UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 May 31, 2000
Commission file number 0-24450
RAWLINGS SPORTING GOODS COMPANY, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 43-1674348
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
Organization)
1859 Intertech Drive, Fenton, Missouri 63026
(Address of Principal Executive Offices) (Zip Code)
(636) 349-3500
(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
Number of shares outstanding of the issuer's Common Stock,
par value $0.01 per share, as of June 30, 2000: 7,939,120
shares.
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Rawlings Sporting Goods Company, Inc. and Subsidiaries
Consolidated Statements of Income
(Amounts in thousands, except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
May 31, May 31,
2000 1999 2000 1999
Net revenues $45,978 $44,740 $143,680 $133,092
Cost of goods sold 30,174 30,715 96,420 89,707
Aluminum bat recall - 1,600 - 1,600
Gross profit 15,804 12,425 47,260 41,785
Selling, general 12,031 11,635 33,617 33,081
and administrative
expenses
Unusual charges - - 1,497 -
Operating income 3,773 790 12,146 8,704
Interest expense, 1,439 1,344 4,666 3,577
net
Other expense, net 70 50 221 118
Income (loss)
from continuing
operations
before income 2,264 (604) 7,259 5,009
taxes
Provision (benefit) 794 (224) 2,642 1,853
for income taxes
Net income (loss)
from continuing
operations
before 1,470 (380) 4,617 3,156
extraordinary
item
Loss from
operations of
discontinued
segment, net of (1,458) (297) (2,314) (1,013)
tax
Loss on disposal of
discontinued
segment including
provision of
$1,500 for operating
losses during
phaseout period, (11,326) - (11,326) -
net of tax
Net income (loss) (11,314) (677) (9,023) 2,143
before
extraordinary
item
Extraordinary item, - - (646) -
net of tax
Net income (loss) $(11,314) $(677) $(9,669) $2,143
Net income (loss)
per common share:
Basic
Continuing $0.18 $(0.05) $0.58 $0.40
operations
Discontinued (1.61) (0.04) (1.72) (0.13)
segment
Extraordinary - - (0.08) -
item
Net income $(1.42) $(0.09) $(1.22) $0.27
(loss)
Diluted
Continuing $ 0.18 $(0.05) $ 0.58 $0.40
operations
Discontinued (1.61) (0.04) (1.72) (0.13)
segment
Extraordinary - - (0.08) -
item
Net income $(1.42) ($0.09) $(1.22) $0.27
(loss)
Shares used in
computing per
share amounts:
Basic 7,956 7,870 7,937 7,839
Assumed exercise - 16 2 28
of stock options
Diluted 7,956 7,886 7,939 7,867
The accompanying notes are an integral part of these consolidated
statements.
<PAGE>
Rawlings Sporting Goods Company, Inc. and Subsidiaries
Consolidated Balance Sheets
(Amounts in thousands, except share data)
(Unaudited)
May 31, August 31,
2000 1999
ASSETS
Current Assets:
Cash and cash equivalents $ 2,728 $ 904
Accounts receivable, net of
allowance of $2,934 and $2,243
respectively 36,781 26,919
Inventories 39,774 35,220
Deferred income taxes 3,983 3,983
Prepaid expenses 794 851
Net assets of discontinued 1,436 9,287
segment
Total current assets 85,496 77,164
Property, plant and equipment, net 9,324 10,687
Deferred income taxes 20,929 20,920
Other assets 1,097 643
Net noncurrent assets of 504 11,261
discontinued segment
Total assets $117,350 $120,675
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt $ 45,064 $ 51,015
Accounts payable 14,127 7,969
Accrued liabilities 14,230 10,626
Total current liabilities 73,421 69,610
Long-term debt, less current 2,182 133
maturities
Other long-term liabilities 9,291 8,855
Total liabilities 84,894 78,598
Stockholders' equity:
Preferred stock, none issued - -
Common stock, 7,931,603 and
7,897,708 shares issued and
outstanding, respectively 79 79
Additional paid-in capital 30,707 30,482
Stock subscription receivable (1,421) (1,421)
Cumulative other comprehensive
loss (1,576) (1,399)
Retained earnings 4,667 14,336
Stockholders' equity 32,456 42,077
Total liabilities and $117,350 $120,675
stockholders' equity
The accompanying notes are an integral part of these
consolidated balance sheets.
<PAGE>
Rawlings Sporting Goods Company, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
(Amounts in thousands)
(Unaudited)
Nine Months Ended
May 31,
2000 1999
Cash flows from operating activities:
Net income (loss) $(9,669) $ 2,143
Add net loss from discontinued segment 13,640 1,013
Add extraordinary item 646 -
Net income from continuing operations 4,617 3,156
Adjustments to reconcile net income
from continuing operations to net
cash provided by (used in) continuing
operations:
Depreciation and amortization 2,228 1,622
Deferred income taxes 2,633 2,181
Changes in operating assets and
liabilities:
Accounts receivable, net (9,862) (6,500)
Inventories (4,554) (3,462)
Prepaid expenses 57 (34)
Other assets (1,381) (149)
Accounts payable 6,158 2,415
Accrued liabilities and other 3,936 (793)
Net cash provided by (used in) continuing 3,832 (1,564)
operations
Net cash provided by discontinued segment 2,396 1,865
Net cash provided by operating activities 6,228 301
Cash flows from investing activities:
Capital expenditures of continuing (657) (1,552)
operations
Capital expenditures of discontinued (70) (177)
segment
Net cash used in investing activities (727) (1,729)
Cash flows from financing activities:
Net decrease in short-term borrowings (6,353) -
Borrowings of long-term debt 2,500 41,750
Repayments of long-term debt (49) (40,096)
Issuance of common stock 225 758
Net cash (used in) provided by financing (3,677) 2,412
activities
Net increase in cash and cash equivalents 1,824 984
Cash and cash equivalents, beginning of 904 724
period
Cash and cash equivalents, end of period $ 2,728 $1,708
The accompanying notes are an integral part of these consolidated
statements.
<PAGE>
Rawlings Sporting Goods Company, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Summary of Significant Accounting Policies.
The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission pertaining
to interim financial information and do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. These
financial statements should be read in conjunction with the
consolidated financial statements and accompanying notes included
in the Company's Form 8-K filed on January 3, 2000. In the
opinion of management, all adjustments consisting only of normal
recurring adjustments considered necessary for a fair
presentation of financial position and results of operations have
been included therein. The results for the nine months ended May
31, 2000 are not necessarily indicative of the results that may
be expected for a full fiscal year.
Note 2: Discontinued Segment
On June 26, 2000 the Company made a strategic decision to
seek a buyer for its Vic hockey business. Vic provides an
extensive line of equipment for hockey including hockey sticks,
hockey protective equipment and goalie protective equipment. The
sale of the Vic hockey business is expected to be completed
during fiscal 2001. Vic hockey is accounted for as a
discontinued segment, and accordingly, operating results and net
assets are segregated in the Company's financial statements.
The net current assets of this discontinued segment are
primarily accounts receivable, inventory, accounts payable and
accrued expenses. Net noncurrent assets are primarily property,
plant and equipment and goodwill.
<PAGE>
Operating results for the hockey business are included in
the Consolidated Statements of Income as net income from
discontinued segment for all periods presented. Results for the
discontinued segment are as follows (in thousands):
Quarter Ended Nine Months Ended
May 31, May 31,
2000 1999 2000 1999
Net revenues $ 1,426 $1,874 $ 5,070 $ 5,053
Loss from operations $ (1,385) $(471) $(2,744) $(1,608)
of
discontinued segment
before income taxes
Provision (benefit)for 73 (174) (430) (595)
income taxes
Net loss from $ (1,458) $(297) $(2,314) $(1,013)
operations of
discontinued segment
Loss on disposal of $(13,000) $ - $(13,000) $ -
discontinued segment
before income taxes
Benefit for income (1,674) - (1,674) -
taxes
Net loss on disposal $(11,326) $ - $(11,326) $ -
of discontinued
segment
The loss on disposal includes the writedown of assets of the hockey
business ($10,750,000) to estimated net realizable value, the provision for
operating losses during the phaseout period of $1,500,000 and the estimated
costs to dispose of this business of $750,000.
Note 3: Credit Facility
On December 28, 1999, the Company refinanced its credit
facility by entering into a $75,000,000 five-year term credit
agreement with a new lender. Actual availability is based on the
Company's outstanding receivables and inventories. The facility
also allows for a $15,000,000 seasonal advance from November
through April. Borrowings under the agreement are based on an
interest rate of LIBOR plus 2.25 percent. A commitment fee of
0.50 percent is charged on any unused portion of the facility.
On May 15, 2000 the Company and its lenders amended the
credit agreement to convert $2,500,000 of the seasonal advance
portion of the facility to a term loan. The amount of seasonal
advance available to the Company was reduced by the amount of the
term loan. The term loan provides for monthly installment
payments and the aggregate outstanding principal balance of the
term loan becomes due and payable in full on the termination date
of the credit facility. The term loan bears interest at LIBOR
plus 2.50 percent.
<PAGE>
The credit facility includes various restrictions, including
requirements that the Company achieve certain EBITDA levels as
defined in the agreement, maintain a fixed charge ratio of 1 to 1
and limit capital expenditures and the payment of dividends.
Certain restrictions contained in the credit facility require,
based on current accounting literature, that debt under the
facility, with the exception of the term loan component, be
classified as current.
Note 4: Inventories
Inventories consisted of the following (in thousands):
May 31, August 31,
2000 1999
Raw materials $ 7,943 $7,885
Work in process 2,370 1,253
Finished goods 29,461 26,082
$39,774 $35,220
Note 5: Comprehensive Income
For the three months ended May 31, 2000 comprehensive loss
was $11,666,000 compared with a comprehensive loss of $518,000
for the comparable prior year period. For the nine months ended
May 31, 2000 comprehensive loss was $9,846,000 compared with
comprehensive income of $2,491,000 for the nine months ended May
31, 1999.
Note 6: Operating Segments
In 1999, the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of a
Business Enterprise and Related Information," which establishes
standards for reporting information about reportable operating
segments. Operating segments, as defined, are components of an
enterprise about which separate financial information is
available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance. The Company has identified operating
segments based on internal management reports. This Statement
allows aggregation of similar operating segments into a single
reportable operating segment if the businesses are considered
similar under the criteria of this Statement. The Company has
four operating segments based on its product categories, which in
applying the aggregation criteria of this Statement have been
aggregated into two reportable segments: Sports Equipment and
Licensing.
<PAGE>
The sports equipment segment manufactures and distributes
sports equipment and uniforms for team sports including baseball,
basketball and football. The licensing segment licenses the
Rawlings brand name on products sold by other companies,
including products such as golf equipment, footwear, and
activewear. There are no determinable operating expenses for the
licensing segment. The accounting policies of the segments are
the same as those for the Company. The revenues generated and
long- <PAGE> lived assets located outside the United States are not
significant and therefore, separate presentation is not required.
Quarter Ended Nine Months Ended
May 31, May 31,
2000 1999 2000 1999
Net revenues
Sports equipment $44,269 $42,889 $139,428 $128,712
Licensing 1,709 1,851 4,252 4,380
Consolidated net $45,978 $44,740 $143,680 $133,092
revenues
Operating income
(loss)
Sports equipment $ 2,064 $(1,061) $ 7,894 $ 4,324
Licensing 1,709 1,851 4,252 4,380
Consolidated $ 3,773 $ 790 $ 12,146 $ 8,704
operating income
May 31, August 31,
2000 1999
Total assets
Sports equipment $113,476 $ 98,898
Licensing 1,934 1,229
Net assets of 1,940 20,548
discontinued segment
Consolidated total assets $117,350 $120,675
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Statements made in this report that are not historical in
nature, or that state the Company's or management's intentions,
hopes, beliefs, expectations, or predictions of the future, for
example, the intent of the Company to restructure operations,
redesign certain processes and potentially sell underperforming
assets are "forward-looking statements" <PAGE> under the Private
Securities Litigation Reform Act of 1995, and involve risks and
uncertainties. The words "should", "will be", "intended",
"continue", "believe", "may", "expect", "hope", "anticipate",
"goal", "forecast" and similar expressions are intended to
identify such forward-looking statements. It is important to
note that any such forward-looking statements are not guarantees
of future performance, and the Company's actual results,
financial condition or business could differ materially from
those expressed in such forward-looking statements. Factors that
could cause or contribute to such differences include, but are
not limited to, those discussed below under the caption
"Cautionary Factors That May Affect Future Results or the
Financial Condition of the Business", as well as those discussed
elsewhere in the Company's reports filed with the Securities and
Exchange Commission. The Company undertakes no obligation to
update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes in
future operating results over time.
Discontinued Segment
On June 26, 2000, the Company made a strategic decision to
seek a buyer for its Vic hockey business. Vic provides an
extensive line of equipment for hockey including hockey sticks,
hockey protective equipment and goalie protective equipment. The
sale of the Vic hockey business is expected to be completed
during fiscal 2001. Vic hockey is accounted for as a
discontinued segment, and accordingly, operating results and net
assets are segregated in the Company's financial statements.
RESULTS OF OPERATIONS
Quarter Ended May 31, 2000 Compared
with Quarter Ended May 31, 1999
Net revenues from continuing operations for the quarter
ended May 31, 2000 were $45,978,000 or 2.8 percent higher than
net revenues from continuing operations of $44,740,000 for the
same quarter last year. The increase in net revenues from
continuing operations was primarily the result of strong demand
across all categories of baseball equipment (up $2,208,000) with
the exception of radar speed-sensing baseballs, partially offset
by a decrease in basketball net revenues (down $636,000).
Basketball net revenues were down from the comparable prior year
quarter partially as a result of the NBA players' strike which
delayed shipments into the May 31, 1999 quarter.
The Company's gross profit from continuing operations was
$15,804,000 or 27.2 percent higher than the gross profit from
continuing operations of $12,425,000 for the comparable prior
year period. The gross profit margin from continuing operations
for the quarter was 34.4 percent, 6.6 margin points higher than
the comparable prior year quarter. <PAGE> Cost of sales for the quarter
ended May 31, 1999 included a $1,600,000 provision for a
voluntary slow-pitch softball aluminum bat recall for safety
reasons. Excluding that provision, the gross profit margin from
continuing operations for the May 31, 1999 quarter was 31.3
percent, 3.1 margin points lower than the comparable current year
quarter. The higher gross profit margin was primarily related to
improved margins for baseball equipment (with the notable
exception of radar speed-sensing baseballs and wood bats),
improved margins for footballs (specifically due to outsourcing)
and improved margins across the apparel business. Gross profit
margin for radar speed-sensing baseballs was lower as a result of
markdowns taken to dispose of excess inventory, while the margin
for wood bats was lower by comparison because of unusually strong
sales of high margin Mark McGwire memorabilia baseball bats in
the comparable prior year period.
Selling, general and administrative (SG&A) expenses from
continuing operations of $12,031,000 were 3.4 percent above SG&A
expenses of $11,635,000 for the comparable prior year quarter.
The increase in SG&A expenses was primarily related to increases
in freight, salaries and wages and depreciation, partially offset
by decreases in professional fees and advertising and promotion.
SG&A expenses were 26.2 percent of net revenues from continuing
operations or 0.2 points higher than the comparable prior year
quarter.
Interest expense for the quarter ended May 31, 2000 was
$1,439,000 or 7.1 percent higher than the interest expense of
$1,344,000 for the comparable prior year quarter. Lower average
borrowings by $14,068,000 were more than offset by an increase in
average interest rates of 2.8 points.
Net revenues from the discontinued segment for the quarter ended
May 31, 2000 were $1,426,000 or 23.9 percent lower than net revenues
from the discontinued segment of $1,874,000 for the same quarter last
year. The decrease in net revenues was primarily the result of lower
sales of hockey sticks and goalie equipment. Loss from operations for
the discontinued segment for the quarter ended May 31, 2000 was
$1,385,000 or $914,000 higher than the loss from operations of $471,000
for the same quarter last year. The increased loss from operations was
primarily the result of lower sales volume, an increased percentage of
low margin sales of discontinued product and increased provisions for
inventory obsolescence and reserve for bad debts.
Nine Months Ended May 31, 2000 Compared with the
Nine Months Ended May 31, 1999
Net revenues from continuing operations for the nine months
ended May 31, 2000 were $143,680,000 or 8.0 percent higher than
the net revenues from continuing operations of $133,092,000 for
the comparable nine month period last year. The increase in net
revenues from continuing operations was primarily the result of
strong demand across all categories of baseball equipment (up
$11,205,000) with the exception <PAGE> of radar speed-sensing baseballs
and wood bats. Radar speed-sensing baseball net revenues were
off significantly after an initial introduction of the product in
late 1998. Sales of wood bats were lower by comparison because
of unusually strong sales of Mark McGwire memorabilia baseball
bats in the comparable prior year period. Additionally, net
revenues from apparel were up $1,329,000 primarily as a result of
additional demand for stock baseball apparel. Net revenues from
footballs were down $1,606,000 due to the decision not to renew
the NCAA football contract.
The Company's gross profit from continuing operations for
the nine months ended May 31, 2000 was $47,260,000 or 13.1
percent higher than the gross profit from continuing operations
of $41,785,000 for the comparable prior year period. The gross
profit margin from continuing operations for the nine months
ended May 31, 2000 was 32.9 percent, 1.5 margin points higher
than the comparable prior year period. Cost of sales for the
nine months ended May 31, 1999 included a $1,600,000 provision
for a voluntary slow-pitch softball aluminum bat recall for
safety reasons. Excluding that provision the gross profit margin
from continuing operations for the nine month period ended May
31, 1999 was 32.6 percent, 0.3 margin points lower than the
comparable current year period. Profit margin for the nine
months ended May 31, 2000 was negatively impacted (approximately
1.6 margin points) by a higher volume of low margin sales of
discontinued products because of a concerted effort by management
to reduce the levels of such inventories, and lower sales of high
margin memorabilia wood baseball bats and radar speed-sensing
baseballs.
The Company is continuing to look for further production
efficiencies in apparel and significant cost reductions in other
areas including the potential sale of underperforming assets,
consolidation of certain production and distribution facilities,
various process redesigns in customer service and distribution,
and a 15 percent reduction in headquarters' staff. The
headquarters' staff reduction was completed during the first
quarter through an early retirement program which resulted in a
first quarter charge of $759,000. Additional charges may result
from these or other actions.
SG&A expenses from continuing operations for the nine months
ended May 31, 2000 were $33,617,000, 1.6 percent above SG&A
expenses of $33,081,000 for the comparable prior year period.
The increase in SG&A expenses was primarily related to increases
in freight, salaries and wages and depreciation, partially offset
by decreases in advertising and promotion and professional fees.
SG&A expenses were 23.4 percent of net revenues from continuing
operations or 1.5 points lower than the comparable prior year
period.
Unusual charges included a charge of $759,000 for the
previously discussed early retirement program and $738,000 of
costs associated with the Company's recently completed review of
strategic alternatives.
<PAGE>
Interest expense for the nine months ended May 31, 2000 was
$4,666,000 or 30.4 percent higher than the interest expense of
$3,577,000 for the comparable prior year period. Lower average
borrowings by $10,220,000 were more than offset by an increase in
average interest rates of 3.7 points. On December 28, 1999, the
Company refinanced its credit facility by entering into a
$75,000,000 five-year term credit agreement with a new lender.
Borrowings under the new agreement are based on an interest rate
of LIBOR plus 2.25 percent. On May 15, 2000 the Company and its
lenders amended the credit agreement to convert $2,500,000 of the
seasonal advance portion of the facility to a term loan. The term
loan component of the credit facility bears interest at the rate of
LIBOR plus 2.50 percent. See Note 3 to the Consolidated Financial
Statements.
The extraordinary item of $646,000 was due to the write-off
of deferred financing costs associated with the early
extinguishment of the previous credit facility.
Net revenues from the discontinued segment for the nine months
ended May 31, 2000 were $5,070,000, essentially flat with net revenues
from the discontinued segment of $5,053,000 for the comparable prior
year period. Loss from operations for the discontinued segment for the
nine month period ended May 31, 2000 was $2,744,000 or $1,136,000 higher
than the loss from operations of $1,608,000 for the comparable prior
year period. The increased loss from operations was primarily the result
of higher sales of low margin discontinued product and increased provisions
for inventory obsolescence and reserve for bad debts.
Seasonality
Net revenues of baseball equipment and team uniforms are
highly seasonal. Customers generally place orders with the
Company for baseball-related products beginning in August for
shipment beginning in November (pre-season orders). These pre-
season orders from customers generally represent approximately 50
percent to 65 percent of the customers' anticipated needs for the
entire baseball season. The amount of these pre-season orders
generally determines the Company's net revenues and profitability
between November 1 and March 31. The Company then receives
additional orders (fill-in orders) which depend upon customers'
actual sales of products during the baseball season (sell-
through). Fill-in orders are typically received by the Company
between February and May. These orders generally represent
approximately 35 percent to 50 percent of the Company's sales of
baseball-related products during a particular season. Pre-season
orders for certain baseball-related products from certain
customers are not required to be paid until early spring. These
extended terms increase the risk of collectibility of accounts
receivable. An increasing number of customers are on automatic
replenishment systems; therefore, more orders are received on a
ship-at-once basis. This change has resulted in shipments to the
customer closer to the time the products are actually sold. This
trend has and may continue to have the effect of shifting <PAGE> the
seasonality and quarterly results of the Company with higher
inventory and debt levels required to meet orders for immediate
delivery. The sell-through of baseball-related products also
affects the amount of inventory held by customers at the end of
the season which is carried over by the customer for sale in the
next baseball season. Customers typically adjust their pre-
season orders for the next baseball season to account for the
level of inventory carried over from the preceding baseball
season. Football equipment and team uniforms are both shipped by
the Company and sold by retailers primarily in the period between
March 1 and September 30. Basketballs and team uniforms
generally are shipped and sold throughout the year. Because the
Company's sales of baseball-related products exceed those of its
other products, Rawlings' business is seasonal, with its highest
net revenues and profitability recognized between November 1 and
April 30.
Liquidity and Capital Resources
Working capital increased by $4,521,000 during the nine
months ended May 31, 2000 primarily as a result of a seasonal
increase in accounts receivable and inventories, partially offset
by an increase in accounts payable due to the conversion of
foreign vendors from payment by letter of credit to open account
payment terms.
Cash flows provided by operating activities for the nine
months ended May 31, 2000 were $6,228,000 or $5,927,000 higher
than the $301,000 provided in the comparable prior year period.
The improvement is primarily the result of converting foreign
vendors from payment by letter of credit to open account payment
terms and tighter cash controls, partially offset by volume
driven increases in accounts receivable and inventory.
Capital expenditures were $727,000 for the nine months ended
May 31, 2000 compared to $1,729,000 for the comparable prior year
period. The Company intends to continue to carefully review all
proposed capital investments and expects total fiscal 2000
capital expenditures to be substantially below the $1,932,000
expended in fiscal 1999.
During the nine months ended May 31, 2000, the Company
repaid $3,902,000 of its outstanding debt. This resulted in
total debt of $47,246,000 as of May 31, 2000 or 7.6 percent lower
than total debt of $51,148,000 as of August 31, 1999. Compared
to debt as of May 31, 1999 of $58,763,000, debt as of May 31,
2000 was down $11,517,000 or 19.6 percent. The decrease in total
debt was primarily the result of more efficient working capital
management. Management believes that the Company's current
credit facility is sufficient to adequately finance its existing
and future operators.
<PAGE>
Cautionary Factors That May Affect Future Results, Financial
Condition or Business
Statements made in this report, other reports and proxy
statements filed with the Securities and Exchange Commission,
communications to stockholders, press releases and oral
statements made by representatives of the Company that are not
historical in nature, or that state the Company's or management's
intentions, hopes, beliefs, expectations, or predictions of the
future, are "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended,
and involve risks and uncertainties. The words "should," "will
be," "intended," "continue," "believe," "may," "expect," "hope,"
"anticipate," "goal," "forecast" and similar expressions are
intended to identify such forward-looking statements. It is
important to note that any such performance, and actual results,
financial condition or business could differ materially from
those expressed in such forward-looking statements. Factors that
could cause or contribute to such differences include, but are
not limited to, those discussed in this document as well as those
discussed elsewhere in other reports filed with the Securities
and Exchange Commission. The Company undertakes no obligation to
update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes in
future operating results, financial condition or business over
time.
Item 3. Quantitative and Qualitative Disclosure about Market
Risk
The Company has no material sensitivity to changes in
foreign currency exchange rates on its net exposed derivative
financial instrument position.
<PAGE>
Part II.
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults on Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The annual Stockholders' Meeting was held on April 13,
2000. At the meeting the following nominees were
elected pursuant to the following votes:
Number of Number of
Nominee Votes For Votes
Withheld
Charles L. Jarvie 6,778,129 751,276
Michael McDonnell 6,761,117 768,288
Michael J. Roarty retired as a director at the meeting.
The following directors' term of office continued after
the meeting:
Andrew N. Baur
Linda L. Griggs
Stephen M. O'Hara
Robert S. Prather, Jr.
William C. Robinson
<PAGE>
The approval of the Board of Directors' selection of
Arthur Andersen LLP as independent public accountants
was approved pursuant to the following vote:
For Against Abstain
7,447,954 59,331 22,120
The shareholder proposal to revoke the Rights
Agreement, dated July 1, 1994 was ratified pursuant to
the following vote:
For Against Abstain Non-Vote
3,402,524 1,236,620 57,407 2,832,854
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Amendment No. 2 to the Credit Agreement among
Rawlings Sporting Goods Company, Inc.,
General Electric Capital Corporation and
LaSalle Bank National Association dated May
15, 2000.
<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.
RAWLINGS SPORTING GOODS COMPANY, INC.
Date: /s/ STEPHEN M. O'HARA
Stephen M. O'Hara
Chairman of the Board and
Chief Executive Officer
Date: /s/ MICHAEL L. LUETKEMEYER
Michael L. Luetkemeyer
Chief Financial Officer
(Principal Accounting Officer)
