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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 December 28, 1996
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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13405 Yarmouth Road, N.W., Pickerington, Ohio 43147
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 864-6400
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ---------------------
Common Shares, Par Value $1.00 New York Stock Exchange
(9,444,800 outstanding on March 17, 1997)
Securities registered pursuant to Section 12(g) of the Act: None
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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 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. [ ]
Based upon the closing price reported on the New York Stock Exchange on March
17, 1997, the aggregate market value of the Common Shares of the Registrant
held by non-affiliates on that date was $90,557,290.50.
Documents Incorporated by Reference:
(1) Portions of the Registrant's Annual Report to Shareholders
for the fiscal year ended December 28, 1996, are incorporated
by reference into Part II of this Annual Report on Form 10-K.
(2) Portions of the Registrant's definitive Proxy Statement for
its Annual Meeting of Shareholders to be held on May 16,
1997, are incorporated by reference into Part III of this
Annual Report on Form 10-K.
Index to Exhibits begins on Page 67.
Page 1 of 84 Pages.
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PART I
Item 1. Business.
Principal Products
R. G. Barry Corporation (the "Registrant") is organized under the laws of
the State of Ohio. The Registrant and its subsidiaries, Barry de Mexico, S.A.
de C.V., Barry de Acuna, S.A. de C.V., Barry de Zacatecas, S.A. de C.V., R. G.
Barry International, Inc., R.G.B., Inc. and Vesture Corporation (Registrant and
such subsidiaries are referred to collectively as the "Company"), manufacture
and market products which serve the comfort needs of people. The Company
believes that it is the world's largest manufacturer of comfort footwear for at
and around the home, and the dominant domestic supplier of thermal retention
technology products. Comfort is the dominant influence in the Company's brand
lines.
The Company designs, manufactures and markets specialized comfort footwear
for men, women and children. The Company is in the business of responding to
consumer demand for comfortable footwear combined with attractive appearance.
The Company also designs, manufactures and markets thermal retention consumer
products in the food preservation; portable, personal comfort; and comfort
therapy categories. As discussed further below, the Company also designs,
manufactures and markets commercial products which use thermal retention
technology to preserve and/or transport temperature-sensitive, perishable
commodities.
Historically, the Company's primary products have been foam-soled, soft
washable slippers for men, women and children. The Company developed and
introduced women's Angel Treads*, the world's first foam-soled, washable
slipper, in 1947. Since that time, the Company has introduced additional
slipper-type brand lines for men, women and children based upon the concept of
comfort, softness and washability. These footwear products are sold, for the
most part, under various brand names including, but not limited to, Angel
Treads*, Dearfoams*, Dearfoams* for Kids, Dearfoams* for Men, Madye's*, Snug
Treds*, Soft Notes* and E-Z Feet*. The Company has also marketed certain of its
slipper-type footwear under licensed trademarks. See "Trademarks and Licenses".
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* Hereinafter denotes a trademark of the Company registered in the United
States Department of Commerce Patent and Trademark Office.
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The Company's foam-soled footwear lines have fabric uppers made of terry
cloths, velours, fleeces, satins, nylons and other washable materials.
Different brand lines are marketed for men, women and children with a variety
of styles, colors and ornamentation.
The marketing strategy for the Company's slipper-type brand lines has been
to expand counter space for its products by creating and marketing brand lines
to different portions of the consumer market. Retail prices for the Company's
footwear range from approximately $4 to $30 per pair, depending on the style of
footwear, type of retail outlet and retailer mark-up.
Since 1988, the Company has manufactured and marketed the Soft Notes* foam
cushioned casual slipper line. The Company believes that this brand line is a
bridge between slippers and casual footwear. The marketing strategy with
respect to this product emphasizes the fashion, comfort and versatility
provided by the Soft Notes* foam cushioned casual slippers.
The Company believes that many consumers of its slippers are loyal to the
Company's brand lines, usually own more than one pair of slippers and have a
history of repeat purchases. Substantially all of the slipper brand lines are
displayed on a self-selection basis in see-through packaging at the point of
purchase and have appeal to the "impulse" buyer. The Company believes that many
of the slippers are purchased as gifts for others.
Many styles of slipper-type footwear have become standard in the Company's
brand lines and are in demand year after year. For many of these styles, the
most significant changes made in response to fashion changes are in
ornamentation, fabric and/or color. The Company also introduces new, updated
styles of slippers with a view toward enhancing the fashion appeal and
freshness of its products. The Company anticipates that it will continue to
introduce new styles in future years responsive to fashion changes.
It is possible to fit most consumers of the Company's slipper-type
footwear within a range of four or five sizes. This allows the Company to carry
lower levels of inventories in these lines in comparison with other footwear
styles.
In 1994, the Company introduced on a national basis its thermal retention
products for consumers featuring MICROCORE* microwave-activated technology
developed by the Company. During that year, the Registrant also acquired all of
the outstanding
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stock of Vesture Corporation ("Vesture"), the originators of microwave-heated
comfort care products.
The Company's MICROCORE* thermal retention technology consists of a family
of patented technologies which, when energized with heat or cold, act as
reservoirs that release heat or cold at a constant temperature for extended
periods of time. There are three categories of MICROCORE* thermal retention
products: (1) commercial products which use the Company's MICROCORE* patented
thermal retention technology, either hot or cold, to preserve and/or transport
temperature-sensitive, perishable commodities such as food, medicine,
pharmaceuticals and flowers; (2) thermal retention consumer products that the
Company creates, designs, sells and distributes under its brand names; and (3)
thermal retention products created in partnership with other companies
featuring the patented MICROCORE* technology.
The Company's thermal retention products for consumers generally fall
within three categories: (1) food preservation products such as breadwarmer
baskets and portable food carriers; (2) comfort therapy products such as
heating pads and backwarmers; and (3) portable, personal comfort products such
as heated seat cushions, booties, scarves and ear muffs. Retail prices for
substantially all of the Company's thermal retention consumer products range
from approximately $12 to $40, depending on the product, type of retail outlet
and retailer mark-up. The Company believes that the food preservation and
comfort therapy thermal retention products are not weather sensitive and have a
year-round sales appeal while the cold weather portion of the personal,
portable comfort product line is more seasonal and affected by weather changes.
The thermal retention consumer products are sold under the major brand lines of
Dearfoams*, Vesture*, Lava*, Lava Pac*, Lava Buns* and Lava Booties*. All carry
MICROCORE* energy packs.
PYREX(R) Portables(TM) with MICROCORE*, which the Company created and are
sold through Corning Consumer Products Company, a subsidiary of Corning, Inc.,
are transportable food carriers designed to keep hot dishes warm and cold
dishes chilled using the Company's patented MICROCORE* thermal retention
technology. The Company is refining its relationship with Corning in an effort
to utilize the particular strengths of each company to enhance each company's
profitability in this product category. In 1997, Corning will directly
outsource the PYREX(R) Portables(TM) fabric carrier component which the Company
had previously outsourced as an accommodation to Corning. The fabric carrier
was a low margin commodity component for the Company and it is expected that
the Company's 1997 sales will be impacted from this change on the order of
$10,000,000. The Company will continue to
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manufacture and supply to Corning the Company's patented MICROCORE* hot and
cold thermal retention elements, where the Company has significant margin and
proprietary, competitive value-added advantages. Corning will continue to
feature the MICROCORE* brand name on the product packaging.
In the commercial product area, the Company has made a strategic decision
to focus on the commercial application of MICROCORE* patented thermal retention
technology, either hot or cold, to preserve and/or transport
temperature-sensitive, perishable commodities. The Company's POWERTECH(TM) with
MICROCORE* is a new, advanced portable heat storage technology (patent pending)
which permits portable, electrically energized heat storage from either A.C. or
D.C. power sources and at specific temperatures through the use of a
thermostat. Underwriters Laboratories Inc. has granted a UL listing mark to
the Company's POWERTECH(TM) with MICROCORE* Pizza Delivery System which is
designed to keep pizza hot at oven temperatures for two hours so that a pizza
is delivered to a home oven-hot, dry and crisp. The Company is actively
marketing the POWERTECH(TM) with MICROCORE* Pizza Delivery System to pizza
chains nationwide who have expressed interest in the technology. A major
national pizza chain has completed intensive field testing of this system and
has deployed over 3,000 test units to date. The Company is continuing to work
with this pizza chain. In addition, the Company is promoting the POWERTECH(TM)
with MICROCORE* Pizza Delivery System at the National Pizza Expo Show in March
of 1997.
In 1996, the Company announced the launch of the new PortaFreeze(TM) with
MICROCORE* portable frozen storage system which incorporates the MICROCORE*
thermal retention technology. The PortaFreeze(TM) with MICROCORE* system has
been thermally engineered to hold refrigerated and frozen materials at sub-zero
temperatures for a period of at least 24 hours without the need for an external
power source or dry ice. The Company believes that PortaFreeze(TM) with
MICROCORE* has a wide range of storage and delivery application potentials in
the food, medical and scientific industries, among others. PortaFreeze(TM)
(patent pending) is a rechargeable thermal energy cell configuration with an
insulated carrier which can be designed and manufactured to meet specific
storage and delivery needs of different industries in terms of size,
temperature parameters and desired length of temperature retention. The Company
intends to field test PortaFreeze(TM) with MICROCORE* during 1997.
Marketing
The Company's brand lines are sold to department, chain and specialty
stores; through mass merchandising channels of distribution such as discount
stores, warehouse clubs, drug and
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variety chain stores, and supermarkets; and to independent retail
establishments. The Company's brand lines are marketed primarily through
Company salespersons and, to a lesser extent, through independent sales
representatives. The Company does not finance its customers' purchases.
Each spring and autumn, new designs and styles are presented to buyers
representing the Company's retail customers at regularly scheduled showings.
Company designers also produce new styles and experimental designs throughout
the year which are evaluated by the Company's sales and marketing personnel.
Buyers for department stores and other large retail customers attend the spring
and autumn showings and make periodic visits to the Company's showroom in New
York. Company salespersons regularly visit retail customers. The Company also
regularly makes catalogs available to its current and potential customers and
periodically follows up with such current and potential customers by telephone.
In addition, the Company participates in trade shows, both regionally and
nationally.
During the 1996 Christmas selling season, the Company provided
approximately 350 temporary merchandisers to service the retail selling floor
of department stores and chain stores nationally. The Company believes that
this point-of-sale management of the retail selling floor, combined with
computerized automatic replenishment systems that the Company installed with
the stores, put the Company in a position to optimize its comfort footwear
business during the fourth quarter of 1996.
Sales during the last six months of each year have historically been
greater than during the first six months. The Company's inventory is largest in
early autumn in order to accommodate the retailers' fall selling seasons. See
"Backlog of Orders".
The Company advertises principally in the print media. In 1995, the
Company used television advertising for the thermal comfort products sold
through accessories departments in department stores. The Company believes that
the use of this television advertising was not cost-effective and discontinued
it for 1996. The Company's promotional efforts are often conducted in
cooperation with customers. The Company's products are displayed at the
retail-store level on a self-selection and gift-purchase basis.
In September of 1996, the Company announced the establishment of the
Barry/Europe division to support what the Company believes will be a major
expansion opportunity in the
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United Kingdom and Europe for its at and around the home comfort footwear. The
Company has made a strategic commitment to building its business in Europe with
France as the first target market. The Company has been market testing its
products in hypermarket stores in France and intends to introduce its comfort
footwear products in France in the fall of 1997 with national network
television advertising. The Company anticipates that the launch of business in
France will lose approximately $1 million in 1997, the full amount of which
will be expensed in 1997.
Prior to the formation of the Barry/Europe division, the Company's
international sales were focused on the department store channels in the United
Kingdom and Europe. This operation is now part of the Barry/Europe division.
The Company also markets its products in Canada, Mexico and several other
countries around the world. In 1996, the Company's foreign sales comprised
approximately 5% of its total sales.
Research and Development
Most of the Company's research efforts are undertaken in connection with
the design and consumer appeal of new styles of slipper-type footwear and
thermal retention products. During fiscal years 1996, 1995 and 1994, the
amounts spent by the Company in connection with the research and design of new
products and the improvement or redesign of existing products were
approximately $3.0 million, $3.1 million and $3.3 million, respectively.
Substantially all of the foregoing activities were Company-sponsored.
Approximately 50 employees were engaged full time in research and design during
the 1996 fiscal year.
Materials
The principal raw materials used by the Company in the manufacture of its
slipper and thermal retention product brand lines are textile fabrics, threads,
foams and other synthetic products. All are available domestically from a wide
range of suppliers. The Company has experienced no difficulty in obtaining raw
materials from suppliers and anticipates no future difficulty. In addition, in
the manufacture of its thermal retention products, the Company uses proprietary
patented materials developed with Battelle scientific research institute
headquartered in Columbus, Ohio.
Trademarks and Licenses
Approximately 97% of the Company's sales are represented by brand items
sold under trademarks owned by the Company. The Company is the holder of many
trademarks which identify its products. The trademarks which are most widely
used by the
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Company include: (a) Angel Treads*, Dearfoams*, Dearfoams* for Kids, Dearfoams*
for Men, Madye's*, Snug Treds*, Soft Notes* and E-Z Feet*, in the Company's
comfort footwear products; and (b) Dearfoams*, Vesture*, Lava*, Lava Pac*, Lava
Buns*, Lava Booties*, MICROCORE*, POWERTECH(TM) and PortaFreeze(TM), in the
Company's thermal retention products. The Company believes that its products
are identified by its trademarks and, thus, its trademarks are of significant
value. Each registered trademark has a duration of 20 years and is subject to
an indefinite number of renewals for a like period upon appropriate
application. The Company intends to continue the use of each of its trademarks
and to renew each of its registered trademarks.
The Company also has sold comfort footwear under various names as licensee
under license agreements with the owners of those names. In the 1996, 1995 and
1994 fiscal years, 3%, 4% and 5%, respectively, of the Company's total footwear
sales were represented by footwear sold under these names.
In 1989, the Company entered into a licensing agreement with Fieldcrest
Cannon, Inc., the largest marketer of bed and bath products in the United
States, which allows the Company to manufacture and sell a line of mid-priced
slippers under the Cannon** trademark in the mass merchandise channels of the
Company's business. The Company continued its distribution and marketing of the
Cannon** line of slippers in the 1996 fiscal year. The term of the Company's
license to use the Cannon** trademark expires in December, 1998; however, the
term may be extended for such period as may be mutually agreed upon by the
Company and Fieldcrest Cannon, Inc.
Customers
The customers of the Company which accounted for more than 10% of the
Company's consolidated revenues in fiscal year 1996 were Wal-Mart Stores, Inc.
("Wal-Mart"), J. C. Penney Company, Inc. ("J.C. Penney"), Corning Consumer
Products Company ("Corning"), and Sears, Roebuck & Company ("Sears"), which
accounted for 15%, 12%, 11% and 10%, respectively. The customers of the
Company which accounted for 10% or more of the Company's consolidated revenues
in fiscal year 1995 were Wal-Mart and J.C. Penney, which accounted for
approximately 16% and 11%, respectively. The customers of the Company
which accounted for 10% or more of the Company's consolidated revenues in
fiscal year 1994 were Wal-Mart and J.C. Penney, which accounted for
approximately 15% and 11%, respectively.
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** Denotes a trademark of the licensor registered in the United States
Department of Commerce Patent and Trademark Office.
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Backlog of Orders
The Company's backlog of orders at the close of fiscal year 1996 and
fiscal year 1995 was $14.9 million and $12.2 million, respectively. It is
anticipated that a large percentage of the orders as of the end of the
Company's last fiscal year will be filled during the current fiscal year.
Generally, the Company's backlog of unfilled sales orders is largest after
the spring and autumn showings of the Company. For example, the Company's
backlog of unfilled sales orders following the conclusion of such showings
during the last two years were as follows: August, 1996 - $80.2 million;
August, 1995 - $64.1 million; February, 1996 -- $15.2 million; and February,
1995 - $14.5 million. The Company's backlog of unfilled sales orders reflects
the seasonal nature of the Company's sales - approximately 75% of such sales
occur during the second half of the year as compared to approximately 25%
during the first half of the year.
Inventory
While the styles of some of the Company's slipper brand lines change
little from year to year, the Company has also introduced, and intends to
continue to introduce, new, updated styles in an effort to enhance the comfort
and fashion appeal of its products. As a result, the Company anticipates that
some of its slipper styles will change from year to year, particularly in
response to fashion changes. The Company has introduced, and intends to
continue to introduce, a variety of new thermal retention products to
compliment its existing products in response to consumer and commercial demand.
The Company believes that it will be able to control the level of its obsolete
inventory. The Company traditionally has had a limited exposure to obsolete
inventory.
Competition
The Company operates in the portion of the footwear industry providing
comfort footwear for at and around the home. The Company believes that it is a
small factor in the highly competitive footwear industry. The Company also
believes that it is the world's largest manufacturer of comfort footwear for at
and around the home. The Company also operates in an area where it provides
portable warmth and cold through its line of thermal retention products. The
Company believes that it is the dominant domestic supplier of thermal retention
products. The Company competes primarily on the basis of the value, quality and
comfort of its products, service to its customers, and its marketing expertise.
The Company knows of no reliable published statistics which indicate its
current relative position in the footwear or
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any other industry or in the portion of the footwear industry providing comfort
footwear for at and around the home.
Manufacturing, Sales and Distribution Facilities
The Company has seven manufacturing facilities. The Company operates
sewing plants in Nuevo Laredo, Ciudad Acuna, and Zacatecas, Mexico. The Company
also operates a cutting plant in Laredo, Texas and a sole molding operation in
San Angelo, Texas. The Company also has the exclusive rights to the
manufacturing output of a factory in Shenzhen, People's Republic of China. The
Company produces thermal retention products at its manufacturing facilities in
Asheboro, North Carolina.
The Company maintains sales offices in New York, New York; London,
England; and Paris, France. The Company also operates distribution centers
in Asheboro and Goldsboro, North Carolina; San Angelo, Texas; and
Mid Glamorgan, Wales.
The Company's manufacturing, sales and distribution facilities are
described more fully in Item 2. Properties below.
Effect of Environmental Regulation
Compliance with federal, state and local provisions regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not had a material effect upon the capital
expenditures, earnings or competitive position of the Company. The Company
believes that the nature of its operations has little, if any, environmental
impact. The Company, therefore, anticipates no material capital expenditures
for environmental control facilities for its current fiscal year or for the
foreseeable future.
Employees
At the close of the 1996 fiscal year, the Company employed approximately
2,900 persons.
Item 2. Properties.
The Company owns a warehouse facility in Goldsboro, North Carolina,
containing approximately 120,000 square feet.
The Company leases one facility pursuant to a lease agreement with the
local government which issued industrial revenue bonds to construct and equip
the facility. The Company has the right to purchase the facility at a nominal
sum upon
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retirement of the bonds issued in respect thereof. This transaction has been
treated as a purchase for accounting and tax purposes. See Note (6) to the
Company's Consolidated Financial Statements set forth on pages 26 and 27 of the
Company's Annual Report to Shareholders for the fiscal year ended December 28,
1996. The following table describes this facility:
Average
Annual Lease
Location Use Square Feet Rental Expires
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Fairfield County, Administrative 55,000 $150,000 1999
Ohio (Leased from and Executive
County of Offices
Fairfield, Ohio)
In addition to the leased property described above, the Company leases
space aggregating approximately 980,000 square feet at an approximate
aggregate annual rental of $2.2 million. The following table sets forth
certain information with respect to the Company's principal leased properties
which were not in the preceding table:
Approximate Approximate
Square Annual Lease
Location Use Feet Rental Expires Renewals
- -------- --- ---- ----------- ------- --------
Distribution Center Shipping, Warehouse, Office 48,400 $ 16,000(1) 1999 None
Goldsboro, N.C.
Empire State Building Sales Office 4,300 $117,000 1999 None
New York City, N.Y.
2800 Loop 306 Manufacturing, Office, 145,800 $166,000(1) 2000 5 years
San Angelo, Texas Warehouse
Distribution Center Shipping, Warehouse 172,800 $432,000(1) 2007 15 years
San Angelo, Texas
Cesar Lopez Manufacturing, Office 90,200 $168,000 1999 5 years
de Lara Ave.
Nuevo Laredo, Mexico
Ciudad Acuna Manufacturing, Office 64,700 $254,000 1999 5 years
Industrial Park
Ciudad Acuna,
Mexico
Corridor Road Manufacturing, Warehouse, 165,000 $386,000(1) 2001 2 terms of 5
Laredo, Texas Office years each
Corridor Road Manufacturing, Warehouse, 76,000 $190,000(1) 2006 5 years
Laredo, Texas Storage
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Approximate Approximate
Square Annual Lease
Location Use Feet Rental Expires Renewals
- -------- --- ---- ----------- ------- --------
Industrial Zone Manufacturing 26,200 $ 58,000 1998 2 terms of 5
Zacatecas, Mexico years each
Industrial Zone Manufacturing 25,800 $ 58,000 2005 3 terms of 5
Zacatecas, Mexico years each
120 E. Pritchard Street Manufacturing, Office, 57,500 $ 96,000(1) 2001 None
Asheboro, North Carolina Warehouse
8000 Interstate Administrative Office 8,500 $124,000(1) 1998 None
Highway 10 West
San Antonio, Texas
Chelsea Harbour Sales & Administrative 1,100 $ 40,000 1997 None
London, England Office
Mid Glamorgan, Warehouse 8,000 $ 21,000 Month-to N/A
Wales Month
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(1) Net net lease.
The Company believes that all of the buildings owned or leased by it are
well maintained, in good operating condition, and suitable for their present
uses.
Item 3. Legal Proceedings.
There are no pending legal proceedings to which the Company or any of its
subsidiaries is a party or to which any of their respective properties are
subject, except routine legal proceedings to which they are parties incident to
their respective businesses. None of such proceedings are considered by the
Company to be material.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive Officers of the Registrant.
The following table lists the names and ages of the executive officers of
the Registrant as of the date of this Annual Report on Form 10-K, the positions
with the Registrant presently held by each such executive officer and the
business experience of each such executive officer during the past five years.
Unless otherwise indicated, each person has held his principal occupation for
more than five years. All executive
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officers serve at the pleasure of the Board of Directors of the Registrant.
Position(s) Held with the
Registrant and Principal
Name Age Occupation(s) for Past Five Years
- ---- --- ---------------------------------
Gordon Zacks 64 Chairman of the Board and Chief Executive Officer since
1979, President since 1992, and Director since 1959, of the
Registrant.
Richard L. Burrell 64 Senior Vice President-Finance since 1992, Treasurer and
Secretary since 1976, Vice President-Finance from 1976 to
1992, and Director since 1984, of the Registrant.
Christian Galvis 55 Executive Vice President-Operations and Director since
1992, and Vice President-Operations from 1991 to 1992, of
the Registrant.
Charles E. Ostrander 48 Executive Vice President-Sales & Marketing and Director
since 1992, Vice President-Sales & Marketing from 1990 to
1992, and Vice President-Marketing from 1987 to 1990, of
the Registrant.
Daniel D. Viren 50 Senior Vice President-Administration since 1992, and Vice
President-Controller from 1988 to 1992, of the Registrant.
Harry Miller 54 Vice President-Human Resources of the Registrant since
1993; Director of Human Resources, Bassett-Walker, apparel
manufacturers, a division of VF Corporation, from 1986 to
1993.
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PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
In accordance with General Instruction G(2), the information called for in
this Item 5 is incorporated herein by reference to page 16 of the Registrant's
Annual Report to Shareholders for the fiscal year ended December 28, 1996.
Item 6. Selected Financial Data.
In accordance with General Instruction G(2), the information called for in
this Item 6 is incorporated herein by reference to pages 14 and 15 of the
Registrant's Annual Report to Shareholders for the fiscal year ended December
28, 1996.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
In accordance with General Instruction G(2), the information called for in
this Item 7 is incorporated herein by reference to pages 17 through 20 of the
Registrant's Annual Report to Shareholders for the fiscal year ended December
28, 1996.
Item 8. Financial Statements and Supplementary Data.
The Consolidated Balance Sheets of the Registrant and its subsidiaries as
of December 28, 1996 and December 30, 1995, the related Consolidated Statements
of Earnings, Shareholders' Equity and Cash Flows for each of the fiscal years
in the three-year period ended December 28, 1996, the related Notes to
Consolidated Financial Statements and the Independent Auditors' Report,
appearing on pages 21 through 33 of the Registrant's Annual Report to
Shareholders for the fiscal year ended December 28, 1996, are incorporated
herein by reference. Quarterly Financial Data set forth on page 16 of the
Registrant's Annual Report to Shareholders for the fiscal year ended December
28, 1996, are also incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
None.
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PART III
Item 10. Directors and Executive Officers of the Registrant.
In accordance with General Instruction G(3), the information called for in
this Item 10 is incorporated herein by reference to the Registrant's definitive
Proxy Statement, filed with the Securities and Exchange Commission pursuant to
Regulation 14A of the General Rules and Regulations under the Securities
Exchange Act of 1934, relating to the Registrant's Annual Meeting of
Shareholders to be held on May 16, 1997, under the captions "SHARE OWNERSHIP,"
"ELECTION OF DIRECTORS" and "COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS--Employment Contracts and Termination of Employment and
Change-in-Control Arrangements." In addition, certain information concerning
the executive officers of the Registrant called for in this Item 10 is set
forth in the portion of Part I of this Annual Report on Form 10-K entitled
"Executive Officers of the Registrant" in accordance with General Instruction
G(3).
Item 11. Executive Compensation.
In accordance with General Instruction G(3), the information called for in
this Item 11 is incorporated herein by reference to the Registrant's definitive
Proxy Statement, filed with the Securities and Exchange Commission pursuant to
Regulation 14A of the General Rules and Regulations under the Securities
Exchange Act of 1934, relating to the Registrant's Annual Meeting of
Shareholders to be held on May 16, 1997, under the caption "COMPENSATION OF
EXECUTIVE OFFICERS AND DIRECTORS." Neither the report of the Compensation
Committee of the Registrant's Board of Directors on executive compensation nor
the performance graph included in the Registrant's definitive Proxy Statement
relating to the Registrant's Annual Meeting of Shareholders to be held on May
16, 1997, shall be deemed to be incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
In accordance with General Instruction G(3), the information called for in
this Item 12 is incorporated herein by reference to the Registrant's definitive
Proxy Statement, filed with the Securities and Exchange Commission pursuant to
Regulation 14A of the General Rules and Regulations under the Securities
Exchange Act of 1934, relating to the Registrant's Annual Meeting of
Shareholders to be held on May 16, 1997, under
-15-
16
the captions "SHARE OWNERSHIP" and "COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS -- Employment Contracts and Termination of Employment and
Change-in-Control Arrangements."
Item 13. Certain Relationships and Related Transactions.
In accordance with General Instruction G(3), the information called for in
this Item 13 is incorporated herein by reference to the Registrant's definitive
Proxy Statement, filed with the Securities and Exchange Commission pursuant to
Regulation 14A of the General Rules and Regulations under the Securities
Exchange Act of 1934, relating to the Registrant's Annual Meeting of
Shareholders to be held on May 16, 1997, under the captions "SHARE OWNERSHIP,"
"ELECTION OF DIRECTORS" and "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS."
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1) Financial Statements.
For a list of all financial statements incorporated by reference in
this Annual Report on Form 10-K, see "Index to Financial Statements
and Financial Statement Schedules" at page 22.
(a)(2) Financial Statement Schedules.
For a list of all financial statement schedules included in this
Annual Report on Form 10-K, see "Index to Financial Statements and
Financial Statement Schedules" at page 22.
(a)(3) Exhibits.
Exhibits filed with this Annual Report on Form 10-K are attached
hereto. For list of such exhibits, see "Index to Exhibits" at page
67. The following table provides certain information concerning
executive compensation plans and arrangements required to be filed as
exhibits to this Annual Report on Form 10-K.
-16-
17
Executive Compensation Plans and Arrangements
Exhibit
No. Description Location
- ------- ----------- --------
10(a) R. G. Barry Corporation Salaried Employees' Incorporated herein by reference to Registrant's
Pension Plan (as Amended and Restated Annual Report on Form 10-K for the fiscal year
Effective January 1, 1989) ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(a)]
10(b) R. G. Barry Corporation Supplemental Incorporated herein by reference to Registrant's
Retirement Plan Annual Report on Form 10-K for the fiscal year
ended December 29, 1990 (File No. 0-12667)
[Exhibit 10(b)]
10(c) R. G. Barry Corporation 1984 Incentive Incorporated herein by reference to Registrant's
Stock Option Plan for Key Employees Current Report on Form 8-K dated June 22, 1984,
filed June 26, 1984 (File No. 1-7231) [Exhibit
10(d)]
10(d) R. G. Barry Corporation Incentive Plan for Incorporated herein by reference to Registrant's
Key Employees Annual Report on Form 10-K for the fiscal year
ended December 29, 1984 (File No. 0-12667)
[Exhibit 10(e)]
10(e) Employment Agreement, dated July 1, 1994, Incorporated herein by reference to Registrant's
between the Registrant and Gordon Zacks Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(e)]
10(f) Agreement, dated September 27, 1989, Incorporated herein by reference to Registrant's
between the Registrant and Gordon Zacks Current Report on Form 8-K dated October 11,
1989, filed October 12, 1989 (File No. 0-12667)
[Exhibit 28.1]
-17-
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Exhibit
No. Description Location
- ------- ----------- --------
10(g) Amendment No. 1, dated as of Incorporated herein by reference to Amendment
October 12, 1994, between the Registrant No. 14 to Schedule 13D, dated January 27, 1995,
and Gordon Zacks filed by Gordon Zacks on February 13, 1995
[Exhibit 5]
10(h) Amended Split-Dollar Insurance Agreement, Incorporated herein by reference to Registrant's
dated March 23, 1995, between the Annual Report on Form 10-K for the fiscal year
Registrant and Gordon B. Zacks ended December 30, 1995 (File No. 1-8769)
("Registrant's 1995 Form 10-K") [Exhibit 10(h)]
10(i) R. G. Barry Corporation 1988 Stock Option Incorporated herein by reference to Registrant's
Plan (Reflects amendments through May 11, Registration Statement on Form S-8, filed August
1993) 18, 1993 (Registration No. 33-67594) [Exhibit
4(r)]
10(j) Form of Stock Option Agreement used in Incorporated herein by reference to Registrant's
connection with the grant of incentive 1995 Form 10-K [Exhibit 10(k)]
stock options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
10(k) Form of Stock Option Agreement used in Incorporated herein by reference to Registrant's
connection with the grant of non-qualified 1995 Form 10-K [Exhibit 10(l)]
stock options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
10(l) Description of Incentive Bonus Program Incorporated herein by reference to Registrant's
Annual Report on Form 10-K for the fiscal year
ended December 28, 1991 (File No. 1-8769)
[Exhibit 10(k)]
-18-
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Exhibit
No. Description Location
- ------- ----------- --------
10(m) R. G. Barry Corporation Employee Stock Incorporated herein by reference to Registrant's
Purchase Plan (Reflects amendments and Registration Statement on Form S-8, filed August
revisions for stock dividends and stock 18, 1993 (Registration No. 33-67596) [Exhibit
splits through May 11, 1993) 4(r)]
10(n) R. G. Barry Corporation 1994 Stock Option Incorporated herein by reference to Registrant's
Plan (Reflects stock splits through Registration Statement on Form S-8, filed
June 22, 1994) August 24, 1994 (Registration No. 33-83252)
[Exhibit 4(q)]
10(o) Form of Stock Option Agreement used in Incorporated herein by reference to Registrant's
connection with the grant of incentive 1995 Form 10-K [Exhibit 10(p)]
stock options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
10(p) Form of Stock Option Agreement used in Incorporated herein by reference to Registrant's
connection with the grant of non-qualified 1995 Form 10-K [Exhibit 10(q)]
stock options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
10(q) Executive Employment Agreement, dated Incorporated herein by reference to Registrant's
July 1, 1994, between Registrant and Annual Report on Form 10-K for the fiscal year
Christian Galvis ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(n)]
10(r) Agreement, dated July 1, 1994, between Incorporated herein by reference to Registrant's
Registrant and Richard L. Burrell Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(o)]
-19-
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Exhibit
No. Description Location
- ------- ----------- --------
10(s) Agreement, dated July 1, 1994, between Incorporated herein by reference to Registrant's
Registrant and Daniel D. Viren Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(p)]
10(t) Agreement, dated July 1, 1994, between Incorporated herein by reference to Registrant's
Registrant and Harry Miller Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(q)]
10(u) R. G. Barry Corporation Deferred Incorporated herein by reference to Registrant's
Compensation Plan (Effective as of 1995 Form 10-K [Exhibit 10(v)]
September 1, 1995)
10(v) R. G. Barry Corporation Stock Option Plan Incorporated herein by reference to Registrant's
for Non-Employee Directors Registration Statement on Form S-8, filed June
26, 1996 (Registration No. 333-06875) [Exhibit
4(k)]
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K filed during the
fiscal quarter ended December 28, 1996.
(c) Exhibits
Exhibits filed with this Annual Report on Form 10-K are
attached hereto. For a list of such exhibits, see "Index to
Exhibits" at page 67.
(d) Financial Statement Schedules
Financial Statement Schedules included with this Annual Report
on Form 10-K are attached hereto. See "Index to Financial
Statements and Financial Statement Schedules" at page 22.
-20-
21
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.
R. G. BARRY CORPORATION
Date: March 26, 1997 By: /s/ RICHARD L. BURRELL
---------------------------------
Richard L. Burrell,
Senior Vice President-Finance,
Secretary and Treasurer
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.
Name Date Capacity
- ---- ---- --------
*Gordon Zacks * Chairman of the Board, President, Chief Executive
Officer and Director
*Richard L. Burrell * Senior Vice President-Finance, Secretary,
Treasurer, Principal Financial and Accounting
Officer and Director
*Christian Galvis * Executive Vice President-Operations and Director
*Charles E. Ostrander * Executive Vice President-Sales & Marketing and
Director
*Leopold Abraham II * Director
*Philip G. Barach * Director
*William Giovanello * Director
Harvey M. Krueger Director
*Edward M. Stan * Director
*By: /s/ RICHARD L. BURRELL
-------------------------
Richard L. Burrell,
Attorney-in-Fact
Date: March 26, 1997
-21-
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R. G. BARRY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 28, 1996
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
DESCRIPTION OF FINANCIAL STATEMENTS
(ALL OF WHICH ARE INCORPORATED BY
REFERENCE IN THIS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR PAGE(S) IN 1996 ANNUAL REPORT
ENDED DECEMBER 28, 1996) TO SHAREHOLDERS
Consolidated Balance Sheets at December 28,
1996 and December 30, 1995.............................................................21
Consolidated Statements of Earnings for the years ended December 28, 1996,
December 30, 1995 and December 31, 1994................................................22
Consolidated Statements of Shareholders' Equity
for the years ended December 28, 1996,
December 30, 1995 and December 31, 1994................................................22
Consolidated Statements of Cash Flows for the
years ended December 28, 1996, December 30,
1995 and December 31, 1994.............................................................23
Notes to Consolidated Financial Statements.....................................................24-33
Independent Auditors' Report....................................................................33
ADDITIONAL FINANCIAL DATA
The following additional financial data should be read in conjunction with
the Consolidated Financial Statements of R. G. Barry Corporation and its
subsidiaries included in the 1996 Annual Report to Shareholders. Schedules not
included with this additional financial data have been omitted because they are
not applicable or the required information is shown in the Consolidated
Financial Statements or Notes thereto.
Independent Auditor's Report on Financial Statement Schedules:
Included at page 63 of this Annual Report on Form 10-K
Schedules for the fiscal years ended December 28, 1996, December 30, 1995 and
December 31, 1994:
II - Reserves: Included at pages 64 through 66 of this
Annual Report on Form 10-K
-22-
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Five Year Review of Selected Financial Data
R.G. Barry Corporation and Subsidiaries
- -------------------------------------------------------------------------------
SUMMARY OF OPERATIONS (THOUSANDS)
Net Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Interest expense, net
Other income (expense)
Earnings (loss) before income taxes and extraordinary credit
Income tax expense (benefit)
Earnings (loss) before extraordinary credit
Extraordinary credit-utilization of net operating loss carryforward
Net earnings (loss)
ADDITIONAL DATA
Primary earnings (loss) per share before extraordinary credit*
Earnings (loss) per share after extraordinary credit*
Fully diluted earnings (loss) per share*
Book value per share*
Annual % change in net sales
Annual % change in net earnings (loss)
Net earnings (loss) as a percentage of beginning shareholders' equity
Primary average number of shares outstanding (in thousands)*
FINANCIAL SUMMARY (THOUSANDS)
Current assets
Current liabilities
Working capital
Long-term debt and capital leases
Net shareholders' equity
Net property, plant and equipment
Total assets
Capital expenditures
Depreciation and amortization of property, plant and equipment
See also Management's Discussion & Analysis of Financial Condition &
Results of Operations.
* Retroactively restated to reflect 5-for-4 share split distributed
June 17, 1996 and 4-for-3 share splits distributed September 15,
1995 and June 22, 1994.
** Fiscal year includes fifty-three weeks.
-23-
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1996 1995 1994 1993 1992**
- -----------------------------------------------------------------------------------------------------------
$148,626 $136,561 $116,720 $101,172 $101,823
83,202 76,065 69,975 59,795 60,890
65,424 60,496 46,745 41,377 40,933
49,008 48,557 39,375 34,322 34,453
(2,483) (2,962) (1,701) (1,474) (2,128)
(211) 1,060 333 400 400
13,722 10,037 6,002 5,981 4,752
5,465 3,738 2,191 2,183 1,711
8,257 6,299 3,811 3,798 3,041
-- -- -- -- 300
$ 8,257 $ 6,299 $ 3,811 $ 3,798 $ 3,341
$ 0.84 $ 0.65 $ 0.43 $ 0.45 $ 0.36
$ 0.84 $ 0.65 $ 0.43 $ 0.45 $ 0.40
$ 0.84 $ 0.64 $ 0.43 $ 0.45 $ 0.40
$ 6.05 $ 5.14 $ 4.44 $ 3.71 $ 3.24
8.8% 17.0% 15.4% (0.6%) (0.9%)
31.1% 65.3% 0.3% 13.7% 364.3%
17.3% 15.3% 12.1% 13.9% 14.2%
9,827 9,690 8,823 8,374 8,373
$ 67,679 $ 62,721 $ 56,683 $ 39,974 $ 35,786
13,956 18,793 17,332 12,119 10,607
53,723 43,928 39,351 27,855 25,179
15,265 15,390 16,445 9,745 11,625
56,743 47,611 41,054 31,483 27,232
13,929 14,156 13,785 13,410 14,050
89,067 84,340 76,961 55,635 51,132
2,404 3,363 2,234 1,034 1,195
2,571 2,158 1,905 1,607 1,857
-24-
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Market and Dividend Information
R.G. Barry Corporation and Subsidiaries
MARKET VALUE (Restated to reflect share split of June 17, 1996 and
September 15, 1995)
- -------------------------------------------------------------------------------
QUARTER HIGH LOW
1996 First $15.70 $11.50
Second 15.80 13.60
Third 15.88 12.75
Fourth 13.75 10.25
1995 First $7.95 $5.70
Second 11.10 6.60
Third 14.40 10.73
Fourth 18.40 12.50
Stock Exchange: New York Stock Exchange (Since July, 1995)
Stock Ticker Symbol: RGB
Wall Street Journal Listing: BarryRG
Approximate Number of Registered Shareholders: 1,300
A five-for-four share split was distributed on June 17, 1996 to
shareholders of record on June 3, 1996 and a four-for-three share split
was distributed on September 15, 1995 to shareholders of record on
September 1, 1995.
No cash dividends were paid during the periods noted. While the Company
has no current intention to pay cash dividends, it is currently able to
pay cash dividends, and is subject to the restrictions contained in the
various loan agreements. See also Note 5 to Consolidated Financial
Statements, and Management's Discussion & Analysis of Financial Condition
& Results of Operations.
Quarterly Financial Data
R.G. Barry Corporation and Subsidiaries
1996 FISCAL QUARTERS in thousands, except net earnings (loss) per share
- --------------------------------------------------------------------------------------------------------------------------
FIRST (2) SECOND (2) THIRD (2) FOURTH (2)
NET SALES $16,074 $19,961 $45,161 $67,430
GROSS PROFIT 8,712 8,297 19,854 28,561
NET EARNINGS (LOSS) (893) (1,234) 4,820 5,564
NET PRIMARY EARNINGS (LOSS) PER SHARE $(0.09) $(0.14) $0.50 $0.57
1995 Fiscal Quarters
- --------------------------------------------------------------------------------------------------------------------------
First (1) Second (2) Third (2) Fourth (3)
Net sales $14,979 $10,806 $44,442 $66,334
Gross profit 7,368 6,072 19,669 27,387
Net earnings (loss) (2,004) (2,479) 4,465 6,317
Net primary earnings (loss) per share $(0.22) $(0.27) $0.49 $0.65
(1) Quarter contains twelve weeks
(2) Quarter contains thirteen weeks
(3) Quarter contains fourteen weeks
See also Management's Discussion & Analysis of Financial Condition &
Results of Operations.
-25-
26
Management's Discussion & Analysis of
Financial Condition & Results of Operations
- -----------------------------------------------------------------------------
FIVE-FOR-FOUR SHARE SPLIT
On May 16, 1996, the Company declared a five-for-four share split. The share
split was distributed on June 17, 1996, to shareholders of record as of June 3,
1996. In recent years, the Company has also distributed four-for-three share
splits on September 15, 1995, and June 22, 1994 to shareholders of record on
September 1, 1995, and June 1, 1994, respectively. All share amounts and per
share amounts, in the discussion that follows, have been restated to give
effect to all share splits.
LIQUIDITY AND CAPITAL RESOURCES
The assets used by the Company in the development, production, marketing,
warehousing and distribution, and sale of its products consist mainly of
current assets, such as cash, receivables, inventory, and prepaid expenses;
plus net property, plant and equipment, and other non-current assets. Most of
the Company's assets are current assets: at the end of 1996, 76 percent of
total assets were current assets, compared with 74 percent at the end of 1995.
Substantially all non-current assets of the Company are net property, plant and
equipment.
As of the end of 1996, the Company had $53.7 million in net working capital,
made up of $67.7 million in current assets, minus $14.0 million in current
liabilities. At the end of 1995, the Company had $43.9 million in net working
capital. Substantially all of the increase in net working capital has been
generated as a result of Company net earnings.
The Company ended 1996 with $13.2 million in cash and equivalents, $17.4
million in net trade receivables, and $28.9 million in inventories. At the end
of 1995, by comparison, the Company had $6.3 million in cash and equivalents,
$15.2 million in net trade receivables, and $31.7 million in inventories. The
increase in cash from 1995 to 1996, is largely the result of the profits
generated by the Company in 1996--see also the accompanying Consolidated
Statements of Cash Flows. The increase in net trade receivables is mainly due
to growth in sales, as the receivables turnover improved in 1996 to 6.5 times
from 6.2 times in 1995. The decline in inventories from $31.7 million in 1995
to $28.9 million in 1996, is mainly the result of an effort by the Company to
lower its overall investment in inventory.
Traditionally, the Company has leased most of its operating facilities.
There were no significant changes in the Company's facilities in 1996. However,
in 1995, the Company leased a second plant building in Zacatecas, Mexico that
is adjacent to its first leased facility. The Company periodically reviews its
facilities to determine whether its current facilities will satisfy its
anticipated operating needs for the foreseeable future. Most capital
expenditures in 1995 and 1996 were for production machinery and equipment.
The Company has typically relied on its Revolving Credit Agreement
("Revolver") to satisfy additional capital requirements, including seasonal
working capital needs. In February 1996, the Company and its three main banks
agreed on a new multiyear Revolver, that extends through 1998, with provisions
for extensions beyond 1998, under certain conditions. The Revolver provides the
Company with a seasonally adjusted available line of credit ranging from $6
million to $51 million. During 1996, the Company's peak borrowing amounted to
$33 million versus $38 million in 1995. The average borrowing under the
Revolver amounted to $16.9 million in 1996 compared with $19.2 million in 1995.
The Company has met the conditions for extension of the Revolver, and intends
to seek and expects to receive such an extension of the agreement through 1999.
The Revolver contains covenants that the Company believes are typically found
in agreements of similar type and duration.
-26-
27
Management's Discussion & Analysis of
Financial Condition & Results of Operations
continued
- ------------------------------------------------------------------------------
At times the Company has borrowed additional long-term capital from lenders
to provide long-term financing to the Company. The last time the Company
incurred additional long-term debt was in 1994, when the Company issued a
$15million, 9.7 percent Note, due in 2004. The Note contains covenants that the
Company believes are normally found in similar agreements of this type. The
Note and the Revolver place restrictions on the amount of future borrowing the
Company may incur, and contain certain other financial covenants. The Note
requires semi-annual interest payments, with principal repayments commencing in
1998. The Company is in compliance with all covenants of the Note, Revolver and
all other debt agreements.
The Company last paid cash dividends in 1981. While the Company's various
loan agreements, at year end 1996, permitted the payment of cash dividends and
the repurchase of common shares for treasury, the Company has no current plans
to resume payment of cash dividends. The Company anticipates continuing to use
its cash resources to finance operations and to fund future growth. Subject to
the covenants in the various loan agreements, the Company currently may incur
additional long-term debt, should that become necessary. See Note 5 to the
Consolidated Financial Statements for additional information.
The Company believes that it has a strong balance sheet, with strong
financial ratios. At the end of 1996, the Company's total capitalization
amounted to $72.0 million, which was composed of 21.2 percent long-term debt
and capital leases and 78.8 percent shareholders' equity. This compares with
$63.0 million in total capitalization at year end 1995, composed of 24.4
percent long-term debt and capital leases and 75.6 percent shareholders'
equity. The Company's current ratio, a measure of the relationship of current
assets to current liabilities, was 4.85 to 1 at year end 1996, compared with
3.34 to 1 at year end 1995.
EFFECT OF NEW ACCOUNTING STANDARD
FINANCIAL ACCOUNTING STANDARDS NO. 123 - "ACCOUNTING FOR STOCK-BASED
COMPENSATION"
During 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation." The Standard provided that beginning in 1996, companies must
either recognize as compensation expense in the financial statements the cost
of certain stock-based plans or disclose in the footnotes the pro forma impact
of such stock-based compensation. See Note 10 to the Consolidated Financial
Statements for a discussion of the impact of this accounting standard.
RESULTS OF OPERATIONS
1996 SALES AND OPERATIONS COMPARED WITH 1995
Total net sales during 1996 increased by 8.8 percent to $148.6 million from
$136.6 million during 1995. A substantial portion of the growth in net sales
occurred in the Company's at and around the home comfort footwear, and mostly
represents growth in volume with only modest unit price increases. As a result
of the Company's determination, in 1995, that the use of television was not
cost-effective for advertising thermal products sold through accessories
departments of department stores, sales of those products declined in 1996. The
Company's net sales of food preservation products increased to 10.2 percent of
total net sales in 1996 compared with 6.7 percent in 1995. Net sales of these
products are expected to be below 10 percent in 1997, because certain
non-MICROCORE(R) components of the principal food preservation product will be
sourced directly by a major customer.
-27-
28
Management's Discussion & Analysis of
Financial Condition & Results of Operations
continued
- -------------------------------------------------------------------------------
Gross profit in 1996 increased by 8.1 percent, which is consistent with the
8.8 percent increase in sales. Gross profit as a percent of net sales remained
nearly constant at 44.0 percent in 1996, compared with 44.3 percent in 1995.
The Company's manufacturing operations continued to function very efficiently
in 1996, as they had in 1995.
Selling, general and administrative expenses, at $49.0 million in 1996,
increased by less than one percent from 1995. In 1996, there was a sizable
decline in television advertising costs relating to advertising of thermal
comfort products in department store accessories departments. The most sizable
item of increase related to a management incentive profit sharing plan in the
fourth quarter of 1996, as a result of the Company's profit improvement. The
expense relating to the plan, of $2.1 million, was fully accrued in the fourth
quarter of 1996; there was no similar bonus accrual in 1995.
Net interest expense in 1996, declined to $2.5 million from $3.0 million in
1995. The Company's improved profitability in 1996 resulted in improved
liquidity as well. In 1996, the Company's borrowings under the Revolver
averaged $16.9 million, with a weighted average interest rate of 6.5 percent.
This compares with an average borrowing in 1995 of $19.2 million with a
weighted average interest rate of 7.1 percent.
For the entire year, the Company earned $13.7 million before income taxes,
compared with $10.0 million in 1995; an increase of 36.7 percent. After income
taxes, net earnings increased 31.1 percent to $8.3 million, compared with $6.3
million in 1995. After restatement for the five-for-four share split
distributed June 17, 1996, primary earnings per share increased to $0.84 per
share from $0.65 per share in 1995. For 1995, fully diluted earnings per share
amounted to $0.64 per share. The 1995 results included a pre-tax gain of $966
thousand for the sale of two buildings. Without considering the gain on the
sale of the buildings, primary earnings per share for 1995 would have been
$0.59 per share, and fully diluted earnings per share would have been $0.58 per
share.
1995 SALES AND OPERATIONS COMPARED WITH 1994
Net sales for 1995 grew by 17.0 percent to $136.6 million from $116.7
million in 1994. During the same period, net earnings increased by 65.3 percent
to $6.3 million from $3.8 million, in 1994. The increase in net sales came from
nearly all the Company's product lines.
Gross profit for 1995 also increased. Gross profit amounted to $60.5
million, compared with $46.7 million in 1994, an increase of 29.4 percent. The
largest portion of the increase in gross profit dollars was directly related to
the 17.0 percent increase in net sales. As a percent of net sales, gross profit
also increased to 44.3 percent in 1995 from 40.0 percent in 1994. The principle
factors accounting for the increase in gross profit percent were: a) during
1995, the Company's manufacturing operated very efficiently, without any
significant problems similar to those that occurred in 1994; and b) the
devaluation of the Mexican peso in December 1994, helped to lower the costs of
operating the Company's Mexican manufacturing facilities. The Company estimates
that the devaluation of the peso resulted in a net $1.5 million reduction in
manufacturing labor costs during 1995.
Selling, general and administrative expenses also increased in 1995 to $48.6
million, a 23.3 percent increase over the $39.4 million expense incurred in
1994. Most of the increase related to marketing and sales programs implemented
to support the additional net sales realized during the year. Included in the
marketing program was the use of television advertising for some channels of
distribution. In 1995, the Company utilized television advertising for the
thermal items sold through accessories departments of department stores.
-28-
29
Management's Discussion & Analysis of
Financial Condition & Results of Operations
continued
- -------------------------------------------------------------------------------
Net interest expense increased in 1995, to $3.0 million from $1.7 million in
1994. During 1995, the Company's average short-term seasonal borrowings
amounted to $19.2 million compared with $12.5 million in 1994. The average
interest rate incurred on those borrowings in 1995 was 7.1 percent compared
with an average rate of 5.7 percent in 1994. In addition, the Company issued a
$15 million, 9.7 percent Note in mid-year 1994; that Note was outstanding for
only half of 1994, but for the entire year of 1995.
For the year, earnings before income taxes amounted to $10.0 million
compared with $6.0 million in 1994, a 67.2 percent increase. Net earnings after
taxes increased 65.3 percent in 1995 to $6.3 million from $3.8 million in 1994.
After restatement for the four-for-three share split distributed on September
15, 1995 (and the five-for-four share split distributed on June 17, 1996),
primary earnings per share in 1995 amounted to $0.65, a 51.2 percent increase.
For 1995, fully diluted earnings per share amounted to $0.64. The 1995 results
included a gain on the sale of two buildings late in the year. Without
considering the gain on the sale of the buildings primary earnings per share
for 1995 would have been $0.59 per share, and fully diluted earnings per share
would have amounted to $0.58 per share.
-29-
30
Consolidated Balance Sheets
R.G. Barry Corporation and Subsidiaries
DECEMBER 28, 1996 December 30, 1995
- --------------------------------------------------------------------------------------------------------------
(in thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (note 5) $13,187 $6,267
Accounts and note receivable:
Trade (less allowance for doubtful receivables, returns and
promotions of $8,972,000 and $7,670,000, respectively) 17,372 15,222
Other 1,184 3,030
Inventory (note 3) 28,854 31,708
Deferred income taxes (note 7) 5,055 4,406
Prepaid expenses 2,027 2,088
------- -------
Total current assets 67,679 62,721
------- -------
Property, plant and equipment, at cost (notes 4 and 6) 39,088 36,964
Less accumulated depreciation and amortization 25,159 22,808
------- -------
Net property, plant and equipment 13,929 14,156
------- -------
Deferred income taxes (note 7) 470 --
Goodwill (less accumulated amortization of $280,000 and $164,000,
respectively) 4,346 4,462
Other assets 2,643 3,001
------- -------
$89,067 $84,340
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt and capital lease
obligations (notes 5 and 6) $ 125 $ 815
Accounts payable 4,170 8,961
Accrued expenses (note 8) 9,661 9,017
------- -------
Total current liabilities 13,956 18,793
------- -------
Accrued retirement cost, net (note 9) 2,889 2,484
Deferred income taxes (note 7) -- 62
Other 214 --
Long-term debt and capital lease obligations, excluding current installments:
Long-term debt (note 5) 15,000 15,000
Capital lease obligations (note 6) 265 390
------- -------
Long-term debt and capital lease obligations 15,265 15,390
------- -------
Total liabilities 32,324 36,729
------- -------
SHAREHOLDERS' EQUITY (NOTES 5, 10 AND 11):
Preferred shares, $1 par value. Authorized 4,000,000 Class A
and 1,000,000 Series I Junior Participating Class B shares;
none issued -- --
Common shares, $1 par value. Authorized 15,000,000 shares;
issued 9,375,000 and 7,410,000 shares (excluding treasury
shares of 557,000) 9,375 7,410
Additional capital in excess of par value 14,071 15,161
Retained earnings 33,297 25,040
------- -------
Net shareholders' equity 56,743 47,611
------- -------
Commitments and contingencies (notes 6, 12 and 13)
$89,067 $84,340
======= =======
See accompanying notes to consolidated financial statements.
-30-
31
Consolidated Statements of Earnings
R.G. Barry Corporation and Subsidiaries
DECEMBER 28, 1996 December 30, 1995 December 31, 1994
- -------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
Net sales $148,626 $136,561 $116,720
Cost of sales 83,202 76,065 69,975
-------- -------- --------
Gross profit 65,424 60,496 46,745
Selling, general and administrative expenses 49,008 48,557 39,375
-------- -------- --------
Operating income 16,416 11,939 7,370
Other (expense) income (note 4) (211) 1,060 333
Interest expense, net of interest income of $172,000,
$67,000, and $152,000, respectively (2,483) (2,962) (1,701)
-------- -------- --------
Earnings before income taxes 13,722 10,037 6,002
Income tax expense (note 7) 5,465 3,738 2,191
-------- -------- --------
Net earnings $ 8,257 $ 6,299 $ 3,811
======== ======== ========
Earnings per common share:
Primary .84 .65 .43
======== ======== ========
Fully diluted .84 .64 .43
======== ======== ========
Consolidated Statements of Shareholders' Equity
R.G. Barry Corporation and Subsidiaries
Additional
capital in
Common excess of Deferred Retained
shares par value compensation earnings
- --------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at January 1, 1994 $3,815 $12,905 $(167) $14,930
Net earnings -- -- -- 3,811
Stock options exercised 84 367 -- --
Amortization of deferred compensation (note 10) -- -- 167 --
Four-for-three stock split (including $8,000 paid
for fractional shares) 1,275 (1,283) -- --
Issuance of shares in the Vesture
Corporation acquisition (note 2) 319 4,681 -- --
Issuance of shares in connection with
the employee stock purchase plan 86 245 -- --
Purchase of shares (note 10) (30) (488) -- --
Tender of shares (6) (98) -- --
Tax benefit associated with the activity
under various stock plans (note 10) -- 441 -- --
------ ------- ----- -------
Balance at December 31, 1994 5,543 16,770 -- 18,741
Net earnings -- -- -- 6,299
Stock options exercised 39 155 -- --
Purchase of shares (note 10) (20) (220) -- --
Four-for-three stock split (including $11,000 paid
for fractional shares) 1,848 (1,859) -- --
Tender of shares -- (5) -- --
Tax benefit associated with the activity
under various stock plans (note 10) -- 320 -- --
------ ------- ----- -------
Balance at December 30, 1995 7,410 15,161 -- 25,040
Net earnings -- -- -- 8,257
Five-for-four stock split (including $7,000 paid
for fractional shares) 1,855 (1,862) -- --
Issuance of shares in connection with
the employee stock purchase plan 25 252 -- --
Stock options exercised 85 335 -- --
Tax benefit associated with the activity
under various stock plans (note 10) -- 174 -- --
Other -- 11 -- --
------ ------- ----- -------
Balance at December 28, 1996 $9,375 $14,071 $ -- $33,297
See accompanying notes to consolidated financial statements.
-31-
32
Consolidated Statements of Cash Flows
R.G. Barry Corporation and Subsidiaries
DECEMBER 28, 1996 December 30, 1995 December 31, 1994
- ------------------------------------------------------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 8,257 $ 6,299 $ 3,811
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Tax benefit associated with the activity under
various stock plans 174 320 441
Depreciation and amortization of property,
plant and equipment 2,571 2,158 1,905
Amortization of goodwill 116 116 48
Deferred income tax provision (credit) (1,181) (1,385) (178)
Loss (gain) on disposal of property, plant and equipment 25 (966) (15)
Amortization of deferred compensation -- -- 167
Net (increase) decrease in:
Accounts receivable (304) 5,160 (6,157)
Inventory 2,854 (5,646) (7,552)
Prepaid expenses 61 (158) (688)
Other assets 358 (1,126) 58
Net increase (decrease) in:
Accounts payable (4,791) 787 2,903
Accrued expenses 644 2,536 348
Accrued retirement cost, net 405 354 (158)
Other liabilities 214 -- --
------- ------- -------
Net cash provided by (used in) operating activities 9,403 8,449 (5,067)
------- ------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (2,404) (3,363) (2,234)
Proceeds from disposal of property, plant and equipment 35 1,800 14
------- ------- -------
Net cash used in investing activities (2,369) (1,563) (2,220)
------- ------- -------
Cash flows from financing activities:
Repayment of long-term debt, capital lease obligations
and short-term note payable (815) (2,917) (6,996)
Proceeds from borrowing debt -- -- 15,000
Proceeds from stock issued 701 194 782
Purchase of common shares for treasury -- (256) (622)
------- ------- -------
Net cash provided by (used in) financing activities (114) (2,979) 8,164
------- ------- -------
Net increase in cash 6,920 3,907 877
Cash at beginning of year 6,267 2,360 1,483
------- ------- -------
Cash at end of year $13,187 $ 6,267 $ 2,360
======= ======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 2,624 $ 2,930 $ 1,351
======= ======= =======
Income taxes paid $ 8,713 $ 1,740 $ 1,770
======= ======= =======
See accompanying notes to consolidated financial statements.
-32-
33
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
- ------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Operations
R.G. Barry Corporation (the Company) is a United States-based
multinational corporation. Its principal line of business is comfort
products for at and around the home. The predominant market for the
Company's products is North America. Products are sold primarily to
department and discount stores.
In 1996, four customers accounted for approximately 15%, 12%, 11% and
10% of the Company's net sales. In 1995, two customers accounted for
approximately 16% and 11% of the Company's net sales. In 1994, two
customers accounted for approximately 15% and 11% of the Company's net
sales.
(b) Principles of Consolidation and Industry Information
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
(c) Cash Equivalents
Investments with maturities of three months or less at the date of
issuance are considered cash equivalents.
(d) Inventory
Inventory is valued at the lower of cost or market. Approximately 72%
and 69% of the 1996 and 1995, respectively, ending inventory costs are
determined on the last in, first out (LIFO) basis. The remainder are
determined on the first in, first out (FIFO) basis.
(e) Depreciation and Amortization
Depreciation and amortization have been provided substantially using
the double declining-balance method over the estimated useful lives of
the assets acquired prior to September 30, 1991. The Company adopted
the straight-line method of depreciation on its machinery and
equipment for all property acquired after September 30, 1991.
(f) Revenue Recognition
The Company recognizes revenue when the goods are shipped to
customers. The Company has established programs which, in certain
circumstances, enable its customers to return product. The effect of
these programs is estimated and a returns allowance is provided.
(g) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
(h) Employee Retirement Plans
Retirement plan expense is determined in accordance with Statement of
Financial Accounting Standards (SFAS) No. 87, Employers' Accounting
for Pensions.
(i) Per-Share Information
The computation of earnings for common and dilutive common equivalent
shares (primary) for 1996 and 1995 is based on the weighted average
number of outstanding common shares during the period plus, when their
effect is dilutive, common stock equivalents consisting of certain
shares subject to stock options and the stock purchase plan. Earnings
per common share assuming full dilution (fully diluted) is based on
the higher of the market price of the Company's common stock as of the
end of each quarter or the average price during the quarter.
The primary weighted average number (in thousands) of common and
equivalent shares outstanding were 9,827 and 9,690 in 1996 and 1995,
respectively. The fully diluted weighted average number of common and
equivalent shares outstanding (in thousands) was 9,830 and 9,861 in
1996 and 1995, respectively. Earnings per share, both primary and
fully diluted, for 1994 are based on the averaged number of
outstanding common shares as the dilutive effect of equivalent common
shares was not material. Average outstanding common shares was 8,823
in 1994.
-33-
34
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
Effective June 17, 1996, the Board of Directors of the Company
approved a five-for-four share split to shareholders of record on June
3, 1996. On September 15, 1995, the Board of Directors of the Company
approved a four-for-three share split to shareholders of record on
September 1, 1995. In addition, on June 22, 1994, the Board of
Directors of the Company approved a four-for-three share split to
shareholders of record on June 1, 1994. All share splits have been
distributed in the form of a share dividend. The stock splits
specifically excluded treasury shares. All references to the number of
shares and per-share amounts in the footnotes to the financial
statements have been restated to reflect the stock splits.
(j) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Significant estimates made by management include the adequacy of
accounts receivable and inventory valuation allowances, and the
realizability of the deferred tax assets.
(k) Fair Value of Financial Instruments
Cash, accounts receivable, accounts payable and accrued liabilities as
reported in the financial statements approximate their fair value
because of the short-term maturity of those instruments. The fair
value of the Company's long-term debt is disclosed in note 5.
(l) Goodwill
The cost in excess of the fair value of net assets acquired (goodwill)
is amortized on a straight-line basis over 40 years.
(m) Stock Option Plan
Effective for fiscal 1996, the Company adopted SFAS No. 123,
Accounting for Stock-Based Compensation, which permits entities to
recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123
allows entities to continue to apply the provisions of APB Opinion No.
25, Accounting for Stock Issued to Employees, and provide certain pro
forma information. APB Opinion No. 25 requires that compensation
expense be recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price. The Company
has elected to continue to apply the provisions of APB Opinion No. 25
and provide the pro forma disclosure provisions of SFAS No. 123 (see
note 10).
(n) Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of
The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, on December 31, 1995. This statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Adoption of
this statement did not have a material impact on the Company's
financial position or results of operations.
(o) Advertising
The Company expenses the costs of advertising as incurred. For the
years ended December 28, 1996, December 30, 1995 and December 31,
1994, advertising expenses were $5,314,000, $6,056,000, and
$4,517,000, respectively.
(p) Reclassification
Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 presentation.
(2) ACQUISITION
On July 14, 1994, the Company acquired all of the outstanding stock of
Vesture Corporation, formerly of Randleman, North Carolina. The
acquisition has been accounted for by the purchase method of accounting.
The purchase price was paid by the issuance of approximately 531,000
common shares of the Company held in treasury, valued at $5,000,000.
(3) INVENTORY
If the FIFO method had been used to value inventory, inventory would have
been $3,113,000, $3,050,000, and $2,669,000 higher than that reported at
the end of 1996, 1995 and 1994, respectively. Because LIFO inventory is
valued using the dollar value method, it is impracticable to separate
inventory values between raw materials, work-in-process and finished
goods.
-34-
35
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
DECEMBER 28, December 30, Estimated
1996 1995 life in years
--------------------------------------------------------
(in thousands)
Land and improvements $ 490 $ 490 8-15
Buildings and improvements 4,315 4,308 40-50
Machinery and equipment 27,039 24,580 3-10
Leasehold improvements 6,980 6,780 5-20
Construction in progress 264 806
------- -------
$39,088 $36,964
======= =======
In December 1995, the Company sold two properties that it had previously
leased to other companies. The properties, located in Arkansas and Texas
were sold at a gain of $966,000.
See note 6 for a summary of property and equipment, included above,
representing capitalized leases.
(5) LONG-TERM DEBT AND RESTRICTIONS
Long-term debt consists of the following:
DECEMBER 28, December 30,
1996 1995
----------------------------------
(in thousands)
9.7% note, due July 2004 $15,000 $15,000
9 3/4% Subordinated Sinking Fund Debentures due April 1996 -- 700
------- -------
Total long-term debt 15,000 15,700
Less current installments -- 700
------- -------
Long-term debt, excluding current installments $15,000 $15,000
======= =======
The 9.7% note, issued in July 1994, requires semiannual interest payments
and annual principal repayments of $2,143,000 commencing in 1998 and
ending in 2004.
The Company has determined the fair value of its long-term debt based
upon the present value of expected cash flows, considering expected
maturities and using current interest rates available to the Company for
borrowings with similar terms. The fair value of the 9.7% note payable
was $15,400,000 and $15,900,000 at December 28, 1996 and December 30,
1995, respectively.
In February 1996, the Company negotiated a new unsecured revolving credit
agreement with its banks. The new agreement provides the Company with a
seasonally adjusted amount of credit that has a minimum availability of
$6 million and a peak availability of $51 million, with interest at
variable rates. At December 28, 1996 and December 30, 1995, no amounts
were outstanding.
Under the most restrictive covenants of the various loan agreements, the
Company is (1) required to maintain a seasonally adjusted current ratio,
as defined; (2) required to maintain a minimum seasonally adjusted
tangible net worth, as defined; (3) restricted as to annual acquisition
of fixed assets; and (4) restricted with regard to the amount of
additional borrowings, purchase of treasury shares and payment of
dividends. At December 28, 1996, approximately $8 million of retained
earnings was available for the payment of cash dividends and the purchase
of treasury shares (see also note 10). There were no covenant violations
during fiscal 1996 and 1995.
The Company maintains compensating cash balances, which are not legally
restricted, to defray the costs of other banking services provided.
(6) LEASED ASSETS AND LEASE COMMITMENTS
The Company has a lease agreement with a local government which issued
Industrial Development Revenue Bonds to construct and purchase an office
facility. The lease expires in 1999, at which time the Company has the
right to acquire (at a nominal amount) the property under this lease
agreement. The Company also has the option to acquire the leased assets
prior to the expiration of the lease for an amount approximating the
outstanding bonds, plus accrued interest. The outstanding bonds bear
interest at 6.5%.
-35-
36
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
At December 28, 1996, minimum lease payments due under this capital lease are:
Fiscal year AMOUNT
-----------------------------------------------------------------
(in thousands)
1997 $150
1998 147
1999 144
----
Total minimum lease payments 441
Less amount representing interest 51
----
Present value of minimum lease payments $390
====
The present value of minimum capital lease payments are reflected in the
balance sheets:
DECEMBER 28, 1996 December 30, 1995
---------------------------------------
(in thousands)
Current $ 125 $ 115
Noncurrent 265 390
----- -----
$ 390 $ 505
===== =====
These leased assets are capitalized in property, plant and equipment:
DECEMBER 28, 1996 December 30, 1995
---------------------------------------
(in thousands)
Land and improvements $ 392 $ 392
Buildings and improvements 2,482 2,478
------ ------
2,874 2,870
Less accumulated amortization 1,666 1,602
------ ------
Net book value $1,208 $1,268
====== ======
The Company occupies certain manufacturing, warehousing, operating and
sales facilities and uses certain equipment under other cancelable and
noncancelable operating lease arrangements. A summary of the
noncancelable operating lease commitments at December 28, 1996 follows:
Fiscal year AMOUNT
-----------------------------------------------------------------
(in thousands)
1997 $ 3,088
1998 2,711
1999 2,250
2000 1,507
2001 1,017
Later fiscal years, through 2007 4,041
-------
$14,614
=======
Substantially all of these operating lease agreements are renewable for
periods of 3 to 15 years and require the Company to pay insurance, taxes
and maintenance expenses. Rent expense under cancelable and noncancelable
operating lease arrangements in 1996, 1995 and 1994 amounted to
$4,956,000, $4,569,000, and $3,480,000, respectively.
(7) INCOME TAXES
Income tax expense (benefit) consists of:
1996 1995 1994
----------------------------------------
(in thousands)
Current expense:
Federal $5,682 $4,483 $2,083
Foreign 137 60 50
State 827 580 236
------ ------ ------
6,646 5,123 2,369
Deferred federal benefit (1,181) (1,385) (178)
------ ------ ------
$5,465 $3,738 $2,191
====== ====== ======
-36-
37
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
The differences between income taxes computed by applying the statutory
federal income tax rate (35% in 1996 and 34% in 1995 and 1994) and income
tax expense in the consolidated financial statements are:
1996 1995 1994
--------------------------------------------------
(in thousands)
Computed "expected" tax expense $4,803 $3,413 $2,041
State income taxes, net of federal income taxes 538 383 156
Foreign income tax expense 137 60 50
Adjustment of estimated income tax liabilities
for prior years -- -- (181)
Other, net (13) (118) 125
------ ------ ------
$5,465 $3,738 $2,191
====== ====== ======
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below:
DECEMBER 28, 1996 December 30, 1995
---------------------------------------
(in thousands)
Deferred tax assets:
Accounts receivable, principally due to allowances for returns,
promotions and doubtful accounts $3,232 $2,915
Inventories, principally due to additional costs inventoried for
tax purposes and valuation allowances 1,284 840
Package design costs not currently deductible for tax purposes 318 367
Certain accounting accruals, including such items as self-insurance
costs, vacation costs, and others, not currently
deductible for tax purposes 221 284
Pension costs not currently deductible for tax purposes 1,173 849
------ ------
Total deferred tax assets 6,228 5,255
Deferred tax liabilities--
Basis differences and differing methods of depreciation
for book and tax purposes 530 521
Difference in gain recognition on sale of property, plant,
and equipment 173 390
------ ------
Total deferred tax liabilities 703 911
------ ------
Net deferred tax assets $5,525 $4,344
====== ======
In order to realize the deferred tax asset established, the Company will
need to generate future taxable earnings or be able to carryback taxable
earnings to 1996, 1995 or 1994, totaling $16.2 million. The Company's
earnings before taxes and taxable earnings history is as follows (in
thousands):
1996 1995 1994
-----------------------------------------------------------------------
Pretax book earnings $13,722 10,037 6,002
Taxable earnings $17,000 11,939 4,167
The Company believes the existing net deductible temporary differences
will reverse during periods in which the Company generates net taxable
earnings, or in periods in which a carryback to 1996, 1995 or 1994 is
available. Further, the Company believes it has available certain tax
planning strategies, that could be implemented, if necessary, to
supplement taxable earnings from operations. The Company has considered
the above factors in concluding that it is more likely than not that the
Company will realize the benefits of existing deferred tax assets. There
can be no assurance, however, that the Company will generate any specific
level of continuing earnings.
-37-
38
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
(8) ACCRUED EXPENSES
Accrued expenses consist of the following:
DECEMBER 28, 1996 December 30, 1995
---------------------------------------
(in thousands)
Salaries and wages $3,287 $ 774
Income taxes 3,650 5,283
Other 2,724 2,960
------ ------
$9,661 $9,017
====== ======
(9) EMPLOYEE RETIREMENT PLANS
In 1995, the Company and its domestic subsidiaries had noncontributory
retirement plans for the benefit of salaried and nonsalaried employees.
In 1996, these retirement plans were combined into the Associates'
Retirement Plan (ARP).
The employees covered under the ARP are eligible to participate upon the
completion of one year of service. Salaried participant benefits are
based upon a formula applied to a participant's final average salary and
years of service, which is reduced by a certain percentage of the
participant's social security benefits. Nonsalaried participant benefits
are based on a fixed amount for each year of service. The Plans provide
reduced benefits for early retirement. The Company intends to fund the
minimum amounts required under the Employee Retirement Income Security
Act of 1974.
The funded status of the ARP and combined amounts from noncontributory
retirement plans for the benefit of salaried and nonsalaried employees,
and the accrued retirement costs recognized at December 28, 1996 and
December 30, 1995 were:
DECEMBER 28, 1996 December 30, 1995
---------------------------------------
(in thousands)
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefit of
$17,292,000 and $16,418,000, respectively $17,873 $16,882
Projected effect of increase in compensation levels 1,422 1,411
------- -------
Projected benefit obligation (PBO) 19,295 18,293
Plan assets at fair value 20,641 19,411
------- -------
Plan assets in excess of PBO 1,346 1,118
Unrecognized net gain from past experience different from that
assumed and effects of changes in actuarial assumptions (1,374) (241)
Unamortized net asset existing at the date of adoption of
FAS No. 87, which is being amortized over approximately 12 years (458) (705)
Unrecognized prior service cost 226 (347)
------- -------
Accrued retirement cost recognized in the accompanying
consolidated balance sheets $ (260) $ (175)
======= =======
The Company also has a Supplemental Retirement Plan (SRP) for certain
officers and other key employees of the Company as designated by the
Board of Directors. The SRP is unfunded, noncontributory, and provides
for the payment of monthly retirement benefits. Benefits are based on a
formula applied to the recipients' final average monthly compensation,
reduced by a certain percentage of their social security benefits.
-38-
39
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
The funded status of the SRP and the accrued retirement cost recognized
at December 28, 1996 and December 30, 1995 are:
DECEMBER 28, 1996 December 30, 1995
---------------------------------------
(in thousands)
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefit of
$2,710,000 and $2,634,000, respectively $ 2,718 $ 2,676
Projected effect of increase in compensation levels 370 482
------- -------
Projected benefit obligation (PBO) 3,088 3,158
Plan assets at fair value -- --
------- -------
PBO in excess of plant assets (3,088) (3,158)
Unrecognized net loss from past experience different from that
assumed and effects of changes in actuarial assumptions 9 69
Unamortized net asset existing at the date of adoption of
FAS No. 87, which is being amortized over approximately 12 years 217 266
Unrecognized prior service cost 149 371
Adjustment required to recognize minimum liability (15) (249)
------- -------
Accrued retirement cost recognized in the accompanying
consolidated balance sheets $(2,728) $(2,701)
======= =======
The components of net pension cost for the retirement plans were:
1996 1995 1994
---------------------------------------------------
(in thousands)
Service cost-benefits earned during the period $ 662 $ 572 $ 643
Interest cost on PBO 1,604 1,498 1,397
Actual return on plan assets (1,582) (1,384) (1,355)
Net amortization and deferral (133) (63) (166)
------- ------- -------
$ 551 $ 623 $ 519
======= ======= =======
Assumptions used in accounting for the pension plans as of December 28,
1996 and December 30, 1995 were:
1996 1995
---------------------------
Discount rates 7.75% 7.50%
Rates of increase in compensation levels 5.00% 5.00%
Expected long-term rate of return on assets 9.25% 9.25%
The Company adopted a 401(k) plan effective September 1, 1995. Salaried
and nonsalaried employees contribute a percentage, as defined, of their
compensation per pay period and the Company contributes 50% of the first
2% of each participant's compensation contributed to this plan. The
Company's contribution to the 401(k) plan for the year ended December 28,
1996 and December 30, 1995 was $150,000 and $57,000, respectively.
-39-
40
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
(10) SHAREHOLDERS' EQUITY
The Company has various stock option plans, which have granted incentive
stock options (ISO's) and nonqualified stock options exercisable for
periods of up to 10 years from date of grant at prices not less than 100%
of the fair market value at date of grant. Information with respect to
options under these plans follows:
ISO NONQUALIFIED
NUMBER NUMBER WEIGHTED-AVERAGE
QUALIFIED PLANS OF SHARES OF SHARES EXERCISE PRICE
----------------------------------------------------------------------------------------------------------------
Outstanding at January 1, 1994 688,800 -- $ 2.85
Granted 404,100 85,200 8.59
Exercised (164,900) -- 2.74
Canceled (23,500) -- 4.33
--------- ------- -------
Outstanding at December 31, 1994 904,500 85,200 5.67
Granted 82,600 -- 8.64
Exercised (58,400) -- 3.31
Canceled (17,200) -- 8.75
--------- ------- -------
Outstanding at December 30, 1995 911,500 85,200 6.00
Granted 207,600 54,600 12.62
Exercised (85,400) (2,700) 4.77
Canceled (14,600) -- 8.59
--------- ------- -------
Balance outstanding at December 28, 1996 1,019,100 137,100 $ 7.57
========= ======= =======
Options exercisable at December 28, 1996 407,900 73,500
========= =======
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------------- ------------------------------
NUMBER WEIGHTED-AVERAGE NUMBER
RANGE OF OUTSTANDING REMAINING WEIGHTED-AVERAGE EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/28/96 CONTRACTUAL LIFE EXERCISE PRICE AT 12/28/96 EXERCISE PRICE
----------------------------------------------------------------------------------------------------------------
$ 1.63 - $5.00 391,900 4.93 $ 2.92 273,900 $ 2.84
5.01 - 10.00 489,600 7.55 $ 8.44 170,300 $ 8.46
10.01 - 15.13 274,700 9.21 $12.63 37,200 $13.95
--------- -------
1,156,200 481,400
At December 28, 1996, the remaining number of ISO and nonqualified shares
available for grant was 112,000.
At December 28, 1996, December 30, 1995, and December 31, 1994, the
options outstanding under these plans were held by 105, 84, and 81
employees, respectively, and had expiration dates ranging from 1997 to
2006.
In the event that shares received through the ISO plan are sold within one
year of exercise, the Company is entitled to a tax deduction. The
deduction is not reflected in the consolidated statement of earnings but
is reflected as an increase in additional capital in excess of par value.
Had the Company elected to determine compensation cost based on the fair
value at the grant date, as alternatively permitted under SFAS No. 123,
the Company's net earnings would have been reduced to the pro forma
amounts indicated below:
1996 1995
----------------------------
Net earnings:
As reported $8,257 $6,299
Pro forma 7,517 6,189
Earnings per share (primary):
As reported .84 .65
Pro forma .76 .64
-40-
41
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
Using the Black Scholes option-pricing model, the per-share,
weighted-average fair value of stock options granted during 1996 and 1995
was $6.16 and $4.21, respectively, on the date of grant. The assumptions
used in estimating the fair value of the options as of December 28, 1996
and December 30, 1995 were:
1996 1995
-------------------------------
Expected dividend yield 0% 0%
Expected volatility 47% 48%
Risk-free interest rate 5.5% 5.5%
Expected life - ISO grants 5.5 YEARS 5.5 years
Nonqualified grants 8 YEARS --
Pro forma net earnings reflects only options granted in 1996 and 1995.
Therefore, the full impact of calculating compensation cost for stock
options under SFAS No. 123 is not reflected in the pro forma net earnings
amounts presented above because compensation cost is reflected over the
options' vesting period of 5 years and compensation cost for options
granted prior to January 1, 1995 is not considered.
The Company has an employee stock purchase plan in which approximately
600 employees are eligible to participate. Under the terms of the Plan,
employees receive options to acquire common shares at the lower of 85% of
the fair market value on their enrollment date or at the end of each 2
year plan term.
SHARES
SUBSCRIBED
----------
Balance at January 1, 1994 146,600
Subscriptions 69,000
Purchases (141,400)
Cancellations (6,000)
--------
Balance at December 31, 1994 68,200
Subscriptions 3,100
Purchases --
Cancellations (10,200)
--------
Balance at December 30, 1995 61,100
Subscriptions --
Purchases (24,900)
Cancellations (36,200)
--------
Balance at December 28, 1996 --
========
Stock appreciation rights may be issued subject to certain limitations.
There were no rights outstanding at December 28, 1996, December 30, 1995,
or December 31, 1994.
The Company previously issued 666,000 restricted common shares pursuant
to an employment agreement with a key executive. Prior to the lapse of
restrictions, these shares could not be disposed of or transferred by the
holder, however, the shares were entitled to full voting and dividend
rights. The restrictions lapsed, with certain exemptions, at the rate of
10% per year. Without regard to any debt covenant limitations, the
Company was obligated under the agreement to purchase up to 50% of the
unrestricted shares presented by the executive within 90 days of the date
the restrictions lapsed. In March 1995 and March 1994, the Company
purchased 34,000 shares and 66,000 shares, respectively, presented by the
executive at a price of $9.60 per share and $13.80 per share,
respectively, which represented the market value of the shares on the
date of purchase. During 1995, the final restrictions lapsed, and the
Company fulfilled its final obligation, under the agreement, to purchase
any such shares. Charges to earnings relating to this plan were $0 in
1995 and $167,000 in 1994. The agreement also provides for separation
compensation in the certain circumstances and in the event of early
termination.
(11) PREFERRED SHARE PURCHASE RIGHTS
The Company's Board of Directors previously declared a dividend of one
Preferred Share Purchase Right (Right) on each outstanding common share
of the Company. Under certain conditions, each Right may be exercised to
purchase a fractional share of Series I Junior Participating Class B
Preferred Shares, par value $1 per share, at an initial exercise price of
$20. The Rights may not be exercised until the earlier of 15 days after a
public announcement that a person or group has acquired, or obtained the
right to acquire, 25% or more of the Company's outstanding common shares
or 10 business days after the commencement of a tender or exchange offer
that would result in a person or group owning 30% or more of the
Company's outstanding common shares (Share Acquisition Date).
-41-
42
Notes to Consolidated Financial Statements
R.G. Barry Corporation and Subsidiaries
continued
- -------------------------------------------------------------------------------
In the event that, at any time following the Share Acquisition Date, the
Company is acquired in a merger or other business combination transaction
in which the Company is not the surviving corporation or 50% or more of
the Company's assets or earning power is sold or transferred, each holder
of a Right will be entitled to buy the number of shares of common stock
of the acquiring company which at the time of such transaction will have
a market value of two times the exercise price of the Right. If, after
the Share Acquisition Date, the Company is the surviving corporation in a
merger with the acquiring person or group, or if a person or group
acquires 30% or more of the Company's common shares under certain
circumstances, then each holder of a Right will be entitled to buy common
shares of the Company having a market value of two times the exercise
price of the Right.
Each Class A Preferred share is entitled to one-tenth of one vote, while
the Class B Series I Junior Participating shares are entitled to ten
votes. The preferred shares are entitled to a preference in liquidation.
The Series I Junior Participating Class B Preferred shares are entitled
to cumulative dividends at a quarterly rate of five cents per share. None
of these shares have been issued.
The Rights, which do not have any voting rights, expire on March 16,
1998, and may be redeemed by the Company at a price of $0.01 per Right at
any time until 15 days following the Share Acquisition Date.
(12) RELATED PARTY OBLIGATION
The Company and a key executive have entered into an agreement pursuant
to which the Company is obligated for up to two years after the death of
the key executive to purchase, if the estate elects to sell, up to $4
million of the Company's common shares, at their fair market value. To
fund its potential obligation to purchase such shares, the Company has
purchased a $5 million life insurance policy on the key executive, the
cash surrender value of which is included in other assets in the
accompanying balance sheet. In addition, for a period of 24 months
following the key executive's death, the Company will have a right of
first refusal to purchase any shares of the Company owned by the key
executive at the time of his death if his estate elects to sell such
shares. The Company would have the right to purchase such shares on the
same terms and conditions as the estate proposes to sell such shares.
(13) CONTINGENT LIABILITIES
The Company has been named as defendant in various other lawsuits arising
from the ordinary course of business. In the opinion of management, the
resolution of such matters is not expected to have a material adverse
effect on the Company's financial position or results of operations.
Independent Auditors' Report
R.G. Barry Corporation and Subsidiaries
- -------------------------------------------------------------------------------
The Board of Directors and Shareholders
R.G. Barry Corporation:
We have audited the accompanying consolidated balance sheets of R.G. Barry
Corporation and subsidiaries (the Company) as of December 28, 1996 and December
30, 1995, and the related consolidated statements of earnings, shareholders'
equity, and cash flows for each of the fiscal years in the three-year period
ended December 28, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of R.G. Barry
Corporation and subsidiaries as of December 28, 1996 and December 30, 1995, and
the results of their operations and their cash flows for each of the fiscal
years in the three-year period ended December 28, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 20, 1997
-42-
43
[KPMG PEAT MARWICK LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Shareholders
R. G. Barry Corporation:
Under date of February 20, 1997, we reported on the consolidated balance sheets
of R. G. Barry Corporation and subsidiaries as of December 28, 1996 and December
30, 1995, and the related consolidated statements of earnings, shareholders'
equity and cash flows for each of the fiscal years in the three-year period
ended December 28, 1996, as contained in the fiscal 1996 annual report to
shareholders. These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the fiscal year
1996. In connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial statement
schedules as listed in the accompanying index. These financial statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statement schedules based on our
audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
/s/ KPMG PEAT MARWICK LLP
Columbus, Ohio
February 20, 1997
44
Schedule II
-----------
R. G. BARRY CORPORATION AND SUBSIDIARIES
Reserves
Fiscal year ended December 28, 1996
Column A Column B Column C Column D Column E
- ------------------------------------------------------ --------------- -------------- ---------------- --------------
Additions
Balance at charged to Balance at
beginning costs and end of
Description of period expenses Deductions period
----------- --------- -------- ---------- ----------
Reserves deducted from accounts receivable:
Allowance for doubtful receivables $ 349,000 140,000 254,000(1) 235,000
Allowance for returns 3,021,000 4,052,000 3,021,000(2) 4,052,000
Allowance for promotions 4,300,000 4,685,000 4,300,000(3) 4,685,000
=============== ============== ================ ==============
$ 7,670,000 8,877,000 7,575,000 8,972,000
=============== ============== ================ ==============
- --------
(1) Write-off of uncollectible accounts.
(2) Represents 1996 sales returns reserved for in fiscal 1995.
(3) Represents 1996 promotions expenditures committed to and reserved for in fiscal 1995.
45
Schedule II
-----------
R. G. BARRY CORPORATION AND SUBSIDIARIES
Reserves
Fiscal year ended December 30, 1995
Column A Column B Column C Column D Column E
- ------------------------------------------------------ --------------- -------------- ---------------- --------------
Additions
Balance at charged to Balance at
beginning costs and end of
Description of period expenses Deductions period
----------- ---------- ---------- ---------- ----------
Reserves deducted from accounts receivable:
Allowance for doubtful receivables $ 160,000 648,000 459,000(1) 349,000
Allowance for returns 1,537,000 3,021,000 1,537,000(2) 3,021,000
Allowance for promotions 2,403,000 4,300,000 2,403,000(3) 4,300,000
=============== ============== ================ ==============
$ 4,100,000 7,969,000 4,399,000 7,670,000
=============== ============== ================ ==============
- ----------
(1) Write-off of uncollectible accounts.
(2) Represents 1995 sales returns reserved for in fiscal 1994.
(3) Represents 1995 promotions expenditures committed to and reserved for in fiscal 1994.
46
Schedule II
-----------
R. G. BARRY CORPORATION AND SUBSIDIARIES
Reserves
Fiscal year ended December 31, 1994
Column A Column B Column C Column D Column E
- ------------------------------------------------------ --------------- -------------- ---------------- --------------
Additions
Balance at charged to Balance at
beginning costs and end of
Description of period expenses Deductions period
----------- ---------- ----------- ---------- ----------
Reserves deducted from accounts receivable:
Allowance for doubtful receivables $ 253,000 239,000 332,000(1) 160,000
Allowance for returns 2,487,000 1,537,000 2,487,000(2) 1,537,000
Allowance for promotions 2,426,000 2,403,000 2,426,000(3) 2,403,000
--------------- -------------- ---------------- --------------
$ 5,166,000 4,179,000 5,245,000 4,100,000
=============== ============== ================ ==============
Reserve for costs of restructuring $ 58,000 - 58,000(4) -
=============== ============== ================ ==============
- ----------
(1) Write-off of uncollectible accounts.
(2) Represents 1994 sales returns reserved for in fiscal 1993.
(3) Represents 1994 promotions expenditures committed to and reserved for in fiscal 1993.
(4) Represents reduction of reserve during fiscal 1994.
47
R. G. BARRY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 28, 1996
INDEX TO EXHIBITS
Exhibit
No. Description Location
- ------- ----------- --------
3(a) Articles of Incorporation of Registrant, as Incorporated herein by reference to Registrant's
amended Annual Report on Form 10-K for fiscal year ended
December 30, 1995 (File No. 1-8769) (the
"Registrant's 1995 Form 10-K") [Exhibit 3(a)]
3(b) Certificate of Amendment to the Articles of Incorporated herein by reference to Registrant's
Incorporation of Registrant, as filed with 1995 Form 10-K [Exhibit 3(b)]
the Ohio Secretary of State on May 22, 1995
3(c) Certificate of Amendment to Articles of Incorporated herein by reference to Registrant's
Incorporation of Registrant, as filed with 1995 Form 10-K [Exhibit 3(c)]
the Ohio Secretary of State on September
1, 1995
3(d) Regulations of Registrant, as amended Incorporated herein by reference to Registrant's
Annual Report on Form 10-K for the fiscal year
ended January 2, 1988 (File No. 0-12667) [Exhibit
3(b)]
4(a) Trust Indenture, dated as of July 1, 1972, by Incorporated herein by reference to Registrant's
and between Registrant and The Huntington Registration Statement on Form S-1, filed June
National Bank of Columbus, as Trustee 27, 1972 (Registration No. 2-44432) [Exhibit 4(a)]
48
Exhibit
No. Description Location
- ------- ----------- --------
4(b) First Supplemental Trust Indenture, dated as Incorporated herein by reference to Registrant's
of May 2, 1975, by and between Registrant and Registration Statement on Form S-7, filed March
The Huntington National Bank of Columbus, as 3, 1978 (Registration No. 2-60888) [Exhibit
Trustee 2(b)(ii)]
4(c) Second Supplemental Trust Indenture, dated as Incorporated herein by reference to Registrant's
of April 1, 1978, by and between Registrant Registration Statement on Form S-7, filed March
and The Huntington National Bank of Columbus, 3, 1978 (Registration No. 2-60888) [Exhibit 2(b)(iii)]
as Trustee
4(d) Third Supplemental Indenture, dated as of Incorporated herein by reference to Registrant's
June 22, 1984, between Registrant and The Current Report on Form 8-K dated June 22, 1984,
Huntington National Bank, as Trustee filed June 26, 1984 (File No. 1-7231) [Exhibit 4(d)]
4(e) Fourth Supplemental Trust Indenture, dated as Incorporated herein by reference to Registrant's
of February 27, 1985, between Registrant and Annual Report on Form 10-K for the fiscal year
The Huntington National Bank, as Trustee ended December 29, 1984 (File No. 0-12667)
[Exhibit 4(e)]
4(f) Revolving Credit Agreement, made to be Incorporated herein by reference to Registrant's
effective on February 28, 1996, among 1995 Form 10-K [Exhibit 4(f)]
Registrant, The Bank of New York, The
Huntington National Bank and NBD Bank
4(g) Note Agreement, dated July 5, 1994, between Incorporated herein by reference to Registrant's
Registrant and Metropolitan Life Insurance Registration Statement on Form S-3, filed July
Company 21, 1994 (Registration No. 33-81820) [Exhibit 4(t)]
49
Exhibit
No. Description Location
- ------- ----------- --------
4(h) Rights Agreement, dated as of February 29, Incorporated herein by reference to Registrant's
1988, between Registrant and The Huntington Current Report on Form 8-K dated March 14, 1988,
National Bank filed March 15, 1988 (File No. 0-12667) [Exhibit 4]
9(a) Zacks-Streim Voting Trust and amendments Incorporated herein by reference to Registrant's
thereto Annual Report on Form 10-K for the fiscal year
ended January 2, 1993 (File No. 1-8769) [Exhibit 9]
9(b) Documentation related to extension of term of Incorporated herein by reference to Registrant's
the Voting Trust Agreement for the 1995 Form 10-K [Exhibit 9(b)]
Zacks-Streim Voting Trust
10(a) R. G. Barry Corporation Salaried Employees' Incorporated herein by reference to Registrant's
Pension Plan (as Amended and Restated Annual Report on Form 10-K for the fiscal year
Effective January 1, 1989) ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(a)]
10(b) R. G. Barry Corporation Supplemental Incorporated herein by reference to Registrant's
Retirement Plan Annual Report on Form 10-K for the fiscal year
ended December 29, 1990 (File No. 0-12667)
[Exhibit 10(b)]
10(c) R. G. Barry Corporation 1984 Incentive Stock Incorporated herein by reference to Registrant's
Option Plan for Key Employees Current Report on Form 8-K dated June 22, 1984,
filed June 26, 1984 (File No. 1-7231) [Exhibit
10(d)]
10(d) R. G. Barry Corporation Incentive Plan for Key Incorporated herein by reference to Registrant's
Employees Annual Report on Form 10-K for the fiscal year
ended December 29, 1984 (File No. 0-12667)
[Exhibit 10(e)]
50
Exhibit
No. Description Location
- ------- ----------- --------
10(e) Employment Agreement, dated July 1, 1994, Incorporated herein by reference to Registrant's
between Registrant and Gordon Zacks Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(e)]
10(f) Agreement, dated September 27, 1989, between Incorporated herein by reference to Registrant's
Registrant and Gordon Zacks Current Report on Form 8-K dated October 11,
1989, filed October 12, 1989 (File No. 0-12667)
[Exhibit 28.1]
10(g) Amendment No. 1, dated as of October 12, 1994, Incorporated herein by reference to Amendment No.
between Registrant and Gordon Zacks 14 to Schedule 13D, dated January 27, 1995, filed
by Gordon Zacks on February 13, 1995 [Exhibit 5]
10(h) Amended Split-Dollar Insurance Agreement, Incorporated herein by reference to Registrant's
dated March 23, 1995, between Registrant and 1995 Form 10-K [Exhibit 10(h)]
Gordon B. Zacks
10(i) R. G. Barry Corporation 1988 Stock Option Plan Incorporated herein by reference to Registrant's
(Reflects amendments through May 11, 1993) Registration Statement on Form S-8, filed
August 18, 1993 (Registration No. 33-67594)
[Exhibit 4(r)]
10(j) Form of Stock Option Agreement used in Incorporated herein by reference to Registrant's
connection with the grant of incentive stock 1995 Form 10-K [Exhibit 10(k)]
options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
51
Exhibit
No. Description Location
- ------- ----------- --------
10(k) Form of Stock Option Agreement used in Incorporated herein by reference to Registrant's
connection with the grant of non-qualified 1995 Form 10-K [Exhibit 10(l)]
stock options pursuant to the R. G. Barry
Corporation 1988 Stock Option Plan
10(l) Description of Incentive Bonus Program Incorporated herein by reference to Registrant's
Annual Report on Form 10-K for the fiscal year
ended December 28, 1991 (File No. 1-8769)
[Exhibit 10(k)]
10(m) R. G. Barry Corporation Employee Stock Incorporated herein by reference to Registrant's
Purchase Plan (Reflects amendments and Registration Statement on Form S-8, filed
revisions for stock dividends and stock splits August 18, 1993 (Registration No. 33-67596)
through May 11, 1993) [Exhibit 4(r)]
10(n) R. G. Barry Corporation 1994 Stock Option Plan Incorporated herein by reference to Registrant's
(Reflects stock splits through June 22, 1994) Registration Statement on Form S-8, filed August
24, 1994 (Registration No. 33-83252) [Exhibit 4(q)]
10(o) Form of Stock Option Agreement used in Incorporated herein by reference to Registrant's
connection with the grant of incentive stock 1995 Form 10-K [Exhibit 10(p)]
options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
10(p) Form of Stock Option Agreement used in Incorporated herein by reference to Registrant's
connection with the grant of non-qualified 1995 Form 10-K [Exhibit 10(q)]
stock options pursuant to the R. G. Barry
Corporation 1994 Stock Option Plan
52
Exhibit
No. Description Location
- ------- ----------- --------
10(q) Executive Employment Agreement, dated July 1, Incorporated herein by reference to Registrant's
1994, between Registrant and Christian Galvis Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(n)]
10(r) Agreement, dated July 1, 1994, between Incorporated herein by reference to Registrant's
Registrant and Richard L. Burrell Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(o)]
10(s) Agreement, dated July 1, 1994, between Incorporated herein by reference to Registrant's
Registrant and Daniel D. Viren Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(p)]
10(t) Agreement, dated July 1, 1994, between Incorporated herein by reference to Registrant's
Registrant and Harry Miller Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 10(q)]
10(u) R. G. Barry Corporation Deferred Compensation Incorporated herein by reference to Registrant's
Plan (Effective as of September 1, 1995) 1995 Form 10-K [Exhibit 10(v)]
10(v) R. G. Barry Corporation Stock Option Plan for Incorporated herein by reference to Registrant's
Non-Employee Directors Registration statement on Form S-8, filed June
26, 1996 (Registration No. 333-06875) [Exhibit
4(k)]
53
Exhibit
No. Description Location
- ------- ----------- --------
13 Registrant's Annual Report to Shareholders for Incorporated herein by reference to the financial
the fiscal year ended December 28, 1996 (Not statements portion of this Annual Report on Form
deemed filed except for the portions thereof 10-K beginning at page 22
which are specifically incorporated by
reference into this Annual Report on
Form 10-K)
21 Subsidiaries of Registrant Incorporated herein by reference to Registrant's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 1-8769)
[Exhibit 21]
23 Consent of Independent Auditors Page 74
24 Powers of Attorney Pages 75 through 83
27 Financial Data Schedule Page 84