1 of 18 Pages
Exhibit Index
Appears on Page 16
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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 26, 1999
( ) 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 02421
(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, 1999, 46,411,735 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 26, February 27,
1999 November 27, 1998
(Unaudited) 1998 (Unaudited)
-------------- -------------- --------------
Assets
Current Assets:
<S> <C> <C> <C>
Cash and cash equivalents $2,327 $42,427 $3,342
Short-term investments - - 6,450
Accounts and notes
receivable, net 108,485 56,475 95,199
Inventories 125,610 128,472 120,087
Deferred income taxes 24,758 24,758 29,013
Other assets 4,478 6,097 7,044
------- ------- -------
Total current assets 265,658 258,229 261,135
Property and equipment, net 59,433 58,350 54,764
Other assets 24,193 18,917 21,184
-------- -------- --------
Total assets $349,284 $335,496 $337,083
========== ========== =========
</TABLE>
The accompanying 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 26, February 27,
1999 November 27, 1998
(Unaudited) 1998 (Unaudited)
--------------- -------------- -------------
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term debt $13,700 - $ 4,000
<S> <C> <C> <C>
Accounts payable 28,951 $40,951 26,155
Income taxes payable 22,731 14,130 23,732
Accrued expenses and other
liabilities 29,033 29,646 32,894
-------- -------- -------
Total current liabilities 94,415 84,727 86,781
Deferred income taxes 6,042 6,042 6,504
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 21,975 22,063 22,309
Retained earnings 341,833 337,943 328,331
Less cost of 10,541,243
shares of common stock
held in treasury
(10,565,526 on November
27, 1998 and 9,679,987
on February 27, 1998) (129,218) (129,516) (121,079)
--------- --------- ---------
Total stockholders' equity 248,827 244,727 243,798
--------- --------- ---------
Total liabilities and
stockholders' equity $349,284 $335,496 $337,083
========== ========== ==========
</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 26, 1999 and February 27, 1998
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
1999 1998
------------ --------------
<S> <C> <C>
Net sales $148,184 $128,985
Cost of sales 93,677 82,505
Selling and administrative expenses 44,540 39,145
--------- ---------
Operating income 9,967 7,335
Other income (expense):
Interest income 957 930
Interest expense (646) (386)
Other, net (365) (936)
--------- --------
(54) (392)
--------- --------
Income before income taxes 9,913 6,943
Provision for income taxes 3,764 2,542
--------- --------
Net income $ 6,149 $ 4,401
========= =========
Net income per common share:
Diluted $ .13 $ .09
======= =======
Basic $ .13 $ .09
======= =======
Dividends per common share $ .05 $ .05
======= =======
Average shares used in per share computations:
Diluted 46,530 47,569
========= ========
Basic 46,394 47,289
========= ========
</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 26, 1999 and February 27, 1998
(Dollars in Thousands)
<TABLE>
<CAPTION>
1999 1998
-------------- -------------
Cash was provided from (used for) Operations:
<S> <C> <C>
Net income $6,149 $4,401
Adjustments to reconcile to net cash
provided from (used for) operations:
Depreciation and amortization 2,499 2,577
Compensation expense related to executive
stock plans 160 83
Equity in loss of affiliate 276 -
Loss on disposal of property and equipment 908 635
Changes in:
Accounts and notes receivable (52,010) (43,491)
Inventories 2,862 14,641
Other current assets 1,619 (1,922)
Accounts payable, income taxes, accrued
expenses and other current liabilities (3,956) (10,777)
-------- --------
Net cash used for operations (41,493) (33,853)
-------- --------
Investments:
Short-term investments - 2,967
Additions to property and equipment (4,424) (3,060)
Decrease (increase) in noncurrent marketable 346 (1,020)
securities
Increase in other assets (5,965) (3,356)
-------- --------
Net cash used for investments (10,043) (4,469)
-------- --------
Financing:
Proceeds from sale of stock under stock plans 55 725
Cash dividends paid (2,319) (2,363)
Repurchase of common stock - (2,361)
Short-term debt 13,700 4,000
-------- --------
Net cash provided from financing 11,436 1
-------- --------
Net decrease in cash and cash equivalents (40,100) (38,321)
Cash and cash equivalents at beginning of the
period 42,427 41,663
-------- --------
Cash and cash equivalents at end of the period $ 2,327 $ 3,342
========= =========
</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 26, 1999 and February
27, 1998 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 26, 1999 and February 27, 1998 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. The Company filed audited consolidated
financial statements for the year ended November 27, 1998 on Form 10-K which
included all information and footnotes necessary for such presentation.
The Company's preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingency assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the reported
periods. The most significant estimates included in these financial statements
include valuation allowances and reserves for accounts receivable, inventory and
income taxes. Actual results could differ from those estimates.
NOTE 2
Interest payments amounted to $646,000 in the first quarter of fiscal 1999
($386,000 in 1998). For the first three months of fiscal 1999, the Company
received a net refund of income taxes amounting to $4.8 million as compared to
income tax payments of $255,000 during the first three months of fiscal 1998.
NOTE 3
Effective November 28, 1998, the Company elected to adopt AICPA Statement
of Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" (SOP 98-1). SOP 98-1 requires the capitalization of
certain costs, including internal payroll costs, incurred in connection with the
development or acquisition of software for internal use. The adoption of this
standard resulted in an increase in net earnings of $216,000 for the quarter
ended February 26, 1999. No restatement of prior years results was allowed or
required by the new accounting standard.
6
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
THE STRIDE RITE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4
The Company computes basic and diluted earnings per share in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128"). The following table reconciles the numerator and denominator of
the basic and diluted earnings per share computations shown on the Condensed
Consolidated Statements of Income.
<TABLE>
<CAPTION>
(in thousands, Except per share date) For the First Quarter
1999 1998
Basic EPS
Numerator:
<S> <C> <C>
Net income $6,149 $4,401
Denominator:
Weighted common shares outstanding 46,394 47,289
Basic EPS $.13 $.09
Diluted EPS
Numerator:
Net income $6,149 $4,401
Denominator:
Weighted common shares outstanding 46,394 47,289
Weighted common stock equivalents 136 280
------------- ------------
46,530 47,569
Diluted EPS $.13 $.09
</TABLE>
Options to purchase 2,591,449 weighted shares of common stock outstanding at
February 26, 1999 were excluded from the calculation of diluted earnings per
share because their inclusion would be anti-dilutive. Options to purchase
705,875 weighted shares of common stock outstanding at February 27, 1998, were
excluded from the calculation of diluted earnings per share because the exercise
prices of those options exceeded the average market price of common stock for
the three-month period ended February 27, 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. The words "expect", "estimate", and other
similar expressions which do not relate solely to historical matters identify
forward-looking statements. Undue reliance should not be placed on
forward-looking statements because they involve known and unknown risks and
uncertainties which may cause actual results to differ materially from
anticipated, projected or implied future results. 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 certain such factors. The Company
disclaims any obligation to update such forward-looking statements.
Results of Operations
The following table summarizes the Company's performance for the first
quarter of fiscal 1999 as compared to the results for the comparable period in
fiscal 1998:
Increase (Decrease) Percent vs. 1998 Results:
<TABLE>
<CAPTION>
First Quarter
<S> <C>
Net sales 14.9%
Gross profit 17.3%
Selling and administrative expenses 13.8%
Operating income 35.9%
Income before income taxes 42.8%
Net income 39.7%
</TABLE>
Operating Ratios as a Percent to Net Sales:
<TABLE>
<CAPTION>
First Quarter
--------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
Gross profit 36.8% 36.0%
Selling and administrative expenses 30.1% 30.3%
Operating income 6.7% 5.7%
Income before income taxes 6.7% 5.4%
Net income 4.1% 3.4%
</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 1999 increased $19.2 million
(14.9%) from the sales level achieved in the comparable period of fiscal 1998.
Revenues related to the Company's wholesale divisions increased 16% during the
first quarter of 1999, while retail sales during the period increased 9% from
last year. The wholesale divisions of the Company had unit shipments of current
line merchandise during the first quarter of 1999 which were 8% higher than the
1998 first quarter. The Company's average selling price was also higher in the
first quarter of 1999, increasing 7% from 1998. This price increase was
primarily the result of a higher-priced product mix in the Keds division. Sales
of discontinued products increased 19% in the first quarter of fiscal 1999 as
compared to the comparable period of fiscal 1998. Excluding the impact of
product mix changes, net sales in the first quarter of 1999 decreased by
approximately $1.6 million due to selling price deflation.
In the first quarter of fiscal 1999, each domestic wholesale business
experienced increased sales as compared to the 1998 first quarter. Sales of the
Keds division, the Company's largest business unit, increased 11% during the
first quarter of 1999, with sales of women's products up 9% and sales of Keds
children's line above last year by 40%. In the women's product category, sales
of Keds' new basics offerings, the Ready to Wear(TM) and Relaxed Fit(TM)
collections, offset the lower sales of the Champion(R) style, which declined 44%
in the first quarter of 1999 as compared to last year. Sales of the Stride Rite
Children's Group in the first quarter of 1999 increased 5% compared to the same
period in 1998, the result of an 8.4% retail sales increase at comparable stores
combined with a 3% increase in sales to independent accounts. At the end of the
first quarter of 1999, the Company operated 195 stores, up slightly from the 191
stores open at the end of the first quarter in 1998. Sales of the Sperry
Top-Sider division increased 11% in the quarter, as the brand's dress casual
collection and new Hydroactive(TM) athletic styles benefited from favorable
shipping trends and reduced order cancellations. Sales of the Tommy Hilfiger(R)
brand in 1999 were 75% above the first quarter of fiscal 1998, as the division
delivered its first Spring product line for women. The introduction of the Tommy
women's line offset lower revenues from the Tommy Hilfiger men's product line.
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)
Sales of the Company's International division in the first quarter of 1999
decreased 5% compared to the prior year, as the Company continued to change
business relationships to emphasize royalty arrangements
Gross Profit
During the first quarter of fiscal 1999, gross profit increased $8
million, or 17.3%, as compared to the net sales increase of 14.9%. The
consolidated gross profit percentage for the first three months of 1999
increased 0.8 percentage points, to 36.8% in 1999 from 36.0% in 1998. The
increase was due primarily to reduction in inventory obsolescence charges. This
improvement was especially evident in the Tommy Hilfiger business unit. In the
prior year, the Tommy Hilfiger sales slowdown and generally weak conditions in
the athletic footwear sector resulted in significant retailer order
cancellations and related inventory obsolescence charges. The Company's gross
profit performance in the first quarter of 1998 was also negatively affected by
$0.8 million in start-up costs related to new licensed product lines which were
introduced in the second half of the year. The LIFO provision had an unfavorable
effect on gross profit comparisons, with LIFO decreasing gross profit by $0.6
million (0.4% of net sales) in 1999 compared to an increase of $0.7 million
(0.5% of net sales) in 1998. In 1998, the Company recorded LIFO benefits due to
the reduction of certain domestically manufactured inventory quantities, which
were valued at lower costs.
Operating Costs
Selling and administrative expenses in the first quarter of fiscal 1999
increased $5.4 million or 13.8% from $39.1 million in the first quarter of 1998.
This rate of increase was slightly below the overall increase in net sales of
14.9%. Operating costs as a percentage of sales decreased from last year by 0.2
percentage points in the first quarter (30.1% in 1999 compared to 30.3% in
1998). Advertising expense represented 6.8% of net sales in the first quarter of
1999, which was consistent with the spending rate in the comparable period in
1998. Distribution expenses represented 2.3% of net sales in the first quarter
of 1999 compared to 1.9% in the 1998 first quarter. This increased level of
distribution costs was primarily the result of the decision to outsource the
distribution of certain products in 1999 due to shipment capacity constraints at
our warehouses. In addition, increased spending in information technology,
primarily related to the cost of achieving Year 2000 (Y2K) compliance, resulted
in additional costs of $1.1 million compared to 1998. Operating costs in the
first quarter of 1998 included
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)
$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(R)
licenses which generated revenues starting in the second half of 1998.
Other Income and Taxes
Other income (expense) decreased pre-tax income by $0.1 million in the
first quarter of fiscal 1999 compared to a decrease of $0.4 million in the first
quarter of fiscal 1998. Interest income during the first quarter of 1999 was
slightly above the prior year. Interest expense in the first quarter of 1999 was
higher than 1998, increasing $0.3 million due to higher borrowings caused by
expenditures related to the Company's share repurchase program during the last
nine months of 1998 and increased working capital levels. Average short-term
borrowings in the first quarter of 1999 were $43.3 million, above the average
borrowings of $24.1 million in the first quarter of 1998.
The provision for income taxes increased $1.2 million in the first quarter
of fiscal 1999 as compared to the similar period in fiscal 1998 primarily due to
the higher pre-tax income earned in the period. The 1999 effective income tax
rate was also higher, 38.0% compared to 36.6% in 1998, due mostly to the reduced
tax savings related to a company-owned life insurance program.
Net Income
Net income for the first quarter of fiscal 1999 increased $1.7 million, up
39.7% from the income earned in the 1998 first quarter. The increased net sales
and improved gross profit performance were the primary factors contributing to
the improved earnings. As a result, the Company's return on net sales improved
by 0.7 percentage points in the first quarter of 1999 (4.1% of sales in 1999
compared to 3.4% in 1998).
Liquidity and Capital Resources
At February 26, 1999, the Company's balance sheet reflects a current ratio
of 2.8 to 1 with no long-term debt. The Company's cash and short-term
investments totaled $2.3 million at the end of the latest quarter, below the
prior year's cash and investments total of $9.8 million. This lower cash and
short-term investment balance was principally the result of cash used in the
Company's share repurchase program during 1998 and increased working capital
needs during the first quarter of fiscal 1999 to support the higher sales
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)
level. The Company uses bank lines of credit to fund seasonal working capital
needs. Borrowings under these lines of credit totaled $13.7 million at February
26, 1999, higher than the $4 million of short-term debt outstanding at the end
of the first quarter of 1998.
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 1999, the Company used $41.5 million of cash to fund
operating needs. This negative cash flow amount was higher than the $33.9
million use of cash to fund operations during the first quarter of fiscal 1998.
At February 26, 1999, accounts receivable and inventory levels totaled
$234.1 million, an increase of $18.8 million or 8.7% above the $215.3 million
asset amount at the end of the first quarter of 1998. Accounts receivable at the
end of the first quarter of 1999 increased $13.3 million from 1998. The first
quarter 1999 receivable amount increased 14% compared to the prior year, below
the wholesale businesses' sales increase of 16% in the first quarter of 1999.
Inventories were higher at the end of the first quarter of 1999, up $5.5 million
or 4.6% from the 1998 level, as additional inventory associated with Keds "new
basics" product lines offset an inventory reduction at Tommy Hilfiger(R).
Additions to property and equipment totaled $4.4 million in the first
quarter of 1999 compared to $3.1 million in the 1998 first quarter. A large
portion of the Company's capital expenditures over the next year will continue
to be related to information systems in order to upgrade capabilities and to
prepare for the Year 2000 transition.
Other Matters
During the quarter, the Company continued its efforts to minimize the risk
of disruption from the "Year 2000 (`Y2K') problem." This problem is a result of
computer programs having been written using two digits (rather than four) to
define the applicable year. The Company's overall plan to address the Y2K
problem is described more fully in its 1998 Annual Report on Form 10-K, and the
following is an update of the information included therein.
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)
Information Technology ("IT") Systems:
Remediation efforts (including testing and certification) continued with
respect to the Company's previously identified "critical" and "important" IT
business systems during the first quarter of fiscal 1999. The Company continues
to expect that the bulk of these systems will be tested and certified as Y2K
compliant by June 1999 although testing of a small number of critical or
important business systems may not be completed until September 1999.
Non-IT and Partner Systems:
During the first quarter of 1999, the Company continued its inventory of
third party and internal embedded, or "non-IT" systems. Company representatives
continued to meet with significant business partners to ensure that equipment is
Y2K compliant. The Company expects to have compiled detailed information
regarding all of its significant business partners by June 1999. In appropriate
cases, the Company will be relying upon vendors' testing and certification
documents to validate that the related systems are Y2K compliant. Where the
Company does not have adequate assurance that remediation efforts by third
parties are on schedule, contingency plans are being developed to minimize
potential disruption from embedded system failures. These plans include
avoidance of those partners who may present an unacceptable level of risk.
Validation efforts are expected to continue through September 1999.
Contingency Planning:
Contingency planning is being developed on a case by case basis and
include encouraging customers to place orders before potential business
disruptions, manual intervention of processes or finding alternative suppliers.
There are, however, many variables and uncertainties surrounding the
effectiveness of contingency planning. Thus, there is no certainty that the
Company's contingency plans will be adequate to mitigate the materially adverse
effect related to a large scale Y2K failure.
Costs:
Total anticipated expenditures related to the Y2K project remain on target
at approximately $24 million, of which approximately $19 million is expected to
be capitalized. Total Y2K project costs expended during the first quarter of
1999 amounted to approximately $2.1 million.
13
<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.
14
<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 9, 1999 By: /S/ John M. Kelliher
---------------------------
John M. Kelliher
Chief Financial Officer
15
<PAGE>
THE STRIDE RITE CORPORATION
INDEX TO EXHIBITS
Exhibit Sequential Page No.
No.
11 Computation of Per Share Earnings 17 of 18
27 Financial Data Schedule 18 of 18
16
<PAGE>
Exhibit 11
THE STRIDE RITE CORPORATION
COMPUTATION OF PER SHARE EARNINGS
(In Thousands except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
Feb. 26, 1999 Feb. 27, 1998
---------------- ----------------
Net income applicable to common
<S> <C> <C>
shares $ 6,149 $ 4,401
======= =======
Calculation of shares:
Weighted average number of
common shares outstanding(basic) 46,394 47,289
Common shares attributable to
assumed exercise of dilutive
stock options and
stock purchase rights using the
treasury stock method 136 280
------- -------
Average common shares and common
equivalents outstanding during
the period (diluted) 46,530 47,569
======= =======
Basic and diluted net income per
common share $ .13 $ .09
===== =====
</TABLE>
17
<PAGE>
<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> DEC-03-1999
<PERIOD-END> FEB-26-1999
<CASH> 2,327
<SECURITIES> 0
<RECEIVABLES> 119,035
<ALLOWANCES> 10,550
<INVENTORY> 125,610
<CURRENT-ASSETS> 265,658
<PP&E> 97,083
<DEPRECIATION> 37,650
<TOTAL-ASSETS> 349,284
<CURRENT-LIABILITIES> 94,415
<BONDS> 0
0
0
<COMMON> 14,237
<OTHER-SE> 234,590
<TOTAL-LIABILITY-AND-EQUITY> 349,284
<SALES> 148,184
<TOTAL-REVENUES> 148,184
<CGS> 93,677
<TOTAL-COSTS> 93,677
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 852
<INTEREST-EXPENSE> 646
<INCOME-PRETAX> 9,913
<INCOME-TAX> 3,764
<INCOME-CONTINUING> 6,149
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,149
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
