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FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant To
Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended
November 1, 1997
[ ] Transition Report Pursuant To
Section 13 or 15(d) of the
Securities Exchange Act of 1934
Securities and Exchange Commission
Washington, D.C. 20549
Commission File No. 1-3083
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GENESCO INC.
A Tennessee Corporation
I.R.S. No. 62-0211340
Genesco Park
1415 Murfreesboro Road
Nashville, Tennessee 37217-2895
Telephone 615/367-7000
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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 such shorter period that
the registrant was required to file
such reports with the commission) and
(2) has been subject to such filing
requirements for the past 90 days.
Yes x No
---- ----
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Common Shares Outstanding December 5, 1997 - 25,770,895
2
INDEX
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PAGE
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Part 1 - Financial Information 3
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Consolidated Balance Sheet - November 1, 1997, February 1, 1997 and November 2, 1996 3
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Consolidated Earnings - Three Months Ended and Nine Months Ended November 1, 1997
and Three Months Ended and Nine Months Ended November 2, 1996 4
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Consolidated Cash Flows - Three Months Ended and Nine Months Ended November 1, 1997
and Three Months Ended and Nine Months Ended November 2, 1996 5
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Consolidated Shareholders' Equity - Year Ended February 1, 1997 and Nine Months Ended November 1, 1997 6
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Notes to Consolidated Financial Statements 7
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Management's Discussion and Analysis of Financial Condition and Results of Operations 15
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Part II - Other Information 26
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Signature 27
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2
3
PART I - FINANCIAL INFORMATION
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheet
In Thousands
NOVEMBER 1, FEBRUARY 1, NOVEMBER 2,
1997 1997 1996
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ASSETS
CURRENT ASSETS
Cash and short-term investments $ 13,167 $ 43,375 $ 25,182
Accounts receivable 41,612 34,389 40,635
Inventories 128,641 95,884 103,620
Other current assets 4,590 4,509 4,130
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Total current assets 188,010 178,157 173,567
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Plant, equipment and capital leases, net 44,022 34,471 31,909
Other noncurrent assets 8,349 9,026 11,988
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TOTAL ASSETS $ 240,381 $ 221,654 $ 217,464
=======================================================================================================================
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 58,092 $ 65,331 $ 57,004
Current payments on capital leases 355 768 839
Provision for discontinued operations 2,995 3,263 3,696
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Total current liabilities 61,442 69,362 61,539
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Long-term debt 75,000 75,000 75,000
Capital leases 50 717 899
Other long-term liabilities 12,394 11,172 23,931
Provision for discontinued operations 10,886 11,613 12,084
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Total liabilities 159,772 167,864 173,453
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Contingent liabilities (see Note 7) - - -
SHAREHOLDERS' EQUITY
Non-redeemable preferred stock 7,938 7,944 7,963
Common shareholders' equity:
Par value of issued shares 26,243 25,195 25,167
Additional paid-in capital 132,724 122,615 122,551
Accumulated deficit (68,439) (84,107) (85,569)
Minimum pension liability adjustment -0- -0- (8,244)
Treasury shares, at cost (17,857) (17,857) (17,857)
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Total shareholders' equity 80,609 53,790 44,011
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 240,381 $ 221,654 $ 217,464
=======================================================================================================================
The accompanying Notes are an integral part of these Financial Statements.
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4
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Consolidated Earnings
In Thousands
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- ----------------------------
NOVEMBER 1, NOVEMBER 2, NOVEMBER 1, NOVEMBER 2,
1997 1996 1997 1996
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Net sales $147,046 $124,109 $381,255 $327,283
Cost of sales 86,387 72,921 223,596 194,694
Selling and administrative expenses 48,361 41,120 134,900 115,315
Restructuring income and other charges, net -0- 1,693 (275) 1,693
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Earnings from operations before
other income and expenses 12,298 8,375 23,034 15,581
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Other expenses (income):
Interest expense 2,541 2,556 7,614 7,729
Interest income (160) (264) (937) (1,126)
Other expense (income) 340 90 404 233
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Total other (income) expenses, net 2,721 2,382 7,081 6,836
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Earnings before income taxes,
discontinued operations and
extraordinary loss 9,577 5,993 15,953 8,745
Income taxes (benefit) 55 90 116 (347)
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Earnings before discontinued operations
and extraordinary loss 9,522 5,903 15,837 9,092
Discontinued operations -0- -0- -0- (150)
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Earnings before extraordinary loss 9,522 5,903 15,837 8,942
Extraordinary loss from
early retirement of debt (169) -0- (169) -0-
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NET EARNINGS $ 9,353 $ 5,903 $ 15,668 $ 8,942
======================================================================================================================
Earnings per share:
Earnings before discontinued operations
and extraordinary loss $ .35 $ .23 $ .58 $ .35
Discontinued operations $ .00 $ .00 $ .00 $ (.01)
Extraordinary loss $ (.01) $ .00 $ (.01) $ .00
Net earnings $ .34 $ .23 $ .57 $ .34
======================================================================================================================
The accompanying Notes are an integral part of these Financial Statements.
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Consolidated Cash Flows
In Thousands
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
NOVEMBER 1, NOVEMBER 2, NOVEMBER 1, NOVEMBER 2,
1997 1996 1997 1996
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OPERATIONS:
Net earnings $ 9,353 $ 5,903 $ 15,668 $ 8,942
Noncash charges to earnings:
Depreciation and amortization 2,217 1,946 6,647 5,703
Provision for deferred income taxes -0- -0- (687) -0-
Provision for losses on accounts receivable 63 373 1,114 1,974
Impairment of long-lived assets and other charges -0- -0- 831 -0-
Loss on retirement of debt 169 -0- 169 -0-
Restructuring charge (credit) -0- 1,693 (1,106) 1,693
Provision for discontinued operations -0- -0- -0- 150
Other 286 214 924 649
Effect on cash of changes in working capital and other
assets and liabilities:
Accounts receivable (5,937) (5,619) (8,337) (10,474)
Inventories (5,175) (9,163) (32,757) (18,690)
Other current assets (773) (433) (81) 187
Accounts payable and accrued liabilities (1,261) 6,926 254 11,765
Other assets and liabilities 278 (3,320) 375 (2,561)
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Net cash used in operations (780) (1,480) (16,986) (662)
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INVESTING ACTIVITIES:
Capital expenditures (5,066) (4,174) (17,603) (9,912)
Proceeds from asset sales 1 (1) 193 39
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Net cash used in investing activities (5,065) (4,175) (17,410) (9,873)
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FINANCING ACTIVITIES:
Payments on capital leases (156) (293) (1,080) (968)
Exercise of stock options and related income tax benefits 654 570 4,378 1,139
Other 890 -0- 890 (4)
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Net cash provided by financing activities 1,388 277 4,188 167
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NET CASH FLOW (4,457) (5,378) (30,208) (10,368)
Cash and short-term investments at
beginning of period 17,624 30,560 43,375 35,550
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CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 13,167 $ 25,182 $ 13,167 $ 25,182
================================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Net cash paid (received) for:
Interest $ 534 $ 324 $ 9,094 $ 9,176
Income taxes 22 4 105 (467)
================================================================================================================================
The accompanying Notes are an integral part of these Financial Statements.
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Consolidated Shareholders' Equity
In Thousands
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TOTAL MINIMUM TOTAL
NON-REDEEMABLE PENSION SHARE-
PREFERRED COMMON PAID-IN ACCUMULATED TREASURY LIABILITY HOLDERS'
STOCK STOCK CAPITAL DEFICIT STOCK ADJUSTMENT EQUITY
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Balance January 31, 1996 $ 7,958 $ 24,844 $ 121,715 $ (94,511) $ (17,857) $ (8,244) $ 33,905
===================================================================================================================================
Exercise of options -0- 187 455 -0- -0- -0- 642
Issue shares - Employee Stock Purchase Plan -0- 161 399 -0- -0- -0- 560
Net earnings -0- -0- -0- 10,404 -0- -0- 10,404
Minimum pension liability adjustment -0- -0- -0- -0- -0- 8,244 8,244
Other (14) 3 46 -0- -0- -0- 35
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Balance February 1, 1997 $ 7,944 $ 25,195 $ 122,615 $ (84,107) $ (17,857) $ -0- $ 53,790
===================================================================================================================================
Net earnings -0- -0- -0- 15,668 -0- -0- 15,668
Exercise of options -0- 437 2,689 -0- -0- -0- 3,126
Issue shares - litigation settlement -0- 525 6,175 -0- -0- -0- 6,700
Tax effect of exercise of stock options -0- -0- 687 -0- -0- -0- 687
Issue shares - Employee Stock Purchase Plan -0- -0- 496 -0- -0- -0- 496
Other (6) 86 62 -0- -0- -0- 142
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BALANCE NOVEMBER 1, 1997 $ 7,938 $ 26,243 $ 132,724 $ 68,439 $ (17,857) $ -0- $ 80,609
===================================================================================================================================
The accompanying Notes are an integral part of these Financial Statements.
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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INTERIM STATEMENTS
The consolidated financial statements contained in this report are unaudited but
reflect all adjustments, consisting of only normal recurring adjustments,
necessary for a fair presentation of the results for the interim periods of the
fiscal year ending January 31, 1998 ("Fiscal 1998") and of the fiscal year ended
February 1, 1997 ("Fiscal 1997"). The results of operations for any interim
period are not necessarily indicative of results for the full year. The
financial statements should be read in conjunction with the financial statements
and notes thereto included in the annual report on Form 10-K.
NATURE OF OPERATIONS
The Company's businesses include the manufacture or sourcing, marketing and
distribution of footwear under the Johnston & Murphy, Laredo, Code West, Larry
Mahan, Dockers and Nautica brands, the tanning and distribution of leather by
the Volunteer Leather division and the operation of Jarman, Journeys, Johnston &
Murphy, Boot Factory and General Shoe Warehouse retail footwear stores.
BASIS OF PRESENTATION
All subsidiaries are included in the consolidated financial statements. All
significant intercompany transactions and accounts have been eliminated.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FINANCIAL STATEMENT RECLASSIFICATIONS
Certain reclassifications have been made to conform prior years' data to the
current presentation.
CASH AND SHORT-TERM INVESTMENTS
Included in cash and short-term investments at February 1, 1997 and November 1,
1997, are short-term investments of $38.1 million and $ 7.7 million,
respectively. Short-term investments are highly-liquid debt instruments having
an original maturity of three months or less.
INVENTORIES
Inventories of wholesaling and manufacturing companies are stated at the lower
of cost or market, with cost determined principally by the first-in, first-out
method. Retail inventories are determined by the retail method.
PLANT, EQUIPMENT AND CAPITAL LEASES
Plant, equipment and capital leases are recorded at cost and depreciated or
amortized over the estimated useful life of related assets. Depreciation and
amortization expense are computed principally by the straight-line method.
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
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The Company periodically assesses the realizability of its long-lived assets and
evaluates such assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Asset
impairment is determined to exist if estimated future cash flows, undiscounted
and without interest charges, are less than carrying amount.
HEDGING CONTRACTS
In order to reduce exposure to foreign currency exchange rate fluctuations in
connection with inventory purchase commitments, the Company enters into foreign
currency forward exchange contracts for Italian Lira. At February 1, 1997 and
November 1, 1997, the Company had approximately $18.8 million and $11.5 million,
respectively, of such contracts outstanding. Forward exchange contracts have an
average term of approximately four months. Gains and losses arising from these
contracts offset gains and losses from the underlying hedged transactions. The
Company monitors the credit quality of the major national and regional financial
institutions with whom it enters into such contracts.
POSTRETIREMENT BENEFITS
Substantially all full-time employees are covered by a defined benefit pension
plan. The Company also provides certain former employees with limited medical
and life insurance benefits. The Company funds at least the minimum amount
required by the Employee Retirement Income Security Act.
In accordance with SFAS 106, postretirement benefits such as life insurance and
health care are accrued over the period the employee provides services to the
Company.
ENVIRONMENTAL COSTS
Environmental expenditures relating to current operations are expensed or
capitalized as appropriate. Expenditures relating to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable and the costs can be reasonably
estimated and are evaluated independently of any future claims for recovery.
Generally, the timing of these accruals coincides with completion of a
feasibility study or the Company's commitment to a formal plan of action. Costs
of future expenditures for environmental remediation obligations are not
discounted to their present value.
INCOME TAXES
Deferred income taxes are provided for all temporary differences and operating
loss and tax credit carryforwards limited, in the case of deferred tax assets,
to the amount of taxes recoverable from taxes paid in the current or prior
years.
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9
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 2
RESTRUCTURING GAIN, ASSET IMPAIRMENT AND OTHER CHARGES
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During the second quarter of Fiscal 1998 the Company recorded a restructuring
gain of $1.1 million and losses from an asset impairment and other charges of
$0.8 million resulting in a net gain of $0.3 million reported in the income
statement. The restructuring gain relates to both the Manufacturing
Restructuring and a restructuring plan adopted in the third quarter of Fiscal
1995 (the "1995 Restructuring") and relates primarily to the selling of one
facility and cancellation of leases on two facilities (including one facility
included in the 1995 Restructuring) more quickly and on more favorable terms
than contemplated when the reserves were established.
The asset impairment and other charges arose from the decrease in production in
one of the Company's western boot plants in response to the continued weakness
in the western boot market. The asset impairment and other charges related to
excess equipment, including $0.1 million of equipment covered by operating
leases. The Company expects only negligible recovery on the sale of the excess
equipment.
NOTE 3
ACCOUNTS RECEIVABLE
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NOVEMBER 1, FEBRUARY 1,
IN THOUSANDS 1997 1997
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Trade accounts receivable $ 43,736 $ 32,721
Miscellaneous receivables 4,602 6,960
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Total receivables 48,338 39,681
Allowance for bad debts (3,959) (3,353)
Other allowances (2,767) (1,939)
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NET ACCOUNTS RECEIVABLE $ 41,612 $ 34,389
===================================================================================================================
The Company's footwear wholesaling business sells primarily to independent
retailers and department stores across the United States. Receivables arising
from these sales are not collateralized. Credit risk is affected by conditions
or occurrences within the economy and the retail industry. The Company
establishes an allowance for doubtful accounts based upon factors surrounding
the credit risk of specific customers, historical trends and other information.
No single customer accounted for more than 7% of the Company's trade receivables
balance as of November 1, 1997.
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10
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 4
INVENTORIES
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NOVEMBER 1, FEBRUARY 1,
IN THOUSANDS 1997 1997
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Raw materials $ 7,219 $ 8,870
Work in process 2,845 3,333
Finished goods 32,471 29,270
Retail merchandise 86,106 54,411
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TOTAL INVENTORIES $ 128,641 $ 95,884
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NOTE 5
PLANT, EQUIPMENT AND CAPITAL LEASES, NET
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NOVEMBER 1, FEBRUARY 1,
IN THOUSANDS 1997 1997
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Plant and equipment:
Land $ 277 $ 241
Buildings and building equipment 2,546 2,552
Machinery, furniture and fixtures 38,627 37,522
Construction in progress 4,694 3,130
Improvements to leased property 49,526 42,734
Capital leases:
Land -0- 60
Buildings 1,191 1,904
Machinery, furniture and fixtures 6,745 7,285
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Plant, equipment and capital leases, at cost 103,606 95,428
Accumulated depreciation and amortization:
Plant and equipment (52,487) (53,241)
Capital leases (7,097) (7,716)
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NET PLANT, EQUIPMENT AND CAPITAL LEASES $ 44,022 $ 34,471
==============================================================================================================
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 6
PROVISION FOR DISCONTINUED OPERATIONS AND RESTRUCTURING RESERVES
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PROVISION FOR DISCONTINUED OPERATIONS
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EMPLOYEE FACILITY
RELATED SHUTDOWN
IN THOUSANDS COSTS COSTS OTHER TOTAL
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Balance February 1, 1997 $13,356 $ -0- $ 1,520 $14,876
Charges and adjustments, net (875) -0- (120) (995)
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Balance November 1, 1997 12,481 -0- 1,400 13,881
Current portion 1,785 -0- 1,210 2,995
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Total Noncurrent Provision For
Discontinued Operations $10,696 $ -0- $ 190 $10,886
==============================================================================================================================
RESTRUCTURING RESERVES
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EMPLOYEE FACILITY
RELATED SHUTDOWN
IN THOUSANDS COSTS COSTS OTHER TOTAL
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Balance February 1, 1997 $ 672 $ 1,637 $ 369 $ 2,678
Charges and adjustments, net (536) (800) (355) (1,691)
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Balance November 1, 1997 136 837 14 987
Current portion (included in accounts
payable and accrued liabilities) 136 772 14 922
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Total Noncurrent Restructuring Reserves
(included in other long-term liabilities) $ -0- $ 65 $ -0- $ 65
==============================================================================================================================
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 7
LEGAL PROCEEDINGS
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New York State Environmental Proceedings
The Company is a defendant in two separate civil actions filed by the State of
New York; one against the City of Gloversville, New York, and 33 other private
defendants and the other against the City of Johnstown, New York, and 14 other
private defendants. In addition, third party complaints and cross claims have
been filed against numerous other entities, including the Company, in both
actions. These actions arise out of the alleged disposal of certain hazardous
material directly or indirectly in municipal landfills. The complaints allege
that the defendants, together with other contributors to the municipal
landfills, are liable under a federal environmental statute and certain common
law theories for the costs of investigating and performing remedial actions
required to be taken with respect to the landfills and damages to the natural
resources.
In March 1997, the Company accepted an offer to settle the Johnstown action for
a payment of $31,000 and is now awaiting entry of an acceptable consent order
and dismissal of that action. The Company remains a defendant in the
Gloversville action. The environmental authorities have issued decisions
selecting plans of remediation with respect to the Gloversville site with a
total estimated cost of approximately $10.0 million.
The Company has filed answers to the complaint in the Gloversville case denying
liability and asserting numerous defenses. Because of uncertainties related to
the ability or willingness of the other defendants, including the municipalities
involved, to pay a portion of future remediation costs, the availability of
State funding to pay a portion of future remediation costs, the insurance
coverage available to the various defendants, the applicability of joint and
several liability and the basis for contribution claims among the defendants,
management is unable to predict the outcome of the Gloversville action. However,
management does not presently expect the Gloversville action to have a material
effect on its financial condition or results of operations.
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 7
LEGAL PROCEEDINGS, CONTINUED
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The Company has received notice from the New York State Department of
Environmental Conservation (the "Department") that it deems remedial action to
be necessary with respect to certain contaminants in the vicinity of a knitting
mill operated by a former subsidiary of the Company from 1965 to 1969, and that
it considers the Company a potentially responsible party. In August 1997, the
Department and the Company entered into a consent order whereby the Company
assumed responsibility for conducting a remedial investigation and feasibility
study ("RIFS") and implementing an interim remediation measure with regard to
the site, without admitting liability or accepting responsibility for any future
remediation of the site. The Company believes that it has adequately reserved
for the costs of conducting the RIFS and implementing the interim remedial
measure contemplated by the consent order, but there is no assurance that the
consent order will ultimately resolve the matter. In conjunction with the
consent order, the Company entered into an agreement with the owner of the site
providing for necessary access to the site. The Company has not ascertained what
responsibility, if any, it has for any contamination in connection with the
facility or what other parties may be liable in that connection and is unable to
predict whether its liability, if any, beyond that voluntarily assumed by the
consent order will have a material effect on its financial condition or results
of operations.
Whitehall Environmental Sampling
The Michigan Department of Environmental Quality ("MDEQ") has performed sampling
and analysis of soil, sediments, surface water, groundwater and waste management
areas at the Company's Volunteer Leather Company facility in Whitehall,
Michigan. MDEQ advised the Company that it would review the results of the
analysis for possible referral to the EPA for action under the Comprehensive
Environmental Response Compensation and Liability Act. However, the Company is
cooperating with MDEQ and has been advised by MDEQ that no EPA referral is
presently contemplated. Neither MDEQ nor the EPA has threatened or commenced any
enforcement action. In response to the testing data, the Company submitted and
MDEQ approved a work plan, pursuant to which a hydrogeological study was
completed and submitted to MDEQ in March 1996. Additional studies regarding
wastes on-site, groundwater and adjoining lake sediments have been performed and
will serve as a basis for the Company's remedial action plan for the site.
Although there can be no assurance that MDEQ will not require a more costly
remediation than the Company anticipates, the Company does not presently expect
that implementation of the plan will have a material effect on its financial
condition or results of operations.
13
14
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 7
LEGAL PROCEEDINGS, CONTINUED
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Other Legal Proceedings
On October 6, 1995, a prior holder of a license to manufacture and market
western boots and other products under a trademark now licensed to the Company
filed an action in the District Court of Dallas County, Texas against the
Company and a contract manufacturer alleging tortious interference with a
business relationship, breach of contract, tortious interference with a
contract, breach of a confidential relationship and civil conspiracy based on
the Company's entry into the license and seeking damages of $20 million. The
Company filed an answer denying all the material allegations of the plaintiff's
complaint. The Company has also filed motions to dismiss the case based upon the
plaintiff's inability to demonstrate damages caused by the Company's alleged
acts and upon the ruling of another court that the plaintiff's license had been
properly terminated prior to the Company's entry into its license. While there
can be no assurance of success either on the motions to dismiss or, if the case
is not dismissed, at trial, the Company does not presently expect the litigation
to have a material effect upon its financial condition or results of operations.
On August 8, 1997, the trustee in bankruptcy of a Texas boot retailer filed an
action in Texas state court against the Company and an unrelated boot wholesaler
and retail chain alleging violations of a Texas antitrust statute and breach of
contract by the Company. The trustee's allegations against the Company involve
its decision not to consign additional boot inventories to the bankrupt retailer
for its liquidation sale. The complaint seeks damages in an unspecified amount.
The Company is presently unable to predict whether the action will have a
material effect on its financial condition or results of operations.
14
15
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
This discussion and the notes to the Consolidated Financial Statements include
certain forward-looking statements. Actual results could differ materially from
those reflected by the forward-looking statements in the discussion and a number
of factors may adversely affect future results, liquidity and capital resources.
These factors include softness in the general retail environment, particularly
as it may result in changing buying patterns by customers of the Company's
wholesale divisions, the timing and acceptance of products being introduced to
the market, international trade developments affecting foreign sourcing of
products, the outcome of various litigation and environmental contingencies,
including those discussed in Note 7 to the Consolidated Financial Statements,
the solvency of the retail customers of the Company, the level of margins
achievable in the marketplace and the ability to minimize operating expenses and
to deal with changes in markets for the Company's products, including the market
for tanned leather used in military footwear. The continuing weakening of the
western boot market has caused declining sales in the Company's western boot
business and erosion of its retail customer base, leading to the Manufacturing
Restructuring, asset impairment and other charges discussed below. The Company
is presently reviewing its options for further actions to address the weakness
of the western boot business. These include further reductions in manufacturing
capacity and other steps designed to reduce costs to a level consistent with
lower sales expectations, divestiture or liquidation of the business, a
strategic alliance such as joint venture with another western boot marketer or
some combination of these options. Although the Company believes it has an
appropriate business strategy and the resources necessary for its operations,
future revenue and margin trends cannot be reliably predicted and the Company
may further alter its business strategies during the balance of Fiscal 1998.
SIGNIFICANT DEVELOPMENTS
Revolving Credit Agreement
On September 24, 1997, the Company entered into a revolving credit agreement
with three banks providing for loans or letters of credit of up to $65 million.
The agreement expires September 24, 2002. This agreement replaced a $35 million
revolving credit agreement with two banks that was to expire January 5, 1999
providing for loans or letters of credit. In connection with the cancellation of
the old revolving credit agreement, the Company recorded an extraordinary loss
of $169,000 ($.01 per share) for the third quarter ended November 1, 1997. See
"Liquidity and Capital Resources."
Manufacturing Restructuring
In response to the continued weakening of the western boot market, the Company
approved a plan (the "Manufacturing Restructuring"), in the third quarter of
Fiscal 1997 to realign its manufacturing operations as part of an overall
strategy to focus on marketing and global sourcing. The plan included closing
the Company's Hohenwald, Tennessee, western boot plant by July 1997, with the
elimination of approximately 190 jobs. The plant was closed in April 1997. In
connection with the adoption of the plan, the Company recorded a charge to
earnings in the third quarter of Fiscal 1997 of $1.7 million, including $0.5
million in asset write-downs of the plant and excess equipment to estimated
market value and $1.2 million of other costs. Included in other costs is
employee severance, facility shutdown and lease costs of which the Company has
spent $0.7 million through
15
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
November 1, 1997. After adjustment for the restructuring gain described below,
$0.1 million of other costs remains to be spent.
Restructuring Gain, Asset Impairment and Other Charges
During the second quarter of Fiscal 1998 the Company recorded a restructuring
gain of $1.1 million and losses from an asset impairment and other charges of
$0.8 million resulting in a net gain of $0.3 million reported in the income
statement. The restructuring gain relates to both the Manufacturing
Restructuring and a restructuring plan adopted in the third quarter of Fiscal
1995 (the "1995 Restructuring") and relates primarily to the selling of one
facility and cancellation of leases on two facilities (including one facility
included in the 1995 Restructuring) more quickly and on more favorable terms
than contemplated when the reserves were established.
The asset impairment and other charges arose from the decrease in production in
one of the Company's western boot plants in response to the continued weakness
in the western boot market. The asset impairment and other charges related to
excess equipment, including $0.1 million of equipment covered by operating
leases. The Company expects only negligible recovery on the sale of the excess
equipment.
RESULTS OF OPERATIONS - THIRD QUARTER FISCAL 1998 COMPARED TO FISCAL 1997
The Company's net sales in the third quarter ended November 1, 1997, increased
18.5% from the previous year. Total gross margin for the quarter increased 18.5%
and increased slightly as a percentage of net sales from 41.2% to 41.3%. Selling
and administrative expenses increased 17.6% but decreased as a percentage of net
sales from 33.1% to 32.9%. Pretax earnings in the third quarter ended November
1, 1997 were $9.6 million, compared to pretax earnings of $6.0 million for the
quarter ended November 2, 1996. Pretax earnings for the third quarter ended
November 2, 1996 included the $1.7 million manufacturing restructuring charge
discussed above. The Company reported net earnings of $9.4 million ($0.34 per
share) for the third quarter ended November 1, 1997 compared to net earnings of
$5.9 million ($0.23 per share) in the third quarter ended November 2, 1996. Net
earnings for the third quarter ended November 1, 1997 included an extraordinary
charge of $169,000 ($.01 per share) for the early retirement of debt discussed
above.
Footwear Retail
Three Months Ended
--------------------------
Nov. 1, Nov. 2, %
1997 1996 Change
----------- ----------- ------
(In Thousands)
Net Sales............................................... $ 91,403 $ 71,143 28.5%
Operating Income........................................ $ 11,063 $ 7,055 56.8%
Operating Margin........................................ 12.1% 9.9%
16
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
Primarily due to increases in comparable store sales of approximately 10% and a
18% increase in average retail stores operated, net sales from footwear retail
operations increased 28.5% in the quarter ended November 1, 1997 compared to the
previous year. The average price per pair decreased 1% while unit sales
increased 32% for the third quarter of Fiscal 1998.
The Company's comparable store sales and store count for the third quarter were
as follows:
Store Count
-------------------
Nov. 1, Nov. 2,
Comp Sales 1997 1996
---------- ---- ----
Jarman Retail +8% 154 143
Jarman Lease +8% 86 84
Journeys +15% 170 109
Johnston & Murphy (including factory stores) +10% 125 116
Other Outlet Stores +3% 41 40
---- ----
Total Retail +10% 576 492
=== ===
The Jarman Lease comparable store increase was aided by a 3% increase in the
average square footage due to remodeling.
Gross margin as a percentage of net sales decreased from 49.9% to 49.3%,
primarily from changes in product mix to more branded products and increased
markdowns to stimulate sales. Operating expenses increased 18.9%, primarily due
to the 18% increase in average stores operated, which caused increased rent
expense and selling salaries expense. In addition, divisional management
expenses increased to support new store growth. Overall operating expenses
decreased as a percentage of net sales from 39.9% to 36.9%.
Operating income for the third quarter ended November 1, 1997 was up 56.8%
compared to the same period last year due to increased sales and the lower
expenses as a percentage of sales.
17
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
Footwear Wholesale & Manufacturing
Three Months Ended
----------------------------
Nov. 1, Nov. 2, %
1997 1996 Change
------------ ---------- ------
(In Thousands)
Net Sales............................................. $ 55,643 $ 52,966 5.1%
Operating Income...................................... $ 3,785 $ 3,666 3.2%
Operating Margin...................................... 6.8% 6.9%
Net sales from footwear wholesale and manufacturing operations were $2.7 million
(5.1%) higher, in the third quarter ended November 1, 1997 than in the same
period last year, reflecting primarily increased men's branded footwear sales,
which more than offset the continuing trend of decreased sales of western boots,
attributable to both lower unit sales and lower prices.
Gross margin in the third quarter ended November 1, 1997 decreased 0.3%, and
decreased as a percentage of net sales from 29.6% to 28.1%, primarily from
increased markdowns to stimulate sales principally in the Company's boot
division.
Operating expenses increased 13.9% and increased as a percentage of net sales
from 19.5% to 21.1%, primarily due to higher divisional administrative expenses
to support the expected growth in the branded businesses and increased royalty
expenses, from increased sales and higher royalty rates.
Operating income for the quarter ended November 2, 1996 included a $1.7 million
manufacturing restructuring charge. Operating income, excluding the $1.7 million
restructuring charge, decreased 29.4% primarily due to the continued weakness in
the Company's western boot division.
Corporate and Interest Expenses
Corporate and other expenses in the third quarter ended November 1, 1997 were
$2.9 million compared to $2.4 million for the same period last year, an increase
of 19%. The increase in corporate expenses is attributable primarily to
increased compensation expense, including performance-related stock based
compensation and increased bonus accruals based on the Company's increased
earnings.
Interest expense was flat with last year and interest income decreased $104,000
from last year due to decreased short-term investments. There were no borrowings
under the Company's revolving credit facility during the three months ended
November 1, 1997 or November 2, 1996.
18
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GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS - NINE MONTHS FISCAL 1998 COMPARED TO FISCAL 1997
The Company's net sales for the nine months ended November 1, 1997 increased
16.5% from the previous year. Total gross margin for the nine months increased
18.9% and increased as a percentage of net sales from 40.5% to 41.4%. Selling
and administrative expenses increased 17.0% and increased as a percentage of net
sales from 35.2% to 35.4%. Pretax earnings for the nine months ended November 1,
1997 were $16.0 million, compared to pretax earnings of $8.7 million for the
nine months ended November 2, 1996. Pretax earnings for the nine months ended
November 1, 1997 included a net restructuring gain of $0.3 million. Pretax
earnings for the nine months ended November 2, 1996 included a $1.7 million
manufacturing restructuring charge. The Company reported net earnings of $15.7
million ($0.57 per share) for the nine months ended November 1, 1997 compared to
net earnings of $8.9 million ($0.34 per share) for the nine months ended
November 2, 1996, which included a tax credit of $347,000. Net earnings for the
nine months ended November 1, 1997 included an extraordinary charge of $169,000
($.01 per share) for the early retirement of debt.
Footwear Retail
Nine Months Ended
-----------------------
Nov. 1, Nov. 2, %
1997 1996 Change
----------- --------- ------
(In Thousands)
Net Sales............................................... $ 241,345 $ 192,025 25.7%
Operating Income........................................ $ 24,319 $ 14,483 67.9%
Operating Margin........................................ 10.1% 7.5%
Primarily due to increases in comparable store sales of approximately 11% and a
15% increase in average retail stores operated, net sales from footwear retail
operations increased 25.7% for the nine months ended November 1, 1997 compared
to the previous year. The average price per pair decreased 1% while unit sales
increased 27% for the nine months ended November 1, 1997.
19
20
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
The Company's comparable store sales and store count for the nine months were as
follows:
Store Count
--------------------
Nov. 1, Nov. 2,
Comp Sales 1997 1996
---------- ---- ----
Jarman Retail +5% 154 143
Jarman Lease +8% 86 84
Journeys +18% 170 109
Johnston & Murphy (including factory stores) +12% 125 116
Other Outlet Stores +7% 41 40
---- ----
Total Retail +11% 576 492
=== ===
The Jarman Lease comparable store increase was aided by a 4% increase in the
average square footage due to remodeling.
Gross margin as a percentage of net sales remained flat at 49.3%. A change in
product mix to more branded non-western boots in the Company's boot outlets
created less markdowns as a percentage of sales compared to last year which was
offset by increased markdowns in certain other companies in the Company's retail
division. Operating expenses increased 18.2%, primarily due to the 15% increase
in average stores operated, which caused increased rent expense, selling
salaries and advertising expense. In addition, divisional management expenses
increased to support new store growth. Overall operating expenses decreased as a
percentage of net sales from 41.6% to 39.1%.
Operating income for the nine months ended November 1, 1997 was up 67.9%
compared to the same period last year due to increased sales and the lower
expenses as a percentage of sales.
Footwear Wholesale & Manufacturing
Nine Months Ended
---------------------------
Nov. 1, Nov. 2, %
1997 1996 Change
----------- --------- ------
(In Thousands)
Net Sales.............................................. $ 139,910 $ 135,258 3.4%
Operating Income....................................... $ 6,366 $ 7,457 (14.6)%
Operating Margin....................................... 4.6% 5.5%
Net sales from footwear wholesale and manufacturing operations were $4.7 million
(3.4%) higher, for the nine months ended November 1, 1997 than in the same
period last year, reflecting primarily increased men's branded footwear sales,
which more than offset lower tanned leather sales and the
20
21
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
continuing trend of decreased sales of western boots, primarily attributable to
lower unit sales. Tanned leather sales were down due to Department of Defense
delays in awarding military footwear contracts and lower orders from military
footwear suppliers, which have been impacted by the continuing decrease in
demand for leather military footwear, which makes up the bulk of the Company's
tanned leather business. The increase in branded sales included sales of new
products introduced by the Company's Nautica division.
Gross margin for the nine months ended November 1, 1997 increased 1.6%, but
decreased as a percentage of net sales from 28.1% to 27.6%, primarily from
increased markdowns in the Company's boot division.
Operating expenses increased 12.3% and increased as a percentage of net sales
from 21.3% to 23.1%, primarily due to higher divisional administrative expenses
to support the expected growth in the branded businesses and increased royalty
expenses, from increased sales and higher royalty rates.
Operating income for the nine months ended November 1, 1997 included a $0.3
million restructuring gain and the nine months ended November 2, 1996 included a
$1.7 million manufacturing restructuring charge. Excluding the above charges,
operating income decreased 33.4% primarily due to the impact of lower sales of
western boots, lower earnings in the Company's tanned leather business due to
Department of Defense delays in awarding military boot contracts, resulting in
delays in orders and lower orders from the division's customers and the increase
in operating expenses.
Corporate and Interest Expenses
Corporate and other expenses for the nine months ended November 1, 1997 were
$8.1 million compared to $6.6 million for the same period last year, an increase
of 22%. The increase in corporate expenses is attributable primarily to
increased compensation expense, including performance-related stock based
compensation and increased bonus accruals based on the Company's increased
earnings.
Interest expense decreased $115,000, or 1% from last year, and interest income
decreased $189,000 from last year due to decreased short-term investments. There
were no borrowings under the Company's revolving credit facility during the nine
months ended November 1, 1997 or November 2, 1996.
21
22
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth certain financial data at the dates indicated.
All dollar amounts are in millions.
Nov. 1, Nov. 2,
1997 1996
---- ----
Cash and short-term investments........................................................... $ 13.2 $ 25.2
Working capital........................................................................... $ 126.6 $ 112.0
Long-term debt............................................................................ $ 75.0 $ 75.0
Current ratio............................................................................. 3.1x 2.8x
Working Capital
The Company's business is somewhat seasonal, with the Company's investment in
inventory and accounts receivable normally reaching peaks in the spring and fall
of each year. Cash flow from operations is ordinarily generated principally in
the fourth quarter of each fiscal year.
Cash used by operating activities was $17.0 million in the first nine months of
Fiscal 1998 compared to $662,000 used by operating activities last year. The
$16.3 million reduction in cash flow from operating activities between the first
nine months of Fiscal 1998 and the first nine months of Fiscal 1997 reflects
primarily the additional working capital needed to support new store growth. The
Company has added a net of 72 stores for the first nine months ended November 1,
1997 compared to a net of 29 stores for the same period last year.
A $32.8 million increase in inventories from February 1, 1997 levels reflected
in the Consolidated Cash Flows Statement reflects planned seasonal increases and
increases in retail inventory to support the net increase of 72 stores from
February 1, 1997. In addition, there were increases in men's branded wholesale
inventory to support growth in certain of the wholesale businesses and
reflecting lower than anticipated sales in certain product styles. The $25.0
million increase in inventories compared with November 2, 1996 reflects a 33%
increase in retail inventories and a 10% increase in wholesale inventories. The
retail inventory increase is primarily caused by a net increase of 84 stores
from November 2, 1996 and resulting 19% increase in square footage and inventory
needed to support the 11% increase in same store sales. The increase wholesale
inventories reflects the anticipation of higher sales of certain footwear
products and lower than anticipated sales in certain product styles.
As reflected in the Consolidated Cash Flows Statement, accounts receivable at
November 1, 1997 increased $8.3 million compared to February 1, 1997. Excluding
a $4.0 million litigation settlement, accounts receivable at November 1, 1997
increased $12.3 million primarily due to seasonal increases as well as increased
sales of men's branded footwear. Accounts receivable at November 1, 1997 were
$1.0 million more than at November 2, 1996, primarily reflecting higher
wholesale sales in the third quarter which was partially offset by improved
accounts receivable turn.
22
23
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
Cash provided (or used) due to changes in accounts payable and accrued
liabilities in the Consolidated Cash Flows Statement at November 1, 1997 and
November 2, 1996 is as follows:
Nine Months Ended
----------------------------
Nov. 1, Nov. 2,
(In Thousands) 1997 1996
-------- --------
Accounts payable $ 6,794 $14,181
Accrued liabilities (6,540) (2,416)
-------- -------
$ 254 $11,765
======== =======
The fluctuations in accounts payable are due to changes in buying patterns,
payment terms negotiated with individual vendors and changes in inventory
levels. The change in accrued liabilities was due primarily to payment of
litigation settlement, bonuses and interest payments on the Company's long-term
debt.
There were no revolving credit borrowings during the nine months ended November
1, 1997 and November 2, 1996, as cash on hand funded working capital
requirements and capital expenditures. On September 24, 1997, the Company
entered into a revolving credit agreement with three banks providing for loans
or letters of credit of up to $65 million. The agreement expires September 24,
2002.
Capital Expenditures
Total capital expenditures in Fiscal 1998 are expected to be approximately $26.3
million. These include expected retail expenditures of $18.4 million to open
approximately 98 new retail stores and to complete 60 major store renovations.
Capital expenditures for wholesale and manufacturing operations and other
purposes are expected to be approximately $7.9 million including approximately
$4.4 million for new systems to improve customer service and support the
Company's growth. During the nine months ended November 1, 1997 the Company had
$17.6 million in capital expenditures which included opening 84 new stores and
completing 34 major renovations.
Year 2000
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather that the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal activities.
Based on a recent assessment, the Company determined that it will be required to
modify or replace significant portions of its software so that its computer
systems will properly utilize dates beyond December 31, 1999. The Company has
also begun the process of upgrading and modernizing its major information
systems, including its wholesale and retail operating systems and its financial
systems. The replacement systems will be Year 2000 compliant. The Company will
utilize both internal and external resources to reprogram,
23
24
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
or replace, and test the software for Year 2000 modifications. The Company
currently has 62 percent of its estimated resources committed and expects to
have the remaining resources committed in the second quarter of fiscal 1999. The
Company plans to complete the Year 2000 project not later than July 31, 1999.
The total cost of the Year 2000 project for fiscal years 1998 through 2000,
including the concurrent upgrade of most of the Company's major operating
systems is estimated at $22 million and is being funded through operating cash
flows. Of the total project cost, approximately $14 million is attributable to
the purchase of new software and hardware which will be capitalized. The
remaining $8 million, will be expensed as incurred over 3 years, including a
projected $2 million for fiscal 1998.
The Company has developed plans for formal communications with all of its
significant suppliers and large customers to determine the extent to which the
Company is vulnerable to those third parties' failure to remediate their own
Year 2000 Issue. The communications will begin no later than the first quarter
of fiscal 1999 and the Company anticipates completion in the second half of
fiscal 1999. There can be no guarantee that the systems of other companies on
which the Company's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have material adverse effect on the Company.
The costs of the project and the date on which the Company plans to complete the
Year 2000 modifications are based on management's best estimates, which were
derived utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.
Environmental and Other Contingencies
The Company is subject to certain loss contingencies related to environmental
proceedings and other legal matters, including those disclosed in Note 7 to the
Consolidated Financial Statements. The Company has made provisions for certain
of these contingencies, including provisions of $150,000 and $500,000 in
discontinued operations in fiscal 1997 and fiscal 1996, respectively, and
$500,000 and $1,300,000 reflected in fiscal 1996 and 1995, respectively. The
Company monitors these proceedings on an ongoing basis and at least quarterly
management reviews the Company's reserves and accruals in relation to each of
them, adjusting provisions as management deems necessary in view of changes in
available information. Changes in estimates of liability are reported in the
periods when they occur. Consequently, management believes that its reserve in
relation to each proceeding is a reasonable estimate of the probable loss
connected to the proceeding, or in cases in which no reasonable estimate is
possible, the minimum amount in the range of estimated losses, based upon its
analysis of the facts as of the close of the most recent fiscal quarter. Because
of uncertainties and risks inherent in litigation generally and in environmental
proceedings in particular, however, there can be no assurance that future
developments will not require additional reserves to be set aside, that some or
all reserves may not be inadequate or that the amounts of any such additional
reserves or any such inadequacy will not have a material adverse effect upon the
Company's financial condition or results of operations.
24
25
GENESCO INC.
AND CONSOLIDATED SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
- --------------------------------------------------------------------------------
Future Capital Needs
The Company expects that cash on hand and cash provided by operations will be
sufficient to fund all of its capital expenditures through Fiscal 1998, although
the Company may borrow from time to time to support seasonal working capital
requirements. The approximately $3.8 million of costs associated with the 1994
Restructuring, 1995 Restructuring and the Manufacturing Restructuring that are
expected to be incurred during the next twelve months are also expected to be
funded from cash on hand and from cash generated from operations.
There were $8.6 million of letters of credit outstanding under the Company's
revolving credit agreement at November 1, 1997, leaving availability under the
revolving credit agreement of $56.4 million.
The restricted payments covenant contained in the indenture under which the
Company's 10 3/8% senior notes were issued prohibits the Company from declaring
dividends on the Company's capital stock, except from a pool of available net
earnings and the proceeds of stock sales. At November 1, 1997, that pool was in
a $72.0 million deficit position. The aggregate of annual dividend requirements
on the Company's Subordinated Serial Preferred Stock, $2.30 Series 1, $4.75
Series 3 and $4.75 Series 4, and on its $1.50 Subordinated Cumulative Preferred
Stock is $300,000. The Company currently has dividend arrearages in the amount
of $1.2 million and is unable to predict when dividends may be reinstated.
Changes in Accounting Principles
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, "Earnings Per Share" ("SFAS No. 128")
which is effective for financial statements issued for periods ending after
December 15, 1997. SFAS No. 128 requires the disclosure of basic and diluted
earnings per share. For the third quarter ended November 1, 1997, basic earnings
per share would have been $.36 and diluted earnings per share would have been
$.34 per share in accordance with SFAS No. 128. For the nine months ended
November 1, 1997, basic earnings per share would have been $.61 and diluted
earnings per share would have been $.57 per share in accordance with SFAS No.
128. For the year ended February 1, 1997, primary earnings per share were $.39
and fully diluted earnings per share were $.39. Had SFAS No. 128 been in effect
for the year ended February 1, 1997, basic earnings per share would have been
$.41 and diluted earnings per share would have been $.39.
25
26
PART II - OTHER INFORMATION
- --------------------------------------------------------------------------------
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
At November 1, 1997 Genesco was in arrears with respect to dividends payable on
the following classes of preferred stock:
ARREARAGE
--------------------------
DATE DIVIDENDS BEGINNING THIS END OF
CLASS OF STOCK PAID TO OF QUARTER QUARTER QUARTER
- --------------------------------------------------------------------------------------------------------------
$2.30 Series 1 October 31, 1993 $ 320,229 $ 21,349 $ 341,578
$4.75 Series 3 October 31, 1993 345,010 23,001 368,011
$4.75 Series 4 October 31, 1993 292,339 19,489 311,828
$1.50 Subordinated Cumulative
Preferred October 31, 1993 168,846 11,256 180,102
- --------------------------------------------------------------------------------------------------------------
TOTALS $1,126,424 $ 75,095 $1,201,519
==============================================================================================================
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
(10)1. Modified and Restated Loan Agreement dated as of September 24, 1997
among the Company and The First National Bank of Chicago, NationsBank,
N.A. and Bank of America, FSB.
(11) Computation of earnings per common and common share equivalent.
(27) Financial Data Schedule (for SEC use only)
- --------------
REPORTS ON FORM 8-K
None
26
27
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.
Genesco Inc.
/s/ James S. Gulmi
James S. Gulmi
Chief Financial Officer
December 16, 1997
27