SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
(Mark one)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________to_______________
Commission file number 1-8769
R. G. BARRY CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-4362899
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
13405 Yarmouth Road, NW, Pickerington, Ohio 43147
(Address of principal executive offices) (Zip Code)
614-864-6400
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Common Shares, $1 Par Value,
Outstanding as of September 28, 1996 - 9,349,074
Index to Exhibits at page 11
-1-
PART I FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Sept 28, 1996 Dec 30, 1995
------------- ------------
ASSETS:
Cash. . . . . . . . . . . . $ 4,050,000 6,267,000
Accounts receivable, less allowances . 33,711,000 18,252,000
Inventory (note 3) . . . . . . . 48,179,000 31,708,000
Deferred federal income taxes (note 4) 4,406,000 4,406,000
Prepaid expenses and other assets . . 1,775,000 2,088,000
---------- ----------
Total current assets . . . . 92,121,000 62,721,000
---------- ----------
Property, plant and equipment, at cost 37,532,000 36,964,000
Less accumulated depreciation
and amortization. . . . . . . 22,994,000 22,808,000
---------- ----------
Net property, plant and equipment 14,538,000 14,156,000
---------- ----------
Goodwill, net of amortization . . . 4,375,000 4,462,000
Other assets . . . . . . . . . 2,829,000 3,001,000
---------- ----------
$113,863,000 84,340,000
============ ==========
LIABILITIES & SHAREHOLDERS' EQUITY:
Current installments of long-term debt
and capital lease obligations. . . 115,000 815,000
Short-term notes payable . . . . . 33,000,000 -
Accounts payable. . . . . . . . 7,387,000 8,961,000
Accrued expenses. . . . . . . . 4,372,000 9,017,000
---------- ----------
Total current liabilities. . . 44,874,000 18,793,000
---------- ----------
Accrued supplemental retirement plan . 2,889,000 2,546,000
Long-term debt and capital lease
obligations, excluding current
installments:
Note payable . . . . . . . . 15,000,000 15,000,000
Capital lease obligations . . . . 390,000 390,000
---------- ----------
Long-term debt and capital lease
obligations . . . . . . . 15,390,000 15,390,000
---------- ----------
Total liabilities . . . . . 63,153,000 36,729,000
---------- ----------
Shareholders' equity:
Preferred shares, $1 par value.
Authorized 4,000,000 Class A,
1,000,000 Series I Junior
Participating Class B shares,
none issued . . . . . . . . - -
Common shares, $1 par value.
Authorized 15,000,000 shares
(excluding treasury shares). . . 9,349,000 7,410,000
Additional capital in excess of
par value. . . . . . . . . 13,628,000 15,161,000
Retained earnings. . . . . . . 27,733,000 25,040,000
---------- ----------
Net shareholders' equity . . . 50,710,000 47,611,000
---------- ----------
$113,863,000 84,340,000
============ ==========
-2-
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Thirty-nine Thirty-eight
Thirteen Weeks Ended Weeks Ended Weeks Ended
Sept 28, Sept 23, Sept 28, Sept 23,
-------- -------- -------- --------
1996 1995 1996 1995
---- ---- ---- ----
Net sales . . . . $45,161,000 44,442,000 81,196,000 70,227,000
Cost of sales. . . 25,307,000 24,773,000 44,333,000 37,118,000
----------- ---------- ---------- ----------
Gross profit . . 19,854,000 19,669,000 36,863,000 33,109,000
Selling, general
and administrative
expense . . . . 11,117,000 11,450,000 30,882,000 31,144,000
----------- ---------- ---------- ----------
Operating
income. . . . 8,737,000 8,219,000 5,981,000 1,965,000
Royalty income . . 134,000 44,000 341,000 88,000
Interest expense. . ( 862,000) ( 959,000) ( 1,920,000) ( 2,115,000)
Interest income . . 30,000 16,000 94,000 32,000
----------- ---------- ---------- ----------
Net interest
expense . . . ( 832,000) ( 943,000) ( 1,826,000) ( 2,083,000)
----------- ---------- ---------- ----------
Earnings (loss) before
tax (benefit) . . 8,039,000 7,320,000 4,496,000 ( 30,000)
Income tax (benefit)
(note 4). . . . 3,219,000 2,855,000 1,803,000 ( 12,000)
----------- ---------- ---------- ----------
Net earnings (loss) $4,820,000 4,465,000 2,693,000 ( 18,000)
=========== ========== ========== ==========
Net earnings (loss)
per common share (note 5)
Primary . . . $ 0.50 0.49 0.27 0.00
======== ==== ==== ====
Fully diluted . $ 0.50 0.49 0.27 0.00
======== ==== ==== ====
Average number of
shares outstanding
Primary . . . 9,872,000 9,234,000 9,834,000 9,226,000
Fully diluted . 9,872,000 9,234,000 9,834,000 9,226,000
-3-
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirty-nine Thirty-eight
Weeks Ended Weeks Ended
Sept 28, 1996 Sept 23, 1995
------------- -------------
Cash flows from operating activities:
Net earnings (loss) . . . . . . $ 2,693,000 ( 18,000)
Adjustments to reconcile net
earnings (loss) to net cash
used in operating activities:
Depreciation and amortization of
property, plant and equipment. . 1,203,000 1,162,000
Amortization of goodwill . . . . 87,000 88,000
Net (increase) decrease in:
Accounts receivable, net . . . (15,459,000) (12,269,000)
Inventory . . . . . . . . (16,471,000) (20,299,000)
Prepaid expenses and other
current assets . . . . . . 313,000 245,000
Other assets . . . . . . . 172,000 ( 273,000)
Net increase (decrease) in:
Accounts payable . . . . . . ( 1,574,000) 201,000
Accrued expenses . . . . . . ( 4,645,000) ( 3,635,000)
Accrued supplemental retirement
and other liabilities. . . . 343,000 206,000
Net cash used in operating ---------- ----------
activities. . . . . . . (33,338,000) (34,592,000)
---------- ----------
Cash flows from investing activities:
Additions of property, plant
and equipment, net . . . . . . ( 1,585,000) ( 2,308,000)
---------- ----------
Cash flows from financing activities:
Proceeds from short-term notes. . . 33,000,000 36,000,000
Acquisition of treasury shares - ( 240,000)
Stock options exercised . . . . . 406,000 106,000
Repayment of long-term debt
and capital lease obligations . . ( 700,000) ( 567,000)
---------- ----------
Net cash provided by
financing activities . . . 32,706,000 35,299,000
---------- ----------
Net decrease in cash. . . . . . . ( 2,217,000) ( 1,601,000)
Cash at beginning of the period . . . 6,267,000 2,360,000
---------- ----------
Cash at end of the period . . . . . $ 4,050,000 759,000
========== ==========
Supplemental cash flow disclosures:
Interest paid . . . . . . . . $ 2,066,000 2,300,000
========== ==========
Taxes paid, net. . . . . . . . $ 5,618,000 2,634,000
========== ==========
-4-
R. G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
Under Item 1 of Part I of Form 10-Q/A
for the Periods Ended
September 28, 1996 and September 23, 1995
1. These interim financial statements are unaudited. All adjustments
(consisting solely of normal recurring adjustments) have been made, which
in the opinion of management, are necessary to fairly present the results
of operations for the periods.
2. The Company operates on a fifty-two or fifty-three week annual fiscal
year. Prior to 1996, the fiscal quarters were comprised of a twelve week
first quarter, thirteen week second and third quarters, and a fourteen
week fourth quarter. When there was a fifty-three week fiscal year, the
Company added one week to the first quarter. Effective in 1996, the
Company has modified its quarters, so that all quarters will routinely
have thirteen weeks, except that in fifty-three week years, the fourth
quarter will have fourteen weeks. The objective of this change is to even
out the length of the quarters, and to more closely follow the fiscal
accounting periods of the Company's principle retailing customers. Fiscal
1995 and 1996 are both fifty-two week years.
3. A substantial portion of inventory is valued using the dollar value LIFO
method and, therefore, it is impractical to separate inventory values
between raw materials, work-in-process and finished goods.
4. Income tax (benefit) for the periods ended Sept 28, 1996 and Sept 23,
1995, consists of:
1996 1995
---- ----
Current:
U. S. Federal (benefit) . . $1,503,000 ($ 9,000)
State & Local . . . . . 300,000 ( 3,000)
---------- ----------
Total. . . . . . . $1,803,000 ($ 12,000)
========== ==========
The income tax (benefit) reflects a combined federal, foreign, state and
local effective rate of 40.1% for the first nine months of 1996 and 40.0%
for the same period of 1995, as compared to the statutory U. S. federal
rate of 34.0% in both years.
Income tax for the periods ended Sept 28, 1996 and Sept 23, 1995 differed
from the amounts computed by applying the U. S. federal income tax rate
of 34.0% to pretax income (loss) as a result of the following:
1996 1995
---- ----
Computed "expected"
tax expense (benefit):
U. S. Federal (benefit) . . $1,530,000 ($ 10,000)
Other . . . . . . . . 75,000 -
State & Local (benefit) net of
Federal income tax benefit. 198,000 ( 2,000)
---------- ----------
Total. . . . . . . $1,803,000 ($ 12,000)
========== ==========
5. Net earnings (loss) per common share has been computed based on the
average number of shares outstanding during each period plus, when their
effect is dilutive, common share equivalents consisting of certain shares
subject to stock options and the stock purchase plan.
-5-
R. G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
Under Item 1 of Part I of Form 10-Q/A
for the Periods Ended
September 28, 1996 and September 23, 1995
(continued)
5. (continued)
Average common shares outstanding for prior periods have been
retroactively restated to give effect to all prior splits and dividends.
On June 17, 1996, the Company distributed a five-for-four share split to
shareholders of record on June 3, 1996. Previously the Company had
distributed a four-for-three share split on September 15, 1995 to
shareholders of record on September 1, 1995.
6. The Company previously reported that in 1994, the Company and several of
its officers and directors were named as defendants in three purported
class actions filed in the United States District Court for the Southern
District of Ohio, Eastern Division. The Complaints generally alleged that
the Company made several false and misleading statements in violation of
certain provisions of the federal securities laws. One complaint also
alleged claims arising under state law. The District Court judge
subsequently consolidated these three class actions into a single case.
In March 1996, the judge granted the Company's motion to dismiss the
action and entered a judgement dismissing with prejudice the federal
securities claims and dismissing without prejudice the state law claims.
In March 1996, plaintiffs filed a motion asking that the District Court
reconsider the decision. In May 1996, the action was again dismissed.
Plaintiffs have filed no further appeal.
-6-
R. G. BARRY CORPORATION AND SUBSIDIARIES
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995:
The statements in this Quarterly Report on Form 10-Q/A which are not
historical fact are forward looking statements that involve risks
and uncertainties, including, but not limited to, product demand and
market acceptance risks, the effect of economic conditions, the
impact of competitive products and pricing, capacity and supply
constraints or difficulties, weather conditions, and other risks
detailed in the Company's Securities and Exchange Commission
filings.
Liquidity and Capital Resources
The Company ended the third quarter of 1996 with $47.2 million in net
working capital. This compares with $37.0 million at the end of the same
quarter in 1995, and $43.9 million as of the end of fiscal 1995. The increase
in net working capital from the third quarter of 1995 to the third quarter of
1996, is almost entirely due to the profits earned by the Company over the
last four quarters. The increase in net working capital from the end of fiscal
1995 through the end of the current quarter is also due mainly to the profit
earned during 1996.
The Company's capital expenditures during the first three quarters of
1996, amounted to $1.6 million, compared with $2.3 million during the same
period of 1995. Capital expenditures in both years were funded out of working
capital. The Company does not currently have commitments for future additional
capital expenditures at amounts materially different from those typically in
place to support ordinary operation of the Company.
Some of the changes in the components of the Company's net working
capital are:
i) Accounts receivable decreased at the end of the third quarter of 1996,
to $33.7 million from $35.7 million at the end of the third quarter of 1995,
and increased from $18.3 at the end of fiscal 1995. The decrease in
receivables from third quarter 1995 to 1996, is mainly related to an
improvement in the collections of accounts from one year to the next. The
increase from the end of fiscal 1995 mainly represents a normal seasonal
growth in receivables.
ii) Inventories ended the third quarter of 1996 at $48.2 million compared
with $46.4 million one year ago, and $31.7 million as of fiscal year end 1995.
The increase in inventories from year end follows a normal seasonal buildup in
inventories, as the Company prepares to satisfy the demand for its products
anticipated for the fourth quarter of the year.
iii) Mainly as a result of the increase in profitability from the third
quarter of 1995 to the third quarter of 1996, the Company's short-term
borrowings under its Revolving Credit Agreement ("Revolver") ended the third
quarter of 1996 at $33.0 million, compared with $38.0 million at the end of
the same quarter in 1995.
In late February 1996, the Company negotiated a new Revolving Credit Agreement
("Revolver"), with its three main lending banks, replacing the agreement that
had been in place for a number of years. The Revolver provides the Company a
seasonally adjusted available line of credit ranging from $6 million in
January, to a peak of $51 million from July through November. The Revolver
currently extends through 1998 and provides for periodic extensions upon
request and with the approval of the banks. The Revolver contains financial
-7-
Management's Discussion and Analysis of Financial Condition
and Results of Operations - continued
covenants typical of agreements of its type and duration. The Company is in
compliance with all covenants of the Revolver, and all other debt agreements.
Results of Operations
During the third quarter of 1996, net sales amounted to $45.2 million, a
1.6 percent increase over net sales of $44.4 million in the third quarter of
1995. For the first nine months of 1996, net sales amounted to $81.2 million
compared with $70.2 million for the first nine months of 1995, a 15.6 percent
increase. Increases in net sales for nine months, were derived from both
slippers and thermal products, and primarily represent increases in volume and
mix changes with only modest price increases. The increase in net sales during
the third quarter was entirely related to slippers. Additionally, the first
nine months of 1996 included thirty-nine weeks, while the first nine months of
1995 included only thirty-eight weeks. The third quarter in both years had
thirteen weeks.
Gross profit during the third quarter of 1996, was $19.9 million,
compared with $19.7 million during the third quarter of 1995. For the first
nine months of 1996, gross profit amounted to $36.9 million, compared with
$33.1 million during the same nine months of 1995. The primary source of
increased gross profit dollars is the increase in net sales.
Gross profit as a percentage of net sales was fairly flat in the third
quarter, at 44.0 percent in 1996 compared with 44.3 percent during the third
quarter of 1995. For the entire first nine months of 1996, gross profit
percentage was 45.4 compared with 47.1 percent during the first nine months of
1995. The change in gross profit percentages is principally due to a change in
mix from one period to the other.
Selling, general and administrative expenses during the quarter decreased
slightly to $11.1 million from $11.5 million during the third quarter of 1995.
For the nine months, these expenses also decreased to $30.9 million from $31.1
for the same nine months of 1995, this despite the 15.6 percent increase in
net sales.
Net interest expense also declined from 1995 to 1996. During the third
quarter of 1996, net interest expense amounted to $832 thousand compared with
$943 thousand in the third quarter of 1995. For the first nine months of 1996,
net interest expense amounted to $1.8 million compared with $2.1 million the
prior year. The decrease in net interest is mainly due to the Company's lower
usage of its Revolver in 1996, than in 1995, plus generally lower interest
rates in 1996 than in 1995.
For the third quarter of 1996, the Company earned a net profit of $4.8
million after taxes, or $0.50 per share [fully diluted], an 8.0 percent
increase when compared with a net profit in the same quarter of last year of
$4.5 million, or $0.49 per share [fully diluted]. For the first nine months of
1996, the Company earned a net profit of $2.7 million, or $0.27 per share,
compared with a nominal loss of $18 thousand, or $0.00 per share for the first
nine months of 1995. All per share calculations have been retroactively
restated to give effect to the four-for-three share split paid to shareholders
on September 15, 1995, and the five-for-four share split paid to shareholders
on June 17, 1996.
-8-
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
No response required.
Item 2. Changes in Securities.
(a), (b) Not Applicable.
Item 3. Defaults Upon Senior Securities.
(a), (b) Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) -(d) Not Applicable.
Item 5. Other Information.
No response required.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: See Index to Exhibits at page 11.
(b) Reports on Form 8-K: No reports on Form 8-K were filed
during the quarter ended September 28, 1996.
-9-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
R. G. BARRY CORPORATION
Registrant
November 5, 1996 /s/Richard L. Burrell
-------------------------- --------------------------------------
Date Richard L. Burrell
Senior Vice President-Finance
(Principal Financial Officer)
(Duly Authorized Officer)
-10-
R. G. BARRY CORPORATION
INDEX TO EXHIBITS
Exhibit Page
Number Description Number
--------- ------------- --------
27 Financial Data Schedule 12
-11-