http://www.businesswire.com/news/home/20091026005851/en
Third Quarter 2009 Highlights
* Net income for the quarter was $3.5 million
* Net interest income increased $4.7 million or 16% over third quarter 2008
* Net interest margin exceeded 4.00%
* Provision for loan losses was $11.9 million compared to $7.1 million in third
quarter 2008
* Deposit growth was $304.2 million or 12% since year-end 2008
* Total loans decreased $37.1 million or 2% since year-end 2008
* Galena State Bank acquired The Elizabeth State Bank on July 2, 2009, in a
whole bank loss sharing transaction facilitated by the FDIC
DUBUQUE, Iowa--(Business Wire)--
Heartland Financial USA, Inc. (NASDAQ: HTLF)
Quarter Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net income (in millions) $ 3.5 $ 2.9 $ 14.2 $ 13.8
Net income available to common stockholders (in millions) 2.2 3.0 10.4 14.0
Diluted earnings per common share 0.13 0.18 0.64 0.85
Return on average assets 0.22 % 0.35 % 0.37 % 0.56 %
Return on average common equity 3.54 5.26 5.81 8.04
Net interest margin 4.06 3.96 3.98 3.92
"Though falling short of our overall expectations, we are pleased to report another profitable quarter. Heartland`s third quarter results reflect very solid core earnings, aided by an exceptional net interest margin of 4.06%. We also continue to benefit from increased mortgage banking revenues, securities gains and our FDIC-assisted acquisition of The Elizabeth State Bank."
Lynn B. Fuller, chairman, president and chief executive officer, Heartland Financial USA, Inc.
Heartland Financial USA, Inc. (NASDAQ: HTLF) today reported net income of $3.5
million for the quarter ended September 30, 2009, compared to net income of $2.9
million earned during the third quarter of 2008. Net income available to common
stockholders was $2.2 million, or $0.13 per diluted common share, for the
quarter ended September 30, 2009, compared to $3.0 million, or $0.18 per diluted
common share, earned during the third quarter of 2008. Return on average common
equity was 3.54 percent and return on average assets was 0.22 percent for the
third quarter of 2009, compared to 5.26 percent and 0.35 percent, respectively,
for the same quarter in 2008.
Net income recorded for the first nine months of 2009 was $14.2 million,
compared to $13.8 million recorded during the first nine months of 2008. Net
income available to common stockholders was $10.4 million, or $0.64 per diluted
common share, for the nine months ended September 30, 2009, compared to $14.0
million, or $0.85 per diluted common share, earned during the first nine months
of 2008. Return on average common equity was 5.81 percent and return on average
assets was 0.37 percent for the first nine months of 2009, compared to 8.04
percent and 0.56 percent, respectively, for the same period in 2008.
Lynn B. Fuller, Heartland`s chairman, president and chief executive officer
said, "Though falling short of our overall expectations, we are pleased to
report another profitable quarter. Heartland`s third quarter results reflect
very solid core earnings, aided by an exceptional net interest margin of 4.06%.
We also continue to benefit from increased mortgage banking revenues, securities
gains and our FDIC-assisted acquisition of The Elizabeth State Bank."
Earnings for the quarter and nine months ended September 30, 2009, were
positively affected by increased net interest income, loan servicing income,
securities gains and gains on sale of loans. The growth in these areas was
partially offset by an increase in the loan loss provision, which was $11.9
million during the third quarter of 2009 compared to $7.1 million during the
third quarter of 2008. For the nine-month comparative period, the loan loss
provision was $28.6 million during 2009 compared to $14.2 million during 2008.
Also negatively affecting earnings during the third quarter and first nine
months of 2009 were increased FDIC assessments and expenses associated with
other real estate owned.
The Elizabeth State Bank Acquisition
On July 2, 2009, Heartland acquired all deposits of The Elizabeth State Bank in
Elizabeth, Illinois through its subsidiary Galena State Bank based in Galena,
Illinois in a whole bank loss sharing transaction facilitated by the FDIC. Bank
branches previously owned and operated by The Elizabeth State Bank reopened on
Monday, July 6, 2009, as Galena State Bank branches. As of July 2, 2009, The
Elizabeth State Bank had loans of $42.7 million and deposits of $49.3 million.
Galena State Bank paid a premium of 1.0 percent to acquire all of the deposits
of the failed bank. In addition to assuming all of the deposits of the failed
bank, Galena State Bank agreed to purchase $52.3 million of assets. The FDIC
retained the remaining assets for later disposition.
The loans and other real estate owned are covered by two loss share agreements
between the FDIC and Galena State Bank, which affords Galena State Bank
significant loss protection. Under the loss share agreements, the FDIC will
cover 80 percent of the covered loan and other real estate owned losses
(referred to as covered assets) up to $10 million and 95 percent of losses in
excess of that amount. The term for loss sharing on non-residential real estate
losses is five years with respect to losses and eight years with respect to
recoveries, while the term for loss-sharing on residential real estate loans is
ten years with respect to losses and recoveries. The reimbursable losses from
the FDIC are based on the book value of the relevant loan as determined by the
FDIC at the date of the transaction. New loans made after that date are not
covered by the loss share agreements.
Galena State Bank received a $2.5 million discount on the assets acquired and
paid a 1 percent deposit premium. The expected reimbursements under the loss
sharing agreements were recorded as an indemnification asset at the estimated
fair value of $4.4 million at the acquisition date. The estimated fair value of
the loans acquired was $37.8 million and the deposits assumed was $49.5 million.
In addition, a core deposit intangible was recorded of $200 thousand. An
acquisition gain totaling $998,000 resulted from the acquisition and is included
as a component of noninterest income on the statement of income. The amount of
the gain is equal to the amount by which the fair value of the liabilities
assumed exceeded the fair value of the assets purchased.
Commenting on the acquisition, Fuller said, "The Elizabeth State Bank is
precisely the type of growth opportunity we have been seeking. The acquisition
strengthens our Galena State Bank subsidiary through increased market share and
provides more convenience for current customers."
Net Interest Margin Improves; Net Interest Income Grows
Net interest margin, expressed as a percentage of average earning assets, was
4.06 percent during the third quarter of 2009 compared to 3.96 percent during
the third quarter of 2008. For the nine-month periods ended September 30, net
interest margin, expressed as a percentage of average earning assets, was 3.98
percent during 2009 and 3.92 percent during 2008.
Fuller commented, "Heartland`s net interest margin expanded measurably in the
third quarter, primarily due to disciplined pricing and lower-trending interest
rates. Growing by 14 basis points, margin is now at 4.06% and continues to be a
bright spot in the Company`s performance."
Net interest income on a tax-equivalent basis totaled $35.8 million during the
third quarter of 2009, an increase of $4.9 million or 16 percent from the $30.9
million recorded during the third quarter of 2008. For the nine-month period
during 2009, net interest income on a tax-equivalent basis was $101.4 million,
an increase of $12.0 million or 13 percent from the $89.4 million recorded
during the first nine months of 2008. These increases occurred as Heartland`s
interest bearing liabilities repriced downward more quickly than its interest
bearing assets. Also contributing to these increases was the $396.4 million or
13 percent growth in average earning assets during the third quarter of 2009
compared to the same quarter in 2008 and the $364.8 million or 12 percent growth
in average earning assets during the first nine months of 2009 compared to the
same nine months of 2008.
On a tax-equivalent basis, interest income in the third quarter of 2009 totaled
$53.1 million compared to $52.0 million in the third quarter of 2008, an
increase of $1.1 million or 2 percent. For the first nine months of 2009,
interest income on a tax-equivalent basis remained consistent at $155.4 million
compared to $155.3 million for the same period in 2008. Nearly half of
Heartland`s commercial and agricultural loan portfolios consist of floating rate
loans that reprice immediately upon a change in the national prime interest
rate, thus changes in the national prime rate impact interest income more
quickly than if there were more fixed rate loans. The national prime interest
rate was 3.25 percent for the first nine months of 2009. During the first nine
months of 2008, the national prime interest rate decreased from 7.25 percent on
January 1, 2008, to 5.00 percent at September 30, 2008. A large portion of
Heartland`s floating rate loans that reprice immediately with a change in
national prime have interest rate floors that are currently in effect.
Additionally, Heartland had two $50.0 million derivative transactions on the
loan portfolio that were at their floor interest rates. One of these derivative
transactions matured on April 4, 2009.
Interest expense for the third quarter of 2009 was $17.3 million compared to
$21.1 million in the third quarter of 2008, a decrease of $3.8 million or 18
percent. On a nine-month comparative basis, interest expense decreased $11.9
million or 18 percent. Interest rates paid on Heartland`s deposits and
borrowings were significantly lower during the first nine months of 2009
compared to the first nine months of 2008. Approximately 40 percent of
Heartland`s certificate of deposit accounts will mature within the next six
months at a weighted average rate of 2.23 percent.
Noninterest Income Increases; Noninterest Expense Grows
Noninterest income was $11.9 million during the third quarter of 2009 compared
to $7.9 million during the third quarter of 2008, an increase of $4.0 million or
51 percent. Included in noninterest income during the third quarter of 2009 was
the $998,000 gain on The Elizabeth State Bank acquisition. Included in the third
quarter 2008 noninterest income was a $5.2 million gain on the sale of
Heartland`s merchant bankcard processing services and a $4.6 million impairment
loss recorded on Heartland`s investment in perpetual preferred securities issued
by Fannie Mae. For the first nine months of 2009, noninterest income was $39.3
million compared to $24.7 million during the first nine months of 2008, an
increase of $14.7 million or 59 percent. The categories experiencing the largest
increases for both comparative periods were loan servicing income, securities
gains and gains on sale of loans. Loan servicing income increased $662,000 or 61
percent for the quarter and $4.3 million or 119 percent for the nine-month
periods under comparison due to an increase in the number of residential real
estate loans that Heartland services. The portfolio of mortgage loans serviced
for others by Heartland totaled $1.08 billion at September 30, 2009, compared to
$703.3 million at September 30, 2008. Securities gains totaled $1.3 million
during the third quarter of 2009 compared to $5,000 during the third quarter of
2008. For the nine-month comparative period, securities gains totaled $6.5
million during 2009 compared to $1.0 million during 2008. Securities designed to
outperform in a declining rate environment were sold during the first nine
months of 2009 and replaced with securities that are expected to outperform as
rates rise. Gains on sale of loans totaled $877,000 during the third quarter of
2009 compared to $295,000 during the third quarter of 2008. For the first nine
months of 2009, gains on sale of loans totaled $4.9 million compared to $1.3
million for the first nine months of 2008. As long-term mortgage loan rates fell
below 5.00 percent during the first half of 2009, refinancing activity
significantly increased on 15- and 30-year, fixed-rate mortgage loans. Heartland
normally elects to sell these types of loans into the secondary market and
retains the servicing on these loans.
Fuller stated, "Noninterest income continues to help offset higher provision
expense. Residential loan refinance activity has slowed from the first two
quarters this year, but continues to out-pace last year. Also contributing to
the increase in noninterest income is loan servicing income, securities gains
and the gain on our acquisition of The Elizabeth State Bank."
For the third quarter of 2009, noninterest expense totaled $30.3 million, an
increase of $3.6 million or 13 percent from the same period in 2008. This
increase was primarily attributable to higher FDIC assessments, which totaled
$1.4 million during the third quarter of 2009 compared to $384,000 during the
third quarter of 2008, and net losses on repossessed assets, which totaled $3.7
million during the third quarter of 2009 compared to $327,000 during the third
quarter of 2008. For the nine-month period ended September 30, 2009, noninterest
expense totaled $89.1 million, an increase of $11.0 million or 14 percent when
compared to the same nine-month period in 2008. The noninterest expense
categories to experience a significant increase during the nine-month periods
under comparison were FDIC assessments, which were $5.3 million during the first
nine months of 2009 compared to $955,000 during the first nine months of 2008,
and net losses on repossessed assets, which were $6.8 million during the first
nine months of 2009 compared to $517,000 during the first nine months of 2008.
Salaries and employee benefits, increased $1.6 million or 4 percent during the
nine-month comparative period, primarily due to the opening of Minnesota Bank &
Trust in April 2008 and additional staffing at Summit Bank & Trust and New
Mexico Bank & Trust to grow its customer base, at Heartland`s operations center
to provide support services to the bank subsidiaries and at Galena State Bank as
a result of The Elizabeth State Bank acquisition. Total full-time equivalent
employees averaged 1,029 during the first nine months of 2009, compared to 1,002
during the first nine months of 2008.
Heartland`s effective tax rate was 27.61 percent for the first nine months of
2009 compared to 26.97 percent for the first nine months of 2008. Heartland`s
effective tax rate during the first nine months of 2009 did not include any
federal rehabilitation tax credits, whereas Heartland`s effective tax rate
during the first nine months of 2008 included $247,000 in federal rehabilitation
tax credits associated with Dubuque Bank and Trust Company`s ownership interests
in limited liability companies that own certified historic structures.
Heartland`s effective tax rate is also affected by the level of tax-exempt
interest income which, as a percentage of pre-tax income, was 31.38 percent
during the first nine months of 2009 compared to 28.44 percent during the first
nine months of 2008. The tax-equivalent adjustment for this tax-exempt interest
income was $3.3 million during the first nine months of 2009 compared to $2.9
million during the same nine months in 2008.
Loan Demand Slows; Growth in Deposits Continues
At September 30, 2009, total assets had increased $249.3 million or 9 percent
annualized since year-end 2008. Total loans and leases, exclusive of those
covered by the FDIC loss share agreements, were $2.37 billion at September 30,
2009, compared to $2.41 billion at year-end 2008, a decrease of $37.1 million or
2 percent annualized. The only loan category to experience growth during the
first nine months of 2009 was agricultural and agricultural real estate loans.
Nearly all of this growth occurred at Dubuque Bank and Trust Company. Total
loans and leases decreased $7.2 million during the third quarter of 2009
compared to an increase of $18.6 million during the second quarter of 2009 and a
decrease of $48.6 million during the first quarter of 2009.
Total deposits grew to $2.94 billion at September 30, 2009, an increase of
$304.2 million or 15 percent annualized since year-end 2008. The Elizabeth State
Bank acquisition accounted for $49.5 million of this growth. With the exception
of First Community Bank, Wisconsin Community Bank and Rocky Mountain Bank, all
Heartland banks experienced a significant increase in deposits. This growth was
weighted more heavily in Heartland`s Western markets, which were responsible for
nearly 55 percent of the growth. Demand deposits increased $68.6 million or 24
percent annualized since year-end 2008 with $6.9 million coming from The
Elizabeth State Bank acquisition. Savings deposit balances experienced an
increase of $257.7 million or 30 percent annualized since year-end 2008 with
$21.0 million coming from The Elizabeth State Bank acquisition. Time deposits,
exclusive of brokered deposits, experienced a decrease of $14.1 million or 2
percent annualized since year-end 2008 despite the $21.6 million assumed in The
Elizabeth State Bank acquisition. At September 30, 2009, brokered time deposits
totaled $43.5 million or 1 percent of total deposits compared to $51.5 million
or 2 percent of total deposits at year-end 2008. Deposit growth, exclusive of
The Elizabeth State Bank acquisition, was $67.4 million during the third quarter
of 2009 compared to $38.8 million during the second quarter of 2009 and $148.5
million during the first quarter of 2009.
"I am extremely pleased with our continued success in executing our strategic
initiative to focus on non-maturity core deposit growth versus higher-cost
certificates of deposit. Going forward, we will develop and execute strategies
that reward our certificate customers based on their overall banking
relationship," commented Fuller.
Nonperforming Assets Increase
The allowance for loan and lease losses at September 30, 2009, was 1.78 percent
of loans and leases and 50.31 percent of nonperforming loans, compared to 1.57
percent of loans and leases and 52.32 percent of nonperforming loans at June 30,
2009 and 1.48 percent of loans and leases and 45.73 percent of nonperforming
loans at December 31, 2008. The first nine months of 2009 provision for loan
losses was $28.6 million compared to $14.2 million for the first nine months of
2008. Additions to the allowance for loan and lease losses during the first nine
months of 2009 were driven by a variety of factors including deterioration of
economic conditions, downgrades in internal risk ratings, reductions in
appraised values and higher levels of charge-offs, primarily in Heartland`s
Western markets of Arizona, Montana and Colorado.
Nonperforming loans, exclusive of those covered under the loss sharing
agreements, were $84.0 million or 3.55 percent of total loans and leases at
September 30, 2009, compared to $71.1 million or 3.00 percent of total loans and
leases at June 30, 2009, and $78.0 million or 3.24 percent of total loans and
leases at December 31, 2008. Approximately 65 percent, or $55.0 million, of
Heartland`s nonperforming loans are to 19 borrowers, with $14.7 million
originated by Arizona Bank & Trust, $11.7 million originated by Rocky Mountain
Bank, $9.1 million originated by Summit Bank & Trust, $7.3 million originated by
Wisconsin Community Bank, $6.5 million originated by New Mexico Bank & Trust,
$3.3 million originated by Riverside Community Bank and $2.4 million originated
by Dubuque Bank and Trust. The portion of Heartland`s nonperforming loans
covered by government guarantees was $3.8 million at September 30, 2009.
Other real estate owned, exclusive of assets covered under the loss sharing
agreements, was $32.6 million at September 30, 2009, compared to $29.3 million
at June 30, 2009, and $11.8 million at December 31, 2008. The majority of the
increase during 2009 occurred during the first quarter with $12.0 million
attributable to a residential lot development loan originated at Rocky Mountain
Bank. Liquidation strategies have been identified for all the assets held in
other real estate owned. Management plans to market these properties under an
orderly liquidation process instead of under a quick liquidation process which
would most likely result in discounts greater than the projected carrying costs.
Net charge-offs during the first nine months of 2009 were $22.0 million compared
to $12.4 million during the first nine months of 2008. A large portion of the
net charge-offs was related to commercial real estate development loans and
residential lot loans, primarily in the Phoenix, Arizona market.
"With nonperforming assets rising by $15 million during the quarter, the
reduction of nonperforming assets clearly continues as our number one priority.
As with others in our industry, we remain dependent on the direction of the
economies in the markets we serve," Fuller said.
Conference Call Details
Heartland will host a conference call for investors at 5:00 p.m. EDT today. To
participate, dial 877-941-6010 at least five minutes before start time, or log
onto www.htlf.com. If you are unable to participate on the call, a replay will
be available until January 26, 2010, by dialing 800-406-7325, pass code 4172485,
or by logging onto www.htlf.com.
About Heartland Financial USA, Inc.
Heartland Financial USA, Inc. is a $3.9 billion diversified financial services
company providing banking, mortgage, wealth management, insurance and consumer
finance services to individuals and businesses. Heartland currently has 63
banking locations in 42 communities in Iowa, Illinois, Wisconsin, New Mexico,
Arizona, Montana, Colorado and Minnesota. Additional information about Heartland
Financial USA, Inc. is available at www.htlf.com.
Safe Harbor Statement
This release, and future oral and written statements of Heartland and its
management, may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 about Heartland`s financial
condition, results of operations, plans, objectives, future performance and
business. Although these forward-looking statements are based upon the beliefs,
expectations and assumptions of Heartland`s management, there are a number of
factors, many of which are beyond the ability of management to control or
predict, that could cause actual results to differ materially from those in its
forward-looking statements. These factors, which are detailed in the risk
factors included in Heartland`s Annual Report on Form 10-K filed with the
Securities and Exchange Commission, include, among others: (i) the strength of
the local and national economy; (ii) the economic impact of past and any future
terrorist threats and attacks and any acts of war, (iii) changes in state and
federal laws, regulations and governmental policies concerning the Company`s
general business; (iv) changes in interest rates and prepayment rates of the
Company`s assets; (v) increased competition in the financial services sector and
the inability to attract new customers; (vi) changes in technology and the
ability to develop and maintain secure and reliable electronic systems; (vii)
the loss of key executives or employees; (viii) changes in consumer spending;
(ix) unexpected results of acquisitions; (x) unexpected outcomes of existing or
new litigation involving the Company; and (xi) changes in accounting policies
and practices. All statements in this release, including forward-looking
statements, speak only as of the date they are made, and Heartland undertakes no
obligation to update any statement in light of new information or future
events.
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Interest Income
Interest and fees on loans and leases $ 38,790 $ 40,990 $ 116,696 $ 124,444
Interest on securities and other:
Taxable 10,809 8,228 29,269 22,728
Nontaxable 2,231 1,670 6,139 4,996
Interest on federal funds sold - 85 1 267
Interest on deposits in other financial institutions 17 3 18 10
Total Interest Income 51,847 50,976 152,123 152,445
Interest Expense
Interest on deposits 13,046 15,622 40,744 48,375
Interest on short-term borrowings 154 776 539 4,049
Interest on other borrowings 4,065 4,692 12,803 13,562
Total Interest Expense 17,265 21,090 54,086 65,986
Net Interest Income 34,582 29,886 98,037 86,459
Provision for loan and lease losses 11,896 7,083 28,602 14,213
Net Interest Income After Provision for Loan and Lease Losses 22,686 22,803 69,435 72,246
Noninterest Income
Service charges and fees 3,288 3,125 9,284 8,620
Loan servicing income 1,756 1,094 7,853 3,585
Trust fees 1,949 2,070 5,617 6,159
Brokerage and insurance commissions 824 942 2,420 2,717
Securities gains, net 1,291 5 6,462 1,015
Gain (loss) on trading account securities 210 (33 ) 272 (467 )
Impairment loss on securities - (4,688 ) - (4,804 )
Gains on sale of loans 877 295 4,916 1,279
Income (loss) on bank owned life insurance 297 (247 ) 640 596
Gain on acquisition 998 - 998 -
Gain on sale of merchant bankcard processing services - 5,200 - 5,200
Other noninterest income 418 117 872 772
Total Noninterest Income 11,908 7,880 39,334 24,672
Noninterest Expense
Salaries and employee benefits 14,661 15,000 46,046 44,459
Occupancy 2,221 2,262 6,772 6,799
Furniture and equipment 1,594 1,662 4,936 5,201
Professional fees 2,706 2,712 7,027 7,299
FDIC assessments 1,393 384 5,258 955
Advertising 740 1,012 2,272 2,853
Other intangibles amortization 199 236 668 708
Net loss on repossessed assets 3,680 327 6,832 517
Other noninterest expenses 3,129 3,142 9,275 9,290
Total Noninterest Expense 30,323 26,737 89,086 78,081
Income Before Income Taxes 4,271 3,946 19,683 18,837
Income taxes 803 1,018 5,434 5,081
Net Income $ 3,468 $ 2,928 $ 14,249 $ 13,756
Net income attributable to noncontrolling interest, net of tax 44 77 147 219
Net Income Attributable to Heartland 3,512 3,005 14,396 13,975
Preferred dividends and discount (1,336 ) - (4,008 ) -
Net Income Available to Common Stockholders $ 2,176 $ 3,005 $ 10,388 $ 13,975
Earnings per common share-diluted $ 0.13 $ 0.18 $ 0.64 $ 0.85
Weighted average shares outstanding-diluted 16,340,092 16,355,393 16,320,205 16,392,321
HEARTLAND FINANCIAL USA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
For the Quarter Ended
9/30/2009 6/30/2009 3/31/2009 12/31/2008 9/30/2008
Interest Income
Interest and fees on loans and leases $ 38,790 $ 38,423 $ 39,483 $ 39,905 $ 40,990
Interest on securities and other:
Taxable 10,809 10,039 8,421 8,503 8,228
Nontaxable 2,231 2,025 1,883 1,692 1,670
Interest on federal funds sold - - 1 32 85
Interest on deposits in other financial institutions 17 - 1 8 3
Total Interest Income enowrap bwcellpaddingright0 bwverticalalignbottom bwtextalignright" id="t6082409_3_20_7856"> 10,288 $ 11,020
Accrued compensation 2,546 3,151 2,947
Other accruals 1,893 2,528 3,472
Total current liabilities 16,127 15,967 17,439
Deferred revenue 263 375 413
Deferred lease obligations 599 190 178
Compensation and benefits 5,424 5,844 1,564
Deferred tax liabilities 2,174 777 2,330
Total liabilities 24,587 23,153 21,924
Total shareholders' equity 63,443 61,412 63,540
Total liabilities and shareholders' equity $ 88,030 $ 84,565 $ 85,464
LaCrosse Footwear, Inc.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
Three Quarters Ended
September 26, September 27,
2009 2008
Cash flows from operating activities:
Net income $ 3,187 $ 4,983
Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of effects of acquisitions:
Depreciation and amortization 2,041 1,368
Stock-based compensation expense 448 454
Deferred income taxes 1,366 15
Loss on disposal of property and equipment 194 2
Changes in operating assets and liabilities, net of effects of acquisitions:
Trade and other accounts receivable (5,482 ) (9,367 )
Inventories (5,778 ) (469 )
Accounts payable 1,400 3,564
Accrued expenses and other (735 ) 936
Net cash provided by (used in) operating activities (3,359 ) 1,486
Cash flows from investing activities:
Purchases of property and equipment (4,723 ) (1,504 )
Proceeds from sale of property and equipment 33 -
Acquisitions (388 ) (3,169 )
Net cash used in investing activities (5,078 ) (4,673 )
Cash flows from financing activities:
Cash dividends paid (2,362 ) (8,541 )
Purchase of treasury stock - (95 )
Proceeds from exercise of stock options 432 938
Net cash used in financing activities (1,930 ) (7,698 )
Effect of foreign currency exchange rate changes on cash and cash equivalents 179 (184 )
Net decrease in cash and cash equivalents (10,188 ) (11,069 )
Cash and cash equivalents:
Beginning of period 13,683 15,385
End of period $ 3,495 $ 4,316
Heartland Financial USA, Inc.
John K. Schmidt, 563-589-1994
Chief Operating Officer
Chief Financial Officer
jschmidt@htlf.com
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