##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q

(Mark One)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 27, 2003

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from  to



Commission file number
    
    001-31309


PHOENIX FOOTWEAR GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware
    
    15-0327010(State or Other Jurisdiction of
Incorporation or Organization)
    
    (IRS Employer
Identification No.)5759 Fleet Street, Suite 220, Carlsbad, California
    
    92008(Address of Principal Executive Offices)
    
    (Zip Code)


(760) 602-9688

(Registrants Telephone Number, Including Area Code)


(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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 for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.



CLASS
    
    OUTSTANDING AT NOVEMBER 3, 2003Common, $0.01 par value
    
    5,060,311






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TABLE OF CONTENTS



|                              |                                                                                               |  |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I: FINANCIAL INFORMATION
|                              | Item 1. Consolidated Condensed Financial Statements                                          
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                              | Item 4. Controls and Procedures                                                              
|Part II  Other Information  
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 2. Changes in Securities and Use of Proceeds                                            
|                              | Item 3. Defaults upon Senior Securities                                                      
|                              | Item 4. Submission of matters to a vote of security holders                                  
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|EXHIBIT 10.2                 
|EXHIBIT 10.3                 
|EXHIBIT 10.4                 
|EXHIBIT 31.1                 
|EXHIBIT 31.2                 
|EXHIBIT 32.1                 
|EXHIBIT 32.2                 



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##### Table of Contents



PHOENIX FOOTWEAR GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

PagePART I
    
    FINANCIAL INFORMATIONItem 1. Consolidated Condensed Financial Statements and Notes to Consolidated Condensed Financial
Statements
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    14Item 4. Controls and Procedures
    
    15PART II
    
    OTHER INFORMATIONItem 1. Legal Proceedings
    
    16Item 2. Changes in Securities
    
    16Item 3. Defaults Upon Senior Securities
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    16Item 5. Other Information
    
    16Item 6. Exhibits and Reports on Form 8-K
    
    16Signatures
    
    17


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PART I: FINANCIAL INFORMATION

Item 1. Consolidated Condensed Financial Statements

PHOENIX FOOTWEAR GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS

September 27,
    
    December 31,2003
    
    2002(Unaudited)ASSETSCURRENT ASSETS:Cash
    
    $
    
    
    
    $
    1,265,000Accounts receivable (less allowances of $752,000 in 2003 and $479,000 in 2002)
    
    
    9,414,000
    
    
    
    5,679,000Inventoriesnet
    
    
    9,725,000
    
    
    
    6,662,000Other receivable
    
    
    545,000
    
    
    
    316,000Other current assets
    
    
    448,000
    
    
    
    185,000Deferred income tax asset
    
    
    297,000
    
    
    
    297,000Total current assets
    
    
    20,429,000
    
    
    
    14,404,000PLANT AND EQUIPMENTNet
    
    
    1,106,000
    
    
    
    1,499,000OTHER ASSETS:Other assetsnet
    
    
    121,000
    
    
    
    158,000Goodwill and unamortizable intangibles
    
    
    5,256,000
    
    
    
    1,645,000Intangible assets, net
    
    
    778,000
    
    
    
    Other receivable
    
    
    719,000
    
    
    
    1,248,000Total other assets
    
    
    6,874,000
    
    
    
    3,051,000TOTAL ASSETS
    
    $
    28,409,000
    
    
    $
    18,954,000LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    3,044,000
    
    
    $
    1,872,000Accrued expenses
    
    
    1,321,000
    
    
    
    1,164,000Note payable, line of credit
    
    
    2,967,000
    
    
    
    Notes payablecurrent
    
    
    1,350,000
    
    
    
    750,000Liability to former stockholders
    
    
    
    
    
    
    1,806,000Income taxes payable
    
    
    427,000
    
    
    
    Total current liabilities
    
    
    9,109,000
    
    
    
    5,592,000OTHER LIABILITIES:Notes payablenoncurrent
    
    
    3,900,000
    
    
    
    2,250,000Deferred income tax liability
    
    
    1,000,000
    
    
    
    1,000,000Total other liabilities
    
    
    4,900,000
    
    
    
    3,250,000Total liabilities
    
    
    14,009,000
    
    
    
    8,842,000STOCKHOLDERS EQUITY:Common stock, $.01 par value50,000,000 shares authorized; 4,988,422 and 4,588,360 shares
issued in 2003 and 2002, respectively
    
    
    50,000
    
    
    
    46,000Additional paid-in-capital
    
    
    10,712,000
    
    
    
    8,081,000Retained earnings
    
    
    5,212,000
    
    
    
    4,379,00015,974,000
    
    
    
    12,506,000Less: Treasury stock at cost, 602,894 and 998,194 shares in 2003 and 2002, respectively
    
    
    (1,574,000
    )
    
    
    (2,394,000
    )Total stockholders equity
    
    
    14,400,000
    
    
    
    10,112,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    28,409,000
    
    
    $
    18,954,000


See notes to consolidated condensed financial statements.

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PHOENIX FOOTWEAR GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
    
    Nine Months EndedSeptember 27,
    
    September 30,
    
    September 27,
    
    September 30,2003
    
    2002
    
    2003
    
    2002NET SALES
    
    $
    11,002,000
    
    
    $
    9,521,000
    
    
    $
    27,761,000
    
    
    $
    28,760,000COST OF GOODS SOLD
    
    
    6,463,000
    
    
    
    5,703,000
    
    
    
    16,015,000
    
    
    
    18,026,000GROSS PROFIT
    
    
    4,539,000
    
    
    
    3,818,000
    
    
    
    11,746,000
    
    
    
    10,734,000OPERATING EXPENSES:Selling, general and administrative expenses
    
    
    3,009,000
    
    
    
    2,621,000
    
    
    
    8,463,000
    
    
    
    7,622,000Other (income) expensesnet
    
    
    (184,000
    )
    
    
    205,000
    
    
    
    1,231,000
    
    
    
    205,000Total operating expenses
    
    
    2,825,000
    
    
    
    2,826,000
    
    
    
    9,694,000
    
    
    
    7,827,000OPERATING INCOME
    
    
    1,714,000
    
    
    
    992,000
    
    
    
    2,052,000
    
    
    
    2,907,000INTEREST EXPENSE
    
    
    61,000
    
    
    
    73,000
    
    
    
    513,000
    
    
    
    408,000EARNINGS BEFORE INCOME TAXES
    
    
    1,653,000
    
    
    
    919,000
    
    
    
    1,539,000
    
    
    
    2,499,000INCOME TAX PROVISION
    
    
    507,000
    
    
    
    368,000
    
    
    
    706,000
    
    
    
    1,000,000NET INCOME
    
    $
    1,146,000
    
    
    $
    551,000
    
    
    $
    833,000
    
    
    $
    1,499,000NET INCOME PER SHARE (Note 2)Basic
    
    $
    .28
    
    
    $
    .16
    
    
    $
    .22
    
    
    $
    .44Diluted
    
    $
    .26
    
    
    $
    .14
    
    
    $
    .20
    
    
    $
    .39SHARES OUTSTANDING:Basic
    
    
    4,066,444
    
    
    
    3,541,210
    
    
    
    3,777,910
    
    
    
    3,404,674Diluted
    
    
    4,479,444
    
    
    
    3,886,494
    
    
    
    4,092,379
    
    
    
    3,872,362


See notes to consolidated condensed financial statements.

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PHOENIX FOOTWEAR GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine Months EndedSeptember 27,
    
    September 30,2003
    
    2002CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    833,000
    
    
    $
    1,499,000Adjustments to reconcile net income to net cash (used) provided by operating activities:Depreciation and amortization
    
    
    170,000
    
    
    
    205,000Allocation of shares in defined contribution plan
    
    
    402,000
    
    
    
    Loss on sale of property and equipment
    
    
    8,000
    
    
    
    Loss on impairment of assets
    
    
    
    
    
    
    205,000Changes in assets and liabilities:(Increase) decrease in:Accounts receivable  net
    
    
    (2,564,000
    )
    
    
    1,199,000Inventories  net
    
    
    (315,000
    )
    
    
    3,335,000Other current receivable
    
    
    (229,000
    )
    
    
    Other current assets
    
    
    (209,000
    )
    
    
    (146,000
    )Other noncurrent assets
    
    
    568,000
    
    
    
    1,236,000Increase (decrease) in:Accounts payable
    
    
    761,000
    
    
    
    1,664,000Accrued expenses
    
    
    (411,000
    )
    
    
    (320,000
    )Liability to former stockholders
    
    
    (1,806,000
    )
    
    
    Income taxes payable
    
    
    491,000
    
    
    
    957,000Net cash (used) provided by operating activities
    
    
    (2,301,000
    )
    
    
    9,834,000CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of equipment
    
    
    (214,000
    )
    
    
    (255,000
    )Payments for acquisitions
    
    
    (2,739,000
    )
    
    
    Proceeds from disposal of property and equipment
    
    
    457,000
    
    
    
    Net cash used by investing activities
    
    
    (2,496,000
    )
    
    
    (255,000
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net borrowings (payments) on note payableline of credit
    
    
    4,466,000
    
    
    
    (7,456,000
    )Repayments of notes payable
    
    
    (750,000
    )
    
    
    (2,878,000
    )Issuance of common stock
    
    
    57,000
    
    
    
    5,000Purchases of treasury stock
    
    
    (201,000
    )
    
    
    Debt issuance and other costs
    
    
    (40,000
    )
    
    
    (19,000
    )Net cash provided (used) by financing activities
    
    
    3,532,000
    
    
    
    (10,348,000
    )NET DECREASE IN CASH
    
    
    (1,265,000
    )
    
    
    (769,000
    )CASHBeginning of period
    
    
    1,265,000
    
    
    
    1,161,000CASHEnd of period
    
    $
    
    
    
    $
    392,000


See notes to consolidated condensed financial statements.

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PHOENIX FOOTWEAR GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Description of Business and Summary of Significant Accounting

1. Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of
Phoenix Footwear Group, Inc. (the Company) have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments which are of a normal recurring
nature, necessary for fair presentation have been included in the accompanying
financial statements. These financial statements should be read in conjunction
with the consolidated financial statements and footnotes included in the
Companys Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 2002. The results of
operations for the three and nine months ended September 27, 2003, or for any
other interim period, are not necessarily indicative of the results that may be
expected for the full year.

On May 22, 2003, the Board of Directors authorized a two-for-one stock split
which became effective on June 12, 2003. All references in these consolidated
financial statements and notes related to numbers of shares and per share
amounts have been restated to reflect the effect of the stock split.

Principles of Consolidation

The consolidated financial statements consist of Phoenix Footwear Group, Inc.
and its wholly owned subsidiaries, Penobscot Shoe Company (Penobscot) and
H.S. Trask & Co (Trask). The results of Trasks operations have been
included in the consolidated financial statements since August 7, 2003, the
date of acquisition. Intercompany accounts and transactions have been
eliminated in consolidation.

Accounting Period

Effective January 1, 2003, the Company changed its year-end to a fiscal year
that is the 52- or 53-week period ending the Saturday nearest to December 31st.

2. Per Share Data

In addition to shares outstanding held by the public, the Companys defined
contribution 401(k) savings plan held approximately 602,000 shares as of
September 27, 2003, which were issued during 2001 in connection with the
termination of the Companys defined benefit pension plan. These shares, while
eligible to vote, are classified as treasury stock and therefore are not
outstanding for purpose of determining per share earnings until the time that
such shares are allocated to employee accounts. This allocation is occurring
over a seven year period which commenced in 2002. During the first quarter of
2003 approximately 119,000 shares were allocated to the defined contribution
401(k) savings plan. No shares were allocated during the second or third
quarters of 2003. Basic net income per share is computed by dividing net
income by the weighted average number of common shares outstanding for the
period. Diluted net income per share is calculated by dividing net income and
the effect of assumed conversions by the weighted average number of common and,
when applicable, potential common shares outstanding during the period. Net
income per share for prior periods has been restated to reflect a two-for-one
stock split effective May 22, 2003. A reconciliation of the numerators and
denominators of basic and diluted income per share is presented below.

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Three Months Ended
    
    Nine Months EndedSeptember 27,
    
    September 30,
    
    September 27,
    
    September 30,2003
    
    2002
    
    2003
    
    2002Basic net income per share:Net income
    
    $
    1,146,000
    
    
    $
    551,000
    
    
    $
    833,000
    
    
    $
    1,499,000Weighted average common shares outstanding
    
    
    4,066,444
    
    
    
    3,541,210
    
    
    
    3,777,910
    
    
    
    3,404,674Basic net income per share
    
    $
    0.28
    
    
    $
    0.16
    
    
    $
    0.22
    
    
    $
    0.44Diluted net income per share:Net income
    
    $
    1,146,000
    
    
    $
    551,000
    
    
    $
    833,000
    
    
    $
    1,499,000Interest on convertible debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,000Net income and effect of assumed conversions
    
    
    1,146,000
    
    
    
    551,000
    
    
    
    833,000
    
    
    
    1,516,000Weighted average common shares outstanding
    
    
    4,066,444
    
    
    
    3,541,210
    
    
    
    3,777,910
    
    
    
    3,404,674Effect of stock options outstanding
    
    
    413,000
    
    
    
    345,284
    
    
    
    314,469
    
    
    
    323,516Effect of convertible debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,172Weighted average common and potential
common shares outstanding
    
    
    4,479,444
    
    
    
    3,886,494
    
    
    
    4,092,379
    
    
    
    3,872,362Diluted net income per share
    
    $
    0.26
    
    
    $
    0.14
    
    
    $
    0.20
    
    
    $
    0.39


3. Goodwill

Effective January 1, 2002, the Company changed its method of accounting for
goodwill to conform with Statement of Financial Accounting Standards (SFAS) No.
142, Goodwill and Other Intangible Assets. SFAS No. 142 discontinues the
practice of amortizing goodwill and initiates an annual review for impairment.
Impairment would be examined more frequently if certain indicators are
encountered. The Company determined that there was no impairment of goodwill to
be recorded during the quarter ended September 27, 2003. In accordance with
SFAS No. 142 no goodwill amortization was recognized in either the quarter or
nine month periods ended September 27, 2003 or September 30, 2002,
respectively.

4. Acquisition

On August 7, 2003, the Company purchased all of the outstanding shares of Trask
for approximately $2.9 million in cash and 699,980 shares of newly issued
common stock. The results of Trasks operations have been included in the
consolidated financial statements since that date. Trask is a provider of
mens casual boots and shoes and the acquisition allows the Company to compete
in the mens casual footwear market.

The aggregate purchase price was $6.3 million, including $2.9 million in cash
and common stock valued at $3.2 million. The value of the 699,980 common
shares issued was determined based on the average market price of the Companys
common shares over the 3-day period before and after the terms of the
acquisition were agreed to and announced.

The following table summarizes the preliminary allocation of the purchase price
based on the estimated fair values of the assets acquired and liabilities
assumed at August 7, 2003, the date of acquisition. The preliminary purchase
price allocation is subject to refinement based upon managements final
conclusions.

Current assets
    
    $
    4,326,000Property, plant and equipment
    
    
    15,000Intangible assets, subject to amortization
    
    
    794,000Goodwill and unamortizable intangibles
    
    
    3,610,000Total assets acquired
    
    
    8,745,000Current liabilities
    
    
    (2,416,000
    )Net assets acquired
    
    $
    6,329,000


Of the $4.4 million of acquired goodwill and intangible assets, $1.2 million
was preliminarily allocated to registered trademarks and tradenames that are
not subject to amortization. Intangible assets totaling $794,000 which are
subject to amortization have a weighted-average useful life of approximately 9
years. The intangible assets subject to amortization include wholesale
customer list of $700,000 (ten year weighted-average useful life), retail
customer list of $46,000 (five year weighted-average useful life), non-compete
agreement of $23,000 (two year weighted-average useful life) and website of
$25,000 (five year weighted-average useful life).

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The following is the consolidated results of operations of the Company for the
three and nine month periods ended September 27, 2003 and September 30, 2002,
respectively, on a proforma basis using internally generated unaudited
information, assuming the Trask acquisition occurred at the beginning of the
earliest period presented. This pro forma information is presented after giving
effect to certain adjustments which are based upon currently available
information and upon certain assumptions that the Company believes are
reasonable. This pro forma information does not purport to present what the
Companys consolidated results of operations would actually have been if the
Trask acquisition had in fact occurred at the beginning of the periods
indicated, nor do they project the Companys consolidated results of operations
for any future period.

Three Months Ended
    
    Nine Months EndedSeptember 27,
    
    September 30,
    
    September 27,
    
    September 30,2003
    
    2002
    
    2003
    
    2002Net sales
    
    $
    12,103,000
    
    
    $
    12,073,000
    
    
    $
    32,663,000
    
    
    $
    34,886,000Gross profit
    
    $
    4,937,000
    
    
    $
    4,744,000
    
    
    $
    13,735,000
    
    
    $
    12,922,000Net earnings
    
    $
    1,219,000
    
    
    $
    599,000
    
    
    $
    677,000
    
    
    $
    1,340,000Net earnings per diluted common share
    
    $
    0.27
    
    
    $
    0.13
    
    
    $
    0.17
    
    
    $
    0.30


5. Liability to Former Stockholders

The accompanying consolidated balance sheet as of December 31, 2002 included an
obligation of approximately $1.8 million and accrued interest of $280,000 to
dissenting former stockholders of Penobscot. This liability arose prior to the
acquisition of Penobscot and was assumed by the Company. On May 30, 2003 the
Company received from the Superior Court in Penobscot County, Maine its
decision which stated dissenting Penobscot stockholders are entitled to $15.87
per common share, which represents $4.12 more per share than the amount the
Company paid at the time of the acquisition. Additionally, the ruling granted
interest to the dissenting stockholders bringing the total judgment to $3.1
million. As a result, the Company recorded in Other expenses $751,000 of
litigation related legal and settlement expenses and $346,000 of interest
expense related to this litigation during the quarter ended June 28, 2003. The
Company used $500,000 in cash and increased its note payable  line of credit
in the amount of $2.6 million to pay the settlement. No additional amounts
related to this litigation settlement were recorded in the quarter ended
September 27, 2003.

6. Debt

The Company has a loan agreement which consists of a revolving line of credit
(revolver) and a term loan facility in the amount of $5.2 million. Under the
terms of the agreement, the borrowing base for the revolver is based on certain
balances of accounts receivable and inventory, as defined in the agreement. As
of September 27, 2003 the maximum credit amount under the revolver is $11.0
million. The revolver expires on May 1, 2006 and has an interest rate of LIBOR
plus 175 to 300 basis points. The revolver is secured by accounts receivable,
inventory and equipment. The balance owed under the Companys revolving line
of credit as of September 27, 2003 totaled $3.0 million. The term loans, which
are subject to similar interest rate changes as the revolver, are payable as
noted below and are also secured by accounts receivable, inventory and
equipment.

Long-term debt as of September 27, 2003 consisted of the following:

Term loan payable to bank in annual installments of
$750,000 through 2006, interest due monthly
at LIBOR plus 200 basis points
    
    $
    2,250,000Term loan payable to bank in quarterly installments of
$150,000 through 2008, interest due monthly
at LIBOR plus 200 basis points
    
    
    3,000,000Less: current portion
    
    
    (1,350,000
    )Noncurrent portion
    
    $
    3,900,000


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7. Other (Income) Expenses -Net

Other (income) expenses-net, of ($184,000) for the quarter ended September 27,
2003 consists primarily of an excise tax refund of $285,000 associated with the
2001 Penobscot pension plan reversion, offset by expenses totaling $109,000
related to the Trask acquisition and the ongoing relocation of the Companys
corporate headquarters from Old Town, Maine to Carlsbad, California. In
accordance with Statement of Financial Accounting Standards (SFAS) No. 146,
Accounting for Costs Associated with Exit or Disposal Activities, the
relocation costs have been recorded as incurred at their fair values for the
quarter ended September 27, 2003.

8. Recent Accounting Pronouncements

In May 2003, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 149, Amendment of Statement No.
133 on Derivative Instruments and Hedging Activities. The statement is
effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. This statement amends Statement 133 for decisions made as
part of the Derivatives Implementation Group process that effectively required
amendments to Statement 133, in connection with other Board projects dealing
with financial instruments and in connection with implementation issues raised
in relation to the application of the definition of a derivative. The Company
does not believe that the adoption of this Statement will have a significant
impact on the Companys consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. The statement
is effective for financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. This statement establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a liability. Many
of those instruments were previously classified as equity. The Company does not
believe that the adoption of this Statement will have a significant impact on
the Companys consolidated financial statements.

9. Subsequent Events

On October 31, 2003, the Company purchased all of the outstanding shares of
Royal Robbins, Inc. (Robbins) for approximately $6.5 million payable in cash
and 71,889 shares of newly issued common stock, plus potential earnout cash
payments of 25% of Robbins gross profit over two twelve month periods ending
May 31, 2004 and 2005, respectively, so long as minimum thresholds are achieved
by the acquired business for each of these twelve month periods. Robbins is
engaged in the import and sale of casual and outdoor apparel. During and
subsequent to Robbins fiscal year ended May 31, 2003, Robbins transferred to
5.11, Inc. (a then commonly controlled entity with Robbins) the
assets and liabilities of Robbins tactical clothing line business at book
value. All transfers to 5.11, Inc. were completed by October 31, 2003.

The following is the consolidated results of operations of the Company for the
three and nine month periods ended September 27, 2003 and September 30, 2002,
respectively, on a proforma basis using internally generated unaudited
information, assuming the Robbins and Trask acquisitions and the 5.11 transfer
occurred at the beginning of the earliest period presented, including the newly
issued 71,889 common shares related to the Robbins acquisition and 699,980
commons shares related to the Trask acquisition. This pro forma information
is presented after giving effect to certain adjustments which are based upon
currently available information and upon certain assumptions that the Company
believes are reasonable. This pro forma information does not purport to
present what the Companys consolidated results of operations would actually
have been if the Trask and Robbins acquisitions and the 5.11 transfer had in
fact occurred at the beginning of the periods indicated, nor do they project
the Companys consolidated results of operations for any future period.

Three Months Ended
    
    Nine Months EndedSeptember 27,
    
    September 30,
    
    September 27,
    
    September 30,2003
    
    2002
    
    2003
    
    2002Net sales
    
    $
    16,203,000
    
    
    $
    16,420,000
    
    
    $
    47,499,000
    
    
    $
    49,982,000Gross profit
    
    $
    7,023,000
    
    
    $
    7,132,000
    
    
    $
    21,390,000
    
    
    $
    20,103,000Net earnings
    
    $
    1,480,000
    
    
    $
    888,000
    
    
    $
    1,730,000
    
    
    $
    1,873,000Net earnings per diluted common share
    
    $
    0.33
    
    
    $
    0.19
    
    
    $
    0.42
    
    
    $
    0.41


9



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In addition, on October 31, 2003, in connection with the acquisition of
Robbins, the Company entered into a new $24.75 million credit facility with
Manufactures and Traders Trust Company. This new facility increased the
Companys maximum capacity of its existing line of credit from $11.0 million to
$18.0 million (subject to a borrowing base formula) and included the
refinancing of $5.25 million in existing term loans and a new term loan of $1.5
million. The Company paid the cash portion of the Robbins acquisition purchase
price with borrowings under its line of credit and with the proceeds from the
new term loan.




Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations

Overview

The Company designs, develops and markets mens and womens casual and
dress footwear and apparel. The Companys premium footwear brands include the
Trotters®, SoftWalk®, H.S. Trask®, and Ducks Unlimited® lines while the mens
and womens apparel is sold under the Royal Robbins® brand name. The Companys
emphasis is on classic, comfortable footwear and outerwear brands.

On June 12, 2003, the Company effected a two-for-one stock split of our
outstanding common stock. On August 7, 2003, the Company purchased all of the
outstanding shares of H.S. Trask & Co. (Trask) for approximately $2.9 million
in cash and 699,980 shares of newly issued common stock. Trask is a provider of
mens casual boots and shoes. The results of Trasks operations have been
included in the consolidated financial statements since that date. The
aggregate purchase price was $6.3 million, including $2.9 million in cash and
common stock valued at $3.2 million. The value of the 699,980 common shares
issued was determined based on the average market price of the Companys common
shares over the 3-day period before and after the terms of the acquisition were
agreed to and announced.

On October 31, 2003, the Company purchased all of the outstanding shares
of Royal Robbins, Inc. (Robbins) for approximately $6.5 million payable in
cash and 71,889 shares of newly issued common stock, plus potential earnout
cash payments of 25% of Robbins gross profit over two twelve month periods
ending May 31, 2004 and 2005, respectively, so long as minimum thresholds are
achieved by the acquired business for each of these twelve month periods.
Robbins is engaged in the import and sale of casual and outdoor apparel. The
purchase price and goodwill for this acquisition may increase if the minimum
earnout thresholds are achieved.

Results of Operations

Comparison of the quarter ended September 27, 2003 and September 30, 2002.

Net Sales

Net sales for the quarter ended September 27, 2003 were $11.0 million, an
increase of $1.5 million or 15.8% as compared to $9.5 million for the prior
year period. This increase is due primarily to the inclusion of sales from the
H.S. Trask® and Ducks Unlimited® footwear lines acquired on August 7, 2003.

Gross Profit

Gross profit in the third quarter of 2003 increased 18.9% to $4.5 million or
41.3% of net sales as compared to $3.8 million or 40.1% of net sales in the
third quarter of 2002. The improvement in gross margin as a percentage of net
sales primarily relates to an improved product sales mix and a reduction in the
volume of closeout sales. The increase in gross profit dollar amount is due to
both an increase in the gross profit margin and in net sales.

Expenses

Selling, general and administrative expenses were $3.0 million, or as a
percentage of net sales were 27.3%, in the third quarter of 2003 versus 27.5%
or $2.6 million for the comparable prior year period. This increase was
primarily related to increased marketing and advertising expenses, increased
employee compensation and benefit costs, and occupancy costs associated with
the Companys new West Coast operations.

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Other net operating (income) expenses were ($184,000) in 2003 and consisted
primarily of an excise tax refund of $285,000 associated with the 2001
Penobscot pension plan reversion, offset by expenses totaling $109,000 related
to the Trask acquisition and the ongoing relocation of the Companys corporate
headquarters from Old Town, Maine to Carlsbad, California. Other net operating
expenses for the comparable quarter in 2002 of $205,000 relate to an impairment
loss on the Companys Dolgeville facilities.

Interest Expense

Interest expense for the third quarter of 2003 was $61,000 compared to $73,000
in the comparable prior year period. The decrease was a result of lower
interest rates and average outstanding indebtedness during the current quarter
as compared to the prior year period.

Income Tax Provision

The Company recorded an excise tax refund during the third quarter of 2003 of
$285,000 which is non-taxable for income tax purposes and caused the effective
tax rate during the third quarter to be 31%. The Companys effective tax rate
during the three months ended September 30, 2002 was 40%.

Comparison of the nine month periods ended September 27, 2003 and September 30,
2002.

Net Sales

Net sales for the nine month period ended September 27, 2003 were $27.8
million, a decrease of $1.0 million or 3.5% as compared to $28.8 million for
the prior year period. This decrease is due primarily to depressed retail and
economic conditions partially offset by the inclusion of sales from the H.S.
Trask® and Ducks Unlimited® footwear lines acquired on August 7, 2003.

Gross Profit

Gross profit for the nine month period ended September 27, 2003 increased 9.4%
to $11.7 million or 42.3% of net sales as compared to $10.7 million or 37.3% of
net sales in the same period of 2002. The improvement in gross margin as a
percentage of net sales primarily relates to an improved product sales mix and
a reduction in the volume of closeout sales.

Expenses

Selling, general and administrative expenses as a percentage of net sales were
30.5% or $8.5 million for the nine month period ended September 27, 2003 versus
26.5% or $7.6 million for the comparable prior year period. This increase is
due primarily to increased marketing and advertising expenses, increased
employee compensation and benefit costs, and occupancy costs associated with
the Companys new West Coast operations.

Other net operating (income) expenses were $1.2 million for the nine month
period ended September 27, 2003 and consisted primarily of costs associated
with the settlement of the dissenting stockholders litigation, relocation of
the Companys corporate headquarters from Old Town, Maine to Carlsbad,
California, the acquisition of Trask and the discontinued Antigua Enterprises
acquisition effort. These expenses were partially offset by the recording of
the excise tax refund in the third quarter of 2003. Other net operating
expenses for the comparable period in 2002 of $205,000 relate to an impairment
loss on the Companys Dolgeville facilities which were sold in the fourth
quarter of 2002.

Interest Expense

Interest expense for the nine month period ended September 27, 2003 was
$513,000 and included an interest charge of $376,000 related to the previously
disclosed dissenting shareholders litigation. Excluding the dissenting
stockholders interest charge, interest expense decreased $271,000 or 66.4% from
the prior year period total of $408,000. The decrease in interest expense
during 2003 is a result of lower interest rates and lower average outstanding
indebtedness as compared to 2002.

11



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Income Tax Provision

The Companys tax expense for the nine months ended September 27, 2003 was
$706,000 as compared to $1,000,000 in the prior year period. The Companys
effective tax rate during the nine month period ended September 27, 2003 and
September 30, 2002 was 46% and 40%, respectively. Affecting the 2003 period
were approximately $611,000 of the dissenting stockholders litigation
settlement which was not tax deductible and the excise tax refund during the
third quarter of $285,000 which is non-taxable for income tax purposes.

Liquidity and Capital Resources

As of September 27, 2003 the Company had working capital of approximately $11.3
million as compared to working capital of $8.8 million at December 31, 2002.
Working capital may vary from time to time as a result of seasonal
requirements, which have historically been heightened during the first and
third quarters, the timing of factory shipments and the need to increase
inventories and support an in-stock position in anticipation of customers
orders, and the timing of accounts receivable collections. The Companys
current ratio, the relationship of current assets to current liabilities,
decreased to 2.24 as of September 27, 2003 from 2.58 as of December 31, 2002
due primarily to the Trask acquisition and the dissenting stockholders litigation
settlement.

During the first nine months of 2003, the Companys cash decreased $1.3 million
compared to a decrease of $769,000 in cash during the comparable period of
2002. This decrease primarily resulted from cash used by operating activities
of $2.3 million, cash used by investing activities of $2.5 million, partially
offset by net cash provided by financing activities of $3.5 million.

For the nine month period ended September 27, 2003, net cash used by operating
activities was approximately $2.3 million, due primarily to the increase in
receivables related to the inclusion of sales from the H.S. Trask® and Ducks
Unlimited® footwear lines acquired on August 7, 2003 and payment of the
dissenting stockholders settlement expenses. Net cash provided by operating
activities for the comparable period in 2002 was $9.8 million, due primarily to
the decrease in inventories, accounts receivable and accounts payable
associated with the divestiture of the previously owned slipper brands.

Net cash used by investing activities for the nine month period ended September
27, 2003 was $2.5 million, due primarily to cash payments associated with the
Trask acquisition. Net cash used by investing activities includes capital
expenditures of approximated $214,000 for 2003, as compared to $255,000 in the
prior year period.

Net cash flows provided from financing activities for the nine month period
ended September 27, 2003 was $4.5 million related to net borrowings on the
notes payable  line of credit, partially offset by $750,000 in repayments of
notes payable and $201,000 in repurchases of common stock. Net cash used by
financing activities for the comparable period in 2002 reflect $10.3 million in
repayments on the notes payable  line of credit and notes payable.

Contractual Obligations

The Companys material contractual obligations as of September 27, 2003
consisted of notes payable-line of credit and long-term debt, and are
summarized in the following table:

Notes payable  line of credit:Total
    
    $
    2,967,000Long-term debt:Total
    
    $
    5,250,000Payments due in one year
    
    
    1,350,000Payments due in two years
    
    
    1,350,000Payments due in three years
    
    
    1,350,000Payments due thereafter
    
    
    1,200,000


On October 31, 2003, in connection with the Robbins acquisition, the Company
entered into a new $24.75 million credit facility with

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Manufactures and Traders Trust Company. This new facility increased the
Companys maximum capacity of its existing line of credit from $11.0 million to
$18.0 million (subject to a borrowing base formula) and included the
refinancing of $5.25 million in existing term loans and a new term loan of $1.5
million. This credit facility is secured by substantially all of the assets of
the Company and its subsidiaries, and imposes customary negative and
affirmative covenants. The Company paid the cash portion of the Robbins
acquisition purchase price with borrowings under its line of credit and with
the proceeds from the new term loan. As of October 31, 2003, the Company has
$7.0 million outstanding under its line of credit and
$6.8 million outstanding under its term loans.

In connection with the Robbins acquisition, the Company agreed to pay to
the former Robbins stockholders potential earn-out payments equal to 25% of
Robbins gross profit over two twelve month periods ending May 31, 2004 and
2005, respectively, so long as minimum thresholds are achieved by the acquired
business for each of these twelve month periods. As a result of these earn-out
provisions, the Company may be obligated to pay additional consideration in
future periods. The future earn-out
payments, if any, will not be reflected in the Companys balance sheet until
the earn-out period has elapsed and the achievement of the performance target
is known.

The Company believes that, based on current levels of operations and
anticipated growth, cash flow from operations, together with other available
sources of funds, including borrowings under its line of credit, will be
adequate to fund its operational and capital requirements for at least the next
twelve months.

Critical Accounting Policies:

The Companys critical accounting policies and related risks described in
our Annual Report on Form 10-K for the year ended December 31, 2002 are those
that depend most heavily on managements judgments and estimates. As of
September 27, 2003, there have been no material changes to any of the Critical
Accounting Policies contained therein, except as follows:

Business Combinations

Acquisitions require significant estimates and judgments related to the fair
value of assets acquired and liabilities assumed to which the
transaction costs are allocated under the purchase method of
accounting. Certain liabilities are
subjective in nature. The Company reflects such liabilities based upon the most
recent information available. The ultimate settlement of such liabilities may
be for amounts which are different from the amounts initially
recorded. A significant amount of judgement is also involved in
determining the fair value of assets acquired. Different assumptions
could yield materially different results.

Goodwill And Intangible Assets

Certain of the Companys identifiable intangible assets, including non-compete
agreements and customer lists are being amortized on the straight-line method
over their estimated useful lives which range from 2 to 10 years. Additionally,
the Company has recorded goodwill and trademarks and tradenames, all of which
have indefinite useful lives and are therefore not amortized. All of the
Companys intangible assets and goodwill are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable, and goodwill and intangible assets with
indefinite lives are reviewed for impairment at least annually. The Companys
management is responsible for determining if impairment exists and considers a
number of factors, when making these determinations.

FORWARD LOOKING STATEMENTS

Statements in this document, other than the statements of historical
information, are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the Act). For those statements, we
claim the protection of the safe harbors for forward looking statements
contained in the Act. Investors are cautioned that forward-looking statements
are inherently uncertain. Actual results and timing of the events may differ
materially from the future results, timing, performance or achievements
expressed or implied by such forward-looking statements.

Forward-looking statements, within the meaning of the Act include certain
written and oral statements made, or incorporated by reference, by the Company
or its representatives in this report, other reports, filings with the
Securities and Exchange Commission (the S.E.C.), press releases, conferences
or otherwise. Such forward-looking statements include without limitation, any
statement that may predict, forecast, indicate, or imply future results,
performance, or achievements, and may contain the words believe,
anticipate, expect, estimate, intend, plan, project, will likely
result, or any variations of such words with similar meaning. These statements
are not guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that

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are difficult to predict; therefore, actual results may differ materially from
those expressed or forecasted in any such forward-looking statements. Investors
should carefully review the risk factors set forth in the Companys
registration statement on Form S-3 (Registration No. 333-109092), as amended
from time to time, and any other reports or documents the Company files with
the S.E.C., including Forms 10-Q, 10-K, and 8-K. Some of the other risks and
uncertainties that should be considered include, but are not limited to, the
following:



| |  |  | risks of changing consumer preference;
| | - |  | --------------------------------------



| |  |  | risks related to Phoenix Footwears ability to successfully design, develop and market its brands;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | competition from others competing in our markets;
| | - |  | -------------------------------------------------



| |  |  | loss of key employees;
| | - |  | ----------------------



| |  |  | the inability of Phoenix Footwear to source its products due to
political or economic factors or the imposition of trade or duty
restrictions;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | material adverse changes in economic conditions generally or in
the markets in which Phoenix Footwear participates;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | the ability to complete announced acquisitions and
divestitures;
| | - |  | ----------------------------------------------------------------



| |  |  | risks that businesses we have or will acquire will not be
integrated successfully with our existing business and the impact
that any such failure could have on the realization of the
anticipated benefits of the acquisition;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the ability of Phoenix Footwear to retain customers of acquired businesses and market acceptance of the acquisition;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | costs related to any acquisitions; and
| | - |  | --------------------------------------



| |  |  | other risks and uncertainties as may be detailed from time to
time in our public announcements and filings with the SEC.
| | - |  | ------------------------------------------------------------------------------------------------------------------------

The Company operates in a very competitive and rapidly changing environment.
New risk factors can arise and it is not possible for management to predict all
such risk factors, nor can it assess the impact of all such risk factors on the
Companys business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements.

Investors should also be aware that while the Company does, from time to time,
communicate with securities analysts, it is against the Companys policy to
disclose to them any material non-public information or other confidential
commercial information. Accordingly, investors should not assume that the
Company agrees with any statement or report issued by any analyst irrespective
of the content of the statement or report.

Furthermore, the Company has a policy against issuing or confirming financial
forecasts or projections issued by others. Thus, to the extent that reports
issued by securities analysts contain any projections, forecasts or opinions,
such reports are not the responsibility of the Company.

The Company undertakes no obligation to release publicly the results of any
revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business and consistent with established policies and
procedures we use the necessary financial instruments to manage the
fluctuations in interest rates. The Company does not have any foreign currency
risk. The Company does not enter into any of these transactions for speculative
purposes.

14



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Item 4. Controls and Procedures

An evaluation was performed under the supervision of the Companys management,
including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO),
of the effectiveness of the design and operation of the Companys disclosure
controls and procedures (as defined in Securities Exchange Act of 1934 (the
Exchange Act) Rules 13a-15(e) and 15-d-15(e)) as of the end of the period
covered by this report. Based on that evaluation, the Companys management,
including the CEO and CFO, concluded that the Companys disclosure controls and
procedures were effective to provide reasonable assurance that information we
are required to disclose in reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms.

Notwithstanding the foregoing, there can be no assurance that the Companys
disclosure controls and procedures will detect or uncover all failures of
persons within the Company and its consolidated subsidiaries to disclose
material information otherwise required to be set forth in the Companys
periodic reports. There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only
provide reasonable, not absolute, assurance of achieving their control
objectives.

There has been no change in the Companys internal controls over financial
reporting that occurred during the last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Companys internal
controls over financial reporting.

15



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##### Table of Contents






Part II  Other Information




Item 1. Legal Proceedings  None




Item 2. Changes in Securities and Use of Proceeds 

On August 7, 2003, the Company issued 699,980 shares of common stock to
the holders of H.S. Trask & Co., common stock as partial consideration for the
acquisition of that company. No underwriters were involved. The securities
were issued in reliance upon the exemption from registration provided under
Section 4(2) of the Securities Act, and Rule 506 promulgated thereunder, based
on the fact that the common stock was sold by the issuer in a transaction not
involving a public offering. Each former H.S. Trask common stockholder
represented to the Company that he or she either met the definition of an
accredited investor set forth in Rule 501, or, with respect to twenty of them
who were not accredited investors, that he or she, either alone or with his or
her purchaser representative, had such knowledge and experience in financial
and business matters that he or she was capable of evaluating the risks and
merits of the investment in the Companys common stock.

On September 24, 2003, the Company filed a registration statement with the
SEC for the resale of these 699,980 shares. The registration statement was
declared effective on October 27, 2003.




Item 3. Defaults upon Senior Securities  None




Item 4. Submission of matters to a vote of security holders  None




Item 5. Other Information  None




Item 6. Exhibits and Reports on Form 8-K:



| | a) |  | Exhibits required by Item 601 of regulation S-K
| | -- |  | -----------------------------------------------



| |  |  | Exhibit 2.1  Stock Purchase Agreement entered into as of October 2, 2003,
by and among Dan J. and Denise L. Costa, as trustees of the Dan J.
and Denise L. Costa 1997 Family Trust and Douglas Vient as trustee of the
Kelsie L. Costa Trust and the Daniel S. Costa Trust, Royal Robbins, Inc.,
and Phoenix Footwear Group, Inc. (incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K filed by Phoenix Footwear Group, Inc.,
October 24, 2003)(Exhibits and schedules have been omitted pursuant to
Item 601(b)(2) of Regulation S-K, but a copy will be furnished
supplementally to the Securities and Exchange Commission upon request)
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Exhibit 10.1  Guaranty made as of October 1, 2003 by Dan J. Costa in
favor of Phoenix Footwear Group, Inc., and the Buyer Indemnitees (as
defined in the Stock Purchase Agreement)(incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed by Phoenix Footwear
Group, Inc., on October 24, 2003)
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Exhibit 10.2  Consulting Agreement dated October 31, 2003 between Royal
Robbins, Inc. and Dan J. Costa
| |  |  | -------------------------------------------------------------------------------------------------------



| |  |  | Exhibit 10.3  Noncompetition and Confidentiality Agreement between
Phoenix Footwear Group, Inc., Royal Robbins, Inc. and Dan J. Costa entered
into as of October 31, 2003
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Exhibit 10.4  Second Amended and Restated Revolving Credit and Term Loan
Agreement made as of October 31, 2003 by and among Manufacturers and
Traders Trust Company and Phoenix Footwear Group, Inc. (Exhibits and schedules have been omitted pursuant to
Item 601(b)(2) of Regulation S-K, but a copy will be furnished
supplementally to the Securities and Exchange Commission upon request)
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Exhibit 10.5  Escrow Agreement between Phoenix Footwear Group, Inc.,
Nancy Delekta and American Stock Transfer & Trust Company dated August 6,
2003 (incorporated by reference to Exhibit 10.3 to the Quarterly Report on
Form 10-Q filed by Phoenix Footwear Group, Inc., August 12, 2003)
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Exhibit 10.6  Employment and Consulting Agreement between Harrison S.
Trask and H.S. Trask & Co., dated August 6, 2003 (incorporated by
reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed by
Phoenix Footwear Group, Inc., August 12, 2003)
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16



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##### Table of Contents





| |  |  | Exhibit 10.7  Non-Competition and Non-Disclosure Agreement between
Harrison S. Trask, Phoenix Footwear Group, Inc. and PFG Acquisition, Inc.,
dated August 6, 2003 (incorporated by reference to Exhibit 10.5 to the
Quarterly Report on form 10-Q filed by Phoenix Footwear Group, Inc.,
August 12, 2003)
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Exhibit 31.1  Section 302 Certification of Chief Executive Officer
| |  |  | -------------------------------------------------------------------



| |  |  | Exhibit 31.2  Section 302 Certification of Chief Financial Officer and
Treasurer
| |  |  | ---------------------------------------------------------------------------------



| |  |  | Exhibit 32.1  Section 906 Certification of Chief Executive Officer
| |  |  | -------------------------------------------------------------------



| |  |  | Exhibit 32.2  Section 906 Certification of Chief Financial Officer and
Treasurer
| |  |  | ---------------------------------------------------------------------------------



| | b) |  | Forms 8-K
| | -- |  | ---------



| | 1) |  | On November 5, 2003, the Company filed a report on Form 8-K
announcing that on October 31, 2003 the Company acquired all of the
outstanding capital stock of Royal Robbins, Inc., a privately held
California-based casual and outdoor apparel brand.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2) |  | On October 22, 2003, the Company filed a report on Form 8-K
announcing the Companys results of operations for the three and nine
month periods ended September 27, 2003.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3) |  | On October 2, 2003, the Company filed a report on Form 8-K
announcing the signing of a definitive stock purchase agreement to
acquire all of the outstanding capital stock of Royal Robbins, Inc.,
a privately held California-based casual and outdoor apparel brand.
Upon consummation of the acquisition, Royal Robbins would become a
wholly-owned subsidiary of the Company.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4) |  | On September 19, 2003, the Company filed a report on Form 8-K/A
amending its Report on Form 8-K, filed with the Securities and
Exchange Commission on August 22, 2003, to update its report of this
transaction and file the financial statements and pro forma financial
information required by Item 7 of Form 8-K.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5) |  | On August 22, 2003, the Company filed a report on Form 8-K
announcing under Item 2 the completion of its acquisition of H.S.
Trask & Co. on August 7, 2003.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6) |  | On August 12, 2003, the Company filed a report on Form 8-K
attaching a press release announcing the finalization of the
Companys acquisition of H.S. Trask & Co. on August 7, 2003.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7) |  | On July 24, 2003, the Company filed a report on Form 8-K
announcing the Companys results of operations for the three and six
month periods ended June 28, 2003.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

PHOENIX FOOTWEAR GROUP, INC.
Registrant

Date: November 11, 2003
    
    /s/ James R. RiedmanJames R. RiedmanChairman and Chief Executive OfficerDate: November 11, 2003
    
    /s/ Kenneth E. WolfKenneth E. WolfChief Financial Officer and Treasurer


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