<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
June 29, 1996 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 0-24730
THE FLORSHEIM SHOE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-3520923
------------------------------------------------ -------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
130 South Canal Street, Chicago, Illinois 60606
------------------------------------------------ -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 559-2500
--------------
Not Applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 requirement for the past 90 days. Yes [x] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [x] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
8,346,051 Shares as of July 26, 1996
------------------------------------
================================================================================
<PAGE> 2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Financial Statements for the quarter ended June 29, 1996.
Consolidated Balance Sheet:
June 29, 1996
December 30, 1995
Consolidated Statement of Operations:
Three Months Ended June 29, 1996
Three Months Ended July 1, 1995
Six Months Ended June 29, 1996
Six Months Ended July 1, 1995
Consolidated Statement of Cash Flows:
Six Months Ended June 29, 1996
Six Months Ended July 1, 1995
Notes to Consolidated Financial Statements
The financial statements are unaudited, but include all adjustments (consisting
of normal recurring adjustments) which the management of the Company considers
necessary for a fair presentation of the period. The results for the three
months and the six months ended June 29, 1996 are not necessarily indicative of
the results to be expected for the full year.
2
<PAGE> 3
THE FLORSHEIM SHOE COMPANY
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Unaudited
----------------
December 30, June 29,
ASSETS 1995 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,249 $ 20,466
Receivables, less allowances of $2,284 at
December 30, 1995 and $1,963 at June 29, 1996 36,113 25,947
Inventories 84,684 68,766
Deferred tax assets, net 10,027 10,582
Prepaid expenses and other current assets 4,091 4,795
- ----------------------------------------------------------------------------------------------------------
Total current assets 140,164 130,556
Property, plant and equipment 34,388 34,297
Less accumulated depreciation 12,646 14,736
- ----------------------------------------------------------------------------------------------------------
Net property, plant and equipment 21,742 19,561
Deferred tax assets, net 6,144 5,818
Other assets 18,271 17,900
- ----------------------------------------------------------------------------------------------------------
$ 186,321 $ 173,835
- ----------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------
Current liabilities:
Notes payable $ 94 $ 224
Accounts payable 11,492 8,951
Accrued expenses 13,088 13,780
Accrued interest expense 3,082 2,912
Accrued income taxes payable 486 237
- ----------------------------------------------------------------------------------------------------------
Total current liabilities 28,242 26,104
Long-term debt 80,126 69,450
Other long-term liabilities 22,885 23,235
- ----------------------------------------------------------------------------------------------------------
131,253 118,789
Shareholders' equity:
Preferred stock, without par value, 2,000,000 shares
authorized and no shares issued and outstanding - -
Common stock, 20,000,000 shares authorized,
without par value, $1.00 stated value, 8,346,051 shares
issued and outstanding 8,346 8,346
Paid-in capital 50,295 50,295
Accumulated translation adjustment (251) 170
Retained earnings (deficit) (3,322) (3,765)
- ----------------------------------------------------------------------------------------------------------
Total shareholders' equity 55,068 55,046
- ----------------------------------------------------------------------------------------------------------
$ 186,321 $ 173,835
- ----------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
THE FLORSHEIM SHOE COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Three months Three months
ended ended
July 1, June 29,
1995 1996
- -------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 68,859 $ 58,958
Cost of sales 38,378 31,059
- -------------------------------------------------------------------------------------
Gross profit 30,481 27,899
Selling, general
and administrative expenses 28,366 26,005
- -------------------------------------------------------------------------------------
Earnings from operations 2,115 1,894
Interest expense, net 3,520 2,397
Other income, net 48 60
- -------------------------------------------------------------------------------------
Loss before income taxes (1,357) (443)
Income tax benefit (475) (159)
- -------------------------------------------------------------------------------------
Net loss $ (882) $ (284)
- -------------------------------------------------------------------------------------
Net loss per common share $ (0.10) $ (0.03)
- -------------------------------------------------------------------------------------
Weighted average common shares outstanding - 8,346,051
Weighted average common shares /
equivalents outstanding 8,416,477 -
- -------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
THE FLORSHEIM SHOE COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Six months Six months
ended ended
July 1, June 29,
1995 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 139,990 $ 120,885
Cost of sales 77,628 65,102
- ------------------------------------------------------------------------------
Gross profit 62,362 55,783
Selling, general
and administrative expenses 56,349 52,888
- ------------------------------------------------------------------------------
Earnings from operations 6,013 2,895
Interest expense, net 6,989 5,191
Other income, net 68 1,604
- ------------------------------------------------------------------------------
Loss before income taxes (908) (692)
Income tax benefit (318) (248)
- ------------------------------------------------------------------------------
Net loss $ (590) $ (444)
- ------------------------------------------------------------------------------
Net loss per common share $ (0.07) $ (0.05)
- ------------------------------------------------------------------------------
Weighted average common shares outstanding - 8,346,051
Weighted average common shares /
equivalents outstanding 8,414,482 -
- ------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
THE FLORSHEIM SHOE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Six months Six months
ended ended
July 1, June 29,
1995 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (590) $ (444)
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
(excluding assets/liabilities related to
the sale of assets of Hy-Test):
Loss (gain) on disposal of assets 23 (1,847)
Depreciation and amortization 2,386 2,329
Deferred taxes 95 (488)
Noncash interest expense 472 443
Decrease in receivables 4,528 1,379
Decrease in inventories 9,224 4,660
Increase in prepaid expenses and other assets (2,975) (485)
Increase (decrease) in accounts payable, accrued
interest expense and other accrued expenses 176 (1,667)
Increase in other long-term liabilities 32 350
- ----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 13,371 4,230
- ----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of assets of Hy-Test,
net of transaction costs - 22,600
Proceeds from the disposal of assets 94 110
Additions to property, plant and equipment (2,187) (1,177)
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (2,093) 21,533
- ----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase in notes and loans payable - 130
Payments of long-term debt (10,783) (10,676)
- ----------------------------------------------------------------------------------------------------------
Net cash used in financing activities (10,783) (10,546)
- ----------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 495 15,217
Cash and cash equivalents at beginning of period 4,872 5,249
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 5,367 $ 20,466
- ----------------------------------------------------------------------------------------------------------
Supplemental disclosure:
Cash payments for income taxes, net $ 1,274 $ 934
Cash payments for interest $ 4,643 $ 4,918
- ----------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 29, 1996
(Dollars in thousands)
(Unaudited)
(1) DISTRIBUTION
Effective November 17, 1994, The Florsheim Shoe Company
(Florsheim or the Company) became an independent public company.
Furniture Brands International, Inc., formerly known as INTERCO
INCORPORATED, its former parent company and sole stockholder,
distributed all of the Company's common stock to existing
INTERCO shareholders at a rate of one share of Florsheim common
stock for every six shares of INTERCO common stock (the
Distribution). In connection with the Distribution, Florsheim
issued $85,000 in 12-3/4% Senior Notes due 2002 (Senior Notes)
and entered into a $75,000 secured credit facility (credit
facility). Florsheim used the proceeds from the Senior Notes
and $25,000 borrowed under the credit facility to pay financing
expenses and repay its share of outstanding joint and several
indebtedness issued in connection with the 1992 plan of
reorganization of INTERCO and its principal subsidiaries.
(2) SALE OF ASSETS OF HY-TEST SAFETY SHOE DIVISION
On March 22, 1996, the Company completed the sale of the assets
of its Hy-Test safety shoe division, including its Kirksville,
Missouri factory, to Wolverine World Wide, Inc., for an all cash
sale price of approximately $22,750. A portion of this cash was
used to reduce to zero the $17.6 million of outstanding
borrowings under the Company's bank credit facility as of the
sale date. The balance of the proceeds are available for
investment in the business and for further debt reduction.
Annual net sales of the sold business were $38,659 for the
twelve months ended December 30, 1995. The net gain on sale of
$1,850 is included in other income (expense), net.
(3) NET EARNINGS (LOSS) PER COMMON SHARE
For the six months ended June 29, 1996, net loss per share data
was computed using the average weighted shares outstanding.
Common stock equivalents were not used due to the antidilutive
effect on the computation.
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 29, 1996
(Dollars in thousands)
(Unaudited)
(4) INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
December 30, June 29,
1995 1996
- -----------------------------------------------------------------------
<S> <C> <C>
Retail merchandise $ 45,543 $ 41,724
Finished Products 29,186 19,203
Work-in-process 1,418 951
Raw materials 8,537 6,888
---------- ---------
$ 84,684 $ 68,766
========== =========
- -----------------------------------------------------------------------
</TABLE>
(5) SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
In connection with the Distribution, Florsheim issued $85,000,
of which $69,450 are outstanding at June 29, 1996, of 12-3/4%
Senior Notes due 2002. The Senior Notes are guaranteed, on a
joint and several basis, by all domestic subsidiaries of
Florsheim.
The following condensed consolidating information presents:
1. Condensed consolidating balance sheets as of December 30,
1995 and June 29, 1996, condensed consolidating statements of
operations for the three months ended July 1, 1995 and the three
months ended June 29, 1996, condensed consolidating statements of
operations and statements of cash flows for the six months ended
July 1, 1995 and the six months ended June 29, 1996, of (a)
Florsheim, the parent, (b) the guarantor subsidiaries, (c) the
nonguarantor subsidiaries and (d) Florsheim on a consolidated
basis.
2. Florsheim, the parent, with the investments in the guarantor
and nonguarantor subsidiaries accounted for on the equity method,
and
3. Elimination entries necessary to consolidate Florsheim, the
parent, with the guarantor and nonguarantor subsidiaries.
8
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For six months ended June 29, 1996
(Continued)
(Dollars in thousands)
(Unaudited)
Condensed Consolidating Balance Sheet
December 30, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Guarantor Nonguarantor
Parent subsidiaries subsidiaries Eliminations Consolidated
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Current assets:
Cash and cash
equivalents $ 2,658 $ 1,131 $ 1,460 $ - $ 5,249
Receivables 15,756 10,490 8,906 961 36,113
Inventories 45,250 28,751 10,683 - 84,684
Prepaid expenses and
other current assets 11,032 1,450 1,636 - 14,118
- -------------------------------------------------------------------------------------------------------------------
Total current assets 74,696 41,822 22,685 961 140,164
Net property, plant and
equipment 14,473 4,640 2,629 - 21,742
Other assets 22,231 1,755 504 (75) 24,415
Investments in subsidiaries 65,006 - - (65,006) -
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 176,406 $ 48,217 $ 25,818 $ (64,120) $ 186,321
- -------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Current liabilities:
Notes payable - - 94 - 94
Accounts payable 5,133 2,469 2,929 961 11,492
Accrued expenses
and other current
liabilities 13,194 874 2,588 - 16,656
- -------------------------------------------------------------------------------------------------------------------
Total current liabilities 18,327 3,343 5,611 961 28,242
Long-term debt, less
current maturities 80,126 - - - 80,126
Other long-term liabilities 22,885 - 75 (75) 22,885
Shareholders' equity 55,068 44,874 20,132 (65,006) 55,068
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $ 176,406 $ 48,217 $ 25,818 $ (64,120) $ 186,321
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For six months ended June 30, 1996
(Continued)
(Dollars in thousands)
(Unaudited)
Condensed Consolidating Balance Sheet
June 29, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Guarantor Nonguarantor
Parent subsidiaries subsidiaries Eliminations Consolidated
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Current assets:
Cash and cash
equivalents $ 17,167 $ 1,791 $ 1,508 $ - $ 20,466
Receivables 21,315 147 6,579 (2,094) 25,947
Inventories 35,412 21,152 12,202 - 68,766
Prepaid expenses and
other current assets 13,230 745 1,402 - 15,377
- -----------------------------------------------------------------------------------------------------------------------------
Total current assets 87,124 23,835 21,691 (2,094) 130,556
Net property, plant and
equipment 13,235 3,882 2,444 - 19,561
Other assets 21,478 2,414 532 (706) 23,718
Investments in subsidiaries 44,549 - - (44,549) -
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 166,386 $ 30,131 $ 24,667 $ (47,349) $ 173,835
- -----------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Current liabilities:
Note payable - - 224 - 224
Accounts payable 6,164 1,803 3,078 (2,094) 8,951
Accrued expenses
and other current
liabilities 12,491 1,495 2,943 - 16,929
- -----------------------------------------------------------------------------------------------------------------------------
Total current liabilities 18,655 3,298 6,245 (2,094) 26,104
Long-term debt, less
current maturities 69,450 - - - 69,450
Other long-term liabilities 23,235 - 706 (706) 23,235
Shareholders' equity 55,046 26,833 17,716 (44,549) 55,046
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $ 166,386 $ 30,131 $ 24,667 $ (47,349) $ 173,835
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For six months ended June 29, 1996
(Continued)
(Dollars in thousands)
(Unaudited)
Condensed Consolidating Statements of Operations
For three months ended July 1, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Guarantor Nonguarantor
Parent subsidiaries subsidiaries Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 42,371 $ 20,675 $ 9,657 $ (3,844) $ 68,859
Cost of sales 24,217 12,385 5,620 (3,844) 38,378
- ------------------------------------------------------------------------------------------------------------------------------------
Gross profit 18,154 8,290 4,037 - 30,481
Selling, general and
administrative expenses 16,942 7,438 3,986 - 28,366
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from operations 1,212 852 51 - 2,115
Interest expense 3,520 - - - 3,520
Equity in earnings of subsidiaries,
net of tax 426 - - (426) -
Other income (expense), net 130 21 (103) - 48
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before
income taxes (1,752) 873 (52) (426) (1,357)
Income tax expense (benefit) (870) 349 46 - (475)
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ (882) $ 524 $ (98) $ (426) $ (882)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
For three months ended June 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Guarantor Nonguarantor
Parent subsidiaries subsidiaries Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 43,070 $ 12,120 $ 9,854 $ (6,086) $ 58,958
Cost of sales 25,435 6,103 5,607 (6,086) 31,059
- ------------------------------------------------------------------------------------------------------------------------------------
Gross profit 17,635 6,017 4,247 - 27,899
Selling, general and
administrative expenses 16,759 5,301 3,945 - 26,005
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from operations 876 716 302 - 1,894
Interest expense 2,397 - - - 2,397
Equity in earnings of subsidiaries,
net of tax 608 - - (608) -
Other income (expense), net 49 - 11 - 60
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before
income taxes (864) 716 313 (608) (443)
Income tax expense (benefit) (580) 284 137 - (159)
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ (284) $ 432 $ 176 $ (608) $ (284)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For six months ended June 29, 1996
(Continued)
(Dollars in thousands)
(Unaudited)
Condensed Consolidating Statements of Operations
For six months ended July 1, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Guarantor Nonguarantor
Parent subsidiaries subsidiaries Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 84,858 $ 43,643 $ 19,044 $ (7,555) $ 139,990
Cost of sales 47,413 26,647 11,123 (7,555) 77,628
- ------------------------------------------------------------------------------------------------------------------------------------
Gross profit 37,445 16,996 7,921 - 62,362
Selling, general and
administrative expenses 33,697 15,008 7,644 - 56,349
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from operations 3,748 1,988 277 - 6,013
Interest expense 6,989 - - - 6,989
Equity in earnings of subsidiaries,
net of tax 1,327 - - (1,327) -
Other income (expense), net 147 20 (99) - 68
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before
income taxes (1,767) 2,008 178 (1,327) (908)
Income tax expense (benefit) (1,177) 796 63 - (318)
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ (590) $ 1,212 $ 115 $ (1,327) $ (590)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
For six months ended June 29, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Guarantor Nonguarantor
Parent subsidiaries subsidiaries Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 84,201 $ 29,119 $ 19,781 $ (12,216) $ 120,885
Cost of sales 49,504 16,336 11,478 (12,216) 65,102
- ------------------------------------------------------------------------------------------------------------------------------------
Gross profit 34,697 12,783 8,303 - 55,783
Selling, general and
administrative expenses 32,301 12,557 8,030 - 52,888
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from operations 2,396 226 273 - 2,895
Interest expense 5,191 - - - 5,191
Equity in earnings of subsidiaries,
net of tax (335) - - 335 -
Other income (expense), net 1,593 (12) 23 - 1,604
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before
income taxes (1,537) 214 296 335 (692)
Income tax expense (benefit) (1,093) 645 200 - (248)
- ------------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ (444) $ (431) $ 96 $ 335 $ (444)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For six months ended June 29, 1996
(Continued)
(Dollars in thousands)
(Unaudited)
Condensed Consolidating Statements of Cash Flows
For six months ended July 1, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Guarantor Nonguarantor
Parent subsidiaries subsidiaries Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
operating activities $ 11,779 $ 353 $ 2,914 $ (1,675) $ 13,371
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing
activities:
Proceeds from the
disposal of assets 94 - - - 94
Additions to property,
plant and equipment (1,532) (259) (396) - (2,187)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing
activities (1,438) (259) (396) - (2,093)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing
activities:
Net capital contribution
from (to) Parent (763) 652 (1,564) 1,675 -
Payment of long-term debt (10,783) - - - (10,783)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities (11,546) 652 (1,564) 1,675 (10,783)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (1,205) 746 954 - 495
Cash and cash equivalents
at beginning of period 2,157 1,061 1,654 - 4,872
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents
at end of period $ 952 $ 1,807 $ 2,608 $ - $ 5,367
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For six months ended June 29, 1996
(Continued)
(Dollars in thousands)
(Unaudited)
Condensed Consolidating Statements of Cash Flows
For six months ended June 29, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Guarantor Nonguarantor
Parent subsidiaries subsidiaries Eliminations Consolidated
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities
(excluding assets/liabilities related
to the sale of assets of Hy-Test) $ 2,806 $ (1,161) $ 2,995 $ (410) $ 4,230
- -----------------------------------------------------------------------------------------------------------------------
Cash flows from investing
activities:
Proceeds from the sale of assets of
Hy-Test, net of transaction costs 22,600 - - - 22,600
Proceeds from the
disposal of assets 110 - - - 110
Additions to property,
plant and equipment (753) (280) (144) - (1,177)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in)
investing activities 21,957 (280) (144) - 21,533
- -----------------------------------------------------------------------------------------------------------------------
Cash flows from financing
activities:
Net increase in notes and loans payable - - 130 - 130
Net capital contribution
from (to) Parent 422 2,101 (2,933) 410 -
Payment of long-term debt (10,676) - - - (10,676)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities (10,254) 2,101 (2,803) 410 (10,546)
- -----------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash
equivalents 14,509 660 48 - 15,217
Cash and cash equivalents
at beginning of period 2,658 1,131 1,460 - 5,249
- -----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents
at end of period $ 17,167 $ 1,791 $ 1,508 $ - $ 20,466
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands)
OVERVIEW
The Florsheim Shoe Company (Florsheim or the Company), founded in 1892,
designs, markets, manufactures, and sources a diverse and extensive range of
products in the middle to upper price range of the men's quality footwear
market. Florsheim distributes its products in more than 6,000 department and
specialty store locations worldwide and through 354 company-operated specialty
stores and outlet stores as of June 29, 1996.
Effective November 17, 1994, Florsheim became an independent public company
when Furniture Brands International, Inc., formerly known as INTERCO
INCORPORATED, its former parent company and sole stockholder, distributed all
of the Company's common stock to existing INTERCO shareholders at a rate of one
share of Florsheim common stock for every six shares of INTERCO common stock
(the Distribution). In connection with the Distribution, Florsheim issued
$85,000 in 12-3/4% Senior Notes due 2002 (Senior Notes) and entered into a
$75,000 secured credit facility (credit facility). Florsheim used the proceeds
from the Senior Notes and $25,000 borrowed under the credit facility to pay
financing expenses and repay its share of the outstanding joint and several
indebtedness issued in connection with the 1992 plan of reorganization of
INTERCO and its principal subsidiaries.
On March 22, 1996, the Company completed the sale of the assets of its Hy-Test
safety shoe division, including its Kirksville, Missouri factory, to Wolverine
World Wide, Inc., for an all cash sale price of approximately $22,750. Annual
net sales of the sold business were $38,659 for the twelve months ended
December 30, 1995.
15
<PAGE> 16
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 29, 1996 COMPARED TO THREE MONTHS ENDED JULY 1, 1995.
Historical Comparisons
The following tables set forth, for the periods indicated, certain historical
operating data, expressed in thousands of dollars and as a percentage of net
sales, and retail store information.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Three months ended
-----------------------------------------------
(Dollars in thousands) July 1, 1995 June 29, 1996
- --------------------------------------------------------------------------------
Amount % Amount %
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales:
U.S. Wholesale $ 19,651 28.5 % $ 18,895 32.0 %
U.S. Retail 30,493 44.3 29,691 50.4
International (including
exports from U.S.) 10,107 14.7 10,372 17.6
- --------------------------------------------------------------------------------
Subtotal 60,251 87.5 58,958 100.0
Hy- Test (1) 8,608 12.5 - 0.0
- --------------------------------------------------------------------------------
Total net sales $ 68,859 100.0 % $ 58,958 100.0 %
- --------------------------------------------------------------------------------
Percent change in same store
sales (2) (4.9)% (2.1)%
EBITDA (3) $ 3,256 4.7 % $ 3,024 5.1 %
- --------------------------------------------------------------------------------
Interest expense, net $ 3,520 $ 2,397
Less: non-cash interest 236 222
--------- ----------
Cash interest expense, net $ 3,284 $ 2,175
========= ==========
- --------------------------------------------------------------------------------
Number of retail stores:
U.S. specialty 223 211
U.S. outlets 80 91
International 57 52
--------- ----------
Total 360 354
========= ==========
- --------------------------------------------------------------------------------
</TABLE>
(1) The Hy-Test safety shoe business was sold on March 22, 1996.
(2) Includes only those sales figures for U.S. specialty
stores that have been in operation for at least twelve full
months. Percentage change reflects figures for period
depicted as compared to the figures from the preceding period
of comparable length.
(3) Earnings before interest expense, income taxes,
depreciation and amortization, and other income (expense),
net.
16
<PAGE> 17
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Three months ended
-----------------------------
July 1, June 29,
Operations data (as a percent of net sales) 1995 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Net sales 100.0 % 100.0 %
Gross profit 44.3 47.3
Selling, general, and administrative expenses 41.2 44.1
Earnings from operations 3.1 3.2
Interest expense 5.1 4.1
Net loss (1.3) (0.5)
- -------------------------------------------------------------------------------
</TABLE>
Net sales for the three months ended June 29, 1996 (Second Quarter 1996) were
$58,958, down $9,901, or 14.4%, as compared to the three months ended July 1,
1995 (Second Quarter 1995). Of the decrease, $8,608, or 12.5% is attributed to
the Hy-Test division, which was sold on March 22, 1996. U.S. wholesale net
sales decreased $756, or 3.8%, due primarily to a decrease in unit volume
reflecting difficult market conditions partially offset by gains from increased
average selling price. U.S. retail net sales decreased $802, or 2.6%, as
additional sales from stores opened during or after the Second Quarter 1995
were more than offset by store closings and Second Quarter 1996 same store
sales decreases at U.S. specialty stores of 2.1%. International sales
increased $265, or 2.6%.
Gross profit margin for Second Quarter 1996 was 47.3% of net sales, as compared
to 44.3% of net sales for Second Quarter 1995. The increase was due to a mix
change (reflecting the sale of Hy-Test) to a higher percentage of retail sales
and costs decreases due to the Company's expense reduction programs and was
partially offset by increased price promotion activity.
Selling, general and administrative expenses for Second Quarter 1996 were
$26,005, a decrease of $2,361, or 8.3%, from Second Quarter 1995. Selling,
general and administrative expenses for Second Quarter 1996 were 44.1% of net
sales, an increase from 41.2% of net sales for Second Quarter 1995 due to lower
sales volume and a mix change reflecting the sale of Hy-Test. Expense
decreases due to the Company's expense reduction programs were partially offset
by increased selling costs and spending on sales growth opportunities.
Earnings from operations for Second Quarter 1996 were $1,894, a decrease of
$221, or 10.4%, from Second Quarter 1995, and EBITDA for Second Quarter 1996
was $3,024, a decrease of $232, or 7.1%, from Second Quarter 1995. Earnings
from operations for Second Quarter 1996 were 3.2% of net sales, as compared to
3.1% of net sales for Second Quarter 1995, and EBITDA for Second Quarter 1996
was 5.1% of net sales, as compared to 4.7% net sales for Second Quarter 1995.
The decrease in earnings from operations was primarily due to sales volume
decreases and the elimination of the operating profit contribution by Hy-Test
to central overhead offset in part by the effect of the Company's expense
reduction programs.
Interest expense for Second Quarter 1996 was $2,397, as compared to the Second
Quarter 1995 amount of $3,520. This decrease is due to the lower amount of
Senior Notes outstanding in Second Quarter 1996 as compared to the Second
Quarter 1995 and the fact that there were no outstanding borrowings under the
credit facility during the Second Quarter 1996.
The loss per share for Second Quarter was $ 0.03 per share, an improvement of
$0.07 per share from the Second Quarter 1995. The improvement is primarily due
to the reduction in interest expense.
17
<PAGE> 18
Pro forma Comparisons
The following pro forma financial data reflects the sale of the assets of
Hy-Test as if the sale had occurred as of January 1, 1995 for pro forma
statement of operations purposes. The pro forma data excludes the net sales
and direct costs of the Hy-Test division and the Hy-Test operating profit
contribution to central overhead costs. Management believes that the
assumptions used provide a reasonable basis on which to present the pro forma
condensed financial data. The pro forma data are presented for informational
purposes only and are not necessarily indicative of the results that would have
been achieved had the transaction actually been consummated as of such date.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Statement of Operations Data Three months ended
------------------------------------------------
Pro forma
July 1, June 29,
1995 1996
- -------------------------------------------------------------------------------------------
Amount % Amount %
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $60,251 100.0 % $58,958 100.0 %
Gross profit 28,184 46.8 27,899 47.3
Selling, general, and
administrative expenses 26,505 44.0 26,005 44.1
Earnings from operations 1,679 2.8 1,894 3.2
EBITDA 2,791 4.6 3,024 5.1
- -------------------------------------------------------------------------------------------
</TABLE>
Net sales for Second Quarter 1996 were $1,293 (2.1%) lower than for Second
Quarter 1995 pro forma net sales. As noted above, the reduction was primarily
due to decreases in U.S. wholesale unit volume and same store sale decreases at
Company-operated stores.
Earnings from operations and EBITDA for Second Quarter 1996 were $215 and $233,
respectively, greater than Second Quarter 1995 pro forma earnings from
operations and pro forma EBITDA. As noted above, the effect of the expense
reduction programs were partially offset by the lower sales volume and
increased price promotion activity.
The pro forma operations data percentages reflect the elimination of the
Hy-Test operating profit contribution to central overhead. As the result of
the Hy-Test asset sale, the Company's sales mix shifts to a higher percentage
of the total sales from the Company-operated retail stores. Accordingly, the
pro forma gross profit increases as a percent of sales as compared to
historical results with an offsetting increase in the pro forma selling,
general and administrative expenses as a percent of sales as compared to
historical results.
18
<PAGE> 19
SIX MONTHS ENDED JUNE 29, 1996 COMPARED TO SIX MONTHS ENDED JULY 1, 1995.
Historical Comparisons
The following tables set forth, for the periods indicated, certain historical
operating data, expressed in thousands of dollars and as a percentage of net
sales, and retail store information.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Six months ended
---------------------------------------------------
(Dollars in thousands) July 1, 1995 June 29, 1996
- ----------------------------------------------------------------------------------------------------
Amount % Amount %
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales:
U.S. Wholesale $ 39,887 28.5 % $ 35,896 29.7 %
U.S. Retail 59,452 42.5 56,995 47.1
International (including
exports from U.S.) 19,916 14.2 21,051 17.4
- ----------------------------------------------------------------------------------------------------
Subtotal 119,255 85.2 113,942 94.3
Hy- Test (1) 20,735 14.8 6,943 5.7
- ----------------------------------------------------------------------------------------------------
Total net sales $ 139,990 100.0 % $ 120,885 100.0 %
- ----------------------------------------------------------------------------------------------------
Percent change in same store
sales (2) (7.8) % (2.6) %
EBITDA (3) $ 8,399 6.0 % $ 5,224 4.3 %
- ----------------------------------------------------------------------------------------------------
Interest expense, net $ 6,989 $ 5,191
Less: non-cash interest 472 443
---------- ---------
Cash interest expense, net $ 6,517 $ 4,748
========== =========
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) The Hy-Test safety shoe business was sold on March 22, 1996.
(2) Includes only those sales figures for U.S. specialty
stores that have been in operation for at least twelve full
months. Percentage change reflects figures for period
depicted as compared to the figures from the preceding period
of comparable length.
(3) Earnings before interest expense, income taxes,
depreciation and amortization, and other income (expense),
net.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Six months ended
-----------------------------
July 1, June 29,
Operations data (as a percent of net sales) 1995 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Net sales 100.0 % 100.0 %
Gross profit 44.5 46.1
Selling, general, and administrative expenses 40.3 43.8
Earnings from operations 4.3 2.4
Interest expense 5.0 4.3
Net loss (0.4) (0.4)
- -------------------------------------------------------------------------------
</TABLE>
Net sales for the six months ended June 29, 1996 (First Half 1996) were
$120,885, down $19,105, or 13.6%, as compared to the six months ended July 1,
1995 (First Half 1995). Of the decrease, $13,792, or 9.8%, is attributed to
the
19
<PAGE> 20
Hy-Test division, which was sold on March 22, 1996. U.S. wholesale net
sales decreased $3,991, or 10.0%, due to decreases in unit volume reflecting
difficult market conditions. U.S. retail net sales decreased $2,457, or 4.1%,
as additional sales from stores opened during or after the First Half 1995 were
more than offset by store closings and First Half 1996 same store sales
decreases at U.S. specialty stores of 2.6%. International sales increased
$1,135, or 5.7%, with the increase due to increased sales at company-operated
stores and expanded wholesale distribution.
Gross profit margin for First Half 1996 was 46.1% of net sales, as compared to
44.5% of net sales for First Half 1995. The increase was due to a mix change
(reflecting the sale of Hy-Test) to a higher percentage of retail sales, and
costs decreases due to the Company's expense reduction programs and was
partially offset by increased price promotion activity.
Selling, general and administrative expenses for First Half 1996 were $52,888,
a decrease of $3,461, or 6.1%, from First Half 1995. Selling, general and
administrative expenses for First Half 1996 were 43.8% of net sales, an
increase from 40.3% of net sales for First Half 1995 due to lower sales volume
and a mix change reflecting the sale of Hy-Test. Expense decreases due to the
Company's expense reduction programs were partially offset by increased selling
costs and spending on sales growth opportunities.
Earnings from operations for First Half 1996 were $2,895, a decrease of $3,118,
or 51.9%, from First Half 1995, and EBITDA for First Half 1996 was $5,224, a
decrease of $3,175, or 37.8%, from First Half 1995. Earnings from operations
for First Half 1996 were 2.4% of net sales, as compared to 4.3% of net sales
for First Half 1995, and EBITDA for First Half 1996 was 4.3% of net sales, as
compared to 6.0% of net sales for First Half 1995. The decrease was primarily
due to sales volume decreases and the elimination of the operating profit
contribution by Hy-Test to central overhead offset by the effect of the
Company's expense reduction programs.
Interest expense for First Half 1996 was $5,191, as compared to the First Half
1995 amount of $6,989. This decrease is due to the lower amount of Senior
Notes outstanding and lower average outstanding borrowings under the credit
facility during the First Half 1996 as compared to the average outstanding
during First Half 1995.
The loss per share for First Half 1996 was $ 0.05 per share, an improvement of
$ 0.02 per share from the First Half 1995. The improvement is primarily due to
the reduction in interest expense partially offset by the reduction in earnings
from operations due to sales volume decreases.
Pro forma Comparisons
The following pro forma financial data reflects the sale of the assets of
Hy-Test as if the sale had occurred as of January 1, 1995 for pro forma
statement of operations purposes and as of December 30, 1995 for pro forma
balance sheet purposes. The pro forma data excludes the net sales and direct
costs of the Hy-Test division and the Hy-Test operating profit contribution to
central overhead costs. Management believes that the assumptions used provide
a reasonable basis on which to present the pro forma condensed financial data.
The pro forma data are presented for informational purposes only and are not
necessarily indicative of the results that would have been achieved had the
transaction actually been consummated as of such dates.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Statement of Operations Data Six months ended
---------------------------------------
Pro forma
---------------------------------------
July 1, June 29,
1995 1996
- -----------------------------------------------------------------------------------
Amount % Amount %
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $119,255 100.0 % 113,942 100.0 %
Gross profit 56,903 47.7 54,183 47.6
Selling, general, and
administrative expenses 52,366 43.9 50,788 44.6
Earnings from operations 4,537 3.8 3,395 3.0
EBITDA 6,862 5.8 5,724 5.0
- -----------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
Pro forma net sales for First Half 1996 were $5,313 (4.5%) lower than for First
Half 1995 pro forma net sales. As noted above, the reductions were primarily
due to decreases in U.S. wholesale unit volume and same store sale decreases at
Company-operated stores.
Pro forma earnings from operations and pro forma EBITDA for First Half 1996
were $1,142 and $1,138, respectively, lower than First Half 1995. As noted
above, the effect of the expense reduction programs were more than offset by
the lower sales volume and increased price promotion activity.
The pro forma operations data percentages reflect the elimination of the
Hy-Test operating profit contribution to central overhead. As the result of
the Hy-Test asset sale, the Company's sales mix shifts to a higher percentage
of the total sales from the Company-operated retail stores. Accordingly, the
pro forma gross profit increases as a percent of sales as compared to
historical results with an offsetting increase in the pro forma selling,
general and administrative expenses as a percent of sales as compared to
historical results.
The pro forma balance sheet data reflects the sale of Hy-Test receivables and
inventory, the sale of the Kirksville, Missouri factory, the transfer of
certain liabilities to Wolverine, the use of cash proceeds from the sale to
eliminate outstanding borrowings under the bank credit facility, and the
unapplied balance of the cash proceeds from the sale, net of transaction costs
and taxes as a result of the transaction, as if the transaction occurred as
of December 30, 1995.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Balance Sheet Data Pro forma
------------
December 30, June 29,
ASSETS 1995 1996
- -----------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 16,227 $ 20,466
Receivables, net 25,810 25,947
Inventories 74,826 68,766
Other current assets 14,111 15,377
- -----------------------------------------------------------------------
Total current assets 130,974 130,556
Property, plant and equipment, net 20,686 19,561
Other assets 23,898 23,718
- -----------------------------------------------------------------------
Total assets $175,558 $173,835
- -----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 27,242 $ 26,104
- -----------------------------------------------------------------------
Long-term debt 69,450 69,450
Other long-term liabilities 22,885 23,235
- -----------------------------------------------------------------------
Total liabilities 119,577 118,789
- -----------------------------------------------------------------------
Shareholders' equity 55,981 55,046
Total liabilities & shareholders' equity $175,558 $173,835
- -----------------------------------------------------------------------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
As part of a continuing effort to decrease working capital requirements, the
Company initiated a program in 1994 to identify additional opportunities to
reduce working capital. To date, the Company has been successful in
significantly reducing its inventory requirements by: (i) eliminating poor
performing product styles; (ii) reducing the range of sizes and eliminating
duplication of its products; (iii) reducing inventory at Company-operated
stores; (iv) reducing inventory at the Company's Jefferson City distribution
center by redesigning current processes and systems; (v) expanding supplier
partnering programs to reduce lead times and improve quality of raw materials;
and (vi) redesigning management incentives to emphasize working capital
improvements. Under this program, inventory was reduced $27,357 during the
1995 fiscal year. During the three months ended June 29, 1996, the Company
reduced inventory by
21
<PAGE> 22
$4,660, following a reduction of $11,064 during the three months ended March
30, 1996 primarily due to the sale of the assets of the Hy-Test division. The
Company intends to continue to implement its inventory reduction initiatives.
Working capital at June 29, 1996 was $104,452, as compared to $111,922 at
December 30, 1995. The decrease is primarily due to the inventory reduction
during the First Half 1996, the sale of assets of the Hy-Test division and the
use of a portion of the cash proceeds to reduce to zero the $17.6 million of
outstanding borrowings under the Company's bank credit facility as of the sale
date. Cash interest payments totaled $4,918 during First Half 1996, and cash
income tax payments were $934 during First Half 1996.
FINANCING ARRANGEMENTS
Credit facility borrowings may be made from time to time to finance future
liquidity requirements, including seasonal working capital requirements. The
credit facility provides for borrowings of up to $75,000 based on a borrowing
base formula reflecting eligible accounts receivable and inventory and
includes, as part of and not in addition to the $75,000 credit limit, a
subfacility for the issuance of up to an aggregate of $60,000 in letters of
credit for issuance to Florsheim suppliers in connection with the importation
of foreign goods and for other corporate purposes and foreign currency hedging
obligations. As of June 29, 1996, the Company's borrowing base was
approximately $30,900, outstanding letters of credit were $2,601, and there
were no outstanding borrowings under the credit facility. The borrowing base
was reduced by approximately $11 million due to the sale of the assets of
Hy-Test. There were $224 of outstanding borrowings under a line of credit for
a foreign subsidiary as of June 29, 1996.
On March 22, 1996, the Company received an amendment to its credit facility
agreement allowing it to purchase on the open market (and retire) Senior Notes
using up to $15,000 of proceeds from the credit facility. Such repurchases, if
executed, will enable the Company to reduce its interest expense by replacing a
portion of the Senior Notes with lower cost debt from the credit facility.
However, the amount of availability under the credit facility to meet working
capital and other borrowing needs is reduced by the amount borrowed for the
purpose of purchasing Senior Notes, and the term of the credit facility is less
than the maturity date of the Senior Notes. As of June 29, 1996, the Company
had made no purchases of Senior Notes under the amendment. Florsheim believes
that, if repurchases of Senior Notes are made, available borrowings under the
credit facility, together with cash generated from operations, will be adequate
to meet debt service, capital expenditures, and other liquidity requirements
for the foreseeable future.
SEASONALITY OF BUSINESS
Typically, the Company's net sales are somewhat seasonal with slightly greater
net sales occurring in the fourth quarter of each fiscal year.
22
<PAGE> 23
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders, held on May 15, 1996, stockholders
voted upon the following matters:
(a) Election of 11 directors. The number of votes cast for and
withheld for each individual are as follows:
<TABLE>
<CAPTION>
Name For Withheld
---- --- --------
<S> <C> <C>
Bernard Attal 7,990,872 32,224
Charles J. Campbell 8,000,692 22,404
Robert H. Falk 8,000,674 22,422
Michael S. Gross 8,000,569 22,527
John J. Hannan 8,000,618 22,478
Joshua J. Harris 7,990,486 32,610
John H. Kissick 8,000,624 22,472
Richard B. Loynd 8,000,421 22,675
John Madden 7,999,584 23,512
Ronald J. Mueller 8,000,579 22,517
Michael D. Weiner 8,000,618 22,478
</TABLE>
(b) Proposal to approve the adoption of 1994 Stock Option Plan,
as amended and restated
<TABLE>
<S> <C>
Affirmative votes 6,917,283
Negative votes 84,528
Abstentions 10,525
Broker non votes 1,010,760
</TABLE>
(c) Proposal to approve the adoption of Charles J. Campbell Stock
Option Plan, as amended and restated
<TABLE>
<S> <C>
Affirmative votes 7,755,569
Negative votes 43,267
Abstentions 10,076
Broker non votes 214,184
</TABLE>
(d) Proposal to ratify the selection of KPMG Peat Marwick as
independent auditors for the fiscal year ending December 28, 1996
<TABLE>
<S> <C>
Affirmative votes 8,020,932
Negative votes 1,207
Abstentions 957
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this
report:
10.1 1994 Stock Option Plan, as amended and restated as of
March 15, 1996 (incorporated by reference to Exhibit 10.1,
as filed with the Company's Registration Statement on Form
S-8 No. 333-6353)).
10.2 Charles J. Campbell Stock Option Plan, as amended and
restated as of March 15, 1996 (incorporated by reference to
Exhibit 10.2, as filed with the Company's Registration
Statement on Form S-8 (No. 333-6353)).
11. Statement re Computation of Net Earnings Per Common Share.
(b) A Form 8-K was filed on April 3, 1996 with regards to the
sale of the assets of the Hy-Test division to Wolverine World
Wide, Inc.
23
<PAGE> 24
SIGNATURE
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.
THE FLORSHEIM SHOE COMPANY
(Registrant)
By Larry J. Svoboda
---------------------------
Larry J. Svoboda
Vice-President, Finance,
Chief Financial Officer and
Secretary
Date: August 2, 1996
24
<PAGE> 1
THE FLORSHEIM SHOE COMPANY EXHIBIT 11
STATEMENT RE COMPUTATION OF NET EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
July 1, 1995 June 29, 1996
------------ -------------
<S> <C> <C>
Weighted average common shares during the period 8,346,051 8,346,051
Common shares issuable on exercise of stock options 68,431(1) - (2)
------------ -------------
Weighted average common and common equivalent shares
outstanding 8,414,482 8,346,051
============ =============
</TABLE>
(1) Includes common stock options, the exercise of which would result
in dilution of net earnings per share. If the average common stock
price was higher than the common stock option exercise price during the
period, common stock options were considered as exercised and the
proceeds assumed to be used to purchase common stock at the average
common stock market price.
(2) Common stock options were not included since the exercise of
which would have had an antidilutive effect on the net loss per share.
25
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000928908
<NAME> THE FLORSHEIM SHOE CO.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-31-1996
<PERIOD-END> JUN-29-1996
<EXCHANGE-RATE> 1
<CASH> 3,504
<SECURITIES> 16,962
<RECEIVABLES> 25,947
<ALLOWANCES> 1,963
<INVENTORY> 68,766
<CURRENT-ASSETS> 130,556
<PP&E> 34,297
<DEPRECIATION> 14,736
<TOTAL-ASSETS> 173,835
<CURRENT-LIABILITIES> 26,104
<BONDS> 69,450
<COMMON> 8,346
0
0
<OTHER-SE> 46,700
<TOTAL-LIABILITY-AND-EQUITY> 173,835
<SALES> 58,958
<TOTAL-REVENUES> 58,958
<CGS> 31,059
<TOTAL-COSTS> 26,005
<OTHER-EXPENSES> (60)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,397
<INCOME-PRETAX> (443)
<INCOME-TAX> (159)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (284)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> 0
</TABLE>
