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Florsheim Reports Second Quarter Earnings.

CHICAGO--(BUSINESS WIRE)--July 26, 1999--

Florsheim Group Inc. (NASDAQ: FLSC) today reported net earnings of $129,000 or $0.02 per share, for the second quarter of 1999, excluding non-recurring costs, compared to $598,000 or $0.07 per share for the second quarter of 1998. For the six months ended July 3, 1999 net earnings were $1,089,000, or $0.13 per share, excluding non-recurring costs, compared to $1,124,000 or $0.13 per share, for the six months ended July 4, 1998. In addition to the non-recurring charges, results for the second quarter and six months periods of 1999 were adversely impacted by a $700,000 pre-tax charge relating to bankruptcy filings by two large customers.

Net sales were $62.5 million for the second quarter of 1999, compared to $61.8 million in the corresponding 1998 period, a 1.1 percent increase. For the six months ended July 3, 1999, net sales were $126.1 million compared to $120.5 million for the six months ended July 4, 1998, a 4.6 percent increase.

U.S. Wholesale sales in the second quarter increased 8.4 percent over the corresponding period of 1998. This increase resulted from the continued strong sales of the Spring product line and continued expansion of department store doors and Big Box retailers.

Reflecting planned store closings, U.S. Retail net sales for specialty and outlet stores declined 6.4 percent for the second quarter and decreased 5.6 percent for the six-month period. Same store specialty sales increased 3.1 percent for the quarter and 4.2 percent for the six-month period. This sales improvement is primarily attributable to new spring product, remodeled stores and the closing of unproductive stores.

International net sales increased 5.1 percent in the second quarter and 3.8 percent for the six-month periods. This increase was highlighted by improved performance in Canada and the Pacific region.

Richard J. Anglin, Executive Vice President and Chief Financial Officer of Florsheim commented, "We are pleased that overall our business remained strong in the second quarter. While we lost some of the momentum which commenced in the first quarter of 1999, largely due to our computer system implementation problems, our backlog at July 3, 1999 has increased 22.4 percent over the prior year period and is at the highest level we have seen in the past two years. We are optimistic regarding performance for the remainder of 1999."

Florsheim Group Inc. designs, markets, manufactures and sources a diverse and extensive range of products in the middle to upper price range of the men's quality footwear market. Florsheim distributes its products in more than 6,000 department and specialty locations worldwide, through approximately 289 company-owned specialty and outlet stores and 43 licensed stores worldwide.

Information contained in this release with respect to the Company's opportunities and prospects for 1999 is forward-looking. These statements represent the Company's reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially. Such factors include materially adverse changes in economic conditions affecting the men's footwear markets served by the Company, delay in the implementation of the company's programs and lower than expected customer acceptance. -0-
 FLORSHEIM GROUP INC.
 CONSOLIDATED OPERATING RESULTS
 (Dollars in Thousands, except per share amounts)
 (Unaudited)

 Pro Forma(1)
 Three Months Ended Three Months Ended
 ------------------ ------------------
 7/04/98 7/03/99 7/04/98 7/03/99
 -------- -------- -------- --------
NET SALES $ 61,812 $ 62,544 $ 61,812 $ 62,544

COST OF SALES 33,162 32,797 33,162 32,797
 -------- -------- -------- --------
GROSS PROFIT 28,650 29,747 28,650 29,747
 % OF NET SALES 46.4% 47.6% 46.4% 47.6%

SELLING, GENERAL
 AND ADMINISTRATIVE EXPENSES 25,456 27,099 25,456 27,099
 % OF NET SALES 41.2% 43.3% 41.2% 43.3%

OTHER EXPENSE 9 1,123 9 23
 -------- -------- -------- --------
EARNINGS FROM OPERATIONS 3,185 1,525 3,185 2,625
 % OF NET SALES 5.2% 2.4% 5.2% 4.2%

INTEREST EXPENSE, NET 2,250 2,430 2,250 2,430
 -------- -------- -------- --------
EARNINGS BEFORE
 INCOME TAX EXPENSE 935 (905) 935 195

INCOME TAX EXPENSE 337 (318) 337 66
 -------- -------- -------- --------
NET EARNINGS $ 598 $ (587) $ 598 $ 129
 % OF NET SALES 1.0% -0.9% 1.0% 0.2%
 ======== ======== ======== ========
BASIC EARNINGS PER SHARE:

 NET EARNINGS PER SHARE $ 0.07 $ (0.07) $ 0.07 $ 0.02
 ======== ======== ======== ========

 Weighted average number of
 shares outstanding 8,413 8,454 8,413 8,454
 ======== ======== ======== ========

DILUTED EARNINGS PER SHARE:

 NET EARNINGS PER SHARE $ 0.07 $ (0.07) $ 0.07 $ 0.02
 ======== ======== ======== ========

 Weighted average number of
 shares outstanding 8,588 8,524 8,588 8,524
 ======== ======== ======== ========


EBITDA $ 4,420 $ 4,260
 ======== ========

(1) Pro Forma excludes $1,100 of non-recurring charges.


 FLORSHEIM GROUP INC.
 CONSOLIDATED OPERATING RESULTS
 (Dollars in Thousands, except per share amounts)
 (Unaudited)

 Pro Forma (1)
 Six Months Ended Six Months Ended
 7/04/98 7/03/99 7/04/98 7/03/99

Net sales $ 120,482 $ 126,069 $ 120,482 $ 126,069
Cost of sales 64,048 66,199 64,048 66,199
Gross profit 56,434 59,870 56,434 59,870
 % of net sales 46.8% 47.5% 46.8% 47.5%
Selling, general and
 administrative
 expenses 50,354 53,273 50,354 53,273
 % of net sales 41.8% 42.3% 41.8% 42.3%
Other expense 7 1,149 7 49
Earnings from operations 6,073 5,448 6,073 6,548
 % of net sales 5.0% 4.3% 5.0% 5.2%
Interest expense, net 4,316 4,827 4,316 4,827
Earnings before
 income tax expense 1,757 621 1,757 1,721
Income tax expense 633 229 633 632
Net earnings $ 1,124 $ 392 $ 1,124 $ 1,089
 % of net sales 0.9% 0.3% 0.9% 0.9%
Basic earnings per
 share:
 Net earnings
 per share: $ 0.13 $ 0.05 $ 0.13 $ 0.13
Weighted average
 number of shares
 outstanding 8,413 8,454 8,413 8,454
Diluted earnings per
 share:
 Net earnings
 per share: $ 0.13 $ 0.05 $ 0.13 $ 0.13
Weighted
 average number of
 shares outstanding 8,479 8,513 8,479 8,513

EBITDA(1) $ 8,511 $ 9,694

(1) Pro Forma excludes $1,100 of non-recurring charges.


 FLORSHEIM GROUP INC.
 CONDENSED CONSOLIDATED BALANCE SHEET
 (Dollars in Thousands)
 (Unaudited)

 Jan. 2, July 3,
 1999 1999
 ---- ----
Assets
------

CASH AND CASH EQUIVALENTS $ 6,931 $ 7,798
RECEIVABLES, NET 33,370 36,609
INVENTORIES 79,855 80,324
PREPAID EXPENSES AND OTHER CURRENT ASSETS 10,170 10,539
 --------- ---------
 TOTAL CURRENT ASSETS 130,326 135,270

PROPERTY, PLANT AND EQUIPMENT, NET 30,981 30,325
OTHER NONCURRENT ASSETS 38,259 39,925
 --------- ---------
TOTAL ASSETS $ 199,566 $ 205,520
 ========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES
 ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 28,374 $ 26,964
 REVOLVING CREDIT FACILITY - SHORT TERM 18,500 25,500
 --------- ---------
 TOTAL CURRENT LIABILITIES 46,874 52,464

LONG-TERM DEBT 18,412 18,412
REVOLVING CREDIT FACILITY - LONG TERM 58,500 58,500
OTHER LONG-TERM LIABILITIES 22,433 22,366
 --------- ---------
TOTAL LIABILITIES 146,219 151,742
TOTAL SHAREHOLDERS' EQUITY 53,347 53,788
 --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
 EQUITY $ 199,566 $ 205,520
 ========= =========


 FLORSHEIM GROUP INC.
 SELECTED HISTORICAL DATA
 (Unaudited)

 Three months ended
(Dollars in thousands) July 4, 1998 July 3, 1999
 Amount % Amount %
Net sales:
 U.S. Wholesale $ 23,315 37.7% $ 25,263 40.4%
 U.S. Retail 27,737 44.9 25,971 41.5
 International (including
 exports from U.S.) 10,760 17.4 11,310 18.1

 Total net sales $ 61,812 100.0% $ 62,544 100.0%

Percent change in same
 store sales(1) 3.2% 3.1%


 Six months ended
(Dollars in thousands) July 4, 1998 July 3, 1999
 Amount % Amount %
Net sales:
 U.S. Wholesale $ 44,087 36.6% $ 51,870 41.1%
 U.S. Retail 54,036 44.8 50,983 40.4
 International (including
 exports from U.S.) 22,359 18.6 23,216 18.4

 Total net sales $120,482 100.0% $126,069 100.0%

Percent change in same
 store sales(2) (2.2)% 4.2%

Number of retail stores:
 U.S. specialty 179 166
 U.S. outlets 90 71
 International 54 52
 Total 323 289

(1) Includes only those sales figures for U.S. specialty stores that
have been in operation for at least twelve full months. Percentage
change reflects sales for period depicted as compared to the sales
from the prior year period of comparable length.
COPYRIGHT 1999 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Business Wire
Geographic Code:1USA
Date:Jul 27, 1999
Words:1414
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