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Exhibit Index
Appears on Page 17
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 February 27, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to .
Commission File Number: 1-4404
THE STRIDE RITE CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-1399290
(State or other jurisdiction) (I.R.S. Employer Identified No.)
191 Spring Street, Lexington, Massachusetts 02173
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617)824-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common stock, $.25 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required 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 report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
As of March 31, 1998, 47,273,257 shares of the registrant's common stock, $.25
par value, and the accompanying Preferred Stock Purchase Rights were
outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
THE STRIDE RITE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
February 27, February 28,
1998 November 28, 1997
(Unaudited) 1997 (Unaudited)
---------------- -------------- --------------
Assets
Current Assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 3,342 $41,663 $11,551
Short-term investments 6,450 9,417 36,270
Accounts and notes 95,199 51,708 92,804
receivable, net
Inventories:
Finished goods 118,844 133,233 101,654
Work in process - 256 1,380
Raw materials 1,243 1,239 4,349
------- ------- -------
120,087 134,728 107,383
Deferred income taxes and
prepaid expenses 36,057 34,135 36,939
------- ------- -------
Total current assets 261,135 271,651 284,947
Property and equipment, net 54,764 55,395 53,222
Other assets 21,184 16,872 19,115
-------- -------- --------
Total assets $337,083 $343,918 $357,284
======== ======== ========
</TABLE>
Theaccompanying notes are an integral part of the condensed
consolidated financial statements.
2
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
February 27, February 28,
1998 November 28, 1997
(Unaudited) 1997 (Unaudited)
------------ ------------ ------------
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of
<S> <C>
long-term debt - - $ 833
Short-term debt $ 4,000 - 3,200
Accounts payable 26,155 $ 31,748 22,000
Income taxes payable 23,732 21,445 25,533
Accrued expenses and other
liabilities 32,894 42,195 39,846
------- -------- ------
Total current liabilities 86,781 95,388 91,412
Deferred income taxes 6,504 6,504 8,275
Stockholders' Equity:
Preferred stock, $1 par value
Shares authorized - 1,000,000
Shares issued - None - - -
Common stock, $.25 par value
Share authorized - 135,000,000
Shares issued - 56,946,544 14,237 14,237 14,237
Capital in excess of par value 22,309 22,289 22,691
Retained earnings 328,331 326,292 317,799
Less cost of 9,679,987 shares
of common stock held in
treasury(9,630,600 on
November 28, 1997 and
7,746,230 on February 28,1997) (121,079) (120,792) (97,130)
--------- --------- --------
Total stockholders' equity 243,798 242,026 257,597
--------- --------- --------
Total liabilities and stockholders'
equity $337,083 $343,918 $357,284
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
3
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the periods ended February 27, 1998 and February 28, 1997
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
1998 1997
-------------- ---------------
<S> <C> <C>
Net sales $128,985 $131,805
Cost of sales 82,505 85,795
Selling and administrative expenses 39,145 39,712
-------- --------
Operating income 7,335 6,298
Other income (expense):
Interest income 930 852
Interest expense (386) (31)
Other, net (936) (684)
--------- ---------
(392) 137
--------- ---------
Income before income taxes 6,943 6,435
Provision for income taxes 2,542 2,315
--------- ---------
Net income $ 4,401 $ 4,120
========= =========
Net income per common share:
Diluted $ .09 $ .08
========= =========
Basic $ .09 $ .08
========= =========
Dividends per common share $ .05 $ .05
========= =========
Average shares used in per share computations:
Diluted 47,569 49,962
========= =========
Basic 47,289 49,593
========= =========
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements
4
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended February 27, 1998 and February 28 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
1998 1997
-------- ---------
Cash was provided from (used for) Operations:
<S> <C> <C>
Net income $4,401 $4,120
Adjustments to reconcile to net cash
provided from (used for)operations:
Depreciation and amortization 2,577 2,284
Compensation expense related to executive
stock plans 83 178
Equity in loss of affiliate - 400
Loss on disposal of property and equipment 635 -
Changes in:
Accounts and notes receivable (43,491) (47,938)
Inventories 14,641 11,704
Prepaid expenses (1,922) 3,356
Accounts payable, income taxes, accrued
expenses and other current liabilities (10,777) (6,290)
-------- --------
Net cash used for operations (33,853) (32,186)
-------- --------
Investments:
Short-term investments 2,967 (1,659)
Additions to property and equipment (3,060) (2,527)
Purchase of noncurrent marketable securities (1,020) (1,600)
Increase in other assets (3,356) (2,656)
------- -------
Net cash used for investments (4,469) (8,442)
------- -------
Financing:
Proceeds from sale of stock under stock plans 725 6
Cash dividends paid (2,363) (2,483)
Repurchase of common stock (2,361) (5,813)
Short-term debt 4,000 3,200
------- -------
Net cash provided from (used for) financing 1 (5,090)
------- -------
Net decrease in cash and cash equivalents (38,321) (45,718)
Cash and cash equivalents at beginning of the
period
41,663 57,269
-------- --------
Cash and cash equivalents at end of the period $ 3,342 $11,551
========= =========
</TABLE>
The accompanying notes are an integral part of the
condensed consolidated financial statements
5
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
The financial information included in this Form 10-Q of The Stride Rite
Corporation (the "Company") for the periods ended February 27, 1998 and February
28, 1997 is unaudited and subject to year-end audit adjustments. However, such
information includes all adjustments (including all normal recurring
adjustments) which, in the opinion of management, are considered necessary for a
fair presentation of the consolidated results for those periods. The results of
operations for the periods ended February 27, 1998 and February 28, 1997 are not
necessarily indicative of the results of operations that may be expected for the
complete fiscal year. The year-end condensed balance sheet data was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. Certain reclassifications have been
made to the 1997 condensed consolidated financial statements to conform to the
fiscal 1998 presentation.
NOTE 2
During the first three months of fiscal 1998, interest payments
amounted to $385,000($13,000 in 1997). For the first three months of 1998, the
Company paid income taxes amounting to $255,000 as compared to a net refund of
income taxes in 1997 totaling $278,000.
NOTE 3
Earnings per share has been restated to adopt SFAS No. 128, "Earnings
per Share". Basic earnings per common share was calculated by dividing net
income by the weighted average number of common shares outstanding during the
period. Diluted earnings per share was calculated by dividing net income by the
sum of the weighted average number of shares plus additional common shares that
would have been outstanding if potential dilutive common shares had been issued
for stock options granted. The following table reconciles the number of shares
for basic versus dilutive for the quarters ended February 27, 1998 and February
28, 1997 and shows the prior three fiscal year ends restated for SFAS No. 128
"Earnings per Share".
6
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 3 - continued...
<TABLE>
<CAPTION>
(in thousands, except per share data) Feb. 27, Feb. 28,
1998 1997
<S> <C> <C>
Net income $ 4,401 $ 4,120
Earnings per common share:
Basic .09 .08
Diluted .09 .08
Weighted average common shares
outstanding (basic)
47,289 49,593
Calculation of dilutive effect 280 369
============== =============
Weighted average common shares
outstanding (diluted)
47,569 49,962
============== =============
</TABLE>
Restated earnings per share information for the three years ended November 28,
1997 is as follows:
<TABLE>
Years Ended
--------------------------------------------
<CAPTION>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Basic net income per share $.41 $.05 $(.17)
Diluted net income per share .40 .05 (.17)
</TABLE>
NOTE 4
On March 31, 1998, the Company sold two buildings and adjoining land in
Boston which was formerly used as a distribution center for the Company's
wholly-owned subsidiary, Stride Rite Children's Group. The Boston facility was
closed in December 1997 following the transfer of operations to a new
distribution center in Huntington, Indiana. The transaction will result in a
pre-tax gain of approximately $3.8 million ($.05 per share) in the second
quarter of fiscal 1998.
7
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements contained in this Item 2 are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and are thus prospective. Such forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Readers are referred to Exhibit 99 to the Company's
Quarterly Report on Form 10-Q for the fiscal period ended March 1, 1996 for a
discussion of some of such factors.
Results of Operations
The following table summarizes the Company's performance for the first
quarter of fiscal 1998 as compared to the results for the comparable period in
fiscal 1997:
Increase (Decrease) Percent vs. 1997 Results:
<TABLE>
<CAPTION>
First Quarter
<S> <C>
Net sales (2.1%)
Gross profit 1.0%
Selling and administrative expenses (1.4%)
Operating income 16.5%
Income before income taxes 7.9%
Net income 6.8%
</TABLE>
Operating Ratios as a Percent to Net Sales:
<TABLE>
First Quarter
<CAPTION>
--------------------------------------
1998 1997
----------------- ---------------
<S> <C> <C>
Gross profit 36.0% 34.9%
Selling and administrative expenses 30.3% 30.1%
Operating income 5.7% 4.8%
Income before income taxes 5.4% 4.9%
Net income 3.4% 3.1%
</TABLE>
8
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
Net Sales
Net sales in the first quarter of fiscal 1998 decreased $2.8 million
(2.1%) from the sales level achieved in the comparable period of fiscal 1997. A
decline of 3.6% in revenues related to the Company's wholesale divisions during
the first quarter of 1998 was somewhat offset by a 4.6% increase in retail sales
during the period. The wholesale divisions of the Company had unit shipments of
current line merchandise during the first quarter of 1998 which were 2.2% lower
than the 1997 first quarter. Sales of discontinued products declined 6% in the
first quarter of fiscal 1998 as compared to the comparable period of fiscal
1997. Excluding the impact of product mix changes, net sales in the first
quarter of 1998 increased by approximately $0.1 million due to selling price
inflation.
In the first quarter of fiscal 1998, each of the domestic wholesale
businesses experienced sales declines from the 1997 first quarter. Sales of the
Tommy Hilfiger(R) division in 1998 were 9% below the first quarter of fiscal
1997, which included heavy shipments to retailers to support the initial launch
of the brand. Difficult market conditions for athletic footwear, and the brand's
disappointing retail results in the Fall 1997 season, negatively impacted
shipments in the first quarter of 1998. Sales of the Keds division, the
Company's largest business unit, declined 3% in total as the sales of
discontinued styles decreased sharply. Sales of Keds current line merchandise
increased 3% in the first quarter of 1998. Keds has expanded its core styles in
1998 with the introduction of the Ready to Wear(TM) and Relaxed Fit(TM)
collections. These new "basics" have offset the continuing sales decrease of the
Champion(R) style, which declined 28% in the first quarter of 1998 compared to
the prior year. Sales of the consolidated Stride Rite Children's Group in the
first quarter of 1998 were even with the comparable period of the prior year as
an 8.6% retail sales increase at comparable stores offset the impact of a lower
store count and a 3% decrease in sales to independent accounts. Much of the
retail store sales improvement was driven by a more aggressive promotion of
clearance merchandise. At the end of the first quarter of 1998, the Company
operated 191 stores, down 6% from the 204 stores open at the end of the first
quarter in 1997. Sales of the Sperry Top-Sider division declined 15% in the
quarter as the brand
9
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
experienced delayed future orders and soft reorders due to competitive
conditions and high retailer inventories. Sales of the Company's International
division in the first quarter of 1998 increased 30% compared to the prior year
as Keds sales in Europe and the Middle East were shipped earlier than in 1997.
International sales also benefited from the transition to licenses from direct
sales in certain geographic regions. In the second half of fiscal 1998, the
Company currently plans to launch licensed products to customers for the new
Levi's(R) product line for men and boys; the Tommy Hilfiger(R) women's
collection; and the Nine West Kids(TM) products for girls.
Gross Profit
During the first quarter of fiscal 1998, gross profit increased $0.5
million, or 1.0% despite the net sales decrease of 2.1%. The consolidated gross
profit percent for the first three months of 1998 increased 1.1 percentage
points, finishing at 36.0% in 1998 compared to 34.9% in 1997. The increased
sales of current line merchandise and the lower sales of discontinued styles in
the first quarter of 1998 helped to offset a less profitable product mix than in
the comparable period of 1997. Markdowns and inventory obsolescence expense
reduced the gross profit rate by 5.7 percentage points in the first quarter of
1998 compared to a reduction of 2.4 percentage points in 1997, due principally
to the Tommy Hilfiger(R) sales slowdown and the more aggressive clearance in
Retail operations. The Company's gross profit performance in the first quarter
of 1998 was also negatively impacted by $0.8 million in start-up costs related
to the new licensed product lines which will be introduced in the second half of
the year. The LIFO provision had a favorable impact on gross profit comparisons,
with LIFO increasing gross profit by $0.7 million (0.5% of net sales) in 1998
compared to a reduction of $0.2 million (0.2% of net sales) in 1997. The primary
reason for the favorable LIFO impact was the reduction of certain manufactured
inventory quantities which were valued at costs prevailing in prior years. The
Company's gross profit performance in the first quarter of 1998 also benefited
from the shut-down of domestic manufacturing facilities during 1997 and the
shifting of product sourcing to lower cost resources. In the first quarter of
1997, inefficiencies in domestic manufacturing operations reduced the Company's
gross profit percentage by 1.1%.
10
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
Operating Costs
Selling and administrative expenses in the first quarter of fiscal 1998
decreased $0.6 million or 1.4% below the spending levels in the first quarter of
1997. This rate of decrease was slightly below the overall decline in net sales
of 2.1%. Operating costs as a percentage of sales increased from last year by
0.2 percentage points in the first quarter (30.3% in 1998 compared to 30.1% in
1997). Operating costs in the first quarter of 1998 included $1.4 million of
product development and other selling and administrative costs related to the
Levi's(R), Tommy Hilfiger(R) women's and Nine West Kids(TM) licenses which are
expected to produce revenues in the second half of 1998. In addition, the
Company incurred $0.5 million of increased advertising spending, principally
related to the Keds Spring 1998 national television campaign supporting the
introduction of the Ready to Wear(TM) and Relaxed Fit(TM) collections. As a
percentage of net sales, advertising expense represented 6.6% of net sales in
the first quarter of 1998, which was higher than the spending rate of 6.3% of
net sales in the comparable period in 1997. Offsetting these spending increases
was a $0.8 million decrease in distribution expenses due to the lower costs and
efficiencies of the new Huntington, Indiana distribution facility. Distribution
expenses represented 1.9% of net sales in the first quarter of 1998 compared to
2.4% in the 1997 first quarter. In addition, the elimination of certain
international division overhead costs of $0.8 million and various other
administrative expense decreases also contributed to the overall reduction in
operating expenses.
Other Income and Taxes
Other income (expense) decreased pre-tax income by $0.4 million in the
first quarter of fiscal 1998 compared to an increase of $0.1 million in the
first quarter of fiscal 1997. Interest income increased $0.1 million in the
quarter due to a higher return on short-term investments. Interest expense in
the first quarter of 1998 was higher than 1997, increasing $0.4 million due to
higher borrowings caused by expenditures related
11
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
to the Company's share repurchase program and increased inventory levels.
Average short-term borrowings in the first quarter of 1998 were $24.1 million,
significantly increased from the average borrowings of $0.6 million in the first
quarter of 1997.
The provision for income taxes increased $0.2 million in the first
quarter of fiscal 1998 as compared to the similar period in fiscal 1997
primarily due to the higher pre-tax income earned in the period. The 1998
effective income tax rate was also higher, 36.6% compared to 36.0% in 1997, due
to the reduced tax savings related to a company-owned life insurance program.
Net Income
Net income for the first quarter of fiscal 1998 increased $0.3 million,
up 7% from the income earned in the 1997 first quarter. This increase in net
income was achieved despite the $2.2 million of start-up costs related to the
three new licensed brands which will be introduced in the second half of 1998.
The improved gross profit rate and the favorable LIFO impact resulted in an
increase in the Company's return on net sales in the first quarter of 1998,
which improved by 0.3 percentage points (3.4% of sales in 1998 compared to 3.1%
in 1997).
Liquidity and Capital Resources
At February 27, 1998, the Company's balance sheet reflects a current
ratio of 3 to 1 with no long-term debt. The Company's cash and short-term
investments totaled $9.8 million at the end of the latest quarter, significantly
below the prior year's cash and investments total of $47.8 million. This lower
cash and short-term investment balance was principally the result of cash used
in the Company's share repurchase program and a $15.6 million increase in
inventory levels entering the quarter of fiscal 1998. The Company uses bank
lines of credit to fund seasonal working capital needs. Borrowings under these
lines of credit totaled $4 million at the period ending February 27, 1998,
slightly higher than the $3.2 million of short-term debt outstanding at the end
of the first quarter of 1997. The
12
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
Company's cash and investments balance, net of these short-term borrowings,
totaled $5.8 million at February 27, 1998 compared to $44.6 million at the end
of the 1997 first quarter.
The Company's normal seasonal shipping and cash flow patterns generally
require the use of funds in the first quarter of the fiscal year. During the
first quarter of fiscal 1998, the Company used $33.9 million of cash to fund
operating needs. This negative cash flow amount was slightly higher than the
$32.2 million use of cash to fund operations during the first quarter of fiscal
1997.
At February 27, 1998, accounts receivable and inventory levels totaled
$215.3 million, an increase of $15.1 million or 7.5% above the $200.2 million
comparable asset amount at the end of the first quarter of 1997. Inventories
were higher at the end of the first quarter of 1998, up $12.7 million or 11.8%
from the 1997 level, as additional inventory associated with the Tommy
Hilfiger(R) product line offset an inventory reduction at Keds.
Additions to property and equipment totaled $3.1 million in the first
quarter of 1998 compared to $2.5 million in the 1997 first quarter. A large
portion of the Company's capital expenditures over the next two years will be
related to information systems in order to upgrade capabilities and to prepare
for the Year 2000 transition. During fiscal 1997, the Company formulated a plan
to implement system changes designed to handle the transition in the Company's
systems. In most areas, the Company plans to implement new computer systems,
which will be Year 2000 compliant, as part of its continuing efforts to upgrade
systems capabilities and to effect the transition from mainframe computer
processing to lower cost, midrange computers. As previously disclosed, the
Company expects to spend approximately $15 million in capital expenditures
during the 1997 to 1999 period as part of this effort to upgrade system
capabilities and to deal with the Year 2000 transition. The Company is presently
evaluating a plan to remediate certain elements of its existing business
software as a further step to minimize business interruptions related to the
Year 2000 issue. The cost of this remediation effort, which is expected to be
approximately $1 million, will be charged to expense as the costs are incurred.
13
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
During the first quarter of 1998, the Company repurchased 215,000
shares of stock for an aggregate expenditure of $2.4 million in cash. This
brings the cumulative shares repurchased under the authorization approved by the
Company's Board of Directors in October 1997 to 740,000 shares leaving 1,260,000
shares authorized for future repurchase.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following Exhibits are contained in this report:
Exhibit No. Description of Exhibit
11 Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the most recent
quarterly period.
15
<PAGE>
THE STRIDE RITE CORPORATION
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 duly authorized.
THE STRIDE RITE CORPORATION
(Registrant)
Date: April 10, 1998 By: /S/ John M. Kelliher
-------------------------
John M. Kelliher
Chief Financial Officer
16
<PAGE>
THE STRIDE RITE CORPORATION
INDEX TO EXHIBITS
Exhibit
No. Sequential Page No.
11 Computation of Per Share Earnings 17 of 19
27 Financial Data Schedule 19 of 19
17
<PAGE>
Exhibit 11
THE STRIDE RITE CORPORATION
COMPUTATION OF PER SHARE EARNINGS
(In Thousands except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
Feb. 27, 1998 Feb. 28, 1997
----------------- ------------------
Net income applicable to common
shares
<S> <C> <C>
$ 4,401 $ 4,120
======= =======
Calculation of shares:
Weighted average number of
common shares outstanding (basic) 47,289 49,593
Common shares attributable to assumed exercise of dilutive stock options and
stock purchase rights using the treasury stock method
280 369
-------- --------
Average common shares and common
equivalents outstanding during
the period (diluted)
47,569 49,962
====== ======
Basic and diluted net income per
common share
$ .09 $ .08
======== ========
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The notes to the condensed consolidated financial statements are an integral
part of such statements and the condensed consolidated financial information in
this schedule. Figures below are in thousands, except per-share data.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-27-1998
<PERIOD-END> FEB-27-1998
<CASH> 3,342
<SECURITIES> 6,450
<RECEIVABLES> 104,397
<ALLOWANCES> 9,198
<INVENTORY> 120,087
<CURRENT-ASSETS> 261,135
<PP&E> 89,341
<DEPRECIATION> 34,577
<TOTAL-ASSETS> 337,083
<CURRENT-LIABILITIES> 86,781
<BONDS> 0
0
0
<COMMON> 14,237
<OTHER-SE> 229,561
<TOTAL-LIABILITY-AND-EQUITY> 337,083
<SALES> 128,985
<TOTAL-REVENUES> 128,985
<CGS> 82,505
<TOTAL-COSTS> 82,505
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 496
<INTEREST-EXPENSE> 386
<INCOME-PRETAX> 6,943
<INCOME-TAX> 2,542
<INCOME-CONTINUING> 4,401
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,401
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
