UNITED STATES
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 DECEMBER 31, 1999.
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: 0-20850
HAGGAR CORP.
(Exact name of the registrant as specified in the charter)
NEVADA 75-2187001
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6113 LEMMON AVENUE
DALLAS, TEXAS 75209
(Address of principal executive offices)
TELEPHONE NUMBER (214) 352-8481
(Registrant's telephone number including area code)
Indicate by a 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 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 / /
As of February 14, 2000, there were 6,659,460 shares of the Registrant's
Common Stock outstanding.
HAGGAR CORP. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations
(Three months ended December 31, 1999 and 1998) 3
Consolidated Balance Sheets
(As of December 31, 1999 and September 30, 1999) 4
Consolidated Statements of Cash Flows
(Three months ended December 31, 1999 and 1998) 5
Notes to Consolidated Financial Statements 6-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-14
Part II. Other Information.
Item 6. Exhibits and Reports on Form 8-K 14
Signature 14
2
HAGGAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended
December 31,
-------------------------
1999 1998
---------- ----------
Net sales $ 98,682 $ 84,795
Cost of goods sold 64,381 55,139
----------- -----------
Gross profit 34,301 29,656
Selling, general and administrative expenses (32,954) (28,773)
Royalty income, net 44 341
----------- -----------
Operating income 1,391 1,224
Other income, net 344 356
Interest expense (799) (773)
------------ ------------
Income from operations before provision
for income taxes 936 807
Provision for income taxes 379 313
----------- -----------
Net income $ 557 $ 494
=========== ===========
Net income per share on a basic and diluted basis $ 0.08 $ 0.06
=========== ===========
Weighted average number of common shares
outstanding - Basic 7,081 7,716
=========== ===========
Weighted average number of common shares
and common share-equivalents outstanding - Diluted 7,136 7,732
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
3
HAGGAR CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31,
1999 September 30,
(Unaudited) 1999
------------ -------------
ASSETS
Current assets:
Cash and cash equivalents $ 13,546 $ 6,380
Accounts receivable, net 43,130 59,488
Due from factor 2,383 4,034
Inventories 90,199 85,985
Deferred tax benefit 11,805 12,100
Other current assets 3,623 1,639
----------- -----------
Total current assets 164,686 169,626
Property, plant, and equipment, net 60,848 61,897
Goodwill, net 28,389 28,751
Other assets 2,950 3,257
----------- -----------
Total assets $ 256,873 $ 263,531
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 26,968 $ 33,030
Accrued liabilities 24,367 27,954
Accrued wages and other employee compensation 1,315 7,014
Accrued workers' compensation 4,600 4,775
Current portion of long-term debt 4,069 4,069
----------- -------------
Total current liabilities 61,319 76,842
Deferred income taxes 867 867
Long-term debt 33,564 21,374
----------- -----------
Total liabilities 95,750 99,083
Commitments and contingencies
Stockholders' equity:
Common stock - par value $0.10 per share; 25,000,000 shares authorized and
8,578,665 and 8,576,998 shares issued at
December 31, 1999 and September 30, 1999, respectively. 857 857
Additional paid-in capital 41,876 41,860
Retained earnings 136,482 136,267
----------- -----------
179,215 178,984
Less - Treasury stock, 1,685,605 and 1,391,605 shares at cost at
December 31, 1999 and September 30, 1999, respectively. (18,092) (14,536)
----------- -----------
Total stockholders' equity 161,123 164,448
----------- -----------
Total liabilities and stockholders' equity $ 256,873 $ 263,531
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
4
HAGGAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
Three Months Ended
December 31,
----------------------------
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 557 $ 494
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 3,375 3,203
Gain on disposal of property, plant, and equipment (561) (117)
Changes in assets and liabilities:
Accounts receivable, net 16,358 23,779
Due from factor 1,651 -
Inventories, net (4,214) (3,461)
Current deferred tax benefit 295 (1,323)
Other current assets (1,984) (140)
Accounts payable (6,062) (9,439)
Accrued liabilities (3,587) 1,561
Accrued wages, workers compensation and other employee benefits (5,874) (4,702)
----------- -----------
Net cash (used in) provided by operating activities (46) 9,855
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment, net (2,557) (2,050)
Proceeds from sale of property, plant, and equipment, net 1,180 285
Decrease (increase) in other assets 281 (154)
----------- -----------
Net cash used in investing activities (1,096) (1,919)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from short-term borrowings - 679
Purchase of treasury stock at cost (3,556) (4,352)
Proceeds from issuance of long-term debt 57,000 -
Proceeds from issuance of common stock 16 -
Payments on long-term debt (44,810) (3,671)
Payments of cash dividends (342) (381)
----------- -----------
Net cash provided by (used in) financing activities 8,308 (7,725)
Increase in cash and cash equivalents 7,166 211
Cash and cash equivalents, beginning of period 6,380 20,280
----------- -----------
Cash and cash equivalents, end of period $ 13,546 $ 20,491
=========== ===========
Supplemental disclosure of cash flow information
Cash paid for:
Interest $ 1,094 $ 1,247
Income taxes $ 2,653 $ 19
The accompanying notes are an integral part of these
consolidated financial statements.
5
HAGGAR CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS.
The consolidated balance sheet as of December 31, 1999, and the consolidated
statements of operations and cash flows for the three months ended December
31, 1999 and 1998, have been prepared by Haggar Corp. (the "Company") without
audit. In the opinion of management, all adjustments necessary (which include
only normal recurring adjustments) to present fairly the consolidated
financial position, results of operations, and cash flows of the Company at
December 31, 1999, and for all other periods presented, have been made.
Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These financial statements should be
read in conjunction with the financial statements and accompanying footnotes
in the Company's Annual Report on Form 10-K for the year ended September 30,
1999.
ACQUISITION
On January 13, 1999, the Company, through its main operating subsidiary,
Haggar Clothing Co., acquired Jerell, Inc. ("Jerell"), a company engaged in
the design and marketing of women's apparel, for an aggregate acquisition
cost of $43.6 million. The acquisition cost consists of $36.9 million paid to
the shareholders of Jerell, $0.4 million as consideration for a covenant not
to compete to an executive officer, $4.7 million paid to a third party
factor, and $1.6 million in expenses attributable to the acquisition. In
conjunction with the acquisition, the Company received payments of notes
receivable due from former stockholders of Jerell, Inc. of $2.8 million and
payments of $0.7 million from former stockholders of Jerell for tax
withholdings, resulting in a net acquisition cost of $40.1 million. The
acquisition was accounted for under the purchase method. Based on current
estimates, which may be revised at a later date, the excess consideration
paid over the estimated fair value of net assets acquired of approximately
$29.8 million was recorded as goodwill and is being amortized on a
straight-line basis over its estimated useful life of 20 years. The Company's
consolidated financial statements have incorporated Jerell's operating
results from the effective date of the acquisition. The following unaudited
pro forma financial information combines the results of operations of the
Company and Jerell as if the acquisition had taken place at the beginning of
fiscal 1998. These results are not intended to be a projection of future
results.
Three Months Ended
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 31,
-------------------------
1999 1998
---- ----
Net sales $ 98,682 $ 98,979
Net income 557 (76)
Net Income per share - Basic and Diluted $ 0.08 $ (0.01)
In conjunction with the acquisition, liabilities were assumed as follows (in
thousands):
Fair value of assets acquired $ 46,665
Net cash paid for Jerell Inc. 39,317
--------
Liabilities assumed $ 7,348
========
6
CONCENTRATIONS OF CREDIT RISK.
Financial instruments which potentially expose the Company to concentrations
of credit risk, as defined by Statement of Financial Accounting Standards
("SFAS") No. 105, "Disclosure of Information about Financial Instruments with
Off-Balance Sheet Risk and Financial Instruments with Concentrations of
Credit Risk," consist primarily of trade accounts receivable. The Company's
customers are not concentrated in any specific geographic region but are
concentrated in the apparel industry. The Company's largest current customer,
J.C. Penney Company, Inc., accounted for 24.0% and 29.3% of the Company's net
sales for the three months ended December 31, 1999 and 1998, respectively.
The Company's second largest current customer, Kohl's Department Stores,
Inc., accounted for 11.7% and 10.8% of the Company's net sales for the three
months ended December 31, 1999 and 1998, respectively. No other customer
accounted for more than 10% of the Company's net sales. The Company performs
ongoing credit evaluations of its customers' financial condition and
establishes an allowance for doubtful accounts based upon factors surrounding
the credit risk of specific customers, historical trends, and other
information.
DUE FROM FACTOR
The Company has a factoring agreement with Bank of America for the purposes
of providing credit administration for the Company. Under the terms of the
factoring agreement, Bank of America purchases substantially all of Jerell's
specialty store accounts receivable without recourse.
INVENTORIES.
Inventories are stated at the lower of cost (first-in, first-out) or market
and consisted of the following at December 31, 1999, and September 30, 1999
(in thousands):
December 31, September 30,
1999 1999
---------------- ---------------
Piece goods $ 9,466 $ 10,001
Trimmings & supplies 3,141 2,651
Work-in-process 17,109 17,443
Finished garments 60,483 55,890
---------------- ---------------
$ 90,199 $ 85,985
================ ===============
Work-in-process and finished garments inventories consisted of materials,
labor and manufacturing overhead.
7
LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1999, and September
30, 1999 (in thousands):
December 31, September 30,
1999 1999
-------------- -------------
Borrowings under revolving credit line $ 16,000 $ -
Industrial Development Revenue
Bonds with interest at a rate equal
to that of high-quality, short-term,
tax-exempt obligations, as defined
(5.60% and 3.85% at December 31, 1999
and September 30, 1999, respectively),
payable in annual installments of $100
to $200 and a final payment of $2,000
in 2005, secured by certain buildings
and equipment 2,500 2,600
Allstate notes 17,857 21,429
Other 1,276 1,414
-------------- --------------
37,633 25,443
Less - Current portion 4,069 4,069
-------------- -------------
$ 33,564 $ 21,374
============== =============
Net assets mortgaged or subject to lien under the Industrial Development
Revenue Bonds totaled approximately $1,169,495 at December 31, 1999.
As of December 31, 1999, the Company had a revolving credit line agreement
(the "Agreement") with certain banks subject to certain borrowing base
limitations. The Company had additional available borrowing capacity of
approximately $63,000,000 under this Agreement at December 31, 1999. The
Company incurred approximately $40,932 in commitment fees related to the
available borrowing capacity during the quarter ended December 31, 1999. The
interest rates for the quarter ended December 31, 1999, ranged from 6.25% to
8.50%. The facility will mature June 30, 2002, unless renewed and is
unsecured. The Agreement prohibits the Company from pledging its account
receivables and inventories, contains limitations on incurring additional
indebtedness and requires the maintenance of certain financial ratios. In
addition, the agreement requires the Company and Haggar Clothing Co., the
Company's main operating subsidiary, to maintain net worth, as defined, in
excess of $149,494,000 and $55,000,000, respectively, as of December 31,
1999. The Agreement requires the Company to maintain a net worth in excess of
the net worth of the preceding fiscal year plus 50% of the Company's
consolidated net income. The Agreement prohibits the payment of any dividend
if a default exists after giving effect to such dividend.
In 1995, the Company completed the sale and issuance of $25,000,000 in senior
notes (the "Allstate notes"). Proceeds from the Allstate notes were used to
partially fund the construction of the Company's Customer Service Center
("CSC"). Significant terms of the Allstate notes include a maturity date of
ten years from the date of issuance, interest payable semi-annually and
annual principal payments beginning in the fourth year. The interest rate on
the Allstate notes is fixed at 8.49%. The terms and conditions of the note
purchase agreement governing the Allstate notes include restriction on the
sale of assets, limitations on additional indebtedness, and the maintenance
of certain net worth requirements.
8
CONTINGENCIES
LAWSUIT
On April 12, 1999, a jury returned an approximate $3.6 million verdict
against Haggar Clothing Co. and in favor of a former employee relating to
claims for wrongful discharge and common law tort. The Company believes the
verdict in this lawsuit was both legally and factually incorrect. The Company
presently intends to appeal the judgment. The Company does not believe that
the outcome of this verdict will have a material impact on its financial
statements.
NET INCOME PER COMMON SHARE - BASIC AND DILUTED
Basic earnings per share excludes dilution and is computed by dividing net
income by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share is computed by dividing net income by the
sum of the weighted-average number of common shares outstanding for the
period and the number of equivalent shares assumed outstanding under the
Company's stock based compensation plans.
Options to purchase 826,865 common shares at prices ranging from $12.13 to
$23.00 were not dilutive and were outstanding for the three months ended
December 31, 1999. Options to purchase 874,683 common shares at prices
ranging from $12.13 to $23.00 were not dilutive and were outstanding for the
three months ended December 31, 1998. These shares for the aforementioned
periods were not included in the diluted earnings per share calculation
because the options' exercise prices were greater than the average market
price of the common shares. Diluted earnings per share was calculated as
follows (unaudited, in thousands, except per share data):
Three Months Ended
December 31, December 31,
1999 1998
--------------- ----------------
Net income $557 $494
Weighted average number of common shares outstanding 7,081 7,716
Common share-equivalents, due to stock options 55 16
--------------- ----------------
7,136 7,732
=============== ================
Net income per share on a diluted basis $0.08 $0.06
=============== ================
9
EMPLOYEE BENEFIT PLANS
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AND TRUST ("SERP")
In order to provide supplemental retirement benefits and pre-retirement death
benefits to select members of the Company's senior management, the Company
formed the Haggar Corp. Supplemental Executive Retirement Plan ("SERP")
during the first quarter of fiscal 2000. At retirement age, as defined in the
SERP, each participant will be entitled to a life annuity benefit (if
married, a joint and 50% survivor annuity) equal to 65% of the participant's
average total compensation during the three prior fiscal years, reduced by
any Company-provided benefit under the existing deferred annuity program. If
a participant dies before retirement, the surviving spouse or other
beneficiary will receive a death benefit equal to $400,000 per year payable
annually for 10 years.
The Company has established a trust to which the Company will contribute cash
to purchase variable life insurance policies insuring each participant.
Annual premiums for the current participants are approximately $878,000.
The SERP is operating as an unfunded compensation arrangement that is not
subject to the annual reporting and disclosure requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA").
SUBSEQUENT EVENTS
DIVIDEND DECLARED
On January 25, 2000, the Company declared a cash dividend of $0.05 per share
payable to the stockholders of record on February 7, 2000. The dividend of
approximately $333,800 will be paid on February 18, 2000.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
consolidated financial statements and the notes thereto and with the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1999.
RESULTS OF OPERATIONS
The Company's first quarter fiscal 2000 net income of $0.6 million was
relatively consistent compared to a net income of $0.5 million in the first
quarter fiscal 1999.
Net sales for the first quarter of fiscal 2000 increased 16.4% to $98.7
million from $84.8 million for the first quarter of fiscal 1999. Net sales
increased for the first quarter of fiscal 2000 primarily due to our improved
sportswear lines and the addition of our new women's division. Excluding the
impact of the women's division, unit sales increased 6.0% and the average
sales price decreased 10.8%. The 10.8% decrease in average sales price is
primarily attributable to certain markdowns on sportcoats and shirts.
The 34.8% gross profit as a percentage of net sales in the first quarter of
fiscal 2000 was comparable to the 35.0% in the first quarter of the prior
fiscal year. The gross profit has remained comparable by maintaining the same
strategic sourcing mix.
Selling, general and administrative expenses as a percentage of net sales
decreased to 33.4% in the first quarter of fiscal 2000 compared to 33.9% in
the first quarter of fiscal 1999. However, actual selling, general and
administrative expenses increased $4.2 million to $33.0 million for the first
quarter of fiscal 2000 compared to $28.8 million for first quarter of fiscal
1999. The overall increase in selling, general and administrative expenses
includes additional expenses of $0.5 million related to the opening and
operating of new retail stores, a $0.6 million increase from starting Haggar
Japan operations in February 1999, $0.3 million attributable to new executive
compensation arrangements which will continue in subsequent periods, and the
inclusion of the women's division expenses of $3.4 million. These increases
are offset by a decrease of $0.4 million in sales and marketing expenses. At
the end of the first quarter of fiscal 2000, 66 retail stores were open and
operational, as compared to 60 retail stores at the end of the same period
one year ago.
Royalty income for the first quarter of fiscal 2000 decreased $0.3 million
from the first quarter of fiscal 1999, primarily due to slow licensee sales
and the Company's assumption of a licensee's business.
LIQUIDITY AND CAPITAL RESOURCES
The Company's trade accounts receivable potentially expose the Company to
concentrations of credit risks as most of its customers are in the retail
apparel industry. The Company performs ongoing credit evaluations of its
customers' financial condition and establishes an allowance for doubtful
accounts based upon the factors related to the credit risk of specific
customers, historical trends and other information. The Company's trade
accounts receivable decreased approximately $16.4 million to $43.1 million at
December 31, 1999, from $59.5 million at September 30, 1999. In addition, the
Company's due from factor decreased from $4.0 million at September 30, 1999,
to $2.4 million at December 31, 1999. The decreases in trade accounts
receivable and due from factor are primarily the result of reduced retail
sales for the Company's customers.
Inventories as of December 31, 1999, increased to $90.2 million from $86.0
million at September 30, 1999. The increase in inventory levels during the
first quarter of fiscal 1999 is mainly due to the timing of certain
deliveries of seasonal products.
11
The Company has a revolving credit line facility with certain banks. As of
December 31, 1999, the Company had additional available borrowing capacity of
approximately $63.0 million under that facility. The Company incurred
approximately $40,932 in commitment fees related to the available borrowing
capacity during the first quarter of fiscal 2000. The interest rates during
the first quarter of fiscal 2000 ranged from 6.25% to 8.50%. The facility
will mature June 30, 2002, with a one year renewal at the option of the banks.
The Company remained unchanged in cash from operating activities for the
three months ended December 31, 1999, primarily as a result of an increase in
inventories of $4.2 million offset by a reduction in accounts receivable and
due from factor of $18.0 million and reductions in (i) accounts payable, (ii)
accrued liabilities and (iii) accrued wages, worker's compensation and other
employee benefits of $6.1, $3.6, and $5.9, respectively. The Company used
cash in investing activities of $1.1 million during the first three months of
fiscal 2000, primarily as the result of purchasing property, plant, and
equipment for the opening of retail stores and building in-store customer
shops, which were offset by the proceeds from the sale of machinery and
equipment. Cash flows provided by financing activities of $8.3 million for
the three months ended December 31, 1999, were primarily the result of a net
increase in long-term debt of $12.2 million to fund ongoing operations which
was offset by the purchase of $3.6 million in treasury stock.
By comparison, the Company provided cash from operating activities for the
three months ended December 31, 1998, of $9.9 million, primarily as a result
of the reduction in accounts receivable of $23.8 million, offset by
reductions in accounts payable of $9.4 million and an increase in inventories
of $3.5 million. The Company used cash in investing activities of $1.9
million during the first three months of fiscal 1999, the result of purchases
of property, plant, and equipment of $2.1 million, primarily in conjunction
with the opening of retail stores in the first quarter of fiscal 1999. Cash
flows used in financing activities of $7.7 million for the three months ended
December 31, 1998, were primarily the result of a net reduction in long-term
debt of $3.7 million and the purchase of $4.4 million in treasury stock.
The Company believes that the cash flows generated from operations and the
funds available under the foregoing credit facilities will be adequate to
meet its working capital and related financing needs for the foreseeable
future.
YEAR 2000 CONSIDERATIONS
GENERAL. The Year 2000 issue concerns the inability of some computerized
systems to properly process date-sensitive information on and after January
1, 2000, because of the use of only the last two digits to identify a year.
The Company has a full-time project manager coordinating the assessment and
remediation of Year 2000 issues affecting the Company. The project manager
and team leaders from various areas within the Company implemented the
remediation necessary to prepare the Company for the Year 2000. The Year 2000
steering committee, composed of members from various functional groups,
provided oversight by reviewing and evaluating the progress of the Year 2000
program. In addition to its internal Year 2000 compliance program, the
Company requested information from a majority of its customers and vendors
concerning their Year 2000 compliance.
STATE OF READINESS. The Company had completed the assessment, remediation and
testing of all its computerized systems by November 30, 1999. Subsequent to
December 31, 1999, the Company has not experienced any significant systems
failures related to the Year 2000 issue. Similarly, no customers or suppliers
have reported any significant Year 2000 problems to the Company. Nonetheless,
the Company intends to continue monitoring its computerized systems and
communicate with its customers and suppliers to identify any Year 2000 issues
which may arise or be discovered during the 2000 calendar year.
COSTS TO ADDRESS YEAR 2000 ISSUES. The Company executed its Year 2000 program
primarily with existing internal resources. The principal costs associated
with these internal resources were payroll and employee benefits
12
of the information systems group. The Company did not separately track the
internal costs attributable to the Year 2000 program.
The Company also incurred costs for contract programmers and systems upgrades
in connection with its Year 2000 program. As a result of Year 2000 issues,
the Company elected to upgrade its accounting, order processing,
manufacturing, and electronic data interchange software; retail store
systems; distribution conveyor systems; and most PC hardware and software
systems. No other significant projects were accelerated or deferred due to
Year 2000 issues. The costs of these programmers and upgrades were not
material to the results of operations or the financial condition of the
Company. All costs of Year 2000 compliance were recorded in the period
incurred.
RISKS OF YEAR 2000 ISSUES. Although the Company believes that it has
adequately addressed the Year 2000 issue, there can be no assurance that Year
2000 problems will not have a material adverse affect on its business,
financial condition or results of operations. In addition, disruptions in the
economy generally resulting from Year 2000 failures or the public's
perceptions of failures could have a material adverse effect on the Company.
CONTINGENCY PLANS. The Company has developed contingency plans for potential
risks such as interruptions in supply chain, transportation delays and
communications breakdowns with foreign vendors. The Company generated risk
analysis reports from the testing of systems and the responses received from
customers and vendors. The reports were divided between internal and external
risks.
The internal risks relate to the Company's systems and facilities. The
Company conducted extensive testing to assure the Company that date changes
would not affect its systems before, during or after January 1, 2000. In
addition, the Company increased MIS staff coverage from December 30, 1999, to
January 15, 2000. Also, facilities staff were on site during the January 1
weekend to confirm that building and mechanical systems operated as expected.
The external risk categories covered in the reports are customers, importers,
piece goods and trim suppliers, manufacturing contractors, licensees,
transportation and utility vendors. The Company's senior managers used risk
analysis reports to develop contingency plans where necessary. In light of
the lack of any significant Year 2000 problems reported to date, the Company
does not believe such contingency plans will be utilized.
FORWARD LOOKING STATEMENTS
This report contains certain forward-looking statements. In addition, from
time to time the Company may issue press releases and other written
communications, and representatives of the Company may make oral statements,
which contain forward-looking information. Except for historical information,
matters discussed in such oral and written communications are forward-looking
statements that involve risks and uncertainties which could cause actual
results to differ materially from those in such forward-looking statements.
Risks and uncertainties inherent to the Company's line of business include
such factors as natural disasters, general economic conditions, the
performance of the retail sector in general and the apparel industry in
particular, the competitive environment, consumer acceptance of new products,
and the success of advertising, marketing and promotional campaigns.
Additional risks and uncertainties which could cause the Company's actual
results to differ from those contained in any forward-looking statements are
discussed elsewhere herein.
13
SUBSEQUENT EVENT
DIVIDEND DECLARED
On January 25, 2000, the Company declared a cash dividend of $0.05 per share
payable to the stockholders of record on February 7, 2000. The dividend of
approximately $333,800 will be paid on February 18, 2000.
PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 10(a) Supplemental Executive Retirement Plan (SERP) and related Participant
Agreements.
10(b) Split-Dollar Life Insurance Plan, related Collateral Assignments
and Participant Insurance Agreements.
10(c) Wage Continuation Plan.
27.1 Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
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.
Haggar Corp.,
Date: February 14, 2000 By: /S/ DAVID M. TEHLE
-------------------------
David M. Tehle
Sr. Vice President
Chief Financial Officer
Signed on behalf of the
registrant and as principal
financial officer.
14