-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LOclKgEio4h1mGDwGlOM8i5fDekAwFcSZK5TRF0d/cYFrnALZ8Vm9OiRHOCHN/AW sxyghOVJ9Mu45M9FFBHnrw== 0000049401-95-000005.txt : 19950814 0000049401-95-000005.hdr.sgml : 19950814 ACCESSION NUMBER: 0000049401-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HYDE ATHLETIC INDUSTRIES INC CENTRAL INDEX KEY: 0000049401 STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021] IRS NUMBER: 041465840 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05083 FILM NUMBER: 95561337 BUSINESS ADDRESS: STREET 1: 13 CENTENNIAL DR STREET 2: CENTENNIAL INDUSTRIAL PK CITY: PEABODY STATE: MA ZIP: 01961 BUSINESS PHONE: 5085329000 MAIL ADDRESS: STREET 1: 13 CENTENNIAL DRIVE STREET 2: CENTENNIAL INDUSTRIAL PARK CITY: PEABODY STATE: MA ZIP: 01960 FORMER COMPANY: FORMER CONFORMED NAME: HYDE A R & SONS CO DATE OF NAME CHANGE: 19701030 10-Q 1 2ND QUARTER 10Q 1995 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the 26 Weeks Ended June 30, 1995 Commission File Number 0-05083 HYDE ATHLETIC INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-1465840 (State or other jurisdiction of (I.R.S. employer identification number) incorporation or organization) Centennial Industrial Park, 13 Centennial Drive, Peabody, MA 01960 (Address of principal executive offices) 508-532-9000 Registrant's telephone number (including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Class Outstanding as of July 31, 1995 Class A Common Stock-$.33 1/3 Par Value 2,701,027 Class B Common Stock-$.33 1/3 Par Value 3,532,415 --------- 6,233,442 ========= HYDE ATHLETIC INDUSTRIES, INC. INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 30, 1995 and December 30, 1994 Condensed Consolidated Statements of Income for the thirteen weeks and twenty-six weeks ended June 30, 1995 and July 1, 1994 Condensed Consolidated Statements of Stockholders' Equity for the twenty-six weeks ended June 30, 1995 and July 1, 1994 Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended June 30, 1995 and July 1, 1994 Notes to Condensed Consolidated Financial Statements - June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K Signature Index Exhibit HYDE ATHLETIC INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) ASSETS
June 30, December 30, 1995 1994 ---- ---- CURRENT ASSETS Cash and cash equivalents $ 4,912,138 $ 3,349,776 Accounts receivable 22,152,341 23,947,584 Inventories 29,584,551 31,863,443 Prepaid expenses and other current assets 3,675,594 2,460,952 ----------- ----------- TOTAL CURRENT ASSETS 60,324,624 61,621,755 ----------- ----------- PROPERTY, PLANT, AND EQUIPMENT, NET 8,034,597 8,292,926 ----------- ----------- OTHER ASSETS Investments in limited partnerships 753,433 5,746,768 Other assets 1,303,879 1,420,882 ----------- ----------- TOTAL OTHER ASSETS 2,057,312 7,167,650 ----------- ----------- TOTAL ASSETS $70,416,533 $77,082,331 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 2,677,927 $ 2,825,120 Accounts payable 4,796,067 4,718,069 Accrued expenses and other current liabilities 4,313,170 5,382,463 Current maturities of long term debt 2,130,413 2,732,208 ----------- ----------- TOTAL CURRENT LIABILITIES 13,917,577 15,657,860 ----------- ----------- LONG TERM DEBT 5,861,617 11,922,391 ----------- ----------- DEFERRED INCOME TAXES 2,195,324 2,320,777 ----------- ----------- MINORITY INTEREST 313,327 426,475 ----------- ----------- STOCKHOLDERS' EQUITY Common stock, $.33 1/3 par value 2,138,514 2,138,047 Additional paid in capital 15,521,470 15,592,805 Retained earnings 32,087,737 30,619,761 Accumulated translation (274,930) (171,471) ------------ ------------ Total 49,472,791 48,179,142 Less: Unearned compensation 290,313 447,211 Treasury stock 1,053,790 977,103 ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 48,128,688 46,754,828 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $70,416,533 $77,082,331 =========== =========== See notes to condensed consolidated financial statements
HYDE ATHLETIC INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THIRTEEN WEEKS AND TWENTY-SIX WEEKS ENDED JUNE 30, 1995 AND JULY 1, 1994 (Unaudited)
13 Weeks 13 Weeks 26 Weeks 26 Weeks Ended Ended Ended Ended June 30, July 1, June 30, July 1, 1995 1994 1995 1994 ------- ------ ------- ------- Net sales $ 25,413,737 $ 24,744,815 $ 55,651,638 $ 50,859,025 Other income 859,868 240,981 986,089 370,831 ------------- ------------ ------------- -------------- Total revenue 26,273,605 24,985,796 56,637,727 51,229,856 ------------- ------------ ------------- -------------- Costs and expenses Cost of sales 17,380,076 16,879,487 37,756,810 34,658,820 Selling, general and administrative expenses 7,395,735 7,638,202 15,873,765 14,833,825 Interest expense 311,463 358,138 746,631 729,276 ------------- ------------ ------------- -------------- Total costs and expenses 25,087,274 24,875,827 54,377,206 50,221,921 ------------- ------------ ------------- -------------- Income before income taxes and minority interest 1,186,331 109,969 2,260,521 1,007,935 Provision for income taxes 460,844 13,277 877,947 332,506 Minority interest in loss of consolidated subsidiaries (113,550) (87,002) (85,402) (25,090) -------------- ------------- -------------- --------------- Net income $ 839,037 $ 183,694 $ 1,467,976 $ 700,519 ============= ============ ============= ============== Per share amounts: Net income $0.13 $0.03 $0.23 $0.11 ============= ============= ============= ============== Weighted average common shares and equivalents outstanding 6,245,913 6,457,466 6,249,313 6,456,682 ============= ============= ============= ============== Cash dividends per share of common stock 0 0 $ 0 $ 0 ============= ============ ============= ============== See notes to condensed consolidated financial statements
HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE TWENTY-SIX WEEKS ENDED JUNE 30, 1995 AND JULY 1, 1994 (Unaudited)
Additional Common Stock Paid-In Retained Treasury Stock Class A Class B Capital Earnings Shares Amount ------- ------- ------- -------- ------ ------ Balance, January 1, 1994 $ 915,937 $1,249,404 $16,287,197 $27,683,124 -- -- Issuance of 1,600 shares of common stock, stock option exercise 267 267 3,516 -- -- -- Retirement of 89,566 shares of common stock (14,928) (14,929) (914,048) -- -- -- Issuance of below market options -- -- 237,925 -- -- -- Cancellation of below market options -- -- (41,580) -- -- -- Amortization of unearned compensation -- -- -- -- -- -- Net income -- -- -- 700,519 -- -- Foreign currency translation adjustments -- -- -- -- -- -- --------- ---------- ---------- ---------- --------- ---------- Balance, July 1, 1994 $ 901,276 $1,234,742 $15,573,010 $28,383,643 -- -- ========= ========== =========== =========== ========= ========== Balance, December 31, 1994 $ 901,342 $1,236,705 $15,592,805 $30,619,761 $ 180,700 $ (977,103) Issuance of 1,400 shares of common stock, stock option exercise 233 234 3,184 -- -- -- Cancellation of below market options -- -- (74,519) -- -- -- Amortization of unearned compensation -- -- -- -- -- -- Acquisition of 17,700 shares of common stock, at cost -- -- -- -- 17,700 (76,687) Net income -- -- -- 1,467,976 -- -- Foreign currency translation adjustments -- -- -- -- -- -- --------- ---------- ---------- ---------- --------- ---------- Balance, June 30, 1995 $ 901,575 $1,236,939 $15,521,470 $32,087,737 198,400 $(1,053,790) ========= ========== =========== =========== ========= ============ Total Unearned Notes Accumulated Stockholders' Compensation Receivable Translation Equity ------------ ---------- ----------- ------ Balance, January 1, 1994 $ (950,354) $ (400,911) $ (74,573) $44,709,824 Issuance of 1,600 shares of common stock, stock option exercise -- -- -- 4,050 Retirement of 89,566 shares of common stock 542,995 400,911 -- -- Issuance of below market options (237,925) -- -- -- Cancellation of below market options 41,580 -- -- -- Amortization of unearned compensation 26,968 -- -- 26,968 Net income -- -- -- 700,519 Foreign currency translation adjustments -- -- (80,105) (80,105) ---------- ---------- ----------- ------------ Balance, July 1, 1994 $ (576,736) $ 0 $ (154,678) $45,361,256 =========== =========== =========== =========== Balance, December 31, 1994 $ (447,211) $ -- $ (171,471) $46,754,828 Issuance of 1,400 shares of common stock, stock option exercise -- -- -- 3,651 Cancellation of below market options 74,519 -- -- -- Amortization of unearned compensation 82,379 -- -- 82,379 Acquisition of 17,700 shares of common stock, at cost -- -- -- (76,687) Net income -- -- -- 1,467,976 Foreign currency translation adjustments -- -- (103,459) (103,459) ---------- ---------- ----------- ------------ Balance, June 30, 1995 $ (290,313) -- $ (274,930) $48,128,688 =========== ========== =========== =========== See notes to condensed consolidated financial statements.
HYDE ATHLETIC INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWENTY-SIX WEEKS ENDED JUNE 30, 1995 AND JULY 1, 1994 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Unaudited)
June 30, July 1, 1995 1994 ---- ---- Cash flows from operating activities: Net income $1,467,976 $ 700,519 ---------- --------- Adjustments to reconcile net income to net cash Provided (used) by operating activities: Depreciation and amortization 577,275 524,894 Deferred income tax benefit (375,806) (84,632) Provision for bad debts and discounts 2,778,129 2,149,716 Minority interest in consolidated subsidiaries loss (85,402) (25,090) Compensation from stock grants and stock options 82,379 26,968 Unrealized loss on marketable securities -- 41,686 Gain on sale of investment in limited partnership (397,645) -- Changes in operating assets and liabilities: Decrease (increase) in assets: Marketable securities -- 2,470,444 Accounts receivable (1,030,190) (4,164,240) Inventories 2,235,890 3,974,096 Prepaid expenses and other current assets (964,996) 375,125 Increase (decrease) in liabilities: Accounts payable 19,707 (250,925) Accrued expenses (942,916) (411,647) ----------- ---------- Total adjustments 1,896,425 4,626,395 ---------- --------- Net cash provided by operating activities 3,364,401 5,326,914 ---------- --------- Cash flows from investing activities: Purchases of property, plant and equipment (146,027) (204,829) Increase in deferred charges, deposits and other (51,652) (196,672) Proceeds from sale of investment in limited partnership 1,335,289 -- ---------- --------- Net cash provided (used) by investing activities 1,137,610 (401,501) ---------- ---------- Cash flows from financing activities: Net short term borrowings (177,511) 908,679 Repayment of long term debt and capital lease obligations (2,695,918) (2,445,058) Payment of termination benefit payable (26,866) (149,342) Common stock repurchased (76,687) -- Issuances of common stock, including options 3,651 4,050 ---------- --------- Net cash used by financing activities (2,973,331) (1,681,671) Effect of exchange rate changes on cash and cash equivalents 33,682 (226,142) ---------- ---------- Net increase in cash and cash equivalents 1,562,362 3,017,600 Cash and equivalents at, beginning of period 3,349,776 10,013,166 ---------- ---------- Cash and equivalents at, end of period $4,912,138 $13,030,766 ========== =========== Supplemental disclosure of cash flow information: Cash paid during the period for: Incomes taxes $1,204,406 $ 570,772 ========== ========= Interest $1,015,067 $ 652,796 ========== ========= Non-cash investing and financing activities: Property purchased under capital leases $ 98,103 $ 65,512 Sale of investment in limited partnership Cash received, net of broker fees $1,335,289 -- Investment in limited partnership (4,993,335) -- Current liabilities (796,568) -- Long-term debt (3,259,123) -- ----------- --------- Gain realized on sale 397,645 -- ========== ========= Reconciliation of assets acquired and liabilities assumed, business acquisitions Assets acquired $ 62,777 -- Liabilities assumed 62,777 -- ---------- --------- Cash paid for business acquisitions $ -- -- ========== ========= See notes to condensed consolidated financial statements
HYDE ATHLETIC INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 1995 (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principals. In the opinion of Management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation have been included. Operating results for twenty-six weeks ended June 30, 1995, are not necessarily indicative of the results for the entire year. NOTE B - INVENTORIES Inventories at June 30, 1995 and December 30, 1994 consisted of the following: June 30, December 30, 1995 1994 ---- ---- Finished Goods $ 25,550,405 $ 24,722,893 Work in Process 35,114 71,700 Raw Materials and Supplies 3,999,032 7,068,850 ---------------- -------------- $ 29,584,551 $ 31,863,443 ================ ============== NOTE C - OTHER INCOME On June 1, 1995 the Company sold its entire interest, as a limited partner, in the Columbia Housing Partners Corporate Tax Credit II Limited Partnership, for the sum of $5,501,000. Net proceeds totalled $1,335,000 resulting in a pre-tax gain of $398,000, after transaction expenses, or $.03 per share after tax. The after tax gain is based upon projected tax credits and passive losses provided by the general partner. As a result of the sale, the Company realized reductions in current and long-term debt of $4,056,000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIRTEEN WEEKS ENDED JUNE 30, 1995 COMPARED TO THIRTEEN WEEKS ENDED JULY 1, 1994 Net sales increased approximately 3% to $25,414,000 for the thirteen weeks ended June 30, 1995, compared to $24,745,000 for the thirteen weeks ended July 1, 1994, primarily as a result of increased international sales of both Saucony and Brookfield products. An increase of approximately 57% in foreign sales of Saucony products, reflecting both higher selling prices and greater unit volume, was offset by a decrease of approximately 10% in Saucony domestic sales, resulting in an overall Saucony sales increase of approximately 4%. Foreign sales of Brookfield products increased by approximately 73% due to increased volume of Barbie and other licensed product sales. Domestic Brookfield sales declined by approximately 15%, resulting in overall Brookfield sales declining approximately 4%. The Company's gross profit increased by approximately 2%, to $8,034,000, in the second quarter of 1995 in comparison with the comparable 1994 quarterly period. The gross margin was 31.6%, which was .2% lower than the gross margin of 31.8% in the comparable 1994 quarterly period. The gross margin from sales of Saucony products increased over the 1994 period due primarily to lower levels of close- out merchandise sales by foreign subsidiaries in 1995. The decrease in gross margin from sales of Brookfield products resulted from the higher percentage of international sales, which have a lower gross margin than domestic sales, in the 1995 quarterly period. Selling, general and administrative expenses as a percentage of net sales decreased by 1.8% to 29.1% of net sales for the 1995 quarterly period from 30.9% in the comparable 1994 quarter. Advertising and promotion decreased by approximately $770,000, primarily due to reductions in television production and related costs, print ads and agency fees. Selling expenses increased by approximately $400,000, due primarily to increases in payroll and trade show costs. In addition, general and administrative expenses increased by approximately $100,000 due to increased professional service costs and the addition of the Company's German subsidiary, Saucony GmbH, which did not exist in the comparable period in 1994. Other income increased by approximately $600,000 or 256% for the quarter ended June 30, 1995 compared with the same period in 1994, primarily as a result of the gain on the sale of the Company's investment in a limited partnership and increased royalty income. Interest expense decreased by approximately $46,000 in the second quarter of 1995 in comparison with the comparable period in 1994, reflecting a paydown of the Company's long term debt.The effective tax rate of 38.8% in the second quarter of 1995 increased from 12.0% in the comparable period in 1994. The tax rate of 12% in the quarterly period ended July 1, 1994 was due to the relative effect of fixed tax credits,from the Company's tax related investment, on lower levels of income before tax for the period. TWENTY-SIX WEEKS ENDED JUNE 30, 1995 COMPARED TO TWENTY-SIX WEEKS ENDED JULY 1, 1994 For the twenty-six weeks ended June 30, 1995, net sales increased by 9.4% to $55,652,000 from $50,859,000 for the twenty-six weeks ended July 1, 1994. Net sales of Saucony brand products increased by approximately 8.5% to $41,846,000 for the twenty-six week period ended June 30, 1995, compared to $38,615,000 for the twenty-six week period ended July 1, 1994. Foreign sales of Saucony products increased by approximately 33% while sales in the domestic market remained relatively flat in the comparable twenty-six week periods. Net sales of Brookfield products increased by 9% to $9,839,000 from $9,027,000, during the twenty-six week period ended June 30, 1995 in comparison with the comparable period in fiscal 1994. Domestic Brookfield sales during the comparative periods remained relatively flat while international sales nearly doubled. The Company's gross profit grew by approximately 10% to $17,895,000 for the twenty-six week period ended June 30, 1995 compared with the first twenty-six weeks of 1994. The gross margin grew by .3% to 32.2% in the 1995 period from 31.9% in the 1994 period. Margin increases in the Saucony brand were largely attributable to lower levels of close-out merchandise sales by foreign subsidiaries in 1995. Brookfield margins remained flat over the comparable twenty-six week periods. Selling, general and administrative expenses decreased as a percentage of sales by .7% to 28.5% of net sales for the twenty-six week period ended June 30, 1995 from 29.2% in the comparable 1994 period. Advertising and promotion was reduced by approximately $500,000, due primarily to reductions in television production and related costs, print ads and agency fees. Other selling expenses grew mainly due to increases in sales commissions, payroll and trade show costs. General and administrative expense increases of approximately $700,000 were due to increased professional service costs, an increase in bad debt expense and the addition of the Saucony subsidiary in Germany which did not exist in the 1994 period. Other income increased by approximately $615,000 or 165% for the twenty-six week period ended June 30, 1995 in comparison with the first twenty-six weeks of 1994, primarily as a result of the gain on the sale of the Company's investment in a limited partnership and increased royalty income. The royalty payment was the final payment under a litigation settlement; accordingly, income in future periods will decrease from the current level. Interest expenses increased by approximately $17,000 in the 1995 period. Foreign interest expense grew due to increased borrowings by the Company's foreign subsidiaries under their bank lines of credit while domestic interest expense decreased due the paydown of the Company's long term debt. The effective tax rate rose to 38.8% for the twenty-six week period ended June 30, 1995 compared with 33.0% for the comparable period in 1994. The lower tax rate in 1994 is attributable to the relative effect of fixed tax credits, from the Company's tax related investment, on lower levels of income tax for the period. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1995, the Company's cash and cash equivalents totalled $4,912,000, an increase of approximately $1,562,000 from December 30, 1994. For the twenty-six weeks ended June 30, 1995, the Company generated $3,364,000 of net cash from operations, expended $146,000 for capital expenditures, expended $2,723,000 to reduce long-term debt and other long-term commitments, expended $77,000 to repurchase shares of the Company's Common Stock, reduced short-term borrowings by $178,000 and received $1,335,000 in cash as the result of the sale of an investment in a tax credit limited partnership. As part of the sale of this investment, the Company realized a reduction of $4,056,000 of debt, of which $3,259,000 was long-term. Principal factors (other than net income) affecting the Company's cash flow from operations in this period included a decrease in accounts receivable, net of the increased provision for bad debts and discounts, of $1,748,000, as a result of seasonal payment patterns, a decrease in inventories of $2,236,000 (due to lower Saucony inventory requirements), an increase in prepaid expenses and other current assets of $965,000 (due to advance payments for advertising and promotions) and a decrease in accrued expenses of $943,000 (due to the payment of year end bonuses, lower royalties payable due to the seasonality of the retail industry and lower interest payable as the result of the reduction in interest expense and the timing of interest payments). The increase in the provision for bad debts resulted from the bankruptcy of a retailer. INFLATION AND CURRENCY RISK The Company has experienced minimal impact of inflation over the past three years. The Company has also experienced minimal impact due to currency fluctuations because substantially all purchases from foreign suppliers and sales to customers to date have been denominated in United States dollars. PART II OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS The Company held its Annual Meeting of Stockholders (the `Annual Meeting') on May 16, 1995. At the Annual Meeting, the stockholders of the Company elected James A. Buchanan, John H Fisher, Phyllis H. Fisher, Charles A. Gottesman, Jonathan O. Lee and John J. Neuhauser as directors of the Company (by votes of 2,378,900 shares of Class A Common Stock in favor of each nominee and 38,662 shares of Class A Common Stock withheld from each nominee). At the Annual Meeting, stockholders holding 2,395,510 shares of Class A Common Stock voted to ratify the appointment of Coopers & Lybrand L.L.P. as the Company's independent accountants for the 1995 fiscal year. Stockholders holding 19,007 shares of Class A Common Stock voted against such ratification and stockholders holding 3,045 shares of Class A Common Stock abstained. No `broker non-votes' were recorded at the Annual Meeting. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits 10.01 - Employment Agreement, dated as of June 1, 1995, between the Registrant and Wolfgang Schweim. 11.00 - Computation of Earnings Per Share 27.00 - Financial Data Schedule b. Reports on Form 8-K. None. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HYDE ATHLETIC INDUSTRIES, INC. Date: August 11, 1995 By: /s/Charles A. Gottesman ----------------------- Charles A. Gottesman Executive Vice President Chief Operating Officer (Duly authorized officer and principal financial officer) EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------ ----------- 10.01 Employment Agreement, dated as of June 1, 1995, between the Registrant and Wolfgang Schweim 11.00 Computation of Earnings Per Share 27.00 Financial Data Schedule EX-10 2 EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT (the "Agreement"), made as of this 1st day of June, 1995, is entered into by Hyde Athletic Industries, Inc., a Massachusetts corporation with its principal place of business at Centennial Industrial Park, 13 Centennial Drive, Peabody, Massachusetts 01961 (the "Company"), and Wolfgang Schweim, residing at Sagamore Road, Hamilton, Massachusetts (the "Employee"). The Company desires to employ the Employee, and the Employee desires to be employed by the Company. In consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties agree as follows: 1. Term of Employment. The Company hereby agrees to employ the Employee, and the Employee hereby accepts employment with the Company, upon the terms set forth in this Agreement, for the period commencing on the date hereof (the "Commencement Date") and ending on May 31, 1997, unless sooner terminated in accordance with the provisions of Section 4 (such period, the "Employment Period"). Notwithstanding the foregoing, the Company shall have no obligation to employ the Employee in the United States prior to the time that the Employee obtains a visa that will enable the Company to employ him. The Company shall use its best efforts to obtain such a visa for the Employee. 2. Title; Capacity. During the Employment Period, the Employee shall serve as President of the Company's Saucony athletic footwear operations (the "Saucony Division"). During the Employment Period, the Employee shall be subject to the supervision of, and shall have such authority as is delegated to him by, the President and Chief Executive Officer and the Executive Vice President and Chief Operating Officer of the Company, or each of them acting singly (the "Office of the President"). The Employee shall be based at the Company's headquarters in Peabody, Massachusetts, or such place or places in the continental United States as the Office of the President shall determine. The Company may transfer the Employee to its European offices from time to time. Each such transfer shall last no longer than two months. The Employee's compensation and benefits during such periods of transfer shall be no less those provided under this Agreement. The Employee hereby accepts such employment and agrees to undertake the duties and responsibilities inherent in such position and such other duties and responsibilities as the Office of the President shall from time to time reasonably assign to him. During the Employment Period, the Employee agrees to devote his full business time, best efforts, business judgment, skill and knowledge to the advancement of the Company and its interests and to the discharge of his duties and responsibilities hereunder. The Employee shall not engage in any other business activity, except as may be approved by the Office of the President in advance. The Employee agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein which may be adopted from time to time by the Company. 3. Compensation and Benefits. 3.1 Salary. The Company shall pay the Employee, in installments payable every two weeks, an annual base salary of $200,000 (the "Base Salary"), subject to adjustment as provided in the next sentence. Commencing with the contract year which begins on June 1, 1996, for each contract year during the Employment Period, the Base Salary shall be increased over the Base Salary in effect as of the end of the preceding contract year by the same percentage as that by which the U.S. Consumer Price Index, 1982=100, for Urban Wage Earners and Clerical Workers, published by the United States Department of Labor, Bureau of Statistics (or its successor equivalent index), as of June 1st of the year for which such increase is being determined has increased over said Index as of June 1st of the preceding contract year. In the event that the Employee is, or is to be, employed for less than a full calendar month, the biweekly installments of the Base Salary shall be appropriately adjusted. 3.2 Bonus. For each fiscal year of the Company beginning with fiscal 1995, the Employee shall be eligible to receive a cash bonus of up to 50% of his Base Salary for such fiscal year, as determined in the sole discretion of the Board of Directors of the Company (the "Board"), provided, however, that nothing contained herein shall preclude the Board, in its sole discretion, from awarding the Employee a bonus for any fiscal year of greater than 50% of the Employee's Base Salary. The Company shall pay the Employee any bonus due under this Section 3.2 as to any fiscal year by the 90th day after the end of such fiscal year. 3.3 Fringe Benefits; Vacation. The Employee shall be entitled to participate in all benefit programs that the Company establishes and makes available to its employees, if any, to the extent that the Employee's position, tenure, salary, health and other qualifications make him eligible to participate. The Employee shall be entitled to four weeks paid vacation per calendar year, to be taken at such times as may be approved by the Office of the President. 3.4 Life Insurance. During the Employment Period, the Company shall obtain so-called term life insurance coverage on the life of the Employee on such terms as are acceptable to the Office of the President providing for a death benefit of $1,000,000, the beneficiary to be selected by the Employee. 3.5 Reimbursement of Expenses. The Company shall reimburse the Employee for all reasonable travel, entertainment and other expenses incurred or paid by the Employee in connection with, or related to, the performance of his duties, responsibilities or services under this Agreement, upon presentation by the Employee of documentation, expense statements, vouchers and/or such other supporting information as the Company may request, provided, however, that the amount available for such travel, entertainment and other expenses may be fixed in advance by the Board. 3.6 Automobile. During the Employment Period, the Company shall provide the Employee with the use of a Jeep Grand Cherokee or comparable vehicle. The Company shall pay and be responsible for all normal expenses of operation of such automobile, including insurance, repairs and maintenance. 3.7 Temporary Housing; Moving Expenses. The Company shall provide the Employee with temporary housing accommodations in the Peabody, Massachusetts area for up to six months from the date hereof. The Company shall also reimburse the Employee for reasonable moving and travel expenses, not to exceed $10,000, incurred by him in moving himself, his wife and his children from Germany to the Boston, Massachusetts area. 3.8 Airfare. The Company shall provide the Employee or members of his family, as the case may be, with the following business class (or equivalent) airfare: (a) two round-trip tickets from Germany to Boston, Massachusetts, for the Employee's wife, to enable the Employee's wife to search for a home in the Boston, Massachusetts area; (b) one one-way ticket from Germany to Boston, Massachusetts for each of the Employee's children; and (c) one round-trip ticket from Boston, Massachusetts to Germany for each contract year during the Employment Period for the Employee, the Employee's wife and each of the Employee's children. 3.9 Professional Services. During the Employment Period, the Company shall retain the services of an accounting firm, at the Company's expense, to assist the Employee in the preparation of his requisite tax returns. In addition, during the Employment Period, the Company shall reimburse the Employee for reasonable legal expenses, not to exceed $5,000 per contract year, incurred by the Employee in connection with general personal matters. 3.10 Stock Options. (a) Option Grants. Subject to compliance with applicable securities laws, the Company shall grant the Employee as of the date hereof three options (individually, a "Stock Option" and collectively, the "Stock Options") to purchase an aggregate of 22,500 shares (7,500 shares per Stock Option) of the Company's Class B Common Stock, $.33-1/3 par value per share (the "Class B Common Stock"), at a per share price equal to the closing price of the Class B Common Stock on the Nasdaq National Market ("Nasdaq") on the date hereof (the "Closing Price"). (b) Option Terms. Subject to the provisions of Section 3.10(c), each Stock Option shall have a term of five years and shall become exercisable in five equal annual installments, on the date hereof and on the first through fourth anniversary dates of the date hereof (the "Vesting Schedule"), so long as the Employee shall remain in the employment of the Company on such dates. Each Stock Option shall contain such other terms as are customary in options awarded by the Company to its employees. (c) Additional Vesting Provisions. In addition to the requirements set forth in Section 3.10(b), (i) one Stock Option shall not become exercisable (notwithstanding that the shares have become exercisable pursuant to the Vesting Schedule) until the first day (if any) on which the Average Closing Price (as defined below) for the Class B Common Stock equals or exceeds the sum of the Closing Price plus $2.50 per share (subject to adjustment for stock splits, stock dividends, subdivisions, combinations or reclassifications), and (ii) a second Stock Option shall not become exercisable (notwithstanding that the shares have become exercisable pursuant to the Vesting Schedule) until the first day (if any) on which the Average Closing Price for the Class B Common Stock equals or exceeds the sum of the Closing Price plus $5.00 per share (subject to adjustment for stock splits, stock dividends, subdivisions, combinations or reclassifications). (d) Average Closing Price. For purposes of this Agreement, "Average Closing Price" means, as of a particular date, the average of the closing sales prices for the Class B Common Stock on Nasdaq, or, if the Class B Common Stock is then listed on a national securities exchange, of the closing sales prices of the Class B Common Stock on such exchange, as published in The Wall Street Journal, for a period of 20 consecutive trading days prior to such date, or, if the Common Stock is listed on neither Nasdaq nor a national securities exchange, as determined in good faith by the Board of Directors of the Company. 4. Employment Termination. The employment of the Employee by the Company pursuant to this Agreement shall terminate upon the occurrence of any of the following: 4.1 Expiration of the Employment Period in accordance with Section 1. 4.2 At the election of the Company, for cause, immediately upon written notice by the Company to the Employee. For the purposes of this Section 4.2, "cause" for termination shall be deemed to exist solely upon (a) the occurrence of dishonesty, gross negligence or misconduct by the Employee, or (b) the conviction of the Employee of, or the entry of a pleading of guilty or nolo contendere by the Employee to, any crime involving moral turpitude or any felony. For purposes of clause (a) of the previous sentence, "misconduct" shall include without limitation alcoholism and drug abuse if not cured within 30 days following notice from the Company. 4.3 Upon the death or disability of the Employee. As used in this Agreement, the term "disability" shall mean the inability of the Employee, due to a physical or mental disability, for a period of 90 days, whether or not consecutive, during any 360-day period to perform the services contemplated under this Agreement. A determination of disability shall be made by a physician satisfactory to both the Employee and the Company, provided that if the Employee and the Company do not agree on a physician, the Employee and the Company shall each select a physician and these two together shall select a third physician, whose determination as to disability shall be binding on all parties. 4.4 At the election of the Company, upon 90 days' written notice to the Employee. 5. Effect of Termination. 5.1 Termination for Cause. In the event the Employee's employment is terminated for cause pursuant to Section 4.2, the Company shall pay to the Employee the compensation and benefits otherwise payable to him under Section 3 (other than Section 3.2) through the last day of his actual employment by the Company. 5.2 Termination for Death or Disability. If the Employee's employment is terminated by death or because of disability pursuant to Section 4.3, the Company shall pay to the estate of the Employee or to the Employee, as the case may be, the compensation and benefits to which the Employee would otherwise be entitled under Section 3 (including without limitation a pro rata portion of the bonus provided for in Section 3.2) through the last day of his actual employment. 5.3 Termination at the Election of the Company. If the Employee's employment is terminated by the Company pursuant to Section 4.4, the Company shall pay to the Employee the compensation and benefits payable to him under Section 3 (other than Section 3.2) at the times provided in Section 3 through May 31, 1997. 5.4 Survival. The provisions of Sections 5, 6 and 7 shall survive the termination of this Agreement. 6. Non-Compete. (a) So long as the Employee is employed by the Company, and for a period of two years after the termination or expiration of such employment, the Employee will not directly or indirectly: (i) as an individual proprietor, partner, stockholder, officer, employee, director, joint venturer, investor, lender, or in any other capacity whatsoever (other than as the holder of not more than one percent (1%) of the total outstanding stock of a publicly held company), engage in the business of developing, producing, marketing or selling products or performing services competitive with the products or services developed or being developed, produced, marketed, sold or performed by the Company, or under active consideration by the Company for development, production, marketing, selling or performing, while the Employee was employed by the Company; or (ii) recruit, solicit or induce, or attempt to induce, any employee or employees of the Company to terminate their employment with, or otherwise cease their relationship with, the Company; or (iii) solicit, divert or take away, or attempt to divert or to take away, the business or patronage of any of the clients, customers or accounts, or prospective clients, customers or accounts, of the Company which were contacted, solicited or served by the Employee while employed by the Company or known to the Employee as a result of his employment by the Company; or (iv) interfere in any manner in the relationships between the Company and its suppliers. (b) If any restriction set forth in this Section 6 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable. (c) The restrictions contained in this Section 6 are necessary for the protection of the business and goodwill of the Company and are considered by the Employee to be reasonable for such purpose. The Employee agrees that any breach of this Section 6 will cause the Company substantial and irrevocable damage and therefore, in the event of any such breach, in addition to such other remedies which may be available, the Company shall have the right to seek specific performance and injunctive relief. (d) If at any time or from time to time during the noncompetition period provided for in Section 6(a) hereof the Employee accepts new employment with a third party, the Employee immediately shall notify the Company of the identity and business of the new employer. Without limiting the foregoing, the Employee's obligation to give notice under this Section 6(d) shall apply to any business ventures in which the Employee proposes to engage even if not with a third-party employer (such as, without limitation, a joint venture, partnership or sole proprietorship). The Employee hereby consents to the Company notifying any such new employer of the terms of this Agreement. 7. Inventions and Proprietary Information. 7.1 Inventions. (a) All inventions, discoveries, computer programs, data, technology, designs, innovations and improvements (whether or not patentable and whether or not copyrightable) related to the business of the Company which are made, conceived, reduced to practice, created, written, designed or developed by the Employee, solely or jointly with others and whether during normal business hours or otherwise, during his employment by the Company pursuant to this Agreement ("Inventions"), shall be the sole property of the Company. The Employee hereby assigns to the Company all such Inventions and any and all related patents, copyrights, trademarks, trade names, and other industrial and intellectual property rights and applications therefor, in the United States and elsewhere and appoints any officer of the Company as his duly authorized attorney to execute, file, prosecute and protect the same before any government agency, court or authority. Upon the request of the Company, the Employee shall execute such further assignments, documents and other instruments as may be necessary or desirable to fully and completely assign all such Inventions to the Company and to assist the Company in applying for, obtaining and enforcing patents or copyrights or other rights in the United States and in any foreign country with respect to any such Invention. (b) The Employee shall promptly disclose to the Company all such Inventions and will maintain adequate and current written records (in the form of notes, sketches, drawings and as may be reasonably specified by the Company) to document the conception and/or first actual reduction to practice of any such Invention. Such written records shall be available to and remain the sole property of the Company at all times. 7.2 Proprietary Information. (a) The Employee acknowledges that his relationship with the Company is one of high trust and confidence and that in the course of his employment by the Company he will have access to and contact with Proprietary Information. The Employee agrees that he will not, during the Employment Period or at any time thereafter, disclose to others, or use for his benefit or the benefit of others, any Proprietary Information or any Invention. (b) For purposes of this Agreement, "Proprietary Information" shall mean all information (whether or not patentable and whether or not copyrightable) owned, possessed or used by the Company, including, without limitation, any Invention, formula, formulation, vendor information, customer information, apparatus, equipment, trade secret, process, research, report, technical data, know-how, computer program, software, software documentation, hardware design, technology, marketing or business plan, forecast, unpublished financial statement, budget, license, price, cost and employee list that is communicated to, learned of, developed or otherwise acquired by the Employee in the course of his employment by the Company. (c) The Employee's obligations under this Section 7.2 shall not apply to any information that (i) is or becomes known to the general public under circumstances involving no breach by the Employee of the terms of this Section 7.2, (ii) is generally disclosed to third parties by the Company without restriction on such third parties, (iii) is approved for release by written authorization of the Board, or (iv) is communicated to the Employee by a third party under no duty of confidentiality to the Company. (d) Upon termination of this Agreement or at any other time upon request by the Company, the Employee shall promptly deliver to the Company all records, files, memoranda, notes, designs, data, reports, price lists, customer lists, drawings, plans, computer programs, software, software documentation, sketches, research notebooks and other documents (and all copies or reproductions of such materials in his possession or control) belonging to the Company. (e) The Employee represents that the Employee's employment by the Company and the performance by the Employee of his obligations under this Agreement do not, and shall not, breach any agreement that obligates him to keep in confidence any trade secrets or confidential or proprietary information of his or of any other party or to refrain from competing, directly or indirectly, with the business of any other party. The Employee shall not disclose to the Company any trade secrets or confidential or proprietary information of any other party. 7.3 Remedies. The Employee acknowledges that any breach of the provisions of this Section 7 shall result in serious and irreparable injury to the Company for which the Company cannot be adequately compensated by monetary damages alone. The Employee agrees, therefore, that in addition to any other remedy it may have, the Company shall be entitled to seek to enforce the specific performance of this Agreement by the Employee and to seek both temporary and permanent injunctive relief (to the extent permitted by law) without the necessity of proving actual damages. 8. Notices. All notices required or permitted under this Agreement shall be in writing and shall be deemed effective upon personal delivery or two days after deposit in the United States mail, by registered or certified mail, postage prepaid, return receipt requested, addressed to the other party at the address shown above (and, in the case of any notice to the Company, with a copy to David E. Redlick, Esq., Hale and Dorr, 60 State Street, Boston, Massachusetts 02109), or at such other address or addresses as either party shall designate to the other in accordance with this Section 8. 9. Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa. 10. Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. In addition, the Employment Agreement dated October 24, 1993 between the Employee and Saucony, Inc. is hereby terminated in its entirety. 11. Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee. 12. Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts. 13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Employee are personal and shall not be assigned by him. 14. Miscellaneous. 14.1 No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion. 14.2 The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. 14.3 In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. 14.4 This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 14.5 All payments provided for in this Agreement shall be subject to such tax withholding and other governmental contributions as are required under applicable law. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. HYDE ATHLETIC INDUSTRIES, INC. By: /Charles Gottesman Title: Executive Vice President Chief Operating Officer EMPLOYEE /Wolfgang Schweim The undersigned executes this Agreement solely for purposes of its rights and obligations under Section 10: SAUCONY, INC. By: /Charles Gottesman Title: Executive Vice President Chief Operating Officer EX-11 3 HYDE ATHLETIC INDUSTRIES, INC. AND SUBSIDIARIES EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
For the For the Thirteen Weeks Ended Twenty-Six Weeks Ended -------------------- ---------------------- June 30, July 1, June 30, July 1, 1995 1994 1995 1994 ---- ----- ---- ---- PRIMARY Net income applicable to common stock $ 839,037 $ 183,694 $ 1,467,976 $ 700,519 ------------ ------------- -------------- ------------ Weighted average shares: Average shares outstanding 6,232,105 6,447,276 6,232,774 6,449,732 Dilutive stock options based upon application of the treasury stock method using average market price 13,808 10,190 16,539 6,950 ------------ ------------- -------------- ------------ Total shares 6,245,913 6,457,466 6,249,313 6,456,682 ============ ============= ============== ============ Net income per share $ 0.13 $ 0.03 $ 0.23 $ 0.11 ============ ============= ============== ============ FULLY DILUTED Net income applicable to common stock $ 839,037 $ 183,694 $ 1,467,976 $ 700,519 ------------ ------------- -------------- ------------ Weighted average shares: Average shares outstanding 6,232,105 6,447,276 6,232,774 6,449,732 Dilutive stock options based upon application of the treasury stock method using market price at end of period or average market price, if greater 13,793 10,155 17,313 7,110 ------------ ------------- -------------- ------------ Total shares 6,245,898 6,457,431 6,250,087 6,456,842 ============ ============= ============== ============ Net income per share $ 0.13 $ 0.03 $ 0.23 $ 0.11 ============ ============= ============== ============
EX-27 4
5 This schedule contains summary financial information extracted from Hyde Athletic Industries, Inc. 2nd quarter 10Q for the period ending June 30, 1995 and is qualified in its entirety by reference to such 10Q. 1 6-MOS JAN-05-1996 JUN-30-1995 4,912,138 0 22,152,341 498,422 29,584,551 60,324,624 14,164,488 6,129,891 70,416,533 13,917,577 5,861,617 2,138,514 0 0 45,990,174 70,416,533 55,651,638 56,637,727 37,756,810 37,756,810 15,873,765 411,813 746,631 2,260,521 877,947 1,467,976 0 0 0 1,467,976 .23 .23
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