UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FIRST QUARTER ENDED JANUARY 29, 2000
Commission File Number 0-934
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B.B. WALKER COMPANY
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(Exact name of registrant as specified in its charter)
North Carolina 56-0581797
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
414 East Dixie Drive, Asheboro, NC 27203
- ----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (336) 625-1380
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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
--- ---
On March 6, 2000, 1,745,954 shares of the Registrant's voting common stock
with a par value of $1.00 per share were outstanding.
Cover
B.B. WALKER COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) (Audited)
January 29, October 30,
Assets 2000 1999
------ ----------- -----------
Cash $ 1 $ 1
Accounts receivable, less allowance
for doubtful accounts of $576 in
2000 and $525 in 1999 4,048 6,471
Inventories 8,443 9,210
Prepaid expenses 481 471
Property held for sale 803 803
Deferred income tax benefit, current 1,039 1,039
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Total current assets 14,815 17,995
Property, plant and equipment, net of
accumulated depreciation and amortization
of $6,717 in 2000 and $6,690 in 1999 1,427 1,467
Other assets 130 130
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$ 16,372 $ 19,592
======= =======
(Continued)
1
B.B. WALKER COMPANY
CONSOLIDATED BALANCE SHEETS, Continued
(In thousands)
(Unaudited) (Audited)
January 29, October 30,
Liabilities and Shareholders' Equity 2000 1999
------------------------------------ ----------- -----------
Borrowings under finance agreement $ 5,251 $ 7,113
Current portion of long-term obligations 2,600 1,118
Accounts payable, trade 3,008 3,518
Accrued salaries, wages and bonuses 182 368
Other accounts payable and accrued liabilities 517 471
Income taxes payable 182 182
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Total current liabilities 11,740 12,770
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Long-term obligations 1,128 2,726
Minority interests in consolidated subsidiary 31 31
Shareholders' equity:
7% cumulative preferred stock, $100 par value,
1,150 shares authorized, 828 shares issued
and outstanding in 2000 and 1999 83 83
Common stock, $1 par value, 6,000,000 shares
authorized, 1,745,954 shares in 2000 and
1,745,954 in 1999 issued and outstanding 1,746 1,746
Capital in excess of par value 2,712 2,712
Retained earnings (deficit) (997) (400)
Shareholders' loans (71) (76)
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Total shareholders' equity 3,473 4,065
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$ 16,372 $ 19,592
======= =======
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
2
B.B. WALKER COMPANY
CONSOLIDATED STATEMENTS OF LOSS
(In thousands, except per share data)
(Unaudited)
First Quarter
Ended
------------------------
January 29, January 30,
2000 1999
----------- -----------
Net sales $ 4,975 $ 6,123
Interest and other income 17 117
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Total revenues 4,992 6,240
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Cost of products sold 3,741 4,511
Selling and administrative expenses 1,562 1,677
Depreciation and amortization 40 47
Interest expense 244 233
------- -------
Total costs and expenses 5,587 6,468
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Loss before income taxes and
minority interest (595) (228)
Benefit from income taxes - -
Minority interest (1) (1)
------- -------
Net loss (596) (229)
Retained earnings, beginning of quarter (400) 198
Dividends on preferred stock (1) (1)
------- -------
Retained earnings, end of quarter $ (997) $ (32)
======= =======
Net loss per share:
Basic $ (.34) $ (.13)
======= =======
Diluted $ (.34) $ (.13)
======= =======
Weighted average common shares outstanding:
Basic 1,746 1,722
======= =======
Diluted 1,746 1,722
======= =======
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
3
B.B. WALKER COMPANY
CONSOLIDATED CASH FLOWS STATEMENTS
(In thousands)
(Unaudited)
First Quarter
Ended
------------------------
January 29, January 30,
2000 1999
----------- -----------
Cash Flows From Operating Activities:
Net loss $ (596) $ (229)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 40 47
Gain on sale of fixed assets (13) -
(Increase) decrease in:
Accounts receivable, net 2,423 1,559
Inventories 767 564
Prepaid expenses (10) 82
Other assets - (5)
Increase (decrease) in:
Accounts payable, trade (510) (640)
Accrued salaries, wages and bonuses (186) (191)
Other accounts payable and accrued liabilities 46 75
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Net cash provided by operating activities 1,961 1,262
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Cash Flows From Investing Activities:
Capital expenditures - (31)
Proceeds from disposal of fixed assets 13 -
Purchase of property held for sale - -
------- -------
Net cash used for
investing activities 13 (31)
------- -------
Cash Flows From Financing Activities:
Net payments under finance agreement (1,862) (1,145)
Proceeds from issuance of long-term obligations 25 10
Payment on long-term obligations (141) (103)
Proceeds from issuance of common stock - 4
Loans to shareholders, net of repayments 5 4
Dividends paid on 7% cumulative preferred stock (1) (1)
------- -------
Net cash used for financing activities (1,974) (1,231)
------- -------
Net change in cash - -
Cash at beginning of year 1 1
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Cash at end of quarter $ 1 $ 1
======= =======
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
4
B.B. WALKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
- ------
A summary of the Company's significant accounting policies is presented on
page 9 of its 1999 Annual Report to Shareholders. Users of financial
information presented for interim periods are encouraged to refer to the
footnotes contained in the Annual Report to Shareholders when reviewing interim
financial results.
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary for a fair presentation of the
financial results of B.B. Walker Company and Subsidiary (the "Company") for the
interim periods included. All such adjustments are of a normal recurring
nature. The results of operations for the interim periods shown in this report
are not necessarily indicative of the results to be expected for the fiscal
year.
The Company's operations are reported on a fifty-two, fifty-three week fiscal
year that ends on the Saturday closest to October 31. The results for the
first quarters ended January 29, 2000 and January 30, 1999 each include
thirteen weeks of operations.
Note 2
- ------
Basic earnings per share (EPS) is computed by dividing income (loss) available
to common shareholders by the weighted-average number of common shares out-
standing for the year. In arriving at income (loss) available to common
shareholders, preferred stock dividends of $1,449 were deducted in each quarter
presented. Diluted EPS reflects the potential dilution that could occur if
dilutive securities and other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the Company.
Note 3
- ------
Statement of Financial Accounting Standards ("FAS") No. 130, "Reporting
Comprehensive Income" requires that certain items such as foreign currency
translation adjustments, unrealized gains and losses on certain investments in
debt and equity securities, minimum pension liability adjustments, and unearned
compensation expense related to stock issuances to employees be presented as
separate components of stockholders' equity. FAS 130 defines these as items of
other comprehensive income and as such must be reported in a financial
statement that is displayed with the same prominence as other financial
statements. At January 30, 2000, the Company does not have any items of
comprehensive income to report.
5
B.B. WALKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Note 4
- ------
Long-term obligations consist of the following amounts (in thousands):
(Unaudited) (Audited)
January 29, October 30,
2000 1999
----------- -----------
Notes payable to banks $ 2,049 $ 2,160
Notes payable to governmental authorities 511 522
Promissory notes payable to shareholders 1,168 1,162
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3,728 3,844
Less portion payable within one year 2,600 1,118
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$ 1,128 $ 2,726
======= =======
Note 5
- ------
Inventories are composed of the following amounts (in thousands):
(Unaudited) (Audited)
January 29, October 30,
2000 1999
----------- -----------
Finished goods $ 5,691 $ 6,059
Work in process 504 544
Raw materials and supplies 2,248 2,607
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$ 8,443 $ 9,210
======= =======
Note 6
- ------
The Company's reportable segments are wholesale and retail sales. Whereas
wholesale sales are made to major chain wholesale stores, retail stores, and
governmental entities, retail sales are made directly to the public from the
Company's two retail stores in Asheboro, NC, and Lancaster, PA. The segments
are managed separately because each business unit requires different marketing
strategies. Segment information for the first quarters of 2000 and 1999 are
as follows:
WHOLESALE RETAIL TOTAL
--------------------------------------------
2000 (in 000s)
--------------------------------------------
Net sales $ 4,548 $ 427 $ 4,975
Cost of sales 3,490 251 3,741
Gross profit 1,058 176 1,234
Operating earnings (losses) (568) (28) (596)
Depreciation and amortization 40 - 40
--------------------------------------------
1999 (in 000s)
--------------------------------------------
Net sales $ 5,635 $ 488 $ 6,123
Cost of sales 4,225 286 4,511
Gross profit 1,410 202 1,612
Operating earnings (losses) (231) 2 (229)
Depreciation and amortization 47 - 47
Note 7
- ------
In February 2000, the Company entered into a contract to sell its manufacturing
facility in Asheboro, North Carolina, along with an adjacent piece of property.
6
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
- ---------------------
The following summarizes the results of operations for the Company for the
first quarter ended January 29, 2000 and January 30, 1999:
Three
Months Ended
-------------------------
January 29, January 30,
2000 1999
----------- -----------
Net sales 100.0% 100.0%
Cost of products sold 75.2% 73.6%
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Gross margin 24.8% 26.4%
Selling and administrative expenses 31.4% 27.4%
Depreciation and amortization .8% .8%
Interest expense 4.9% 3.8%
Interest and other income (.3%) (1.9%)
------- -------
Loss before income taxes
and minority interest (12.0%) (3.7%)
Benefit from income taxes - -
Minority interest - -
------- -------
Net loss (12.0%) (3.7%)
======= =======
FIRST QUARTER 2000 COMPARED TO FIRST QUARTER 1999
- -------------------------------------------------
Net Sales
- ---------
Net sales for the first quarter of 2000 were $4,975,000, or 18.5% lower than
net sales of $6,123,000 in the first quarter of 1999. The Company's sales
include sales of footwear manufactured and wholesaled by the Company and sales
from the Company's retail outlets. Footwear manufactured and wholesaled by
the Company, which includes branded, private label and institutional sales,
comprised 90.7% of net sales in the first quarter of 2000 and 91.3% of net
sales in the first quarter of 1999. The remaining 9.3% and 8.7% of net sales
in 2000 and 1999, respectively, were sales from the Company's retail outlets.
The decrease in net sales can be attributed to two factors. First, import
penetration of 95% into the U.S. footwear market has made it easier to enter
the work shoe market. This increase in low-priced imports has caused a
dramatic adverse effect on the Company's work/outdoor shipments. However,
due to an expected increased use by the Company of imports from Mexico in
the second quarter of 2000, the Company should start recovering some of the
ground lost in the work shoe market these past two years.
The second factor that hampered sales in the first quarter of 2000 was the
inclement winter weather during the final two weeks of January 2000. The third
storm, which brought 18 inches of snow on January 24, 2000, shut down our
North Carolina plant, warehouse, retail store, and offices during much of the
final week in January, which is historically the Company's busiest week of the
month. Most of those shipments spilled over into February to start off the
second quarter of the fiscal year. One promising result of this severe bad
weather is that the Company should experience increased orders from many of its
customers who liquidated much of their work/outdoor footwear inventory which
had not sold due to the relatively mild winters of the past several years.
7
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
Sales of the Company's branded footwear in the first quarter of 2000 were down
$515,000, or 13.2%, from 1999's first quarter because of the reasons discussed
above. Branded pairs shipped were down 14,681, or 19.9%, in the first quarter
while price per pair was up 8.3%. The slight decrease in price per pair
can be attributed to product mix. Nearly 80% of the Company's branded net
sales are coming from its western styles that carry a higher price per pair
than its work/outdoor styles.
Private label sales in the first quarter of 2000 were down $565,000, or 35.9%,
from the first quarter of 1999. The decrease can be attributed to weaker work/
outdoor private label business as discussed above. Pairs shipped were down
25,483, or 49.1%, while the price per pair was down 25.9%. The primary reason
for this decrease in price per pair is due to a significant private label order
which required only the finishing procedure by the Company in the first quarter
of 1999; therefore, the realized price per pair was lower than usual in the
first quarter of last year.
Sales to institutional customers in the first quarter of 2000 were down
$80,000, or 23.7%, from the first quarter of 1999. Much of this business is
solicited through a formal bidding process with governmental entities, and the
results of this division are impacted by the Company's success in bidding on
new business. Unfortunately, there is an increasing trend toward being
underbid by import suppliers on new institutional business.
Retail sales decreased $66,000, or 12.4%, from the first quarter of the prior
year. The two retail outlets, one in Asheboro, NC and one in Lancaster, PA,
continue to experience increased competition from major discount retailers
surrounding their locations.
Gross Margin
- ------------
The Company's gross margin as a percentage of sales was 24.8% for the first
three months of 2000 and 26.3% for the first three months of 1999. The
Company's 1.5% decrease in gross margin was due primarily to the effect of
January 2000's low gross margin of 22.2% in a sales month of only $1,174,000
(compared to $1,669,000 in January 1999). The Company's low gross margin
continues to be impacted by competitive pressure at the retail level that
requires the Company to remain competitive in the pricing and terms offered.
Selling and Administrative Expenses
- -----------------------------------
Selling and administrative expenses were $1,562,000 for the first quarter of
2000 as compared to $1,677,000 for the first quarter of 1999, a decrease of
$115,000, or 6.9%. This improvement is due to management's continuing
emphasis of controlling costs and improving operations in the selling and
administrative areas. One such cost-cutting measure was the consolidation
of job responsibilities which led to the elimination of five office positions
late in the fourth quarter of 1999.
8
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
Interest Expense
- ----------------
Interest expense in the first quarter of 2000 was $244,000, or $11,000 higher
than interest expense of $233,000 for the first quarter of 1999. This 4.7%
increase in interest expense for the three month period is attributable to a
0.75% increase in the interest rate plus a higher average balance on outstand-
ing loan advances under the revolving loan agreement in the first quarter due
to lower sales. Other long-term debt carried lower balances in 2000 when com-
pared to 1999, as the Company continued to amortize the debt according to each
issue's respective terms. Additional interest expense came from the Company's
short-term loan agreement with First National Bank and Trust on April 6, 1999
to finance adjacent land parcels.
Depreciation and Amortization
- -----------------------------
Depreciation and amortization in the first quarter of 2000 was $40,000, or
$7,000 less than 1999 expenses of $47,000. With minimal amounts invested in
fixed assets in recent years, depreciation charges on fixed assets that are
becoming fully depreciated are not being replaced, resulting in lower
depreciation expense.
Benefit From Income Taxes
- -------------------------
For the first quarter of both 2000 and 1999, the Company recorded no benefit
from income taxes. The Company evaluated the valuation allowance reserved
against its deferred income tax asset at the end of the first quarter and
determined that the net deferred income tax asset was appropriately recorded
at its net realizable value.
Net Income (Loss)
- -----------------
The Company reported a net loss of $596,000 in the first quarter of 2000 and
$229,000 in the first quarter of 1999. The $367,000 increase in net loss is
mostly attributable to the 18.5% decrease in net sales, especially the low
shipment month of January 2000 as discussed above. It should also be noted,
however, that the Company recognized miscellaneous income of $110,000 in the
first quarter of 1999 from a property transaction with a neighboring business.
9
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Historically, the Company has funded substantially all of its working capital
and capital expenditure requirements through borrowings under its finance
agreement and other indebtedness. The revolving finance agreement provides
flexibility to the Company as the availability of funds fluctuates with the
seasonal needs of the Company. Generally, the Company's working capital needs
are highest in the fourth fiscal quarter and lowest in the first fiscal
quarter. With its revolving finance agreement, the Company finances its
accounts receivable and inventories, paying interest at a variable rate (prime
plus 1.50%, or 10.0%, at January 29, 2000). The Company had outstanding
advances of $5,250,000 at January 29, 2000 and an additional $683,000
available under the agreement.
During the first quarter of 2000, the Company generated $1,961,000 of cash from
operations which was used to reduce the advances under the revolving finance
agreement by $1,862,000. The Company continues to rely on the revolving
finance agreement to provide working capital and management anticipates that
the revolving finance agreement will continue to provide the necessary
liquidity to fund its daily operations going forward.
Under the Company's financing agreement with the bank, the amount available to
be drawn is determined by a formula based on certain percentages of eligible
accounts receivable and inventories. The credit line available under the
agreement is a maximum of $8,000,000. In addition, the sublimit for inventory,
which is the maximum advance that can be taken against inventory under the
revolving credit agreement, is $4,000,000. The Company entered into amend-
ments to its credit agreement on December 30, 1999 and on January 26, 2000.
The former set the maturity date at December 31, 2000, whereas the latter
amended certain restrictive financial covenants retroactive to fiscal year
ending October 30, 1999 and for periods thereafter. As of January 29, 2000,
the Company was in compliance with all but one interim debt covenant which it
expects to satisfy by fiscal year-end 2000.
In addition to the revolving credit facility, the financing agreement also
provided a $3,000,000 term loan that was used to repay an existing mortgage
note payable to a bank that carried a balance of approximately $1,383,000.
The term loan bears interest at the bank's prime rate plus 1.50% (10.0% at
January 29, 2000).
All advances under the revolving credit facility and the term loan are secured
by all accounts receivable, inventories, machinery and equipment of the
Company. In addition, the bank has a first lien on the Asheboro land and
facilities and a subordinated lien on the Somerset facilities.
The Company made only minimal capital expenditures during the past five years.
The Company made significant upgrades to its equipment and facilities in 1993
and 1994. Because of cash flow considerations and restrictions under the
finance agreement, the Company has only been making capital expenditures to
maintain current levels of operations during the past four years. Funding for
capital expenditures, other than the acquisition of the Somerset, Pennsylvania
facility in July 1994, has primarily come from the available balance on the
financing agreement.
Net working capital, which consists primarily of accounts receivable and
inventories less current liabilities, was $4,030,000 at January 29, 2000 and
$5,225,000 at October 30, 1999. The ratio of current assets to current
liabilities decreased to 1.37 to 1 at January 29, 2000 compared to 1.41 to 1
at October 30, 1999. These calculations are based on special classification
by the bank of the current portion of one long-term debt instrument.
10
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
FINANCIAL CONDITION
- -------------------
Accounts Receivable
- -------------------
Accounts receivable were $4,048,000 at January 29, 2000 compared to $6,471,000
at October 30, 1999, a decrease of $2,423,000. Trade receivables are
historically at their highest point at the end of the fourth quarter because of
the heavy sales volume related to Christmas buying by retailers. This 37.4%
decrease in accounts receivable is also related to the 18.5% decrease in net
sales compared to last year's first quarter. There was also a very strong
collections effort in December 1999 since the balances of several large
accounts with special 90-day dating were due that month.
Inventories
- -----------
Inventories were $8,443,000 at January 29, 2000, a decrease of $767,000, or
8.3%, from the inventories held at October 30, 1999 of $9,210,000. Of the
decrease, approximately $368,000 is in finished goods, $359,000 is in raw
materials, and the remaining $40,000 is in work in process. The Company
continues to focus on improving turns in inventory and improving the efficiency
of raw material procurement.
Borrowings Under Finance Agreement
- ----------------------------------
The balance outstanding under the finance agreement was $5,251,000 at January
29, 2000 compared to $7,113,000 at October 30, 1999. The decrease can be
attributed to the cash applied against the outstanding balance from collections
of accounts receivable which were down $2,423,000 in the first quarter of 2000
and better management of inventories.
Potential Sale of Property
- --------------------------
In December 1999, the Company received an attractive offer to sell all of its
approximately 26 acres of real property in Asheboro, North Carolina. This land
is in one of the prime commercial sections of Randolph County. The Company
entered into a contract on February 4, 2000. Under this contract, the purchaser
has until August 2, 2000 to examine the suitability of the property for its
needs. At the end of this 180 day period, the purchaser may extend the
examination period for two additional 90 day periods. At the end of the
examination period, the contract may be terminated by the purchaser without
further obligation to the Company. Accordingly, there can be no assurances
that the sale of the Asheboro, North Carolina property will be consummated or,
if consummated, that such sale will occur in the Company's fiscal year 2000.
While there will be costs associated with relocating the Asheboro operations,
the Company has taken steps to limit the effects of these matters and does not
expect the relocation to have a material adverse effect on the operations of
the Company.
11
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
Readiness for Year 2000 Compliance
- ----------------------------------
The Company initiated a program to minimize the risk of potential dis-
ruption from the "Year 2000 ('Y2K') problem." This problem was the result of
computer programs having been written using two digits (rather than four) to
define the applicable year. Any information technology ("IT") systems having
time-sensitive software might recognize a date using "00" as the year 1900
rather than the year 2000, which could result in miscalculations and system
failures. The problem also extended to "non-IT" systems; that is, operating
and control systems that rely on embedded chip systems. In addition, like
every other business enterprise, the Company would be at risk from Y2K failures
on the part of its major business counterparts, including suppliers,
distributors, and manufacturers, as well as potential failures in public and
private infrastructure services, including electricity, water, gas,
transportation, and communications.
The Company began developing a plan in November 1997 to resolve the Y2K issues
that are reasonably within its control. These efforts were being coordinated
through the Company's data processing department and chaired by the information
systems programming manager ("ISPM"). With respect to the Company's Y2K
efforts, the ISPM reported periodically to the Company's president, who in turn
updated the Audit Committee of the Board of Directors.
In January 1998, the ISPM completed an identification of those IT systems which
would require detailed program changes to be Y2K compliant. An employee
programmer already familiar with the Company's computer system was assigned
full-time to modify those identified programs. Program changes and testing
were made in a test directory specifically created for the Y2K modifications
so that there are no conflicts with live data. When testing was
completed for a system, files were then converted, and modified programs were
copied to live directories on a weekend when no users were on the system. The
Company's timetable anticipated completion of all conversions, necessary
testing, and full implementation by November 30, 1999. As the Company was
able to meet its various conversion deadlines in a timely manner, it was deemed
unnecessary to develop contingency plans for any of the applications being
converted.
With regard to non-IT systems, the Company's phone and security systems were
both Y2K compliant prior to October 31, 1999. Major suppliers to the Company
had been contacted by questionnaire, and the Company had received confirmations
of either Y2K compliance or a timetable to be compliant from such suppliers.
The Company had also contacted its major customers by questionnaire to assess
their status with regard to the Y2K issue. No contingency plans were
considered necessary to be developed since all parties appeared to be Y2K
compliant by December 31, 1999.
12
B.B. WALKER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION, Continued
It is important to note that the description of the Company's efforts
necessarily involved estimates and projections with respect to activities re-
quired in the future. The required code changes, testing, and implementation
necessary to address the Y2K issue were expected to cost approximately
$115,000.
The Company completed it final Y2K system testing on December 10, 1999. When
January 1, 2000 passed, the Y2K costs had not exceeded the project budget of
$115,000. Now well into March 2000, the Company believes it has successfully
avoided any significant disruption from any Y2K issues relating to the new
century rollover. Therefore, no contingency plans appear to be necessary, but
the Company will continue to monitor all critical systems for the appearance
of delayed complications or disruptions, problems relating to the leap year,
and problems encountered through suppliers, customers, and third parties with
whom the Company deals. Although these and other unanticipated Y2K issues
could have an adverse effect on the results of operations or financial condi-
tion of the Company, it is not possible to anticipate the extent of impact
at this time.
Forward-Looking Statements
- --------------------------
The foregoing discussion contains some forward-looking statements about the
Company's financial condition and results of operations, which are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which reflect management's judgment only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements
to reflect events and circumstances that arise after the date hereof.
Factors that might cause actual results to differ materially from these
forward-looking statements include (1) the effects of general economic
conditions, (2) the impact of competitive products and pricing in the footwear
industry, (3) failure to achieve anticipated sales results, (4) management's
ability to accurately predict the effect of cost reductions, (5) management's
ability to accurately predict the adequacy of the Company's financing
arrangement to meet its working capital and capital expenditure requirements,
and (6) failure to consummate the sale of the Asheboro, North Carolina property.
13
Part II. OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Filed:
(27) Financial Data Schedule for the first quarter ended
January 29, 2000
(b) Reports on Form 8-K:
NONE.
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.
B.B. WALKER COMPANY
Date: March 10, 2000 KENT T. ANDERSON
----------------
Chairman of the Board, Chief
Executive Officer and President
Date: March 10, 2000 CAREY M. DURHAM
---------------
Vice President / Chief Financial Officer
14