dated as of --
October 7, 1994, between LaCrosse Footwear, Inc.
and Teachers Insurance and Annuity Association of
America [Incorporated by reference to Exhibit
(10.3) to LaCrosse Footwear, Inc.'s Quarterly Report
on Form 10-Q for the quarter ended October 1, 1994]
(9.1) Voting Trust Agreement, dated as of June 21, --
1982, as amended [Incorporated by reference to
Exhibit (9) to LaCrosse Footwear, Inc.'s Form S-1
Registration Statement (Registration No. 33-75534)]
(9.2) Amendment No. 9 to Voting Trust Agreement, dated
June 30, 1997
(10.1) Lease, dated as of January 7, 1991, between --
LaCrosse Footwear, Inc. and Central States
Warehouse, Inc. [Incorporated by reference to
Exhibit (10.2) to LaCrosse Footwear, Inc.'s Form
S-1 Registration Statement (Registration No. 33-
75534)]
(10.2) Amendment, dated as of June 29, 1995, to Lease --
between LaCrosse Footwear, Inc. and Central
States Warehouse, Inc. [Incorporated by
reference to Exhibit (10.2) to LaCrosse Footwear,
Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1995]
(10.3)* Employment and Consulting Agreement, dated as of --
October 1, 1990 and as amended as of October 31,
1992, between Frank J. Uhler, Jr. and LaCrosse
Footwear, Inc. [Incorporated by reference to
Exhibit (10.4) to LaCrosse Footwear, Inc.'s Form
S-1 Registration Statement (Registration No. 33-
75534)]
(10.4)* Amendment No. 1, dated as of December 31, 1994, --
to Employment and Consulting Agreement between
Frank J. Uhler, Jr. and LaCrosse Footwear, Inc.
[Incorporated by reference to Exhibit (10.5) to
LaCrosse Footwear, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1994]
(10.5)* Employment Agreement, dated as of July 1, 1992, --
and amended as of May 28, 1993, between Patrick
K. Gantert and LaCrosse Footwear, Inc.
[Incorporated by reference to Exhibit (10.8) to
LaCrosse Footwear, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1994]
(10.6)* Employment Agreement, dated as of March 14, 1994, --
between LaCrosse Footwear, Inc. and Eric E. Merk,
Sr. [Incorporated by reference to Exhibit
(10.12) to LaCrosse Footwear, Inc.'s Form S-1
Registration Statement (Registration No. 33-75534)]
(10.7)* Amendment No. 1, dated as of June 1, 1995, to --
Employment Agreement between LaCrosse Footwear,
Inc. and Eric E. Merk, Sr. [Incorporated by
reference to Exhibit (10.1) to LaCrosse Footwear,
Inc.'s Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995]
(10.8)* Employment Agreement, dated as of June 9, 1994, --
between David Llewellyn and LaCrosse Footwear,
Inc. [Incorporated by reference to Exhibit (10.1)
to LaCrosse Footwear, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended July 2, 1994]
(10.9)* LaCrosse Footwear, Inc. Deferred Compensation
Plan for Key Employees, as amended and restated
(10.10)* LaCrosse Footwear, Inc. Deferred Compensation --
Plan for Directors [Incorporated by reference to
Exhibit (10.15) to LaCrosse Footwear, Inc.'s Form
S-1 Registration Statement (Registration No. 33-
75534)]
(10.11)* LaCrosse Footwear, Inc. Retirement Plan --
[Incorporated by reference to Exhibit (10.18) to
LaCrosse Footwear, Inc.'s Form S-1 Registration
Statement (Registration No. 33-75534)]
(10.12)* LaCrosse Footwear, Inc. Employees' Retirement --
Savings Plan [Incorporated by reference to
Exhibit (10.19) to LaCrosse Footwear, Inc.'s Form
S-1 Registration Statement (Registration No. 33-
75534)]
(10.13)* LaCrosse Footwear, Inc. 1993 Employee Stock --
Incentive Plan [Incorporated by reference to
Exhibit (10.20) to LaCrosse Footwear, Inc.'s Form
S-1 Registration Statement (Registration No. 33-
75534)]
(10.14)* LaCrosse Footwear, Inc. 1997 Employee Stock --
Incentive Plan [Incorporated by reference to
Exhibit (10.17) to LaCrosse Footwear, Inc.'s
Annual Report on Form 10-K for the year ended
December 31, 1996]
(10.15) Agreement, dated as of October 2, 1995, between --
Local No. 14, United Steel Workers of America
(AFL-CIO-CLC) and LaCrosse Footwear, Inc.
[Incorporated by reference to Exhibit (10.20) to
LaCrosse Footwear, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1995]
(10.16) Lease, dated as of March 14, 1994, between Jepco --
Development Company and LaCrosse Footwear, Inc.
[Incorporated by reference to Exhibit (10.22) to
LaCrosse Footwear, Inc.'s Form S-1 Registration
Statement (Registration No. 33-75534)]
(10.17) Manufacturing Certification Agreement, dated as --
of October 19, 1993, between W.L. Gore &
Associates, Inc. and Danner Shoe Manufacturing
Co. [Incorporated by reference to Exhibit
(10.23) to LaCrosse Footwear, Inc.'s Form S-1
Registration Statement (Registration No. 33-75534)]
(10.18) Trademark License, dated as of October 19, 1993, --
between W.L. Gore & Associates, Inc. and Danner
Shoe Manufacturing Co. [Incorporated by
reference to Exhibit (10.24) to LaCrosse
Footwear, Inc.'s Form S-1 Registration Statement
(Registration No. 33-75534)]
(10.19) Registration Rights Agreement, dated as of March --
14, 1994, between LaCrosse Footwear, Inc., Danner
Shoe Manufacturing Co. and the shareholders of
Danner Shoe Manufacturing Co. [Incorporated by
reference to Exhibit (10.25) to LaCrosse
Footwear, Inc.'s Form S-1 Registration Statement
(Registration No. 33-75534)]
(10.20) Guarantee Agreement, dated as of March 14, 1994, --
between LaCrosse Footwear, Inc. and Danner Shoe
Manufacturing Co. [Incorporated by reference to
Exhibit (10.26) to LaCrosse Footwear, Inc.'s Form
S-1 Registration Statement (Registration No. 33-
75534)]
(10.21) Form of Indemnification and Investment Agreement --
to be entered into between LaCrosse Footwear,
Inc. and the shareholders of Danner Shoe
Manufacturing Co. [Incorporated by reference to
Exhibit (10.27) to LaCrosse Footwear, Inc.'s Form
S-1 Registration Statement (Registration No. 33-
75534)]
(10.22)* Employment Agreement, dated as of May 31, 1996,
by and between Craig L. Leipold, Rainco, Inc. and
LaCrosse Footwear, Inc.
(10.23)* Amendment Agreement, dated as of August 23, 1997, --
by and between LaCrosse Footwear, Inc., Rainfair,
Inc. (f/k/a Rainco, Inc.) and Craig L. Leipold
[Incorporated by reference to Exhibit (10.1) to
LaCrosse Footwear, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended September 27,
1997]
(13) Portions of the 1997 Annual Report to
Shareholders that are incorporated by reference
herein
(21) List of subsidiaries of LaCrosse Footwear, Inc.
(23) Consent of McGladrey & Pullen, LLP
(27.1) Financial Data Schedule - 1997 (EDGAR version only)
(27.2)** Restated Financial Data Schedules for fiscal year --
ended December 31, 1996 and each quarterly period
in 1996 and 1997
(99) Proxy Statement for the 1998 Annual Meeting of --
Shareholders
[The Proxy Statement for the 1998 Annual Meeting
of Shareholders will be filed with the Securities
and Exchange Commission under Regulation 14A
within 120 days after the end of the Company's
fiscal year. Except to the extent specifically
incorporated by reference, the Proxy Statement
for the 1998 Annual Meeting of Shareholders shall
not be deemed to be filed with the Securities and
Exchange Commission as part of this Annual Report
on Form 10-K.]
--------------------
* A management contract or compensatory plan or arrangement.
** Not applicable -- no amounts reported in these previously
filed Financial Data Schedules change as a result of adoption of
Statement of Financial Accounting Standards No. 128.
Exhibit 9.2
AMENDMENT NO. 9 TO VOTING TRUST AGREEMENT
THIS AMENDMENT NO. 9 to that certain Voting Trust Agreement,
dated as of June 21, 1982, as restated, by and between the parties
identified on the signature pages hereto, is made as of June 30, 1997.
W I T N E S S E T H :
WHEREAS, the undersigned constitute the holders of all of the
outstanding voting trust certificates ("Voting Trust Certificates") issued
with respect to shares of the Common Stock of LaCrosse Footwear, Inc., a
Wisconsin corporation ("Company");
WHEREAS, each such Voting Trust Certificate was issued pursuant
to that certain Voting Trust Agreement, dated as of June 21, 1982, as
amended ("Voting Trust Agreement"), between George W. Schneider,
Virginia F. Schneider and Leo J. Schneider, as the initial trustees, and
George W. Schneider, Virginia F. Schneider, Joan S. Gilles, Anna Marie
Cronin, Katherine S. Buschelman (formerly Katherine M. Schneider), John F.
Schneider, Christopher Schneider, Mary E. Schubothe (formerly Mary E.
Schneider), Joseph P. Schneider, Steven M. Schneider, Henry P. Schneider,
Virginia S. Corrada (formerly Virginia M. Schneider), Leo J. Schneider and
Schneider Properties, as depositors; and
WHEREAS, the parties hereto believe it to be in their best
interest to amend the Voting Trust Agreement as provided herein.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. The second (2nd) sentence of Paragraph 6.1 of the Voting
Trust Agreement shall be amended to read in full as follows: "Unless and
until this Agreement has been terminated according to the provisions
hereof, the Trustees shall not accept the surrender of a Beneficiary's
Trust Certificates in exchange for Common Stock, other voting securities
of the Company or other assets held by the Trustees pursuant to this
Agreement; provided, however, that on January 31st of each year commencing
on January 31, 1998, each Beneficiary (and/or such Beneficiary's
transferees in the aggregate) will automatically receive Ten
Thousand (10,000) shares (subject to adjustment to avoid dilution) of
Common Stock as a withdrawal from such Beneficiary's shares held pursuant
to this Agreement."
2. Except as provided in Paragraph 1 hereof, all of the
provisions of the Voting Trust Agreement currently in effect shall
continue in full force and effect.
3. This instrument may be executed in one or more
counterparts, each of which shall be deemed original, but all of which
together shall constitute but one and the same instrument.
Dated and effective as of the day and year first above written.
TRUSTEES
/s/ George W. Schneider (SEAL) /s/ Virginia F. Schneider (SEAL)
George W. Schneider Virginia F. Schneider
/s/ Joseph P. Schneider (SEAL) /s/ Steven M. Schneider (SEAL)
Joseph P. Schneider Steven M. Schneider
/s/ Patrick Greene (SEAL)
Patrick Greene
HOLDERS OF VOTING TRUST CERTIFICATES
GEORGE W. AND VIRGINIA F.
SCHNEIDER TRUST U/A DATED
SEPTEMBER 1, 1987
By: /s/ George W. Schneider (SEAL)
George W. Schneider
Trustee
By: /s/ Virginia F. Schneider (SEAL)
Virginia F. Schneider
Trustee
<PAGE>
GARY AND KATHERINE
BUSCHELMAN TRUST
By: /s/ Katherine S. Buschelman(SEAL)
Katherine S. Buschelman, Trustee
By: /s/ Gary Buschelman (SEAL)
Gary Buschelman, Trustee
/s/ Joan S. Gilles (SEAL) /s/ Joseph P. Schneider (SEAL)
Joan S. Gilles Joseph P. Schneider
/s/ Anna Marie Cronin (SEAL) /s/ Steven M. Schneider (SEAL)
Anna Marie Cronin Steven M. Schneider
/s/ John F. Schneider (SEAL) /s/ Henry P. Schneider (SEAL)
John F. Schneider Henry P. Schneider
/s/ Christopher Schneider (SEAL) /s/ Virginia S. Corrada (SEAL)
Christopher Schneider Virginia S. Corrada
/s/ Mary E. Schubothe (SEAL) /s/ Fredrick G. Schneider(SEAL)
Mary E. Schubothe Fredrick G. Schneider
Exhibit 10.9
LACROSSE FOOTWEAR, INC.
DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
(AS AMENDED AND RESTATED)
1. Definitions. Except as otherwise expressly provided, each of the
following terms used herein shall have the meaning set forth below:
a) "Adjusted Book Value" means the book value of the Company as
determined by the Company and its independent public accountants
in accordance with generally accepted accounting principles,
decreased by all amounts transferred to shareholders' equity as
a result of the amortization of the "Excess of Net Assets
Acquired Over Cost" account since the Company's or its
predecessor's incorporation.
b) "Company" means LaCrosse Footwear, Inc., a Wisconsin
corporation, and all of its consolidated subsidiaries.
c) "Contribution" means a dollar amount determined by the Company's
Board of Directors with respect to a particular Participant and
allocated to the appropriate Participant Account.
d) "Net Income" or "Net Loss", as the case may be, means the
consolidated net income (after-tax) or net loss (after tax
benefits), respectively, of the Company from operations for any
calendar year, as determined by the Company and its independent
public accountants in accordance with generally accepted
accounting principles. Without limiting the generality of the
foregoing, Net Income and/or Net Loss shall not include any
capital gains or losses realized by the Company, proceeds from
insurance policies or any amount resulting from the amortization
of the "Excess of Net Assets Acquired Over Cost" account.
e) "Participant" means any executive or other key employee of the
Company who is designated by the Company's Board of Directors as
a Participant in the Plan.
f) "Participant Account" means the account established for
bookkeeping purposes by the Company under the Plan for each
Participant to reflect all Contributions thereto, together with
any increases and/or decreases thereto as herein provided.
g) "Plan" means the Company's Deferred Compensation Plan for Key
Employees adopted by the Company's Board of Directors on
December 17, 1982 and as last amended and restated on November
22, 1996.
h) "Applicable Interest Rate" means the then current market rate as
reported in The Wall Street Journal, adjusted annually on
January 1 of each year, on United States Treasury obligations
with a maturity date closest to two (2) years as of the
immediately preceding December 31; provided, however, that with
respect to any Participant who retired from the Company prior to
January 1, 1996, the Applicable Interest Rate shall be eight
percent (8%) per annum.
2. Administration. The Plan shall be administered by the Board of
Directors of the Company.
3. Operation.
a) On or before December 31 of any calendar year, the Company's
Board of Directors may make Contributions on behalf of such
Participants as it shall deem appropriate. A Participant
Account will be established for each Participant and will be
increased by the amount (and at the time) of each Contribution
for the account of such Participant. Except as otherwise
provided herein, all Contributions are fully vested at the time
they are allocated to the respective Participant Accounts. Each
Participant Account will be increased in the event of Net Income
or decreased in the event of a Net Loss as of the close of
business on the last day of each calendar year by multiplying
the sum of such Participant Account as of the first day of such
calendar year by a fraction, the numerator of which is the Net
Income or Net Loss, as the case may be, for the then current
calendar year and the denominator of which is the sum of (i) the
Adjusted Book Value as of the first day of such calendar year
plus (ii) the aggregate value of all Participant Accounts as of
the first day of such calendar year. Except as the Company's
Board of Directors shall otherwise provide, no Participant
Account shall be increased or decreased under this Paragraph
after the occurrence of an event described in subparagraphs (a),
(b) and (c) of Paragraph 4 hereof.
b) On or before December 1 of any calendar year, each Participant
may specify to the Company's Board of Directors, in writing, a
percentage of the Contribution(s) to be made on his or her
behalf during the following calendar year or years, to be
deferred to a date specified by the Participant (the "Deferred
Payment Date"). The Deferred Payment Date with respect to any
Participant shall be the fifteenth (15th) day in January of such
year as he shall specify, in writing, to the Company's Board of
Directors. A Participant may extend his Deferred Payment Date
to the January fifteenth (15th) of a later year at any time,
provided that written notice of such extension shall be given to
the Company's Board of Directors at least thirty (30) days
preceding such earlier specified Deferred Payment Date.
4. Distributions.
a) Notwithstanding any other provision of this Paragraph, a
Participant shall receive the dollar value of his Participant
Account within sixty (60) days after the first of the following
events to occur:
i) At any time at the sole discretion of the Company's Board
of Directors;
ii) A merger or consolidation in which the Company does not
survive, a liquidation or dissolution of the Company or the
sale of all or substantially all of the assets of the
Company;
iii) For other than the circumstances covered in subparagraphs
(b) and (c) below, a Participant's termination of
employment with the Company, with or without cause and
regardless of whether initiated by the Company or the
Participant; provided, however, that in no event shall a
Participant who is entitled to a distribution from his or
her Participant Account as a result of an event described
in this subparagraph (iii) receive more than an amount
equal to the Contributions made to such Participant Account
together with interest thereon at the Applicable Interest
Rate, compounded annually, from the date of each
Contribution to the date of the event which triggered the
distribution.
b) In the event of a Participant's death, or any physical or mental
disability resulting in a Participant's inability to perform his
or her duties as an employee of the Company (which determination
will be made by the Company's Board of Directors in its sole
discretion), regardless of any Deferred Payment Date specified
by such Participant pursuant to the provisions of subparagraph
(b) of Paragraph 3 hereof or any distribution method elected
pursuant to subparagraph (d) below, the balance in his or her
Participant Account, plus, for the period from the first (1st)
day of the calendar year to the date of his or her death or
disability, interest at the Applicable Interest Rate on his or
her Participant Account balance, will be paid to the Participant
or his or her estate in no more than five (5) equal annual
installments.
i) The first installment paid within sixty (60) days of death,
or disability, and
ii) Succeeding installments paid on the anniversary date of his
death or disability with interest at the Applicable
Interest Rate on the unpaid balance.
c) Retirement at age 62 or thereafter.
i) If a Participant retires from the Company at age 62 or
thereafter without having specified a later Deferred
Payment Date as provided in subparagraph (b) of Paragraph 3
hereof, the balance in his or her Participant Account will
be paid in the same manner as on his or her death or
disability as provided in subparagraph (b) above.
ii) If a Participant retires from the Company at age 62 or
thereafter but has specified a later Deferred Payment Date
as provided in subparagraph (b) of Paragraph 3 hereof, the
balance in his or her Participant Account will be paid in
accordance with the distribution method elected by the
Participant pursuant to subparagraph (d) below.
iii) Notwithstanding anything in this Plan to the contrary, any
interest credited to a Participant's account during any
calendar year during which the Participant is retired shall
be paid to such Participant within thirty (30) days after
the end of such calendar year.
d) At least six (6) months before a Participant's Deferred Payment
Date, such Participant shall, by written notice to the Company's
Board of Directors, elect a lump payment upon his or her
Deferred Payment Date or periodic payments, as described below:
i) If a Participant shall have elected to receive a lump
payment, or in the event a Participant shall fail to make
any election as hereinbefore provided, the Participant
shall, on his or her Deferred Payment Date, receive the
dollar value of his or her Participant Account.
ii) If a Participant shall have elected to receive periodic
payments, the Company will, upon his or her Deferred
Payment Date and periodically thereafter for such
additional number of months or years not exceeding 119
months or 9 years as the Participant shall have specified,
pay to the Participant the balance in his Participant
Account, divided by the number of periodic payments which
the Participant shall have specified. Interest at the
Applicable Interest Rate on his or her Participant Account
balance will be paid annually as provided in subparagraph
(c) above.
e) If a Participant has specified a Deferred Payment Date which is
later than the date of his or her retirement from the Company at
age 62 or thereafter, such Participant shall earn interest at
the Applicable Interest Rate on his or her Participant Account
balance until his or her Deferred Payment Date. Interest shall
be paid annually as provided in subparagraph (c) above.
5. Nature of Rights. Participant Accounts shall be used solely as a
device for the measurement and determination of the amounts to be
paid to Participants as provided herein. No Participant Account
shall constitute or be treated as a trust fund of any kind. A
Participant shall be entitled only to receive cash as provided
herein.
6. Rights Not Transferable. No right arising under the Plan shall be
transferable other than by will or the laws of descent and
distribution. Except as expressly authorized above, any attempted
transfer or rights under the Plan shall be null and void, and without
legal effect.
7. Withholding of Taxes. There shall be deducted from each distribution
under the Plan the amount of any tax required by any governmental
authority to be withheld and paid over by the Company to such
government authority for the account of the Participant or other
person entitled to such distribution.
8. No Effect on Retirement Benefits. No Contribution, increase in a
Participant Account or distribution of all or any portion of a
participant Account shall be deemed "compensation" for purposes of
Section 1.01(c) or 1.01(j) of the Company's Retirement Plan or
2.01(j) of the Company's Employee Retirement Savings Plan for its
salaried employees or for purposes of any comparable provision of any
other Company pension or retirement plan hereafter in effect.
9. Termination; Amendment; Interpretation. The Company's Board of
Directors may at any time terminate or amend the Plan as it, in its
sole discretion, shall deem advisable. No termination or amendment
of the Plan may, without the consent of a Participant, adversely
affect the vested rights of such Participant. The Company's Board of
Directors is authorized to interpret in good faith any provision of
the Plan, and such interpretation shall be conclusive and binding on
all parties concerned.
Exhibit 10.22
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 31st day of May, 1996, by and
between Craig L. Leipold, an individual resident of Wisconsin ("Mr.
Leipold"), Rainco, Inc., a Wisconsin corporation (the "Company") and
LaCrosse Footwear, Inc., a Wisconsin corporation ("LaCrosse").
W I T N E S S E T H :
WHEREAS, the Company desires to retain the services of Mr.
Leipold as President and Chief Executive Officer;
WHEREAS, the Company is a subsidiary of LaCrosse and LaCrosse
owns 50% of the Company's common equity; and
WHEREAS, Mr. Leipold desires to be employed by the Company on
the terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises set
forth herein and the mutual benefits to be derived from this Agreement,
the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Positions and Duties. Subject to the terms and conditions
of this Agreement, from the date of this Agreement until December 31,
1999, the Company shall employ Mr. Leipold as its President and Chief
Executive Officer. In such position, Mr. Leipold shall be responsible for
the supervision, control and conduct of all the business and affairs of
the Company, under the direction of the Board of Directors of the Company
(the "Board of Directors"), and shall have such additional duties
(consistent with his offices) as shall be assigned to him from time to
time by the Board of Directors. Mr. Leipold will devote his best efforts
to his employment with the Company and shall devote his business time and
attention to the performance of his duties under this Agreement as
follows: from the date hereof through December 31, 1997, not less than
60% of his Business Time (as defined below); from January 1, 1998 through
December 31, 1998, not less than 50% of his Business Time; and from
January 1, 1999 through December 31, 1999, not less than 40% of his
Business Time. For purposes of this Section 1 only, "Business Time" means
1,840 hours devoted to business pursuits annually.
2. Term of Employment. Unless terminated earlier as provided
below, the Company's employment of Mr. Leipold under this Agreement shall
continue until December 31, 1999. The Company's employment of Mr. Leipold
under this Agreement shall terminate prior to the end of the term hereof
only under the following circumstances:
(a) Death. Mr. Leipold's death;
(b) Disability. If, as a result of Mr. Leipold's illness,
physical or mental disability or other incapacity resulting in Mr.
Leipold's inability to perform his duties under this Agreement for
any period of four (4) consecutive months or any six (6) months in a
twelve-month period, and within thirty (30) days after written notice
of termination is given by the Company (which may occur before or
after the end of such four-month or sixth-month period, as
applicable), he shall not have returned to the performance of his
duties hereunder on a full-time basis, the Company may terminate Mr.
Leipold's employment hereunder;
(c) Termination for Good Cause. The Company may, upon written
notice, terminate Mr. Leipold's employment for good cause. "Good
cause" for purposes of this Paragraph 2(c) shall mean Mr. Leipold's
conviction of a felony, conviction of a crime involving moral
turpitude or such other serious personal misconduct by Mr. Leipold of
such a nature that results in a material adverse effect on the
business or reputation of the Company, unless Mr. Leipold cures such
matter to the reasonable satisfaction of the Company within thirty
(30) days after written notice of Company's intention to terminate
Mr. Leipold's employment under this Section 2(c); or
(d) Voluntary Termination by Mr. Leipold. Mr. Leipold's
employment shall terminate sixty (60) days after written notice of
termination is delivered by Mr. Leipold to the Company or such
earlier time as the Company may specify in writing upon receipt of
Mr. Leipold's notice of termination; provided, however, that Mr.
Leipold shall be entitled to his salary for such 60-day period.
In no event shall the termination of Mr. Leipold's employment affect the
rights and obligations of the parties set forth in this Agreement, except
as expressly set forth herein.
3. Compensation. During the term of this Agreement, Mr.
Leipold shall be entitled to the following compensation for services
rendered to the Company:
(a) Mr. Leipold shall be entitled to receive the following
annual salary:
Period Annual Salary
The date hereof through December 31, 1997 $100,000
January 1, 1998 through December 31, 1998 $ 75,000
January 1, 1999 through December 31, 1999 $ 50,000
Mr. Leipold's salary shall be paid ratably on a bi-weekly basis
and shall be pro-rated on a daily basis for any payment covering less
than one half month. All payments under this Agreement shall be
subject to withholding or deduction by reason of the Federal
Insurance Contribution Act, federal income tax, Social Security,
Medicare, state income tax and similar laws and regulations.
(b) Mr. Leipold shall be granted the following options
("Options") to purchase the indicated number of shares of LaCrosse's
Common Stock, $.01 par value ("LaCrosse Common Stock"), as a
participant under LaCrosse's 1993 Employee Stock Incentive Plan, or
any successor plan thereto (the "Plan"): options to purchase 10,000
shares granted on the date hereof; options to purchase 5,000 shares
to be granted one year from the date hereof; and options to purchase
2,500 shares to be granted two years from the date hereof; provided,
however, that Mr. Leipold shall not be granted any options if he is
not an employee of the Company on the day provided for such grant.
All Options will vest in their entirety three (3) years from the date
of grant and shall expire on December 31, 2006. The exercise price
of Options shall be the closing market price of LaCrosse Common Stock
on the date of grant (or the first business day preceding the date of
grant if the date of grant is not a business day). Except as
expressly provided above, the Options shall be granted to Mr. Leipold
subject to the terms and pursuant to agreements provided for and
customarily used under the Plan.
4. Fringe Benefits. During the term of this Agreement, Mr.
Leipold shall be entitled to participate at the Company's expense in any
retirement plan, pension plan, employee stock purchase plan, employee
stock option plan, life insurance plan, health insurance plan or fringe or
other benefit which the Company from time to time makes available
generally to its executive employees. Mr. Leipold shall be entitled to
two (2) weeks paid vacation annually during the term of this Agreement,
prorated for any partial year; provided, however, that any vacation not
taken as of the end of any year during the term of this Agreement shall be
forfeited. Mr. Leipold shall be compensated by the Company for all
reasonable business expenses incurred by him on behalf of the Company upon
presentation of appropriate documentation.
5. Covenant Not to Compete and Non-Disclosure.
(a) During the term of this Agreement and so long as Mr.
Leipold is entitled to compensation under this Agreement, including
during any period in which Mr. Leipold has the right to exercise
unexpired Options granted pursuant to Paragraph 3(b) hereof, Mr.
Leipold covenants and agrees that neither he nor any of his
affiliates (including any corporation or entity in which he is an
officer, director or partner, or in which he owns beneficially five
percent (5%) or more of any class of equity securities) shall, within
the United States or Canada, whether directly or indirectly, with or
without compensation, enter into, engage in or be employed by or act
as a consultant to any corporation or other commercial enterprise
which competes with the Company or LaCrosse in the design,
manufacture, marketing and sale of protective clothing, footwear and
complementary products, or solicit or do any business with any
existing customers of the Company or LaCrosse for a competitive
purpose without the written approval of LaCrosse; provided, however,
that this covenant shall not restrict Mr. Leipold's legal or
beneficial ownership of Johnson Worldwide Associates, Inc. or any of
its controlled subsidiaries.
(b) Mr. Leipold agrees to disclose promptly to the Company and
does assign and agree to assign to the Company, free from any
obligation to him, all his right, title and interest in and to any
and all ideas, concepts, processes, improvements, inventions and
intellectual property of any kind made, conceived, written, acquired,
disclosed or developed by him, solely or in concert with others,
during the term of his employment by the Company, which relate to the
business, activities or facilities of the Company, or resulting from
or suggested by any work he may do for the Company or at its request.
Mr. Leipold further agrees to deliver to the Company any and all
drawings, notes, photographs, copies, outlines, specifications,
memoranda and data relating to such ideas, concepts, processes,
improvements, inventions and intellectual property, to cooperate
fully during his employment and thereafter in the securing of
copyright, trademark or patent protection or other similar rights in
the United States and foreign countries, and to give evidence and
testimony and to execute and deliver to the Company all documents
requested by it in connection therewith.
(c) Except as expressly set forth below, Mr. Leipold agrees,
whether during his employment pursuant to this Agreement or
thereafter, except as authorized or directed by the Company in
writing, not to disclose to others, use for his benefit, copy or make
notes of any confidential knowledge or trade secrets or any other
knowledge or information of or relating to the business, activities
or facilities of the Company or any of its affiliates which may come
to his knowledge during his employment pursuant to this agreement or
thereafter. Mr. Leipold shall not be bound to this obligation of
confidentiality and nondisclosure if:
(i) the knowledge or information shall become part of the
public domain by publication or otherwise through no fault of
Mr. Leipold;
(ii) the knowledge or information is known to the recipient
prior to the receipt of the disclosure from Mr. Leipold; or
(iii) the knowledge or information is disclosed to the
recipient by a third party who is in lawful possession of the
knowledge or information and has the lawful right to make
disclosure thereof.
(d) Upon termination of employment pursuant to this Agreement
for any reason whatsoever, Mr. Leipold will deliver to the Company
all records, notes, data, memoranda, photographs, models and
equipment of any nature which are in his possession or control and
which are the property of the Company or which relate to his
employment or to the business, activities or facilities of the
Company or any of its affiliates.
(e) The parties understand and agree that the remedies at law
for breach of the covenants in this Paragraph 5 would be inadequate
and that the Company shall be entitled to injunctive or such other
equitable relief as a court may deem appropriate for any breach of
these covenants. If any of these covenants shall at any time be
adjudged invalid or unenforceable to any extent by any court of
competent jurisdiction, such covenant shall be deemed modified to the
extent necessary in the opinion of such court to render it valid or
enforceable.
6. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to Mr. Leipold's
employment with the Company, and there have been and are no agreements,
representations or warranties between the parties other than those set
forth or provided for herein.
7. No Assignment. This Agreement shall not be assigned by
either party hereto without the prior written consent of the other party
and any attempted assignment without such prior written consent shall be
null and void and without legal effect.
8. Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if
delivered by hand or if mailed, by certified or registered mail, with
postage prepaid:
(a) If to Mr. Leipold, to Craig L. Leipold, c/o Rainco, Inc.,
3600 South Memorial Drive, Racine, Wisconsin 53403-3871, or to such
other person or place as Mr. Leipold may specify in a prior written
notice to the Company and LaCrosse;
(b) If to the Company to Rainco, Inc., 3600 South Memorial
Drive, Racine, Wisconsin 53403-3871, or to such other person or place
as the Company may specify in prior written notice to Mr. Leipold and
LaCrosse, with a copy to LaCrosse at the address provided in (c)
below.
(c) If to LaCrosse, to LaCrosse Footwear, Inc., 1319 St. Andrew
Street, P.0. Box 1328, La Crosse, Wisconsin 54603, Attention:
Chairman of the Board, or to such other person or place as the
LaCrosse may specify in prior written notice to Mr. Leipold, with a
copy to Luke E. Sims, Foley & Lardner, 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202-5367.
9. Amendment; Modification. This Agreement shall not be
amended, modified or supplemented other than in a writing signed by both
parties hereto.
10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
11. Headings. The headings in the sections of this Agreement
are inserted for convenience only and shall not constitute a part of this
Agreement.
12. Severability. The parties agree that if any provision of
this Agreement shall under any circumstances be deemed invalid or
inoperative, the Agreement shall be construed with the invalid or
inoperative provision deleted, and the rights and obligations of the
parties shall be construed and enforced accordingly.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal law of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
/s/ Craig L. Leipold (SEAL)
Craig L. Leipold ("Mr. Leipold")
RAINCO, INC.
("Company")
By: /s/ Patrick K. Gantert
Patrick K. Gantert, Vice President
LACROSSE FOOTWEAR, INC.
("LaCrosse")
By: /s/ Patrick K. Gantert
Patrick K. Gantert, President
Exhibit 13
[Pages 8-24 of 1997 Annual Report to Shareholders]
[Page 12]
Five-Year Summary of Selected Financial Data
Selected Income
Statement Data ----------------------------------------
In Thousands - Year
Ended December 31 1997 1996 1995 1994 1993
-----------------------------------------------------------------
Net sales $145,503 $121,997 $98,571 $108,319 $82,422
Operating income 13,156 10,088 6,662 11,230 7,250
Net income 6,779 5,386 3,328 6,152 3,700
Selected Balance Sheet Data
In Thousands - Year
Ended December 31 1997 1996 1995 1994 1993
Working capital $48,413 $46,811 $34,537 $35,382 $26,725
Total assets 101,920 92,286 74,862 74,822 46,488
Long-term
obligations 12,499 16,002 4,893 7,340 10,751
Shareholders'
equity 61,848 55,936 51,322 49,154 19,658
Selected Share Data
---------------------------------------------
Year Ended
December 31 1997 1996 1995 1994 1993
-----------------------------------------------------------------
Basic earnings
per share $1.02 $.80 $.48 $.98 $.76
Diluted earnings
per share $1.01 $.80 $.48 $.98 $.76
Dividends per share $.13 $.11 $.09 $.09 $.08
Shares used in
basic per share
calculation (000) 6,668 6,668 6,680 6,158 4,685
Shares used in
diluted per share
calculation (000) 6,713 6,674 6,680 6,158 4,694
Note: Earnings per share prior to 1997 were not impacted by Statement of
Financial Accounting Standards No. 128.
[Pages 9-12]
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview
Net sales generated during the last five months of the year can account
for over 55% of the Company's net sales and have a significant impact on
the Company's results of operations. Because consumers generally purchase
a large percentage of the Company's products from September through
January, retail dealers generally want delivery of products from June
through October for advance orders and from October through December for
restocking (or "fill-in") orders. Generally mild or dry weather during the
late fall and early winter has a negative impact on the Company's net
sales for the current year, while cold or wet weather during such time has
a favorable impact. Further, weather conditions in one season can affect
future net sales, particularly where weather contributes to high or low
dealer inventory levels at the season's end. To satisfy demands for its
products and to provide for uniform production levels, the Company
generally manufactures its footwear products year-round. To assist in
production scheduling, the Company's sales force calls on retail dealers
from January to June to present the product line, review inventory levels
and prepare an advance order. The Company offers price discounts for
orders placed prior to July, although advance orders may be canceled at
any time. To attempt to balance the flow of shipments and the need for
warehouse space, the Company offers extended terms on receivables relating
to advance orders to induce retail dealers to allow some shipments of
seasonal products prior to the peak shipment period. The advance order
terms provide for payment by December 1 (January 1 in the case of Southern
dealers). Because of seasonal fluctuations, inventory levels are highest
at mid-year and accounts receivable levels are highest during the fourth
quarter.
Each year, the Company introduces a number of new products. A new
product, if successful, can generate growing amounts of net sales during
the first two to four years. In some cases, net sales of new products will
help to offset adverse factors, such as mild or dry weather or adverse
economic conditions. In addition, the Rainfair, Inc. subsidiary, which is
primarily in the rainwear business, provides products which react
differently to the weather elements than the footwear business.
In July 1997, the Company acquired all of the outstanding shares of
capital stock of Pro-Trak Corporation, the company that owns and operates
under the Lake of the Woods tradename. Lake of the Woods is a designer,
manufacturer and marketer of branded leather footwear for both the outdoor
and recreational segment of the market. If the acquisition had occurred on
January 1, 1997, net sales and net income reported by the Company would
have been $149.3 million and $6.9 million, respectively.
The Company does not anticipate the future seasonality of sales will
be significantly impacted by the net sales of Lake of the Woods.
Results of Operations
The following table shows the percentage relationship to net sales of
items derived from the Consolidated Statements of Income and the
percentage change from year to year.
Percentage of Net Sales Percentage of Increase
1997 vs. 1996 vs.
Year Ended December 31 1997 1996 1995 1996 1995
Net sales 100.0% 100.0% 100.0% 19% 24%
Cost of goods sold 72.0 72.3 73.1 19 22
Gross profit 28.0 27.7 26.9 21 27
Selling and
administrative
expenses (19.0) (19.4) (20.2) 17 19
Operating income 9.0 8.3 6.7 30 51
Interest expense (1.4) (1.4) (1.5) 22 15
Other income .4 .3 .3 64 36
Income before
income taxes 8.0 7.2 5.5 33 60
Income taxes (3.1) (2.8) (2.1) 33 61
Minority interest (.2) - -
Net income 4.7% 4.4% 3.4% 26% 62%
Year Ended December 31, 1997
Compared To Year Ended December 31, 1996
Net Sales. Net sales in 1997 increased $23.5 million, or 19%, to $145.5
million from $122.0 million in 1996. The increase in net sales was largely
attributable to the July 1997 acquisition of the Lake of the Woods product
line, which added approximately $5.2 million in net sales, along with an
additional $15.2 million of net sales contributed by Rainfair and Red
Ball, mainly as a result of including a full year of sales in 1997 as
compared to 1996 when sales were included from their May acquisition
dates. Danner net sales increased $2.7 million in 1997 compared to 1996
mainly due to increased sales of hiking boots and work boots, due in part
to new product introductions. Net sales of LaCrosse products were up less
than 1% with increased sales in injection molded vinyl knee boots largely
offset by a weather related decrease in cold weather pac boot sales, the
result of the mild weather in December 1997.
Gross Profit. Gross profit as a percentage of net sales increased to
28.0% in 1997 from 27.7% in 1996. The improvement in gross margins as a
percentage of net sales was due to more favorable pricing on key raw
materials, a lower defective return rate on Danner and Red Ball products
and improved margins on the Rainfair business, primarily due to increased
volume.
Selling and Administrative Expenses. As a percent of net sales, selling
and administrative expenses decreased from 19.4% of net sales in 1996 to
19.0% of net sales in 1997. The ability to leverage the LaCrosse operating
expenses across a greater sales base was the primary reason for the
reduction in operating expenses as a percent of net sales. Expenses
increased $3.9 million, or 17%, in 1997 as compared to 1996, partially due
to a $1.4 million increase in expenses reported for Rainfair in 1997 as
compared to 1996 when expenses were included from the date of acquisition
in May 1996. The balance of the increase in spending was largely driven by
the increase in net sales.
Interest Expense. Interest expense increased $363,000, or 22%, in 1997
as compared to 1996. The increase was a result a higher level of average
borrowings needed to provide the working capital in support of the
increased sales of the Lake of the Woods, Rainfair and Red Ball product
lines acquired in July 1997, May 1996 and May 1996, respectively.
Income Tax Expense. The Company's effective income tax rate in 1997 was
39.2%, the same as the 1996 income tax rate.
Year Ended December 31, 1996
Compared To Year Ended December 31, 1995
Net Sales. Net sales in 1996 increased $23.4 million, or 24.0%, to
$122.0 million from $98.6 million in 1995. The increase in net sales was
largely attributable to the May 1996 acquisitions of Rainfair and certain
assets of Red Ball. These acquisitions added $11.1 million and $3.5
million, respectively, of net sales in 1996. Net sales of LaCrosse
products increased $7.3 million in 1996 as compared to 1995, as a result
of a $4.7 million increase in sales through the retail channel of
distribution due to (i) more favorable weather conditions, (ii) an
improved retail climate and (iii) new product offerings, and a $3.0
million improvement in sales through the industrial channel of
distribution, mainly as a result of new products. Danner product sales
increased $1.5 million in 1996 compared to 1995 resulting mainly from the
introduction of the Dri-Foot boot series.
Gross Profit. Gross profit as a percentage of net sales increased to
27.7% in 1996 from 26.9% in 1995. Gross profit margins as a percentage of
net sales on LaCrosse products were up 1.5%, primarily the result of a $.4
million reduction in the LIFO reserve, more favorable pricing on key raw
materials and improved productivity at the La Crosse, Wisconsin factory.
This was partially offset by the lower margin rainwear business and lower
margins on Red Ball brand sales, which were impacted by start-up
inefficiencies.
Selling and Administrative Expenses. Selling and administrative expenses
increased $3.8 million, or 19%, in 1996 as compared to 1995, primarily
resulting from the acquisitions of Rainfair and Red Ball, which added $2.2
million and $.6 million, respectively, to operating expenses in 1996. As a
percent of net sales, operating expenses decreased from 20.2% of net sales
in 1995 to 19.4% of net sales in 1996. The ability to leverage the
LaCrosse operating expenses across a greater sales base was the primary
reason for the reduction in operating expenses as a percent of sales. This
allowed for a planned increase in advertising expenses.
Interest Expense. Interest expense increased $223,000, or 15%, in 1996
as compared to 1995. The increase was the result of a $12.5 million
increase in long-term debt to finance the Rainfair acquisition and the
purchase of Red Ball assets, which was partially offset by lower
short-term borrowings resulting from the reduced inventory levels of
LaCrosse products during the year.
Income Tax Expense. The Company's effective income tax rate in 1996 was
39.2%, the same as the 1995 income tax rate.
Liquidity And Capital Resources
The Company has historically financed its operations with cash generated
from operations, long-term lending arrangements and short-term borrowings
under its line of credit. The Company requires working capital primarily
to support fluctuating accounts receivable and inventory levels caused by
the Company's seasonal business cycle. The Company's working capital needs
are lowest in the first quarter and highest in the third quarter. The
Company invests excess cash balances in short-term investment grade
securities or money market investments.
In May 1996, the Company invested $10.9 million in Rainfair. Of this
investment, approximately $8.0 million was for a secured loan to the
subsidiary to support working capital requirements, consistent with the
Company's intention to fund the working capital requirements of Rainfair
through intercompany loans. Rainfair is a designer, light manufacturer and
distributor of industrial and consumer rainwear, protective clothing and
boots.
In May 1996, the Company also acquired certain of the operating
assets and trademarks of Red Ball for approximately $5.5 million,
including $.3 million paid for equipment leased from a third party and $.5
million for relocation costs. Red Ball was a designer, manufacturer and
distributor of waders, pac boots and children's footwear.
In May 1996, the Company renegotiated its unsecured credit agreement
with Firstar Bank Milwaukee, N.A. as the lead bank. Under the terms of the
revised agreement, the maximum amount of borrowings were increased to
$62.5 million, including a $12.5 million term loan, from the previous
maximum level of $30.0 million. The $12.5 million term loan, which is
outstanding at December 31, 1997, was primarily used to fund the
investment in Rainfair and the acquisition of assets of Red Ball. The term
loan requires quarterly payments of $.4 million commencing in March 1998.
In July, 1997, the Company acquired all of the outstanding shares of
capital stock of Pro-Trak Corporation, the company that operated under the
Lake of the Woods tradename. The purchase price, including the assumption
of liabilities, was approximately $7.3 million. Lake of the Woods is a
designer, manufacturer and marketer of branded leather footwear for both
the outdoor and occupational segment of the market.
Cash generated by operations amounted to $2.1 million in 1997, a
decrease from the $9.7 million and $5.7 million generated in 1996 and
1995, respectively. Net income increased $1.4 million in 1997 compared to
1996, however, cash generated by operating activities in total was down
$7.6 million from the 1996 level. An increase in accounts receivable,
primarily as a result of increased sales and extended terms on fill-in
orders, and a $3.3 million increase in inventories compared to a $2.1
million decrease in 1996 were the main reasons for the reduction in cash
generated by operations. Inventories increased primarily as a result of an
increase in Red Ball inventories to support the anticipated increase in
Red Ball sales. Operating cash flow in 1996 was $9.7 million compared to
$5.7 million in 1995. The improvement was primarily attributable to a $2.0
million increase in net income and a $2.1 million reduction in inventories
(excluding the effect of the Rainfair, Inc. inventories acquired as part
of the May 1996 acquisition). The inventory reduction was the result of
improved production planning.
Net cash used in investing activities during 1997 was $3.7 million,
down significantly from $14.2 million in 1996. During 1996, over $11.0
million of cash was invested in the Rainfair acquisition and the purchase
of the Red Ball trademarks. The only acquisition during 1997 was the
purchase of Pro-Trak Corporation for approximately book value which sis
not result in a significant use of cash for investing activities.
Purchases of property and equipment, which accounted for the bulk of the
cash used in investing activities during 1997, were $3.4 million in 1997
compared to $3.1 million in 1996. It is anticipated 1998 capital spending
will be in excess of $5.0 million, partially as a result of planned
expenditures for a product development center, an injection molding
machine and a new computer software system. In addition, in January 1998,
Rainfair, Inc. became a 100% owned subsidiary when the Company acquired
50% of the common stock of Rainfair, Inc. from the former principal owner
for approximately $2.4 million.
Financing activities used $4.7 million in cash in 1997. In addition
to a $1.7 million scheduled principal payment on long-term debt, over $6.1
million of debt assumed in the Lake of the Woods acquisition was repaid.
This reduction in long-term debt was partially funded by a $4.0 million
increase in short-term borrowings. In addition, the Company paid cash
dividends of $.7 million.
The Company's debt to total capital ratio was 24.3% at December 31,
1997, 24.2% at December 31, 1996 and 11.5% at December 31, 1995.
In March 1994, the Company acquired substantially all of the assets
of Danner Shoe Manufacturing Co. in part by issuing 277,778 shares of
common stock as a portion of the purchase price. In the acquisition, the
Company guaranteed the holders of this common stock a market price of at
least $16.20 per share by March 1, 1999. If the market price is less than
$16.20 per share, the Company will be required to make a cash payment
equal to the difference on March 1, 1999. If the Danner shareholders have
the opportunity to sell their common stock under a Company-filed
registration statement or under Rule 144 promulgated under the Securities
Act of 1933, as amended, and choose not to sell after receiving a Company
request to sell, then the Company's obligation can be reduced or
eliminated to the extent of the number of shares permitted to be sold
based upon the then prevailing market price for the common stock. As of
December 31, 1997, approximately half of these shares have been sold with
no further obligation on the part of the Company.
During 1997, the Company commenced for all of its systems a year 2000
date conversion project to address all necessary code changes, testing and
implementation. Project completion is planned for the middle of 1999 at an
estimated total cost of less than $200,000. The Company expects its year
2000 date conversion project to be completed on a timely basis.
Currently available funds, including the line of credit, together
with the anticipated cash flows generated from future operations, are
believed to be adequate to cover the Company's anticipated capital and
working capital needs during 1998.
From time to time, the Company evaluates acquisitions of businesses
or product lines that could complement the Company's business, such as the
Rainfair and Lake of the Woods acquisitions. The Company has no present
understandings, commitments or agreements with respect to any acquisition.
However, if the Company makes significant future acquisitions, it may be
required to raise funds through additional bank financing or the issuance
of debt or equity securities.
Subsequent Event
In March 1998, the Company was informed by L.L. Bean, a long-term
customer puchasing hand-crafted rubber pac boot bottoms, that they are
going to replace a significant portion of the hand-crafted rubber bottoms
with molded bottoms from other vendors. This decision will reduce the
Company's 1998 net sales to L.L. Bean by approximately $1.5 million. In
future years, the full year impact will reduce Company net sales to L.L.
Bean an additional $0.5 to $1.0 million.
[Pages 13-23]
Consolidated Balance Sheets
December 31, 1997 and 1996
(In Thousands)
Assets 1997 1996
Current Assets
Cash and cash equivalents $426 $6,716
Trade accounts receivable,
less allowances of $1.6 and $1.5 million 27,390 20,705
Inventories (Note 3) 39,073 31,549
Prepaid expenses and deferred
tax assets (Note 4) 4,670 4,016
------- ------
Total current assets 71,559 62,986
------- ------
Property and Equipment
Land and land improvements and buildings 6,678 6,501
Machinery and equipment 26,896 23,391
------- ------
33,574 29,892
Less accumulated depreciation 20,299 17,262
------- ------
13,275 12,630
------- ------
Other Assets
Goodwill, net of amortization of $1.9
and $1.4 million 13,946 13,823
Deferred tax and other assets (Note 4) 3,140 2,847
------- ------
17,086 16,670
------- ------
$101,920 $92,286
======== =======
Liabilities and Shareholders' Equity
Current Liabilities
Current maturities of long-term
obligations (Note 5) $3,349 $1,851
Notes payable, bank (Note 5) 4,000 -
Accounts payable 6,385 5,755
Accrued expenses (Note 7) 9,412 8,569
------- ------
Total current liabilities 23,146 16,175
------- ------
Long-Term Obligations (Note 5) 12,499 16,002
Compensation and Benefits (Note 9) 2,921 2,980
Commitments and Contingencies
(Notes 6, 8, 9 and 10)
Minority Interest in Subsidiary (Note 2) 1,506 1,193
Shareholders' Equity
Common stock, par value $.01 per share;
authorized 50,000,000 shares; issued
and outstanding, 6,717,627 shares
(Notes 8 and 10) 67 67
Additional paid-in capital 27,579 27,579
Retained earnings (Note 5) 34,645 28,733
Less - cost of 49,900 and 50,000 shares
of treasury stock (443) (443)
------- ------
Total shareholders equity 61,848 55,936
------- ------
$101,920 $92,286
======== =======
See Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Income
Years Ended December 31, 1997, 1996 and 1995
(In Thousands,
except for share and per share data)
1997 1996 1995
Net sales $145,503 $121,997 $98,571
Cost of goods sold 104,692 88,176 72,011
-------- -------- -------
Gross profit 40,811 33,821 26,560
Selling and administrative
expenses 27,655 23,733 19,898
-------- -------- -------
Operating income 13,156 10,088 6,662
Non-operating income (expense):
Interest expense (2,043) (1,680) (1,457)
Miscellaneous 593 361 266
-------- -------- -------
(1,450) (1,319) (1,191)
Income before income
taxes 11,706 8,769 5,471
Provision for income taxes
(Note 4) 4,588 3,440 2,143
-------- -------- -------
Net income before
minority interest 7,118 5,329 3,328
Minority interest in net
(income) loss of subsidiary (339) 57 -
-------- -------- -------
Net income $6,779 $5,386 $3,328
======== ======== =======
Basic earnings per share $1.02 $.80 $.48
======== ======== =======
Diluted earnings per share $1.01 $.80 $.48
======== ======== =======
Weighted average shares outstanding:
Basic earnings per share 6,667,702 6,667,627 6,679,545
Diluted earnings per share 6,712,975 6,673,539 6,679,545
See Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 1997, 1996 and 1995
(In Thousands, except for share and per share data)
Additional Total
Common Paid-In Retained Treasury Shareholders'
Stock Capital Earnings Stock Equity
Balance,
December 31, 1994 $67 $27,579 $21,508 $- $49,154
Net income - - 3,328 - 3,328
Common stock
dividends ($.09
per share) - - (600) - (600)
6% preferred
stock dividends - - (117) - (117)
Purchase of 50,000
shares of treasury
stock - - - (443) (443)
---- ------ ------ ----- ------
Balance,
December 31, 1995 67 27,579 24,119 (443) 51,322
Net income - - 5,386 - 5,386
Common stock
dividends ($.11
per share) - - (733) - (733)
6% preferred
stock dividends - - (39) - (39)
---- ------ ------ ----- ------
Balance,
December 31, 1996 67 27,579 28,733 (443) 55,936
Net income - - 6,779 - 6,779
Common stock dividends
($.13 per share) - - (867) - (867)
---- ------ ------ ----- ------
Balance,
December 31, 1997 $67 $27,579 $34,645 $ (443) $61,848
=== ======= ======= ====== =======
See Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Cash Flows
Years Ended December 31, 1997, 1996 and 1995
(In Thousands)
1997 1996 1995
Cash Flows from
Operating Activities
Net income $6,779 $5,386 $3,328
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 3,180 2,925 2,523
Amortization 572 513 484
Other 386 (34) 21
Deferred income taxes 86 (62) (62)
Change in assets and
liabilities, net of
effects from acquisition
of Rainfair, Inc. and
Pro-Trak Corporation:
Trade accounts
receivable (4,033) (2,145) 93
Inventories (3,316) 2,136 (936)
Accounts payable (1,065) 279 382
Other (462) 712 (139)
------ ------ ------
Net cash provided by
operating activities 2,127 9,710 5,694
Cash Flows from Investing Activities
Acquisition of Rainfair, Inc.,
net of cash acquired - (9,597) -
Acquisition of Pro-Trak
Corporation, net of cash
acquired 77 - -
Purchase of property
and equipment (3,364) (3,060) (3,779)
Purchase of trademarks - (1,439) -
Other (416) (67) (13)
------ ------ ------
Net cash (used in)
investing activities (3,703) (14,163) (3,792)
Cash Flows from Financing Activities
Proceeds from long-term
obligations - 12,500 -
Principal payments on
long-term obligations (7,981) (1,742) (2,444)
Net proceeds from
short-term borrowings 4,000 - -
Cash dividends paid (733) (668) (722)
Purchase of redeemable
preferred stock - (1,957) -
Purchase of treasury stock - - (443)
------ ------ ------
Net cash provided by (used in)
financing activities (4,714) 8,133 (3,609)
------ ------ ------
Increase (decrease)
in cash and
cash equivalents (6,290) 3,680 (1,707)
Cash and cash equivalents:
Beginning 6,716 3,036 4,743
------ ------ ------
Ending $426 $6,716 $3,036
====== ====== ======
Supplemental Information
Cash payments for:
Interest $1,891 $1,594 $1,396
Income taxes $4,055 $2,939 $1,762
See Notes to Consolidated Financial Statements.
<PAGE>
Notes to Consolidated Financial Statements
Note 1. Nature of Business and Significant Accounting Policies
Nature of business:
The Company designs, manufactures and markets premium quality protective
footwear and clothing for sale principally throughout the United States.
Significant accounting policies:
Principles of consolidation: The consolidated financial statements
include the accounts of LaCrosse Footwear, Inc. and its wholly owned and
50% owned subsidiaries (the "Company"). The Company consolidates 50% owned
subsidiaries where it has board, operating and financial control. The
Company acquired 100% ownership of its 50% owned subsidiary in January
1998 (Note 2). All material intercompany accounts and transactions have
been eliminated in consolidation.
Use of estimates in the preparation of financial statements:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fair value of financial instruments:
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
The carrying amount of cash and cash equivalents approximates fair
value because of the short maturity of those investments.
The carrying amount of long-term debt approximates fair value based
on the interest rates, maturities and collateral requirements currently
available for similar financial instruments.
Concentrations of credit risk:
The Company grants credit to its customers, who are primarily domestic
retail stores, direct mail catalog merchants and wholesalers, based on an
evaluation of the customer's financial condition. Exposure to losses on
receivables is principally dependent on each customer's financial
condition. The Company monitors its exposure for credit losses and
maintains an allowance for anticipated losses.
Cash and cash equivalents:
The Company considers all highly liquid debt instruments (including
short-term investment grade securities and money market instruments)
purchased with maturities of three months or less to be cash equivalents.
The Company maintains its cash in bank deposit accounts which, at times,
exceed federally insured limits. The Company has not experienced any
losses in such accounts.
Inventories:
Inventories are stated at the lower of cost or market. All inventories,
except for vinyl products, boot liners, leather boots, leather boot
components and rainwear, are valued using the last-in, first-out (LIFO)
method. Vinyl products, boot liners, leather boots, leather boot
components and rainwear are valued using the first-in, first-out (FIFO)
method.
Property and equipment:
Property and equipment are carried at cost and are being depreciated using
straight-line and accelerated methods over their estimated useful lives as
follows: land improvements, 15 years; buildings and improvements, 20 to 39
years; and machinery and equipment, 3 to 7 years.
Intangible assets:
Goodwill, representing the excess of cost over net assets acquired, is
being amortized on a straight-line basis over periods of 8 to 30 years.
The Red Ball trademarks are being amortized on a straight-line basis over
15 years.
Impairment of long-lived assets:
The Company reviews its long-lived assets and intangibles periodically to
determine potential impairment by comparing the carrying value of these
assets with expected future net cash flows provided by operating
activities of the business. Should the sum of the expected future net cash
flows be less than the carrying value, the Company would determine whether
an impairment loss should be recognized. An impairment loss would be
measured by comparing the amount by which the carrying value exceeds the
fair value of the long-lived assets and intangibles based on appraised
market value.
Revenue recognition and product warranty:
Revenue is recognized at the time products are shipped to customers.
Revenue is recorded net of freight, estimated discounts and returns. The
Company warrants its products against defects in design, materials and
workmanship generally for one year. A provision for estimated future
warranty costs is recorded when products are shipped.
Income taxes:
Deferred taxes are provided on a liability method whereby deferred tax
assets and liabilities are recognized for temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment.
Stock-based compensation:
The Company accounts for stock-based compensation using the intrinsic
value method prescribed in APB Opinion No. 25, "Accounting for Stock
Issued to Employees" and related interpretations. Accordingly, since the
exercise price is equal to the market price at the date of the grant, no
compensation costs have been recognized. Disclosures about the fair value
of outstanding stock options are contained in Note 8.
Earnings per share:
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings per Share, which
supersedes APB Opinion No. 15. Statement No. 128 requires the presentation
of earnings per share by all entities that have common stock or potential
common stock (such as options and convertible securities) outstanding that
trade in a public market. Those entities that have only common stock
outstanding are required to present basic earnings per share amounts. All
other entities are required to present basic and diluted per share
amounts. Diluted per share amounts assume the conversion, exercise or
issuance of all potential common stock instruments unless the effect is to
reduce the loss or increase the income per common share from continuing
operations.
The Company initially applied Statement No. 128 for the year ended
December 31, 1997 and, as required by the Statement, has restated all per
share information for the prior years to conform to the Statement. Because
the Company has potential common stock outstanding, as discussed in Note
8, the Company is required to present basic and diluted earnings per
share.
The numerators are the same for the basic and diluted earnings per
share computations for all years presented. The impact of the stock
options on the denominators of the diluted earnings per share computation
was to increase the shares outstanding by 45,273 shares, 5,912 shares and
0 shares for the years ended December 31, 1997, 1996 and 1995,
respectively.
Recent accounting pronouncements:
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
Income, which establishes standards for reporting and displaying
comprehensive income and its components (revenue, expenses, gains and
losses) in a full set of general purpose financial statements. The Company
will adopt SFAS No. 130 for its year ending December 31, 1998.
In June 1997, the FASB issued SFAS No. 131, Disclosure about Segments
of an Enterprise and Related Information, which changes the way public
companies report information about operating segments. SFAS No. 131, which
is based on the management approach to segment reporting, establishes
requirements to report selected segment information quarterly and to
report entity-wide disclosures about products and services, major
customers and the major countries in which the entity holds assets and
reports revenue. The Company will adopt SFAS No. 131 for its year ended
December 31, 1998. Management is evaluating whether it will have
reportable segments under the new standard.
Note 2. Acquisitions
In July 1997, the Company acquired all of the outstanding shares of
capital stock of Pro-Trak Corporation, which operates under the Lake of
the Woods tradename. The purchase price, including the assumption of
liabilities, was approximately $7.3 million. The acquisition has been
accounted for as a purchase. Accordingly, the purchase price has been
allocated to assets and liabilities based on their estimated fair values
as of the date of acquisition.
The value of assets acquired and liabilities assumed is as follows
(in thousands):
Current assets,
including cash of $77 $7,002
Equipment 547
Goodwill 695
Current liabilities (2,113)
Long-term liabilities (6,131)
------
$ --
======
In May 1996, the Company and the former principal owner of Rainfair,
Inc. established a new corporation and each purchased one-half of the new
corporation's common stock for $1,250,000. The Company also purchased all
of the new corporation's outstanding preferred stock for $500,000. On May
31, 1996, this 50% owned subsidiary of the Company purchased substantially
all of the assets of Rainfair, Inc. for approximately $10.9 million in
cash and approximately $1.4 million in assumed liabilities for an
aggregate purchase price of approximately $12.3 million. The name of the
subsidiary was changed to Rainfair, Inc. ("Rainfair") in June 1996 after
the completion of the acquisition. The Company loaned Rainfair
approximately $8.0 million (secured by all assets of Rainfair) to fund the
portion of the purchase price which was not funded by the initial capital
contributions. The acquisition has been accounted for as a purchase.
Accordingly, the purchase price was allocated to assets and liabilities
based on 50% of their estimated fair values and 50% of the predecessor's
historical cost as of the date of acquisition.
In January 1998, the Company purchased all Rainfair common stock of
the former principal owner for approximately $2.4 million.
The Company's consolidated statements of income for the years ended
December 31, 1997 and 1996 include the results of operations of Pro-Trak
Corporation and Rainfair, Inc. since the dates of acquisition. The
following unaudited pro forma information presents the consolidated
results of operations as if the acquisitions had occurred as of the
beginning of 1996 and does not purport to be indicative of what would have
occurred had the acquisitions been made as of that date or of results
which may occur in the future.
(In Thousands, except
for earnings per share)
Years Ending December 31,
1997 1996
(Unaudited)
Net sales $149,282 $135,900
Net income 6,918 5,154
Diluted earnings
per share 1.03 .77
In May 1996, the Company acquired trade accounts receivable,
inventories, machinery and equipment and trademarks from Red Ball, Inc.
for a cash price of approximately $5.5 million. The Company has accounted
for the transaction as a purchase of assets rather than the acquisition of
a business. The primary purpose of the transaction was to purchase the Red
Ball trademarks and there is limited continuity of the sale of Red Ball
products, no facility leases were assumed, and there is no continuity of
Red Ball's sales, production or cost structure. The purchase price was
allocated to the assets based on their fair values as of the date of
acquisition.
Note 3. Inventories
A summary of inventories is as follows:
(In Thousands)
December 31,
1997 1996
Finished goods $28,889 $22,188
Work in process 1,967 2,222
Raw materials 8,217 7,139
------- -------
Total inventories $39,073 $31,549
======= =======
If all inventories were valued on the FIFO method, total inventories
for 1997 and 1996 would have been $42.2 and $35.3 million, respectively.
Note 4. Income Tax Matters
Net deferred tax assets and liabilities consist of the following
components:
(In Thousands)
December 31,
1997 1996
Deferred tax assets:
Receivable allowances $531 $523
Inventory differences 365 525
Compensation and benefits 1,969 1,752
Insurance reserves and other 416 500
----- -----
3,281 3,300
Deferred tax liabilities,
principally intangibles 664 597
------ ------
$2,617 $2,703
====== ======
The components giving rise to the net deferred tax assets described
above have been included in the accompanying consolidated balance sheets
as follows:
(In Thousands)
December 31,
1997 1996
Current assets $2,132 $2,017
Noncurrent assets 485 686
------ ------
$2,617 $2,703
====== ======
The provision for income taxes consists of
the following:
(In Thousands)
Years Ended December 31,
1997 1996 1995
Current:
Federal $3,684 $2,947 $1,723
State 818 555 482
Deferred 86 (62) (62)
------ ------ ------
$4,588 $3,440 $2,143
====== ====== ======
The differences between statutory federal tax rates and the effective
tax rates are as follows:
Years Ending December 31,
1997 1996 1995
Statutory federal
tax rate 35.0% 35.0% 35.0%
State taxes, net
of federal tax
benefit and other 4.2 4.2 4.2
---- ---- ----
Effective tax rate 39.2% 39.2% 39.2%
==== ==== ====
Note 5. Financing Arrangements
Credit agreement:
The Company has a $62.5 million unsecured credit agreement. Under the
agreement, the Company has (1) a $50 million revolving line of credit
which expires on May 31, 1999 ($10 million of which can be used to support
letters of credit) and (2) a $12.5 million term loan due December 31,
2001. At the Company's option, the interest rate is either the bank's
prime rate or LIBOR plus .75% or 1% for the revolving line of credit and
LIBOR plus 1% or 1.25% for the term loan, depending upon the Company's
leverage ratio. (LIBOR plus .75% and LIBOR plus 1% for the revolving line
of credit and term loan, respectively, as of December 31, 1997). The
credit agreement contains various covenants, including minimum
consolidated tangible net worth, sale of assets, indebtedness, current
ratio, interest coverage ratio and leverage ratio. The revolving line of
credit is used to finance peak inventory and accounts receivable levels
and commitments for letters of credit. At December 31, 1997 and 1996,
there was $4.0 million and $0 outstanding under the revolving line of
credit and there were letter of credit commitments outstanding of $2.9
million and $1.0 million, respectively.
Long-term obligations:
(In Thousands)
December 31,
1997 1996
Term loan under credit
agreement, due in quarterly
installments of $.4 million
commencing in March 1998,
interest payable monthly $12,500 $12,500
10.26% unsecured note
payable, due in annual
installments of $1.4 million
excluding interest, interest
payable semi-annually (a) 2,286 3,714
10.73% unsecured note
payable, due in annual
installments of $.3 million
excluding interest, interest
payable semi-annually (a) 457 743
Other 605 896
------- -------
15,848 17,853
Less current maturities 3,349 1,851
------- -------
$12,499 $16,002
======= =======
(a) The loan agreement contains various covenants, including minimum
tangible net worth, working capital, current ratio, permitted
indebtedness, net income before income taxes to interest expense and total
permitted investments and restricted payments. Retained earnings available
for dividends under these agreements amount to approximately $12.8 million
at December 31, 1997.
Maturities of long-term obligations for the next five years are as
follows (in millions): 1998, $3.3; 1999, $2.7; 2000, $1.7; 2001, $7.8;
2002, $0; and $.3 thereafter.
Note 6. Lease Commitments and Total Rental Expense
The Company leases office space, retail stores, manufacturing facilities,
equipment and warehouse space under non-cancelable agreements, which
expire on various dates through 2007, and are recorded as operating
leases. The total rental expense included in the consolidated statements
of income for the years ended December 31, 1997, 1996 and 1995 is
approximately $1.8, $1.6 and $1.2 million, respectively. Approximate
future minimum lease payments are as follows (in millions): 1998, $1.8;
1999, $1.8; 2000, $1.5; 2001, $.7 , 2002, $.5 and $1.4 thereafter.
Note 7. Accrued Expenses
Accrued expenses are comprised of the following:
(In Thousands)
December 31,
1997 1996
Compensation $4,311 $4,423
Workers' compensation
insurance 824 889
Income taxes payable 1,514 1,066
Other, including dividends 2,763 2,191
------ ------
Total accrued expenses $9,412 $8,569
====== ======
Note 8. Stock Options
The Company has granted stock options to officers and key employees under
its 1993 and 1997 stock option plans pursuant to which options for up to
550,000 shares of common stock may be granted. The option price per share
shall not be less than 100% of the fair market value at the date of grant
and the options expire 10 years after grant or such shorter period as the
compensation committee of the Board so determines. Substantially all of
the options vest in equal increments over a five-year period.
The following summarizes all stock options granted under the plans:
Common Per Share
Shares Option Price
December 31, 1994 87,500 $13.00
Granted 41,500 10.25-11.25
-------
December 31, 1995 129,000 10.25-13.00
Granted 89,125 9.06-10.38
Canceled (10,000) 9.06-13.00
-------
December 31, 1996 208,125 9.06-13.00
Granted 63,500 10.88-14.50
Canceled (3,300) 9.06
Exercised (100) 9.06
-------
December 31, 1997 268,225 9.06-14.50
Options for approximately 82,000 shares were exercisable at
December 31, 1997.
Compensation expense under the plans are accounted for following the
provisions of APB Opinion No. 25 and its related interpretations.
Accordingly, no compensation cost has been recognized for grants made to
date. If the Company had elected to recognize compensation cost based on
the fair value of the options granted at the grant date as provided by
SFAS No. 123, pro forma net income would have been reduced by $.1 million
and $.1 million and the pro forma diluted earnings per share would have
been $.99 and $.79 for the years ended December 31, 1997 and 1996,
respectively.
The fair value of each option is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following
assumptions:
1997 1996
Expected dividend yield 1% 1%
Expected stock price volatility 25% 25%
Risk-free interest rate 6.5% 7.0%
Expected life of options 8 years 8 years
The weighted average exercise price of the options granted during
1997 is $11.59 per share.
Note 9. Compensation and Benefit Agreements
The Company has defined benefit pension plans covering a majority of its
employees. Eligible employees are entitled to monthly pension benefits
beginning at normal retirement age (65). The monthly benefit payable at
the normal retirement date under the Company's pension plans is equal to a
specified dollar amount or percentage of average monthly compensation, as
defined in the plans, multiplied by years of benefit service (maximum of
38 years). The Company's funding policy is to make not less than the
minimum contribution that is required by applicable regulations, plus such
amounts as the Company may determine to be appropriate from time to time.
The following table sets forth the funded status of the plans and the
amount recognized in the Company's consolidated balance sheets:
(In Thousands)
December 31,
1997 1996
Actuarial present value
of benefit obligations:
Vested benefits $ 11,068 $ 10,543
-------- --------
Accumulated benefits $ 11,619 $ 11,103
-------- --------
Projected benefits $(12,568) $(12,574)
Plan assets at fair value
(equity securities
and pooled funds) 14,719 12,948
-------- --------
Plan assets in excess of
projected benefit obligation 2,151 374
Unrecognized net gain (3,244) (1,362)
Unrecognized
transition obligation 163 214
Unrecognized
prior service costs 342 383
-------- --------
(Accrued) pension cost $(588) $(391)
======== ========
Actuarial assumptions used at December 31, 1997 and 1996 were as
follows:
1997 1996
Discount rate 7.0% 7.0%
Rate of increase in
compensation levels 4.5% 5.25%
Expected long-term rate
of return on plan assets 8.0% 8.0%
Net pension expense for these plans for each of the years ended
December 31, 1997, 1996 and 1995 approximates $.4 million.
The Company sponsors an unfunded defined benefit postretirement
medical and life insurance plan that covers a majority of its employees
until they qualify for Medicare. The plan is contributory for retirees
with contributions established annually as a specified dollar amount. The
Company funds the postretirement benefit obligation as the costs are
incurred. The accrued postretirement benefit cost is approximately $1.4
million at both December 31, 1997 and 1996 and the related expense is
approximately $.1 million, $.2 million and $.2 million for the years ended
December 31, 1997, 1996 and 1995, respectively. The assumed annual rate of
increase in cost of covered health care benefits used by the Company in
the determination of postretirement benefit information was 6.0% as of
December 31, 1997 and 7.0% as of December 31, 1996 and 1995. The assumed
discount rate was 7.0% as of December 31, 1997, 1996 and 1995.
Note 10. Commitments
In March 1994, the Company acquired substantially all of the assets of
Danner Shoe Manufacturing Co. in part by issuing 277,778 shares of common
stock as a portion of the purchase price. In the acquisition, the Company
guaranteed the holders of this common stock a market price of at least
$16.20 per share by March 1, 1999. If the market price is less than $16.20
per share, the Company will be required to make a cash payment equal to
the difference on March 1, 1999. If the Danner shareholders have the
opportunity to sell their common stock under a Company-filed registration
statement or under Rule 144 promulgated under the Securities Act of 1933,
as amended, and choose not to sell after receiving a Company request to
sell, then the Company's obligation can be reduced or eliminated to the
extent of the number of shares permitted to be sold based upon the then
prevailing market price for the common stock. As of December 31, 1997,
approximately half of these shares have been sold with no further
obligation on the part of the Company.
Independent Auditor's Report
To the Board of Directors and Shareholders of LaCrosse Footwear, Inc.
We have audited the accompanying consolidated balance sheets of LaCrosse
Footwear, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
LaCrosse Footwear, Inc. and Subsidiaries as of December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.
McGLADREY & PULLEN, LLP
La Crosse, Wisconsin
February 6, 1998
<PAGE>
[Page 24]
Quarterly Results of Operations (Unaudited)
The Company reports its quarterly results of operations on the basis of
13-week periods for each of the first three quarters with the year ending
on December 31st.
The following tabulation presents the Company's unaudited quarterly
results of operations for 1997 and 1996.
Thousands of dollars
except per share data First Second Third Fourth
1997 Quarter Quarter Quarter Quarter
-----------------------------------------------------------------
Net sales $32,698 $28,421 $41,884 $42,500
Gross profit 8,286 7,652 12,422 12,451
Operating income 1,565 1,101 5,152 5,338
Net income 545 539 2,933 2,762
Basic earnings per share* .08 .08 .44 .41
Diluted earnings per share* $.08 $.08 $.44 $.41
Thousands of dollars
except per share data First Second Third Fourth
1996 Quarter Quarter Quarter Quarter
-----------------------------------------------------------------
Net sales $22,131 $23,054 $35,714 $41,098
Gross profit 5,807 6,107 10,315 11,592
Operating income 554 651 3,965 4,918
Net income 297 276 2,125 2,688
Basic earnings per share* .04 .04 .32 .40
Diluted earnings per share* $.04 $.04 $.32 $.40
* There was no impact on quarterly earnings per share when calculated in
accordance with Statement of Financial Accounting Standard No. 128.
Market Information
The Company's common stock trades on the Nasdaq National Market tier of
The Nasdaq Stock Market under the symbol BOOT. The following table shows
the high and low transaction prices by calendar quarter for the past three
years. The approximate number of holders of record of common stock on
March 20, 1998 was 400.
<TABLE>
<CAPTION>
1st 2nd 3rd 4th Year end
<S> <C> <C> <C> <C> <C>
1995 $ 8 - 12 $ 8 3/4 - 11 1/4 $10 1/4 - 11 3/4 $ 8 1/2 - 12 $ 8 3/4
1996 $ 8 3/4 - 12 $ 9 1/4 - 11 3/4 $ 9 1/2 - 10 3/4 $10 - 12 1/4 $10 3/4
1997 $10 3/4 - 14 3/8 $11 - 13 1/2 $12 1/2 - 17 1/4 $14 - 16 $14 1/2
</TABLE>
Cash Dividends Declared Per Share
It is the Company's policy to pay annual cash dividends. The chart below
shows annual cash dividends declared per share for the past three years:
1997 1996 1995
Dividends declared per share $.13 $.11 $.09
EXHIBIT (21)
SUBSIDIARIES OF LACROSSE FOOTWEAR, INC.
Jurisdiction
Name of Incorporation Percent Ownership
Direct Indirect
Clintonville Products, Inc. Wisconsin 100%
Hillsboro Footwear, Inc. Wisconsin 100%
Danner Shoe Manufacturing Co. Wisconsin 100%
Rainfair, Inc. Wisconsin 100%
Pro-Trak Corporation Wisconsin 100%
Pro-Trak of Virginia, Inc. Virginia 100%1
-----------------
1 Direct percent ownership by Pro-Trak Corporation.
Exhibit (23)
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Annual Report
on Form 10-K of LaCrosse Footwear, Inc. of our report dated February 6,
1998, included in the 1997 Annual Report of Shareholders of LaCrosse
Footwear, Inc.
We also consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-77516, 33-77518 and 333-2702) pertaining
to the LaCrosse Footwear, Inc. Employees' Retirement Savings Plan, the
LaCrosse Footwear, Inc. Union Employees' Retirement Savings Plan and the
LaCrosse Footwear, Inc. 1993 Employee Stock Incentive Plan of our report
dated February 6, 1998, with respect to the consolidated financial
statements incorporated herein by reference, and our report dated February
6, 1998, with respect to the financial statement schedule included in this
Annual Report on Form 10-K of LaCrosse Footwear, Inc. for the year ended
December 31, 1997.
McGLADREY & PULLEN, LLP
La Crosse, Wisconsin
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LACROSSE FOOTWEAR, INC. AS OF AND FOR THE
YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 426
<SECURITIES> 0
<RECEIVABLES> 28,959
<ALLOWANCES> 575
<INVENTORY> 39,073
<CURRENT-ASSETS> 71,559
<PP&E> 33,574
<DEPRECIATION> 20,299
<TOTAL-ASSETS> 101,920
<CURRENT-LIABILITIES> 23,146
<BONDS> 12,499
0
0
<COMMON> 67
<OTHER-SE> 61,781
<TOTAL-LIABILITY-AND-EQUITY> 101,920
<SALES> 145,503
<TOTAL-REVENUES> 145,503
<CGS> 104,692
<TOTAL-COSTS> 27,493
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 162
<INTEREST-EXPENSE> 2,043
<INCOME-PRETAX> 11,706
<INCOME-TAX> 4,588
<INCOME-CONTINUING> 6,779
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,779
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.01
</TABLE>
