UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 1, 2000
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
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LaCrosse Footwear, Inc.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Wisconsin 39-1446816
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1319 St. Andrew Street, La Crosse, Wisconsin 54603
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(Address of principal executive offices) (Zip Code)
(608) 782-3020
----------------------------------------------------
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value, outstanding as of May 1, 2000: 5,874,449 shares
- -----------------------------------------------------------------------------
<PAGE>
LaCrosse Footwear, Inc.
Form 10-Q Index
For Quarter Ended April 1, 2000
Page
----
PART I. Financial Information
Item 1. Condensed Consolidated Balance Sheets 3-4
Condensed Consolidated Statements of Operations 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 12
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
2
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PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. Financial Statements
--------------------
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 1, December 31,
2000 1999
(Unaudited)
-------------- --------------
CURRENT ASSETS
Cash and cash equivalents $22,170 $2,021,747
Accounts receivable, net 22,586,622 20,444,903
Inventories (2) 42,831,431 40,336,755
Income tax receivable 975,083 910,328
Prepaid expenses 2,158,371 2,068,571
Deferred tax assets 2,681,500 2,746,500
-------------- --------------
Total current assets 71,255,177 68,528,804
PROPERTY AND EQUIPMENT, net of
depreciation and amortization 12,209,821 12,811,029
INTANGIBLES 14,584,384 14,782,423
OTHER ASSETS 1,868,286 1,897,286
-------------- --------------
Total assets $99,917,668 $98,019,542
============== ==============
The accompanying notes are an integral part of the financial statements.
3
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LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
April 1 December 31,
2000 1999
(Unaudited)
------------ -----------
CURRENT LIABILITIES
Current maturities of long-term obligations $1,712,000 $1,712,000
Notes payable, bank 21,300,000 14,088,000
Accounts payable 4,173,097 5,909,802
Accrued expenses 5,359,936 5,197,735
Dividends payable 0 828,678
------------ -----------
Total current liabilities 32,545,033 27,736,215
LONG-TERM OBLIGATIONS 10,281,060 10,701,920
COMPENSATION AND BENEFITS 3,150,552 3,192,722
------------ -----------
Total liabilities 45,976,645 41,630,857
------------ -----------
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share 67,176 67,176
Additional paid-in capital 26,434,480 26,434,480
Retained earnings 32,252,750 32,575,412
Treasury stock (4,813,383) (2,688,383)
------------ -----------
Total shareholders' equity 53,941,023 56,388,685
------------ -----------
Total liabilities and shareholders' equity $99,917,668 $98,019,542
============ ===========
The accompanying notes are an integral part of the financial statements.
4
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LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
April 1, April 3,
2000 1999
------------- -------------
Net sales $31,029,858 $27,946,067
Cost of goods sold 23,153,807 20,474,237
------------- -------------
Gross profit 7,876,051 7,471,830
Selling and administrative expenses 7,992,658 7,369,362
------------- -------------
Operating income (loss) (116,607) 102,468
Non-operating income (expense)
Interest expense (501,857) (375,525)
Miscellaneous 88,643 26,523
------------- -------------
(413,214) (349,002)
------------- -------------
Loss before income taxes (benefit) (529,821) (246,534)
Provision for income taxes (benefit) (207,159) (96,647)
------------- -------------
Net (loss) $(322,662) $(149,887)
============= =============
Basic earnings (loss) per share $(0.05) $(0.02)
============= =============
Diluted earnings (loss) per share $(0.05) $(0.02)
============= =============
Weighted average shares outstanding:
Basic 6,271,188 6,637,812
Diluted 6,271,188 6,637,812
The accompanying notes are an integral part of the financial statements.
5
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<TABLE>
LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
April 1, April 3,
2000 1999
----------------------- -------------------------
<S> <C> <C>
Net cash provided by (used in) operating activities $ (5,548,385) $155,469
----------------------- -------------------------
Cash flows from (used in) investing activities
Purchase of property and equipment (288,654) (497,116)
-------------------------------------------------------
Cash flows from financing activities
Cash dividends paid (828,678) (863,775)
Proceeds from short-term borrowings 7,212,000 3,505,000
Principal payments on long-term obligations (420,860) (800,000)
Purchase of treasury stock (2,125,000) (174,917)
Settlement of Danner acquisition contingency 0 (1,148,067)
Other 0 (3,200)
----------------------- -------------------------
Net cash provided by financing activities 3,837,462 515,041
Increase (decrease) in cash and cash equivalents (1,999,577) 173,394
Cash and cash equivalents:
Beginning 2,021,747 363,966
----------------------- -------------------------
Ending $22,170 $537,360
======================= =========================
Supplemental information--cash payments for:
Interest $410,292 $327,620
======================= =========================
Income taxes $16,780 $530,866
======================= =========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
LACROSSE FOOTWEAR, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. INTERIM FINANCIAL REPORTING
The Company reports its quarterly interim financial information based
on 13 week periods. In the opinion of management, the unaudited
condensed consolidated financial statements include all adjustments
(consisting only of normal recurring adjustments) considered necessary
for a fair presentation of financial position, results of operations
and cash flows in accordance with generally accepted accounting
principles.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with
the consolidated financial statements and the applicable notes thereto
that are included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999.
2. INVENTORIES
Inventories are comprised of the following:
April 1, 2000 December 31, 1999
------------- -----------------
Raw materials $6,854,138 $6,996,001
Work-in process 1,570,314 1,709,383
Finished goods 37,905,208 35,069,600
LIFO reserve (3,498,229) (3,438,229)
----------- -----------
Total $42,831,431 $40,336,755
=========== ===========
The inventory values at December 31, 1999 and April 1, 2000 are net of
reserves to cover losses incurred in the disposition of slow moving,
markdown and obsolete inventory.
3. STOCK INCENTIVE PLANS
In November 1996, the Board of Directors adopted, and in June 1997 the
shareholders of the Company approved, the LaCrosse Footwear, Inc. 1997
Employee Stock Incentive Plan (the "1997 Plan"), pursuant to which
options for up to 300,000 shares of common stock may be granted to
officers and other key employees of the Company. The Company also has
in effect the LaCrosse Footwear, Inc. 1993 Employee Stock Incentive
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Plan, pursuant to which options for approximately 232,000 shares of
common stock (out of a maximum of 250,000) have been granted to, or
executed by, officers and other key employees of the Company.
Effective January 2, 2000, the Company's Board of Directors granted
options to purchase approximately 107,000 shares of common stock under
the 1997 Plan. The exercise price for these options is $4.44 per
share, the mean between the highest and lowest reported selling prices
of the common stock on The Nasdaq Stock Market on December 31, 1999.
Because the options vest in equal increments over a five-year period,
none of such options will be exercisable until January 2001.
8
<PAGE>
ITEM 2
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
The following table sets forth, for the periods indicated, selected financial
information derived from the Company's condensed consolidated financial
statements, expressed as a percentage of net sales. The discussion that follows
the table should be read in conjunction with the condensed consolidated
financial statements.
Percentage of Net Sales
-----------------------
Three Months Ended
April 1, April 3,
2000 1999
---- ----
Net Sales 100.0% 100.0%
Cost of Goods Sold 74.6 73.3
---- ----
Gross Profit 25.4 26.7
Selling and Administrative Expenses 25.8 26.3
---- ----
Operating Income ( 0.4%) 0.4%
The Company's business is seasonal with lower revenues historically being
generated during the first six months of the year. As a result, revenue for the
three-month period ending April 1, 2000 should not be considered to be
indicative of results to be reported for the balance of the fiscal year.
Three Months Ended April 1, 2000 Compared to Three Months Ended April 3, 1999
Net Sales
Net sales for the three months ended April 1, 2000 increased $3,083,791, or 11%,
to $31,029,858 from $27,946,067 for the first three months of 1999. The increase
in net sales during the quarter was due to a $1.4 million increase in Danner(R)
brand shipments (largely due to the success of the new Radical(TM) product), a
$.6 million increase in shipments of consumer rainwear which were driven by an
order from a mass merchant and a $1.0 million increase in shipments of
LaCrosse(R) brand products to the industrial market. While shipments of LaCrosse
brand leather work and sport boots to the retail market increased during the
quarter, they were largely offset by lower sales of cold weather pac boots. In
addition, consistent with a previously announced product line reduction
initiative, discontinued/closeout product shipments were approximately $.6
million higher than last year during the quarter.
9
<PAGE>
Gross Profit
Gross profit for the three months ended April 1, 2000 increased 5% to
$7,876,051, or 25.4% of net sales, from $7,471,830, or 26.7% of net sales, for
the first quarter of 1999. While gross profit did increase $404,221 during the
quarter, primarily as a result of higher sales, gross profit as a percent of net
sales decreased from 26.7% to 25.4%. The decrease in gross profit as a percent
of net sales was largely driven by lower factory utilization resulting in
reduced fixed overhead absorption, an increase in shipments of discontinued
products at reduced margins and the lower margins on the large consumer rainwear
shipment.
Selling and Administrative Expenses
Selling and administrative expenses for the first quarter of 2000 increased 8%,
to $7,992,658, or 25.8% of net sales, from $7,369,362, or 26.3% of net sales for
the first quarter of 1999. The increase in selling and administrative expenses
for the first quarter of 2000 compared to the first quarter of 1999 was
primarily related to the continuing commitment to brand marketing, increased
product development expenses in support of new products and higher expenses
related to professional fees in support of a strategic brand marketing study and
the installation of a new enterprise resource planning (ERP) system.
Interest Expense
Interest expense for the three months ended April 1, 2000 increased 34% to
$501,857, or 1.6% of net sales, from $375,525, or 1.3% of net sales, for the
three months ended April 3, 1999. The increase was the result of higher interest
rates and higher average borrowing, primarily as a result of common stock
repurchases during 1999 and 2000.
Income Tax Expense
The Company's effective income tax rate was 39.1% in the first quarter of 2000
as compared to 39.2% in the first quarter of 1999.
10
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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 an
unsecured revolving credit agreement. The Company requires working capital
primarily to support fluctuating accounts receivable and inventory levels caused
by the Company's seasonal business cycle. The Company invests excess cash
balances in short-term investment grade securities or money market investments.
Net cash used by operating activities was $5.5 million in the first quarter of
2000 compared to $.2 million of cash provided in the first quarter of 1999. In
the first quarter of 2000, accounts receivable increased $2.1 million (primarily
due to higher March sales) and inventories increased $2.5 million (seasonal
build-up) accounting for most of the usage of cash. This compares to the first
quarter of 1999 when a $3.8 million increase in inventories was largely offset
by a $3.7 million decrease in accounts receivable.
Net cash used in investing activities was $.3 million in the first quarter of
2000 compared to $.5 million in the first quarter of 1999. All of the activity
in both years was for capital expenditures.
Net cash provided by financing activities was $3.8 million in the first quarter
of 2000 compared to $.5 million in the first quarter of 1999. In the first
quarter of 2000, $7.2 million of borrowings under the line of credit were used
to purchase treasury stock ($2.1 million); pay cash dividends ($.8 million); and
make principal payments on long-term obligations ($.4 million). In the first
quarter of 1999, $3.5 million of borrowings under the line of credit were used
to pay an obligation related to the shares issued in the 1999 acquisition of
Danner ($1.1 million); pay cash dividends ($.9 million); make principal payments
on long-term debt ($.8 million); and purchase treasury stock ($.2 million).
In March 2000, the Company repurchased 500,000 shares of common stock in a
private transaction at the current market price. The transaction value was $2.1
million.
At December 31, 1999, the Company did not meet the interest coverage ratio
contained in its credit agreement. In March 2000, the Company and bank entered
into an amendment of its credit agreement which changed certain financial
covenants, increased the interest rate on LIBOR based loans by .75% and provided
a waiver of the December 31, 1999 covenant violation. Based on the Company's
projected results of operations for 2000, management believes it is probable the
Company will be in compliance with the covenants in 2000.
The Company believes its existing credit facilities are adequate to meet cash
flow requirements for capital expenditures and operating cash flows for 2000 and
2001.
11
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has not experienced any material changes in its market risk
exposures since December 31, 1999.
PART II - Other Information
---------------------------
ITEM 6 Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit Number Description
-------------- -----------
(4.1) First Amendment to Amended and Restated
Credit Agreement, dated as of March 29,
2000, by and among LaCrosse Footwear,
Inc., Firstar Bank, N.A., The Northern
Trust Company, Harris Trust and Savings
Bank and Firstar Bank, N.A., as the
Agent for the Banks.
(27) Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended April 1, 2000
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LACROSSE FOOTWEAR, INC.
(Registrant)
Date: May 15, 2000 By: /s/ Patrick K. Gantert
----------------------------------------
Patrick K. Gantert
President and Chief Executive Officer
Date: May 15, 2000 By: /s/ Robert J. Sullivan
---------------------------------------
Robert J. Sullivan
Vice President-Finance and Administration
And Chief Financial Officer
(Principal Financial and Accounting Officer)
13
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LACROSSE FOOTWEAR, INC.
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q
for the Quarterly Period ended April 1, 2000
Exhibit
-------
(4.1) First Amendment to Amended and Restated Credit Agreement, dated as of
March 29, 2000, by and among LaCrosse Footwear, Inc., Firstar Bank,
N.A., The Northern Trust Company, Harris Trust and Savings Bank and
Firstar Bank, N.A., as the Agent for the Banks.
(27) Financial Data Schedule (EDGAR version only)
14
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the "First
Amendment"), dated as of March 29, 2000, amends the Amended and Restated Credit
Agreement dated as of May 28, 1999 by and among LACROSSE FOOTWEAR, INC. (the
"Borrower"), the several Lenders from time to time parties thereto (the
"Lenders") and Firstar Bank, N.A. (f/k/a Firstar Bank Milwaukee, N.A.; the
"Agent") (as so amended, and as the same may be amended from time to time, the
"Credit Agreement").
1. Definitions. Capitalized terms not otherwise defined herein shall have
the meanings assigned to them in the Credit Agreement.
2. Waiver. Subject to the terms set forth herein, the Lenders hereby agree
to waive Borrower's breach of Section 8.12(c) of the Credit Agreement for the
period ending December 31, 1999. No waiver of Borrower's compliance with the
terms of Section 8.12(c) of the Credit Agreement is made for any periods other
than for the period set forth above and no waiver is made with respect to any
other covenant or agreement set forth in the Credit Agreement.
3. Amendments. The parties hereby agree to amend the Credit Agreement as
follows:
(a) The defined term "Applicable Percentage" in Section 2.1 is deleted
in its entirety, and Schedule 3.1(d) is deleted in its entirety.
(b) The following definition is added to Section 2.1 in appropriate
alphabetical order:
"`Borrowing Base' means an amount equal to the sum of (i) 80% of
Qualified Receivables plus (ii) 50% of Qualified Inventory
(provided that the maximum amount included in the Borrowing Base
under this clause (ii) shall not exceed $31,250,000)."
(c) The defined term "Credit Documents" in Section 2.1 is deleted in
its entirety and replaced with the following:
"`Credit Documents' means this Credit Agreement, the Notes, the
Security Agreement, any Letter of Credit Document, and all other
related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto."
<PAGE>
(d) All references in the Credit Agreement to "Firstar Bank Milwaukee,
N.A." are deleted in their entirety and replaced with "Firstar Bank, N.A."
(e) The following definitions are added to Section 2.1 in appropriate
alphabetical order:
"`Qualified Inventory' means raw material and finished goods
inventory of the Borrower, valued at the lower of wholesale
market or cost (determined on a LIFO basis), net of reserves,
which meet these specifications:
(1) it is owned by the Borrower free of all Liens (except the
Agent's Lien for the benefit of the Lenders);
(2) no financing statement (other than the Agent's for the
benefit of the Lenders) is on file covering it, its products
or proceeds;
(3) if it is represented by documents of title, the Borrower is
the owner of the documents of title free of all Liens (other
than the Agent's Lien for the benefit of the Lenders);
(4) it is in good condition and it is new and unused except as
the Lenders may otherwise consent in writing; and
(5) it is subject to a valid and perfected first lien security
interest in favor of the Agent for the benefit of the
Lenders.
`Qualified Receivables' means the amounts owing to the Borrower
on accounts receivable which meet these specifications:
(1) it arose from a bona fide sale of goods or services which
have been delivered or shipped to the account debtor and for
which the Borrower has genuine invoices, shipping documents
or receipts;
(2) it is not past due more than ninety (90) days and is not
outstanding more than two hundred seventy-five (275) days
from the delivery of goods, performance of services or date
of invoice;
(3) it is owned by the Borrower free of all Liens (except the
Agent's Lien for the benefit of the Lenders);
2
<PAGE>
(4) it is enforceable against the account debtor for the amount
shown as owing in the statements furnished by the Borrower
to the Lenders;
(5) it and the transaction out of which it arose comply with all
applicable laws and regulations;
(6) it is not subject to any set-off, credit, allowance or
adjustment, except discount for prompt payment, nor has the
account debtor returned the goods or disputed its liability;
(7) the Borrower has no notice or knowledge of anything which
might impair the creditworthiness of the account debtor;
(8) the Lenders have not notified the Borrower that the account
or account debtor is unsatisfactory; and
(9) the account is not subject to any prohibition against or
restriction upon assignments or Liens, and is subject to a
valid and perfected first lien security interest in favor of
the Agent for the benefit of the Lenders.
`Security Agreement' means that certain Security Agreement by and
between the Borrower and the Agent (for the benefit of the
Lenders) substantially in the form of Exhibit A attached to the
First Amendment, as the same may be modified or amended from time
to time."
(f) Section 3.1(a) is deleted in its entirety and the following
inserted in its place:
"(a) Revolving Commitment. During the Revolving Commitment
Period, subject to the terms and conditions hereof, each Lender
severally agrees to make revolving credit loans ("Revolving
Loans") to the Borrower from time to time for the purposes
hereinafter set forth; provided, however, that (i) with regard to
each Lender individually, the sum of such Lender's share of
outstanding Revolving Loans plus such Lender's LOC Commitment
Percentage of LOC Obligations shall not exceed such Lender's
Revolving Committed Amount, and (ii) with regard to the Lenders
collectively, the sum of the aggregate amount of outstanding
Revolving Loans plus the aggregate amount of LOC Obligations plus
the aggregate amount of Commercial Paper Obligations plus the
aggregate amount of outstanding Swing Line Loans shall not exceed
the lesser of: (A) SIXTY-TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS ($62,500,000), as such aggregate maximum amount may be
reduced from time to time as provided herein, and (B) the
Borrowing Base. Revolving Loans may consist of Prime Rate Loans
3
<PAGE>
or Eurodollar Loans, or a combination thereof, as the Borrower
may request, and may be repaid and reborrowed in accordance with
the provisions hereof. Eurodollar Loans shall be made by each
Lender at its Eurodollar Lending Office and Prime Rate Loans at
its Domestic Lending Office."
(g) Section 3.1(d)(ii) is amended by deleting the reference therein to
"the Applicable Margin" and inserting the following in its place: "150 basis
points."
(h) Section 3.2(c)(ii) is amended by deleting the reference therein to
"the Applicable Margin" and inserting the following in its place: "187.5 basis
points."
(i) Section 4.4(a) is deleted in its entirety and the following is
inserted in its place:
"(a) Unused Facility Fee. In consideration of the Revolving
Commitments by the Lenders hereunder, the Borrower agrees to pay
to the Agent for the ratable benefit of the Lenders an unused
facility fee in an amount equal to the average daily unused
portion of such Revolving Commitments, as the same may be reduced
from time to time hereunder, (computed on a quarterly basis in
arrears on the last Business Day of each March, June, September
and December commencing June 30, 2000, based upon the daily
utilization for that quarter as calculated by the Agent) times
1/4 of 1%. The unused facility fee shall be due and payable
quarterly in arrears on the last Business Day of each March,
June, September and December commencing on June 30, 2000, through
the Revolving Termination Date. The unused facility fee shall be
fully earned on each such payment date. Notwithstanding any term
herein to the contrary, it is understood that for purposes of
calculating the unused facility fee, usage of the Revolving
Commitments shall not be deemed to include amounts outstanding in
respect of LOC Obligations, Commercial Paper Obligations or Swing
Line Loans."
(j) The word "and" is deleted following the end of Section 7.1(c), the
period is deleted following the end of Section 7.1(d) and the following is
inserted immediately thereafter:
"; and
4
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(e) Within twenty (20) days after the end of each month, and
within thirty (30) days after the end of its last fiscal month, a
duly executed borrowing base certificate in the form of Exhibit B
attached to the First Amendment (the "Borrowing Base
Certificate")."
(k) Schedule 8.2 is deleted in its entirety and the form of Schedule
8.2 attached to the First Amendment is inserted in its place.
(l) Section 8.12(a) is amended by deleting the dollar amount
"$44,000,000" therein and substituting the dollar amount "$41,000,000" in its
place.
(m) Section 8.12(b) is amended by deleting the date "March 30, 2000"
therein and substituting the date "March 30, 2001" in its place.
(n) Section 8.12(c) is deleted in its entirety and the following
inserted in its place:
"(c) Interest Coverage Ratio. The Borrower will not permit the
ratio of its Consolidated Net Income plus interest expense and
depreciation expense to interest expense to be less than: (i)
1.25 to 1.0 from the date hereof through and including December
31, 2000; and (ii) 2.00 to 1.0 at any time thereafter, in each
case, calculated on a four-quarter rolling basis."
4. Conditions Precedent.
(a) This First Amendment shall become effective on the date that the
Agent shall have received, with a counterpart for each Lender:
(i) this First Amendment, duly executed by an authorized
representative of the Borrower and the Required Lenders;
(ii) the Security Agreement, together with UCC financing
statements, in each case executed by an authorized representative of the
Borrower;
(iii) the Borrowing Base Certificate, duly executed by an
authorized representative of the Borrower;
(iv) a certificate of the Secretary of Borrower, dated as of the
date of the First Amendment, as to: (A) the incumbency and signature of the
officers of Borrower who have signed or will sign this First Amendment and the
Security Agreement and any other documents or materials to be delivered by
Borrower to the Agent pursuant to the Credit Agreement; (B) the adoption and
continued effect of resolutions of the board of directors of Borrower
authorizing the execution, delivery and performance of this First Amendment, the
Security Agreement, and all other documents or materials to be executed,
delivered and performed by the Borrower pursuant or in connection thereto or
hereto; and (C) the accuracy
5
<PAGE>
and completeness of attached copies of the articles of incorporation and bylaws
of Borrower, as amended to date; and
(v) the legal opinion of Foley & Lardner, counsel for the
Borrower, dated the date of this First Amendment and addressed to the Agent and
the Lenders, in form and substance satisfactory to the Agent and the Lenders.
(b) Notwithstanding anything to the contrary contained in the Credit
Agreement, as soon as practicable after the date of this First Amendment, the
Borrower shall permit the Agent (on behalf of the Lenders) during regular
business hours, upon reasonable notice by the Agent and at the Borrower's sole
expense, to conduct a field audit of the Borrower's properties and examine and
make abstracts from any of its books and records and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
5. Representations and Warranties. Borrower certifies that the
representations and warranties contained in the Credit Agreement are true and
correct as of the date of this First Amendment, and that, after giving effect to
the waivers and amendments set forth herein, no condition, event, act or
omission has occurred which, with the giving of notice or passage of time, or
both, would constitute a Default under the Credit Agreement.
6. Full Force and Effect. Except as provided herein, all of the terms and
conditions set forth in the Credit Agreement, and all additional documents
entered into in connection with the Credit Agreement, shall remain unchanged and
shall continue in full force and effect as originally set forth.
7. Binding Effect. This First Amendment shall be binding upon the parties
hereto and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to Loan Agreement as of the date first set forth above.
LACROSSE FOOTWEAR, INC.,
a Wisconsin corporation
By: /s/ Robert J. Sullivan
--------------------------------------
Title: Vice President--Finance and CFO
FIRSTAR BANK, N.A.,
in its capacity as Agent and as
a Lender
By: /s/ Randy D. Olver
--------------------------------------
Title: Senior Vice President
THE NORTHERN TRUST COMPANY
By: /s/ Daniel K. Hintzen
--------------------------------------
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /s/ Gary M. Olintz
--------------------------------------
Title: Vice President
7
<PAGE>
SCHEDULE 8.2
PERMITTED LIENS
Secured Party Filing Jurisdiction Filing Number
- ------------- ------------------- -------------
IBM Credit Corporation WI DFI 1815625
Pitney Bowes Credit Corp. NH Secretary of State 531712
<PAGE>
EXHIBIT B
LACROSSE FOOTWEAR, INC.
BORROWING BASE CERTIFICATE
--------------------------
TO: FIRSTAR BANK, N.A.
HARRIS TRUST AND SAVINGS BANK
THE NORTHERN TRUST COMPANY
This Borrowing Base Certificate is furnished pursuant to the Amended and
Restated Credit Agreement dated as of May 28, 1999 (as amended to date, the
"Agreement"), among LaCrosse Footwear, Inc., a Wisconsin corporation (the
"Borrower"), First Bank, N.A., Harris Trust and Savings Bank and The Northern
Trust Company (collectively, the "Lenders") and Firstar Bank, N.A., as Agent for
the Lenders. Unless otherwise defined herein, the terms used in this Borrowing
Base Certificate have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the chief financial officer of the Borrower.
2. As of ____________________ [previous month-end] the Borrowing Base was as
follows:
(a) Total Accounts Receivable $____________
(b) All accounts that are payable more than 275 days from
the delivery of goods, performance of services or date
of invoice, or that are more than 90 days past due $____________
(c) Accounts subject to setoff, credit, allowance
or adjustment $____________
(d) Accounts subject to Liens (other than in favor
of Lenders) $____________
(e) Accounts subject to any dispute or counterclaim
by the account debtor $____________
(f) Other ineligible accounts under definition of
"Qualified Receivables" in the Agreement $____________
(g) Qualified Receivables
[(a) less (b) + (c) + (d) + (e) + (f)] $____________
(h) Total Inventory (as that term is defined in the Security
Agreement) on a LIFO basis and net of reserves $____________
(i) Work-in-process $____________
<PAGE>
(j) Inventory subject to Liens (other than in favor
of the Lenders) $____________
(k) Inventory represented by documents of title other
than negotiable documents of title in possession of
the Agent $____________
(l) Inventory that is used, obsolete, in poor condition
or otherwise not saleable $____________
(m) Other ineligible inventory under definition of
"Qualified Inventory" in this Agreement $____________
(n) Qualified Inventory
[(h) less (i) + (j) + (k) + (l) + (m)] $____________
TOTAL BORROWING BASE:
(o) 80% of Line (g) $____________
(p) plus 50% of Line (n) (not to exceed $31,250,000) $____________
(q) 100% of Line (o) plus Line (p) $____________
(r) Outstanding aggregate amount of all
Revolving Loans $____________
(s) Outstanding aggregate amount of LOC Obligations $____________
(t) Outstanding aggregate amount of Commercial
Paper Obligations $____________
(u) Outstanding aggregate amount of Swing Line Loans $____________
(v) TOTAL BORROWING AVAILABILITY
[(q) less (r) + (s) + (t) + (u)] $____________
The information set forth above and on the attached Schedule of Qualified
Receivables and Statement of Qualified Inventory is true and correct.
LACROSSE FOOTWEAR, INC.
By:------------------------------------
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF LACROSSE FOOTWEAR, INC. AS
OF AND FOR THE PERIOD ENDED APRIL 1, 2000 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> APR-01-2000
<CASH> 22,170
<SECURITIES> 0
<RECEIVABLES> 23,133,572
<ALLOWANCES> 316,775
<INVENTORY> 42,831,431
<CURRENT-ASSETS> 71,255,177
<PP&E> 40,076,930
<DEPRECIATION> 27,867,109
<TOTAL-ASSETS> 99,917,668
<CURRENT-LIABILITIES> 32,545,033
<BONDS> 10,281,060
0
0
<COMMON> 67,176
<OTHER-SE> 53,873,847
<TOTAL-LIABILITY-AND-EQUITY> 99,917,668
<SALES> 31,029,858
<TOTAL-REVENUES> 31,029,858
<CGS> 23,153,807
<TOTAL-COSTS> 7,955,409
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 37,249
<INTEREST-EXPENSE> 501,857
<INCOME-PRETAX> (529,821)
<INCOME-TAX> (207,159)
<INCOME-CONTINUING> (322,662)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (322,662)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
