Hanson Ski Products Essay

1651 Words Mar 13th, 2013 7 Pages
Hanson Ski Products
I
n early July 1986, Alden (Denny) Hanson, president and chief executive officer of Hanson Ski Products, was preparing for a meeting with his executive commit¬tee on the company's current and longer-term financing needs. For one thing, Mr. Hanson wanted to review the plans for fiscal year (FY) 1987.1 Although the com-pany's bankers had provided a $4-2 million line of credit to meet the year's seasonal cash needs, Denny wanted to recheck his figures to be sure that this credit would be sufficient, particularly since Hanson Ski Products was scheduled to repay stock¬holder loans of $841,000 in November.
COMPANY BACKGROUND
Hanson Ski Products was a leading manufacturer of high-quality ski boots located in Boulder,
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In FY 1975, Hanson shipped 2,300 pairs of boots to retailers. By FY 1986, this figure had grown to 85,000 pairs, and revenues had reached $9.8 million (see Exhibits 1 and 2).

Hanson management expected net revenues to continue to grow at an impressive rate during FY 1987. Sales projections made early in the planning process had later been revised upward so that it was now expected that net sales would reach $12 mil¬lion for the year. By FY 1991, Hanson predicted revenues from ski boots would ap¬proximate $26 million; beyond that point it was expected that unit volume of sales would only increase proportionately to the overall growth in the market.
1 Fiscal year 1987 at Hanson Ski Products began on April 1, 1986, and ended on March 31, 1987.
THE ORDER CYCLE
Hanson's boot business was extremely seasonal and could be broken down into the ordering, shipment, and collection phases. The ordering phase was composed of two parts: the stocking order period and the reorder period. During the stocking order period from March through June, sales representatives conducted an intensive mar¬keting campaign, commencing with the equipment dealers' annual Ski Show held in Las Vegas in March. The timing of this show was important in that it was held just after the end of the previous ski season when both manufacturers and equipment dealers were aware of past equipment sales performance and retail inventory levels.
Hanson usually received 25% to 30% of its total

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