UNITED STATES SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 30, 1999
Commission File Number 0-934
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B. B. WALKER COMPANY
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(Exact name of registrant as specified in its charter)
North Carolina 56-0581797
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
414 East Dixie Drive, Asheboro, NC 27203
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (336) 625-1380
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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
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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. ( )
On January 28, 2000, the aggregate market value of voting stock held by non-
affiliates was approximately $1,964,198.
On January 28, 2000, 1,745,954 shares of the Registrant's voting common stock
with a par value of $1.00 per share were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders of the Company for the year
ended October 30, 1999 are incorporated herein by reference in Parts II and
IV. Portions of the Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on March 20, 2000 are incorporated by reference in
Part III.
The Exhibit Index is on Pages F-3 and F-5.
B.B. WALKER COMPANY
1999 FORM 10-K ANNUAL REPORT
Table of Contents
PART I
Page No.
Item 1. Business 1
Item 2. Properties 7
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Executive Officers of the Company 8
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 9
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis of the
Results of Operations and Financial Condition 9
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure 9
PART III
Item 10. Directors, Executive Officers, Promoters and
Control Persons of the Registrant 10
Item 11. Executive Compensation 10
Item 12. Security Ownership of Certain Beneficial Owners
and Management 10
Item 13. Certain Relationships and Related Transactions 10
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 10
Exhibit Index F-3 to F-5
B.B. Walker Company
1999 Form 10-K
PART I
ITEM 1. BUSINESS
GENERAL
B.B. Walker Company, (the "Company") was incorporated in North Carolina on
October 15, 1952. The Company designs, manufactures and markets complete
lines of moderately-priced, value-oriented western and work/outdoor boots and
shoes for men and women. The majority of the Company's products are sold
under its proprietary brand names, with the remainder sold under major
retailers' private labels and on contract to other footwear manufacturers.
The Company markets its product primarily to wholesale customers in the
United States, but it also serves customers in Canada, Japan and Europe
The Company has one subsidiary, Bender Shoe Company ("Bender"), which is
wholly-owned. Bender is located in Somerset, Pennsylvania and principally
manufactures footwear with welt construction. In addition, the Company
operates two retail shoe outlets which carry a wide assortment of footwear,
including other footwear companies' brands, accessories, and footwear care
products. The Company's business is separated into two divisions, wholesale
and retail. Footwear manufactured and wholesaled by the Company, which
includes branded, private label and institutional sales, comprised 91.6% of
net sales in 1999, 91.8% of net sales in 1998, and 92.0% of net sales in 1997.
The remaining 8.4%, 8.2%, and 8.0% of net sales in fiscal 1999, 1998, and 1997,
respectively, were sales from the Company's retail outlets.
Revenues for 1999 decreased $2,917,000 (or 10.1%) from 1998. Although the
Company showed a $122,000 (or 0.9%) increase in sales of western footwear in
1999, it was not enough to overcome the $2,325,000 (or 20.9%) decrease in work/
outdoor shoe shipments. This deterioration in revenues was due primarily to
the current import penetration of 95% of the U.S. footwear market, which has
made it easier for other companies to enter the work shoe market. This has
resulted in a proliferation of brands full of low-priced imports adversely
affecting business. Due to this increased competition, the Company has been
forced to rethink its approach to the work shoe business and take action
to preserve its position in the industry. Accordingly, the Company
dramatically reduced its manufacturing operation in the Asheboro, North
Carolina plant and increased its use of imported goods. Introduced by the
Company in fiscal 1999, a line of work shoes manufactured in Mexico will begin
shipment early in calendar 2000. The combined.sales of the Company's two
retail outlets declined $197,000 (or 8.3%) due to increased competition from
major discount retailers surrounding the retail outlets.
In spite of 1999's decrease in net sales, a positive note is that gross margin
as a percentage of sales increased from 25.4% in 1998 to 28.1% in 1999. This
2.7% increase was due primarily to improved operations from the welt and
cement construction footwear being produced in separate locations since late
in fiscal 1998. This improvement allowed our loss from operations to be
reduced $145,000 (or 19.7%) from $736,000 in 1998 to $591,000 on 1999.
In December 1999, the Company received an attractive offer to sell all of its
approximately 26 acres of real property in Asheboro, North Carolina. This
land is in one of the prime commercial sections of Randolph County. The
Company entered into a contract on February 4, 2000. Under this contract, the
purchaser has until August 2, 2000 to examine the suitability of the property
for its needs. At the end of this 180 day period, the purchaser may extend
the examination period for two additional 90 day periods. At the end of the
examination period, the contract may be terminated by the purchaser without
further obligation to the Company. Accordingly, there can be no assurances
that the sale of the Asheboro, North Carolina property will be consummated or,
if consummated, that such sale will occur in the Company's fiscal year 2000.
While there will be costs associated with relocating the Asheboro operations,
the Company has taken steps to limit the effects of these matters and does
not expect the relocation to have a material adverse effect on the operations
of the Company.
1
B.B. Walker Company
1999 Form 10-K
CURRENT PRODUCTS
The Company manufactures and distributes high quality, moderately-priced
branded and private label footwear. The Company's product offerings to its
customers consist principally of either western boots or work/outdoor boots.
The Company also manufactures safety shoes with steel toe construction. The
following is a description of the respective product offerings of the
Company for each of its primary markets:
BRANDED FOOTWEAR
For western boot customers, the Company offers quality western boots through
two proprietary brands. With its ABILENE[REGISTERED] brand, the Company
manufactures high quality, all-leather boots for the traditional boot wearer.
ABILENE BOOTS[REGISTERED] are made in both men's and women's styles and are
distributed mainly through a variety of western apparel and footwear stores.
A more contemporary line, SAGE[REGISTERED], is offered at a lower price point
and features brighter colors and accents. The SAGE[REGISTERED] line is
offered in both men's and women's styles. Also under the SAGE[REGISTERED]
brand, the Company has a children's line of western footwear which is
manufactured overseas for the Company.
For the work/outdoor customer, the Company manufactures and distributes
work/outdoor footwear under its GOLDEN RETRIEVER[REGISTERED] brand. The
Company offers a variety of work/outdoor styles under the GOLDEN RETRIEVER
[REGISTERED] trademark, including pull-on, lace-up, lined, insulated
and waterproof, in a variety of heights, soles and constructions. The
DURATUFF[REGISTERED] Work Boot brand, which has been well-received since
being introduced in 1997, features double-cushioned insoles. In addition, the
Company manufactures and markets quality boots and shoes for work and safety
use under the WALKER FOOTWEAR THAT WORKS[REGISTERED] brand and the SAFETY
FIRST[REGISTERED] brand.
After being produced in either of the Company's two manufacturing plants, the
final product is transferred to the central warehouse in Asheboro, North
Carolina for distribution.
The Company continues to review all styles in its product lines and eliminates
those styles that offer only marginal returns to the Company. Historically,
the Company has developed a solid reputation as a producer of quality, durable
work boots and western footwear.
PRIVATE LABEL FOOTWEAR
The Company manufactures shoes for large retailers and other footwear
manufacturers under contract. Most of the private label products consist of
work/outdoor footwear, although the Company is actively pursuing new customers
of its western private label products. The significant customers in this
division consist of large national retail chains, specialty catalog retailers,
and large wholesalers. In addition, this division serves several accounts
overseas, primarily in Europe and Japan.
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B.B. Walker Company
1999 Form 10-K
OTHER
The Company operates two retail stores which offer the Company's branded
merchandise at discount prices to retail customers. In addition to Company
brands, a wide selection of other manufacturers' brands and accessories are
offered to provide customers with a variety of options from which to choose.
One retail store, which operates under THE FOOTFACTORY[REGISTERED] name, is
located in an outlet mall in Lancaster, Pennsylvania. The second store is a
factory outlet store located in its Asheboro, North Carolina facility.
In addition, the Company also manufactures footwear for institutional
customers, primarily prisons and correctional facilities. Styles manufactured
for these customers are a basic work boot construction. Most orders for
institutional customers are obtained through a competitive bidding process.
MANUFACTURING
The Company operates two manufacturing facilities, in Asheboro, North Carolina
and in Somerset, Pennsylvania. As of the fourth quarter of 1998, the Asheboro
plant produces only cement-constructed footwear while the Somerset plant
manufactures only welt-constructed footwear. The Company has entered into an
Agreement for Purchase and Sale of Real Property located in Asheboro, North
Carolina, dated as of February 4, 2000 (see previous discussion in Item 1
under GENERAL).
The Company traditionally has manufactured the majority of its footwear
products in its own factories. In situations where it is advantageous to the
Company, production of components, primarily uppers, used in the manufacture
of footwear are outsourced to other manufacturers. Some of these
manufacturers are outside of the United States which subjects the Company to
the normal risks of conducting business abroad, such as political unrest,
labor disturbances or expropriation. No such problems have been experienced
or are anticipated.
The manufacture of footwear is relatively labor-intensive and involves five
primary operations: production of uppers; lasting the uppers to define the
shape, form and size of the footwear; bottoming the footwear; finishing the
footwear; and packaging the footwear. The Company produces boots and shoes
with "cemented" or molded bottoms as well as boots and shoes with bottoms
that are "welted" or stitched to the uppers.
The Company continues to explore manufacturing and product design innovations
in order to utilize its production capacity in the most efficient manner, to
produce high quality footwear, and to maintain a moderate price structure for
its products. Management believes innovation in its manufacturing process,
including innovation in product design and cost containment, is instrumental
in the Company's long-term success.
SALES AND MARKETING
The Company markets its products through a single sales force directed by a
national sales manager. The national sales manager is accountable for
planning the territory, budget, service, sales operations, and motivation of
the sales staff. Territories are established by the national sales manager
using Metro Market Demographic and other statistical data. Salespersons are
hired based on strengths and experience to sell and service within a
territory, including development of the customer base. The Company's
salespersons solicit orders within the territory to which they are assigned.
Orders are submitted to the Company's credit department in Asheboro, North
Carolina for acceptance or rejection based on the customer's credit history.
To a lesser extent, the Company's products are also marketed by independent
sales representatives, who are often engaged to develop new geographic
markets for the Company.
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B.B. Walker Company
1999 Form 10-K
The Company markets its products primarily to wholesale customers in the
United States, but also provides footwear to customers in Canada, Japan and
Europe. The Company has approximately 2,600 active accounts. The Company's
salesmen are offered special incentives for opening new accounts. A majority
of the customer base is made up of small retail chains and independent retail
outlets, which have been adversely affected by the larger retail chains.
One customer accounted for approximately 12% of net sales in 1999 and 1998,
and 10% in 1997. Historically, the largest ten customers account for less
than 30% of net sales. The Company does not feel that a single customer or
group of customers comprise a significant portion of operations or exert
significant influence over the Company.
DISTRIBUTION
The Company's footwear is distributed nationally from its warehouse in
Asheboro, North Carolina. The Company ships its finished goods with its own
fleet of trucks and trailers leased from a third party carrier or uses a
parcel delivery service and common carriers when cost effective or requested
by the customer. The Company's trucks deliver goods to large customers, as
well as to trucking terminals for subsequent delivery to customers by local
or cartage carriers. On the back haul, the trucks generally pick up raw
materials from suppliers for delivery to the Company's warehouse at its
Asheboro facility.
COMPETITION
The Company operates in a highly competitive industry. Competition comes from
numerous domestic manufacturers of footwear, as well as imports, particularly
from China and Mexico. With the North American Free Trade Agreement ("NAFTA")
and the General Agreement on Trade and Tariffs ("GATT"), foreign competition
has easier access to the United States markets. The growth in footwear
imports, particularly in the work/outdoor markets, has led the Company to
increase its use of imports. Introduced by the Company in fiscal 1999, a line
of work shoes manufactured in Mexico will begin shipments early in calendar
2000.
Many of the Company's competitors have greater financial, distribution, brand
name recognition and marketing resources than the Company. The Company relies
on product performance, styling, quality, and timeliness of product delivery
and perceived product value to distinguish its products from the competition.
The Company believes that, based on these factors, it maintains a strong
competitive position in its current market niches. Additionally, with the use
of an extensive cost accounting system, the Company maintains a tight control
on the costs that go into the manufacture of its products. The Company
believes this gives it the advantage of being a low cost producer and allows
it to be competitive in the pricing of its products, which are medium priced
in relation to the market. The Company anticipates that substantial
competition will continue in the future and therefore continues to plan and
develop strategies to enhance its competitive position.
RAW MATERIAL AND FINISHED GOODS INVENTORIES
Each of the Company's footwear styles has different raw material requirements
and is produced in numerous sizes and widths. The Company maintains its
inventories of raw materials at both its Asheboro and Somerset facilities.
To the extent practicable, the Company strives to support customers
by maintaining the Company's most popular branded products in stock and by
shipping products quickly to meet customer delivery requirements, with timely
notification to customers of unavoidable delays in delivery. Because of the
large number of variations in sizes and widths for each style, the Company
continues to develop enhancements to its inventory control system and
production planning process to ensure adequate stock levels are maintained
and to minimize delivery time for out-of-stock items.
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B.B. Walker Company
1999 Form 10-K
While the Company believes that its products are relatively insensitive to
fashion trends, changes in consumer tastes do impact inventory levels. The
Company's product development staff monitors the market and responds on a
timely basis with new constructions and styles to prevent the buildup of
inventory that is no longer in peak demand in the marketplace. In addition,
the Company offers special incentive-based inventory reduction programs to
turn over on-hand inventory of styles that are slow moving or that are being
replaced with newer styles.
The Company's principal raw materials are leather, rubber and composition-
based heels and soles, and fiber based items, such as insoles. The Company
purchases its raw materials from numerous suppliers, the majority of which
are domestic. The Company is not dependent on any one supplier for raw
materials. While the Company expects that supplies of raw materials will
continue to be readily available as needed for the Company's operations, the
price of some of the components of its products, primarily leather, has
exhibited volatility in the past, and some price volatility can be
anticipated in future years. The supply of leather and other raw materials
was adequate in fiscal 1999.
SEASONALITY
The Company experiences significant seasonal fluctuations in net sales because
consumers purchase a large percentage of the Company's products from September
through December. As a result, retail dealers of the Company's products
generally request delivery of products from June through October for advance
orders and from October through December for restocking orders. Accordingly,
inventory levels are highest during June and July and accounts receivable
levels are highest during October through December. Because of seasonal
fluctuations, there can be no assurance that the results of any particular
quarter will be indicative of results for the full year or for future years.
BACKLOG
Backlog records are maintained based on orders for pairs of footwear, rather
than in terms of dollars. The backlog fluctuates on a seasonal basis,
reaching higher levels in the spring and summer months when retailers buy for
fall selling. At October 30, 1999, the backlog for orders believed to be
firm was 38,989 pairs, as compared to 65,289 pairs as of October 31, 1998.
One of the reasons for this backlog decrease is the general softness in the
retail footwear environment, as evidenced by the 22.4% sales decrease from
1998 to 1999. The backlog at a particular time is affected by a number of
factors, including seasonality and scheduled date of manufacture and delivery.
Private label and export orders often have significant lead times. Therefore,
a comparison of the Company's backlog from period to period may not be
meaningful and may not be indicative of future sales.
Advance private label and export orders provide the Company with a stable work
flow which complements orders for branded footwear. The Company attempts to
ship orders for branded products from inventory as they are received. Thus,
the backlog of branded products only reflects orders that were not immediately
filled from inventory and does not accurately predict the mix of future sales.
All orders at October 30, 1999 are expected to be filled during the current
fiscal year.
INTELLECTUAL PROPERTY
The Company owns federal trademark registrations for many of its marks,
including ABILENE[REGISTERED], SAGE[REGISTERED], GOLDEN RETRIEVER
[REGISTERED], DURATUFF[REGISTERED], WALKER FOOTWEAR THAT WORKS[REGISTERED],
SAFETY FIRST[REGISTERED], AIR RIDE[REGISTERED], COMFORT SYSTEM[REGISTERED],
and EASY COMFORT SYSTEM[REGISTERED]. The Company's trademarks are valuable
assets. Therefore, it is the policy of the Company to pursue registration of
its trademarks whenever possible and to defend its trademarks from
infringement. There are no patents, licenses, franchises or concessions
that are material to the operations of the Company.
5
B.B. Walker Company
1999 Form 10-K
GOVERNMENTAL REGULATION
All of the Company's operations are subject to federal, state and local
regulatory standards, primarily in the area of safety, health, employment and
environmental standards. In general, the Company has experienced no
difficulty in complying with these standards and believes that they have not
had any material effect on its capital expenditures, earnings or competitive
position.
EMPLOYEES
The Company and its subsidiary employed 350 persons as of October 30, 1999,
139 at the Asheboro, North Carolina facility and 211 at the Somerset,
Pennsylvania facility. Of these individuals, 270 were engaged in
manufacturing and 80 in administrative, sales, and transportation functions.
Substantially all of the Company's employees were employed on a full-time
basis. None of the Company's employees are covered by collective bargaining
agreements and the Company believes its relations with its employees are good.
READINESS FOR YEAR 2000 COMPLIANCE
In November 1997 the Company initiated a program to minimize the risk of
potential disruption from the "Year 2000 ('Y2K') problem." This problem was
a result of computer programs having been written using two digits (rather
than four) to define the applicable year. Any information technology ("IT")
systems having time-sensitive software might recognize a date using "00" as
the year 1900 rather than the year 2000, which could result in miscalculations
and system failures. The problem also extended to "non-IT" systems; that is,
operating and control systems that rely on embedded chip systems. In
addition, like every other business enterprise, the Company would be at risk
from Y2K failures on the part of its major business counterparts, including
suppliers, distributors, and manufacturers, as well as potential failures in
public and private infrastructure services, including electricity, water, gas,
transportation, and communications.
The Company began developing a plan in November 1997 to resolve the Y2K issues
that are reasonably within its control. These efforts were being coordinated
through the Company's data processing department and chaired by the
information systems programming manager ("ISPM"). With respect to the
Company's Y2K efforts, the ISPM reported periodically to the Company's
president, who in turn updated the Audit Committee of the Board of Directors.
In January 1998, the ISPM completed an identification of those IT systems
which would require detailed program changes to be Y2K compliant. An employee
programmer already familiar with the Company's computer system was assigned
full-time to modify those identified programs. Program changes and
testing were made in a test directory specifically created for the Y2K
modifications so that there were no conflicts with live data. When testing
was completed for a system, files were then converted, and modified programs
were copied to live directories on a weekend when no users were on the system.
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B.B. Walker Company
1999 Form 10-K
With regard to non-IT systems, the Company's phone and security systems were
both Y2K compliant as of October 30, 1999. Major suppliers to the Company had
been contacted by questionnaire, and the Company had received confirmations
of either Y2K compliance or a timetable to be compliant from such suppliers.
The Company had also contacted its major customers by questionnaire to assess
their status with regard to the Y2K issue. Contingency plans would be
developed for any significant suppliers or customers that are not Y2K compliant
by December 15, 1999, or earlier if the Company became aware that such
entities would not be Y2K compliant in a timely manner.
It is important to note that the description of the Company's efforts
necessarily involved estimates and projections with respect to activities
required in the future. The required code changes, testing, and
implementation necessary to address the Y2K issue were expected to cost
approximately $115,000, and the Company had incurred approximately $110,000
through October 30, 1999. As of that date, the Company estimated being
approximately 99% complete with the efforts required to be Y2K compliant.
Subsequent to fiscal year ended October 30, 1999, the Company completed its
final Y2K system testing on December 10, 1999. When January 1, 2000 passed,
the Y2K costs had not exceeded the project budget of $115,000. Now well into
January 2000, the Company believes it has successfully avoided any significant
disruption from any Y2K issues relating to the new century rollover.
Therefore, no contingency plans appear to be necessary, but the Company will
continue to monitor all critical systems for the appearance of delayed
complications or disruptions, problems relating to the leap year, and problems
encountered through suppliers, customers, and other third parties with whom
the Company deals. Although these and other unanticipated Y2K issues could
have an adverse effect on the results of operations or financial condition
of the Company, it is not possible to anticipate the extent of impact at this
time.
FORWARD-LOOKING STATEMENTS
The foregoing discussion contains some forward-looking statements about the
Company's financial condition and results of operations, which are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking state-
ments, which reflect management's judgment only as of the date hereof. The
Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events and circumstances that arise after the date
hereof.
Factors that might cause actual results to differ materially from these
forward-looking statements include (1) the effects of general economic
conditions, (2) the impact of competitive products and pricing in the
footwear industry, (3) failure to achieve anticipated sales results,
(4) management's ability to accurately predict the effect of cost reductions,
and (5) management's ability to accurately predict the adequacy of the
Company's financing arrangement to meet its working capital and capital
expenditure requirements.
ITEM 2. PROPERTIES
As of October 30, 1999, the Company and its subsidiary utilized an aggregate
of approximately 355,000 square feet of floorspace in various facilities, all
of which are in service and are adequate for the operations performed.
Substantially all of the Company's property, including its facilities and
inventories, are insured on a replacement value basis.
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B.B. Walker Company
1999 Form 10-K
The Company and its subsidiary, Bender Shoe Company, operate manufacturing and
warehousing facilities as follows:
Asheboro, North Carolina - This location on 414 East Dixie Drive, Asheboro,
North Carolina contains the manufacturing facility for footwear with cement
construction, as well as the administrative offices of the Company. The
Company uses 281,857 square feet of space in one building on approximately
26 acres of land. The premises are used for manufacturing, shipping,
warehousing, administration, and a retail outlet store. Paved parking and
truck loading areas are maintained. The premises owned in fee are subject to
an existing lien under a deed of trust in favor of Mellon Bank, N.A. The
Company has entered into an Agreement for Purchase and Sale of Real Property
located in Asheboro, North Carolina, dated as of February 4, 2000 (see
previous discussion in Item 1 under GENERAL).
Somerset, Pennsylvania - The Company's subsidiary, Bender Shoe Company, moved
to a larger facility in Somerset in August, 1994. The facility provides
approximately 68,000 square feet of space on 3.8 acres of land. The facility
is used primarily for the manufacture of footwear with welt construction plus
raw material storage. A small portion of the space is used as administrative
offices. The Company owns the facility which is subject to existing liens in
favor of First National Bank and Trust Company in Asheboro, NC, the
Pennsylvania Industrial Development Authority, the Pennsylvania Economic
Revitalization Fund and Mellon Bank, N.A.
The Company also operates factory outlet retail stores in Asheboro, North
Carolina and Lancaster, Pennsylvania. The Asheboro retail store is located
at the Company's Asheboro manufacturing facility. The Company leases the
retail store space in Lancaster, PA.
ITEM 3. LEGAL PROCEEDINGS
(a) From time to time, the Company is a defendant in legal actions
involving claims arising in the normal course of business. In management's
opinion, after consultation with counsel and a review of the facts, the
liabilities, if any, resulting from such legal proceedings currently pending
will not have a material effect on the Company's financial position or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
The names, ages and positions of the executive officers of the Company as of
October 30, 1999 are listed below along with their business experience during
the past five years. Officers are elected annually by the Board of Directors
at the Annual Meeting of the Board of Directors convened immediately following
the Annual Meeting of the Shareholders. Executive officers serve until the
next annual meeting of the Directors and until their successors are elected
and qualified.
Executive Officer (Age) Position and Office
----------------------- -------------------
Kent T. Anderson (57) Chairman (1992), President (1984) and
Chief Executive Officer (1986) (1)
French P. Humphries (59) Executive Vice President (1995) (2)
Carey M. Durham (48) Chief Financial Officer (1998) (3)
(1) Officer is also a director of the Company.
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B.B. Walker Company
1999 Form 10-K
(2) As of December 1995, officer was named Executive Vice President and
directs the Company's marketing and merchandising efforts. From 1992 to 1995,
he served as Vice President - Marketing. Prior to 1992, he was General
Manager of the Western Division, a position he held since 1977.
(3) Served in this position since October 1, 1998. His responsibilities
include directing the Company's finance and accounting functions. A Certified
Public Accountant, he was in executive financial management in the home
furnishings industry (1995-98) and injection-molded plastics manufacturing
(1989-95) prior to joining the Company.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this Item is found under the heading "Stock
Prices" on page 41 of the Annual Report to Shareholders (included as Exhibit
13 to this filing) for the year ended October 30, 1999 and is incorporated
herein by reference. The Company had 1,163 shareholders of record at January
28, 2000.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is reported on page 28 of the Annual
Report to Shareholders (included as Exhibit 13 to this filing) under the
heading "Selected Financial Data" and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information required by this Item is on pages 29 through 40 of the Annual
Report to Shareholders (included as Exhibit 13 to this filing) under the
heading "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is reported on pages 1 through 41 of
the Annual Report to Shareholders (included as Exhibit 13 to this filing)
and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Certain information required by Part III has been omitted under Item G of the
General Instructions for Form 10-K, Rule 12-b-23, as the Company files with
the Securities and Exchange Commission a definitive proxy statement pursuant
to Regulation 14A not later than 120 days after the end of its fiscal year.
Only those sections of the Proxy Statement which specifically address the
items set forth herein are incorporated by reference.
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B.B. Walker Company
1999 Form 10-K
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information concerning the Company's directors required by this Item is
incorporated herein by reference to the Company's Proxy Statement.
Information concerning the Company's executive officers required by this Item
is incorporated herein by reference to Part I of this Form 10-K on Page 8,
under the caption "Executive Officers of the Company".
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to
the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference to
the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference to
the Company's Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) The following documents are filed as part of this Form 10-K:
(1) Financial Statements - The following consolidated financial
statements of the Company are incorporated herein by reference to
pages 4 through 27 of the Annual Report to Shareholders:
(a) Consolidated Statements of Income (Loss) for the fiscal years
ended October 30, 1999, October 31, 1998, and November 1, 1997.
(b) Consolidated Balance Sheets at October 30, 1999 and October 31,
1998.
(c) Consolidated Statements of Cash Flows for the fiscal years ended
October 30, 1999, October 31, 1998, and November 1, 1997.
(d) Consolidated Statements of Shareholders' Equity for the fiscal
years ended October 30, 1999, October 31, 1998, and November 1,
1997.
(e) Notes to Consolidated Financial Statements
(f) Report of Independent Accountants
(2) Financial Statement Schedule - The following supplementary
consolidated financial statement schedule of the Company is filed
as part of this Form 10-K and should be read in conjunction with
the Annual Report to Shareholders:
Schedule Page
-------- ----
II Valuation and Qualifying Accounts F-2
10
B.B. Walker Company
1999 Form 10-K
The reports of the Company's independent public accountants with
respect to the above described financial statements and financial
statement schedules appear on page 27 of the Annual Report to
Shareholders and on page F-1 of this report, respectively, and are
incorporated herein by reference.
All other financial statements and schedules not listed have been
omitted since the required information is included in the
consolidated financial statements or the notes thereto or is not
applicable or required.
(B) No reports on Form 8-K were filed by the Company during the last quarter
of fiscal 1999.
(C) A listing of exhibits is incorporated herein by reference to the Index to
Exhibits on pages F-3 through F-5.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
B.B. WALKER COMPANY (Registrant)
By: DOROTHY W. CRAVEN
---------------------
Dorothy W. Craven
Date: February 08, 2000 Corporate Secretary
-----------------
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities indicated and on the date indicated.
Signature Title
--------- -----
Principal Executive Officer:
KENT T. ANDERSON 2/08/2000 Chairman of the Board, Chief Executive
- ------------------ --------- Officer and President
Kent T. Anderson Date
Principal Financial and Accounting Officer:
CAREY M. DURHAM 2/08/2000 Vice President/Chief Financial Officer
- ------------------ ---------
Carey M. Durham Date
BOARD OF DIRECTORS
KENT T. ANDERSON 2/08/2000 EDNA A. WALKER 2/08/2000
- ------------------ --------- ---------------- ---------
Kent T. Anderson Date Edna A. Walker Date
Chairman
ROBERT L. DONNELL, JR. 2/08/2000 MICHAEL C. MILLER 2/08/2000
- ------------------------ --------- ------------------- ---------
Robert L. Donnell, Jr. Date Michael C. Miller Date
JAMES P. McDERMOTT 2/08/2000 GEORGE M. BALL 2/08/2000
- -------------------- --------- ---------------- ---------
James P. McDermott Date George M. Ball Date
11
B.B. Walker Company
1999 Form 10-K
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
---------------------------------
To the Board of Directors and Shareholders of
B.B. Walker Company
Our audits of the consolidated financial statements referred to in our report
dated December 3, 1999 appearing on page 27 of the 1999 Annual Report to
Shareholders of B.B. Walker Company (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item
14(A) of this Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
- --------------------------
PricewaterhouseCoopers LLP
Greensboro, North Carolina
December 3, 1999
F-1
B.B. Walker Company
1999 Form 10-K
B.B. WALKER COMPANY Schedule II
-----------
VALUATION AND QUALIFYING ACCOUNTS
Balance at Charged to Charged to
Beginning Costs and Other Balance at
Description of Year Expenses Accounts Deductions End of Year
----------- ---------- ---------- ----------- ---------- ----------
Allowance for Doubtful Accounts:
October 30, 1999 $ 557,000 199,000 - 231,000 $ 525,000
========== ========== =========== ========= ===========
October 31, 1998 $ 503,000 453,000 - 399,000 $ 557,000
========== ========== ========== ========== ===========
November 1, 1997 $ 742,000 267,000 - 506,000 $ 503,000
========== ========== =========== ========= ===========
F-2
INDEX TO EXHIBITS
Page Number or
Exhibit Incorporation By
Number Description Reference To
- ------- ----------- ------------
(3) Articles of Incorporation and By-Laws
(3)(a) Articles of Amendment to Articles of Exhibit D to Form 10-K
Incorporation and Restated Charter of for the fiscal year
B.B. Walker Company dated November 28, 1979, ended November 3, 1979
filed with the Secretary of State in
Raleigh, NC
(3)(b) Articles of Amendment to Articles of Exhibit A to Form 10-Q
Incorporation dated March 24, 1980, filed for the six month
with the Secretary of State in Raleigh, NC period ended May 3,
1980
(3)(c) Articles of Merger of Lyon & Shaw, Inc. Exhibit (3) (c) to
into Registrant dated January 21, 1987 the Form 10-K for the
fiscal year ended
November 1, 1986
(3)(d) Copy of the revised By-Laws of B.B. Walker Exhibit (3)(d) to the
Company as amended January 7, 1992 Form 10-K for the
fiscal year ended
November 2, 1991
(3)(e) Articles of Merger of Walker Shoe Company Exhibit (3)(g) to the
into B.B. Walker Company dated June 29, 1987 Form 10-K for the
fiscal year ended
October 31, 1987
(3)(f) Articles of Amendment to Articles of Exhibit (3)(f) to the
Incorporation dated November 16, 1988, filed Form 10-K for the
with the Secretary of State in Raleigh, NC fiscal year ended
October 30, 1988
(3)(g) Articles of Amendment to Articles of Exhibit (3)(g) to the
Incorporation dated March 30, 1994, filed Form 10-K for the
with the Secretary of State in Raleigh, NC fiscal year ended
October 29, 1994
(4) The Registrant, B.B. Walker Company, by signing Exhibit (4) to Form
this report, agrees to furnish the Securities 10-K for the fiscal
and Exchange Commission upon its request a copy year ended November
of any instrument which defines the rights of 2, 1985
holders of long-term debt of the Registrant and
its subsidiary for which consolidated or
unconsolidated financial statements are required
to be filed and which authorizes a total amount
of securities not in excess of 10% of the total
assets of the Registrant and its subsidiary on a
consolidated basis.
(4)(a) Certificate of Common Capital Stock of B.B. Exhibit (N) to Form
Walker Company 10-K for the fiscal
year ended October
28, 1978
(4)(b) Unsecured Promissory Note of B.B. Walker Exhibit (B) to Form
Company with flexible rate minimum interest 10-K for the fiscal
provisions year ended November
1, 1980
F-3
Page Number or
Exhibit Incorporation By
Number Description Reference To
- ------- ----------- ------------
(4)(c)(1) Credit Agreement dated August 15, 1995 Exhibit (4)(c)(1) to
between Mellon Bank, N.A., Philadelphia, PA, Form 10-Q for the
as Lender and B.B. Walker Company, Asheboro, third quarter ended
NC, the Registrant, as Borrower. The twenty- July 29, 1995
one supporting schedules have been omitted
being detailed forms, lists and support for
specific provisions set out in the agreement.
(4)(c)(2) Revolving Credit Note dated August 15, 1995 Exhibit (4)(c)(2) to
in the amount of $20 million; signed by the Form 10-Q for the
Registrant and in favor of Mellon Bank, N.A., third quarter ended
Philadelphia, PA July 29, 1995
(4)(c)(3) Term Loan Note dated August 15, 1995 in the Exhibit (4)(c)(3) to
amount of $3 million; signed by the Form 10-Q for the
Registrant and in favor of Mellon Bank, third quarter ended
N.A., Philadelphia, PA July 29, 1995
(4)(c)(4) Letter dated February 6, 1996 acknowledging Exhibit (4)(c)(4) to
Mellon Bank's agreement to amend financial Form 10-Q for the
covenants of the Revolving Credit Agreement first quarter ended
effective as of October 28, 1995 and February 3, 1996
thereafter
(4)(c)(5) First Amendment to the Credit Agreement Exhibit (4)(c)(5) to
dated April 15, 1996 between B.B. Walker Form 10-Q for the
and Mellon Bank, N.A. second quarter ended
May 4, 1996
(4)(c)(6) Second Amendment to the Credit Agreement Exhibit (4)(c)(6) to
dated October 18, 1996 between B.B. Walker Form 10-K for the
and Mellon Bank, N.A. fiscal year ended
November 2, 1996
(4)(c)(7) Third Amendment to the Credit Agreement Exhibit (4)(c)(7) to
dated November 14, 1996 between B.B. Walker Form 10-K for the
and Mellon Bank, N.A. fiscal year ended
November 2, 1996
(4)(c)(8) Fourth Amendment to the Credit Agreement Exhibit (4)(c)(8) to
dated April 15, 1997 between B.B. Walker Form 10-Q for the
and Mellon Bank, N.A. second quarter ended
May 3, 1997
(4)(c)(9) Fifth Amendment to the Credit Agreement Exhibit (4)(c)(9)
dated July 8, 1998 between B.B. Walker Form 10-Q for the
and Mellon Bank, N.A. third quarter ended
August 1, 1998
(4)(c)(10)Separate Agreement with Mellon Bank Exhibit (4)(c)(10)
Regarding Calculation of Financial Form 10-Q for the
Covenants, dated September 10, 1998 third quarter ended
August 1, 1998
(4)(c)(11)Sixth Amendment to the Credit Agreement Exhibit (4)(c)(11)
dated December 29, 1998 between B.B. Walker Form 10-K for the
and Mellon Bank, N.A. fiscal year ended
October 31, 1998
(4)(c)(12)Separate Agreement with Mellon Bank Exhibit (4)(c)(12)
Regarding Calculation of Financial Form 10-K for the
Covenants, dated December 30, 1998 fiscal year ended
October 31, 1998
F-4
Page Number or
Exhibit Incorporation By
Number Description Reference To
- ------- ----------- ------------
(4)(c)(13)Seventh Amendment to the Credit Agreement Exhibit (4)(c)(13)
dated June 30, 1999 between B.B. Walker Form 10-K for the
and Mellon Bank, N.A. third quarter ended
July 31, 1999
(4)(c)(14)Eighth Amendment to the Credit Agreement Exhibit (4)(c)(14)
dated December 30, 1999 between B.B. Walker Form 10-K for the
and Mellon Bank, N.A. fiscal year ended
October 30, 1999
(4)(c)(15)Ninth Amendment to the Credit Agreement Exhibit (4)(c)(15)
dated January 26, 2000 between B.B. Walker Form 10-K for the
and Mellon Bank, N.A. fiscal year ended
October 30, 1999
(10)(a) B.B. Walker Company Nonqualified Deferred Exhibit (10) to Form
Compensation Plan as amended, adopted 10-K for the fiscal
June 7, 1983. year ended October
29, 1983
(10)(d) 1987 Incentive Stock Option Plan effective Exhibit (10)(d) to
February 11, 1987 Form 10-K for the
fiscal year ended
October 29, 1988
(10)(e) 1995 Incentive Stock Option Plan for Key Filed with the 1994
Employees and Non-Employee Directors Proxy Statement
effective March 20, 1995 mailed to
to shareholders on
February 27, 1995
(10)(f)(1) Employment Agreement between B.B. Walker Exhibit (10)(f)(1) to
Company and Kent T. Anderson, President Form 10-Q for the
and Chief Executive Officer, dated October nine months ended
2, 1989 July 28, 1990
(10)(f)(2) First Amendment to Employment Agreement Exhibit (10)(f)(2) to
between B.B. Walker Company and Kent T. Form 10-Q for the
Anderson, President and Chief Executive nine months ended
Officer, dated July 6, 1990 July 28, 1990
(10)(g) Contract for Purchase and Sale of Real Exhibit (10)(g) to
Property Located in Asheboro, North Form 10-K for the
Carolina, between B.B. Walker Company fiscal year ended
and H. William Hull, Jr., dated October 31, 1998
January 28, 1999
(10)(h) Agreement for Purchase and Sale of Real Exhibit (10)(h) to
Property located in Asheboro, North Form 10-K for the
Carolina, between B.B. Walker Company fiscal year ended
and MART Acquisition, Inc. October 30, 1999
dated February 4, 2000
(11) Computation of earnings per share amounts are
explained in Note 1 to the Consolidated
Financial Statements in the Annual Report to
Shareholders for the fiscal year ended
October 30, 1999, which is Exhibit 13 to this
filing
(13) Annual Report to Shareholders for the fiscal Filed herewith as
year ending October 30, 1999 Exhibit (13)
(22) Subsidiaries of the Registrant Filed herewith as
Exhibit (22)
(27) Summary Financial Information Schedule Filed herewith as
Exhibit (27)
F-5