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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
_____
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For fiscal year ended December 1, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
_____
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to .
Commission File Number: 1-4404
THE STRIDE RITE CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-1399290
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
191 Spring Street, P.O. Box 9191, Lexington, Massachusetts 02173
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-824-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock $.25 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed
all reports required 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
report), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
___ ___
-Continued-
___
/___/ Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the registrant's Common Stock $.25
par value, held by non-affiliates of the registrant as of
February 9, 1996, was $414,391,243.50 based on the closing price
on that date on the New York Stock Exchange. As of February 9,
1996, 49,571,263 shares of the registrant's Common Stock, $.25
par value, were outstanding and 6,196,408 of the registrant's
Preferred Stock Purchase Rights, which trade together with the
registrant's common stock, were outstanding.
Documents Incorporated by Reference
Certain portions of the following documents (as more specifically
identified elsewhere in this Annual Report) are incorporated by
reference herein:
Part of Form 10-K into
Name of Document which document is incorporated
_________________ ______________________________
Portions of the Registrant's Annual
Report to Stockholders for fiscal year
ended December 1, 1995 Part I and Part II
Portions of the Registrant's Proxy
Statement for 1996 Annual Meeting
of Stockholders Part III
2
PART I
Item 1. Business
General
The Stride Rite Corporation is the leading marketer of high
quality children's footwear in the United States and a major
marketer of athletic and casual footwear for children and adults.
The Company manufactures products in its own facilities in the
United States and in the Dominican Republic and also imports a
significant portion of its products from abroad. Footwear
products are distributed through independent retail stores,
Company-owned stores and footwear departments in department
stores. Unless the context otherwise requires, references to the
"Company" and "The Stride Rite Corporation" in this document are
to The Stride Rite Corporation and all of its wholly-owned
subsidiaries.
Products
Children's footwear, designed primarily for consumers
between the ages of six months and 12 years, encompasses a
complete line of products, including dress and recreational
shoes, boots, sandals and sneakers, in traditional and
contemporary styles. Those products are marketed under the
Company's STRIDE RITE(R), SPERRY(R), STREET HOT(R) and TODDLER
UNIVERSITY(R) trademarks in medium to high price ranges. The
Company acquired, in the first quarter of fiscal 1995, the
TODDLER UNIVERSITY(R), KIDS UNIVERSITY(R) and STREET HOT(R)
brands from the University Brands division of Genesco Inc.
The Company also markets sneakers and casual footwear for
adults and children under the KEDS(R), ahh...keds(R) and
PRO-Keds(R) trademarks and casual footwear for women under the
GRASSHOPPERS(R) label.
Marine footwear and portions of the Company's outdoor
recreational, dress and casual footwear for adults and children
are marketed under the Company's SPERRY TOP-SIDER(R) and
SPERRY(R) trademarks. Products sold under the SPERRY
TOP-SIDER(R) label also include sneakers and sandals for men and
women.
Sales and Distribution
During the 1995 fiscal year, the Company sold its products
nationwide to customers operating retail outlets, including
department stores, sporting goods stores and marinas, as well as
Stride Rite Bootery stores and other shoe stores operated by
independent retailers. In addition, the Company sold footwear
products to consumers through Company-owned stores, including
bootery stores, manufacturers' outlet stores, Keds concept
stores, concept stores called Great Feet(TM), and children's
footwear departments in department stores. The Company's largest
single customer accounted for less than 8% of consolidated net
sales for the fiscal year ended December 1, 1995. In 1995, the
Company entered into a licensing agreement to produce and market
a line of premium dress casual, sport casual, dress and
athleisure men's footwear under the TOMMY HILFIGER(R) trademark.
The Company expects to introduce this line in Spring 1997.
The Company provides assistance to a limited number of
qualified specialty retailers to enable them to operate
independent Stride Rite children's bootery stores. Such
assistance sometimes includes the sublease
3
of a desirable retail site by the Company to a dealer. There are
approximately 50 independent dealers who currently sublease store
locations from the Company.
The Company owns an automated distribution center located in
Louisville, Kentucky providing 520,000 square feet of space and a
warehouse in Boston, Massachusetts, providing 565,000 square feet
of space. Reference is hereby made to the section of the
Company's annual report to stockholders entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Results of Operations" for additional information
regarding these facilities.
The Company maintains an in-stock inventory of its various
branded footwear in a wide range of sizes and widths for shipment
to its wholesale customers. It is the Company's policy to ship
promptly every order (except for orders placed in advance of
seasonal requirements) received for footwear included in its
in-stock inventory. This policy enables retailers to minimize
the amount of their capital invested in inventory, while
providing the availability of footwear for which customer demand
exists. In accordance with practices in the footwear industry,
the Company encourages early acceptance of merchandise by
shipping some products to customers in advance of their seasonal
requirements and permitting payment for such merchandise at
specified later dates.
In fiscal 1995, in addition to the United States, KEDS(R)
brand products were distributed through third parties in Brazil,
Chile, Denmark, France, Germany, Greece, Hong Kong, Indonesia,
Israel, Italy, Japan, Portugal, Singapore, Sweden and Turkey, as
well as in several other countries in Latin America and Asia,
using local distributors. PRO-Keds(R) brand products are sold
by a distributor in Japan, under a trademark license agreement.
Further, KEDS(R) products are sold in Central America, Bolivia,
Colombia, Ecuador, Peru, Venezuela and in the Caribbean countries
and territories (except the United States and French territories)
under a license agreement. Keds(R) products were also sold in
the United Kingdom through a representative office and in 1996
will be sold through subsidiaries in France, Mexico and the
United Kingdom. The Company is also a party to foreign license
agreements in which independent companies operate Keds retail
stores outside the United States. An aggregate of six stores are
currently operating in Asia and the Eastern Mediterranean
pursuant to such agreements.
In fiscal 1995, in addition to the United States, the
Company distributed its SPERRY TOP-SIDER(R) brand products in
Italy, Japan, Portugal, Singapore and the United Kingdom, as well
as other countries in Europe, South America and Asia, through
local distributors. Further, the Company distributes SPERRY
TOP-SIDER(R) products in Belgium, France, Germany and the
Netherlands, through a subsidiary. The Company is also a party
to foreign license agreements in which independent companies
operate joint Sperry Top-Sider/Keds retail stores outside the
United States. An aggregate of two stores are currently
operating in Asia and the Eastern Mediterranean.
The Company is also a party to foreign license agreements in
which independent companies operate Stride Rite retail stores
outside the United States. An aggregate of 18 stores are
currently operating in Canada, Costa Rica, Guatemala, Honduras,
Mexico and Peru pursuant to such agreements. In addition, the
Company also distributes STRIDE RITE(R) brand products to several
retailers in the Caribbean, Latin America, Israel and South
Korea.
4
The Company also distributes SPERRY TOP-SIDER(R), STRIDE
RITE(R) and KEDS(R) products in Canada through its Canadian
subsidiary.
International Sourcing
The Company purchases a significant portion of its product
line overseas. It maintains a staff of approximately 114
professional and technical personnel in South Korea, Taiwan,
Thailand and mainland China, to supervise a substantial portion
of its canvas and leather footwear production. The Company is a
party to a joint venture agreement with a foreign footwear
manufacturer which operates a manufacturing facility in Thailand.
The Company has a 49.5% interest in the Thai corporation
operating this facility, which manufactures vulcanized canvas and
leather footwear. During fiscal 1995, approximately 12% of the
Company's total production requirements for footwear were
fulfilled by the Thai facility. In addition, the Company uses
the services of buying agents to source merchandise.
Having closed several of its manufacturing facilities in the
United States and the Caribbean over the years, the Company has
increased the volume of leather footwear and leather footwear
components for which it contracts from independent offshore
suppliers to approximately 90% in 1995. It is anticipated that
overseas resources will continue to be utilized in the future.
The Company purchases certain raw materials (particularly
leather) from overseas resources.
By virtue of its international activities, the Company is
subject to the usual risks of doing business abroad, such as the
risks of expropriation, acts of war, political disturbances and
similar events, including trade sanctions, loss of most favored
nation trading status and other trading restrictions. Management
believes that over a period of time, it could arrange adequate
alternative sources of supply for the products obtained from its
present foreign suppliers. However, disruption of such sources
of supply could, particularly on a short-term basis, have a
material adverse impact on the Company's operations. The
Company's contracts to procure finished goods and other materials
are denominated in United States dollars, thereby eliminating
short term risks attendant to foreign currency fluctuations.
Retail Operations
As of December 1, 1995, the Company operated 149 Stride Rite
Bootery stores, 80 leased children's shoe departments in leading
department stores, two retail stores for KEDS(R) brand products,
three concept stores operated under the name GREAT FEET(TM) and
20 manufacturers' outlet stores for STRIDE RITE(R), KEDS(R),
SPERRY TOP-SIDER(R) and TODDLER UNIVERSITY(R) brand products.
The product and merchandising formats of the Stride Rite Bootery
stores are utilized in the 80 leased children's shoe departments
which the Company operates in certain divisions of Federated
Department Stores, including Macy's, Jordan Marsh, Rich's and
Lazarus department stores. The Stride Rite Bootery stores carry
a significant portion of the lines of the Company's STRIDE
RITE(R), SPERRY TOP-SIDER(R) and STREET HOT(R) children's
footwear and a portion of the KEDS(R) children's product line.
The two Keds stores carry a complete line of KEDS(R) products.
The GREAT FEET(TM) stores carry a full line of products for
children aged 0 to 12, including STRIDE RITE(R), KEDS(R), SPERRY
TOP-SIDER(R) and STREET HOT(R) brand products. The Company's
stores are located primarily in larger regional shopping malls,
clustered generally in the major marketing
5
areas of the United States. Most of the Company's manufacturers'
outlet stores are located in malls consisting only of outlet
stores.
During the 1995 fiscal year, the Company opened 10 leased
departments, nine manufacturers' outlet stores, two GREAT
FEET(TM) stores and one Keds(R) concept store. In addition
during fiscal 1995, the Company commenced operating 18 Stride
Rite booteries, 13 of which were purchased from independent
dealers. During 1995, the Company also closed five booteries.
The Company currently plans to open approximately four Stride
Rite Booteries and to convert one existing Stride Rite Bootery to
a Great Feet(TM) concept store during fiscal 1996 and close or
sell approximately 48 Stride Rite retail stores during fiscal
1996. For more information on the proposed closure of such
stores, reference is hereby made to the section of the Company's
annual report to stockholders entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Results of Operations".
Sales through the Company's retail operations accounted for
approximately 18% of consolidated net sales for the fiscal year
ended December 1, 1995.
Apparel Licensing Activities
The Company has a license agreement under which hosiery for
men, women and children is marketed under the KEDS(R) and
PRO-Keds(R) brands for distribution in the United States and
Canada and a license agreement under which apparel, using the
KEDS(R) trademark, is marketed in Japan. The Company terminated,
in the first quarter of fiscal 1996, a license agreement under
which handbags for women were marketed under the KEDS(R)
trademark in the United States. License royalties accounted for
less than one percent of the Company's sales in fiscal year 1995.
The Company continually evaluates new licensees, for both
footwear and non-footwear products.
Raw Materials
The Company purchases its raw materials from a number of
domestic and foreign sources. See "International Sourcing". The
Company does not believe that any particular raw materials
supplier is dominant.
Backlog
At December 1, 1995 and December 2, 1994, the Company had a
backlog of orders amounting to approximately $150,500,000 and
$184,000,000, respectively. To a significant extent, the backlog
at the end of each fiscal year represents orders for the
Company's spring footwear styles, and traditionally substantially
all of such orders are delivered or cancelled during the first
two quarters of the next fiscal year. Approximately two-thirds
of the backlog reduction in 1995 is related to a lower level of
advance orders for Keds products. The Spring 1996 sales policies
of the Keds subsidiary encouraged national retailers to place
greater reliance on the quick-response capabilities of the
Company's Louisville, Kentucky distribution center. The change
in sales policies is expected to result in increased reorders on
Keds basic products for the Spring 1996 season, thus offsetting a
portion of the order backlog decrease. The increased reliance on
reorders is expected to change Keds' normal shipping pattern by
shifting sales from the first quarter to the second quarter of
fiscal 1996. This change is also expected to result in reduced
retailer inventories and
6
improved profitability of the Keds brand for major retailers.
There can be no assurance that this will indeed occur.
Competition
The Company competes with a number of suppliers of
children's footwear, a few of which are divisions of companies
which have substantially greater net worth and/or sales revenue
than the Company. Management believes, however, that on the
basis of sales, the Company is the largest supplier of nationally
branded children's footwear.
In the highly fragmented sneaker, casual and recreational
footwear industry, numerous domestic and foreign competitors,
some of which have substantially greater net worth and/or sales
revenue than the Company, produce and/or market goods which are
comparable to, and compete with, the Company's products in terms
of price and general level of quality. In addition, the domestic
shoe industry has experienced substantial foreign competition,
which is expected to continue.
Management believes that creation of attractive styles,
together with specialized engineering for fit, durability and
quality, and high service standards are significant factors in
competing successfully in the marketing of all types of footwear.
Management believes that the Company is competitive in all such
respects.
In operating its own retail outlets, the Company competes in
the children's retail shoe industry with numerous businesses,
ranging from large retail chains to single store operators.
Employees
As of December 1, 1995, the Company employed approximately
3,600 full-time and part-time employees, approximately 500 of
whom were represented by collective bargaining units. Management
believes that its relations with its employees are good.
Reference is hereby made to Footnote 2 to the Company's
Consolidated Financial Statements for a discussion of the
initiatives taken by the Company in the last quarter of fiscal
1995 to reduce future operating costs and to realign certain
product lines and business units and the impact of such
initiatives on head count.
Environmental Matters
The Company has been named as a potentially responsible
party under the Resource Conservation and Recovery Act of 1976,
as amended, with respect to a hazardous waste site in Saco,
Maine. The Company is investigating its potential responsibility
with respect to this site and believes that its liability will be
immaterial (not greater than $100,000) and that it will be
accorded de minimus status. There can be no assurance, however,
that this will be the case. The Company is vigorously defending
itself with respect to this action. Except as specified above,
compliance with federal, state, local and foreign regulations
with respect to the environment have had, and are expected to
have, no material effect on the capital expenditures, earnings or
competitive position of the Company.
Patents, Trademarks and Licenses; Research and Development
The Company believes that its patents and trademarks are
important to its business and are generally sufficient to permit
the Company to carry on
7
its business as presently conducted. In January, 1995, the
Company acquired the trademarks, patents and other intellectual
property of the University Brands division of Genesco, Inc.,
including TODDLER UNIVERSITY(R), KIDS UNIVERSITY(R) and STREET
HOT(R).
The Company depends principally upon its design,
engineering, manufacturing and marketing skills and the quality
of its products for its ability to compete successfully. The
Company conducts research and development for footwear products;
however, the level of expenditures with respect to such activity
is not significant.
Executive Officers of the Registrant
The information with respect to the executive officers of the
Company listed below is as of February 9, 1996.
Executive Officers of the Registrant
Name Position with Company Age
Robert C. Siegel Chairman of the Board of Directors, 59
President and Chief Executive Officer
of the Company since December 1993.
Previously, Mr. Siegel was President
of the Dockers division of Levi Strauss
& Co., an apparel manufacturer and
distributor from December 1986 to
December 1993, having been employed by
Levi Strauss & Co. since 1964.
Stephen R. DuMont Executive Vice President, of the 52
Company from October 1994. Prior to
joining the Company, Mr. DuMont served
as a principal of DuMont and Associates,
an international management consulting
firm from August 1993 to September 1994,
as the Chief Executive Officer and Chief
Operating Officer of The Antigua Group,
Inc., an apparel and accessories
manufacturer and wholesale and retail
distributor from May 1992 to July 1993
and as Executive Vice President and
Chief Financial Officer of Mast
Industries, Inc. (a wholly owned
subsidiary of The Limited, Inc.), an
apparel manufacturer and wholesale
distributor from February 1986 to April 1992.
Robert B. Moore, Jr. President, Sperry Top-Sider, Inc. since 45
October 1992. From October 1987 until
he joined the Company, Mr. Moore was
President of Bostonian Shoe Co., a
division of C & J Clark, Inc.
8
Executive Officers of the Registrant
Name Position with Company Age
Dennis Garro President, Retail division, Stride 48
Rite Children's Group, Inc. since
April 1994. Prior to joining the Company,
Mr. Garro served as Senior Vice President
and General Merchandise Manager for
Mervyns division of Dayton Hudson
Corp. from May 1992 to September 1993
and as Senior Vice President and
General Merchandise Manager of DFS
Group, Ltd. from November 1989 to
April 1992.
Diane M. Sullivan President, Wholesale division, Stride Rite 40
Children's Group, Inc., since joining the
Company in April 1995. Prior to joining the
Company, Ms. Sullivan was Vice President,
Marketing of The Rockport Co., a division
of Reebok Ltd., a footwear company from
May 1993 to April 1995, the President of
The Comfort Food Co., a specialty foods
firm, from December 1991 to May 1993
and the Vice President, Marketing and
Operations of Bright Horizons Children's
Centers, Inc., a child care provider,
from April 1989 to December 1991. Ms.
Sullivan was previously employed by the
Company as Vice President, Marketing of
Stride Rite Children's Group, Inc. from
October 1985 to April 1989.
C. Madison Riley III Vice President and General Manager, 37
Stride Rite International Corp. since
January 1996. Previous to this position,
Mr. Riley served as Vice President of
Stride Rite International Corp. from
November 1995 to January 1996, as Vice
President and General Manager, Boston
Footwear Group, Inc. from November 1994
to November 1995, as Vice President,
Strategic Planning of the Company from
January 1994 to November 1994, as
Vice President, Strategic Planning of
The Keds Corporation from September 1993
to January 1994 and as Director, Strategic
Planning of the Company from June 1993 to
September 1993. Prior to joining the
Company, Mr. Riley served as a partner
and regional director of Kurt Salmon
Associates, a consulting firm, from
July 1985 to June 1993.
9
Executive Officers of the Registrant
Name Position with Company Age
Joseph T. Barrell Vice President of Global Logistics since 44
January 1995. Prior to joining the
Company, Mr. Barrell was Vice President,
Distribution of The Timberland Company, a
footwear company from June 1991 to January
1995 and the Director, Logistics of Thom
McAn Shoe Co., a footwear retailer, from
January 1976 to June 1991.
Karen K. Crider General Counsel of the Company since 50
October 1992, Clerk of the Company
since November 1992 and Secretary of
the Company since April 1994.
Ms. Crider was U.S. Counsel to
British Airways, plc, from May
1988 to September 1992.
John M. Kelliher Vice President, Finance, Treasurer and 44
Controller of the Company since
February 1993. Mr. Kelliher has been
Corporate Controller of the Company
since March 1982, having joined the
Company in June 1981.
Susan M. McCuaig Vice President of Human Resources since 38
August 1995. Prior to joining the
Company, Ms. McCuaig served as Vice
President, Professional Development,
from 1992 to 1995, Vice President, MIS-
Professional Services from 1991 to 1992
and Director, MIS, User Services, Quality
Assurance and Quick Response from 1989 to
1991, each of Mast Industries, Inc., a
wholly owned subsidiary of The Limited, Inc.,
an apparel manufacturer and wholesale
distributor.
Roger W. Monks Vice President and General Manager of 52
Stride Rite Sourcing International, Inc.
since April 1995. Prior to this position,
Mr. Monks served as Senior Vice President,
Operations of The Keds Corporation from
April 1994 to March 1995 and as Senior
Vice President, Operations and Domestic
Manufacturing of Stride Rite Children's
Group, Inc. from January 1989 to March
1994, having joined the Company in
December 1981.
10
Executive Officers of the Registrant
Name Position with Company Age
Wollaston B. Morin Vice President, Information Systems since 53
July 1993. Prior to joining the Company,
Mr. Morin served as Vice President,
Information Systems for Marshalls, Inc., a
subsidiary of Melville Corporation from
April 1989 to June 1993.
Gerrald B. Silverman Senior Vice President of Sales, The Keds 37
Corporation since January 1996. Prior to
this position, Mr. Silverman served as
President of Stride Rite International
Corp. from April 1994 to January 1996.
Prior to joining the Company, Mr.
Silverman served as the national sales
manager of the Dockers division of Levi
Strauss & Co. from October 1992 to April
1994, as West Coast regional manager of
the Dockers division of Levi Strauss
& Co. from April 1991 to October 1992,
as East Coast district manager of the
Dockers division of Levi Strauss & Co.
from May 1990 to April 1991 and as
national account manager of the
Dockers division of Levi Strauss & Co.
from September 1987 to May 1990.
These executive officers are generally elected at the Board of
Director's Annual Meeting and serve at the pleasure of the Board.
Item 2. Properties
The Company manufactures footwear and footwear components at
two manufacturing and warehouse facilities it owns in Missouri,
having closed one leased facility in Fulton, Missouri during
February 1996. The Missouri facilities contain approximately
62,400 square feet of manufacturing and approximately 31,600
square feet of warehouse space. The Company also manufactures
footwear and footwear components at a 30,000 square foot facility
in the Dominican Republic. In addition, the Company owns a
facility with approximately 20,000 square feet of space for a
technical center in Woburn, Massachusetts, which replaced a
leased 17,000 square foot technical center in Lawrence,
Massachusetts during the fourth quarter of fiscal 1995.
Present manufacturing space totals approximately 124,000
square feet. Approximately 94,000 square feet is owned by the
Company and the balance is leased. Management believes that all
leases are at commercially reasonable rates and terms.
The Company owns an automated distribution center located in
Louisville, Kentucky providing 520,000 square feet of space and a
warehouse in Boston, Massachusetts, which provides 565,000 square
feet of space. Reference is hereby made to the section of the
Registrant's annual report to stockholders entitled "Management's
Discussion and Analysis of Financial
11
Condition and Results of Operations - Results of Operations" for
additional information concerning these facilities. The
Company's Canadian subsidiary leases approximately 28,000 square
feet for warehousing in Mississauga, Ontario.
The Company leases approximately 163,000 square feet for its
headquarters and administrative offices in Lexington,
Massachusetts in a single tenant, leased office building. The
Company leases 5,000 square feet of space for sales offices and
showrooms in New York City, New York; Dallas, Texas and St.
Louis, Missouri and leases 15,000 square feet of space in
Richmond, Indiana for its order processing and telemarketing
functions. In addition, the Company leases approximately 1,700
square feet of office space in Paris, France for its Stride Rite
Europe distribution subsidiary and 22,300 square feet of space
for its liaison offices in Korea, mainland China, Taiwan and
Thailand.
At December 1, 1995, the Company operated 174 retail stores
throughout the country on leased premises which, in the
aggregate, covered approximately 246,000 square feet of space.
The Company also operates 80 children's footwear departments in
certain divisions of Federated Department Stores. In addition,
the Company is the lessee of 50 retail locations totaling
approximately 56,000 square feet which are subleased to
independent Stride Rite dealers and other tenants.
For further information concerning the Company's lease
obligations, see Note 9 to the Company's consolidated financial
statements, which are contained in the annual report to
stockholders and are incorporated by reference herein.
Management believes that, except as stated above, all
properties and facilities of the Company are suitable, adequate
and fit for their intended purposes.
Item 3. Legal Proceedings
On September 27, 1993, the Company announced that The Keds
Corporation, a wholly owned subsidiary of the Company, entered
into settlement agreements with the Attorneys General of all 50
states, the Corporation Counsel of the District of Columbia and
the Federal Trade Commission, to resolve various investigations
into Keds' adoption and enforcement of its suggested retail
pricing policy. In entering into these settlements, Keds,
without admitting any liability, fully settled suits brought by
the Attorneys General in the United States District Court for the
Southern District of New York, in their parens patriae capacity,
on behalf of all consumers who purchased certain KEDS(R) shoes
during the relevant period. The settlements required Keds to pay
$5.7 million to several charities nationwide, as well as $1.5
million to provide nationwide notice to potential class members
and other administrative expenses. Keds has agreed to the
imposition of certain injunctive relief for a period of five
years ending August 31, 1998. Following preliminary Court
approval on September 27, 1993, Keds paid the administrative
costs and part of the settlement amount. Following final court
approval on March 28, 1994, Keds made the remaining payments.
Reference is hereby made to the discussion under Business -
Environmental Matters set forth in Item 1 of this Annual Report
on Form
10-K.
12
The Company is a party to various litigations arising in the
normal course of business. Having considered facts which have
been ascertained and opinions of counsel handling these matters,
management does not believe the ultimate resolution of such
litigations will have a material adverse effect on the Company's
financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
None
13
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The information required by this item is included in the
Registrant's 1995 Annual Report to Stockholders on pages 1, 29
and 36 and is incorporated herein by reference.
Item 6. Selected Financial Data
The information required by this item is included in the
Registrant's 1995 Annual Report to Stockholders on pages 1, 15
and 29 and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The information required by this item is included in the
Registrant's 1995 Annual Report to Stockholders on pages 3
through 9 and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The information required by this item is included in the
Registrant's 1995 Annual Report to Stockholders on pages 10
through 29 and is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
14
PART III
Item 10. Directors and Executive Officers of the Registrant
Reference is made to the information set forth under the caption
"Executive Officers of the Registrant" in Item 1 of Part I of this report
and to information under the captions "Information as to Directors and
Nominees for Director", "Meetings of the Board of Directors and
Committees" and "Compliance with Section 16(a) of the Securities
and Exchange Act of 1934" in the Registrant's definitive proxy
statement relating to its 1996 Annual Meeting of Stockholders,
which will be filed with the Commission within 120 days after the
close of the Registrant's fiscal year ended December 1, 1995, all
of which information is incorporated herein by reference.
Item 11. Executive Compensation
Reference is made to the information set forth in the
Registrant's definitive proxy statement relating to its 1996 Annual
Meeting of Stockholders under the caption "Compensation Committee
Interlocks and Insider Interlocks" and continuing through the caption
"Certain Transactions with Management" (excluding the information
set forth under the caption "Compensation Committee Report")
which will be filed with the Commission within 120 days after the
close of the Registrant's fiscal year ended December 1, 1995,
which information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Reference is made to the information set forth under the
caption "Ownership of Equity Securities" in the Registrant's definitive
proxy statement relating to its 1996 Annual Meeting of Stockholders,
which will be filed with the Commission within 120 days after the
close of the Registrant's fiscal year ended December 1, 1995, which
information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Reference is made to the information set forth under the
caption "Certain Transactions with Management" in the
Registrant's definitive proxy statement relating to its 1996
Annual Meeting of Stockholders, which will be filed with the
Commission within 120 days after the close of the Registrant's
fiscal year ended December 1, 1995, which information is
incorporated herein by reference.
15
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) Financial Statements. The following financial
statements and financial statement schedules are contained herein
or are incorporated herein by reference:
Page in
Form 10-K
Consolidated Balance Sheets as of December 1, 1995
and December 2, 1994 *
Consolidated Statements of Income for the years ended
December 1, 1995, December 2, 1994 and
December 3, 1993 *
Consolidated Statements of Cash Flows for the years
ended December 1, 1995, December 2, 1994 and
December 3, 1993 *
Consolidated Statements of Changes in Stockholders'
Equity for the years ended December 1, 1995,
December 2, 1994 and December 3, 1993 *
Notes to Consolidated Financial Statements *
Report of Independent Accountants *
Report of Independent Accountants on Financial
Statement Schedules F-1
Financial Statement Schedule for the years ended
December 1, 1995, December 2, 1994 and
December 3, 1993:
Schedule II - Valuation and Qualifying
Accounts F-2
Schedules other than those listed above are omitted because they
are either not required or the information is otherwise included.
* Incorporated herein by reference. See Part II, Item 8 on page
14 of this Annual Report on Form 10-K.
16
Exhibits. The following exhibits are contained herein or are
incorporated herein by reference:
Exhibit No. Description of Exhibit
3 (i) Restated Articles of Organization of the Registrant with
amendments thereto through November 28, 1986 -- Such document
was filed as Exhibit 3(i) to the Registrant's Form 10-K for
the fiscal year ended November 28, 1986 and is incorporated
herein by reference.
(ii) Articles of Amendment dated April 7, 1987 to Restated Articles
of Organization -- Such document was filed as Exhibit 3 to
Registrant's Form 10-Q for the fiscal period ended February
27, 1987 and is incorporated herein by reference.
(iii) Articles of Amendment dated December 16, 1987 to Restated
Articles of Organization of the Registrant -- Such document
was filed as Exhibit 3(iii) to Registrant's Form 10-K for the
fiscal year ended November 27, 1987 and is incorporated herein
by reference.
(iv) Articles of Amendment dated December 3, 1991 to the Restated
Articles of Organization of the Registrant -- Such document
was filed as Exhibit 3(iv) to Registrant's Form 10-K for the
fiscal year ended November 29, 1991 and is incorporated herein
by reference.
(v) Certificate of Vote of Directors establishing a series of a
Class of Stock dated July 2, 1987 -- Such document was filed
as Exhibit A to Exhibit 1 to Registrant's Form 8-K dated July
20, 1987 and is incorporated herein by reference.
(vi) By-laws of the Registrant, as amended -- Such document was
filed as Exhibit 3 of the Registrant's Form 10-Q for the
fiscal period ended June 1, 1990 and is incorporated herein by
reference.
4 (i) Reference is made to Exhibit 3(i), (ii), (iii) and (iv)
referred to above, which are expressly incorporated herein by
reference.
(ii) Rights Agreement dated July 2, 1987, as amended on May 1,
1989, between the Registrant and The First National Bank of
Boston -- Such document was filed as an exhibit to
Registrant's Form 8 dated May 4, 1989 and its Form 8-K dated
June 27, 1989 and is incorporated herein by reference.
(iii) Note Purchase Agreement dated September 23, 1977 -- Such
document was filed as Exhibit 4(ii) to the Registrant's Form
10-K for the fiscal year ended November 28, 1986 and is
incorporated herein by reference.
17
Exhibit No. Description of Exhibit
10 (i)* Supplemental Retirement Income Agreement dated as of January
29, 1988 between the Registrant and Arnold Hiatt -- Such
document was filed as Exhibit 10 (i) to Registrant's Form 10-K
for the fiscal year ended November 27, 1987 and is incorporated
herein by reference.
(ii)* 1975 Executive Incentive Stock Purchase Plan of the Registrant
-- Such document was filed as Appendix A to the Registrant's
Prospectus relating to such Plan, dated April 18, 1986, which
was filed with the Commission pursuant to Rule 424(b)
promulgated under the Securities Act of 1933, as amended, and
is incorporated herein by reference.
(iii)* Employee Stock Purchase Plan of the Registrant -- Such
document was filed as Appendix A to the Registrant's
Prospectus relating to such plan, dated October 15, 1991,
which was filed with the Commission pursuant to Rule 424(b)
promulgated under the Securities Act of 1933, as amended, and
is incorporated herein by reference.
(iv)* Annual Executive Incentive Compensation Plan -- Such document
was filed as Exhibit 10 to the Registrant's Form 10-Q for the
quarter ended May 30, 1986 and is incorporated herein by
reference.
(v)* 1995 Long-Term Growth Incentive Plan of the Registrant -- Such
document was filed as Exhibit 10(vi) to the Registrant's Form
10-K for the year ended December 2, 1994 and is incorporated
herein by reference.
(vi)* Annual Executive Incentive Compensation Plan (dated as of
December 4, 1994) -- Such document was filed as Exhibit
10(vii) to the Registrant's Form 10-K for the year ended
December 2, 1994 and is incorporated herein by reference.
(vii)* Form of executive termination agreement, as amended and
restated on February 17, 1995. -- Such document was filed as
Exhibit (10(viii) to the Registrant's Form 10-K for the year
ended December 2, 1994 and is incorporated herein by reference.
All officers with whom the Registrant entered into such
agreement and which are currently in effect and have not
been terminated and the date of each such agreement
are listed on Addendum 10(vii) attached hereto.
*Denotes a management contract or compensatory plan or arrangement.
18
Exhibit No. Description of Exhibit
(viii)* Employment Agreement between the Registrant and Robert C.
Siegel dated as of October 21, 1993 -- Such Agreement was
filed as Exhibit 10(x) to the Registrant's Annual Report on
Form 10-K for the fiscal period ended December 3, 1993 and is
incorporated herein by reference.
(ix) 1994 Non-Employee Director Stock Ownership Plan -- Such Plan
was filed as Appendix A to the Registrant's Proxy Statement
for its 1994 annual meeting of stockholders, portions of which
were filed with the Commission on March 1, 1994 and is
incorporated herein by reference.
(x)* Form of severance agreement dated February 22, 1995. All
executive officers with whom the Registrant entered into such
an agreement are listed on Addendum 10(x) attached hereto.
11 Calculation of Net Income Per Share
13 Selected Portions of Registrant's 1995 Annual Report to
Stockholders
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
27 Financial Data Schedules
(b) Reports on Form 8-K
None
*Denotes a management contract or compensatory plan or arrangement.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE STRIDE RITE CORPORATION THE STRIDE RITE CORPORATION
/s/ John M. Kelliher /s/ Robert C. Siegel
___________________________________ _________________________________
By: John M. Kelliher, Vice By: Robert C. Siegel, Chairman
President, Finance of the Board, President and
Treasurer and Controller Chief Executive Officer
(Principal Accounting Officer)
Date: February 9, 1996 Date: February 9, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Robert C. Siegel /s/ Donald R. Gant
___________________________________ _________________________________
Robert C. Siegel, Chairman of the Donald R. Gant, Director
Board of Directors, President and
Chief Executive Officer
Date: February 9, 1996 Date: February 9, 1996
/s/ Margaret A. McKenna /s/ Myles J. Slosberg
___________________________________ _________________________________
Margaret A. McKenna, Director Myles J. Slosberg, Director
Date: February 9, 1996 Date: February 9, 1996
/s/ W. Paul Tippett, Jr. /s/ Robert Seelert
___________________________________ _________________________________
W. Paul Tippett, Director Robert Seelert, Director
Date: February 9, 1996 Date: February 9, 1996
/s/ Jeanette S. Wagner /s/ Theodore Levitt
___________________________________ _________________________________
Jeanette S. Wagner, Director Theodore Levitt, Director
Date: February 9, 1996 Date: February 9, 1996
20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Directors
of The Stride Rite Corporation:
Our report on the consolidated financial statements of The
Stride Rite Corporation has been incorporated by reference in
this Annual Report on Form 10-K from the 1995 Annual Report to
Stockholders of The Stride Rite Corporation and appears on page
31 therein. In connection with our audits of such financial
statements, we have also audited the related financial statement
schedules listed in the index on page 15 of this Annual Report on
Form 10-K.
In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 5, 1996
F-1
THE STRIDE RITE CORPORATION
Schedule II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
__________
Balance at Additions Deductions Balance at
Beginning Charged to End of
Period Costs and Period
Description Expenses
Fiscal year ended
December 3, 1993:
Deducted from assets:
Allowance for doubt-
ful accounts 4,493 2,256 2,904(a) 3,845
Allowance for sales
discounts 1,442 2,625 2,310(b) 1,757
$5,935 $4,881 $5,214 $5,602
Fiscal year ended
December 2, 1994:
Deducted from assets:
Allowance for doubt-
ful accounts 3,845 3,117 1,101(a) 5,861
Allowance for sales
discounts 1,757 2,579 1,566(b) 2,770
$5,602 $5,696 $2,667 $8,631
Fiscal year ended
December 1, 1995:
Deducted from assets:
Allowance for doubt-
ful accounts $5,861 $1,899 $3,418(a) $4,342
Allowance for sales
discounts 2,770 2,428 2,401(b) 2,797
$8,631 $4,327 $5,819 $7,139
(a) Amounts written off as uncollectible.
(b) Amounts charged against the reserve.
F-2
THE STRIDE RITE CORPORATION
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 1, 1995
Index to Exhibits
Exhibit No. Description of Exhibit Page No.
10 (vii)* Form of executive termination agreement, as 24
amended and restated on February 17, 1995.
Such document was filed as Exhibit 10(viii)
to the Registrant's Form 10-K for the fiscal
year ended December 2, 1994 and is incorporated
herein by reference. All officers with whom
the Registrant entered into such agreement
and which are currently in effect and have
not been terminated and the date of each such
agreement are listed on Addendum 10(vii)
attached hereto.
(x)* Form of severance agreement dated February 22, 25
1995. All executive officers with whom the
Registrant entered into such an agreement are
listed on Addendum 10(x) attached hereto.
11 Calculation of Net Income Per Share 26
13 Selected portions of Registrant's 1995
Annual Report to Stockholders 27
21 Subsidiaries of the Registrant 63
23 Consent of Independent Accountants 64
27 Financial Data Schedules 65
*Denotes a management contract or compensatory plan or arrangement.