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UNITED STATES
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
For the fiscal year ended November 27, 1998
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 of (I.R.S. Employer Identification
incorporation) Number)
191 Spring Street, P.O. Box 9191, Lexington, Massachusetts 02420-9191
(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:
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 ___
---
/___/ 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 17, 1999, was $472,754,004
based on the closing price on that date on the New York Stock Exchange. As of
February 17, 1999, 46,405,301 shares of the Registrant's Common Stock, $.25 par
value, and the accompanying Preferred Stock Purchase Rights 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 November 27, 1998 Part I and Part II
Portions of the Registrant's Proxy
Statement for 1999 Annual Meeting of
Stockholders Part III
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. All of the Company's products are
manufactured abroad by independent manufacturers in accordance with the
Company's specifications and quality standards. 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
The Stride Rite Children's Group designs and markets children's footwear,
primarily for consumers between the ages of six months and ten years, 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), MUNCHKIN(TM), SPERRY(R) and STREET HOT(R) trademarks in medium to high
price ranges. During 1998 the Company introduced a line of casual and dress
footwear, which is targeted at six to ten year old girls, using the NINE WEST
KIDS(TM) trademark under a licensing agreement with Nine West Group.
The Keds group designs and markets sneakers and casual footwear for adults
and children under the KEDS(R) and PRO-KEDS(R) trademarks and casual footwear
for women under the GRASSHOPPERS(R) label.
The Sperry group designs and markets marine footwear and outdoor
recreational, hand-sewn, dress and casual footwear for adults and children 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.
In 1997, the Company began marketing a line of dress casual, sport casual
and athletic footwear for men and boys using the TOMMY HILFIGER(R) brand name
under a license agreement with Tommy Hilfiger Licensing, Inc. A women's footwear
product line was also launched in August 1998 using the TOMMY HILFIGER(R) brand
name.
During fiscal 1998, the Company introduced men's and boys' casual footwear
using the LEVI'S(R) brand name under a licensing agreement with Levi Strauss &
Co. In the fourth quarter of fiscal 1998, the Company and Levi Strauss & Co.
mutually agreed to discontinue this line of footwear.
Sales and Distribution
During the 1998 fiscal year, the Company sold its products nationwide to
customers operating retail outlets, including department stores, sporting
goods stores and marinas, as well as to Stride Rite children's shoe stores and
other shoe stores operated by independent retailers. In addition, the Company
sold footwear products to consumers through company-owned stores, including
children's shoe stores, manufacturers' outlet stores, GREAT FEET(R) concept
stores, and children's footwear departments in department stores. The Company's
largest single customer accounted for less than 7% of consolidated net sales for
the fiscal year ended November 27, 1998.
The Company provides assistance to a limited number of qualified specialty
retailers to enable them to operate independent Stride Rite children's shoe
stores. Such assistance sometimes includes the sublease of a desirable retail
site by the Company to a dealer. There are approximately 19 independent dealers
who currently sublease store locations from the Company.
The Company owns two distribution centers, one located in Louisville,
Kentucky with 520,000 square feet of space and the other in Huntington, Indiana
with 263,000 square feet of space. The Company sold its Boston, Massachusetts
distribution facility in March 1998 after transferring the distribution function
for the Stride Rite brand to the Huntington, Indiana facility.
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. 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.
Generally, the Company uses independent distributors and licensees to
market its various product lines outside of North America. International
revenues, including sales of the Company's Canadian subsidiary, represented 6%
of consolidated net sales for the fiscal year ended November 27, 1998.
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 17 stores are currently operating in Canada, Costa Rica,
El Salvador, Honduras, Mexico and Peru pursuant to such agreements.
The Company also distributes SPERRY TOP-SIDER(R), STRIDE RITE(R), KEDS(R),
TOMMY HILFIGER(R) and NINE WEST KIDS(TM) products in Canada through its Canadian
subsidiary.
International Sourcing
The Company purchases substantially all of its products from foreign
sources. It maintains a staff of approximately 100 professional and technical
personnel in Taiwan, Thailand, Indonesia and 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 1998, approximately 3% 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 all of its manufacturing facilities in the United States and
the Caribbean over the years, the Company has increased the volume of canvas and
leather footwear for which it contracts with independent offshore suppliers so
that now substantially all product is sourced offshore. In December 1997, the
Company closed its manufacturing facility in the Dominican Republic which
produced a portion of its SPERRY TOP-SIDER(R) product line. It is anticipated
that overseas resources will continue to be utilized in the future. The Company
also purchases certain raw materials (particularly leather) from overseas
resources.
Approximately 80% of the Company's footwear products are manufactured by
independently owned footwear manufacturers in China. Historically, instability
in China's political and economic environment has not had a material adverse
effect on the Company's financial condition or results of operations. The
Company cannot predict, however, the effect that future changes in economic or
political conditions in China could have on the economics of doing business with
its Chinese manufacturers.
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 normal trading relations 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
primarily denominated in United States dollars, thereby reducing short term
risks attendant to foreign currency fluctuations. During 1998, the currencies of
certain countries in the Far East weakened as compared to the U.S. dollar. The
Company does not expect these conditions to have a significant effect, favorable
or unfavorable, on the future costs of its production.
Retail Operations
As of November 27, 1998, the Company operated 111 Stride Rite children's
shoe stores, 60 leased children's shoe departments in leading department stores,
4 concept stores operated under the name GREAT FEET(R) and 24 manufacturers'
outlet stores under the name STRIDE RITE FAMILY FOOTWEAR which sell primarily
prior season goods for all of its owned and licensed brands. The product and
merchandising formats of the Stride Rite children's shoe stores are utilized in
the 60 leased children's shoe departments which the Company operates in certain
divisions of Federated Department Stores, including Macy's, Rich's and Lazarus
department stores. The Stride Rite children's shoe stores carry a significant
portion of the lines of the Company's STRIDE RITE(R) and SPERRY TOP-SIDER(R)
children's footwear and a portion of the KEDS(R) children's product line, the
TOMMY HILFIGER(R) boys' line and the NINE WEST KIDS(R) girls' styles. The GREAT
FEET(R) stores carry a full line of products for children aged 6 months to 12
years, including STRIDE RITE(R), KEDS(R), SPERRY TOP-SIDER(R), TOMMY HILFIGER(R)
and NINE WEST
KIDS(TM) brand products. The Company's stores are located primarily in larger
regional shopping centers, clustered generally in the major marketing areas of
the United States. Most of the Company's manufacturers' outlet stores are
located in shopping centers consisting only of outlet stores.
During the 1998 fiscal year, the Company opened three Stride Rite
booteries, four leased departments and five manufacturers' outlet stores. During
1998, the Company closed 14 retail stores in an effort to improve the
profitability of the Retail division. The Company currently plans to open
approximately 10 to 15 retail stores in fiscal 1999. In fiscal 1999, the Company
will also continue its efforts to close or sell underperforming retail locations
and expects to cease operations in 5 to 10 stores during the year.
Sales through the Company's retail operations accounted for approximately
17% of consolidated net sales for the fiscal year ended November 27, 1998.
Apparel and Accessory Licensing Activities
License royalties accounted for approximately 1% of the Company's sales in
fiscal year 1998. The Company has license agreements with a number of third
parties pursuant to which apparel and accessories are designed, manufactured and
sold under the KEDS(R), PRO-KEDS(R), STRIDE RITE (R) and SPERRY TOP-SIDER(R)
trademarks. The Company is actively evaluating its current license structure and
is continually pursuing new licensees.
Backlog
At November 27, 1998 and November 28, 1997, the Company had a backlog of
orders amounting to approximately $170,800,000 and $161,100,000, 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 canceled during the first two quarters of
the next fiscal year. In the Spring season of fiscal 1998, the Company
experienced an unusually high level of order cancellations from retailers,
especially with respect to its SPERRY TOP-SIDER(R) and TOMMY HILFIGER(R) product
lines. For fiscal 1999, the Company has altered its policies for recording
certain advance orders in an effort to better control order cancellations.
In all of the Company's wholesale businesses, reorders from retail
customers are an important source of revenue to supplement the orders taken in
advance of the season. Over the years, the importance of reorder activity to a
season's success has grown as customers, especially larger retailers, have
placed increased reliance on orders during the season which are transmitted via
electronic data interchange (EDI) programs.
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 United States.
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.
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 November 27, 1998, the Company employed approximately 2,400
full-time and part-time employees. One collective bargaining unit represents a
small number of these employees. Management believes that its relations with its
employees are good.
Environmental Matters
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
The Company has an existing trademark license agreement with Tommy
Hilfiger Licensing, Inc. pursuant to which it designs, markets and sells
footwear to men, women and boys. In connection with this agreement, the Company
expects to introduce a TOMMY HILFIGER(R) girls' line during the year 2000. The
Company also has a trademark license agreement with Nine West Group, Inc. to
design, manufacture and sell NINE WEST KIDS(TM) branded children's footwear. In
April 1997 the Company entered into a trademark license agreement with Levi
Strauss & Co. to design, manufacture and sell LEVI'S(R) branded men's, women's
and children's footwear. This agreement was terminated in fiscal 1998.
The Company believes that its patents and trademarks are important to its
business and are generally sufficient to permit the Company to carry on its
business as presently conducted.
Research and Development
The Company depends principally upon its design, engineering 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 material.
Executive Officers of the Registrant
The information with respect to the executive officers of the Company listed
below is as of February 17, 1999.
Name Position with Company Age
James A. Eskridge Chairman of the Board of Directors and Chief 56
Executive Officer of the Company since
joining the Company in December 1998. Mr.
Eskridge was a private investor from April
1996 until December 1998 and was a
consultant with Mattel, Inc., a toy
company. Mr. Eskridge was Group President,
Worldwide, Mattel, Inc., from April 1995
until April 1996 and President and Chief
Executive Officer of Fisher Price, a toy
company wholly owned by Mattel, from October
1993 to April 1995.
Joanna M. Jacobson President, The Keds Corporation since 38
joining the Company in April 1996. Prior to
joining the Company, Ms. Jacobson was a
partner of Core Strategy Group, a consulting
firm, from January 1995 to April 1996 and
was Senior Vice President of Marketing of
Converse Inc., a footwear company, from
November 1991 to September 1994.
Diane M. Sullivan Group President of the Company since October 43
1997. Previous to this position, Ms.
Sullivan was President, Wholesale division,
Stride Rite 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
footwear company wholly owned by Reebok
International Ltd., from May 1993 to April
1995.
Joseph T. Barrell Senior Vice President, Operations since 47
April 1997. Previous to this position, Mr.
Barrell served as Vice President of Global
Logistics since joining the Company in
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.
Executive Officers of the Registrant
Name Position with Company Age
Howard B. Collins, Jr. President, Stride Rite Sourcing 52
International, Inc., since joining the
Company in September 1996. Prior to joining
the Company, Mr. Collins was Vice President
of Sourcing for The Timberland Company, a
footwear company, from July 1991 to
September 1996.
Janet M. DePiero Vice President of Human Resources since 37
March 1997. Previously, Ms. DePiero was
Director of Compensation and Benefits from
October 1995 to February 1997 and Manager of
Compensation and Benefits from December 1991
to September 1995.
John M. Kelliher Chief Financial Officer of the Company since 47
February 1998, Vice President, Finance and
Treasurer of the Company since February 1993.
Thomas L. Nelson President, Sperry Top-Sider, Inc. since 44
joining the Company in May 1998. Prior to
joining the Company, Mr. Nelson was Senior
Vice President for North American Sales for
Converse, Inc., an athletic footwear
company, from March 1995 to May 1998 and
Senior Vice President of Global Sales for
the Rockport Company, a footwear company
wholly owned by Reebok International, Ltd.,
from September 1992 to January 1995.
C. Madison Riley III President, Stride Rite Children's Group, 40
Inc. since October 1997. Previous to this
position, Mr. Riley served as President,
Stride Rite International Corp. from May
1997 to October 1997, and Vice President and
General Manager, Stride Rite International
Corp., from January 1996 to May, 1997. Mr.
Riley served as Vice President of Stride
Rite International Corp. from November 1995
to January 1996. Prior to that, Mr. Riley
held various executive positions since
joining the Company in June 1993.
These executive officers are generally elected at the Board of Directors'
meeting held in conjunction with the Company's Annual Meeting and serve at the
pleasure of the Board.
Item 2. Properties
The Company owns an automated distribution center located in Louisville,
Kentucky with 520,000 square feet of space. During fiscal 1998, the Company
purchased a 263,000 square foot distribution facility in Huntington, Indiana,
which had previously been leased by the Company, and sold its warehouse in
Boston, Massachusetts, which contained 565,000 square feet of space. The Company
also sold a facility with approximately 20,000 square feet of space in Woburn,
Massachusetts. The Company leases approximately 18,000 square feet of space in
Wilmington, Massachusetts for product sample distribution and customer returns
processing. The Company's Canadian subsidiary leases approximately 30,000 square
feet for administrative offices and 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 office
building. The Company leases 20,000 square feet of space in Richmond, Indiana
for its customer service, order processing and telemarketing functions, and
25,000 square feet of space for its liaison offices in mainland China and
Taiwan. In addition, the Company leases smaller facilities for local sales
offices and showrooms in various locations in the United States.
At November 27, 1998, the Company operated 139 retail stores throughout
the country on leased premises which, in the aggregate, covered approximately
211,000 square feet of space. The Company also operates 60 children's footwear
departments in certain divisions of Federated Department Stores. In addition,
the Company is the lessee of 19 retail locations with a total of approximately
22,000 square feet which are subleased to independent Stride Rite dealers and
other tenants.
For further information concerning the Company's lease obligations, see
Note 8 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 all properties and facilities of the Company are
suitable, adequate and fit for their intended purposes.
Item 3. Legal Proceedings
The Company is a party to various litigations arising in the normal course
of business. Management of the Company 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
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 1998
Annual Report to Stockholders on pages 1, 35 and 41 and is incorporated
herein by reference.
Item 6. Selected Financial Data
The information required by this item is included in the Registrant's 1998
Annual Report to Stockholders on page 18 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 1998
Annual Report to Stockholders on pages 19 through 25 and is incorporated
herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
The information required by this item is included in the Registrant's 1998
Annual Report to Stockholders on pages 26 through 43 and is incorporated
herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
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" and "Meetings of the Board of Directors and Committees" in the
Registrant's definitive proxy statement relating to its 1999 Annual Meeting of
Stockholders, which will be filed with the Commission within 120 days after the
close of the Registrant's fiscal year ended November 27, 1998, 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 1999 Annual Meeting of Stockholders
under the caption "Executive Compensation" 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
November 27, 1998, 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 1999 Annual Meeting of Stockholders, which will be filed with
the Commission within 120 days after the close of the Registrant's fiscal year
ended November 27, 1998, 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 1999 Annual Meeting of Stockholders, which will be filed with
the Commission within 120 days after the close of the Registrant's fiscal year
ended November 27, 1998, which information is incorporated herein by reference.
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 November 27, 1998 and November
28, 1997 *
Consolidated Statements of Income for the fiscal years ended
November 27, 1998, November 28, 1997 and November 29, 1996 *
Consolidated Statements of Cash Flows for the fiscal years ended
November 27, 1998, November 28, 1997 and November 29, 1996 *
Consolidated Statements of Changes in Stockholders' Equity for
the fiscal years ended November 27, 1998, November 28, 1997 and
November 29, 1996 *
Notes to Consolidated Financial Statements *
Report of Independent Accountants *
Report of Independent Accountants on Financial Statement Schedules F-1
Financial Statement Schedule for the fiscal years ended
November 27, 1998, November 28, 1997 and November 29, 1996:
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 12 of this
Annual Report on Form 10-K.
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, incorporated by
reference from Exhibit 4(i) to the Registrant's Form S-8
filed on October 25, 1996.
(ii) Articles of Amendment dated April 7, 1987 to Restated Articles
of Organization, incorporated by reference from Exhibit 4(i)
to the Registrant's Form S-8 filed on October 25, 1996.
(iii) Articles of Amendment dated December 16, 1987 to Restated
Articles of Organization of the Registrant, incorporated by
reference from Exhibit 4(i) to the Registrant's Form S-8 filed
on October 25, 1996.
(iv) Articles of Amendment dated December 3, 1991 to the Restated
Articles of Organization of the Registrant, incorporated by
reference from Exhibit 4(i) to the Registrant's Form S-8 filed
on October 25, 1996.
(v) Certificate of Vote of Directors establishing a series of a
Class of Stock dated as of June 18, 1997.
(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 June 18, 1997 between the Registrant
and BankBoston, N.A. - Such document was filed as Exhibit 1 to
the Registrant's Form 8-A dated July 1, 1997 and is
incorporated herein by reference.
Exhibits. The following exhibits are contained herein or are incorporated
herein by reference:
Exhibit No. Description of Exhibit
10 (i)* 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.
(ii)* 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.
(iii)* Form of executive termination agreement dated as of February
12, 1998. Such document was filed as Exhibit 10(iii) to the
Registrant's Form 10-K for the year ended November 28, 1997
and is incorporated herein by reference.
(iv)* Form of executive termination agreement dated as of February
12, 1998. Such document was filed as Exhibit 10(iv) to the
Registrant's Form 10-K for the year ended November 28, 1997
and is incorporated herein by reference.
10 (v)* Form of severance agreement dated February 22, 1995.
This document was filed as Exhibit 10(vi) to the Registrant's
Form 10-K for the year ended November 28, 1997 and is
incorporated herein by reference.
(vi)* Employment Agreement between the Registrant and Robert C.
Siegel dated November 4, 1997. This document was filed as
Exhibit 10(vii) to the Registrant's Form 10-K for the year
ended November 28, 1997 and is incorporated herein by
reference.
(vii)* Amendment to Employment Agreement between the Registrant and
Robert C. Siegel dated June 5, 1998. This document was filed
as Exhibit 10(i) to the Registrant's Form 10-Q for the period
ending August 28, 1998 and is incorporated herein by
reference.
*Denotes a management contract or compensatory plan or arrangement.
Exhibit No. Description of Exhibit
(viii)* Amendment to Employment Agreement between the Registrant
and Robert C. Siegel dated November 11, 1998.
(ix)* Employment Agreement between the Registrant and James A.
Eskridge dated November 11, 1998.
(x)* Annual Incentive Compensation Plan amended and restated as
of December 11, 1997. This document was filed as Exhibit
10(viii) to the Registrant's Form 10-K for the year ended
November 28, 1997 and is incorporated herein by reference.
(xi)* 1998 Stock Option Plan of the Registrant (as amended).
(xii)* 1998 Non-Employee Director Stock Ownership Plan of the
Registrant (as amended).
(xiii)* Senior Executive Annual Incentive Compensation Plan of the
Registrant. This document was filed as Exhibit 10(xi) to the
Registrant's Form 10-K for the year ended November 28, 1997
and is incorporated herein by reference.
(xiv)* 1999 Executive Long Term Bonus Plan of the Registrant.
(xv) Amended and Restated License Agreement between Registrant
and Tommy Hilfiger Licensing, Inc.
(xvi) January 13, 1999 Letter from Lynn Shanahan (Tommy Hilfiger
Licensing, Inc.) to Diane Sullivan (Tommy Hilfiger
Footwear, Inc.)
(xvii) January 14, 1999 Letter from James A. Eskridge (The Stride
Rite Corp.) to Joel Horowitz (Tommy Hilfiger U.S.A., Inc.)
13 Portions of Registrant's 1998 Annual Report to Stockholders
incorporated by reference into this Annual Report on Form
10-K
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
*Denotes a management contract or compensatory plan or arrangement.
Exhibit No. Description of Exhibit
27 Financial Data Schedules
(b) Reports on Form 8-K
On November 30, 1998, the Company filed a report on Form 8-K
restating the quarterly financial data schedules for the
periods ending March 1, 1996; May 31, 1996; August 30, 1996;
November 29, 1996; February 28, 1997; May 30, 1997; August
29, 1997; and November 28, 1997. This restatement was
required by Statement of Financial Accounting Standards No.
128 to reflect a different method of computing net income
per share than previously required under the provisions of
Accounting Principle Board Opinion No. 15.
*Denotes a management contract or compensatory plan or arrangement.
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/ James A. Eskridge
By: John M. Kelliher, Chief By: James A. Eskridge, Chairman
Financial Officer of the Board and Chief
(Principal Accounting Officer) Executive Officer
Date: February 4, 1999 Date: February 4, 1999
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/ James A. Eskridge /s/ Warren Flick
James A. Eskridge, Chairman of Warren Flick, Director
the Board of Directors and
Chief Executive Officer
Date: February 4, 1999 Date: February 4, 1999
/s/ Donald R. Gant /s/ Margaret A. McKenna
Donald R. Gant, Director Margaret A. McKenna, Director
Date: February 4, 1999 Date: February 4, 1999
/s/ Frank R. Mori /s/ Robert L. Seelert
Frank R. Mori, Director Robert L. Seelert, Director
Date: February 4, 1999 Date: February 4, 1999
/s/ Myles J. Slosberg /s/ W. Paul Tippett, Jr.
Myles J. Slosberg, Director W. Paul Tippett, Jr., Director
Date: February 4, 1999 Date: February 4, 1999
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Stockholders and Directors of
The Stride Rite Corporation:
Our audits of the consolidated financial statements referred to in our report
dated January 6, 1999 appearing on page 43 of the 1998 Annual Report to
Stockholders and Directors of The Stride Rite Corporation (which report and
consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the financial statement schedule
listed in Item 14(a)(2) of this Form 10-K. In our opinion, this financial
statement schedule presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
January 6, 1999
F-1
THE STRIDE RITE CORPORATION
Schedule II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Additions
Balance Charged to Balance at
at Costs and End of
Description Beginning Expenses Deductions Period
Period
---------- ------------ ----------- -----------
Fiscal year ended November 29, 1996:
Deducted from assets:
Allowance for doubtful
accounts $4,342 $1,214 $2,108 (a) $3,448
Allowance for sales
discounts 2,797 2,667 1,740 (b) 3,724
=========== ============ ============ ===========
$7,139 $3,881 $3,848 $7,172
=========== ============ ============ ===========
Fiscal year ended November 28, 1997:
Deducted from assets:
Allowance for doubtful
accounts 3,448 1,140 846 (a) 3,742
Allowance for sales
discounts 3,724 3,294 1,754 (b) 5,264
=========== ============ ============ ===========
$7,172 $4,434 $2,600 $9,006
=========== ============ ============ ===========
Fiscal year ended November 27, 1998:
Deducted from assets:
Allowance for doubtful
accounts 3,742 1,402 1,246 (a) 3,898
Allowance for sales
discounts 5,264 2,329 1,920 (b) 5,673
=========== ============ ============ ===========
$9,006 $3,731 $3,166 $9,571
=========== ============ ============ ===========
(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 NOVEMBER 27, 1998
Index to Exhibits
Exhibit No. Description of Exhibit Page No.
10 (viii)* Amendment to Employment Agreement between the 22
Registrant and Robert C. Siegel dated November 11,
1998.
(ix)* Employment Agreement between the Registrant and 24
James A. Eskridge dated November 11, 1998.
(xi)* 1998 Stock Option Plan of the Registrant (as 37
amended).
(xii)* 1998 Non-Employee Director Stock Ownership Plan (as 47
amended).
(xiv)* 1999 Executive Long Term Bonus Plan of the 62
Registrant.
(xv) Amended and Restated License Agreement between 68
Registrant and Tommy Hilfiger Licensing, Inc.
(xvi) January 13, 1999 Letter from Lynn Shanahan (Tommy 144
Hilfiger Licensing, inc.) to Diane Sullivan (Tommy
Hilfiger Footwear, Inc.)
(xvii) January 14, 1999 Letter from James A. Eskridge (The 147
Stride Rite Corp.) to Joel Horowitz (Tommy Hilfiger
U.S.A., Inc.)
13 Portions of Registrant's 1998 Annual Report to 148
Stockholders incorporated by reference into this
Annual Report on Form 10-K.
21 Subsidiaries of the Registrant 184
23 Consent of Independent Accountants 185
27 Financial Data Schedules 186
*Denotes a management contract or compensatory plan or arrangement.