<PAGE> 1
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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 July 1, 2000
[ ] 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 1-13474
FLORSHEIM GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3520923
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
200 North LaSalle Street, Chicago, Illinois 60601-1014
-------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 458-2500
-------------
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 CORPORATE ISSUERS:
Number of shares outstanding of each of the issuer's classes of common stock as
of August 1, 2000.
8,483,651 Shares Common Stock, without par value
================================================================================
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet:
January 1, 2000 and July 1, 2000
Condensed Consolidated Statement of Operations and Comprehensive
Earnings:
Three Months Ended July 3, 1999 and July 1, 2000
Six Months Ended July 3, 1999 and July 1, 2000
Condensed Consolidated Statement of Cash Flows:
Six Months Ended July 3, 1999 and July 1, 2000
Notes to Condensed Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
2
<PAGE> 3
FLORSHEIM GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
January 1, July 1,
2000 2000
---------- ---------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,675 $ 4,119
Accounts receivable, net 30,163 27,446
Inventories 70,964 68,765
Other current assets 11,082 11,470
--------- ---------
Total current assets 117,884 111,800
Property, plant and equipment, net 32,525 30,962
Deferred income taxes 16,623 19,643
Other assets 30,320 32,413
--------- ---------
Total assets $ 197,352 $ 194,818
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 23,767 $ 16,500
Accounts payable and accrued expenses 24,842 26,091
--------- ---------
Total current liabilities 48,609 42,591
Bank credit facility 65,000 73,748
Other long-term debt 18,412 18,412
Other long-term liabilities 20,683 20,655
--------- ---------
Total liabilities 152,704 155,406
Shareholders' equity:
Common stock 8,484 8,484
Paid in capital 50,644 50,644
Accumulated comprehensive loss-
Cumulative translation adjustment (2,760) (3,132)
Accumulated deficit (11,720) (16,584)
--------- ---------
Total shareholders' equity 44,648 39,412
--------- ---------
Total liabilities and shareholders' equity $ 197,352 $ 194,818
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
FLORSHEIM GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE EARNINGS
(Unaudited)
(In thousands, except per share data)
Three months Three months
ended ended
July 3, 1999 July 1, 2000
------------ ------------
Net sales $ 62,544 $ 51,560
Cost of sales 32,797 27,145
-------- --------
Gross profit 29,747 24,415
Selling, general and administrative expenses 27,099 23,427
Non-recurring expenses 1,100 1,976
-------- --------
Earnings (loss) from operations 1,548 (988)
Interest expense, net 2,430 3,166
Other (income) expense, net 23 (436)
-------- --------
Loss before income taxes (905) (3,718)
Income tax benefit (318) (1,331)
-------- --------
Net loss (587) (2,387)
Other comprehensive earnings (loss) -
Foreign currency translation adjustment 181 (60)
-------- --------
Comprehensive loss $ (406) $ (2,447)
======== ========
Loss per share:
Basic $ (0.07) $ (0.28)
======== ========
Diluted $ (0.07) $ (0.28)
======== ========
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
FLORSHEIM GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE EARNINGS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six months Six months
ended ended
July 3, 1999 July 1, 2000
------------ ------------
<S> <C> <C>
Net sales $ 126,069 $ 107,781
Cost of sales 66,199 59,355
--------- ---------
Gross profit 59,870 48,426
Selling, general and administrative expenses 53,273 47,897
Non-recurring expenses 1,100 2,899
--------- ---------
Earnings (loss) from operations 5,497 (2,370)
Interest expense, net 4,827 6,190
Other (income) expense, net 49 (1,007)
--------- ---------
Earnings (loss) before income taxes 621 (7,553)
Income tax expense (benefit) 229 (2,689)
--------- ---------
Net earnings (loss) 392 (4,864)
Other comprehensive earnings (loss)-
Foreign currency translation adjustment 43 (372)
--------- ---------
Comprehensive earnings (loss) $ 435 $ (5,236)
========= =========
Earnings (loss) per share:
Basic $ 0.05 $ (0.57)
========= =========
Diluted $ 0.05 $ (0.57)
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
FLORSHEIM GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six months Six months
ended ended
July 3, July 1,
1999 2000
--------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 392 $(4,864)
Adjustments to reconcile net earnings (loss) to
net cash used in operating activities:
Gain on disposal of assets (380) (619)
Depreciation and amortization 3,153 3,596
Deferred income taxes (35) (2,708)
Noncash interest expense 216 548
(Increase) decrease in receivables (3,239) 3,427
(Increase) decrease in inventories (469) 2,199
Increase in prepaid expenses and other assets (1,863) (3,651)
Decrease in accounts payable and
other accrued expenses (1,414) (1,151)
Decrease in other long-term liabilities (67) (28)
------- -------
Net cash used in operating activities (3,706) (3,251)
------- -------
Cash flows from investing activities:
Proceeds from the disposal of assets 380 691
Additions to property, plant and equipment (2,807) (477)
------- -------
Net cash (used in) provided by investing activities (2,427) 214
------- -------
Cash flows from financing activities:
Net borrowing under (reduction of ) revolving credit facility 7,000 (1,623)
Increase in other long-term debt -- 3,104
------- -------
Net cash provided by financing activities 7,000 1,481
------- -------
Net increase (decrease) in cash and cash equivalents 867 (1,556)
Cash and cash equivalents at beginning of period 6,931 5,675
------- -------
Cash and cash equivalents at end of period $ 7,798 $ 4,119
======= =======
Supplemental disclosure:
Cash payments for income taxes, net $ 347 $ 541
Cash payments for interest $ 4,537 $ 5,616
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 7
FLORSHEIM GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 1, 2000
(Unaudited)
(Dollars in thousands)
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Florsheim Group Inc. ("Florsheim" or the "Company") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, except
as otherwise disclosed, consisting of normal recurring adjustments,
considered necessary for a fair presentation have been included. Operating
results for the three month and six month periods ended July 1, 2000 are not
necessarily indicative of the results that may be expected for the year
ending December 30, 2000.
The balance sheet at January 1, 2000 has been derived from the audited
consolidated financial statements at that date, but does not include all of
the information and notes required by generally accepted accounting
principles for complete financial statements.
For further information, refer to the consolidated financial statements and
notes thereto included in the Company's annual report on Form 10-K for the
fiscal year ended January 1, 2000.
(2) INVENTORIES
Inventories are summarized as follows:
January 3, July 1,
2000 2000
------------- -------------
Retail merchandise $ 34,329 $ 34,883
Finished products 32,682 32,880
Raw materials 3,953 1,002
------------- -------------
$ 70,964 $ 68,765
============= =============
(3) LONG TERM DEBT
In May 2000, the Company amended its bank credit facility, resulting in a
waiver of the financial covenant related to the EBITDA to interest expense
ratio for the quarter ended April 1, 2000. In addition, the amendment reset
this covenant and established new financial covenants commencing with the
quarter ending July 1, 2000. The new covenants include additional
requirements related to the ratios of senior debt to EBITDA and total
7
<PAGE> 8
FLORSHEIM GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 1, 2000
(Unaudited)
(Dollars in thousands)
debt to EBITDA. The Company was in compliance with these financial covenants
at July 1, 2000.
(4) NON-RECURRING EXPENSES
The Company recorded a $1,976 pretax charge in the quarter ended July 1,
2000. The charge consisted of severance costs for approximately 18 people,
located primarily at the Company's corporate headquarters and a provision of
$700 for customer deductions taken against prior periods accounts
receivable. In addition, the Company recorded a $923 pretax charge in the
quarter ended April 1, 2000. The charge included $627 for costs associated
with the downsizing of the Company's corporate headquarters space, including
the write-off of certain leasehold improvements, lease termination costs and
moving expenses. Of these costs, $310 were non-cash. The charge also
included $296 for severance costs for approximately 20 people located
primarily at the Company's corporate headquarters.
The following table summarizes the costs reflected in the Condensed
Consolidated Financial Statements as of and for the six months ended July 1,
2000:
<TABLE>
<CAPTION>
Accrual Amounts Accrual
Balance at Additional Charged Balance at
January 1, 2000 Provision to Accrual July 1, 2000
--------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Resignation/Strategic Study
Legal and professional fees $ 254 $ -- $ (87) 167
Employee related expenses 365 -- (224) 141
------- ------- ------- -------
619 -- (311) 308
------- ------- ------- -------
Cape Girardeau Closing
Inventory write-offs 610 155 (460) 305
Plant and equipment costs 437 (250) (107) 80
Employee related expenses 566 95 (572) 89
------- ------- ------- -------
1,613 -- (1,139) 474
------- ------- ------- -------
Facility Downsizing/Other
Inventory write-offs 300 -- (149) 151
Receivables allowance 365 700 (78) 987
Facilities charges 276 627 (752) 151
Employee related expenses 195 1,572 (384) 1,383
------- ------- ------- -------
1,136 2,899 (1,363) 2,672
------- ------- ------- -------
Total $ 3,368 $ 2,899 $(2,813) $ 3,454
======= ======= ======= =======
</TABLE>
8
<PAGE> 9
FLORSHEIM GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 1, 2000
(Unaudited)
(Dollars in thousands)
(5) EARNINGS PER SHARE
The Company presents basic and diluted earnings per share. Basic earnings
per share excludes dilution and is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised. Basic and diluted earnings per share do
not include securities in instances where they would be antidilutive.
The following table provides a reconciliation of the weighted average shares
outstanding used in calculating basic and diluted earnings per share (in
000's):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ --------------------
July 3, July 1, July 3, July 1,
1999 2000 1999 2000
------- ------- -------- ---------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding - basic 8,454 8,484 8,454 8,484
Assumed exercise of stock options -- -- 59 --
----- ----- ----- -----
Weighted average shares
outstanding - diluted 8,454 8,484 8,513 8,484
===== ===== ===== =====
</TABLE>
9
<PAGE> 10
FLORSHEIM GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 1, 2000
(Unaudited)
(Dollars in thousands)
(6) BUSINESS SEGMENT INFORMATION
Operating segment information is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- ----------------------
July 3, July 1, July 3, July 1,
1999 2000 1999 2000
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net Sales
U.S. Wholesale $ 25,263 $ 19,015 $ 51,870 $ 43,689
U.S. Retail 25,971 22,329 50,983 43,734
International 11,310 10,216 23,216 20,358
--------- --------- --------- ---------
$ 62,544 $ 51,560 $ 126,069 $ 107,781
========= ========= ========= =========
Earnings (Loss) from Operations
U.S. Wholesale $ 2,067 (1,161) 5,908 112
U.S. Retail (1,136) (1,500) (1,791) (4,912)
International 617 1,673 1,380 2,430
--------- --------- --------- ---------
$ 1,548 $ (988) $ 5,497 $ (2,370)
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
January 1, July 1,
2000 2000
------------ ---------
<S> <C> <C>
Total Assets
U.S. Wholesale $ 105,956 $ 108,234
U.S. Retail 69,112 64,221
International 22,284 22,363
--------- ---------
$ 197,352 $ 194,818
========= =========
</TABLE>
U.S. Wholesale includes certain corporate expenses and assets which are not
charged to other reportable segments. The U. S. Wholesale segment includes
$2,899 of non-recurring expenses in the six months ended July 1, 2000, of which
$1,976 were recorded in the second quarter and $923 in the first quarter. The
expenses relate to severance, downsizing and a provision for customer deductions
taken against prior periods accounts receivable. Comparatively, the periods
ended July 3, 1999 include $1,100 of non-recurring expenses recorded in the
second quarter of 1999 related to the resignation of former CEO and the
evaluation of strategic alternatives.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JULY 1, 2000 COMPARED TO THE THREE MONTHS ENDED JULY 3, 1999
Net sales for the three months ended July 1, 2000 were $51.6 million, down $11.0
million, or 17.6%, as compared to the three months ended July 3, 1999. U.S.
Wholesale sales were $19.0 million in 2000 compared to $25.3 million in 1999,
with all channels of distribution showing declines. Orders were down
approximately $13.7 million or 43% in the second quarter of 2000 compared to the
1999 period, reflecting the weakness in the footwear retail market. Net sales of
U.S. Wholesale's Golf products were $2.2 million below the second quarter of
1999 due to uncertainty in the market place regarding the potential sale of the
business. U.S. Retail net sales decreased $3.6 million, or 14.0% to $22.3
million, primarily as a result of store closings in the second half of 1999, but
also due to weakness in the retail market for footwear. U.S. Specialty Stores
same store sales decreased 1.7% versus the comparable 1999 period. International
sales decreased $1.1 million to $10.2 million, due primarily to lower sales in
Canada, and the impact of currency rates in Australia.
Gross profit for the second quarter 2000 was $24.4 million or 47.4% of net
sales, as compared to 47.6% of net sales for the second quarter 1999. Gross
profit margin was negatively impacted by the lower sales volume in each of the
businesses and the sale of close out products, partially offset by higher
earnings by the Company's India joint venture.
Selling, general and administrative expenses for the second quarter 2000 were
$23.4 million, a decrease of $3.7 million from the second quarter 1999. Selling,
general and administrative expenses for the second quarter 2000 were 45.4% of
net sales, an increase from 43.3% of net sales for the second quarter of 1999.
The decrease in expense was the result of cost reduction programs initiated in
the fourth quarter of 1999 affecting marketing, personnel and occupancy costs,
partially offset by increased depreciation expense and costs associated with the
information technology function. The cost reductions were not sufficient to
offset the effect of the reduced sales volume.
Non-recurring expenses of $2.0 million were recorded in the second quarter of
2000. The charge consisted of $1.3 million related to severance and related
expenses for approximately 18 people at the Company's corporate headquarters and
$0.7 million as provision for customer deductions taken against prior
periods accounts receivable. The second quarter of 1999 included $1.1 million of
non-recurring expenses for costs associated with the resignation of the
Company's former Chief Executive Officer and costs related to an evaluation of
strategic alternatives by the Company's financial advisor.
Interest expense for the second quarter 2000 was $3.2 million as compared to the
second quarter 1999 amount of $2.4 million. This increase is due to increased
borrowings during the second quarter 2000 as compared to the second quarter 1999
and an increase in the weighted average interest rate under the Company's new
credit facility.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Other income for the three months ended July 1, 2000 includes income of $0.5
million related to a refund of real estate taxes for the period 1991 to 1993.
SIX MONTHS ENDED JULY 1, 2000 COMPARED TO SIX MONTHS ENDED JULY 3, 1999
Net sales for the six months ended July 1, 2000 were $107.8 million, down $18.3
million, or 14.5%, as compared to the six months ended July 3, 1999. U.S.
Wholesale net sales decreased $8.2 million, or 15.8%. $6.2 million of the
decrease occurred in the second quarter, and is attributed to the weakness in
orders during the quarter, weakness in the retail footwear market and decline in
the Company's Golf product line as a result of uncertainty regarding the
potential sale of the business. Results for the first quarter were negatively
impacted by inventory problems related to the implementation of the Company's
new wholesale computer software system in 1999. The system problems resulted in
reduced shipments to wholesale customers as well as the Company's U.S. Retail
business during the first two months of 2000, as the Company was unable to
satisfy customer orders. The inventory position was much improved by the end of
March 2000. U.S. Retail net sales decreased $7.2 million, or 14.2%, as a result
of store closings and the inventory problems at U.S. Wholesale. Weakness in the
retail footwear market also affected sales in the first six months of 2000, with
U.S. Specialty stores reporting a decline in same store sales of 1.5%.
International net sales were $23.2 million, down $2.9 million from the 1999
period. All units in International reported lower sales, with the largest
decline in Canada, where there was a bankruptcy by a large customer in the
second half of 1999.
Gross profit for the six months ended July 1, 2000 was $48.4 million or 45.0% of
net sales, as compared to $59.9 million or 47.5% of net sales for the second
quarter 1999. The decline was primarily due to the reduced sales volume. In
addition to the reduced volume, margin rates were lower in U.S. Wholesale, where
sales of the Golf product line declined from the prior year and U.S. Retail,
where promotions reduced the margin rate. Gross margin rates also continue to
decline as a greater percentage of the Company's revenues shift to U.S.
Wholesale versus U.S. Retail, which typically carries higher margins.
Selling, general and administrative expenses for the six months ended July 1,
2000 were $47.9 million, a decrease of $5.4 million, or 10.1%, compared to the
1999 period. Selling, general and administrative expenses for 2000 were 44.4% of
net sales, an increase from 42.3% of net sales for 1999. The decrease in expense
was the result of cost reduction programs initiated in the fourth quarter of
1999 affecting marketing, personnel and occupancy costs, partially offset by
increased depreciation expense and costs associated with the information
technology function. The cost reductions were not sufficient to offset the
effect of the reduced sales volume resulting in increased cost as a percent to
sales.
Non-recurring expenses of $2.9 million were recorded in the six months ended
July 1, 2000. The charge included $1.6 million related to severance, $0.6
million related to the downsizing of the Company's corporate headquarters space
and $0.7 million as provision for customer deductions taken against prior
periods accounts receivable. The 1999 period included $1.1 million of non-
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
recurring expenses for costs associated with the resignation of the Company's
former Chief Executive Officer and costs related to an evaluation of strategic
alternatives by the Company's financial advisor.
Interest expense for the six months ended July 1, 2000 was $6.2 million, as
compared to $4.8 million in 1999. This increase is due to increased borrowings
and an increase in the weighted average interest rate under the Company's
current credit facility.
Other income for the six months ended July 1, 2000 includes $0.6 million
related to the gain from the sale of the Company's Cape Girardeau, Missouri,
manufacturing facility, which was closed in December 1999. The sale of the
facility was completed in January 2000. In addition, the company recorded income
of $0.5 million related to a refund of real estate taxes for the period 1991 to
1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash needs are primarily for working capital to support its
operations and its inventory requirements, and cash for interest payments on
borrowings under debt facilities. The Company's ability to fund its activities
is directly dependent on sales, its ability to effectively manage its inventory
and working capital needs and its ability to obtain sufficient external
financing. In the three months ended July 1, 2000, the Company continued to
reduce its overall corporate administrative expenses.
Working capital at July 1, 2000 was $69.2 million, as compared to $69.3 million
at January 1, 2000. Net cash used in operations for the six months ended July 1,
2000 was $3.3 million, as compared to $3.7 million of cash used in operations
during the six months ended July 3, 1999. The improvement reflects efforts to
reduce levels of inventory and accounts receivable, which was offset by the net
loss during six months ended July 1, 2000.
Net cash from investing activities during the six months ended July 1, 2000 was
$0.2 million, as compared to $2.4 million of cash used during the six months
ended July 3, 1999. Spending related to the Company's information technology
initiatives was reduced from the prior year as the significant phases of the SAP
implementation have been completed as well as reduced capital spending at U.S.
Retail.
Net cash provided by financing activities was $1.5 million for the six months
ended July 1, 2000, as compared to $7.0 million for the six months ended July 3,
1999. The $1.5 million consisted of a $1.6 million reduction of net borrowings
under the revolving credit facility which was offset by $3.1 million of
additional borrowings under the previously announced credit facility entered
into by the company's Australian subsidiary in January 2000.
In May 2000, the Company amended its bank credit facility, resulting in a waiver
of the financial covenant related to the ratio of EBITDA to interest expense for
the quarter ended April 1, 2000. In addition, the amendment reset this covenant
and established new financial covenants commencing with the quarter ended July
1, 2000. The new covenants include additional requirements related to the ratios
of senior debt to EBITDA and total debt to EBITDA. The Company was in compliance
with the financial covenants at July 1, 2000.
13
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RECENT ACCOUNT POLICIES
Statement of Financial Accounting Standards No. 133, "Accounting Instruments and
Hedging Activities" ("SFAS No. 133") requires companies to recognize all
derivative instruments as assets and liabilities in the balance sheet and to
measure those instruments at fair value. SFAS No. 133 initially required
adoption by January 1, 2000. However, Statement of Financial Standards No. 137
"Accounting for Derivative Financial Instruments and Hedging Activities -
Deferral of Effective Date of SFAS No. 133 " issued in June 1999 and Statement
of Financial Standards No. 138 "Accounting for Certain Derivative Instruments
and Hedging Activities - an amendment to SFAS No. 133" issued in June 2000
requires adoption in fiscal quarters beginning after June 15, 2000. The Company
anticipates that the new standards will have no material impact on the results
of operations and financial condition.
FORWARD LOOKING STATEMENTS
When used in this discussion, the words "believes" and "expects" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, over which the Company has no
control, which could cause actual results to differ materially from those
projected. Readers are cautioned not to place reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligations to republish revised forward-looking statements to reflect events or
circumstances after the date thereof or to reflect the occurrence of
unanticipated events. Readers are also urged to carefully review and consider
the various disclosures made by the Company in this report, as well as the
Company's periodic reports with the Securities Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There have been no material changes in the Company's market risk during the six
month period ended July 1, 2000. For additional information, refer to Item 7A in
the Company's Annual Report on form 10-K for the year ended January 1, 2000.
14
<PAGE> 15
PART II OTHER INFORMATION
Item 4. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Exhibit
Number Description
------ -----------
27 Financial Data Schedule
(b) Form 8-K was not required to be filed during the quarter ended July 1,
2000.
15
<PAGE> 16
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.
FLORSHEIM GROUP INC.
(Registrant)
By /s/ Thomas P. Polke
----------------------------
Thomas P. Polke
Executive Vice-President,
Chief Financial Officer
Date: August 15, 2000
16
