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UNITED STATES
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 July 3, 2004
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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Shares, $1 Par Value, Outstanding as of July 3, 2004 - 9,836,602
Index to Exhibits at page 22
Page 1
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 3, 2004 January 3, 2004
(unaudited)
------------ ---------------
(in thousands)
ASSETS:
Cash $ 1,630 $ 2,012
Accounts receivable (less allowances of
$5,296 and $18,494, respectively) 8,417 7,118
Assets held for disposal 290 --
Inventory 32,142 32,797
Prepaid expenses 1,735 2,452
-------- --------
Total current assets 44,214 44,379
-------- --------
Property, plant and equipment, at cost 17,095 35,274
Less accumulated depreciation and amortization 12,219 25,905
-------- --------
Net property, plant and equipment 4,876 9,369
-------- --------
Other assets 3,593 7,532
-------- --------
Total assets $ 52,683 $ 61,280
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Short-term notes payable 20,678 2,000
Current installments of long-term debt 1,847 3,869
Accounts payable 5,532 7,485
Accrued expenses 6,075 5,180
-------- --------
Total current liabilities 34,132 18,533
-------- --------
Accrued retirement costs and other, net 14,576 14,841
Long-term debt, excluding current installments 1,269 2,141
-------- --------
Total liabilities 49,977 35,515
-------- --------
Minority interest 388 378
Shareholders' equity:
Preferred shares, $1 par value per share 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 per share
Authorized 22,500 shares (excluding treasury shares) 9,837 9,834
Additional capital in excess of par value 12,851 12,851
Deferred compensation (35) (84)
Accumulated other comprehensive loss (3,419) (3,370)
Retained earnings (accumulated deficit) (16,916) 6,156
-------- --------
Net shareholders' equity 2,318 25,387
-------- --------
Total liabilities and shareholders' equity $ 52,683 $ 61,280
======== ========
Page 2
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Thirteen weeks ended Twenty-six weeks ended
----------------------------- -----------------------------
July 3, 2004 June 28, 2003 July 3, 2004 June 28, 2003
------------ ------------- ------------ -------------
(unaudited)
(in thousands, except per share amounts)
Net sales $ 14,516 $ 19,016 $ 32,946 $ 39,394
Cost of sales 10,483 12,563 23,400 25,856
-------- -------- -------- --------
Gross profit 4,033 6,453 9,546 13,538
Selling, general and
administrative expense 8,857 10,018 20,054 21,575
Restructuring and asset
impairment charges 3,619 - 11,901 200
-------- -------- -------- --------
Operating loss (8,443) (3,565) (22,409) (8,237)
Other income 45 - 90 53
Net interest expense (291) (297) (532) (471)
-------- -------- -------- --------
Loss from continuing operations
before income tax (expense)
benefit and minority interest (8,689) (3,862) (22,851) (8,655)
Income tax (expense) benefit (230) 1,474 (228) 3,341
Minority interest, net of tax (10) (7) (9) (35)
-------- -------- -------- --------
Loss from continuing operations (8,929) (2,395) (23,088) (5,349)
Income (loss) from discontinued
operations, net of income tax 16 (390) 16 (1,308)
-------- -------- -------- --------
Net loss ($ 8,913) ($ 2,785) ($23,072) ($ 6,657)
======== ======== ======== ========
Net loss per common share
Basic and diluted ($ 0.91) ($ 0.29) ($ 2.34) ($ 0.68)
======== ======== ======== ========
Average number of common
shares outstanding
Basic and diluted 9,839 9,815 9,839 9,813
======== ======== ======== ========
Page 3
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twenty-six weeks ended
-----------------------------
July 3, 2004 June 28, 2003
------------ -------------
(unaudited)
(in thousands)
Cash flows from operating activities:
Net loss ($23,088) ($ 6,657)
Net income (loss) from discontinued operations 16 (1,308)
-------- --------
Net loss from continuing operations (23,072) (5,349)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization of
property, plant and equipment 843 844
Restructuring and impairment non-cash charges 6,486 --
Amortization of deferred compensation 50 58
Minority interest, net of tax 9 35
Changes in:
Accounts receivable, net (1,275) (2,366)
Inventory 580 (11,174)
Prepaid expenses 716 (458)
Deferred and recoverable income taxes -- 1,391
Other 826 888
Accounts payable (1,428) 420
Accrued expenses 918 (1,964)
Accrued retirement costs and other, net (186) 17
-------- --------
Net cash used in continuing operations (15,533) (17,658)
-------- --------
Net cash used in discontinued operations (533) (1,654)
-------- --------
Net cash used in operating activities (16,066) (19,312)
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment (123) (1,568)
Proceeds from the sale of
property, plant and equipment 64 --
-------- --------
Net cash used in investing activities (59) (1,568)
-------- --------
Cash flows from financing activities:
Proceeds from short-term notes, net 28,936 18,000
Repayments of short-term notes (10,204) --
Repayment of long-term debt (2,976) (446)
Proceeds from shares issued and other 2 121
-------- --------
Net cash provided by financing activities 15,758 17,675
-------- --------
Effect of exchange rates on cash (15) 38
-------- --------
Net decrease in cash (382) (3,167)
Cash at the beginning of the period 2,012 6,881
-------- --------
Cash at the end of the period $ 1,630 $ 3,714
======== ========
Supplemental cash flow disclosures:
Interest paid $ 508 $ 416
======== ========
Income taxes paid (refunded), net $ 28 ($ 4,653)
======== ========
Page 4
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 July 3, 2004 and June 28, 2003
(in thousands, except per share data)
1. These interim consolidated 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 fiscal year, ending annually on the Saturday
nearest December 31st. Fiscal 2004 is a fifty-two week year, while fiscal
2003 was a fifty-three week year.
3. The Company has various stock option plans, under which have been granted
incentive stock options and nonqualified stock options exercisable for
periods of up to 10 years from the date of grant at prices not less than
fair market value at the date of grant. In December 2002, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards ("SFAS") No. 148, Accounting for Stock- Based Compensation -
Transition and Disclosure, an amendment of SFAS No. 123. SFAS No. 148
provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amended the disclosure
requirements of SFAS No. 123, Accounting for Stock-Based Compensation, to
require prominent disclosures in annual and interim financial statements
about the method of accounting for stock-based employee compensation and
the effect in measuring compensation expense. The disclosure requirements
of SFAS No. 148 were effective for periods beginning after December 15,
2002.
The Company has elected, in accordance with the provisions of SFAS No.
123, as amended by SFAS No. 148, to apply the current accounting rules
under APB Opinion No. 25 and related interpretations in accounting for
employee stock options and, accordingly, has presented the disclosure-only
information as required by SFAS No. 123. Had the Company elected to
recognize compensation expense based on the fair value of the options
granted at the grant date as prescribed by SFAS No. 123, the Company's net
loss would approximate the pro forma amounts indicated in the table below,
for the periods noted:
Thirteen weeks ended Twenty-six weeks ended
------------------------------ -----------------------------
July 3, 2004 June 28, 2003 July 3, 2004 June 28, 2003
------------ ------------- ------------ -------------
Net loss:
As reported $ (8,913) $ (2,785) $ (23,072) $ (6,657)
Pro forma (9,057) (2,976) (23,359) (6,988)
Net loss per share:
As reported $ (0.91) $ (0.29) $ (2.34) $ (0.68)
Pro forma (0.93) (0.30) (2.37) (0.70)
Page 5
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 July 3, 2004 and June 28, 2003 - continued
(in thousands, except per share data)
Using the Black-Scholes option pricing model, the per-share,
weighted-average fair value of stock options granted during 2004 and 2003,
was $1.20 and $1.69, respectively, on the date of grant. The assumptions
used in estimating the fair value of the options as of July 3, 2004, and
June 28, 2003 were:
July 3, 2004 June 28, 2003
------------ -------------
Expected dividend yield 0% 0%
Expected volatility 60% 50%
Risk-free interest rate 3.00% 3.00%
Expected life-ISO grants 6 years 6 years
Expected life-nonqualified grants 2 - 8 years 8 years
4. Income tax expense (benefit), from continuing operations, for the
twenty-six week periods ended July 3, 2004 and June 28, 2003, consisted
of:
2004 2003
---- ----
U. S. Federal and
Foreign tax expense (benefit) $228 $(2,952)
State & Local tax
expense (benefit) -- (389)
---- -------
Total $228 $(3,341)
==== =======
Income tax expense (benefit) for the twenty-six week periods ended July 3,
2004 and June 28, 2003 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:
2004 2003
---- ----
Computed "expected" tax:
U. S. Federal $(7,850) $(2,943)
Valuation allowance 7,850 --
Foreign and other, net 228 (141)
State & Local benefit, net of
Federal tax benefit -- (257)
------- -------
Total $ 228 $(3,341)
======= =======
5. 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 employee stock purchase plan. Diluted
loss per common share as of July 3, 2004 and June 28, 2003 does not
include the effect of potential common shares due to the antidilutive
effect of these instruments, as a result of the losses incurred during the
periods noted.
Page 6
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 July 3, 2004 and June 28, 2003 - continued
(in thousands, except per share data)
6. Inventory by category for the Company consisted of the following:
July 3, January 3,
2004 2004
---- ----
Raw materials $ 2,172 $ 3,771
Work in process 155 615
Finished goods 29,815 28,471
------- -------
Total inventory $32,142 $32,797
======= =======
Inventory is presented at its net realizable value, net of write-downs. Raw
materials reflect a write-down balance of $2,153 as of July 3, 2004 and
$2,839 as of January 3, 2004, and finished goods reflect a write-down
balance of $194 as of July 3, 2004 and $3,022 as of January 3, 2004.
7. Restructuring and asset impairment charges - The Company has previously
announced plans to reduce costs and improve operating efficiencies, and has
recorded restructuring and asset impairment charges as components of
operating expense. The following schedule highlights actual activities for
the twenty-six week period through July 3, 2004, with comparative
information through June 28, 2003.
Non-Cash
As of Write-Offs As of
Jan. 3, Charges Estimate and July 3,
2004 in 2004 Adjustments Paid in 2004 2004
---- ------- ----------- ------------ ----
Employee separations $ 174 $ 2,566 $ (9) $ 2,021 $ 710
Other exit costs -- 1,708 -- 1,708 --
Noncancelable lease costs -- 1,349 -- 77 1,272
Asset impairments -- 6,287 -- 6,287 --
------ -------- ----- -------- -------
Total restructuring costs $ 174 $ 11,901 $ (9) $ 10,093 $ 1,982
====== ======== ===== ======== =======
The Company expects that a substantial portion of the accrued obligations
will be paid before the end of the 2004 fiscal year.
Non-Cash
As of Write-Offs As of
Dec. 28, Charges Estimate and June 28,
2002 in 2003 Adjustments Paid in 2003 2003
---- ------- ----------- ------------ ----
Employee separations $ 1,530 - - $ 1,010 $ 520
Asset impairments - 200 - 200 -
Noncancelable lease costs 208 - - 8 200
------- ----- ----- ------- -----
Total restructuring costs $ 1,738 $ 200 - $ 1,218 $ 720
======= ===== ===== ======= =====
Page 7
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 July 3, 2004 and June 28, 2003 - continued
(in thousands, except per share data)
8. Segment Information - The Company manufactures and markets comfort
footwear for at- and around-the-home. The Company considers its "Barry
Comfort" at- and around-the-home comfort footwear groups in North America
and in Europe, as its two 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
between 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
-------------------
Twenty-six weeks ended North
July 3, 2004 America Europe Total
------- ------ -----
Net sales $ 28,368 $4,578 $ 32,946
Gross profit 8,860 686 9,546
Depreciation and
amortization 722 121 843
Interest expense 501 31 532
Restructuring and asset
impairment charges 11,901 -- 11,901
Pre tax profit (loss) from
continuing operations (22,943) 92 (22,851)
Additions to property, plant
and equipment 92 31 123
Total assets devoted $ 51,279 $1,404 $ 52,683
======== ====== ========
Barry Comfort
-------------------
Twenty-six weeks ended North
June 28, 2003 America Europe Total
------- ------ -----
Net sales $ 34,091 $5,303 $39,394
Gross profit 12,650 888 13,538
Depreciation and
amortization 737 107 844
Interest expense 450 21 471
Restructuring and asset
impairment charges 200 - 200
Pre tax loss from
continuing operations (8,249) (406) (8,655)
Additions to property, plant
and equipment 1,500 68 1,568
Total assets devoted $ 89,418 $6,499 $95,917
======== ====== ========
Page 8
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 July 3, 2004 and June 28, 2003 - continued
(in thousands, except per share data)
8. Segment information - continued
Barry Comfort
-------------------
Thirteen weeks ended North
July 3, 2004 America Europe Total
------- ------ -----
Net sales $ 12,852 $1,664 $ 14,516
Gross profit 3,644 389 4,033
Depreciation and
amortization 367 59 426
Interest expense 271 20 291
Restructuring and asset
impairment charges 3,619 -- 3,619
Pre tax profit (loss) from
continuing operations (8,748) 57 (8,689)
Additions to property, plant
and equipment 57 25 82
Total assets devoted $ 51,279 $1,404 $ 52,683
======== ====== ========
Barry Comfort
-------------------
Thirteen weeks ended North
June 28, 2003 America Europe Total
------- ------ -----
Net sales $ 16,959 $2,057 $19,016
Gross profit 6,156 297 6,453
Depreciation and
amortization 392 14 406
Restructuring and asset
impairment charges -- -- --
Interest expense, net 282 15 297
Pre tax loss from
continuing operations (3,471) (391) (3,862)
Additions to property, plant
and equipment 651 - 651
Total assets devoted $ 89,418 $6,499 $95,917
======== ====== =======
Page 9
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 July 3, 2004 and June 28, 2003 - continued
(in thousands, except per share data)
9. During 2003, the Company sold certain assets of its Vesture thermal
products subsidiary. Selected financial data relating to the discontinued
operations follows:
Thirteen weeks ended Twenty-six weeks ended
-------------------- ----------------------
July 3, June 28, July 3, June 28,
2004 2003 2004 2003
---- ---- ---- -------
Net sales $ -- $ 878 $ -- $ 1,759
===== ===== ==== =======
Gross profit -- 97 -- 57
Selling, general and administrative (2) 392 (2) 1,686
Income (loss) on sale of certain
assets relating to
discontinued operations 14 (223) 14 (223)
----- ----- ---- -------
Income (loss) from discontinued
operations before income tax 16 (363) 16 (1,745)
Income tax benefit -- 196 -- 660
----- ----- ---- -------
Income (loss) from discontinued
operations net of income tax $ 16 $(390) $ 16 $(1,308)
===== ===== ==== =======
10. Employee Retirement Plans
The Company uses a measurement date of September 30 in making the required
pension computations on an annual basis. In 2004, the Company has
potential pension related payments of $1,617 for unfunded, nonqualified
supplemental retirement plans as well as for payments anticipated for the
2003 year and 2004 quarterly estimated contributions into the funded,
qualified associate retirement plan. The Company has applied for a
deferral of the lump 2003 payment due in September 2004, approximating
$747, and is awaiting approval of this application by the Internal Revenue
Service. Once approved, this payment anticipated in the contribution
projection above for 2004 will be deferred to 2005. During the first six
months of 2004, the Company made payments totaling $286 under its
qualified retirement plan and its nonqualified supplemental retirement
plan.
The components of net periodic benefit cost for the retirement plans were:
Thirteen weeks ended Twenty-six weeks ended
-------------------- ----------------------
July 3, June 28, July 3, June 28,
2004 2003 2004 2003
------ -------- ------- -------
Service cost $ -- $ 230 $ 214 $ 461
Interest cost 564 519 1,123 1,085
Expected return on plan
assets (506) (504) (1,003) (1,009)
Net amortization 31 (20) 159 54
Curtailment loss -- -- 1,128 --
----- ----- ------- -------
Total pension expense $ 89 $ 225 $ 1,621 $ 591
===== ===== ======= =======
Page 10
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, other than statements of
historical fact, are forward-looking statements, and are based upon information
available to the Company on the date of this Report. Our forward-looking
statements inherently involve risks and uncertainties that could cause actual
results and outcomes to differ materially from those anticipated by our
forward-looking statements. Factors that would cause or contribute to such
differences include, but are not limited to, the ability of the Company to close
its manufacturing facilities in Mexico in accordance with plan without incurring
substantial unplanned cost or delays or experiencing unforeseen labor
difficulties; the ability of the Company to substantially increase its sourcing
of products from outside North America to replace the products previously
manufactured in its own plants in Mexico without incurring substantial unplanned
cost and without negatively impacting delivery times or product quality; the
continuing willingness of CIT to fund the Company's financing requirements under
CIT's discretionary factoring and financing arrangement with the Company; the
Company's ability to reduce its inventory levels in accordance with its plan;
the continued demand for the Company's products by its customers and the
continuing willingness of its customers and suppliers to support the Company as
it implements its new business plan; the ability of the Company generally to
successfully implement its new business plan; the unexpected loss of key
management; and the impact of competition on the Company's market share. Other
risks to the Company's business are detailed in our previous press releases,
shareholder communications and Securities Exchange Act filings including our
Annual Report on Form 10-K for the fiscal year ended January 3, 2004. Except as
required by applicable law, we do not undertake to update the forward-looking
statements contained in this Quarterly Report on Form 10-Q to reflect new
information that becomes available after the date hereof.
Introduction
The following discussion and analysis provides investors and others with
information that management believes to be necessary for an understanding of our
financial condition and results of operations and cash flows and should be read
in conjunction with the consolidated financial statements and notes to
consolidated financial statements and other information found in this Quarterly
Report on Form 10-Q.
Critical Business Issues
During the fiscal year 2004, management is focused on several key issues -
implementation of our new business plan, inventory management and liquidity.
New Business Plan
With the assistance of experienced turnaround consultants, we developed a new
business model that we believe should significantly reduce operating costs by
simplifying our product offering and focusing our business on a core customer
base that represented approximately 70% of our 2003 revenues.
The key components of our new business plan and the actions we have already
taken or expect to take in 2004 are as follows:
- - We have employed an experienced turnaround professional as the President
and CEO on an interim basis.
- - We are streamlining our management structure and seeking to reduce
selling, general and administrative costs to a lower level that is more
consistent with our simplified business model.
Page 11
Management's Discussion and Analysis of Financial Condition and Results of
Operations - continued
Critical Business Issues - continued
- - We have reduced costs by closing our Mexican manufacturing facilities
during the second quarter of 2004 and we are relying upon third party
contract manufacturers in China and other locations outside North America
to manufacture our products.
- - We intend to further reduce operating costs through the closure of our
operations support office in San Antonio, Texas by the end of 2004. The
staff at this facility primarily supports our operations in Mexico. Some
functions performed in San Antonio will be maintained and relocated to our
Columbus, Ohio headquarters. As a result of the early termination of the
office lease in San Antonio, we currently estimate that additional
restructuring charges of approximately $300 thousand, relating to the
early lease termination, will be incurred during the last half of 2004.
- - We expect to reduce our inventory levels from year-end 2003 levels.
We concluded that the actions contemplated by the 2004 business plan were
necessary to materially reduce and eventually eliminate the operating losses
incurred in 2002 and 2003. Because the business plan will result in substantial
changes in the way in which we have done business for many years, we recognize
that the implementation of the business plan carries business risks, which have
been discussed in the section captioned "Risk Factors" in Item 7 of our Annual
Report on Form 10-K for the fiscal year ended January 3, 2004. Implementation of
the business plan has resulted in significant costs in the form of severance
payments and asset write-downs, and is expected to result in additional such
costs during the second half of 2004. (See also Note 7 of Notes to Consolidated
Financial Statements.) In part due to these costs and write-downs, we expect to
report an operating loss in 2004.
2004 Liquidity
Based on the actions being taken in 2004 to create a lower-cost, more efficient
business model, as described above, and the new CIT Facility, as described below
under "CIT Credit Facility", management believes that there should be sufficient
liquidity and capital resources to fund our operations through the balance of
fiscal 2004, including our anticipated restructuring costs. Although our
restructuring involves cash outlays, the majority of the 2004 restructuring
costs are expected to be non-cash in nature and we expect that our plans to
reduce inventory should generate additional cash flow.
We recognize that the implementation of our new business plan presents business
risks, and as discussed, we can give no assurance of the plan's success.
However, we believe that the new business model, once implemented, should give
the Company a reasonable opportunity to return to profitability, although that
will not occur in 2004.
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires that we make certain
estimates. These estimates can affect our reported revenues, expenses and
results of operations, as well as the reported values of certain of our assets
and liabilities. Making estimates about the impact of future events has been a
generally accepted practice for nearly all companies in nearly all industries
for many years. We make these estimates after gathering as much information from
as many resources, both internal and external to our organization, as are
available to us at the time. After reasonably assessing the conditions that
exist at the time, we make estimates and prepare our financial reports. We make
these estimates in a consistent manner from period to period, based upon
historical trends and conditions, and after review and analysis of current
events and conditions. Management believes that these estimates reasonably
reflect the current assessment of the financial impact of events that may not
become known with certainty until some time in the future.
Page 12
Management's Discussion and Analysis of Financial Condition and Results of
Operations - continued
Critical Accounting Policies and Use of Estimates - continued
A summary of the more critical of these accounting policies requiring management
estimates follows:
a) We recognize revenue when goods are shipped from our warehouses
distribution points to our customers and title passes. In certain circumstances,
we have made arrangements with customers that provide for returns, discounts,
promotions and other incentives. At the time we recognize revenue, we reduce our
measurement of revenue by an estimated cost of potential future returns and
allowable retailer promotions and incentives, and recognize a corresponding
reduction in the amount of accounts receivable. As a result of the rapidly
changing retail environment and the ever-changing economic environment, it is
possible that returns or retailer promotions and incentives could be different
than anticipated. Accordingly, we have identified this estimate as one requiring
significant management judgement. Where appropriate, we also estimate an amount
for the potential of doubtful accounts as a result of bad debts.
b) We value inventories using the lower of cost or market method, based
upon a standard costing method. We evaluate our inventories for any impairment
in realizable value in light of the prior selling season, the economic
environment, and our expectations for the upcoming selling seasons, and we
provide appropriate write-downs under the circumstances. As of July 3, 2004, we
estimated that the standard cost valuation of our inventory exceeded the
estimated net realizable value of that inventory by $2.3 million, compared with
a similar estimate made as of June 28, 2003 of $1.2 million.
c) We make an assessment of the amount of income taxes that will become
currently payable or recoverable for the just concluded period and what deferred
tax costs or benefits will become realizable for income tax purposes in the
future as a result of differences between results of operations as reported in
conformity with accounting principles generally accepted in the United States
and the requirements of the increasingly complex income tax codes existing in
the various jurisdictions where we operate. In evaluating the future usability
of our deferred and recoverable tax assets, we are relying on our capacity for
refund of federal income taxes due to our tax loss carry-back position, and on
projections of future profits. As a result of our cumulative losses, we have
determined that it is uncertain when and whether the deferred tax assets we had
recognized on our consolidated balance sheet will have realizable value in
future years. Accordingly, we have fully reserved the value of those deferred
tax assets. Should our profits improve in future years, such that those deferred
tax items become realizable as deductions in future years, we will recognize
that benefit, by reducing our reported tax expense in future years, once their
realization becomes assured.
d) We record accounts receivable net of allowances for potential future
returns, allowable retailer promotions and incentives, anticipated discounts,
and where appropriate allowances for doubtful accounts. Allowances for doubtful
accounts are determined through analysis of the aging as of the date of the
consolidated financial statements, assessments of collectibility based on
historic trends and an evaluation of economic conditions. Costs associated with
potential returns of products as well as allowable customer markdowns and
operational chargebacks, net of expected recoveries, are included as a reduction
to net sales and are part of the provision for allowances. These provisions are
based upon seasonal negotiations and historic deduction trends, net expected
recoveries and the evaluation of current market conditions. With the new CIT
Facility in 2004, our exposure to bad debts is greatly diminished.
e) We account for the CIT Facility as a financing facility in recognizing
and recording trade receivables. For financial statement purposes, the factoring
of receivables under the CIT Facility is not considered a sale of receivables.
As such, the amounts advanced by CIT are considered short-term loans and are
included within short-term notes payable on the accompanying consolidated
balance sheet.
Page 13
Management's Discussion and Analysis of Financial Condition and Results of
Operations - continued
Critical Accounting Policies and Use of Estimates - continued
f) We make estimates of the future costs associated with restructuring
plans related to operational changes that we have announced. As of July 3, 2004,
we had an accrued balance of $2.0 million relating to the estimated future costs
of closing or reorganizing certain operations, as previously outlined. As of
June 28, 2003, we had an accrued balance of $720 thousand for similar
restructuring and reorganization activities. Should the actual costs of these
activities exceed these estimates, the excess costs will be recognized in the
period in which such costs occur. Conversely, should the costs of such
restructuring be less than the amounts estimated, future periods would benefit
by that difference.
g) In addition, there are various other accounting policies, which also
require some judgmental input by management. We believe that we have followed
these policies consistently from year to year, period to period. For an
additional discussion of all of our significant accounting policies, the reader
may refer to Note 1 of the Notes to Consolidated Financial Statements included
in Item 8 of our Annual Report on Form 10-K for the fiscal year ended January 3,
2004. Actual results may vary from these estimates as a result of activities
after the period end estimates have been made, and those subsequent activities
will have either a positive or negative impact upon the results of operations in
a period subsequent to the period when we originally made the estimate.
Liquidity and Capital Resources
As of the end of the second quarter of 2004, we had $10.1 million in net working
capital. This compares with $35.4 million at the end of the second quarter of
2003, and $25.8 million at fiscal year-end 2003. The declines in net working
capital from the end of the second quarter of 2003 and from fiscal year-end 2003
to the end of the second quarter of 2004 are primarily the result of the net
losses we have incurred during the periods.
The primary components of net working capital have changed as follows:
- - Net accounts receivable decreased from $14.9 million at the end of the
second quarter of 2003, to $8.4 million at the end of the second quarter
of 2004. A portion of the decrease in accounts receivables reflects the
$4.5 million decrease in net sales during the second quarter of 2004
compared with the same quarter in 2003. Accounts receivable at the end of
the second quarter of 2004 increased by $1.3 million from $7.1 million at
the end of fiscal 2003, representing a seasonal pattern of changes in
receivables.
- - Inventories ended the second quarter of 2004 at $32.1 million compared
with $43.7 million one year ago, and $32.8 million as of the end of fiscal
2003. Compared with one year ago, there is a decrease in aggregate raw
materials and work in process inventories from period to period of
approximately $7.4 million, and an approximate $4.2 million decrease in
finished goods inventory. This is consistent with our new business model -
eliminating our production in Mexico and purchasing finished goods from
third parties in China and elsewhere. The amount of inventory has also
decreased from the end of fiscal 2003 by $655 thousand, consistent with
our new business operating model.
- - We ended the second quarter of 2004 with $1.6 million in cash and cash
equivalents, compared with $3.7 million at the end of the second quarter
of 2003. At the end of fiscal 2003, we had $2.0 million in cash and cash
equivalents. At the end of the second quarter of 2004, we had borrowed
$18.5 million in short-term notes from CIT plus $2.2 million against a
life insurance policy insuring one of the Company's former executives,
compared with $18 million in short-term notes borrowed from our bank at
the end of the second quarter of 2003. In addition, at the end of the
second quarter of 2003, there was an outstanding balance of $4.3 million
due the Metropolitan Life Insurance Company under an existing 9.7% Long
Term Note which the we repaid late in March 2004. The increase in
short-term borrowings at the end of the second quarter of 2004 compared
with the end of the second quarter of 2003, is primarily related to the
losses that we incurred during the second half of 2003 and the first half
of 2004. At the end of fiscal 2003 there were $2.0 million in short-term
bank borrowings outstanding.
Page 14
Management's Discussion and Analysis of Financial Condition and Results of
Operations - continued
Net capital expenditures during the first half of 2004 amounted to $59 thousand
compared with $1.6 million during the first half of 2003. All expenditures in
both years were funded out of working capital. As we transition from a
manufacturing business model to an outsourcing model for procuring our finished
goods products, we expect capital expenditures in future periods will continue
at less than historic levels.
CIT Credit Facility
On March 29, 2004, we entered into a new factoring and financing agreement (the
"CIT Facility") with The CIT Group/Commercial Services, Inc. ("CIT"). On March
30, 2004, we borrowed under the CIT Facility approximately $10.3 million to
repay all outstanding indebtedness under our Revolving Credit Agreement
("Revolver") with Huntington National Bank ("Huntington") and related charges,
and the Revolver was terminated. In addition, on that date, we borrowed
approximately $2.3 million under the CIT Facility to repay all outstanding
indebtedness under our Note Agreement with the Metropolitan Life Insurance
Company and that agreement was terminated.
The CIT Facility provides us with advances in a maximum amount equal to the
lesser of (i) $35 million or (ii) a Borrowing Base (as defined in the CIT
Facility). The CIT Facility is a discretionary facility, which means that CIT is
not contractually obligated to advance us funds. The Borrowing Base, which is
determined by CIT in its sole discretion, is determined on the basis of a number
of factors, including the amount of our eligible accounts receivable and the
amount of our qualifying inventory, subject to the right of CIT to establish
reserves against availability as it deems necessary. The CIT Facility also
includes a $3 million subfacility for the issuance of letters of credit that is
counted against the maximum borrowing amount discussed above.
Our obligations under the CIT Facility are secured by a first priority lien and
mortgage on substantially all of our assets, including accounts receivable,
inventory, intangibles, equipment, intellectual property and real estate. In
addition, we have granted to CIT a pledge of the stock in our U.S. wholly owned
subsidiaries. The subsidiaries have guaranteed our indebtedness under the CIT
Facility.
As part of the CIT Facility, we entered into a factoring agreement with CIT,
under which CIT will purchase accounts receivable that meet CIT's eligibility
requirements. The purchase price for the accounts is the gross face amount of
the accounts, less factoring fees (discussed below), discounts available to our
customers and other allowances.
The factoring agreement provides for a factoring fee equal to 0.50% of the gross
face amount of all accounts receivable factored by CIT, plus certain customary
charges. For accounts outside the United States, we will pay an additional
factoring fee of 1% of the gross face amount. For each 30 day period that an
account exceeds 60 days unpaid, we must pay an additional fee of 0.25% of the
gross face amount. The minimum factoring commission fee per year is $400,000 and
if the fees paid throughout the year do not meet this minimum, CIT will charge
us for the difference. We also agreed to pay CIT's expenses incurred in
connection with negotiation of the CIT Facility, as well as fees for preparing
reports, wire transfers, setting up accounts and other administrative services.
Page 15
Management's Discussion and Analysis of Financial Condition and Results of
Operations - continued
Amounts outstanding under the CIT Facility bear interest at the prime rate as
announced by JPMorgan Chase Bank ("Prime Rate") plus 1% (averaging 5% throughout
the second quarter of 2004; increasing to 5.25% effective July 1, 2004 and as of
the end of the second quarter on July 3, 2004). Interest is charged as of the
last day of each month, and any change in the Prime Rate will take effect the
first month following the change in the Prime Rate. Upon entering into the CIT
Facility, we paid to CIT an initial facility set-up fee of $262,500. The term of
the CIT Facility is for a period of three years. As of July 3, 2004, the
outstanding balance under the CIT Facility was $18.5 million. The amount
available to borrow under the CIT Facility changes daily, and we estimate that
there was $4.0 million available to borrow under the CIT Facility as of July 3,
2004.
For financial statement purposes, the factoring of receivables under the CIT
Facility is not considered a sale of receivables. As such, the amounts advanced
by CIT are considered short-term loans and are included within short-term notes
payable on the accompanying consolidated balance sheet.
We expect to meet our liquidity requirements for the remainder of 2004 from
internally generated funds and borrowings under the CIT Facility. The amount of
credit available under the CIT Facility is based, in part, on accounts
receivable so that the adequacy of the CIT Facility in meeting our liquidity
requirements will depend on the our sales results during the remainder of 2004.
As discussed below in "Results of Operations-Continuing Operations," our net
sales in the first half of 2004 declined by 16.4% as compared to net sales in
the first half of 2003. This reduction resulted, in part, from our customers'
concerns about our publicly announced liquidity concerns very early in 2004 and
our introduction of new return policies which limit the magnitude of returned
merchandise from our customers.
Other Short-Term Debt
Early in March 2004, we borrowed $2.2 million against the cash surrender value
of life insurance policies insuring one of our former key executives. This $2.2
million indebtedness is classified within short-term notes payable in the
accompanying consolidated balance sheet.
Other Long-Term Indebtedness
Effective January 1, 2002, the 15% duty imposed by the United States on slippers
made in Mexico was eliminated. The slipper tariff had been scheduled for
reduction at the rate of 2.5% per year until the scheduled elimination on
January 1, 2008.
We utilized third parties to assist us in obtaining this tariff relief. Upon the
successful conclusion, we agreed to pay an aggregate of approximately $6.25
million, mostly in equal quarterly installments over a four-year period through
the end of 2005. For accounting purposes, a portion of the payment to the
consultants has been treated as debt and a portion of the payment has been
treated as an imputed interest charge associated with that debt. The net present
value of this four-year obligation, which is subordinated to our other
obligations, is included within current installments and long-term debt at its
discounted present value totaling $2.1 million as of the end of the second
quarter of 2004.
Off Balance Sheet Arrangements
There have been no material changes in our "Off Balance Sheet Arrangements" and
"Contractual Obligations" since the end of fiscal 2003, other than routine lease
payments, the repayment of the Metropolitan Note, cancellation of the Revolver,
and obtaining the CIT Facility, as noted above.
Page 16
Management's Discussion and Analysis of Financial Condition and Results of
Operations - continued
Results of Operations - Continuing Operations
During the second quarter of 2004, net sales amounted to $14.5 million,
approximately $4.5 million less than net sales of $19.0 million during the same
quarter in 2003. For the first half of 2004, net sales amounted to $32.9
million, compared with $39.4 million during the first half of 2003.
Substantially all of the net sales decline both in the quarter and for the first
half occurred in Barry Comfort North America, with a smaller portion
attributable to Barry Comfort Europe. (See also Note 8 of Notes to Consolidated
Financial Statements for selected segment information.) A portion of the decline
in Barry Comfort North America net sales occurred in our branded Dearfoams(R)
line of slippers for men and women, with smaller offsetting increases in our net
sales to our mass merchandising customers. We believe that this overall
reduction in net sales was attributable, in part, to our customers' concern
about our publicly announced liquidity concerns early in 2004 and our
introduction of new return policies which limit the magnitude of returned
merchandise accepted from our customers.
Gross profit during the second quarter of 2004, amounted to $4.0 million, or
27.8 percent of net sales. This compares with gross profit of $6.5 million, or
33.9 percent of net sales, in the same quarter of 2003. For the six months,
gross profit as a percent of net sales was 29.0 percent in 2004 compared with
34.4 percent in 2003. The most significant portion of the decline in gross
profit dollars is the result of the decrease in net sales for the periods, while
a portion of the decline is the result of a change in sales mix. During 2004, a
greater proportion of sales was made through the mass merchandising channels of
distribution with relatively fewer sales of the Company's branded Dearfoams(R);
in addition, during 2004, we sold more closeout merchandise than in prior
periods, also adversely impacting gross profit.
Selling, general and administrative expenses during the second quarter amounted
to $8.9 million, about $1.2 million lower than the same quarter one year ago.
For the six months, these expenses amounted to $20.1 million, compared with
$21.6 million for the same six months last year. The decrease in these expenses
reflects the initial efforts of reducing the size of the business under the new
business operating model as we reduce our dependence upon manufacturing and
transition to a company dependent upon third parties and the importation of
merchandise.
During the second quarter of 2004, we recognized $3.6 million in restructuring
and asset impairment charges, and during the first six months, we have
recognized a total of $11.9 million in restructuring and asset impairment
charges. These charges relate to the decisions during the first six months of
2004 to close all of the manufacturing operations in Mexico and begin to source
all of our product needs from third party manufacturers in China. This compares
with a $200 thousand asset impairment charge during the first six months of
2003. (See also Note 7 of Notes to Consolidated Financial Statements for added
information relating to restructuring and asset impairment charges.) As a part
of the closing of our Mexican manufacturing operations, we engaged a firm to
conduct a public auction of a substantial portion of our manufacturing
equipment. The auction was conducted in early August 2004. We also engaged the
services of The Meridian Group ("Meridian") to assist us in identifying auction
firms that could successfully market and sell our equipment in Mexico. Our
acting Chief Executive Office, Thomas Von Lehman, is currently on leave from
Meridian, and Mr. Von Lehman's spouse is the President and sole owner of
Meridian. We expect to pay Meridian a fee at their normal and customary rates
for providing such services.
Page 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations - continued
Net interest expense decreased slightly during the second quarter from 2003 to
2004, although net interest expense increased for the six months from 2003 to
2004. During the second quarter of 2004, net interest expense amounted to $291
thousand compared with $297 thousand during the second quarter of 2003. During
2004, we have borrowed relatively more under the CIT facility than we did during
2003 using the Revolving Credit Agreement that was in effect at that time. Also
in 2004 the average interest rate charged under the CIT Facility is
approximately 1 percent greater than under the Revolver. The decline in interest
expense during the second quarter is largely due to the early repayment of the
Metropolitan Note on March 30, 2004, which carried a coupon interest rate of
9.7% replacing that with funding under the CIT Facility at 5 percent.
For the second quarter of 2004, we incurred a net loss of $8.9 million, or $0.91
per diluted share, compared with a net loss incurred during the second quarter
of 2003 of $2.8 million, or $0.29 per diluted share. For the first six months of
2004, we incurred a net loss of $23.1 million, compared with a net loss of $6.7
million in 2003, including a net loss from discontinued operations of $1.3
million in 2003.
Page 18
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk
Market Risk Sensitive Instruments - Foreign Currency
We have historically transacted business in a number of foreign countries. Our
primary foreign currency net cash outflows historically have occurred in Mexico.
We have not hedged 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. With our new business plan as discussed elsewhere, our foreign
currency exposure in Mexican Pesos has diminished for future periods.
Our primary foreign currency net cash inflows have been generated from Canada.
At times, we have employed a foreign currency hedging program utilizing currency
forward exchange contracts for anticipated net cash inflows from Canada. Under
this program, increases or decreases in local operating revenue 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 (loss) in advance of the actual projected
net foreign currency cash flows. This often results in a mismatch between
accounting gains and losses and transactional foreign currency net cash flow
gains and losses.
We believe that the impact of foreign currency forward contracts has not been
material to our financial condition or results of operations. During the
twenty-six weeks ended July 3, 2004, we have had no foreign currency exchange
contracts.
ITEM 4 - Controls and Procedures
Evaluation of Disclosure Controls and Procedures
With the participation of the interim President and Chief Executive Officer (the
principal executive officer) and the Senior Vice President-Finance, Chief
Financial Officer, Secretary and Treasurer (the principal financial officer) of
R. G. Barry Corporation ("R. G. Barry"), R. G. Barry's management has evaluated
the effectiveness of R. G. Barry's disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), as of the end of the fiscal quarter covered by this
Quarterly Report on Form 10-Q. Based on that evaluation, R. G. Barry's interim
President and Chief Executive Officer and R. G. Barry's Senior Vice
President-Finance, Chief Financial Officer, Secretary and Treasurer have
concluded that:
(a) information required to be disclosed by R. G. Barry in this Quarterly
Report on Form 10-Q would be accumulated and communicated to R. G. Barry's
management, including its principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding
required disclosure;
(b) information required to be disclosed by R. G. Barry in this Quarterly
Report on Form 10-Q would be recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms; and
(c) R. G. Barry's disclosure controls and procedures are effective as of
the end of the period covered by this Quarterly Report on Form 10-Q to
ensure that material information relating to R. G. Barry and its
consolidated subsidiaries is made known to them, particularly during the
period in which this Quarterly Report on Form 10-Q is being prepared.
Changes in Internal Control Over Financial Reporting
There were no changes in R. G. Barry's internal control over financial reporting
(as defined in Rule 13a-15(f) under the Exchange Act) that occurred during R. G.
Barry's fiscal quarter ended July 3, 2004, that have materially affected, or are
reasonably likely to materially affect, R. G. Barry's internal control over
financial reporting.
Page 19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On June 8, 2004, R. G. Barry Corporation ("R. G. Barry") received a
"30-day letter" from the Internal Revenue Service ("IRS") proposing
certain adjustments which, if sustained, would result in an additional tax
obligation approximating $4 million plus interest. The proposed
adjustments relate to the years 1998 through 2002. Substantially all of
the proposed adjustments relate to the timing of certain deductions taken
during that period. On July 7, 2004, R. G. Barry submitted to the IRS a
letter protesting the proposed adjustments. R. G. Barry intends to
vigorously contest the proposed adjustments.
Item 2. Changes in Securities and Use of Proceeds
(a) through (d) not applicable
(e) R. G. Barry did not purchase any of its common shares during the
quarterly period ended July 3, 2004. R. G. Barry does not currently
have in effect a publicly announced repurchase plan or program.
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's Annual Meeting of Shareholders (the "Annual Meeting")
was held on May 27, 2004. At the close of business on the record
date, April 1, 2004, 9,836,602 common shares were outstanding and
entitled to vote at the Annual Meeting. At the Annual Meeting,
9,179,029, or 93.3% of the outstanding common shares entitled to
vote, were represented in person or by proxy.
(b) Director elected at the Annual Meeting, for three-year term, was:
Edward M. Stan
For: 8,230,406 Withheld: 948,623 Broker non-votes: none
Other directors whose terms of office continued after the Annual
Meeting:
Christian Galvis Roger E. Lautzenhiser David P. Lauer
Janice Page Harvey A. Weinberg Gordon Zacks
(c) See Item 4(b) for the voting results for directors
Proposal to adopt amendments to Article IV of the Company's Code of
Regulations to clarify and separate the roles of officers:
For: 9,083,176 Against: 75,575
Abstain: 23,278 Broker non-votes: none
(d) Not Applicable
Item 5. Other Information
No response required
Page 20
PART II - OTHER INFORMATION - continued
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: See Index to Exhibits on page 22.
(b) Reports on Form 8-K:
On April 5, 2004, R. G. Barry Corporation ("R. G. Barry") furnished
information to the SEC on a Current Report on Form 8-K dated that
same date, reporting under "Item 12. Results of Operations and
Financial Condition" that on April 2, 2004, R. G. Barry issued a
news release reporting operating results for the fiscal year ended
January 3, 2004.
On May 18, 2004, R. G. Barry furnished information to the SEC on a
Current Report on Form 8-K dated that same date, reporting under
"Item 12. Results of Operations and Financial Condition" that on May
17, 2004, R. G. Barry issued a news release reporting operating
results for its first quarter ended April 3, 2004.
On June 9, 2004, R. G. Barry filed a Current Report on Form 8-K,
dated June 8, 2004, reporting that it had issued a news release
announcing that the New York Stock Exchange ("NYSE") will suspend
trading in the Company's shares prior to the market opening on June
14, 2004 and NYSE will apply to the SEC to delist the Company's
shares.
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
Date: August 16, 2004 /s/ Daniel D. Viren
------------------------------------
Daniel D. Viren
Senior Vice President - Finance, Chief
Financial Officer, Secretary and Treasurer
(Principal Financial Officer)
(Duly Authorized Officer)
Page 21
R. G. BARRY CORPORATION
INDEX TO EXHIBITS
Exhibit No. Description Location
- ----------- ----------- --------
3.1 Certificate adopting amendments to Code of Regulations of Filed herewith
R. G. Barry Corporation (shareholders' action on May 27,
2004)
3.2 Code of Regulations of R. G. Barry Corporation (reflects Filed herewith
all amendments through May 27, 2004)
10.1 R. G. Barry Corporation Supplemental Benefit Plans Trust Filed herewith
(effective as of September 1, 1995)
31.1 Rule 13a-14(a)/15d-14(a) Certification (Principal Filed herewith
Executive Officer)
31.2 Rule 13a-14(a)/15d-14(a) Certification (Acting Principal Filed herewith
Financial Officer)
32.1 Section 1350 Certifications (Principal Executive Officer Filed herewith
and Principal Financial Officer)
Page 22