UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 2, 1996
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: (910) 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 February 12, 1997, the aggregate market value of voting stock held by non-
affiliates was approximately $1,726,534.
On February 12, 1997, 1,726,534 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 November 2, 1996 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 17, 1997 are incorporated by reference in
Part III.
The Exhibit Index is on Pages F-4 through F-6.
B.B. WALKER COMPANY
1996 FORM 10-K ANNUAL REPORT
Table of Contents
PART I
Page No.
Item 1. Business 1
Item 2. Properties 9
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Executive Officers of the Company 11
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 11
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of the
Results of Operations and Financial Condition 12
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure 12
PART III
Item 10. Directors, Executive Officers, Promoters and
Control Persons of the Registrant 12
Item 11. Executive Compensation 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management 12
Item 13. Certain Relationships and Related Transactions 12
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 13
Exhibit Index F-4 to F-6
B.B. Walker Company
1996 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
western footwear. In addition, the Company operates three retail shoe outlets
which carry a wide assortment of footwear, including other footwear companies'
brands, accessories and footwear care products. The retail shoe outlet in
Myrtle Beach, SC is scheduled to close in January 1997.
In December 1995, the Company reorganized its internal structure, moving from
a functional organization to two vertically-integrated, separate divisions
operating independently and supported by a small corporate staff. The new
divisions focused on serving western boot customers and work/outdoor boot
customers, respectively, which included both instock and private label
accounts. Each division was led by a general manager who assumed
responsibility for all phases of manufacturing, marketing and distribution of
the respective division's products. However, during fiscal 1996, a soft
retail environment persisted and sales and profits did not respond as
anticipated to the new divisional structure. Management made a critical
assessment of the Company's situation and the steps that were necessary to
move the Company in a more positive direction. In the fourth quarter of 1996,
management chose to consolidate some operations and services and reduce other
parts of the Company.
During the fourth quarter, the Company began implementation of a plan to
consolidate various operations and services. The Company repositioned its
product offerings to direct the Company's limited resources towards those
styles that display the most potential for the Company. Management reviewed
the existing lines offered by the Company and eliminated styles that would not
generate acceptable returns for the Company. Most of the styles eliminated
were part of the outdoor line. The Company will continue to offer styles
within all of its existing branded lines. With fewer styles in the Company's
product lines, less investment should be required in finished goods and raw
material inventories. In addition, the rate of turns in existing inventories
should improve.
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B.B. Walker Company
1996 Form 10-K
To support the more efficient product lines and improve market coverage for
the Company's styles, the separate sales forces which previously served the
Work/Outdoor Division and the Western Division were merged into a single sales
force under the supervision of one national sales manager. Several new sales
territories were established to allow concentration of efforts in larger
metropolitan areas. The new sales force will market both western and
work/outdoor footwear to customers in their established territories thereby
eliminating the overlap that existed with separate sales forces under the
divisional structure. The Company provided extensive training for the sales
force to prepare them to market both lines of footwear in their territories.
The Company anticipates making other operational changes to support the new
direction of the Company. The efficient use of manufacturing capacity is one
area that holds strong potential for improving the Company's operations.
Management is examining its options related to current manufacturing
operations to maximize use of manufacturing capacity. Also, additional
changes in corporate and administrative operations will result in cost
reductions, primarily in personnel and benefit costs.
The assumptions underlying management's plans are contingent on the Company
achieving anticipated sales levels. Management will analyze the progress of
the current consolidation and reduction of operations in achieving improved
profitability and cash flow projections. If market conditions do not improve
for the Company and the anticipated sales levels are not achieved, further
changes and reductions will be required. Among these changes may be the
discontinuance of certain operations or elimination of certain product lines.
However, if the Company is unable to implement the necessary changes in a
timely manner or unforseen problems occur, there can be no assurances as to
when the Company will return to a profitable level of operations and
positive cash flow.
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 of either western boots or work/outdoor boots. The Company
has approximately 4,200 active accounts. A majority of the customer base is
made up of small retail chains and independent retail outlets. In 1996 and
1995, no single customer comprised 10% or more of net sales. In 1994, one
customer accounted for approximately 12% 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. The
following is a description of the respective product offerings of the Company
for each of its primary markets:
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B.B. Walker Company
1996 Form 10-K
Western Boots
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With its ABILENE brand, the Company offers its western boot customers high
quality, all-leather boots for the traditional boot wearer. The ABILENE boot
is made in both men's and women's styles and is distributed mainly through
western apparel stores and tack shops. A more contemporary line, SAGE, is
offered at a lower price point and features brighter colors and accents. The
SAGE line is offered in both men's and women's styles. In addition, under
the SAGE brand, the Company has a children's line of western footwear. In
addition to the sales force, the Company also promotes these lines through use
of a mobile sales showroom which is used at special customer promotions,
rodeos and other events.
The Company has extended its licensing agreement to manufacture and market a
line of western boots under the JACK DANIEL'S trademark of the Jack Daniel
Distillery of Lynchburg, Tennessee for one year. The JACK DANIEL'S western
boot line consists of quality, all-leather boots, which are marketed as a
separate line of boots within this division. The Company is currently
negotiating the terms for extending this agreement.
To promote brand recognition for the ABILENE line of footwear, the Company
has entered into several promotional relationships with influential talents in
country music and rodeo. In fiscal 1996, the Company's marketing/spokesman
agreement with John Michael Montgomery expired. The Company elected not to
renew the formal agreement with John Michael Montgomery but, on occasion, will
contract with John Michael Montgomery to promote the ABILENE line for special
events. In addition, during 1996, the Company signed a marketing/spokesman
agreement with Noel Haggard, an up and coming star of country music, to
promote the ABILENE line at his concerts and other special events. From
rodeo, the Company is sponsoring Jerome Davis, the 1995 World Champion
Bullrider, and is also producing a line of bullriding boots associated with
him.
The ABILENE, SAGE and JACK DANIEL'S lines are manufactured at the Company's
facility in Somerset, Pennsylvania. The final product is shipped to the
central warehouse in Asheboro, North Carolina for distribution.
3
B.B. Walker Company
1996 Form 10-K
Work/Outdoor Boots and Footwear
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As discussed previously, during the fourth quarter of fiscal 1996, the Company
carefully reviewed all styles in its product lines and eliminated those styles
that offered only marginal returns to the Company. The majority of the styles
dropped were from the work/outdoor line, primarily, outdoor styles. In recent
years, efforts to expand the number and type of outdoor styles offered met
with mixed success. Many of the outdoor styles required significant resources
to develop and promote but could not be turned quickly enough to provide
acceptable returns to the Company. Management decided to reduce the variety
of outdoor styles that were in the line and refocus its marketing and product
development efforts on work styles. Historically, the Company has developed a
solid reputation as a producer of quality, durable work boots. Capitalizing
on this strength is an important component of the reduction in the product
line and consolidation of the sales force. Many of the work boot styles have
the potential to be marketed to western customers, thereby expanding the
customer base.
The Company manufactures and distributes work/outdoor footwear under its
GOLDEN RETRIEVER brand. The Company offers a variety of work/outdoor styles
under the GOLDEN RETRIEVER trademark, including pull-on, lace-up, lined,
insulated and waterproof, in a variety of heights, soles and constructions.
Upon implementation of management's plans, the GOLDEN RETRIEVER brand will
cover the majority of the Company's work and outdoor styles. In addition, the
Company manufactures and markets quality boots and shoes for work and safety
use under the WALKER FOOTWEAR THAT WORKS brand and the SAFETY FIRST brand.
The work/outdoor lines are manufactured at the Company's Asheboro facility.
Private Label Footwear
- ----------------------
The Company also 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 western private label products. The significant customers in this division
consist of large national retail chains, specialty catalogue retailers and
large wholesalers. In addition, this division serves large accounts overseas,
primarily in Europe and Japan.
Other
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The Company operates three 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.
Two retail stores, which operate under THE FOOTFACTORY name, are located in
outlet malls in Myrtle Beach, South Carolina and Lancaster, Pennsylvania. The
third is a factory outlet store located in its Asheboro facility. As of
November 2, 1996, the Company was in the process of closing its retail
location in Myrtle Beach. The store will close effective January 31, 1997.
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B.B. Walker Company
1996 Form 10-K
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 Somerset, Pennsylvania. The Asheboro plant primarily makes work/outdoor
footwear, while the Somerset plant primarily makes western footwear. 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 molded or cemented bottoms and welted 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
Effective with the changes implemented prior to year-end, 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.
Such sales representatives are often engaged to develop new geographic markets
for the Company.
5
B.B. Walker Company
1996 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 4,200 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. These customers have traditionally sold western or rugged
work/outdoor products and, as such, have not been affected by changing fashion
trends. For 1996 and 1995, no customers comprised 10% or more of net sales
and the largest ten customers accounted for less than 25% of sales. During
1994, one customer, Wal-Mart, accounted for approximately 12% 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 and also 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. According to the March 1996 Statistical Reporter of the
Footwear Industries of America, approximately 89% of all non-rubber footwear
purchased in the United States is imported from foreign countries, primarily
from China. 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. Foreign competition has been at a
high level since 1981, when the Reagan Administration eliminated import
restrictions on footwear. Since then, footwear imports have grown from 73% of
the United States market to its current level. However, the growth in
footwear imports in the western and work/outdoor markets, the Company's two
primary markets, has been less than that experienced by footwear manufacturers
serving other markets.
6
B.B. Walker Company
1996 Form 10-K
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, 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 its Asheboro facility. Raw materials are
shipped from the Asheboro facility to the Somerset facility based on scheduled
orders. 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.
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. Prior to year-end, the Company reviewed the
styles offered in its various branded lines and made a decision to discontinue
many styles that it felt would not provide acceptable returns. The Company
wrote down these styles to the lower of cost or market. The majority of the
styles were outdoor styles. The Company is in the process of closing out
its remaining inventory for these 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 1996.
7
B.B. Walker Company
1996 Form 10-K
SEASONALITY
The Company experiences significant seasonal fluctuations in net sales because
consumers purchase a large percentage of the Company's products from September
through January. 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 November 2, 1996, the backlog for orders believed to be firm
was 92,385 pairs, as compared to 94,083 pairs as of October 28, 1995. The
comparable backlog indicates that retailers are still hesitant to commit to
significant orders in anticipation of the Christmas selling season.
At November 2, 1996, the Company's backlog for branded footwear was 49,266
pairs versus 44,549 at October 28, 1995. Backlogs for private label and
export sales were 43,119 pairs as of November 2, 1996 and 49,534 as of October
28, 1995. Private label and export orders often have significant lead times.
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 November 2, 1996 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, SAGE, GOLDEN RETRIEVER, WALKER FOOTWEAR THAT WORKS and
SAFETY FIRST. There are no patents, licenses, franchises or concessions that
are material to the operations of the Company.
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.
8
B.B. Walker Company
1996 Form 10-K
EMPLOYEES
The Company and its subsidiary employed 521 persons as of November 2, 1996,
307 at the Asheboro, North Carolina facility and 214 at the Somerset,
Pennsylvania facility. Of these individuals, 361 were engaged in
manufacturing and 160 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.
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 statements,
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 November 2, 1996, the Company and its subsidiary utilized an aggregate
of approximately 358,000 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.
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 major manufacturing facility for work/outdoor
footwear, as well as the executive offices of the Company. The Company uses
281,857 square feet of space in one building on approximately 21.8 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, NA.
9
B.B. Walker Company
1996 Form 10-K
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 manufacturing and 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, Myrtle Beach, South Carolina and Lancaster, Pennsylvania. Except
for the Asheboro retail store, which is located at the Company's Asheboro
facility, the retail stores are leased by the Company.
The Company has also entered into long-term agreements with non-related
lessors to lease certain machinery and equipment, including transportation
equipment. Some of the leases are in substance financing arrangements and
have been capitalized by the Company. Information regarding cost and present
value of the capitalized leases is presented in Notes 4 and 10, respectively,
in the Notes to Consolidated Financial Statements for the year ended November
2, 1996 and is incorporated herein by reference.
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 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
No matters were submitted to a vote of security holders during the fourth
quarter of the 1996 fiscal year.
10
B.B. Walker Company
1996 Form 10-K
EXECUTIVE OFFICERS OF THE COMPANY
The names, ages and positions of the executive officers of the Company as of
November 2, 1996 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 (54) Chairman (1992), President (1984) and
Chief Executive Officer (1986) (1)
French P. Humphries (56) Executive Vice President (1995) (2)
William C. Massie (59) Executive Vice President (1995) (3)
(1) Officer is also a director of the Company.
(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) As of December 1995, officer was named Executive Vice President and
directs the Company's administrative and finance functions. Prior to this
position, he served as Vice President - Finance and Administration since
joining the Company in 1988.
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 39 of the Annual Report to Shareholders for the year ended
November 2, 1996 and is incorporated herein by reference. The Company had
1,166 shareholders of record at February 1, 1997.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is reported on page 26 of the Annual
Report to Shareholders under the heading "Selected Financial Data" and is
incorporated herein by reference.
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B.B. Walker Company
1996 Form 10-K
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information required by this Item is on pages 27 thru 38 of the Annual
Report to Shareholders 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 4 thru 25 of the
Annual Report to Shareholders and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There is nothing to report for this Item.
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.
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 11,
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.
12
B.B. Walker Company
1996 Form 10-K
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 thru 25 of the Annual Report to Shareholders:
(a) Consolidated Statements of Income (Loss) for the fiscal years
ended November 2, 1996, October 28, 1995 and October 29, 1994.
(b) Consolidated Balance Sheets at November 2, 1996 and
October 28, 1995.
(c) Consolidated Statements of Cash Flows for the fiscal years ended
November 2, 1996, October 28, 1995 and October 29, 1994.
(d) Consolidated Statements of Shareholders' Equity for the fiscal
years ended November 2, 1996, October 28, 1995 and
October 29, 1994.
(e) Notes to Consolidated Financial Statements
(f) Report of Independent Accountants
(2) Financial Statement Schedules - The following supplementary
consolidated financial statement schedules of the Company are filed
as part of this Form 10-K and should be read in conjunction with the
Annual Report to Shareholders:
Schedule Page
-------- ----
VIII Valuation and Qualifying Accounts F-2
X Supplementary Income Statement Information F-3
The reports of the Company's independent public accountants with
respect to the above described financial statements and financial
statement schedules appear on page 25 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 1996.
(C) A listing of exhibits is incorporated herein by reference to the Index to
Exhibits on pages F-4 through F-6.
13
B.B. Walker Company
1996 Form 10-K
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 14, 1997 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 2/14/97 Chairman of the Board, Chief Executive
- ---------------- ------- Officer and President
Kent T. Anderson Date
Principal Financial Officer:
WILLIAM C. MASSIE 2/14/97 Executive Vice President
- ----------------- -------
William C. Massie Date
Principal Accounting Officer:
JOHN R. WHITENER 2/14/97 Corporate Controller
- ---------------- -------
John R. Whitener Date
BOARD OF DIRECTORS
KENT T. ANDERSON 2/14/97 EDNA A. WALKER 2/14/97
- ---------------- ------- -------------- -------
Kent T. Anderson Date Edna A. Walker Date
Chairman
ROBERT L. DONNELL, JR. 2/14/97 MICHAEL C. MILLER 2/14/97
- ---------------------- ------- ----------------- -------
Robert L. Donnell, Jr. Date Michael C. Miller Date
JAMES P. McDERMOTT 2/14/97 GEORGE M. BALL 2/14/97
- ------------------ ------- -------------- -------
James P. McDermott Date George M. Ball Date
14
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
---------------------------------
To the Board of Directors of B.B. Walker Company
Our audits of the consolidated financial statements referred to in our report
dated December 2, 1996 appearing in the 1996 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 Schedules listed in Item 14(a)
of this Form 10-K. In our opinion, these Financial Statement Schedules
present fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Winston-Salem, North Carolina
December 2, 1996
F-1
B.B. WALKER COMPANY Schedule VIII
-------------
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:
November 2, 1996 $ 521,000 922,000 - 701,000 742,000
========== ========== =========== ========== ===========
October 28, 1995 $ 778,000 425,000 - 682,000 521,000
========== ========== =========== ========== ===========
October 29, 1994 $ 845,000 117,000 - 184,000 778,000
========== ========== =========== ========== ===========
F-2
B.B. WALKER COMPANY Schedule X
----------
SUPPLEMENTARY INCOME STATEMENT INFORMATION
November 2, October 28, October 29,
1996 1995 1994
----------- ----------- -----------
The following amounts were charged to
costs and expenses:
Maintenance and repairs $ 438,000 $ 565,000 $ 855,000
========== ========== ==========
Advertising costs $1,349,000 $1,118,000 $1,367,000
========== ========== ==========
F-3
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 with for the six month
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 the
into Registrant dated January 21, 1987 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.
F-4
INDEX TO EXHIBITS
Page Number or
Exhibit Incorporation By
Number Description Reference To
- ------- ----------- ------------
(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
(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
F-5
INDEX TO EXHIBITS
Page Number or
Exhibit Incorporation By
Number Description Reference To
- ------- ----------- ------------
(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)(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
(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
November 2, 1996, which is Exhibit 13 of this
filing
(13) Annual Report to Shareholders for the fiscal Filed herewith as
year ending November 2, 1996 Exhibit (13)
(22) Subsidiaries of the Registrant Filed herewith as
Exhibit (22)
F-6