SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1997
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 (IRS Employer
of incorporation or organization) Identification Number)
13405 Yarmouth Road, NW, Pickerington, Ohio 43147
__________________________________________________________
(Address of principal executive office) (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
requirement for the past 90 days.
Yes __X__ No _____
Common Shares, $1 Par Value, Outstanding as of March 29, 1997 - 9,445,243
Index to Exhibits at page 10
Page 1 of 11 pages
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 29, 1997 December 28, 1996
-------------- -----------------
ASSETS:
Cash and cash equivalents $ 4,450,000 13,187,000
Accounts receivable, less allowances 11,453,000 18,556,000
Inventory (note 3) 37,429,000 28,854,000
Deferred income taxes (note 4) 5,055,000 5,055,000
Recoverable income taxes 678,000 --
Prepaid expenses 2,125,000 2,027,000
----------- ----------
Total current assets 61,190,000 67,679,000
----------- ----------
Property, plant and equipment, at cost 38,267,000 39,088,000
Less accumulated depreciation &
amortization 24,170,000 25,159,000
----------- ----------
Net property, plant and equipment 14,097,000 13,929,000
----------- ----------
Goodwill, net of amortization 4,317,000 4,346,000
Other assets 3,082,000 3,113,000
----------- ----------
$82,686,000 89,067,000
----------- ----------
LIABILITIES AND SHAREHOLDER'S EQUITY:
Current installments of long-term debt
and capital lease obligations 125,000 125,000
Accounts payable 5,902,000 4,170,000
Accrued expenses 2,163,000 9,661,000
----------- ----------
Total current liabilities 8,190,000 13,956,000
----------- ----------
Accrued retirement costs and other, net 3,323,000 3,103,000
Long-term debt and capital lease obligations
excluding current installments:
Note payable 15,000,000 15,000,000
Capital lease obligations 265,000 265,000
----------- ----------
Long-term debt and capital lease
obligations 15,265,000 15,265,000
----------- ----------
obligations
Total liabilities 26,778,000 32,324,000
----------- ----------
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) 9,445,000 9,375,000
Additional capital in excess of par value 14,239,000 14,071,000
Retained earnings 32,224,000 33,297,000
----------- ----------
Net shareholders' equity 55,908,000 56,743,000
----------- ----------
$82,686,000 89,067,000
----------- ----------
Page 2 of 11 pages
<PAGE>
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Thirteen Thirteen
weeks ended weeks ended
March 29, 1997 March 30, 1996
-------------- --------------
Net sales $ 14,963,000 16,074,000
Cost of sales 6,604,000 7,362,000
------------ -----------
Gross profit 8,359,000 8,712,000
Selling, general and
administrative expense 10,087,000 9,955,000
------------ -----------
Operating loss (1,728,000) (1,243,000)
Other income 145,000 163,000
Interest expense (377,000) (446,000)
Interest income 171,000 38,000
------------ -----------
Net interest expense (206,000) (408,000)
Loss before
tax benefit (1,789,000) (1,488,000)
Income tax benefit (note 4) (716,000) (595,000)
------------ -----------
Net loss ($ 1,073,000) (893,000)
------------ -----------
Net loss per common share (note 5)
Primary ($ 0.11) (0.10)
------------ -----------
Fully diluted ($ 0.11) (0.10)
------------ -----------
Average number of shares
outstanding
Primary 9,413,000 9,264,000
Fully diluted 9,413,000 9,264,000
Page 3 of 11 pages
<PAGE>
<TABLE>
R. G. BARRY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Thirteen Thirteen
weeks ended weeks ended
March 29, March 30,
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($ 1,073,000) (893,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of
property, plant and equipment 424,000 387,000
Amortization of goodwill 29,000 29,000
Net (increase) decrease in:
Accounts receivable, net 7,103,000 3,727,000
Inventory (8,575,000) (8,131,000)
Prepaid expenses (98,000) (13,000)
Recoverable income taxes (678,000) (665,000)
Other 31,000 (70,000)
Net increase (decrease) in:
Accounts payable 1,732,000 (3,459,000)
Accrued expenses (7,498,000) (7,281,000)
Accrued retirement costs and other 220,000 4,000
------------ -----------
Net cash used in operating activities (8,383,000) (16,365,000)
------------ -----------
Cash flows from investing activities:
Additions to property, plant and equipment, net (592,000) (555,000)
------------ -----------
Cash flows from financing activities:
Proceeds from short-term notes 0 12,000,000
Stock options exercised, net of treasury 238,000 10,000
acquisitions
Repayment of long-term debt and
capital lease obligations 0 (700,000)
------------ -----------
Net cash provided by financing activities 238,000 11,310,000
------------ -----------
Net decrease in cash (8,737,000) (5,610,000)
Cash at the beginning of the period 13,187,000 6,267,000
------------ -----------
Cash at the end of the period $ 4,450,000 657,000
------------ -----------
Supplemental cash flow disclosures:
Interest paid $ 742,000 771,000
Income taxes paid $ 3,442,000 5,415,000
</TABLE>
Page 4 of 11 pages
<PAGE>
R. G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
Under Item 1 of Part I of Form 10-Q
for the Periods ended
March 29, 1997 and March 30, 1996
1. These interim financial statement 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.
2. The Company operates on a fifty-two or fifty-three week annual fiscal year.
Fiscal 1996 was a fifty-two week year consisting of four quarters each with
thirteen weeks. During fiscal 1997, the first three quarters each have
thirteen weeks with a fourth quarter of fourteen weeks.
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 March 29, 1997 and March 30, 1996,
consists of:
1997 1996
---- ----
Current:
U. S. Federal benefit ($605,000) ($498,000)
State & Local (111,000) (97,000)
--------- ---------
Total ($716,000) ($595,000)
The income tax benefit reflects a combined federal, foreign, state and
local effective rate of 40.0 percent for the first quarter of both years,
as compared to the statutory U.S. federal rate of 34.0 percent in both
years.
Income tax for the periods ended March 29, 1997 and March 30, 1996 differed
from the amounts computed by applying the U.S. federal income tax rate of
34.0 percent to pretax loss as a result of the following:
1997 1996
---- ----
Computed "expected"
tax benefit:
U. S. Federal benefit ($608,000) ($506,000)
Other (35,000) (25,000)
State & Local
benefit, net of
federal income tax benefit (73,000) (64,000)
--------- ---------
Total ($716,000) ($595,000)
5. Net loss per common share has been computed based on average number of
shares outstanding during each period plus, when their effect is dilutive,
common share equivalents consisting of certain shares subject to stock
option and stock purchase plans. Average common shares outstanding for
prior periods have been retroactively restated to give affect to all
previous splits and dividends.
Page 5 of 11 pages
<PAGE>
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, WHICH ARE NOT
HISTORICAL FACT ARE FORWARD LOOKING STATEMENTS BASED UPON THE COMPANY'S CURRENT
PLANS AND STRATEGIES, AND REFLECT THE COMPANY'S CURRENT ASSESSMENT OF THE RISKS
AND UNCERTAINTIES RELATED TO ITS BUSINESS, INCLUDING SUCH THINGS AS PRODUCT
DEMAND AND MARKET ACCEPTANCE; THE ECONOMIC ENVIRONMENT AND THE IMPACT OF
GOVERNMENTAL REGULATIONS, BOTH IN THE UNITED STATES AND ABROAD; THE EFFECTS OF
COMPETITIVE PRODUCTS AND PRICING; CAPACITY, EFFICIENCY, AND SUPPLY CONSTRAINTS;
WEATHER CONDITIONS; AND OTHER RISKS DETAILED IN THE COMPANY'S PRESS RELEASES,
SHAREHOLDER COMMUNICATIONS, AND SECURITIES AND EXCHANGE COMMISSION FILINGS.
ACTUAL RESULTS MAY DIFFER FROM THOSE CURRENTLY ANTICIPATED.
Liquidity and Capital Resources
The Company has ended the first quarter of 1997 with $53.0 million in net
working capital. This compares with $42.8 million at the end of the same quarter
in 1996, and $53.7 million as of the end of fiscal 1996. The increase in net
working capital from the end of the first quarter of 1996 to the end of the
first quarter of 1997, is primarily due to the profit that the Company earned
during fiscal 1996. The decline in working capital from fiscal year end 1996 to
the end of the first quarter of 1997, is mainly the result of the seasonal loss
in the first quarter of 1997.
Some of the changes in the components of the Company's net working capital are:
* Accounts receivable decreased at the end of the first quarter of 1997, to
$11.5 million from $14.5 million at the end of the first quarter of 1996,
and decreased from $18.6 million at the end of fiscal 1996. The decrease in
receivables from first quarter 1996 to 1997, is mainly due to the 6.9
percent decline in net sales during the first quarter of 1997 when compared
with the same quarter of 1996. The decrease from the end of fiscal 1996,
mainly represents a normal seasonal pattern of change in receivables.
* Inventories ended the first quarter of 1997, at $37.4 million compared with
$39.8 million one year ago, and $28.9 million as of the end of fiscal 1996.
The decrease in inventories from one year ago reflects the decline in net
sales activity during the first quarter of 1997 compared with the same
quarter of 1996. The increase in inventories from the end of fiscal 1996,
reflects normal seasonal patterns of inventories, as the Company builds
seasonal inventories in preparation for anticipated needs later in the
year.
* The Company ended the first quarter of 1997, with $4.5 million in cash and
no short-term bank loans. This compares with the first quarter of 1996,
when the Company had $657 thousand in cash and $12 million in short-term
bank loans. The increase in cash and decrease in short-term bank loans is
mainly the result of the year end 1996 cash position of $13.2 million,
compared with the $6.3 million the prior year end. There were no short-term
bank loans outstanding at the end of fiscal 1996.
The Company's capital expenditures during the first quarter of 1997, amounted to
$592 thousand, compared with $555 thousand during the same period of 1996.
Capital expenditures in both years were funded out of working capital.
Page 6 of 11 pages
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations - continued
The Company currently has in place a Revolving Credit Agreement ("Revolver"),
with its three main lending banks. The Revolver provides the Company a
seasonally adjusted available line of credit ranging from $6 million during
January, to a peak of $51 million from July through November. The Revolver
contains financial covenants typical of agreements of its type and duration. The
Company is in compliance with all the covenants of the Revolver, and all other
debt agreements. The Revolver currently extends through 1998 and provides for
periodic extensions upon request and with the approval of the banks. The Company
intends to request an extension through 1999, and anticipates its banks granting
that extension.
Results of Operations
During the first quarter of 1997, net sales amounted to $15.0 million, a 6.9
percent decline in net sales from the $16.1 million during the first quarter of
1996. The primary cause of the decline in net sales is related to the increase
in returns from customers that were received during the first quarter, when
compared with last year. The Company accrued for the profit impact of returns
during the fourth quarter of 1996. In addition, the Company, in its 1996 year
end Annual Report to Shareholders, indicated that it expected sales and earnings
for the first half of the year to be lower than in 1996, mainly as a result of
refining its relationship with Corning Consumer Products ("Corning"). During
1997, Corning intends to outsource directly the Pyrex(R) Portables(TM) fabric
carriers, which the Company had been providing to Corning. The Company will
continue to supply Corning with MICROCORE(R) hot and cold thermal retention
elements.
Gross profit during the first quarter of 1997, amounted to $8.4 million on $15.0
million in net sales, or 55.9 percent of net sales. This compares with gross
profit of $8.7 million on $16.1 million in net sales in the same quarter of
1996, or 54.2 percent of net sales. The increase in gross profit percentages
from year to year, is partially due to the impact on gross profit percentage
from the increase in returns in the first quarter and partially due to a change
in mix of individual styles and products sold from one period to the other.
Selling, general and administrative expenses during the quarter include spending
in preparation for the Company's previously announced fall 1997 entry into the
French market. At $10.1 million, expenses were essentially flat with those
expenses incurred during the first quarter of 1996, at $10.0 million. There was
no single category of expense that fluctuated significantly from year to year.
Net interest expense declined from 1996 to 1997. During the first quarter of
1997, net interest expense amounted to $206 thousand compared with $408 thousand
in the first quarter of 1996. The decrease in net interest expense is partially
due to the Company not utilizing its Revolver during the first quarter of 1997,
compared with $12 million of usage during the same quarter in 1996. In addition,
as a result improved liquidity in 1997, the Company had more excess funds from
which to earn income on short-term instruments in 1997 than in 1996.
For the first quarter of 1997, the Company incurred a loss of $1.1 million, or
$0.11 per share, compared with a loss during the same quarter of last year of
$893 thousand, or $0.10 per share. All per share calculations have been
retroactively restated to give effect to the five-for-four share split
distributed to shareholders on June 17, 1996.
Page 7 of 11 pages
<PAGE>
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 Matter 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 March 29, 1997
Page 8 of 11 pages
<PAGE>
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
May 1, 1997
- -----------
date
/s/ Richard L. Burrell
____________________________________
Richard L. Burrell
Senior Vice President - Finance
(Principal Financial Officer)
(Duly Authorized Officer)
Page 9 of 11 pages
<PAGE>
R. G. BARRY CORPORATION
INDEX TO EXHIBITS
Exhibit Number Description Page Number
-------------- ----------- -----------
27 Financial Data Schedule 11
Page 10 of 11 pages
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> MAR-29-1997
<CASH> 4,450
<SECURITIES> 0
<RECEIVABLES> 15,369
<ALLOWANCES> 3,916
<INVENTORY> 37,429
<CURRENT-ASSETS> 61,190
<PP&E> 38,267
<DEPRECIATION> 24,170
<TOTAL-ASSETS> 82,686
<CURRENT-LIABILITIES> 8,190
<BONDS> 15,265
0
0
<COMMON> 9,445
<OTHER-SE> 46,463
<TOTAL-LIABILITY-AND-EQUITY> 55,908
<SALES> 14,963
<TOTAL-REVENUES> 14,963
<CGS> 6,604
<TOTAL-COSTS> 6,604
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 206
<INCOME-PRETAX> (1,789)
<INCOME-TAX> (716)
<INCOME-CONTINUING> (1,073)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,073)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
