1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended January 29, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from __________ to __________
Commission file number 1-2191
BROWN GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 43-0197190
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
8300 Maryland Avenue, St. Louis, Missouri 63105
(Address of principal executive offices) (Zip Code)
(314) 854-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- -------------------------------------- ------------------------
Common Stock - par value $3.75 a share New York Stock Exchange
with Common Stock Purchase Rights Chicago Stock Exchange
7-3/8% Sinking Fund Debentures due New York Stock Exchange
January 15, 1998
Securities registered pursuant to Section 12(g) of the Act: None
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 [ x ]
As of April 2, 1994, 17,694,841 common shares were outstanding, and the
aggregate market value of the common shares held by non-affiliates of the
registrant was approximately $648 million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual stockholders report for the year ended January 29,
1994, are incorporated by reference into Parts I and II.
Portions of the proxy statement for the annual meeting of stockholders to be
held May 26, 1994, are incorporated by reference into Part III.
Page 1 of 78 pages
Exhibit Index page 22
2
PART I
------
ITEM 1 - BUSINESS
- -----------------
The Corporation was founded in 1878 and incorporated in 1913 and
currently operates in the Footwear and Specialty Retailing industry segments.
The Footwear segment is engaged in the operation of retail shoe stores and in
the manufacture, importing, foreign sourcing, and marketing of women's, men's
and children's footwear. The Specialty Retailing segment comprises a chain of
retail fabric stores. See Note 13 of Notes to Consolidated Financial
Statements on page 29 of the Annual Report to Stockholders for the year ended
January 29, 1994, which is incorporated herein by reference, for additional
information regarding the Corporation's industry segments.
Footwear
- --------
The Footwear segment is engaged in the manufacture, importing, foreign
sourcing, and marketing of a wide variety of types and styles of women's,
men's and children's dress and casual footwear. During 1993, footwear sales
were approximately 66% women's, 21% men's, and 13% children's. This
composition has remained relatively constant over the past few years.
Approximately 52% of 1993 footwear sales were made at retail compared with 47%
in 1992 and 43% in 1991.
The major brand names of the Corporation's footwear include the
following:
Women's: Air Step
Brittania (under license from Brittania Sportswear, Ltd.)
Connie
DeLiso
Donnay (under license from Donnay International, S.A.)
Dr. Scholl's (under license from Schering-Plough HealthCare
Products, Inc.)
Fanfares
Jordache (under license from Jordache Enterprises, Inc.)
Life Stride
Naturalizer
NaturalSport
Penaljo
Revelations (under license from Lowell Shoe, Inc.)
Waikiki (under license from DDKA, S.A.)
Men's: Brittania (under license from Brittania Sportswear, Ltd.)
Donnay (under license from Donnay International S.A.)
Dr. Scholl's (under license from Schering-Plough HealthCare
Products, Inc.)
Jean Pier Clemente
Levi's Shoes and Boots (under license from Levi Strauss & Co.)
Reed St. James (under license from Haggar Apparel Co.)
Regal
3
ITEM 1 - BUSINESS (Continued)
- -----------------
Children's: Aladdin (under license from The Walt Disney Company, Inc.)
Bambi (under license from The Walt Disney Company, Inc.)
Barbie for Girls (under license from Mattel, Inc.)
Beauty and the Beast (under license from The Walt Disney
Company, Inc.)
Bobby's World (under license from Twentieth Century Fox
Licensing and Merchandising)
Buster Brown
Candie's (under license from Candie's, Inc.)
Conan the Adventurer (under license from Hasbro, Inc.)
Dinosaurs (under license from The Walt Disney Company, Inc.)
Disney (under license from The Walt Disney Company, Inc.)
Disney Babies (under license from The Walt Disney Company, Inc.)
Donnay (under license from Donnay International, S.A.)
The Flintstones (under license from MCA/Universal Merchandising,
Inc. and Turner Home Entertainment)
G. I. Joe (under license from Hasbro, Inc.)
Jordache (under license from Jordache Enterprises, Inc.)
The Lion King (under license from The Walt Disney Company, Inc.)
The Little Mermaid (under license from The Walt Disney
Company, Inc.)
101 Dalmatians (under license from The Walt Disney
Company, Inc.)
Playskool (under license from Hasbro, Inc.)
Rookie League (under license from Major League Baseball
Properties, Inc.)
Waikiki (under license from DDKA, S.A.)
Wildcats
The Corporation's retail footwear operations comprise a large number of
retail footwear stores in the United States and Canada including those
operated under various names including: Famous Footwear, Naturalizer, F. X.
LaSalle, Regal and Connie. A substantial portion of retail sales carry
Corporate brand names with the footwear manufactured either by the Corporation
in company-owned factories or under contract to its specifications by domestic
and foreign suppliers.
In retail sales of footwear, the Corporation competes in a highly frag-
mented market with many organizations of various sizes operating retail shoe
stores. Competitors include general shoe store operators, local and regional
shoe store chains, department stores, discount stores and numerous independent
retail operators of various sizes. Customer service, store location, product
display, merchandise selection and pricing are important components of retail
competition.
A summary of retail footwear stores operated by the Corporation at the prior
five fiscal year-ends is as follows:
4
ITEM 1 - BUSINESS (Continued)
- -----------------
Company-Owned Retail Footwear Stores
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Naturalizer
Stores selling the Naturalizer
and NaturalSport brands of
women's footwear; located in
major malls and shopping centers
throughout the U.S. and Canada. 413 451 457 431 450
Connie
Stores selling Connie and other
branded women's footwear;
located in major malls and
shopping centers. 187 134 119 106 81
Famous Footwear
Family footwear stores which
feature "brand names for less";
located in strip centers and
outlet malls. 257 304 353 477 567
Regal/Castleby
Men's footwear stores located
in malls and shopping centers. 94 89 75 65 35
F. X. LaSalle
Stores selling men's and women's
branded footwear in major malls
in Canada. 11 13 14 14 15
Other Family Footwear Stores
Selling men's, women's, and
children's footwear. 138 63 71 4 4
----- ----- ----- ----- -----
Total 1,100 1,054 1,089 1,097 1,152
===== ===== ===== ===== =====
Footwear is distributed by the Corporation's marketing, manufacturing,
importing, and foreign sourcing operations in the United States, Canada,
Europe, Latin America, and the Far East to approximately 5,000 retailers,
including independent and chain operators of shoe and department stores and to
affiliates. Certain of these customers also sell shoes bought from competing
footwear suppliers. Wholesale footwear sales carry Corporate brand names,
brand names licensed by the Corporation, and private label footwear produced
for specific customers. This footwear is either manufactured by the
Corporation in company-owned factories or under contract to its specifications
by domestic and foreign suppliers. The Corporation competes with both domestic
manufacturers and importers of foreign-produced footwear.
The Corporation's womens domestic shoe manufacturing operations, overall,
account for approximately 7% of the total pairs of non-rubber footwear
manufactured annually in the United States, and approximately 21% of the
women's domestic production. Competition in the shoe manufacturing industry
involves style, quality, price, fit and service offered to the customer. The
Corporation attempts to meet competition through manufacturing efficiencies,
by maintaining emphasis on quality and fit, by its ability to anticipate and
create acceptable fashion styles and by manufacturing well-established branded
merchandise available for immediate shipment. The principal raw materials
used by the Corporation in the manufacture of shoes are leather, man-made
materials and fabrics for uppers, and leather, rubber and plastics for soles
and heels. The Corporation has experienced no serious difficulty in
purchasing its needs of raw materials and manufactured component parts at
competitive prices.
5
ITEM 1 - BUSINESS (Continued)
- -----------------
Foreign sourced footwear accounts for approximately 87% of all footwear
sold in the United States. Through the sourcing activities of its Pagoda
organization, the Corporation is a leading supplier of imported footwear. This
organization sources a wide variety of footwear primarily from the Far East and
Brazil for other Brown Group divisions and for outside customers. During 1993
this operation was responsible for sourcing approximately 81 million pairs of
shoes. Pairs sourced for the U.S. market by Pagoda represent approximately 6%
of total pairs imported annually in the United States. These sourcing
activities include coordination of the styling, production, and shipment of
footwear produced for the Corporation by independent footwear manufacturers
in foreign countries. Because Pagoda's sourcing capabilities are diverse and
include numerous countries of origin and manufacturing facilities therein and
since production can be shifted from country to country, the Corporation does
not believe its sourcing arrangements entail significant risks.
The nature of the Corporation's wholesale shoe business is such that it
does not have a significant backlog of non-cancelable orders. Orders for
shoes are solicited by the Corporation's sales force primarily during four
selling seasons in each year, with most sales being for the spring and fall
retail seasons. Orders placed as a result of these sales efforts are taken
before the shoes are manufactured with delivery generally within 10 to 12
weeks thereafter. In addition, the Corporation maintains a stock of the
higher volume styles which are available for prompt shipment on reorder. The
Corporation maintains adequate reserves for returns and allowances which may
occur after sales are recorded.
The Corporation's marketing and promotional efforts are carried out
through a number of avenues. The footwear wholesaling group maintains a sales
force that visits customers periodically, presents its footwear at trade shows
throughout the country, and advertises in trade magazines and publications.
In addition, direct advertising to consumers is carried out through periodic
use of the electronic media, sponsoring of certain sporting events, and in-
store presentations and demonstrations. The footwear retailing organization
advertises its products in the print and electronic media, as well as with in-
store displays and promotions.
Due to the seasonal nature of retail sales of shoes, the Corporation
experiences fluctuations in the components of working capital. Retail
footwear sales are seasonal with significant increases in sales experienced in
the Christmas, Easter and back-to-school periods.
Specialty Retailing
- -------------------
The Specialty Retailing segment comprises the Cloth World chain of
retail fabric stores, one of the nation's largest volume fabric chains. All
of Cloth World's 340 stores are leased with more than half having lease
renewal options. Each store sells competitively priced craft, home
decorating, and sewing fabrics and notions, along with patterns and sewing
machines. Cloth World stores are located predominantly in the southern half
of the United States extending from coast to coast. Stores are typically
located in suburban areas near major metropolitan centers. Most contain
between 10,000 and 12,000 square feet of space, enabling them to carry a large
selection of merchandise for the home sewer and crafter.
A summary of retail fabric stores operated by the Corporation at the prior
five fiscal year ends is as follows:
6
ITEM 1 - BUSINESS (Continued)
- -----------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Cloth World Store Count 316 316 322 354 340
Cloth World purchases its goods from a substantial number of suppliers,
and has experienced no difficulty in acquiring merchandise at competitive
prices.
The Corporation's fabric operation competes with other fabric chains,
discount stores operating their own fabric departments and numerous
independent retailers. A large selection of "fashion" merchandise, in-store
customer service, direct mail, newspaper advertising and competitive pricing
are the primary methods of competition in fabric operations. Fabric retailing
is subject to some seasonal influences, with Easter, back-to-school and the
pre-Christmas season being somewhat stronger than other periods.
Discontinued Operations
- -----------------------
During the fourth quarter of fiscal 1993, the Corporation adopted a
formal plan to withdraw from the Wohl Leased Shoe Department business. This
business involves the management of over 500 shoe departments in department
stores primarily on the West Coast and in the Midwest. Most of the leases are
cancelable after a period of notice by either party and the Corporation
expects to complete most of the withdrawals by the end of fiscal 1994.
Restructuring
- -------------
In January 1994 the Corporation announced restructuring initiatives
related to the Footwear Segment which consist of the following:
* Closing of five manufacturing facilities;
* The closing of more than 100 company-owned Regal and Connie
shoe stores; and
* Reduction of Corporate and Divisional staffing at the St.
Louis, Missouri, headquarters.
It is expected that these restructuring initiatives will be completed
during fiscal 1994 and may extend into the first quarter of fiscal 1995.
Corporate-wide Business Influences
- ----------------------------------
In addition to normal and recurring product development, design and
styling activities, the Corporation engages in research and development
related to new and improved materials for use in its footwear and other
products and to the development and adaptation of production techniques.
The Corporation is involved in environmental remediation and ongoing
compliance at its closed tannery site and two associated landfill locations,
and has been identified by various governmental authorities as a potentially
responsible party at certain other landfills. See page 15 of the Annual
Report to Stockholders for the year ended January 29, 1994, which is
incorporated herein by reference, for a discussion of the financial impact of
environmental issues on the Corporation. Federal, State, and local provisions
for environmental protection have not had, nor are they anticipated to have, a
material effect on the Corporation's capital expenditures or competitive
position.
7
ITEM 1 - BUSINESS (Continued)
- -----------------
The Corporation manufactures and sells certain patented items but does
not consider its business to be dependent on patents. In addition, some
products are sold under license agreements, such as with Schering-Plough
HealthCare Products, Inc., and The Walt Disney Company, Inc. During 1993,
sales under these agreements were approximately 13% of the total sales of the
footwear segment.
From time to time the Corporation investigates and negotiates for the
possible acquisition of other businesses and operations; but at this time,
there are no agreements or understandings for acquisition of any significant
subsidiaries.
The Corporation has approximately 22,000 full and part-time employees
including approximately 5,600 in the leased department business, Connie and
Regal shoe stores, factories, and Corporate offices which will be terminated
as a result of the restructuring and closings previously discussed.
Approximately 2,000 employees engaged in the manufacture of footwear are
employed under union contracts. Such contracts vary in duration and expire in
years between 1994 and 1996.
ITEM 2 - PROPERTIES
- -------------------
The principal executive, sales and administrative offices of the
Corporation are located in Clayton (St. Louis), Missouri, and consist of a
complex of four adjoining office buildings. As a result of reduction in
staffing, the Corporation, subsequent to year end, sold two of the four
buildings.
The Corporation's footwear manufacturing and warehousing operations are
primarily carried out at 10 footwear and component manufacturing plants, two
leather cutting facilities, and three warehouses located mainly in smaller
towns in the Southern and Midwestern sections of the United States and two
manufacturing and one warehouse facility located in Canada. Substantially all
of the facilities are owned or are subject to long-term capital leases. In
January 1994 the Corporation announced the closing of five domestic production
facilities. These closings will be completed in the first and second quarter
of 1994. After these closings the Corporation will have annual domestic
manufacturing capacity of approximately 7,000,000 pairs.
The Corporation's retail footwear operations are conducted throughout the
United States and Canada and involve the operation of 1,152 shoe stores,
including 102 in Canada. In addition, Famous Footwear has leased office space
and a 750,000 square foot distribution center in Madison, Wisconsin. Cloth
World has one warehouse/distribution facility in Amarillo, Texas, and 340
leased retail store locations. All store locations are leased with
approximately one-third having renewal options.
ITEM 3 - LEGAL PROCEEDINGS
- --------------------------
The Corporation is a party to several uninsured lawsuits arising in the
ordinary course of business. While the Corporation is unable to predict the
ultimate outcome of these actions, it believes that their final resolution
will not result in any materially adverse effect on the Corporation's
financial position.
8
ITEM 3 - LEGAL PROCEEDINGS (Continued)
- --------------------------
The Corporation is working with Federal and various State Environmental
Protection Agencies to resolve clean-up issues at several sites, including the
Corporation's closed tannery in New York. The potential financial impact on
the Corporation is discussed on page 15 of the Annual Report to Stockholders
for the year ended January 29, 1994, which is incorporated herein by
reference.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No matter was submitted to a vote of stockholders during the fourth
quarter of fiscal 1993.
9
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
The following is a list of the names and ages of the executive officers
of the registrant and of the offices held by each such person. There is no
family relationship between any of the named persons. The terms of the
following executive officers will expire May, 1994.
Name Age Current Position
- ---- --- ----------------
B. A. Bridgewater, Jr. 60 Chairman of the Board, President and Chief
Executive Officer and Member of Executive
Committee
John B. Biggs, Jr. 50 Senior Vice President
Brian C. Cook 54 Vice President, Footwear Retailing and
President, Famous Footwear
Arthur G. Croci 42 President, Pagoda Trading
Ronald N. Durchfort 40 President, Pagoda International
Ronald A. Fromm 43 Executive Vice President, Famous Footwear
Curtis R. Johnson 62 Executive Vice President, Brown Shoe Company
Raymond F. Moseley 54 President, Wohl Shoe Company
Joseph P. Pearce 48 Executive Vice President, Brown Shoe Company
Robert D. Pickle 56 Vice President, General Counsel and
Corporate Secretary
Gary M. Rich 43 President, Pagoda U.S.A.
Harry E. Rich 54 Director, Executive Vice President and
Chief Financial Officer and Member of
Executive Committee
Donald L. Richey 50 President, Cloth World
Andrew M. Rosen 43 Vice President and Treasurer
Mary Sylvia Siverts 34 Vice President, Public Affairs
Richard L. Stonner 50 Senior Vice President, Retail Sales,
Famous Footwear
Thomas A. Williams 45 Vice President, Footwear Wholesaling;
President, Brown Shoe Company; and Chairman,
Pagoda
E. Lee Wyatt, Jr. 41 Vice President, Planning and Controller
George J. Zelinsky 45 Senior Vice President and General Merchandise
Manager, Famous Footwear
The period of service of each officer in the positions listed and other
business experience are set forth below.
10
EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
- ------------------------------------
B. A. Bridgewater, Jr., Chairman of the Board and Chief Executive Officer of
the registrant since 1985. President of the registrant prior to 1987 and
since 1990.
John B. Biggs, Jr., Senior Vice President of the registrant since January
1994. President of Brown Shoe Company from December 1990 to January 1994.
Senior Vice President of Brown Shoe Company from 1987 to December 1990.
Brian C. Cook, Vice President, Footwear Retailing of the registrant since
March, 1992; President of Famous Footwear since 1981.
Arthur G. Croci, President of Pagoda Trading since November 1993. President of
Brown Group International from December 1990 to November 1993. Vice President
of the registrant from December 1990 to March 1993. Executive Vice President
of Brown Group International from January 1990 to December 1990 and various
positions with the registrant from 1980 through 1989.
Ronald N. Durchfort, President of Pagoda International since March 1993.
Managing Director, BGI, SARL-European Operations from 1989 through 1993.
International Sales Manager, Sidney Rich Associates, Inc. from 1986 through
1989.
Ronald A. Fromm, Executive Vice President, Famous Footwear since September
1992. Vice President and Chief Financial Officer from 1988 to 1992.
Curtis R. Johnson, Executive Vice President, Brown Shoe Company since 1992.
Executive Vice President - Production and Purchasing, Brown Shoe Company since
1982.
Raymond F. Moseley, President of Wohl Shoe Company since March 1992; Executive
Vice President, Operations of Wohl since 1989; previously Senior Vice
President, Operations of Wohl since 1985.
Joseph P. Pearce, Executive Vice President of Brown Shoe Company since June
1991, with principal responsibility for marketing. Previously, a Group
President of the Fisher-Camuto Group, Inc. (a footwear company).
Robert D. Pickle, Vice President, General Counsel and Corporate Secretary of
the registrant since 1985.
Gary M. Rich, President of Pagoda U.S.A. since March 1993. President, Pagoda
Trading Company, Inc. from June 1989 through March 1993. Executive Vice
President, Sidney Rich Associates, Inc. from December 1980 through June 1989.
Account Executive, Sidney Rich Associates, Inc. from August 1975 to December
1980.
Harry E. Rich, Executive Vice President and Chief Financial Officer of the
registrant since 1988. Senior Vice President and Chief Financial Officer of
the registrant from 1984 to 1988.
Donald L. Richey, President of Cloth World since October 1990. Previously,
Executive Vice President and a Director of Hancock Fabrics, Inc.
Andrew M. Rosen, Vice President and Treasurer of the registrant since January
1992. Treasurer of the registrant from 1983 to 1992.
Mary Sylvia Siverts, Vice President of Public Affairs since September 1993.
Director of Public Relations from 1988 to 1993.
11
EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
- ------------------------------------
Richard L. Stonner, Senior Vice President, Retail Sales of Famous Footwear
since May 1987. Vice President and General Merchandise Manager, Shoe Stores,
Wohl Shoe Company from 1985 to 1987.
Thomas A. Williams, Vice President, Footwear Wholesaling; President, Brown
Shoe Company; and Chairman, Pagoda since January 1994. Vice President,
International Operations of the registrant from March 1993 to January 1994.
Chairman of the Board of Pagoda Trading Company from 1990 to January 1994.
Vice Chairman and other management positions at Pagoda Trading Company from
1982 to 1990.
E. Lee Wyatt, Jr., Vice President, Planning and Controller since March 1994.
Vice President, Planning and Taxes of the registrant since December 1992.
Director, Corporate Planning and Taxes and Assistant Secretary since 1990.
Director, Corporate Planning and Analysis since 1989. Manager, Corporate
Planning and Analysis since 1986.
George J. Zelinsky, Senior Vice President and General Merchandise Manager,
Famous Footwear since June 1989. Vice President, Women's Better Grade
Division, Wohl Shoe Company from 1986 to 1989.
12
PART II
-------
ITEM 5 -MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
- -------------------------------------------------
Common Stock market prices and dividends on page 32 of the annual
stockholders report and the number of stockholders on page 34 of the annual
stockholders report for the year ended January 29, 1994 are incorporated
herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
- --------------------------------
Selected Financial Data on page 16 of the annual stockholders report for
the year ended January 29, 1994 is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ------------------------------------------------------
Management's Discussion and Analysis of Operations and Financial
Condition on pages 12 through 15 of the annual stockholders report for the
year ended January 29, 1994 is incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
The consolidated financial statements of the Corporation and its
subsidiaries on pages 17 through 31, and the supplementary financial
information on page 32 of the annual stockholders report for the year ended
January 29, 1994 are incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
- ------------------------------------------------------
None.
13
PART III
--------
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
Information regarding Directors of the Corporation on pages 3 through 9
of the proxy statement for the annual meeting to be held May 26, 1994, is
incorporated herein by reference. Information regarding Executive Officers of
the Corporation is included in Part I of this Form 10-K following Item 4.
ITEM 11 - EXECUTIVE COMPENSATION
- --------------------------------
Information regarding Executive Compensation on pages 10 through 16 and
20 through 24 of the proxy statement for the annual meeting to be held May 26,
1994, is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
- ---------------------------------------------------------
Security Holdings of Directors and Management on page 3 and 4 of the proxy
statement for the annual meeting to be held May 26, 1994, is incorporated
herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
None.
PART IV
-------
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
- ------------------------------------------------------
(a) (1) and (2) The response to this portion of Item
14 is submitted as a separate
section of this report.
(a) (3) Exhibits
Exhibit No.:
3.(a) (i) Certificate of Incorporation of the
Corporation as amended through
February 16, 1984, incorporated
herein by reference to Exhibit 3 to
the Corporation's Report on Form
10-K for the fiscal year ended
November 1, 1986.
14
(a) (ii) Amendment of Certificate of
Incorporation of the Corporation
filed February 20, 1987,
incorporated herein by reference to
Exhibit 3 to the Corporation's
Report on Form 10-K for the fiscal
year ended January 30, 1988.
(b) Bylaws of the Corporation as amended
through December 22, 1993, filed,
herewith.
4. (a) Form of Rights Agreement dated as of
March 6, 1986 between the
Corporation and Morgan Guaranty
Trust Company of New York, which
includes as Exhibit A the form of
Rights Certificate evidencing the
Corporation's Common Stock Purchase
Rights, incorporated herein by
reference to Exhibits 1 and 2 to the
Corporation's Registration
Statement on Form 8-A dated
March 7, 1986.
(b) (i) Indenture dated as of April 2, 1986
between the Corporation and
Citibank, N.A. as Trustee,
incorporated herein by reference to
Exhibit 4 to the Corporation's
Registration Statement on Form S-3
(No. 33-4500).
(c) Certain instruments with respect to
the long-term debt of the
Corporation are omitted pursuant to
Item 601(b)(4)(iii) of Regulation
S-K since the amount of debt
authorized under each such omitted
instrument does not exceed 10
percent of the total assets of the
Corporation and its subsidiaries on
a consolidated basis. The
Corporation hereby agrees to furnish
a copy of any such instrument to the
Securities and Exchange Commission
upon request.
10. (a)* Stock Appreciation, non-qualified
Stock Option and Performance Bonus
Plan of 1976, incorporated herein by
reference to Exhibit 1 to the
Corporation's definitive proxy
statement dated January 18, 1977.
(b)* Stock Appreciation, Stock Option and
Performance Bonus Plan of 1983,
incorporated herein by reference to
Exhibit 3 to the Corporation's
definitive proxy statement dated
January 20, 1984.
15
(c)* Stock Option and Restricted Stock
Plan of 1987, as amended,
incorporated herein by reference to
Exhibit 3 to the Corporation's
definitive proxy statement dated
April 26, 1988.
11. Computation of earnings per share.
13. Annual Report to Stockholders of
Brown Group, Inc. for the fiscal
year ended January 29, 1994. Such
report, except for portions
incorporated by reference herein, is
furnished for the information of the
SEC and is not "filed" as part of
this report.
21. Subsidiaries of the registrant.
23. Consent of Independent Auditors.
24. Power of attorney (contained on
signature page).
(b) Reports on Form 8-K:
The Corporation filed a current
report on Form 8-K dated January 13,
1994, in response to Item 5, which
announced restructuring initiatives,
provision for additional environmental
monitoring costs and plans to discontinue
and withdraw from the Wohl Leased Shoe
Department business.
(c) Exhibits:
Exhibits begin on page 22 of this
Form 10-K.
On request copies of any exhibit
will be furnished to stockholders
upon payment of the Corporation's
reasonable expenses incurred in
furnishing such exhibit.
(d) Financial Statement Schedules.
*Denotes management contract or compensatory plan arrangements.
16
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.
DATE: April 20, 1994 BROWN GROUP, INC.
(Registrant)
Harry E. Rich /s/
Executive Vice President and
Principal Financial Officer
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Harry E. Rich his true and lawful attorney in
fact and agent, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any and
all amendments to this Annual Report on Form 10-K, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney in fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney in fact and agent or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on April 21, 1994, by the following persons on
behalf of the Registrant and in the capacities indicated.
Signatures Title
---------- -----
B. A. Bridgewater, Jr. /s/ Chairman of the Board of Directors
President and Chief Executive Officer
Harry E. Rich /s/ Director, Executive Vice President
and Chief Financial Officer
E. Lee Wyatt, Jr. /s/ Vice President, Planning and
Controller
17
Signature Title
--------- -----
Joseph L. Bower /s/ Director and Chairman of
Compensation Committee
Joan F. Lane /s/ Director and Chairperson of
Governance and Nominating Committee
William E. Maritz /s/ Director
Daniel R. Toll /s/ Director and Chairman of
Audit Committee
18
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a) (1) and (2), and (d)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED JANUARY 29, 1994
BROWN GROUP, INC.
ST. LOUIS, MISSOURI
19
FORM 10-K - ITEM 14 (a) (1) and (2)
BROWN GROUP, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Brown Group, Inc. and
subsidiaries included in the annual report of the registrant to stockholders for
the year ended January 29, 1994 are incorporated by reference in Item 8:
Consolidated Balance Sheets - January 29, 1994 and January 30, 1993.
Consolidated Earnings - Years ended January 29, 1994, January 30, 1993,
and February 1, 1992.
Consolidated Cash Flows - Years ended January 29, 1994, January 30, 1993,
and February 1, 1992.
Consolidated Stockholders' Equity - Years ended January 29, 1994, January
30, 1993, and February 1, 1992.
Notes to consolidated financial statements.
Report of Independent Auditors.
The following consolidated financial statement schedules of Brown Group,
Inc. and subsidiaries are included in Item 14(d):
Schedule VIII - Valuation and Qualifying Accounts
Schedule IX - Short-Term Borrowings
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.
20
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
BROWN GROUP, INC.
- -------------------------------------------------------------------------------
COL. A. COL. B COL. C COL. D COL. E
- -------------------------------------------------------------------------------
ADDITIONS
----------------------
(1) (2)
Balance Charged to
at Charged to Other Balance
Beginning Costs and Accounts- Deductions- at End
of Period Expenses Describe Describe of Period
- --------------------------------------------------------------------------------
(Thousands)
YEAR ENDED JANUARY 29, 1994
Deducted from assets:
For doubtful accounts
and discounts $10,482 $5,272 $4,329-A $11,425
YEAR ENDED JANUARY 30, 1993
Deducted from assets:
For doubtful accounts
and discounts 6,673 7,771 3,962-A 10,482
YEAR ENDED FEBRUARY 1, 1992
Deducted from assets:
For doubtful accounts
and discounts 8,002 3,902 5,231-A 6,673
A. Accounts written off, net of recoveries
and discounts taken.
21
SCHEDULE IX
SHORT-TERM BORROWINGS
BROWN GROUP, INC.
- --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- --------------------------------------------------------------------------------
Maximum Average Weighted
Balance Weighted Amount Amount Average
at End Average Outstanding Outstanding Interest
Category of Aggregate of Interest During the During the Rate During
Short-Term Borrowings Period Rate Period Period the Period
- --------------------------------------------------------------------------------
(Thousands) (A) (B) (C)
YEAR ENDED JANUARY 29, 1994
Notes Payable to
Banks (1) $ 7,000 3.5% $ 42,452 $ 28,701 5.0%
Payable to Holders of
Commercial Paper (2) 164,090(4) 3.3% 164,090 110,404 3.2%
YEAR ENDED JANUARY 30, 1993
Notes Payable to
Banks (1) $ 30 5.3% $ 33,549 $ 23,551 4.6%
Payable to Holders of
Commercial Paper (2) 36,615(4) 3.5% 35,205 27,024 4.0%
YEAR ENDED FEBRUARY 1, 1992
Notes Payable to
Banks (1) $ 20,296(3) 6.4% $ 25,672 $ 19,983 7.9%
Payable to Holders of
Commercial Paper (2) 24,100(3) 4.4% 38,000 30,471 6.2%
A) The maximum amount outstanding during the period was computed based on the
highest month-end balance of the combined total of notes payable to banks
and amounts payable to holders of commercial paper.
B) Average amount outstanding during the period was computed by dividing the
total of month-end outstanding principal balances by 12 months.
C) The weighted average interest rate was computed based on the interest rates
on short-term borrowings outstanding at the month-ends throughout the year.
1) Notes payable to banks represent borrowings under lines of credit borrowing
arrangements generally renewed on an annual basis.
2) Commercial paper with various maturity dates from date of issue has no
specific provisions for the extension of maturity.
3) As a result of the long-term refinancing of $30,000,000 of these short-term
notes and reclassification to long-term debt, as explained in Note 7 to the
1991 consolidated financial statements, these will not agree with the amount
shown on the Consolidated Balance Sheet as of February 1, 1992.
4) Commercial paper borrowings of $25,000,000 are intended to be maintained on
a long-term basis; therefore, reclassification to long-term debt has been
made as explained in Note 9 to the consolidated financial statements. These
amounts will, therefore, not agree with the amount shown on the Consolidated
Balance Sheet as of January 29, 1994, and January 30, 1993.
22
BROWN GROUP, INC.
ANNUAL REPORT TO STOCKHOLDERS ON FORM 10-K
INDEX TO EXHIBITS
Exhibit
-------
3.(b) Bylaws as amended through December 22, 1993
11. Computation of earnings per share
13. 1993 Annual Report to Stockholders of
Brown Group, Inc.
21. Subsidiaries of the registrant
23. Consent of Independent Auditors
24. Power of Attorney (see signature page)