ITEM 1. BUSINESS.
R. G. Barry Corporation ("R. G. Barry") is organized under Ohio law. R. G. Barry and its subsidiaries, R.G.B., Inc., Barry de Mexico, S.A. de C.V., Barry de Acuna, S.A. de C.V., Barry de Zacatecas, S.A. de C.V., ThermaStor Technologies, Ltd., R. G. Barry (Texas) LP, R. G. Barry International, Inc., R. G. Barry Holdings, Inc., R. G. Barry (France) Holdings, Inc., Escapade, S.A., Fargeot et Compagnie, S.A., Michel Fargeot, S.A., Procesadora de Nuevo Laredo, S.A., and Vesture Corporation (R. G. Barry and its subsidiaries are referred to collectively as the "Company"), manufacture and market comfort footwear as well as products that use thermal retention technology to preserve and/or transport temperature-sensitive or perishable commodities such as food. The Company believes it is the world's largest manufacturer of comfort footwear for at- and around-the-home. Comfort is the dominant influence in the Company's brand lines. Through its Vesture subsidiary, the Company manufactures and markets thermal retention technology products incorporating the Company's MICROCORE* technologies.
In October 2001, the Company announced a decision to close the sole molding operations in San Angelo, Texas and relocate those activities to Nuevo Laredo, Mexico. This shift is expected to be completed by the end of the first quarter of the 2002 fiscal year.
On January 7, 2002, R.G. Barry announced that it had been granted accelerated elimination of United States and Mexican tariffs on slippers under the North American Free Trade Agreement ("NAFTA"). The 15% tariff on slippers made in Mexico and sold in the United States was eliminated effective January 1, 2002. Without such elimination, the tariff on Mexican-manufactured slippers would have been phased out under NAFTA over six years at the rate of 2.5% per year with tariffs eliminated in their entirety on January 1, 2008. R.G. Barry had applied in 2001 to the Office of the United States Trade Representative for early elimination of the tariffs under procedures established under NAFTA. The accelerated elimination of the tariffs will allow the Company to relocate cutting and molding operations from the United States to Mexico and significantly reduce costs and lead times.
After receiving accelerated elimination of the NAFTA tariffs in January 2002, the Company announced the transfer of cutting operations from Laredo, Texas to Nuevo Laredo, Mexico and in a coordinated move, announced the significant reduction of sewing operations in Nuevo Laredo, Mexico. The Company expects the transfer to be completed by the end of the second quarter of the 2002 fiscal year.
Further information concerning the restructuring changes which occurred in the 2001 fiscal year as well as in the 2000 and 1999 fiscal years is presented in Note (14) of the Notes to Consolidated Financial Statements on pages 32 and 33 of R. G. Barry's Annual Report to Shareholders for the fiscal year ended December 29, 2001, which information is incorporated herein by this reference.
During the fiscal year ended December 29, 2001, the Company had three operating segments: the Barry Comfort North America group, which includes at- and around-the-home comfort footwear products manufactured and sold in North America; the Barry Comfort Europe group, which includes at- and around-the-home comfort footwear products sold in Europe and footwear products sold by Fargeot;
- -------- * Hereinafter denotes a trademark of the Company registered in the United States Department of Commerce Patent and Trademark Office.
and the Thermal group, which includes thermal retention technology products. Financial information on the Company's segments for the three years ended December 29, 2001, is presented in Note (13) of the Notes to Consolidated Financial Statements on pages 30, 31 and 32 of R. G. Barry's Annual Report to Shareholders for the fiscal year ended December 29, 2001, which financial information is incorporated herein by this reference.
PRINCIPAL PRODUCTS
The Company designs, manufactures and markets specialized comfort footwear for men, women and children. The Company is in the business of responding to consumer demand for comfortable footwear combined with attractive appearance. The Company also designs, manufactures and markets products which use thermal retention technology to preserve and/or transport temperature-sensitive or perishable commodities.
Barry Comfort North America/Barry Comfort Europe
Historically, the Company's primary products have been foam-soled, soft, washable slippers for men, women and children. The Company developed and introduced women's Angel Treads*, the world's first foam-soled, soft, washable slipper, in 1947. Since that time, the Company has introduced additional slipper-type brand lines for men, women and children designed to provide comfort, softness and washability. These footwear products are sold, for the most part, under various brand names including Angel Treads*, Barry*Comfort, Dearfoams*, Dearfoams* for Kids, Dearfoams* for Men, Madye's*, Snug Treds*, Soft Notes*, EZfeet*, Mushrooms* Slippers and Fargeot. The Company has also at times marketed slipper-type footwear under licensed trademarks. See "TRADEMARKS AND LICENSES."
The Company's foam-soled footwear lines have fabric uppers made of terry cloths, velours, fleeces, satins, nylons and other washable materials, as well as uppers made of suede and other man-made materials. Different brand lines are marketed for men, women and children with a variety of styles, colors and ornamentation.
The marketing strategy for the Company's slipper-type brand lines has been to expand counter and floor space for these products by creating and marketing brand lines to different portions of the consumer market. Retail prices for the Company's footwear normally range from approximately $5 to $30 per pair, depending on the style of footwear, type of retail outlet and retailer mark-up.
The Company also manufactures and markets the Soft Notes* foam cushioned casual slipper line. The Company believes that this brand line is a bridge between slippers and casual footwear. The marketing strategy with respect to this product emphasizes the fashion, comfort and versatility provided by the Soft Notes* foam cushioned casual slippers.
The Company believes that many consumers of its slippers are loyal to the Company's brand lines, usually own more than one pair of slippers and have a history of repeat purchases. Substantially all of the slipper brand lines are displayed on a self-selection basis in see-through packaging at the point of purchase and have appeal to the "impulse" buyer. The Company believes that many of the slippers are purchased as gifts for others during the Christmas season, with approximately 60% to 70% of sales occurring in the second half of the year compared to approximately 30% to 40% in the first half of the year.
Many styles of slipper-type footwear have become standard in the Company's brand lines and are in demand year after year. For many of these styles, the most significant changes made in response to fashion changes are in ornamentation, fabric and/or color. The Company often introduces new, updated styles of slippers with a view toward enhancing the fashion appeal and freshness of its products. The Company anticipates that it will continue to introduce new styles in future years in response to fashion changes.
It is possible to fit most consumers of the Company's slipper-type footwear within a range of four to six sizes. This allows the Company to carry lower levels of inventories in these slipper lines compared to other footwear manufacturers.
Thermal
The Company's MICROCORE* thermal retention technology consists of a family of patented or proprietary technologies which, when energized with heat or cold, act as reservoirs that release heat or cold at a constant temperature for extended periods of time. The Company currently markets pizza carriers that utilize the MICROCORE* thermal technology. The Company has also applied its thermal retention technology in consumer products, such as heated seat cushions, heated slippers and hand-warmers, and in personal self-care products, such as heated booties, neck packs and shoulder packs. In recent years, the Company has de-emphasized the development, marketing and sale of consumer products utilizing thermal retention technologies, and currently is not actively engaged in the development, marketing and sale of these consumer products and, in 2001, discontinued its efforts to sell personal self-care products.
The Company has made a strategic decision to focus on the commercial application of MICROCORE* patented thermal retention technology, either hot or cold, to preserve and/or transport temperature-sensitive or perishable commodities. Presently, the Company's primary focus is on products used to transport pizza. The Company's patented portable heat storage technology permits portable, electrically-energized heat storage from either A.C. or D.C. power sources and at specific temperatures through the use of a thermostat. The Company's pizza delivery systems are designed to keep pizza hot at oven temperatures for an extended time period so that pizza marketers may deliver pizza to a home oven-hot, dry and crisp. The Company is currently supplying heated delivery systems to Donatos Pizzeria Corporation, a subsidiary of McDonald's Corporation, and Papa John's International, Inc. The Company continues in various stages of testing future delivery systems with other pizza chains. The Company has also worked with other prepared food providers on potential delivery systems to meet their unique needs.
MARKETING
The Company's slipper-type brand lines are sold to traditional department stores, promotional department stores, national chain department stores and specialty stores; through mass merchandising channels of distribution such as discount stores, warehouse clubs, drug and variety chain stores, and supermarkets; and to independent retail establishments. The Company markets these products primarily through Company salespersons and, to a lesser extent, through independent sales representatives. The Company does not finance its customers' purchases.
As discussed below, the Company has entered into a strategic alliance with British slipper maker GBR Limited related to the distribution of comfort footwear products in the United Kingdom and Ireland. The Company is also in the process of refining its strategies for the Barry Comfort* brand in France. As discussed below, in the Spring of 2002, the Company will introduce a new program called Barry Comfort Too(TM) into the French hypermarkets.
Each spring and autumn and at other times during the year, new designs and styles are presented to buyers representing the Company's retail customers at regularly scheduled showings. Company designers also produce new styles and experimental designs throughout the year which are evaluated by the Company's sales and marketing personnel. Buyers for department stores and other large retail customers attend the spring and autumn showings and make periodic visits to the Company's showroom in New York. Company salespersons regularly visit retail customers. The Company also regularly makes catalogs available to its current and potential customers and periodically follows up with current and potential customers by telephone. In addition, the Company participates in trade shows, both regionally and nationally.
During the 2001 Christmas selling season, the Company again provided approximately 400 to 500 temporary merchandisers to service the retail selling floor of department stores and chain stores nationally. The Company believes that this point-of-sale management of the retail selling floor, combined with computerized automatic replenishment systems the Company maintained with the stores, put the Company in a position to optimize its comfort footwear business during the fourth quarter.
Sales during the last six months of each year have historically been greater than during the first six months. The Company's inventory is largest in early autumn in order to accommodate the retailers' fall and Christmas selling seasons.
The Company advertises principally in the print media. The Company's promotional efforts are often conducted in cooperation with customers. The Company's products are displayed at the retail-store level on a self-selection and gift-purchase basis.
The Company believes it has an opportunity for expansion in Europe for its at- and around-the-home comfort footwear. The Company's international sales are focused on the department store channels and hypermarkets primarily in the United Kingdom, Ireland and France. In 2000, the Company entered into a strategic alliance with British slipper maker GBR Limited. A new company, Barry (GBR) Limited, was formed to sell comfort footwear products in the United Kingdom and Ireland. After entering into this distributorship-like arrangement, the Company closed its London offices and shifted responsibility for marketing, selling, planning and financial administration for its products in the United Kingdom and Ireland to Barry (GBR) Limited. In return, the Company receives a fee on the transfer of all R. G. Barry-manufactured products to the new company and royalties on the sales of all products supplied to Barry (GBR) Limited by others. The Company's distribution center in Wales now handles products for Barry Comfort Europe and for Barry (GBR) Limited. In the Spring of 2002, the Company will introduce a new program called Barry Comfort Too(TM) into the French hypermarkets. Barry Comfort Too(TM) will focus on the 50-to-75 French franc retail price-point and complement the Company's existing 80-to-100 French franc price-point business.
The Company also markets its comfort footwear products in Canada, Mexico and several other countries around the world. In the 2001 fiscal year, the Company's European net sales comprised approximately 7% of its total net sales, while European, Mexican and Canadian net sales combined to represent 9% of total net sales. In the 2000 fiscal year, the Company's European net sales comprised approximately 8% of its total net sales, while European, Mexican and Canadian net sales combined to represent 9% of total net sales. Financial information for the three years ended December 29, 2001 for the geographic areas in which the Company operates is presented in Note (13) of the Notes to Consolidated Financial Statements on pages 30, 31 and 32 of R. G. Barry's Annual Report to Shareholders for the fiscal year ended December 29, 2001, which financial information is incorporated herein by this reference.
The Company markets its thermal retention commercial products directly to prospective customers through Company personnel. The Company does not finance its customers' purchases.
RESEARCH AND DEVELOPMENT
Most of the Company's research efforts are undertaken in connection with the design and consumer appeal of new styles of slipper-type footwear and thermal retention products. During the 2001, 2000 and 1999 fiscal years, the amounts spent by the Company in connection with the research and design of new products and the improvement or redesign of existing products were approximately $3.1 million, $2.7 million and $3.7 million, respectively. Substantially all of the foregoing activities were Company-sponsored. Approximately 50 employees are engaged full time in research and product design.
MATERIALS
The principal raw materials used by the Company in the manufacture of its slipper and thermal retention product brand lines are textile fabrics, threads, foams and other synthetic products. All are available domestically from a wide range of suppliers. The Company has experienced no difficulty in obtaining raw materials from suppliers and anticipates no future difficulty.
TRADEMARKS AND LICENSES
Approximately 95% of the Company's sales are represented by brand items sold under trademarks owned by the Company. The Company is the holder of many trademarks which identify its products. The trademarks which are most widely used by the Company include: (a) Angel Treads*, Barry*Comfort, Dearfoams*, Dearfoams* for Kids, Dearfoams* for Men, Madye's*, Snug Treds*, Soft Notes*, EZfeet*, and Fargeot, in the Company's Barry Comfort businesses; and (b) Dearfoams*, Vesture*, Lava*, LavaPac*, LavaBuns*, LavaBooties*, MICROCORE* and POWERTECH,* in the Company's Thermal business. The Company believes that its products are identified by its trademarks and, thus, its trademarks are of significant value. Each registered trademark has a duration of 20 years and is subject to an indefinite number of renewals for a like period upon appropriate application. The Company intends to continue the use of each of its trademarks and to renew each of its registered trademarks.
The Company has also sold comfort footwear under various names as licensee under license agreements with the owners of those names. In the 2001 fiscal year, sales under the Liz Claiborne** and Claiborne** labels pursuant to the license agreement described below represented less than 2% of the Company's total sales. For the 2000 and 1999 fiscal years, less than 1% of the Company's total sales were represented by footwear sold under these or other licensed names.
In November 2000, R. G. Barry entered into a license agreement with a subsidiary of Liz Claiborne, Inc. which allows R. G. Barry to manufacture and market slippers under the Liz Claiborne** and Claiborne** labels. R. G. Barry's new Liz Claiborne** Slippers for Women and Claiborne** Slippers for Men are and will be sold in upper-tier department stores and specialty retailers nationwide. The first collections of Liz Claiborne** Slippers for Women became available to the trade in March 2001, for Fall 2001 delivery. Claiborne** Slippers for Men will be introduced in 2002. The Liz Claiborne** Slippers for Women and Claiborne** Slippers for Men will initially be sold within the United States and Canada, although the licensor may, in its discretion, grant R. G. Barry the right to
- -------- ** Denotes a trademark of the licensor registered in the United States Department of Commerce Patent and Trademark Office.
distribute these slippers in other foreign countries. The initial term of the license agreement continues through December 31, 2005, and is renewable for an additional five-year term if the net sales of slippers bearing the Liz Claiborne** and Claiborne** labels for the year immediately preceding the last year of the initial term equal or exceed a specified level. The licensor has the right to terminate the license agreement if minimum specified net sales levels are not achieved for two consecutive years.
The Company has also manufactured comfort footwear for customers which sell the footwear under their own private labels. These sales represented less than 3% of the Company's sales during the 2001 fiscal year.
CUSTOMERS
The customers of the Company which accounted for more than 10% of the Company's consolidated net sales in the 2001 fiscal year were Wal-Mart Stores, Inc. and J.C. Penney Company, Inc., both Barry Comfort North America customers, which accounted for 22% and 10%, respectively, of consolidated net sales. The only customer of the Company which accounted for more than 10% of the Company's consolidated net sales in the 2000 and 1999 fiscal years was Wal-Mart Stores, Inc., which accounted for 21% in 2000 and 23% in 1999.
BACKLOG OF ORDERS
The Company's backlogs of orders at the close of the 2001 and 2000 fiscal years were approximately $6.6 million and $8.7 million, respectively. The Company anticipates that a large percentage of the orders as of the end of the 2001 fiscal year will be filled during the current fiscal year.
The Company's backlog of unfilled sales orders is often largest after the spring and autumn showings of the Company. For example, the Company's approximate backlog of unfilled sales orders following the conclusion of such showings during the last two years was: August 2001 -- $50 million; August 2000 - -- $47 million; February 2001 -- $8 million; and February 2000 -- $8 million. The Company's backlog of unfilled sales orders reflects the seasonal nature of the Company's sales - approximately 60% to 70% of such sales occur during the second half of the year as compared to approximately 30% to 40% during the first half of the year.
INVENTORY
While some styles of the Company's slipper-type brand lines change little from year to year, the Company has also introduced, and intends to continue to introduce, new, updated styles in an effort to enhance the comfort and fashion appeal of its products. As a result, the Company anticipates that some of its slipper styles will continue to change from season to season, particularly in response to fashion changes. Historically, the Company has had a limited and manageable exposure to obsolete inventory. However, in 2000, as a result of the Company's aggressive effort to lower inventory levels, the Company sold a sizeable amount of obsolete and out-of-season inventory in a short period of time for little or no profit. During the 2001 fiscal year, the level of obsolete inventory remained at manageable levels and the Company believes it will be able to control the level of obsolete inventory in the future.
The accelerated elimination of the NAFTA tariffs should allow the Company in the foreseeable future to keep its company-owned plant manufacturing costs competitive with products produced offshore while taking advantages of the benefits of manufacturing in the Company's own North American plants. Nevertheless, the Company intends to continue its ongoing plans to reduce its company-owned capacity to a level supported by demand visibility and to outsource the balance from Chinese contract suppliers. The Company plans to import approximately one-third of its product needs
from China and other Asian countries by 2003. Early in 2001, the Company opened a representative office in Hong Kong, which is responsible for procuring outsourced products from the Far East. This supply strategy is expected to reduce inventory risks and markdowns by allowing the Company to better plan inventory purchases in line with customers' demands.
COMPETITION
The Company operates in the portion of the footwear industry providing comfort footwear for at- and around-the-home. The Company believes that it is a small factor in the highly competitive footwear industry. The Company also believes that it is the world's largest manufacturer of comfort footwear for at- and around-the-home. The Company also operates in an area where it provides portable warmth and cold through its line of thermal retention technology products. The Company competes primarily on the basis of the value, quality and comfort of its products, service to its customers, and its marketing expertise. The Company knows of no reliable published statistics which indicate its current relative position in the footwear or any other industry or in the portion of the footwear industry providing comfort footwear for at and around the home or its current relative position in the thermal retention product industry.
MANUFACTURING, SALES AND DISTRIBUTION FACILITIES
The Company has six manufacturing facilities. The Company operates sewing plants in Nuevo Laredo, Ciudad Acuna, and Zacatecas, Mexico. During the 2001 fiscal year, the Company operated a cutting plant in Laredo, Texas and a sole molding operation in San Angelo, Texas. As discussed above, these operations will be relocated to Nuevo Laredo, Mexico during the 2002 fiscal year. The Company produces thermal retention products at its manufacturing facilities in Asheboro, North Carolina, and Nuevo Laredo, Mexico.
The Company maintains sales offices in New York, New York and Paris, France and a sourcing representative office in Hong Kong. The Company also operates distribution centers in Asheboro and Goldsboro, North Carolina; San Angelo and Laredo, Texas; Rhymney, Gwent, Wales; and Thiviers, France. The Company will open a new distribution center in Nuevo Laredo, Mexico during the first half of the 2002 fiscal year, replacing the distribution center in Laredo, Texas with one closer to its manufacturing facilities.
Please also see the discussion of the Company's supply strategy in "INVENTORY".
The Company's principal manufacturing, sales and distribution facilities are described more fully in ITEM 2.
ITEM 2. PROPERTIES.
The Company owns its corporate headquarters and executive offices located at 13405 Yarmouth Road N.W. in Pickerington, Ohio, containing approximately 55,000 square feet as well as a warehouse facility in Goldsboro, North Carolina, containing approximately 170,000 square feet.
The Company leases space aggregating approximately 1 million square feet at an approximate aggregate annual rental of $3.1 million. The following table describes the Company's principal leased properties:
- ---------------------- (1) Net lease. (2) In December 2001, the former owners of Vesture Corporation acquired this property and are leasing the property to the Company.
The Company believes that all of the buildings owned or leased by it are well maintained, in good operating condition, and suitable for their present uses.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
On October 19, 2001, the Vesture Corporation ("Vesture") subsidiary of R. G. Barry received a charge that its MICROCORE* pizza delivery system infringed on two United States Patents, U.S. Patent Nos. 6,232,585 and 6,274,856 (the "Patents") owned by Thermal Solutions, Inc. ("Thermal Solutions") and licensed to CookTek, Inc. ("CookTek"). After receiving the charge of infringement, Vesture and its counsel evaluated the Patents and reached the conclusion that the Patents were not infringed. To protect its rights, on November 2, 2001, Vesture filed an action in the United States District Court for the Middle District of North Carolina (Civil Action No. 1:01CV01006 (the "North Carolina Action")) seeking a declaratory judgment that the Patents are not infringed by Vesture and an order enjoining and restraining Thermal Solutions and CookTek from further charges of infringement, or acts of enforcement based on the Patents against Vesture and Vesture's actual and prospective customers. Vesture also sought damages for CookTek's and Thermal Solutions' unfounded charges of infringement and sales lost as a result of those charges. After the North Carolina Action was filed, Thermal Solutions and CookTek filed suit against Vesture on November 9, 2001, in the United States District Court for the District of Kansas (Civil Action No. 01-2537-JWL (the "Kansas Action")), alleging infringement of the Patents. Because the North Carolina Action was filed first, it had priority. The Kansas Action was voluntarily dismissed by Thermal Solutions and CookTek on December 6, 2001, in favor of the North Carolina Action, where they counterclaimed for infringement of the Patents.
R. G. Barry believes that the patent infringement allegations against Vesture are without merit and intends to defend vigorously against them. However, R. G. Barry does not believe it is feasible to predict the outcome of the North Carolina Action. The timing of the final resolution of North Carolina Action is also uncertain.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. - ------------------------------------------------------------
Not applicable.
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT. - --------------------------------------------------------
The following table lists the names and ages of the executive officers of R. G. Barry as of March 15, 2002, the positions with R. G. Barry presently held by each executive officer and the business experience of each executive officer during the past five years. Unless otherwise indicated, each individual has had his principal occupation for more than five years. Executive officers serve at the discretion of the Board of Directors and in the case of Messrs. Zacks, Lenich, Galvis and Viren, pursuant to employment agreements.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information called for in this Item 5 is incorporated by reference to page 8 of R. G. Barry's Annual Report to Shareholders for the fiscal year ended December 29, 2001.
On December 26, 2001, R. G. Barry granted an option (the "Lenich Option") to purchase 150,000 common shares, $1.00 par value, to William Lenich under the terms of his Employment Agreement, effective February 19, 2001, with R. G. Barry as a result of the closing price of R. G. Barry's common shares having averaged at least $5.00 for 15 consecutive trading days. The exercise price of the Lenich Option is $5.66 per share, the closing price of the common shares on the grant date. The Lenich Option becomes exercisable as to 50,000 common shares on each of the first through third anniversaries of the grant date. The Lenich Option becomes fully exercisable in the event of defined changes in control of R. G. Barry; upon the death or disability of Mr. Lenich; or if Mr. Lenich's employment is terminated by R. G. Barry without "cause" or by Mr. Lenich for "good reason," in each case as defined in Mr. Lenich's Employment Agreement. The Lenich Option expires on December 25, 2006.
R. G. Barry granted the Lenich Option in reliance upon the exemptions from registration provided by Sections 4(2) and 4(6) under the Securities Act of 1933 based upon the fact that there was only one individual to whom an option was granted and the status of that individual as an officer and director of R. G. Barry.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
The information called for in this Item 6 is incorporated by reference to pages 6 and 7 of R. G. Barry's Annual Report to Shareholders for the fiscal year ended December 29, 2001.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
The information called for in this Item 7 is incorporated by reference to pages 9 through 16 of R. G. Barry's Annual Report to Shareholders for the fiscal year ended December 29, 2001.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As of December 29, 2001, R. G. Barry and its subsidiaries were not party to any market risk sensitive instruments which would require disclosure under Item 305 of Regulation S-K.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Balance Sheets of R. G. Barry and its subsidiaries as of December 29, 2001 and December 30, 2000, the related Consolidated Statements of Operations, of Shareholders' Equity and Comprehensive Income and of Cash Flows for each of the fiscal years in the three-year period ended December 29, 2001, the related Notes to Consolidated Financial Statements and the Independent Auditors' Report, appearing on pages 17 through 34 of R. G. Barry's Annual Report to Shareholders for
the fiscal year ended December 29, 2001, are incorporated by reference. Quarterly Financial Data set forth on page 8 of R. G. Barry's Annual Report to Shareholders for the fiscal year ended December 29, 2001, are also incorporated by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information called for in this Item 10 is incorporated by reference to R. G. Barry's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 9, 2002, under the captions "ELECTION OF DIRECTORS," "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS--Employment Contracts, Restricted Stock Agreements and Termination of Employment and Change in Control Arrangements" and "SHARE OWNERSHIP--Section 16(a) Beneficial Ownership Reporting Compliance." In addition, information concerning R. G. Barry's executive officers is included in the portion of Part I of this Annual Report on Form 10-K entitled "Supplemental Item. Executive Officers of the Registrant."
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for in this Item 11 is incorporated by reference to R. G. Barry's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 9, 2002, under the caption "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS."
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information called for in this Item 12 is incorporated by reference to R. G. Barry's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 9, 2002, under the captions "SHARE OWNERSHIP" and "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS -- Employment Contracts, Restricted Stock Agreements and Termination of Employment and Change in Control Arrangements."
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for in this Item 13 is incorporated by reference to R. G. Barry's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 9, 2002, under the captions "SHARE OWNERSHIP," "ELECTION OF DIRECTORS" and "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS."
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) FINANCIAL STATEMENTS.
For a list of all financial statements incorporated by reference in this Annual Report on Form 10-K, see "Index to Financial Statements and Financial Statement Schedules" at page 17.
(a)(2) FINANCIAL STATEMENT SCHEDULES.
For a list of all financial statement schedules included in this Annual Report on Form 10-K, see "Index to Financial Statements and Financial Statement Schedules" at page 17.
(a)(3) EXHIBITS.
Exhibits filed with this Annual Report on Form 10-K are attached hereto. For list of these exhibits, see "Index to Exhibits" beginning at page E-1.
(b) REPORTS ON FORM 8-K
R. G. Barry filed no Current Reports on Form 8-K during the fiscal quarter ended December 29, 2001. On January 8, 2002, R. G. Barry filed a Current Report on Form 8-K, dated January 7, 2002, to report the accelerated elimination of United States and Mexican tariffs on slippers made in Mexico for sale in United States markets under the North American Free Trade Agreement. R. G. Barry also described the agreements which had been entered into with the two firms assisting it in securing tariff relief.
(c) EXHIBITS
Exhibits filed with this Annual Report on Form 10-K are attached hereto. For a list of such exhibits, see "Index to Exhibits" beginning at page E-1.
(d) FINANCIAL STATEMENT SCHEDULES
Financial Statement Schedules included with this Annual Report on Form 10-K are attached hereto. See "Index to Financial Statements and Financial Statement Schedules" at page 17.
SIGNATURES ----------
Pursuant to the requirements of Section 13 or 15(d) 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
Date: March 28, 2002 By: /s/ Daniel D. Viren ---------------------------------------- Daniel D. Viren, Senior Vice President-Finance, Secretary and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities on the 28th day of March, 2002.
Name Capacity - ---- -------- * Chairman of the Board, Chief Executive Officer and - ------------------------- Director Gordon Zacks
* President, Chief Operating Officer and Director - ------------------------- William Lenich
* Executive Vice President-Operations, - ------------------------- President-Operations of Barry Comfort Group and Christian Galvis Director
/s/ Daniel D. Viren Senior Vice President-Finance, Secretary and - ------------------------- Treasurer (Chief Financial and Principal Accounting Daniel D. Viren Officer) and Director
Director - ------------------------- Philip G. Barach
Director - ------------------------- Harvey M. Krueger
* Director - ------------------------- Roger E. Lautzenhiser
Director - ------------------------- Janice E. Page
* Director - ------------------------- Edward M. Stan
Director - ------------------------- Harvey A. Weinberg
- ------------------------------- * By Daniel D. Viren pursuant to Powers of Attorney executed by the directors and executive officers listed above, which Powers of Attorney have been filed with the Securities and Exchange Commission.
/s/ Daniel D. Viren - ------------------------------- Daniel D. Viren
R. G. BARRY CORPORATION
ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 29, 2001
AND FINANCIAL STATEMENT SCHEDULES ---------------------------------
ADDITIONAL FINANCIAL DATA
The following additional financial data should be read in conjunction with the Consolidated Financial Statements of R. G. Barry Corporation and its subsidiaries included in the Annual Report to Shareholders for the fiscal year ended December 29, 2001. Schedules not included with this additional financial data have been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.
Additional Financial Data:
Independent Auditor's Report on Financial Statement Schedules: Included at page 18 of this Annual Report on Form 10-K
Schedules for the fiscal years ended December 29, 2001, December 30, 2000 and January 1, 2000: Schedule 2--Valuation and Qualifying Accounts: Included at pages 19 through 21 of this Annual Report on Form 10-K
[KPMG LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Shareholders R. G. Barry Corporation:
Under date of February 21, 2002 we reported on the consolidated balance sheets of R. G. Barry Corporation and subsidiaries as of December 29, 2001 and December 30, 2000, and the related consolidated statements of operations, shareholders' equity and comprehensive income and cash flows for each of the fiscal years in the three-year period ended December 29, 2001, as contained in the fiscal 2001 annual report to shareholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the fiscal year 2001. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ KPMG LLP Columbus, Ohio February 21, 2002
Notes: 1. Write-off uncollectible accounts. 2. Represents 2001 sales returns reserved for in fiscal 2000. 3. Represents 2001 promotions expenditures committed to and reserved for in fiscal 2000.
Notes: 1. Write-off uncollectible accounts. 2. Represents 2000 sales returns reserved for in fiscal 1999. 3. Represents 2000 promotions expenditures committed to and reserved for in fiscal 1999.
Notes: 1. Write-off uncollectible accounts. 2. Represents 1999 sales returns reserved for in fiscal 1998. 3. Represents 1999 promotions expenditures committed to and reserved for in fiscal 1998.
R. G. BARRY CORPORATION ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 29, 2001
INDEX TO EXHIBITS
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- --------------------- * Management contract or compensatory plan or arrangement. ** Filed herewith
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