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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 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 June 29, 2002
-----------------------------------------------
OR
( ) 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 1-8769
R. G. BARRY CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 31-4362899
--------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
13405 YARMOUTH ROAD NW, PICKERINGTON, OHIO 43147
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
614-864-6400
------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------
(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
--- ---
Common Shares, $1 Par Value, Outstanding as of June 29, 2002 - 9,595,592
---------
Index to Exhibits at page 14
Page 1 of 15 pages
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 29, 2002 DECEMBER 29, 2001
------------- -----------------
(unaudited)
(in thousands)
ASSETS:
Cash and cash equivalents $ 3,101 12,258
Accounts receivable, less allowances 12,112 16,432
Inventory 43,199 35,642
Deferred and recoverable income taxes 7,132 2,896
Prepaid expenses 3,050 2,448
-------- --------
Total current assets 68,594 69,676
-------- --------
Property, plant and equipment, at cost 41,827 40,066
Less accumulated depreciation and amortization 29,727 29,149
-------- --------
Net property, plant and equipment 12,100 10,917
-------- --------
Goodwill, net of amortization 2,247 2,002
Other assets 9,824 6,017
-------- --------
$ 92,765 88,612
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current installments of long-term debt 3,676 2,432
Short-term notes payable 8,000 --
Accounts payable 7,948 7,628
Accrued expenses 1,893 4,411
-------- --------
Total current liabilities 21,517 14,471
-------- --------
Accrued retirement costs and other, net 8,694 8,258
Long-term debt, excluding current installments 8,874 5,162
-------- --------
Total liabilities 39,085 27,891
-------- --------
Minority interest 379 336
Shareholders' equity:
Preferred shares, $1 par value
Authorized 3,775 Class A shares,
225 Series I Junior Participating
Class A shares,
and 1,000 Class B shares, none issued -- ---
Common shares, $1 par value
Authorized 22,500 shares
(excluding treasury shares of 953 and 979) 9,596 9,376
Additional capital in excess of par value 12,434 12,093
Deferred compensation (265) (331)
Accumulated other comprehensive loss (131) (495)
Retained earnings 31,667 39,742
-------- --------
Net shareholders' equity 53,301 60,385
-------- --------
$ 92,765 88,612
======== ========
Page 2 of 15 pages
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
-------------------- ----------------------
JUNE 29, 2002 JUNE 30, 2001 JUNE 29, 2002 JUNE 30, 2001
------------- ------------- ------------- -------------
(unaudited)
(in thousands, except per share amounts)
Net sales $ 16,160 16,352 37,056 41,093
Cost of sales 11,748 11,348 26,225 27,516
-------- -------- -------- --------
Gross profit 4,412 5,004 10,831 13,577
Selling, general and
administrative expense 12,136 10,677 23,517 21,445
Restructuring charges
(adjustments) -- -- 727 (242)
-------- -------- -------- --------
Operating loss (7,724) (5,673) (13,413) (7,626)
Other income 200 200 400 400
Interest expense (306) (230) (540) (424)
Interest income 1 61 40 197
-------- -------- -------- --------
Net interest expense (305) (169) (500) (227)
Loss before
income tax benefit (7,829) (5,642) (13,513) (7,453)
Income tax benefit 3,111 2,059 5,481 2,592
Minority interest, net of tax (26) 4 (43) (31)
-------- -------- -------- --------
Net loss ($ 4,744) (3,579) (8,075) (4,892)
======== ======== ======== ========
Net loss per common share
Basic ($ 0.50) (0.38) (0.85) (0.52)
======== ======== ======== ========
Diluted ($ 0.50) (0.38) (0.85) (0.52)
======== ======== ======== ========
Average number of common
shares outstanding
Basic 9,598 9,379 9,512 9,379
======== ======== ======== ========
Diluted 9,598 9,379 9,512 9,379
======== ======== ======== ========
Page 3 of 15 pages
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Twenty-six weeks ended
JUNE 29, 2002 JUNE 30, 2001
------------- -------------
(unaudited)
(in thousands)
Cash flows from operating activities:
Net loss ($ 8,075) ($ 4,892)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization of
property, plant and equipment 911 909
Amortization of goodwill -- 68
Amortization of deferred compensation 66 66
Minority interest 43 31
Changes in:
Accounts receivable, net 4,429 11,904
Inventory (7,397) (13,783)
Prepaid expenses (602) 383
Deferred and recoverable income taxes (4,236) (2,215)
Other (3,806) 11
Accounts payable 188 2,760
Accrued expenses (2,565) (2,586)
Accrued retirement costs and other 436 367
-------- --------
Net cash used in operating activities (20,608) (6,977)
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment, net (2,032) (496)
-------- --------
Cash flows from financing activities:
Long-term debt, net of (repayments) 4,825 (86)
Proceeds from short-term notes 8,000 4,000
Proceeds from shares issued and other 560 21
-------- --------
Net cash provided by financing activities 13,385 3,935
-------- --------
Effect of exchange rates on cash 98 (65)
-------- --------
Net decrease in cash (9,157) (3,603)
Cash at the beginning of the period 12,258 6,930
-------- --------
Cash at the end of the period $ 3,101 $ 3,327
======== ========
Supplemental cash flow disclosures:
Interest paid $ 414 $ 452
======== ========
Income taxes paid $ 136 $ 119
======== ========
Page 4 of 15 pages
R. G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Under Item 1 of Part I of Form 10-Q
for the periods ended June 29, 2002 and June 30, 2001
1. These interim financial statements are unaudited. All adjustments
(consisting solely of normal recurring adjustments) have been made which,
in the opinion of management, are necessary to fairly present the results
of operations.
2. R. G. Barry Corporation and its subsidiaries (the "Company") operate on a
fifty-two or fifty-three week annual fiscal year, ending annually on the
Saturday nearest December 31. Fiscal 2002 and 2001 are both fifty-two week
years.
3. Income tax benefit for the periods ended June 29, 2002 and June 30, 2001,
consisted of:
2002 2001
---- ----
Current and deferred: (in thousands)
U. S. Federal and
Foreign tax benefit $ 4,805 2,391
State & Local tax benefit 676 201
------- -----
Total $ 5,481 2,592
======= =====
The income tax benefit reflects a combined federal, foreign, state and
local effective rate of approximately 40.6 percent and 34.8 percent for the
first half of 2002 and 2001, respectively, as compared to the statutory U.
S. federal rate of 34.0 percent in both years.
Income tax benefit for the periods ended June 29, 2002 and June 30, 2001
differed from the amounts computed by applying the U. S. federal income tax
rate of 34.0 percent to pretax loss, as a result of the following:
2002 2001
---- ----
Computed "expected" tax
expense (benefit): (in thousands)
U. S. Federal benefit ($ 4,594) (2,534)
Foreign and other, net (441) 75
State & Local benefit, net of
Federal tax benefit (446) (133)
--------- ---------
Total ($ 5,481) (2,592)
========= =========
4. Basic net loss per common share has been computed based on the weighted
average number of common shares outstanding during each period. Diluted net
loss per common share is based on the weighted average number of
outstanding common shares during the period, plus, when their effect is
dilutive, potential common shares consisting of certain common shares
subject to stock options and the stock purchase plan. Diluted loss per
common share as of June 29, 2002 and June 30, 2001 does not include the
effect of potential common shares due to their antidilutive effect.
5. Inventory by category for the Company consisted of the following:
JUNE 29, DECEMBER 29,
-------- -----------
2002 2001
---- ----
(in thousands)
Raw materials $ 9,019 8,203
Work in process 2,221 1,820
Finished goods 31,959 25,619
------ ------
Total inventory 43,199 35,642
====== ======
Page 5 of 15 pages
R. G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Under Item 1 of Part I of Form 10-Q for
the periods ended June 29, 2002 and June 30, 2001 - continued
6. Segment Information - The Company manufactures and markets comfort footwear
for at- and around-the-home and supplies thermal retention technology
products. The Company considers its "Barry Comfort" at- and around-the-home
comfort footwear groups in North America and in Europe, and the thermal
retention technology group, "Thermal", as its three operating segments. The
accounting policies of the operating segments are substantially similar,
except that the disaggregated information has been prepared using certain
management reports, which by their very nature require estimates. In
addition, certain items from these management reports have not been
allocated among the operating segments, including such items as a) costs of
certain administrative functions, b) current and deferred income tax
expense (benefit) and deferred tax assets (liabilities), and c) in some
periods, certain other operating provisions.
Barry Comfort
-------------
2002 North Intersegment
(in thousands) America Europe Thermal Eliminations Total
------- ------ ------- ------------ -----
Net sales $ 29,925 $ 5,131 $ 2,000 $ 37,056
Depreciation and
amortization 735 97 79 911
Interest income 91 (51) 40
Interest expense 520 20 51 (51) 540
Pre tax loss (11,454) (390) (1,669) (13,513)
Additions to property, plant
and equipment, net 1,969 53 10 2,032
Total assets devoted $ 87,590 $ 7,618 $ 4,525 ($ 6,968) $ 92,765
======== ======= ======= ========= ========
Barry Comfort
-------------
2001 North Intersegment
(in thousands) America Europe Thermal Eliminations Total
------- ------ ------- ------------ -----
Net sales $ 33,487 $ 5,176 $2,430 $ 41,093
Depreciation and
amortization 717 103 89 909
Interest income 128 20 49 197
Interest expense 410 14 (49) 49 424
Pre tax loss (5,939) (532) (982) (7,453)
Additions to property, plant
and equipment, net 351 145 - 496
Total assets devoted $ 78,003 $ 7,880 $ 5,548 ($ 2,761) $ 88,670
======== ======= ======= ========= ========
Page 6 of 15 pages
R. G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Under Item 1 of Part I of Form 10-Q for
the periods ended June 29, 2002 and June 30, 2001 - continued
7. Restructuring Charges - The Company has previously announced plans to
reduce costs and improve operating efficiencies, and recorded restructuring
charges as a component of operating expense. The following schedule
highlights actual activities for the six-month periods through June 29,
2002, with comparative information through June 30, 2001.
As of As of
Dec. 29, Charges Estimate June 29,
2001 in 2002 Adjustments Paid in 2002 2002
------- ----------- ------------ --------
(in thousands)
Employee separations $ 346 727 - 895 178
------ ------- ------- ----- ------
Total restructuring costs $ 346 $ 727 $ - $ 895 $ 178
====== ======= ======= ===== ======
As of As of
Dec. 30, Charges Estimate June 30,
2000 in 2001 Adjustments Paid in 2001 2001
-------- ------- ----------- ------------ ---------
(in thousands)
Employee separations $ 527 - - 254 273
Noncancelable lease costs 499 40 ( 282) 89 168
------- ------ ------- ----- ------
Total restructuring costs $ 1,026 $ 40 $( 282) $ 343 $ 441
======= ====== ======= ===== ======
8. Impact of New Accounting Standards
Effective January 2002, the Company adopted the Emerging Issues Task Force
EITF 00-25, "Vendor Income Statement Characterization of Consideration Paid
to a Reseller of the Vendor's Products". EITF 00-25 requires the
reclassification of certain expenses, formerly characterized as selling
expenses, as a reduction of net sales and a corresponding decrease in
selling, general and administrative expenses. Accordingly, upon adoption,
approximately $1.5 million and $1.4 million of expense incurred in the
first half of 2002 and 2001, respectively, was reclassified. There was no
change in the final determination of earnings before income taxes or
earnings after income taxes as a result of the reclassification.
Effective January 2002, the Company adopted SFAS No. 142, "Goodwill and
Other Intangibles", which requires, among other things, the discontinuance
of goodwill amortization, and substituting an annual assessment of the
impairment of existing intangibles. Accordingly, the Company no longer
amortizes approximately $2 million of goodwill. The amortization of
goodwill during the first half of 2001 was $68 thousand, or less than one
cent per share; there was no comparable amortization charge during the
first half of 2002. The Company has determined that no transitional
impairment losses need be recognized due to the change in accounting
principle.
Page 7 of 15 pages
R. G. BARRY CORPORATION AND SUBSIDIARIES
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
The statements in this Quarterly Report on Form 10-Q, which are not historical
fact are forward-looking statements based upon our current plans and strategies,
and reflect our current assessment of the risks and uncertainties related to our
business, including such things as product demand and market acceptance; the
economic and business environment and the impact of governmental regulations,
both in the United States and abroad; the effects of direct sourcing by
customers of competitive products from alternative suppliers; the effect of
pricing pressures from retailers; the loss of significant customers in
connection with mergers, acquisitions, bankruptcies or other circumstances;
inherent risks of international development, including foreign currency risks,
economic, regulatory and cultural difficulties or delays in our business
development outside the United States; our ability to improve processes and
business practices to keep pace with the economic, competitive and technological
environment; the availability and costs of financing; capacity, efficiency, and
supply constraints; weather; the effects of terrorist acts, and governments'
responses to terrorist acts, on business activities and customer orders; acts of
war; and other risks detailed in our press releases, shareholder communications,
and Securities and Exchange Commission filings. Actual events affecting us and
the impact of such events on our operations may vary from those currently
anticipated.
LIQUIDITY AND CAPITAL RESOURCES
As of the end of the second quarter of 2002, we had $47.1 million in net working
capital. This compares with $51.4 million at the end of the second quarter of
2001, and $55.2 million at fiscal year-end 2001. The declines in net working
capital from the end of the second quarter of 2001 and from fiscal year-end 2001
to the end of the second quarter of 2002 are primarily the result of the
comparatively greater losses we have incurred during 2002.
The primary components of net working capital have changed as follows:
- - Accounts receivable increased from $9.6 million at the end of the second
quarter of 2001, to $12.1 million at the end of the second quarter of 2002.
Most of the increase in 2002 reflects slowdown in collections from one
customer. We believe that there is minimal exposure to bad debts and expect
receivables to be at more historically appropriate levels by year-end 2002.
Accounts receivable at the end of the second quarter of 2002 decreased by
$4.3 million from $16.4 million at the end of fiscal 2001, representing a
normal seasonal pattern of change in receivables.
- - Inventories ended the second quarter of 2002 at $43.2 million compared with
$46.4 million one year ago, and $35.6 million as of the end of fiscal 2001.
Most of the decrease in inventory from one year ago, reflects a decrease in
raw materials and in process inventories on hand from period to period.
This decline is consistent with our 3-year strategic plan to purchase
increasing amounts of finished goods from third party suppliers and
decrease the amount of merchandise produced in our own plants. The amount
of inventory has increased from the end of fiscal 2001, as a normal
seasonal pattern of inventory changes from season to season, and is mainly
an increase in finished goods in expectation of sales later in the year.
- - We ended the second quarter of 2002 with $3.1 million in cash and cash
equivalents, compared with $3.3 million at the end of the second quarter of
2001. At the end of fiscal 2001, we had $12.3 million in cash and cash
equivalents. At the end of the second quarter of 2002, we had borrowed $8
million in short-term notes from our bank, compared with $4 million at the
end of the second quarter of 2001. There were no short-term bank borrowings
outstanding at the end of fiscal 2001.
Capital expenditures during the first half of 2002 amounted to $2.0 million
compared with $496 thousand during the first half of 2001. Most of the increase
in capital expenditures from 2001 to 2002, reflects expenditures needed to
implement our three-year strategic plan related to establishing cutting and
molding operations in Mexico. Expenditures in both years were funded out of
working capital.
Page 8 of 15 pages
Management's Discussion and Analysis of Financial Condition
and Results of Operations - continued
We currently have in place an unsecured Revolving Credit Agreement ("Revolver").
The current Revolver became effective in March 2001, and was extended during the
first quarter of 2002 through April 30, 2003. The Revolver provides a seasonally
adjusted available line of credit ranging from zero during the month of January,
to a peak of $30 million from April through November. We ended the second
quarter of 2002 with $8 million outstanding under the Revolver as compared with
$4 million outstanding under the Revolver at the end of the second quarter of
2001. The Revolver contains a number of financial covenants, including:
limitations on incurrence of additional debt and liens, maintenance of minimum
seasonal tangible net worth, limitations on dividends and other restricted
payments, and minimum seasonal earnings before taxes, net interest, depreciation
and amortization. We believe that the covenants are not uncommon for agreements
of its type and duration. We are in compliance with all the covenants of the
Revolver, and all other debt agreements.
Effective January 1, 2002, the 15% duties imposed by the United States on
slippers coming from Mexico were eliminated. The duties had been scheduled for
reduction at the rate of 2.5% per year until the scheduled elimination on
January 1, 2008. With the assistance of two firms, we were successful in
accelerating the elimination of these duties. With the successful conclusion of
this pursuit, we agreed to pay an aggregate of approximately $6.2 million, most
of which is payable in quarterly installments through the end of 2005. Reflected
in current installments and long-term debt is approximately $4.5 million, which
represents the discounted present value of the remaining quarterly installments
due through 2005. The unamortized cost of the services of these firms, amounting
to $4.9 million, is mainly included in other assets as of the end of the first
half of 2002. These costs are being amortized through the end of 2007, which
corresponds with the period of expected benefit from the reduction in duties.
Amortization during the first half of 2002, amounted to $365 thousand.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In July 2002 the Financial Accounting Standards Board (FASB) issued Statement
No. 146, Accounting for costs Associated with Exit or Disposal Activities.
Statement No. 146 requires recognition of costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. The Statement covers costs related to lease termination,
certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, and other exit or disposal activity.
Statement No. 146 is effective prospectively for exit and disposal plans
initiated after December 31, 2002. The Company does not expect Statement No. 146
will have a material impact on the Company upon adoption.
RESULTS OF OPERATIONS
During the second quarter of 2002, net sales of $16.2 million, were nearly flat
when compared with net sales of $16.4 million during the same quarter in 2001.
For the six months, net sales amounted to $37.1 million, a 9.8 percent decrease
in net sales when compared with the first six months of 2001. Nearly the entire
decline in net sales for the half, occurred during the first quarter. As noted
in the first quarter's Form 10-Q, nearly all of that decline related to our
shipments to our largest mass merchandizing customer. In an effort to improve
their inventory productivity, this customer decided to reduce their on-hand and
backup inventory across the board in footwear. As a consequence, first quarter
sales declined by about $4 million. We believe these sales will be made up over
the remainder of the year, as we expect our business with that customer to
increase for the entire year. Indeed, sales to this customer increased during
the second quarter of 2002, compared with last year by about 39 percent. There
were corresponding decreases in net sales, caused by unexpected returns of fall
warm-lined footwear primarily from one customer as a consequence of one of the
warmest winters ever recorded in the United States.
Page 9 of 15 pages
Management's Discussion and Analysis of Financial Condition
and Results of Operations - continued
The returns are first quality products, and we expect to ship them to retailers
at full price during the third and fourth quarters of 2002. In our Barry Comfort
Europe and Thermal segments, net sales for the first half of 2002 were about
equal to net sales realized in the first half of 2001. (See also note 6 of notes
to consolidated financial statements for selected segment information.)
Gross profit during the second quarter of 2002, amounted to $4.4 million, or
27.3 percent of net sales. This compares with gross profit of $5.0 million, or
30.6 percent of net sales, in the same quarter of 2001. For the six months,
gross profit as a percent of net sales was 29.2 percent in 2002 compared with
33.0 percent in 2001.
Planned one-time or excess costs related to transitioning many manufacturing and
distribution processes from the United States to Mexico, increased the costs of
sales and selling, general and administrative expenses in both the first and
second quarters of 2002, when compared with last year. The magnitude of the
increase is approximately $3.5 million for the first half of 2002, with
approximately $2 million incurred during the first quarter and approximately
$1.5 million incurred during the second quarter of 2002. $727 thousand of the
$3.5 million was treated as a restructuring charge during the first quarter.
During the transition, we maintained duplicate activities in certain functional
areas, running certain operations in parallel in both Texas and Mexico, to
ensure a smooth transfer of responsibilities to Mexico, and to ensure that there
was no disruption in service to our customers during the transition. This added
expense adversely impacted both the cost of sales and the resulting gross
profit, as well as the selling, general and administrative expenses, for the
periods noted.
Selling, general and administrative expenses during the second quarter amounted
to $12.1 million, about $1.4 million greater than the same quarter one year ago.
For the six months, these expenses amounted to $23.5 million, compared with
$21.4 million for the same six months last year. The increase mainly reflects
increases in expense, as outlined in the preceding paragraph, during the period
of transition of activities to Mexico.
Net interest expense increased during both the second quarter and first half of
2002 when compared with 2001. During the second quarter of 2002, net interest
expense amounted to $305 thousand compared with $169 thousand in the second
quarter of 2001. For the first half, net interest expense increased to $500
thousand in 2002, from $227 thousand in 2001. As noted in the above discussion
of long-term debt, we will have quarterly fees due through 2005 to the parties
that assisted us in obtaining accelerated duty relief. The interest imputed on
these quarterly fees was the primary factor contributing to the increase in the
level of interest expense for the periods covered. During 2002, we have borrowed
more under the Revolver than in 2001, although interest rates in 2002 at about
4.1 percent are about 2 percent lower than in 2001. In addition, interest income
from short-term investments in 2002 was about $157 thousand lower than in 2001
primarily as a result of lower amounts of investments and lower market
investment income rates from year to year.
For the second quarter of 2002, we incurred a net loss of $4.7 million, or $0.50
per share, compared with the $3.6 million net loss, or $0.38 per share, incurred
during the same quarter of 2001. For the six months, we incurred a net loss in
2002 of $8.1 million, or $0.85 per share, compared with a net loss of $4.9
million, or $0.52 per share during the same period in 2001. Per share
calculations for both years are the same for both basic loss per share and
diluted loss per share.
Page 10 of 15 pages
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk
MARKET RISK SENSITIVE INSTRUMENTS - FOREIGN CURRENCY
We transact business in various foreign countries. Our primary foreign currency
net cash outflows occur in Mexico. We do not hedge anticipated foreign currency
net cash outflows in the Mexican Peso, as the Peso generally has declined in
value over time, when compared with the U. S. Dollar. In addition, forward
contracts in this currency are not normally economically available.
Our primary foreign currency net cash inflows are generated from Canada and
Western Europe, and to a much lesser extent from Mexico. We do, at times, employ
a foreign currency hedging program utilizing currency forward exchange contracts
for anticipated net cash inflows in Canada and Western Europe. Under this
program, increases or decreases in net local operating revenue and expenses as
measured in U. S. Dollars are partially offset by realized gains and losses on
hedging instruments. The goal of the hedging program is to fix economically the
exchange rates on projected foreign currency net cash flows. Foreign currency
forward contracts are not used for trading purposes.
All foreign currency contracts are marked-to-market and unrealized gains and
losses are included in the current period's calculation of net income. Because
not all economic hedges qualify as accounting hedges, unrealized gains and
losses may be recognized in net income in advance of the actual projected net
foreign currency cash flows. This often results in a mismatch of accounting
gains and losses, and transactional foreign currency net cash flow gains and
losses.
We believe that the impact of foreign currency forward contracts is not material
to our financial condition or results of operations. At the end of the second
quarter of 2002, we had net foreign currency exchange contracts outstanding to
sell forward the following currencies. All contracts mature later in fiscal
2002.
Approximate Estimated Fair Unrealized Loss, as
Nominal Amount in Average Exchange Value as of of
US Dollars Rate June 29, 2002 June 29, 2002
(in thousands) (in thousands)
Canadian Dollar $500 US$1 = CAN 1.60 $ 527 ($ 27)
Euros $ 437 US$1 = XEU 1.14 $ 495 ($ 58)
Page 11 of 15 pages
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) through (d) Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a), (b) Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) R. G. Barry Corporation's Annual Meeting of Shareholders (the
"Annual Meeting") was held on May 9, 2002. At the close of business on
the record date, March 15, 2002, 9,402,379 common shares were
outstanding and entitled to vote at the Annual Meeting. At the Annual
Meeting, 8,484,163, or 90.2% of the outstanding common shares entitled
to vote, were represented in person or by proxy.
(b) Directors elected at the Annual Meeting were:
Gordon Zacks
For: 7,161,359 Withheld: 1,322,804 Broker non-votes: none
Christian Galvis
For: 7,430,415 Withheld: 1,053,748 Broker non-votes: none
Roger E. Lautzenhiser
For: 7,430,447 Withheld: 1,053,716 Broker non-votes: none
William Lenich
For: 7,425,187 Withheld: 1,058,976 Broker non-votes: none
Other directors whose term of office continued after the Annual Meeting:
Harvey M. Krueger Janice E. Page Harvey A. Weinberg
Edward M. Stan Philip G. Barach Daniel D. Viren
(c) See Item 4(b) for the voting results for directors
Proposal to approve the R. G. Barry Corporation 2002 Stock Incentive Plan:
For: 6,690,033 Against: 1,750,210
Abstain: 43,920 Broker non-votes: none
(d) Not Applicable
ITEM 5. OTHER INFORMATION
No response required
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS: See index to exhibits on page 14.
(d) REPORTS ON FORM 8-K: No reports on Form 8-K were filed during the
quarter ended June 29, 2002.
Page 12 of 15 pages
SIGNATURES
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.
R. G. BARRY CORPORATION
-----------------------
Registrant
Dated: August 13, 2002
/s/ Daniel D. Viren
-------------------
Daniel D. Viren
Senior Vice President - Finance
(Principal Financial Officer)
(Duly Authorized Officer)
Page 13 of 15 pages
R. G. BARRY CORPORATION
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION LOCATION
----------- ----------- --------
99.1 Certification pursuant to 18 U. S. C. Section 1350,
as adopted pursuant to Section 906 of the Page 15
Sarbanes-Oxley Act of 2002 (Chief Executive Officer
and Chief Financial Officer)
Page 14 of 15 pages